« Are Too Many Young People Going to College? Becker | Main | The Japanese Catastrophe—Posner »

03/14/2011

Comments

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

Thatte

New and up-coming Dis-incentives to produce, never seen before on American soil?

- Maby, retiring at 50, or taking a 10 year sabbatical at 40, with a $50K investment income and offloading almost the entire healthcare costs/premiums of your family on the state (i.e. everybody else)?

- Not saving for college because in the future some French style program will provide education paid by others?

- Not saving for retirement (and thus not even bothering earning too much extra income – i.e. not produce too much or not bothering with the innovation required to produce things of high value) because if you accumulate enough wealth, then a modified MEANS TESTED social security payments system will not give you back most of the Social Security payments you paid all your life?

Its not rocket science. People who look just below the surface are reducing their exposure to American long term economic performance. Personal Incentives To Produce! These are the only parameters that matter in the long term. QE1s QE2s robbing Peter to pay Paul macroeconomic manipulation schemes have little effect on long term economic performance and are actually even detrimental as a sum because they increase uncertainty (should I save? What if the fed indirectly redistributes through inflation etc.).

Why loan money for investment to an American populace that is attracted to adopting French incentives to produce? Europe has become a joke around here in Asia and the rest of the developing world. They are going down faster than anyone and watch the world go by in stupor.

Not that investment in the US has dried up, but all else being equal, the more complacent Americans become the less citizens of emerging economies will be willing to invest in the ability of Americans to produce. Why invest in an ever more complacent US auto worker? Engineer, Accountant etc. Millions of people around the world are now learning to do the same thing. Americans either get the incentives to move up in productivity and the types of things they produce (leaving unhindered the incentives to innovation that others cannot mimic) or they just simply get absorbed into the worldwide average. Its just as simple as that, really.

If you Americans had already started sliding down towards the worldwide average at 3% growth, what do the new welfare incentives of complacency portend for future growth rates? It is amusing to watch your decline. Whom do you expect to wake you up? Your politicians? They will never tell you that there is no such thing as a better more relaxed future with more prosperity based on lower incentives to produce. They just bamboozle you trying to convince of what you want to believe in the first place. That somehow some form of central planning (yet undiscovered by any nation in the history of the world – I mean its laughable!) will make up for the dis-incentives of a more complacent more relaxed populace shifting to a more blunted correlation between productivity and reward. I mean, wake up! Do you know how many times the movie of such promises has been played in the world? Apparently Americans are just watching it for the first time.

If tiny Hong Kong were your only competition you’d be in good shape. But your 300mil citizens together with 500mil economically vanishing Europeans are facing competition from 6,000 million who are growing at 4.5%

Exercise for 5th graders:
- Do two curves, one starting at $5,000 and growing at 4.5% and one starting at $50,000 and growing at 1.5% ever intersect?
- What is relative economic strength of a future with 6 billion people earning $25,000 per capita vs. the economic strength of 0.3 billion Americans earning $50,000 per capita?

It has become amusing to hear typical American hopes of no decline…

In a way I’m sad to see America go down, representing an ever smaller proportion of GDP. We, the whole world, we all benefit from a dynamic America in absolute terms. But in relative terms, a declining America means less competition. If you want to go down dear Americans go ahead. Amuse the world in your pursuit of trying to stay on top through decreased incentives to produce. I mean, what a joke!

Heather E.

It is ironic, but, the compassionate goal of social-democracy leads to the cruel mid-long term outcome of economic decline.

But for social-democrats, hope springs eternal. Hope that that one of these days a sizable enough proportion of citizens will sing Cumbaja, abandon mediocrity, and be convinced to produce under a central plan with less and less direct personal gain, thus leading a great egalitarian society to growth rates that are on par with the worldwide 4-5% average. Pathetic indeed...

Jim

It's absolutely stunning the way so many have bought into the villainization of unions, including lumping them in with Communism.

Is Crony Capitalism a fantasy or an illusion? While I agree that some of these union pensions should be reigned in, is corporate corruption to be considered blameless for our economic woes? Are we really that naive?

Education is fantastic, but everyone doesn't have to go to college to get one.

