Three good reads, two slightly wonkish, that I don’t know how to make into full posts, but thought I’d summarize briefly with links.
1. Apropos of Kain’s post on passenger rail, the Economist has a piece on American freight rail, which is among the cheapest and most used (in terms of share of the freight market) in the world. Some of the roots of American freight rails’ success lie in the deregulatory Staggers Act of 2008 1980. According to this article, the freight rails are worried about increases in passenger rail service, since freight and passenger often share the same lines (though they won’t with any of the new very high-speed services). Some of the piece sounds a bit like anti-regulatory propaganda for the freight rail industry, but still interesting.
2. Crooked Timber has a great piece about differences between American and European economies. In recent history, the US has had about third to a half higher per capita GDP than most European countries, caused in roughly equal parts by higher rates of unemployment, productivity, and average hours per worker. The gap in rate of employment has leveled fairly dramatically in some cases and the gap in productivity is in single digits when one compares with France, Germany and the Netherlands. Now, the difference in per capita GDP is mostly a result of the fact that Americans work longer hours.
3. The New York Times (h/t reader d) has a piece on the paradox of Alaskan glibertarianism, summed up well by one of the authors of the state constitution:
“There’s all this verbiage that says we’re the frontier, rough and ready. The Feds paid for everything, but the conflict runs through our history.”
There’s a side of it I can sympathize with. They like living in a less populated, more wilderness-like area in part because of an apparent live-free-or-die ethos. But such an area is prone to have fewer employment opportunities, higher infrastructure costs per capita (footed by the federal government), and more federal representatives per capita (because of the structure of the Senate) leading to more earmark money. So it’s a recipe for self-styled frontierspeople becoming dependent on federal money.
I’m thinking of doing posts like this on the weekend more regularly — let me know if you think it’s a workable format or an annoying snooze.
Linda Featheringill
Actually, the format is kind of interesting. Sort of Reader’s Digest for BJ folks.
I could see several interesting bits being thrown into such a post.
Thumbs up from here.
c u n d gulag
I give it a ‘thumbs up’ too!
Davis X. Machina
Anyone interested in passenger rail, freight rail, and the role they have in reducing GHG emissions, wants to follow Phillip Longman’s work in Washington Monthly. His recent piece on how more barge shipping could make room for more passenger rail is here.
KG
I’ve got no problem with the format. Whether it works or not, like any form of writing will come down to content. But I’d say give it a go, see if it is sustainable.
In re: point #3, the glibertarianism gets even more annoying when you consider the fact that Alaska’s state government is based on the state owning (certain valuable) mineral rights under private property and property owners have to pay the state (with excess funds being passed on to people who live in the state) for the right to extract the minerals. There’ a name for that, and I’m pretty sure it’s not libertarianism.
roshan
Try just two, add more context and references. Use economics as the main stay of topics.
Can use this as a source: http://www.reddit.com/r/Economics/
Bob Loblaw
In time (like a generation or so), the state of Alaska will basically be America’s biggest gated community. Montana and Wyoming too, thereabouts.
With no state sales or income taxes, Alaska is completely dependent on the federal teat. Without the oil coffers, all they have left to offer is summer estates for rich people.
If you want to know more about link #2, you should read recent stuff from Stiglitz and Amartya Sen.
A correction (important) though. “higher rates of unemployment, productivity, and average hours per worker.” should be changed to “higher rates of employment, productivity, and average hours per worker. Historically, unemployment rates are higher in Western European nations due to differences in the strength of their respective safety nets, among other things.
arguingwithsignposts
Damn, I was going to saw you were trolling for Bob Loblaw, but he beat me here. So there ya go, DougJ.
And, re: passenger vs. freight, fuck the freight. Passenger trains should get first place on all rails they run on. That’s why people don’t use Amtrak so much, when a train can be three hours late for a three hour ride to Chicago because they had to pull off and wait for a bunch of fucking tankers to go by. Nationalize the tracks. Screw the Glibertarians, and tell the freight cos. to suck it.
sven
@Bob Loblaw: I’d be really interested in reading that; can you link to a specific recommendation?
(yeah, yeah, I’m too lazy to google)
Elia
yeah i officially endorse this manner of posting
morzer
@arguingwithsignposts:
Questionable whether this is realistic, either economically or environmentally. The better answer would be an improved rail system where the conflict didn’t arise.
DougJ
@Bob Loblaw:
Thanks for correction.
morzer
@Bob Loblaw:
That depends on which Western European nations you are talking about. Historically, the Spanish economy, to take one example, has been weak, and thus unemployment has been relatively high. It’s very little to do with safety nets, if, in fact anything to do with them. Don’t confuse a moralistic right-wing claim with economic fact.
