« The Decline in American Optimism—Posner | Main | How Dismal is the Fiscal Future For America and Europe? Becker »

08/22/2010

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Gregory

Fascinating. Thank you!

I would be interested in seeing some numbers. E.g. How fast do you expect growth to be if we keep the current policies, and how fast if we adopt your ideal policies? I have some doubts about there being large changes in gdp growth per year, since it seems to have stubbornly stayed around the same trend (3%) over the last 100 years or so.

Let's say we adopt radical education reform (charter schools, merit pay, vouchers, etc.) Do you think this boosts gdp growth by a .1 percentage point or, say, 1 percentage point? Getting a sense of the order of magnitude involved would be interesting.

Pandora Bracelet

It is hard to say .

Aaron

Thanks for the very interesting post--as a member of "the children" of boomers, I certainly am interested in this question!

One thing I have read that I thought was relevant to this discussion is a discussion of likely tax rate changes as a particularly large generation moves through the tax system. When the baby boomers were of prime working age, the number of boomers relative to the number of retirees and school-children was (is?) high, so the tax burden could be relatively lower. As the boomers enter retirement, however, the large number of seniors (who disproportionately need government services) relative to working-age taxpayers will rise, which may lead to a rise in tax rates as well.

Although, obviously, tax rates are only one component of the growth rate, and this demographic phenomenon is only one component of tax rates, it is nonetheless interesting to consider as one of a confluence of reasons why, even if I end up better off than my parents, the gap is unlikely to be as large as it was between the boomers and their parents.

Aaron

Brian Davis, Austin, TX

"Tis a pity youth is wasted on the young." I'm referring to the popular assumption across our consumption society (ages 19-45) that the "elderly," now including the early wave of Boomers, are a bunch of delirious geezers readier for the glue factory than the workplace. Boomers and elders, be thankful above all for your health and strive to preserve it; don't hesitate to take on new challenges. A seasoned, disciplined thinker is worth a dozen clueless tyros. Further to the point, the question is NOT whether we'll leave our children well-heeled. If we've done our jobs as parents, the kids are ready, or they're already making it in American life without depending upon a surname. The one favor most of us, who never expect to be "rich," CAN do for the youngsters is to go out debt-free, not hanging our economic mistakes, our millstones around their necks. It's worth more than trying to leave them money-pits of stuff and even businesses or investments they don't understand or care little about.

Ignacio

Very interesting, as usual!

Mortgages

I appreciated reading your thoughts in a couple of these posts, because I, too, thought some of Posner's reasoned arguments on his blog were flawed. Although I've got great respect for him, I notice some logical leaps and assumptions without evidence (e.g., his idea that the clunkers program would yield only minimal or no environmental gains, because people would suddenly be driving 50% more. Since the largest exchanges have been Ford Explorers for Toyota Corollas, supposedly, it doesn't follow that *suddenly* out of nowhere those people will suddenly start driving 50% more. People who have real "clunkers" are in no position to take on a large carpayment and higher insurance, even if they get a rebate for their clunker. Yes, those people could reasonably be expected to drive a lot more, but that's not what's happening on the ground.)

Btw, you have every right to anonymously post respectfully argued disagreements. Some of our Founding Fathers wrote the Federalist Papers under pseudonyms, so their identities didn't get in the way of people taking their reasoned arguments neutrally. Judge Posner and Becker choose not to write anonymously, presumably, partly because they hope their names and status will lend weight to their arguments. That's fine, but it's also fine to blog anonymously, especially as an ordinary person responding to a famous person in an abusive internet culture and hateful political environment. Keep up the good work; ignore the bullies.


Mortgages
*******
oliver

LVTfan

Per capita growth may sound very egalitarian, but the bulk of the benefit generally accrues to those who own that which the classical economists would recognize as Land -- including forms of it the classical economists didn't see in their lifetimes.

When we talk about the "average child," is that a reference to the child in the middle of the, say, income spectrum, or the wealth spectrum, or the IQ spectrum, or the child of parents whose income or wealth is somewhere around the per capita average?

The reality is Lake Wobegon in reverse. About 80% of us are below average. Not you or I perhaps. But then again, I read somewhere that 19% of us consider ourselves to be in the top 1%, and many more think we have a real shot at being there. And so we toe the line, and tow it, I suppose.

Low marginal rates on wage income are a fine idea. But we ought to be collecting for public purposes the lion's share of the economic rent on natural resources and land value, not permitting that value to accrue to our corporations and their shareholders, our entrepreneurs and their heirs.

st

jobs, jobs, jobs. read Andrew Groove's businessweek publication. Unless the job situation resolved, the kids would not work hard. The optimistic view would not come back. Until the job comes back, hard working, good earning MFG jobs for high tech, auto, or others, there is no future for the middle class, including their kids.

st

http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html

Helen T.

In the business world, which is ultimately where wealth is produced, the major source of pessimism comes from:

The foregone conclusion that incentives to produce for both rich and poor Americans will not go anywhere but DOWN from here.