Jack

Xavier? Krugman's "negativity?" Mostly he's identified a problem those of the "right" would like to ignore. As for "engineering" social outcomes today's consolidation of wealth and income did not come about by happenstance. I'd urge reading "Winner Take All Politics" which illuminates much of the feedback loop of the moneyed purchasing favors from Congress that begets more money and more power etc.

"We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages."

Indeed! That mfg has yielded to Walmart and "service sector" jobs is hardly reason for the impoverishment of the middle class. You'll recall WMT having the chubbiest bottom line in history (other than a windfall year for oil-cos) yet paying so little that taxpayers chip in another billion/year in welfare payments so those poor souls can make ends meet. As something of a conservative, surely you'd find it frustrating to pay a portion of their labor bill whether you shopped their or not. Also, it's clear that the WMT heirs were a MAJOR driving force in getting rid of the inheritance tax for those inheriting more than $15 million.

"We need to guarantee the essentials, above all health care, to every citizen. [How you do it matters. Safety nets are okay. Government run healthcare not. If you don’t believe me read the law itself.”

To some extent we've already made the decision to provide something akin to "H/C" for all, and indeed it does matter; we'll soon go broke treating those of the 50 million "uncovered" or poorly "covered" at the ER. As for "government run" the proposed rationalization is no more "government run" than other H/C programs. In fact MY objection is that of sweeping most into the wait maw of today's insurance parasites, w/o the cost compressing public option.

"The whole thrust of it is that with the whole economy stagnating of course the middle class will stagnate."

Just to get our time frame right, wages have been stagnating for all but the topmost echelons since 1980 and perhaps before. As for your "social engineering" concerns it's no accident that the min wage has been allowed to fall below its purchasing power of the 80's; not EVEN keeping up with inflation, much less that of getting a piece of the "rising tide" of a doubling of productivity.

As for education, it's likely frustrating for your wife that she didn't get her suggestions adopted. There ARE good results being obtained with the EXISTING teachers and it IS puzzling why such successes are not scaled up. As for the "right's" unrealistic schemes involving firing many of today's three plus million teachers and fantasies of there being legions of new super teachers waiting just across the threshold to make miraculous changes, forget it; even as the boomers begin retiring in droves we're some 50,000 teachers short. GIVEN that today's young women have many other, often more lucrative careers open to them, my guess is we'll have to begin paying pro-wages to attract and retain talented people.

"If you can get the economy going again, really going, then you will be able to reconstitute the middle class."

This one might fall in the "if pigs could fly category". But worse, really, as Krugman we've seen ups, downs and ups since 1980 but! the consolidation graph just keeps going up, up and UP.

Did you really look these graphs over? I think many of the "right" don't like to look at indicators they don't like...... but facts are facts.


"Or do you want everyone to be an assembly line worker for ever?"

Hmmm, well to many of our structurally unemployed and indeed those underemployed in deadend jobs that don't pay the bills, the tedium of "the line" probably looks pretty good right now. But........... no. Instead the puzzle of our time is that of figuring out what TO do with those "freed" from "the line" by robotics and other productivity doubling and tripling technologies. Any ideas? Finally the four day work week?

"Let’s move on to something else but the Chinese, Brazilians, others are doing it instead."

Hmm, like what? Say you really do want to fruitfully employ ten percent of America's workforce at an income close to our per capita average, that would mean something like increasing GDP by nearly 10%, which I think we could easily do, but! where do we dump nearly $1.4 trillion worth of goods and services in an era, like the 30's when ever nation wants to export things including their own unemployment rate? Something on the order of one quarter of China's total GDP? That's a LOT of military hardware, movies, heavy equipment et al!

And remember DEMAND drives all, and that "demand" whether in the US, Africa, Asia or anywhere else, sans a buck to spend is not DEMAN

Your paper? Why not put it up on the web and post a link to it? Better yet, as I think there ARE finally, quite a few good minds working hard at trying to resuscitate this ailing dog, but coming up with only HOPES of unemployment rates receding to "normal" levels five or more years from now, pass on the best of your ideas to them?

Indeed! There IS an infestation of ideologues on par with that of the spruce bark beetle epidemic. I can hardly turn on the TwitCam w/o being inundated by them! The static energy of the incoming 'baggers is a bit encouraging but do they really think they can "fix the world" by ladling out unaffordable tax cuts to the richest among us, taking a morsel of food out of the mouths of Women In Crisis and "saving" a buck a household by defunding Sesame Street? The early ed for many, perhaps most, kids? Will they dry behind the ears ........... in time?