One point that deserves to be remembered – the method of calculating unemployment in e.g. the UK changed numerous times in the last 30 years, and, as a rule, each time it changed unemployment magically dropped!
arguingwithsignposts
@morzer:
Don’t know how it would be worse than the system we have now which disincentivizes passenger train travel.
I’d actually argue it could be a temporary thing while high-speed rail was built that would carry passenger traffic only, if that would work.
Dr. Drang
I’ve had dealings with people in the railroad business off and on for twenty years, and they’ve always told me freight is doing well. That success can’t be attributed to a 2008 law.
Also, railroads are still highly regulated and pretty much have to be. It’s the only way to have an interchange system that works.
gnomedad
I thought we all came here for pet photos, whining, and the f-word.
Seriously, thumbs up on this. Good stuff.
morzer
@arguingwithsignposts:
Have your people talk to my people. Long live the Soshulist Muslim Rail Infiltration Jihad!
morzer
@Dr. Drang:
If I remember correctly, historically freight rail was a big part of why the railways were built and where.
mvr
I like it. Saturdays are often very boring on the internet (not that I should spend so much of my time on the internet) because some of the best blogs go dark. One downside to combining the three is that the comments down-thread wind up being on different topics if one bunch of people are interested in pursuing one suggestion and others like another. That might speak in favor of splitting the posts up, even with the same content.
D-boy
re #3, I think it was Wallace Stegner (not sure) who said that the relationship between the western states and the feds was “give us your money and leave us the hell alone”
JGabriel
DougJ:
So, basically, Alaskan glibertarians don’t want to live in a real frontier, just a highly unregulated, theme park version of one.
By the way, I’m not criticizing them for wanting the comforts and assisstance government can provide. There’s a long tradition of government involvement in frontier development. I’m just criticizing the anti-government hypocrisy while taking and lobbying for its money; though I suppose there’s a long tradition of that too.
.
DougJ
@mvr:
Yeah, I think I might split them in general. I’m trying this out because I see a similar format on other blogs, but I don’t like the way they do it — too many different stories and weak-to-nonexistent summaries.
arguingwithsignposts
@DougJ:
I don’t have a problem with several conversations going on in one thread, as long as they don’t all devolve into abortion or IQ and g. ;)
Southern Beale
So it’s a recipe for self-styled frontierspeople becoming dependent on federal money.
Yeah, like how U.S. military doctors, dentists and veterinarians provide FREE health care to remote Alaskan villages, while Sarah Palin and the rest protest “big government” and “socialized medicine.” How come no one ever pointed out the free healthcare Alaskans received courtesy of U.S. tax payers while Palin was spreading her death panels lies?
I’m not saying these remote villages don’t need the assistance and I’m glad that the country is able to provide it. I DO object to the hypocrisy of Alaska Glibertarians pretending to be all self-sufficient when if it weren’t for the largesse of the lower 48 they’d be shivering in their igloos.
Bob Loblaw
@sven:
http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf
The executive summary is a reasonably broad place to start on quality of life issues and recalculating economic benefits thereof.
DougJ
@KG:
I’m not quite sure how that fits in with glibertarianism. On the one hand, it’s mooching and looting, on the other it’s proof that Galtian big business can enrich us all.
It’s easy for me to see them arguing “with less regulation, every state could send checks to its citizens”.
PeakVT
I made some graphs comparing GDP, hours worked, and E2P ratios for some OECD countries a while back. Per worker output for European countries averaged about 80% of US workers due to few hours and lower productivity. Korea was an outlier because Koreans both work much longer and are much less productive than everybody else.
schrodinger's cat
I for one would prefer some more math and science posts.
DougJ
@PeakVT:
The 80% is in line with the CT article (it may even be a little high), since it means that US workers are 25% more productive per person. The figures CT cites have US workers doing about 20-25% more hours and being about 10-15% more productive per hour.
Bob Loblaw
@PeakVT:
The porn and MMORPGs will do that to ya.
DougJ
@schrodinger’s cat:
I’m thinking of doing one on Perlman/Yau. The hard part about is that it’s hard to do it without gushing too much. The Thurston-Hamilton-Perlman result (that’s chronological) is the best geometry humans have done since Euclid. No one I’ve spoken with in the area disputes this, but it sounds very over-the-top.
There’s also a weird cultural part of it that is hard to cut through — crazy Russian genius, nothing like that in the West, that’s how the WSJ put it. But that’s bullshit. The true visionary here was Bill Thurston, though Perlman’s work was fantastic too.
