I think the interesting point about the kibbuzim is not that most eventually switched to a standard capitalist setup, but that it took them on the order of half a century to do so. Some would class that kind of several-generation span as a `long-term society'. Nor was most of the history of the kibbutz just a collapse waiting to happen. As you mention, there was a lot of talent that voluntarily went to live there, and to a great extent Israel owes its existence to these communes.

So what (in your opinion) allowed this organization of self-interested actors to succeed and prosper for so long? What worked for the kibbuzim from the early 1900s to their eventual decline at the end of the century? What could potentially work elsewhere?

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I, too, am very skeptical about socialism's ability to produce large-scale, long-term benefits. But doesn't your post discuss an extreme of contemporary socialist action? Are socialist democracies like Sweden in danger because of enforced altruism? Or are developed nations who have never really warmed to the nuclear-family ideal, like Iceland, inevitably headed for trouble? What about successful businesses that run on socialist models, like Southwest Airlines, or, here in Brooklyn, the Park Slope Co-Op -- which runs a positively booming business? Aren't nations and institutions like these the real rallying-calls for socialists in a post-Soviet age?

"...self interest and family orientation is not the product of capitalism, but is human nature due to selection from evolutionary pressure over billions of years."

The failure of the kibbutz is illustrative of the failures of socialism, but I don't see how this supports or requires an evolutionary account of behavior. It would be interesting to read why you side with Dawkins over Gould on evolutionary psychology, if you can squeeze it in a comment sometime.

Yeah, they didn't work very well. What makes the kibbutz and other designed communities interesting is the population dynamics and the ideal size of a community. Size was a major decisive factor in how a community functioned. The Shakers had smaller numbers:

http://www.blackwell-synergy.com/doi/pdf/10.1111/j.1536-7150.1997.tb03456.x?cookieSet=1

[Shaker community size: 'referring to comments by the Shakers, Andrews (1963,107) notes that "(experience proved that the ideal size was about fifty members."']

My recollection is that the kibbutzim found 150-250 members to be ideal, but I can't find a reference for that. A hippie farming community I studied in Tennessee had about 150 in its "golden age," but became so popular that it grew to 1,500 -- so many that the sense of social fraternity collapsed with the community. It's since reverted to about 100.

I suspect the ideal size of communities like these derives directly from human neural architecture. If I recall correctly, the average person can form strong emotional connections with around, you guessed it, 150 people simultaneously. Beyond this and other people start to blend together into an emotionally indistinguishable mass.

I don't know much about Shaker communities, did they interact with each other frequently? Probably yes, given the lower ideal size - there needs to be room in the net for members of other communities. I'm guessing the kibbutzim were relatively isolated, given their larger ideal size.

Posner concludes that "socialism fails" "Basically, they ignored the evidence of history that self interest and family orientation is not the product of capitalism, but is human nature due to selection from evolutionary pressure over billions of years."

But it appears that unless capitalism is regulated properly and better than is, and has been the case, in the US it fails too making Marx right every so often in predicting that the greed and power of the capitalists work the return to the working class down below the cost of production, ie a living wage. So far the predicted "revolutions" have been to add "fixes" ala the New Deal and patches, ala the current "fixing?" of the mortgage and "financial crisis".

I'm not a fan of socialism nor really any "ism" yet I question whether our brand of "capitalism" "works" or would "work" were it not for were our living standard not benefited so greatly by the labors of those around the world of sub-living wages on their own economies and wages that to the US consumer are virtually zero and where, until recently we've been able to take resources at very low costs.

%0 years ago we seemed to be able to manufacture cars, shoes, clothing and other consumer goods for ourselves, using our own labor, largely with "Mom" staying home and along with paying down a national debt that was larger than our GDP, to export goods and wealth to other nations. Today? with all the help from India, China et al. we seem unable to pay even the current costs of government as our debt soars to 65% of GDP; the highest since WWII while shorting the predictable costs of maintaining our infrastructure.

Worse yet, our trade deficit promises to be higher this year than last and over $600 billion, with the "poorer" nations lending us the money so we can, as the Pres advises, "go shopping". Go shopping? even as our average household has purchased $5,000 more than it produced? and we have a negative savings rate?