Jack

Soaring income inequality graphs:

http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

Jack

Whoops! should read

"And remember DEMAND drives all, and that "demand" whether in the US, Africa, Asia or anywhere else, sans a buck to spend is not DEMAND at all but simply unmet needs and wants."

Wedding Myrtle Beach

I enjoyed reading it. I require to study more on this subject..Thanks for sharing a good info..Any way I’m going to subscribe to your feed and I hope you post again soon.

Pepe Fenjul Jr.

Most people base most of their expectations for the future on simple extrapolation from the recent past. Often that’s the best one can do in the presence of profound uncertainty. But the economic crash that began in 2008 has made us more alert for discontinuities in economic trends.

Christopher Graves

I think Judge Posner is on the right track in his next to the last paragraph arguing that a college education's greatest value is cultivating the minds of the young rather than merely vocational training. As I was arguing a few weeks ago on a related issue, colleges should return to a liberal arts curriculum as professors focus on teaching the student rather than amassing mountains of useless information in obscure research that very few read.

The primary goal of a college should be to preserve and pass on the collected wisdom of the ages as students are trained to sift literature, science, and philosophy in order to recognize truth. While there can be some room for the expansion of knowledge, a college should not ever allow research to crowd out the passing on of established wisdom to the young as they are taught how to think and feel in a deeper, more insightful manner.

Xavier

Jim, “absolutely stunning the way so many have bought into the villainization (sic) of unions, including lumping them in with Communism”? You apparently didn’t read Krugman. Let me repeat the first two sentences of his policy recommendations: “we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost.” So who is, are the ones connecting unions with communism? Go read Krugman again.

Xavier

Jack, I suspected you would come back as you did. A couple of weeks or so ago I had already written that you were being too pessimistic. I hate to say it again but you seem to have fallen into a pattern where you don’t like what you see around you but you dislike even more being reminded of it, specially if you perceive, rightly or wrongly, that it is coming from the “right," again that broad generalization. Here is just one example.

You write that “There ARE good results being obtained with the EXISTING teachers and it IS puzzling why such successes are not scaled up,” but then continue in the very next sentence, with about the "”right's’ unrealistic schemes involving firing many of today's three plus million teachers and fantasies of there being legions of new super teachers waiting just across the threshold to make miraculous changes.” Which is it? Don’t you see the contradiction? You are “puzzled” but to comments like mine about the unions you reply with “the fantasies of there being legions of new super teachers waiting…” Come on! I suspect that injecting the “right,” again, right in the middle may have distracted you from seeing the contradiction.

On the rest, I was going to write you a response drawing on further examples from other countries but Thatte—from another country!—around 9:22 PM wrote and posted it all for me. I can’t improve on what he wrote. Re history, let me repeat his crucial words: “That somehow some form of central planning (yet undiscovered by any nation in the history of the world – I mean its laughable!) will make up for the dis-incentives of a more complacent more relaxed populace shifting to a more blunted correlation between productivity and reward. I mean, wake up! Do you know how many times the movie of such promises has been played in the world? Apparently Americans are just watching it for the first time.”

I suppose some, although I suspect not you, believe that “super scientists” like Krugman are God’s gift to humanity who will finally break history’s pattern and deliver us all to nirvana.

Heather E. at around 9:32 PM says it all with “It is ironic, but, the compassionate goal of social-democracy leads to the cruel mid-long term outcome of economic decline.” Even as I read history I’ve also been reading a whole bunch of other analytical material trying to understand precisely the irony that Heather E. points out. Among the many books I would strongly recommend is Ian Morris’ “Why the West Rules—for Now.” Throughout the book he keeps asking why development seems to hit a ceiling and then stops and even collapses not to recover for hundreds or even thousands of years. Then in page 476 he makes what at first appears like an earthshaking assertion:

“The answer, once again, is that intellectuals ask the questions that social development forces onto them: each age gets the thought it needs…Like the first [Greece] and second [Mahayana Buddhism and Christianity] waves of Axial thought and the Renaissance, the scientific revolution and Enlightenment were initially consequences, rather than causes, of the West’s rising social development.”