Martin
@Bob Loblaw: Wait until the porn MMORPGs come out.
sven
@Bob Loblaw: Danke sehr!
kwAwk
I’m not sure this is limited to Alaska really. Most of the Red States are vastly dependent on the Federal Government for a functioning economy.
Whether it is repeated bailouts for hurricane and/or flood recovery in MS, AL, NC and SC or farm subsidies for the great plains these states can only function to some degree because of the help they receive from others.
KG
@DougJ: but it’s not less regulation. It is saying that the State owns the oil under the ground that you own. And that if you want to extract the oil, you have to pay the government, not on the income you generate on it, just for the right to. It actually more resembles a form of socializm, at least in my opinion.
schrodinger's cat
@DougJ: I think the media has a hard time covering math and science in general, because most journalists have backgrounds in humanities, they don’t really have an idea about what they are writing.
They write about the crazy Russian scientist (he does look a bit crazy, I have seen his photos) makes a much better copy than writing about normal looking, boring mathematicians.
PeakVT
@Bob Loblaw: Unfortunately for you theory, the long hours and low productivity predate the era of online access to sin.
(If anyone has worked in Korea, I’d like to hear your observations on working conditions there.)
Southern Beale
I think the media has a hard time covering math and science in general, because most journalists have backgrounds in humanities
Eh, bullshit. My dad was a journalist, he always said a good reporter can cover ANYTHING. ANY topic. And he was right.
Goddammit, not being an “expert” is not an excuse for sloppy journalism … in fact, it’s probably why our media sucks, they corporate office keeps hiring “experts” who know everything instead of reporters who ASK THE FUCKING QUESTIONS.
Media has killed America.
DougJ
@KG:
I realize it isn’t actually because of deregulation.
I can’t wrap my head around Alaskan glibertarianism (which is a distinctive strain, IMHO).
DougJ
@Southern Beale:
I think it’s tricky with science, the New Yorker piece on Perlman/Yau was by far the best piece I’ve ever read on research math in mass media and it was a joint effort between a reporter and an expert. But you’re right insofar as I don’t think the mathematician could have written the article itself.
Anyway, you touch on a very interesting topic. Mistermix has a lot of interesting thoughts about this.
MikeJ
@DougJ: Alaskan glibertarianism is just a virulent strain of general western glibs. You know, the people that complain about the size of government landholdings in the west and graze/harvest timber/take water from public lands. There’s a lot of stupid people out here. Many of them wouldn’t even live in the west had their ancestors not gotten handouts of free land from the government (and 99% of them wouldn’t be here without the government sponsored genocide of the original inhabitants.)
arguingwithsignposts
@DougJ:
I knew a guy in seminary who was a glibertarian fundamentalist who was of the alaskan variety. He dreamed of getting that yearly oil check. also *very* 2nd amendment type. Studying for an OT Ph.D. – very weird strain, that.
I’m sure he’s teabagging these days.
Little Boots
Social issues aside (okay, that’s a HELL of a caveat,but still …), we had a pretty good plan in the 50s. Strong unions, high taxes on the rich, lots of exports, a sort of unannounced industrial policy, and a growing, and more importantly expanding, economy.
Violet
I like the format, but wouldn’t go more than three articles unless you want to end up with a really disjointed comments section. You might find the discussion leans heavily toward one article, which might be a way of discovering a topic that would benefit from its own post down the road.
As for the Alaskan glibertarian thing, I get why they’ve got such a hypocritical way of looking at things. They’re way far from everywhere and really do benefit from having the government money. I just wish their home-grown idiots like Sarah Palin would stay home and not come ruin things for the rest of us.
Little Boots
I don’t like glibertarianism, but when it meets up with the Christian bullshit artists, it becomes truly unbearable. I think that’s what happens with Alaskan glibertarianism.
schrodinger's cat
Also sometimes an “expert” is not even an expert, example, BJ favorite, McMegan. You do have to agree, that if someone is covering science, it would help if they had more than a passing familiarity with the subject they cover. You don’t need a PhD but it would help if you knew something about the subject you cover. I remember reading a ludicrous column by David Brooks how economics these days was like quantum mechanics, which could have only been written by someone who knew very little of either economics or physics.
DougJ
@schrodinger’s cat:
The trick is in defining “expert”.
That's Master of Accountancy to You, Pal
Wait, I thought that we wanted to find a workable format in order to be an annoying snooze. When did BJ policy change?