Productive people will be taxed further, while perhaps at the same time, less productive people will be further subsidized. With decreased incentives to produce, future economic performance cannot but decline. After all, a country’s prosperity is almost by definition equal to the total value of goods and services it produces. There is no escaping that reality. Even the extra 5% that the rest of the world lends the US (lent against future growth) so that Americans can live a mere 5% beyond their means is essentially a pittance. And even that extra 5% will become increasingly hard to obtain from foreigners as the US stagnates to the low growth levels associated with decreased incentives to produce.

The bottom line is:

A nation’s prosperity = the total value of goods and services it produces.

With decreased incentives to production, prosperity cannot but follow the downward trend.

Its just as simple as that. There is no need to resort to complex theories.

Emily Jones

Hi,

I am a webmaster dealing with few financial websites on topics like debt, mortgage, credit, loans etc. I came to know about your website: from different search engines and I really liked the content of your website:(http://www.becker-posner-blog.com/) I must say that the content of your site is quite rich and worth reading.


But only good content will not help you to gain higher ranking in the search engines. For that you require quality link exchange too. And so for this reason I have come with a new proposal for your website.

If you are interested then please let me know and I will send you the required details. If u want we can also do article exchanges.
Looking forward for your earliest reply.

Regards
Emily Jones
Email:- emily.jones025@gmail.com

virtual assistants

Hey,
Great and informative post.
I'm highly by author information.
Thanks for sharing this informative post.
Keep posting your updates....

sewa mobil

Nice article, thanks for sharing.

Dave P

Talk of per capita GDP and taxation is surely beside the point, otherwise people would have been far more pessimistic in the 1960s. The menace of downward mobility has more to do with it, but the real issue is the combination of inequality & insecurity. Ever more precarious work arrangements and the concentration of wealth in fewer hands means that the danger of your children falling through society's holes is far greater, as is the drop. Add to that the growth of newly-industrialising economies, population aging in the older developed regions and global ecological & resource constraints on growth, and the outlook for the next generations of North Americans and western Europeans isn't at all rosy. It could be if we shift consumption and earnings away from the provision of ever more of the increasingly tacky "things" with which we insist on cluttering our lives, and instead place a higher value on intangible exchanges geared toward cultural & intellectual fulfilment. But we're too fond of the material trappings of affluence, and there just aren't the resources to keep us all supplied with - or engaged in producing & selling - the ten-ton SUV's and 20ft plasma TV's "stuff"-fixated consumers will want in the $500 trillion world economy we'll need in a few generations if we're all to be happy bunnies. So it's vaster accumulations of unsustainable material trash, or rewarding social & cultural interactions: the choice is yours. And the signs aren't promising: the very exchanges that we should be prioritising are the spheres of activity we've downgraded in recent decades from a cornerstone of our civilisation to just more humdrum industrialised "product". Pessimistic? Oh yes. But that's because I believe we're capable of far better than griping about a few per cent on the tax rate and assuming we can just carry on ad nauseam with "business as usual".

Peter

Great article. I would be interested in your thoughts about this article.

http://futuremoneytrends.com/The_Water_Crisis.html

Our future generations have so much to come up against.

Phil in Chicago, MBA '06

Given the topic, the following charts might be interesting to some of you:

http://www.businessinsider.com/us-wealth-inequality-2010-7#despite-the-myth-of-social-mobility-poor-americans-have-a-slim-chance-of-rising-to-the-upper-middle-class-8

According to these data, income inequality is increasing, and social mobility is virtually non-existent. Just food for thought....

Joshua Norman

@Gregory:

I agree with the idea of school choice wholeheartedly! Government run schools are terrible!

@Phil:

There used to be Horatio Algeresque social mobility in America. Unfortunately Human Resources made him fill out an electronic application, then waterboarded him because other people more closely reflectly the open position requirements. But seriously, with the rapid offshoring of American jobs to Turd World countries and the massive influx of immigrants to America, the middle & working classes are facing an onslaught of cheap, desparate labor in this country.

impact crusher

thanks for sharing

Bayoul

Dave P, America’s relative position in the world in the 60’s was very different than today. In the 60’s, despite being a period of rapidly growing collectivism in American politics, America still remained, by far, a much more free and individualistic nation compared to the rest of the world. This is due to the enormous endowment of individualism bestowed upon this nation upon its very unique creation. But decades of advancing collectivism in America and, at the same time, economic liberalizations in the rest of the world, have significantly narrowed the individualism advantage (and hence economic efficiency) that America once enjoyed.

In other words, the endowment of individualism is been used up while other nations are catching up to us in economic freedom. So, while the erosion of American individualism is accelerating in the US, other nations seem to be discovering and implementing economic freedom and individualism. Hence the inevitable convergence and loss of American exceptionalism in the prosperity arena.

Old Broken Down Carpenter

Geez, that young Joshua Norman fella above who thinks "Horatio Algeresque social mobility in America" is dead really ought to come down off his high horse and get a job, even if it means getting his hands dirty. I sure wouldn't hire him, based on the stuff he says on this blog. He don't seem to be the sort of fellow who is interested in hard work. Probably a lot of them folks in "Turd World countries" outwork Mr. Norman in their sleep.