America used to want to grow the pie, and yes, let a rising tide raise all boats. It needed more education to further raise the tide which itself, that is, education would also help raise all boats. It now wants to distribute the pie and seemingly it is okay, at least for Krugman, to let education slip onto a second plane.

Morris’ monumental achievement was to develop a methodology for quantifying social development and tracking it for the last 16,000 years (I wonder how many Stanford undergrad and grad theses went into it!). It is very interesting to note that Rome reached a peak at the turn into the first millennium precisely when it went from a Republic to and Empire, an empire where free food was distributed to citizens and great spectacles like at the Coliseum and many other cities were sponsored by the emperor. Social development in the West stalled not to recover to the same level for 17 or 18 centuries!

By the way, my theory or, more humbly hypothesis is that around the turn of the first millennium Rome was growing in size and population much faster than were the capacity of its institutions for governance. The Roman Republic outgrew its capacity to govern itself more democratically as a Republic. It thus had to go to a more centralized autocratic form of government that bribed its citizens into complacency but that sapped its capacity for further dynamic growth and instead just had its prior momentum carry it a few hundred years more. In my analytical paper that I keep mentioning (and which I can’t post because it is much too long) I write that this “essay also explores whether material progress is advancing more rapidly than society’s ability to adjust to the new formal rules and governance required by that progress.”

But now, hey, Krugman will save us. He will “go about building [a better] society directly,” one where union power able to control corrupt politicians, and they in turn control the people through more handouts—the nanny state—will reign supreme. Labels don’t matter. The substance is more important. But then, hey!, the Roman Empire was not that bad…except I suppose that other powers like China were then too far away. It took a while for the barbarians from afar to show up and by then the Empire had gone soft.

Xavier

PS. My sincere thanks to Prof. Krugman, Judge Posner, Prof. Becker, Jack, Thatte, Heather E., Sato, J. Kumar, and Jim, for serving as lightening rods, prompts or supporters that have helped me further sharpen my analysis, particularly the effects of free riders or free riding—in its usage as a technical term Jack!—on even education and mass social development. For a long time I have been somewhat baffled by puzzling social symptoms around me and I think I now see and understand their dynamic more clearly. The free rider bug has quietly infected many who are otherwise extraordinarily good, well meaning and even motivated people. And we, or at least me as parents are responsible.

Xavier

Sorry for hogging this space so much but I am on a roll of sorts, I just hope I am also right. Also in this blog a few weeks ago I followed up on someone’s suggestion to read Perez Zagorin’s “How the Idea of Religious Toleration Came to the West.” I have been connecting what I am reading there with Ian Morris of my prior entry.

In my 10:18 AM post I included this quote: “The answer, once again, is that intellectuals ask the questions that social development forces onto them: each age gets the thought it needs…Like the first [Greece] and second [Mahayana Buddhism and Christianity] waves of Axial thought and the Renaissance, the scientific revolution and Enlightenment were initially consequences, rather than causes, of the West’s rising social development.”

Morris also writes that the need that initially drove the scientific revolution was “the new frontier across the oceans, [which] needed precise measurements of standardized space, money, and time, and by the point that two-handed clocks had become the norm Europeans would have to have been positively obtuse not to wonder whether nature itself was a mechanism.” Crucially, Morris then adds “Likewise, the West’s ruling classes would have needed to be still more obtuse not to see enough advantages in scientific thinking to take a chance at cutting its eccentric, unpredictable thinkers a little slack.”

Cutting its thinkers a little slack! In other words, the ruling classes had also become tolerant of new ideas! But was it all greed as suggested by Morris? Probably it contributed a lot but values seemingly also played a role. As I’ve pointed out in prior posts, “values” are crucial to my hypothesis. So let’s back up a bit in the chain of causality from the scientific revolution of the 17th century. Note again the title of Zagorin’s book: “How the Idea of Religious Toleration Came to the West.”

Towards the fourth century, even with free handouts of food the Roman Empire and its emperors were having difficulties maintaining social order. So in 315 Emperor Constantine turned to Christianity as a new social glue. To make it stick during the next one hundred years successive emperors further tightened the screws banning even Christian sects that didn’t conform to the accepted version.