That's Master of Accountancy to You, Pal
@Little Boots:
There was also the tiny factor of two-thirds of the world economy trying to rebuild after blowing itself up and desperately needing our exports. I agree that the rest of it was important, but there are certain features of the 1950s that can’t be recovered.
Unless we blow up two-thirds of the world’s economy so that they desperately need our exports again. Which is why it’s so silly to be blowing up Arab countries. They don’t have large enough economies for their desperation to produce much in the way of exports for us, and there are still other people who can provide. We need to blow up Europe and Japan again. If we can convince Japan to invade and wreck China again along the way, so much the better.
Little Boots
no, that wasn’t all of it, Accountancy. We actually created the middle class in the 50’s. Then we decided to piss it away in the 70s and especially the 80s. Now here we are, with outsourcing, cut wages, union busting, and random bullshit. We had an idea that does need to be reworked, that’s true. But now we have Wall Street, and nothing else.
Omnes Omnibus
@That’s Master of Accountancy to You, Pal: Policy changed when the new identity was adopted.
KG
@DougJ: agreed, very distinctive strain of glibertarianism, founded, I believe on cognitive dissonance more than anything. I’d say glibertarianism in general gives too much credence to Locke and not enough to Hobbes, but I highly doubt many glibertarians have read either of them. Throw in the mythical rugged frontierism of the Alaskan version and you get the clusterfuck that is this.
Martin
Yeah, the variable that seems to escape the corporatists/libertarians is that if the bulk of the population can’t afford to buy anything, the economy has nowhere to go. Case in point – I can’t afford to hire contractors any more. My income just can’t swing it. So, from replacing fences, to kitchen remodel, to painting the house, all the way down to mowing the lawn, I make the time to do it all.
I’m very productive, but my contributions to the economy are very meager and efficient. Half of my materials are from craigslist or freecycle or the the city’s hazardous disposal site (seriously – free paint, paint stripper, cleaning supplies – better than having my tax dollars pay to dispose of it) and the rest are all raw materials – lumber, etc. Not a lot of my spending finds its way into labor, so the trades guys aren’t making money and they’re not putting their spending into labor either.
Sure, the post-war rebuilding was helpful, but the amount of domestic infrastructure development needed is massive, but few parts of the country are willing to make the investment. And it doesn’t require a lot of spending – most of California’s investments of late have come from private industry by regulating them out of areas we don’t want them in. You want wind farms across the US? Regulate the coal plants away. The feds don’t need to pay a penny for that, and it’ll expand that industry and create jobs because the energy companies know that in order to keep profits going, they’ll need to take their current profits and invest them creating jobs. It’s the same effect as taxing them and creating stimulus programs, but the government doesn’t need to serve as an intermediate. Not much courage to do it out there, though.
Little Boots
It ain’t just Alaska. It’s the whole West. Bullshit artists bullshitting themselves. And plenty of places outside the West.
Little Boots
Guess you can do whatever you want on the weekends, Doug. Nobody seems to be here anyway.
b-psycho
@KG: Actually it approximates Georgism, in that it realizes that natural resources are collective property (since no one made it). There’s a form of libertarianism that Georgism would be compatible with, but Alaskans would call it far-Left anti-american moonbattery if you explained it to them.
That's Master of Accountancy to You, Pal
@Little Boots:
Gee, then it’s a good thing that I never claimed it was. You’re arguing with your own imagination.
I largely agree with this, except that I think that both the causes and effects of all of this are more complicated and that there aren’t any easy solutions.
For instance, in the 1950s, there weren’t any significant countries where low wage export manufacturing could be done. You had the US and Canada, which were booming, northern and western Europe, which were high wage countries going through a temporary, if enormous, period of economic distress, a bunch of communist countries that were not only struggling even worse than western Europe but also had no interest in trading with us on a significant scale (buying our grain whenever they drove themselves into starvation, sure, but not really trading) and a bunch of post-colonial, or soon to be post-colonial, states with no industrial base at all.
That’s a very, very different world than the one we live in now. The ideas don’t need to be reworked; we need to come up with different ideas. The things you list are goals, but don’t have any content on how to achieve them.
Little Boots
I think we gotta go back to tariffs.
Little Boots
It would instantly help manufacturing and we’d be able to do the only thing that supposedly matters to the great American electorate: income tax cuts.
Davis X. Machina
@Little Boots: Not unless we get the abominations, too.
That's Master of Accountancy to You, Pal
@Martin:
This brings us to another difference. Unlike the 1950s, when the US was the largest creditor nation in the world, we are now deeply in debt, both government and private. Right now, that’s pretty much irrelevant to the fiscal policies we should pursue, but it won’t be once we get out of the recession. Then it’s going to matter a lot.