Joshua Norman

@Old Broken Down Carpenter:

Are you that Jake guy from other posts posting under a pseudonym?

As for getting a job, unfortunately your Christian neoconservative Republicans and their globalist Democrat lackeys sent the majority of new created jobs to Turd World countries & imported coolies from Latin America and Asia to fill the remaining jobs.

The reason why Turd World coolies are in demand for the global labor force is because they're willing to work for $1 a day & no bathroom breaks. I've worked with those people & I'm unimpressed with their so called work ethic.

I OFFERED to pay back all unemployment benefits received if the following took place, whether I could find work or not.
1. The U.S. removes all the illegal immigrants in the country and either deport them back to their home countries or create conditions that compel the illegals to return home on their own accord.
2. The U.S. enforces the immigration laws already on the books and removes the anchor baby loophole.
3. The U.S. reduces the number of legal immigrants permitted to enter the country as well as implements formal policies that focus immigration efforts on immigrants with the desired education, skills & capital.
4. The U.S. implements tariffs on imports, particularly on imports from the Turd World.
5. The U.S. dedicated the revenue raised by tariffs to cut taxes for individuals, businesses and U.S. corporate entities.
6. The U.S. cuts $1 trillion from government spending programs that are not authorized by the enumerated powers of the United States Constitution. I was unaware that America was obligated to provide for the common defense of wealthy foreign countries such as Germany, Japan, Kuwait & Korea nor was I aware that they had to promote the general welfare of Afghanistan, Pakistan & Iraq. I just proposed spending cuts of $250 billion. Anyone else want to suggest spending cuts or do I personally have to make all the suggestions?

If anyone is opposed to what I stand for than debate me on the issues, don't resort to childish insults and sneers like the Old Broken Down Carpenter.

eurail pass

I think this dream can only materlize in our day and age with the increase in etrrepreneurship among today's youth. Working 9-5 jobs just isn't going to cut it anymore. Some work second or even third jobs to to stay afloat. How times have changed.

Martha D

…“It could be if we shift consumption and earnings away from the provision of ever more of the increasingly tacky "things" with which we insist on cluttering our lives, and instead place a higher value on intangible exchanges geared toward cultural & intellectual fulfilment.”

People who measure their standard of living primarily through “intangible exchanges geared toward cultural & intellectual fulfillment” have a quality of life that is largely immune to economic decline since their standard of living seems to be largely un-correlated to per capita income. Therefore, such people have little reason to preoccupy themselves with eventual economic decline. They can be happy regardless of economic prosperity, since they derive their happiness from intangible things that money cannot buy. For these people, the whole issue of economic decline presented in this post would seem largely a mute point.

www.google.com/accounts/o8/id?id=AItOawn7abRk5nRN3j1zRHi5eZf1DsGOCJMeIPU

Examples of childish insults include 'Turd World,' 'Democrat' used as an adjective, and 'anchor baby.'

On the issues, what Joshua Norman appears to stand for is the perennially widespread mixture of populism and nationalism sometimes referred to (perhaps childishly and insultingly) as 'America Firstism.' While it addresses genuine and legitimate concerns about the corrosive effect of hypercompetition on society, its policy prescriptions seem to me to be more about singling out scapegoats than about dealing with the root causes of diminishing economic security expectations. I don't think America has much potential as a gated community among nations. We will stand or fall along with humanity as a whole. An injustice anywhere will inevitably become injustice everywhere. With that understanding, I think the quality of life prospects for Americans will be bleak until the global south (as far as I know a less insulting formulation for 'third world' or 'developing world') adopts human rights and labor rights norms at least as ambitious as those of the United States and western Europe. I'm also very skeptical of the 'globalist' position that these human rights norms must wait in line behind economic growth, let alone will reliably result from economic growth. China and Singapore both stand as proof that capitalism can exist quite independently of democracy.

Joshua Norman

Google blog link says "Examples of childish insults include 'Turd World,' 'Democrat' used as an adjective, and 'anchor baby.'" I also used neoconservative as an adjective too, did you miss that? Isn't that the pot calling the kettle black. You're leveling opprobriums at me.

It also says "On the issues, what Joshua Norman appears to stand for is the perennially widespread mixture of populism and nationalism sometimes referred to (perhaps childishly and insultingly) as 'America Firstism.' While it addresses genuine and legitimate concerns about the corrosive effect of hypercompetition on society, its policy prescriptions seem to me to be more about singling out scapegoats than about dealing with the root causes of diminishing economic security expectations. I don't think America has much potential as a gated community among nations. We will stand or fall along with humanity as a whole."
I'm proud that I belive in American concerns over other concerns. The policies I advocate are merely a reversal of the governing policies the US has pursued over the last 80 years. If you or anyone think they are bad, then address them instead of saying I'm "scapegoating".
You say this means that America has no potential as a gated community, I say America has no potential if it serves as a place of lebensraum for the world's citizens.

The comments to this entry are closed.

Become a Fan

May 2014

Sun Mon Tue Wed Thu Fri Sat
        1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31