I am hesitant to attribute the Dark Ages and later centuries to this alone but I am sure that the intolerance to new ideas that developed in 4th and 5th century Imperial Rome contributed some. There were some very notable exceptions of intensely Catholic “republics” like Venice, which dominated the Mediterranean and accomplished wonders for many centuries. (For those of you interested in Ford’s innovation of assembly line production, you should go read about 12th century Venice and how they mass produced ships in the Arsenale in assembly lines fed by a large number of private suppliers, all very much like the auto industry that Ford gave the West. It was something to behold. It even made the Fourth Crusade and the taking of Constantinople in 1204 possible.)

Venice found a way to checkmate excessive power (the Doge or king was mainly a figurehead) and coexist with the Catholic Church (contrary to what everyone believes, the monumental Basilica of St. Mark was just the Doge’s private chapel—all symbolism—while the local patriarch or ambassador from the Vatican was vanished to the furthest island in the Venetian archipelago, today at the furthest reach from St. Mark of the Castello sestiere, where tourists never go). Venice had learned toleration and how to resolve conflict through negotiation and compromise without having to resort to excessive concentrations and use of power, that is, without hammering down the dissenters. And when a Doge got too cocky the people and their representatives quickly “dethroned” him.

So how was something similar now happening in 17th century Europe? According to Zagorin the incredible bloodshed that followed Martin Luther, Calvin and other reformers, that is, the split and bloodshed that took place in Christian Europe in the 16th century created an urgent need for new solutions. During that century and the beginning of the next Zagorin traces how a large number of Christian thinkers, primarily Protestants, laid the theoretical groundwork required for the ruling classes and even the Church to justify becoming more tolerant.

Without toleration a civil debate cannot even take place and differences resolved through compromise. The different perceptions of the consequences of change cannot be resolved, much less disseminated throughout the society. Instead change and innovation are squashed down. Even in the 17th century it was touch-and-go for a while; witness the fortunes of Copernicus in the 16th century and then Galileo even in the 17th. We probably wouldn’t even know about them if what followed had not been made possible by the emergence of widespread toleration, an event that Zagorin calls an even more important innovation than democracy and the liberal state itself. But eventually toleration did become a more widespread value, and, as the cliché goes, the rest is history.

NEH

My the "Late Great United States"! What an epitaph! All based on a "productivity number" that even the experts can't agree on what it means or even how to calculate it. So let's fire up the Propaganda Machine and let it run wide open based on our Ideological presumptions. As for stagnating wages and salaries and Asia's inability to raise its, I guess we've moved away from the concept of "An Honest days wage for an honest days work" (which is what the Unions, Public & Private, normally negotiated for). As for Klugman's idea involving the hollowing out of the Labor Market, mostly in higher paying middle income jobs (requiring post-secondary education) due to computerization and software development within Business and Industry, there may very well be some truth to it.

It just seems to prove that there is dumbing down of jobs and the population. Educated, critical thinkers need not apply, we only need button pushers with an Eight Grade Education (anyone here ever hear, "You're overqualified"). Which now places a greater emphasis and burden on the K-12 Education System... ;)

Thatte

One big difference between history and our age is that things are now happening faster, much-much faster. Changes that used to take centuries now unfold in a couple of decades. American decline is not some concern of the far future.

Europeans, and now Americans, by loosing 3% of their advantage every year (4.5%-1.5%) compared to the world average (this average mostly driven by emerging world growth of 5-8%) will have lost half of their total advantage in a mere 24 years! As a simple calculation, like 1.03^23 = 203% shows. The loss is relentless and every year it compounds. So in less than one generation American youth will see, in relative terms, its prosperity slashed in half compared to the rest of the world. Yet their prescription for avoiding this fate is exactly in the suicidal direction that had kept the emerging world suppressed in low growth: redistribution and central planning.

Americans either remove the personal dis-incentives to excellence they are mandating on themselves, and start growing at rates comparable to the world average of 4.5%, or, … well… they’re history as most prosperous people on earth.