Wrong. It’s going to require a lot of public investment, even if the wind farms themselves are built by private actors. The entire energy grid of the country is going to have to be rebuilt. Useful wind farms would mostly be in places where we currently don’t have much infrastructure. It also involves switching to a periodic source of power, which sometimes, often unpredictably, won’t be available. Dealing with that is complicated. Personally, I’m not crazy about the idea of private actors owning and controlling the grid.
Again, it’s just not that simple.
Little Boots
We’ll take that chance, Davis. And really what’s the South gonna do? Secede? (Don’t answer that.)
Little Boots
Borrow, borrow, borrow, spend, spend, spend, elect, elect, elect. It really isn’t that complicated, Accountancy, even the Republicans have figured it out. Build a new economy and let the next generation, also known as the beneficiaries, pay for it.
Phoebe
@DougJ: When you say you can’t wrap your head around AK glibs, do you mean that you don’t understand how they can, with a straight face, say “give me money for nothing” and “let me do whatever I want”? It’s a teenage mentality. And a grifter mentality. By which I mean, greedy and shortsighted. There is no logic beyond: “but I want it”. Logical coherence, or a view of a larger picture, is really not a part of the worldview. If you try to introduce these into the conversation, it’s very rough sledding, and generally provokes bafflement, then anger.
That's Master of Accountancy to You, Pal
@Little Boots:
Yeah, but will they help the rest of us?
The history of tariffs is rather checkered, and they often don’t have the results intended. The US imposed a variety of import restrictions on Japanese cars in the mid-1970s to try to do exactly that: help American manufacturing. How did that work out? The US auto companies decided to take advantage of the import restrictions to raise their own prices by about the same amount and not make major changes in their own operations.
I’m actually big on free trade. Not quite an absolutist, but close. Where I part ways with most of the people who advocate pure free trade is that I think it involves a lot more than they do.
Free trade requires free labor markets. Workers must have the right to organize and bargain collectively. Wages must be set by a free market without the government taking interference to cap them. (In principle, minimum wage laws have the same problem, except that they don’t improve a country’s ability to trade, so they can be ignored for this purpose and evaluated on other merits.)
Free trade requires free currency markets. If countries artificially hold down the value of their currency, then they aren’t engaging in free trade.
All of which is to say that free trade gets unfairly blamed for a lot of problems. What creates the big ills we see are still restrictions of free trade, just not the ones that most people focus on.
Of course, we live in a world where an awful lot of countries don’t practice free trade, whatever the WTO says. I do not buy into the idea that unilateral free trade always benefits the party that practices it. It did for the US in the 1950s, but that was a different situation. I don’t have a set of policy prescriptions that I’m all that fond of to deal with it. On some level, we’re simply screwed until a bunch of East Asian countries (plus Germany) decide to stop playing these games. The funny thing is that I don’t think that East Asians and Germans, in general, benefit from these policies, but they sure are wedded to them.
KG
@That’s Master of Accountancy to You, Pal: I’ve read that the issue with things like solar and wind power is energy storage (basically batteries) for when we generate energy but don’t need it at the time (obviously you need energy from solar panels at night and from wind farms when there is no wind). Basically, we don’t have the storage capacity as it stands right now.
@b-psycho: that’s an interesting line of thought. I’m not entirely sure I agree with it, but intriguing nonetheless. I need to take some time to think about it, though.
DougJ
@Phoebe:
No, I think I don’t really understand the thought process thoroughly. I think they might admit that loving all the fed money is hypocritical but I think there would be some Randian explanation of why everybody getting the government check was free market economics at their finest.
Little Boots
So given that free trade is always a bit of a con game, Accountancy, given all that currency manipulation, why not counteract it with some tariffs?
And yes, I think a strong manufacturing base in and of itself is a good thing. It provides a lot of well paying jobs and that translates into a vibrant middle class.
I don’t know where else a vibrant middle class comes from. Certainly what we’re doing now is just pushing us toward a Rich/Poor no middle society, and free trade and outsourcing are a big part of that.
sven
@arguingwithsignposts:
@KG:
The Alaska Permanent Fund is a little more complicated than an ‘oil check’. The state government created the Alaska Permanent Fund Corporation in order to both cushion the impact from boom-and-bust cycles in the oil industry and to ensure that the temporary benefit from natural resource extraction became a permanent revenue stream for the state. The Permanent Fund was invested in private assets including Stocks, Bonds, and Real Estate. For the past 25 years the Permanent Fund has seen an average return of ~ 10% per year. The Fund reinvests about 1/2 of that amount to inflation-proof and continue modest growth and about 1/2 is distributed to each citizen of the state just as a private corporation sends a portion of its profits to shareholders; the payments are literally called ‘Alaska Permanent Fund Dividends’. While the Permanent Fund was started with oil revenue its continued growth, and dividend checks, is from investment.
Linda Featheringill
@Little Boots:
One real reason for the prosperity of the 50s for the US was that we bombed the hell out of the competition in 40s. Well, except for those industrial centers that Germany bombed the hell out of.
The point is, our competition was pretty much demolished and our manufacturing capacity was preserved. So . . . . lots of jobs and lots of exports.
Anne Laurie
Doug, you — you — copycat! /storms off to sulk.
(Not really. I think there’s a place here for “link dumps”, but I’m not sure how best to handle them either, obviously.)
Little Boots
The other good reason was STRONG unions. Something counteracting wall street and the dickwad economy we have now. It really is a problem, and we need something truly strong enough to counter the brokers and bankers that have driven us into this ditch. I think tariffs would help a lot, but if not that, what? And be practical and real, please.
DougJ
@Anne Laurie:
Yours was a slightly different style. I still haven’t found a way I like of doing link dumps.
Bill Murray
@That’s Master of Accountancy to You, Pal: the chimaera that is free trade is great for the developed economies when dealing with less developed economies — it’s pretty much the reason for the resource curse. Ha joon Chang’s Bad Samaritans (http://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596915986/ref=sr_1_1?ie=UTF8&s=books&qid=1282429672&sr=8-1) deals with this in detail.
One thing you missed about free trade and workers is that for their to be free trade the workers must also be able to move freely between countries, if they can’t there is no free trade. One could use a tariff to balance this (and differences in externality cost especially when in many areas these costs aren’t even considered).
Also, Ricardo’s comparative advantage has not be proven for more than 2 quantities and countries (IIRC), let alone for the real world with hundreds of countries and thousand’s of products.
In the end free trade is much like free markets — can’t exist in practice, easily manipulated by the powerful for their ends, never getting anywhere near the promises of the starry-eyed, true believers.
Trade and markets are fine, adopting the principles of those advocating these to be free is great if you have the power to take advantage of the manipulations, for the vast majority of humanity it’s not so great
That's Master of Accountancy to You, Pal
@Little Boots:
Maybe we should. AS I said, I don’t have any policy prescription I like that much. The problem is that I don’t think that tariffs would have the same effects that you do. At least as much as developing a manufacturing base, they allow the people who run manufacturing to engage in rent seeking and behavior that benefits them while providing zero or negative benefits to the rest of us.
Of course, contrary to what most people think, the US has a strong manufacturing base. What it no longer does is employ a lot of people. There is no way to rebuild a vibrant middle class by trying to recreate what we had in the 1950s.
Like it or not (and overall, I think they are a fabulously good thing), productivity advances mean that we WILL have a much higher percentage of the workforce engaged in service industries. You can bemoan it all you want, but without going full on Luddite, you can’t change it.
We need to figure out how to rebuild a vibrant and wealthy middle class in a new type of economy. Pointing to the 1950s is a good way to refute (not that they care) the claim that we can’t raise taxes from where they are without wrecking the economy. As an example, though, they don’t provide much of a guide for where we should go. Once we get through the recession and continued government borrowing is problematic, we’re going to have to really face the problem of what to do to achieve what we want.
Again, I largely agree. That still leaves us with the question of how to recreate them. We had strong unions for a number of reasons. One of them was the high percentage of workers in factories doing manufacturing jobs. That’s no longer true, and no one has come up with a good way to organize service industry workers. It would help to get the NLRB back to siding with labor, but that’s not a full scale solution.
I don’t think tariffs would help at all in reining in the bankers. More to the point, the problem isn’t coming up with suggestions for what to do; I can come up with a bunch, many of which are much more simple, direct and effective than tariffs. The problem is passing them through Congress. If we can solve that problem, there are lots of things to do. If we can’t solve it, then sitting here arguing what we should do may be entertaining, but it doesn’t have much value beyond that.
That's Master of Accountancy to You, Pal
@Bill Murray:
This differentiates it from imposing tariffs how, exactly?
Robert Waldmann
The Economist continues its effort to prove that Jimmy Carter is our greatest President ever. Notice how deregulatoin which worked happened when Democrats controlled the White House and Congress and had a huge majority.
Of course Reagan too was a great pro-market deregulator as is shown by … what exactly ?