Look at Europe. In 30 years they will be gone as major player on the world stage, way before their efforts at controlling climate yield their first 0.05C of benefit (that is …well, pathetic). Apparently Americans have decided to head the same way. Dudes! There’s a train with 3 billion newly at least partially liberated people in this world running at 5-8% lifting world average growth to 4.5%, and Americans respond by the laughable idea of exhuming Brezhnev style 5 year national development plans? Decline will come much sooner than you think.

So how is decline coming to America? What is the day to day, as well as the eventual face of decline? Chinese soldiers in the streets? No, of course not. Notice how European countries at the low competitiveness margin have started crumbling? Notice how the prices of all goods around you seem to be rising? But that is a phenomenon experienced primarily by Europeans and Americans. It is one of the faces of decline. If you are a citizen of the emerging world, growing at 5-8%, your commodity purchasing power is not much affected. Prices around you appear to be climbing simply because you cannot keep up with worldwide average growth. It is the face of decline! Meanwhile your newly instituted incentives to a more comfortable mediocrity cause your workers to become ever less competitive worldwide, while, at the same time, the dis-incentives to excellence instituted to pay in support of mediocrity discourage work at the high end. Do you have to be a rocket scientist to see where this is leading?

Jack

Thatte: Curious stuff! The first part of your post has me wondering if you're in, and always have been in, another country and dealing only with mythology about the US?
You paint a picture of indolent American's idling away their lives on ill-gained income provided (Ayn Rand?) by "others" while the truth is 95% of the American workforce are putting in longer workweeks for a thinner slice of the pie than recent decades.

I'd like to assuage your seeming over concern with our falling productivity by pointing out the per capita GDP is higher than in past years, and higher than all but a few small nations, even after being laid low by a tremendous wave of fraud from a "banking" industry gone rogue. With, I should add, 18% of our workforce under or unemployed.

While, as the producers of "Inside Job" got to remind the huge Academy Award audience ".. none have yet to be prosecuted and imprisoned" my guess is that the rapacious episode has got our attention and served to remind us all, once again, that "the market" like any engine requires controls, governors, fraud protections and above all........... direction. Though often slow to respond the American system does finally respond to acute crises affecting us all.

(One experiment for your 5th graders might be that of tallying up the losses dealt out to the working folk of America by these greed-ridden financial saboteurs, many of whom fed well amongst the top 2% of gleaners to which virtually ALL of the productivity gains of recent decades accrued -- as compared to those "bennies" you feel are accorded, unearned, to the lazy folk of our actual workforce.)

You seem to see the world as a sort of "King of the Hill" competition in which extreme poverty or death is the penalty for the "losers" and that every able bodied soul really ought to use every waking hour to "win the race". Truth is "it" is not such a race and the object of an economic system is that of providing for the welfare of its citizens.

In the years as America's wealth and productivity has more than doubled, for example, Japan and Korea, coming back from WWII destruction have grown much faster than has the US, which lent them both quite a helping hand. Have I been made the poorer for their success? Should I feel "we've won a round" as Japan already struggling to return from financial excesses of their own are further setback by the tragedy of an earthquake? I spent some time in both Korea and Japan during their earlier rebuilding years when things were so hard as to seem nearly hopeless for Korea and am greatly cheered every time I reflect on what their economic gains must mean to those who were so impoverished in those days. It would seem sick to me to instead gloat over "American excellence and top dog "leadership" as they fell further behind, lived in poverty and perhaps adopted the politics of desperation such as has N. Korea.

As for "- What is relative economic strength of a future with 6 billion people earning $25,000 per capita vs. the economic strength of 0.3 billion Americans earning $50,000 per capita?"

"Bring it!" Soon! As China has become even a little bit wealthy GM has gone over and partnered with them to build more Buicks than they can sell in the saturated and fiercely competitive US market. And Hey! folks with $25k can buy our prescription drugs and share in the costly research and development costs of the next generation products! Have you noticed that wealthy neighbors tend to be good neighbors?

Lastly, your "Exercise for 5th graders:
- Do two curves, one starting at $5,000 and growing at 4.5% and one starting at $50,000 and growing at 1.5% ever intersect?"

Well, as 4.5% of $5,000 accrues $225 the first year, while 1.5% of $50,000 accrues $750 it seems doubtful.