Republicans talk the talk, but they side with special interests (almost) every time.
kwAwk
@That’s Master of Accountancy to You, Pal:
I think that the definition people are using for having a strong manufacturing base, is having one that employs a lot of people at good wages, which is what we really don’t have anymore.
Companies that are still manufacturing entities in this country are slashing wages to remain competitive, thus if we added some tariffs we could bring back or at least stabilize our manufacturing base (the one with jobs).
While its true that the rest of the world doesn’t need us as much as they did after WWII, when their economies were decimated, the world still needs US demand and consumption to drive their economies, which I think is why it wouldn’t be a bad idea to keep some of that production here in the near term. Other countries have manufacturing capacity now for sure, but what they don’t have is the demand to keep it occupied.
Just because globalization is inevitable, doesn’t mean that we have to be the only country in the world rushing to have it happen, while others look to their own needs firsts.
asiangrrlMN
Thumbs up from me.
@Anne Laurie: I liked your thread, too, AL. I read most of the links. Very informative.
That's Master of Accountancy to You, Pal (JMN)
@kwAwk:
To some extent, that’s a result of the policies they run. Chinese don’t consume that much because the government makes it difficult for them to do so.
However, the two things you talk about don’t work in tandem; they work in opposition. Until we can get these other countries, again primarily East Asian and Germany, either consuming more or producing less, we’re going to have an unbalanced economy.
That’s the theory. In practice, that’s not usually what happens when you put tariffs in place. What generally happens is that the protected industries simply raise the prices they charge, don’t raise wages any, and turn that into extra profit margin. Tariffs in and of themselves do nothing to increase the economic rationale for companies to increase wages, which is driven by supply and demand within the labor market.
Your argument rests upon the premise that companies will choose to increase wages because they can. It’s at odds with the premise that liberals generally use, which is that companies will only raise wages when they have to. I find the latter a more persuasive case, and wonder why liberals tend to drop it when the idea of tariffs come along. If anything, by raising prices (which is what restricting cheap imports does) they decrease demand, and thus decrease the wage that labor can charge.
There are reasons I can see why you would want to impose tariffs, even if I don’t agree with them all, but trying to drive up wages isn’t one of them. The only way that can work is if you make the tariffs so high that they produce a large gap between the demand for products and what foreign countries can supply that it causes additional manufacturing to increase here. What you absolutely must remember about that is that doing this means a big increase in the price levels. In many ways, tariffs are regressive, because they force up the price of goods that were cheap and that lower and lower middle class people buy. The increase in price level counters the increase in nominal wages, and often leaves them worse off.
Michael
This is a popular blog feature, a.k.a. the tab dump. The one thing I’d add is that these features are increasingly less useful/interesting as they amount to browsing a la TJ Maxx — ya gotta rummage through a bunch of junk before finding something worthwhile.
So, yes! Keep it ‘good reads’ … but curate them, and make sure they’re, you know, good.
M
Tim Connor
I am very appreciative of this format.
PanAmerican
The AAR doesn’t give a shit about Amtrak. They’re concerned about rate re-regulation noise coming out of Congress and are using Amtrak as leverage.
mclaren
And you know who was responsible for deregulating American rail freight and making it the most efficient in the world?
Jimmy Carter.
Best president in the last 40 years.
Nately's Whore's Kid Sister
Judging by the length of the thread, your question has been answered. But I’ll put .02 in and say, yes, please, try this out!
kwAwk
@That’s Master of Accountancy to You, Pal (JMN):
Well, giving protected industries a large enough profit margin is what is going to convince them to keep their production here and not move it overseas. With our present state of the economy simply keeping wages stagnant is worlds of improvement better than what we’ve been seeing over the past 30 years in manufacturing.
Pretty valid economic theory states that if the profit margin gets too high it will attract competitors to the marketplace which will bring profits back down to a normal level.
One industry where tariffs have been very effective is in the auto industry where Ronald Reagan imposes tarriffs and import restrictions on the import of foreign cars, and this had the effect of forcing foreign automakers to start building manufacturing facilities here in the United States. While the Big 3 were still at a disadvantage to their foreign competitors due to legacy healthcare costs, the net effect was to retain our automotive manufacturing base while other industries such as textiles completely disappeared.
If you put in place effective tarriffs which have the affect of increasing the demand for domestic production, then you’ve put in place a system which will raise the demand for domestic labor which will in turn result in an increase in wages. I’ve seen nothing which would indicate to me that China has a policy to prohibit the consumption of goods in China, what I’ve seen more often than not, is that Chinese laborers, as with those is Thailand, Vietnam and India, can’t afford the consumption levels that we have. So people in these countries can for sure, but on average the average household income in these countries is a fraction of what it is here.
On average tariffs will make goods more expensive, but they’ll also make wages go up. Tied to that, with increased production here in the US, it’ll mean greater tax revenues for all levels of government, meaning greater government services and lower tax rates and debt. This doesn’t even include the multiplier effect of how a dollar of production kept here in the US will produce $4 of GDP in a year.
It doesn’t happen because the multinational corporations have figured out that it is in their own best interests to have cheap non-union unprotected workers in Vietnam produce goods for half what they could be produced here and sell them here where the only real market for the products exist. Its a great deal for the multinational corporations and Vietnam, but it sucks for the people on the bottom of the economic ladder here.
What is good for people on the bottom of the economic ladder in the US, isn’t this constant striving to reduce the cost of goods at the expense of jobs here in this country. What good is cheap products from China at Walmart if nobody has the money to buy them?
What it really is, is a short sighted economic policy that has worked well for a couple of decades as price drops helped consumers, but you have to ask yourself if we’ve finally reached the tipping point where the loss of jobs is no longer being offset by drops in prices, where the only gains happening now and in the next couple of decades are only for those at the top of the economic ladder.
Phoebe
@DougJ: I think you give them WAY too much credit, and that if you actually held their feet to the fire and asked them how this makes sense they’d writhe and yell “gotcha journalism!” They don’t like to be made uncomfortable, and that is the alpha and omega of their philosophy.
For people who have managed to reconcile their hatred for gummint with their dependence on same, go to the FLDS, who take pride in “bleeding the beast“. Although they are truly horrible in many ways, I respect them more.
rachel
@PeakVT: This is very late, I know, but I’m catching up on my blog reading.
I think that when you look at Korean’s long work hours and low productivity, you need to consider the historical and social context. Here are just a few points to consider:
1. Until very recently, what little economy Korea had was low tech agrarian. (Farmers are still using oxen to pull their plows in some remote parts of the country.) When you have that kind of a situation, there is so much work to do and so many daylight hours to do it in, and it’s no use killing yourself to get tomorrow’s work or next week’s work done today.
2. Also until very recently (and this is not completely a coincidence to #1), parasite infections (hookworms, roundworms, liver flukes), chronic diseases (malaria, TB, hepatitis B) and food shortages were rife. There’s only so much work to be gotten out of a undernourished, ailing workforce, and even though the population is healthy and well fed now, the old expectations are still hanging on to some extent.
3. Being seen as a dedicated company man is paramount to keeping your work environment running smoothly. One consequence of this is that many people here feel that it’s not a good idea to leave before the boss does, even if the time is up and all their work is done. Many older office workers acquired the habit of dragging out the work to fill the time and hang out with their coworkers smoking and drinking little cups of green tea or instant coffee as much as they can get away with. The younger employees will copy their behavior if they know what’s good for them.
4. “Gogetters”, “movers and shakers” and the openly ambitious are not appreciated here unless they own the company or are very senior in the organization. A young employee should keep his head down, his mouth shut, his nose clean and do what he is told if he wants his employment to be comfortable or long lasting. This is not an atmosphere that leads to people trying to stand out.
Dale
The Economist article has the odor of an industry screed, the headline is enough to give that away.
The resurgence of US freight rail can be explained in one word: coal. One of the graphs suggests that the tremendous surge in railroads’ productivity in the 80’s was a direct result of deregulation. Nowhere does it say that this coincides with the time when they started hauling hundreds of loads of Wyoming coal every day, practically doubling their freight volume with a perfectly predictable cargo stream where no alternative means of transport is practical. The article only mentions coal traffic in passing, and qualifies it in the next paragraph. I suspect that the tremendous volume of coal traffic can explain many of the efficiency advantages American freight rail has over its European counterparts; the infrastructure is supported by this absolutely predictable revenue stream, and the rest of the freight traffic benefits from the improved infrastructure.
The article does raise some interesting points about the challenges of running high-speed passenger traffic on heavily traveled freight lines, but I don’t see the connection with the regulatory bogeyman.
Nutella
@MikeJ:
It’s not just the west and south that are dependent on other people’s money while claiming to be independent. The suburbs always have taken resources from the cities while claiming it’s the other way around. Drivers of private cars think of themselves as independent when they are actually beneficiaries of vast public subsidies to oil and roads.
In fact there seems to be a strong negative correlation between real economic independence and swaggering claims of rugged individualism.
Arclite
I agree. This is a good idea.