It's kind of the same effect as an "across the board 10% increase for all" will leave those below median income, relatively, poorer than they were, while providing a windfall for those well above median income that leads to truthful cliches of "the rich get richer". Sadly it will be a long time before the poorer 5 billion of our world will enjoy a standard of living at all like that of the advanced nations.

NEH

When it comes to "productivity" studies, the U.N. has released data showing that Americans work more hours than Europeans, and have a higher output of goods and services per hour. In comparison to Asia, the U.S. works fewer hours, but produces more goods and services per hour than Asians. Yet, some of us, here classify the U.S. as worthless laggards doomed to failure.

Kind of reminds me about the veracity of Statistics, "Figures don't lie, but liars sure can figure". If we're so incompetent, why is Asia trying to beat down the doors to our Universities and more importantly, our Market...

Xavier

Thatte, your right, of course, that “One big difference between history and our age is that things are now happening faster, much-much faster. Changes that used to take centuries now unfold in a couple of decades.” My theory explains that easily since it starts from the premise that all learning is by trial and error, which necessarily results in cyclical patterns, and as the velocity and complexity increase so too the periodicity.

Regarding the increasing periodicity and also amplitude—re amplitude witness the impact of the 2008 financial crisis—it is interesting to see the statistics in both historian David H. Fischer’s “The Great Wave: Price Revolutions and the Rhythm of History” (Oxford and New York: Oxford, 1996), and economists Carmen Reinhart’s and Kenneth Rogoff’s “This Time is Different: Eight Centuries of Financial Folly” (Princeton: Princeton University, 2009). They cover only the last 800 years but clearly show increasing frequency and amplitude.

In fact regarding Rogoff and Reinhart, elsewhere I wrote. “This Time is Different” is meant as a cliché that refers to how officials and even experts always maintain that their situation is different than all others when in fact historically that has proven not to be the case. However, that “This Time” is in fact “Different” may actually be true despite the intention of the authors. While the processes that lead to change, development, and collapse remain the same, the world system has developed unusual bignesses, it is now more interconnected, and important checks that operate at the level of individual players have been lost. As a consequence the international system may be more vulnerable than it has ever been.”

By the way, when I wrote that I was still struggling to understand Rome. Based on what I wrote in my earlier post at 12:05 PM post, I would probably rewrite the above to reflect that Rome also got very big and then of course the impact of its fall was also very big, so there have been previous big collapses. But then Rome started falling 2,000 years ago and Reinhart and Rogoff only go back 800 years.

For the record, in that paper one of my concluding policy recommendations is that institutions that get too big should be cut into pieces. The simple rule-of-thumb would be that if it is too-big-to-fail then it is too big to continue. Regarding increasing interconnectedness or complexity I don’t have well formed ideas, except that I have been expounding about the need for a new set of deeper and more widely held values. I argue that deeper values can provide a buffer to loser regulation that would allow the overall system to adapt to change and adjust better and more rapidly before the swings get too big. But then that leads to the obvious question of what values and determined by whom.

For starters I would go by what I’ve been seeing about the Japanese in the last few days, which are also values my father thought me very forcefully: respect and honor. The only two times I got the belt in my whole life was for failing to respect an elder. Then there was the time when as a preteen we went to a Jewish wedding and at the synagogue I had to wear a yarmulke. I turned to my father and told him I didn’t want to because I was Catholic, whereupon he looked at me sternly and said you are going to put it on out of respect for these people. My guess is that the world would be an entirely different place if everybody had learned the same lesson. That was more than sixty years ago and I still remember.

Jack

Xavier! 'Tis quite a St Patrick's Day gift to hear a "conservative" For the record, coming out in favor the Anti-trust regulations that were seemingly mothballed during the most recent attack of "government as enemy" forces!

"....in that paper one of my concluding policy recommendations is that institutions that get too big should be cut into pieces. The simple rule-of-thumb would be that if it is too-big-to-fail then it is too big to continue."

But the "cutting" is not easy these days and truth is a hundred Lillipution "Goldman's" lending to all comers at 30plus times assets could have tied Gulliver down and mugged him as well as having one gorilla sized "Goldman's". I don't think there is any economic system that can withstand widespread corruption and fraud.

As for comparing America to Rome? or the Huns, or Third Reich? the lesson as the President holds back from going half-cocked and perhaps ill-prepared into Libya is surely that of not taking on too much and "playing well with others". If the giant Gulliver swaggers in wielding too much power in a callous fashion there are always those Liliputians who band together with surprising power as the Brits learned from the IRA and India at the apex of their imperial power.

While I'm often critical of some of the sillier things the US has been doing I do Not see it as "falling" though as is lamented by Thatte, if other emerging nations are to become wealthy enough to feed and house their citizens the relative size of the economy of just 5% of the world's population is bound to shrink from its post WWII dominance.

As for "deeper values" and "looser regs" have we not relearned at great cost that foxes will always be foxes and that if the hen house is not carefully fenced, the hens will be eaten? If all foxes did not participate it would likely be from acting too slowly or it being too crowded, rather than the fox having "got religion" and deciding to fast.

BTW sometimes the intuitions of kids is right on. It was silly of your father or whoever else, insisted on your donning Jewish religious regalia at a wedding. Tolerance and respect is a two way street and respect was shown by being there. Turn it around. Would he/they have expected Jewish attendees of a Catholic wedding to don crosses?

Jack

NEH, Ha! Radical near "commie" stuff!

"An Honest days wage for an honest days work" (which is what the Unions, Public & Private, normally negotiated for)."

Years ago a union steward in a CA shipyard in reply to a naive question pointed out "Of course we don't want to ruin our shipyard's profitability as that's OUR golden goose, but when they get a good contract and we do the work, we negotiate for our fair share of it".
Not bad for a HS dropout.

And before some "conservative" laments "unions" having driving shipbuilding offshore, in that type of work we could not have competed with Japan at any wage, and later, Japan could not compete with Korea.

NEH

Xavier, As for the wave phenomenon, or the cyclical nature of human events, may I suggest a few hours in the Physics lab with the wave tanks. As one increase the speed of the wave generator, so the wave length becomes shorter. With the increase in power, so the amplitude of the wave increases. The analysis works well for understanding tsunamis and Economic cycles.

As for Rome, it never fell. The "Barbarians" who overran it wouldn't let it, that's why they crossed the Borders. It simply morphed into the Medieval Period. As for being "too big to fail", to me, that indicates a clear case of irrationality. They said something similiar about the Titanic. Ah... the joy of hubris.

As for developing a deeper set of values there still is the list of the Seven Deadly Sins. Which if one closely studies various human calamities, the root causes of which, more often than not, can be traced back to one or more of those seven deadly sins. Perhaps they need to start teaching Ethics in Business School and in Economics.

Thompson

This is off topic, Judge Posner, but that was really clever to put the Google maps in today's opinion involving the anti-Iraq war protesters. What was the Chicago police superintendent thinking?

Also, I am have a great time reading your quotes in Blomquist's book, which is really your book.

Anyway, your opinions are great. But so are Easterbrook's. I love how he yells at people who touch the microphone in court. Hilarious.

Keep up he good work.

Sato in Hong Kong

Posner: “…The number of people who have… …that would enable them to benefit, in the ways described above, from a college education is inherently limited,…”

“…Lastly, your "Exercise for 5th graders:

Q. Do two curves, one starting at $5,000 and growing at 4.5% and one starting at $50,000 and growing at 1.5% ever intersect?"

A. Well, as 4.5% of $5,000 accrues $225 the first year, while 1.5% of $50,000 accrues $750 it seems doubtful [that they will ever intersect].”

---------------------

Shall we then say Q.E.D to Posner’s conjecture?

air jordan retro 5

Sandoval's Jones Vargas reporting is on his 2010 financial disclosure statement.

As for Sandoval's wife, she uses her maiden name on tax forms filed for Children's Cabinet. As AG, Mr. Sandoval steered money to her charity.

Gleaner,
I thought the inquiry appropriate but alas, Nevada is a two law firm state so, SUCK IT, may have been a more appropriate reply from their media center!

P.S. Did the director of taxation "retire" because he inadvertently and publicly disclose that gold has no clothes?

Online DIploma

I agree with the comments "everyone knows that the jobs of the future will require ever higher levels of skill.” this is true i mean the government and all the unions should be investing more on the education. without that the youth will go for some other shortcuts.
Education also gives awareness to person.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Become a Fan

March 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