And the last, for now, "failure" is not as some predicted that democracy would fail as the people voted themselves too many benefits, it's instead, much as Marx predicted that the powerful would engineer too many benefits for themselves at the cost of the working bloke, as we have seen with Big Pharma and Big Oil tapping into our public purse even as their returns were among the highest in history and of other sectors of the economy.

I'm all for the expected benefits of capitalism of inspiring apple producers and apple sellers to get out of bed early and efficiently produce and sell their products. Unfortunately it is all too tempting and common for some to pull the profits out of both with neither producing nor selling which leaves us with a slow rate of increase in our per capita GDP as we fall to 8th position behind nations such as Ireland, along with Denmark, Norway and others noted for their "cradle to grave".......... socialism.

I'm not ready for the commune nor socialism; but we'd better get our act together, and soon! Jack

Jack - great parody of a leftist rant! Thanks for a good laugh.

I grew up in a kibbutz and my parents still live there. If there's sufficient interest I might be able to come up with current and historical data about the quantity of members in different kibbutsim (plural of kibbutz, in Hebrew).

Jonathan

You're welcome gator, but I notice that neither you nor your spokesmen EVER tackle the details. Would you like to, risk, taking a look at our ever deepening trade deficit and offer a rational, suggestion of how we get out of the tailspin w/o, further, lowering of the median standard of living? Thanks, Jack

Jack, a bit off topic but for example..

Ireland's population is young, healthy, and educated. Compared to much of europe it is a capitalist dream. Groups such as the blue shirts may talk socialist but act capitalist. Still, in time, as the population ages the cost of their social programs will increase and their productivity numbers will decrease. Ireland is a wonderful country but it has it's problems (Dublin more expensive then New York, amazing)

Thanks Dan and a few comments, just for discussion:

Jack, a bit off topic but for example..

Ireland's population is young, healthy, and educated.

......... One of my laments is that of the US chest thumping "we're the best" but as you point out, Ireland's work force may on average be far better educated. While Ireland may be an "economic miracle" we've had a long and strong headstart. Seeing them whiz by should be further cause for concern.

......... as for being young our boomers are largely still in the work force and theoretically at near the peak of their productivity. Further we should be getting a boost in terms of per capita GDP by immigrants from all over coming in and putting their shoulder to the grindstone as young adults who we did not have to raise nor educate.

......... "healthy" Interesting as they have comprehensive health care for all. I can't help wonder what the drag is on our economy due to so many lower income folk not having access to decent health care, not to mention the obvious drag of our spending 18% of our fairly high GDP while others "competing" nations spend half that percentage of their, generally lower per capita GDP.

Compared to much of europe it is a capitalist dream.

.......... Hmmm, did you know that on an hours worked basis the French worker is more productive than are the US workers?

Groups such as the blue shirts may talk socialist but act capitalist.

........ They too may be like me...... I'm far more interested in appropriate organization and practical solutions than ideology.

Still, in time, as the population ages the cost of their social programs will increase and their productivity numbers will decrease.

......... As GDP is the monetary sum of all goods and services the care of our oldsters, or theirs, is another element of GDP. (Though I'm aware that it doesn't do much for the standard of living of the younger generations and would be the first to suggest that GDP is a poor measure of the health of an economy or the living standard of its people.

Ireland is a wonderful country but it has it's problems (Dublin more expensive then New York, amazing)

........... Hmmmm, Is that in terms of our eroding, debt burdened buck? The CIA and the IMF have Ireland above the US in Purchasing Power Parity.

But I don't really care that a few nations are above us, but considering we have most of the resources we need (if we didn't waste so much energy) and have the best farm and the best fisheries and should have the best infrastructure, unless we're doing a LOT wrong the standard of living in the US should be above that of any other country. That our productivity is on par with war torn nations with few resources such as France, I take as warning that we ARE doing a LOT of things wrong. The link is wiki on GDP
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

Thanks for the reply, Jack

Mom has to work nowadays, unlike the good ole days. Why? Because Mom & Dad pay more taxes. This is the fault of "capitalism" and "corporations." The only solution? Raise taxes.

This is a fascinating blog post, well worth reading. Collectivism generally doesn't work and defeats initiative and inventiveness.

But there are exceptions to the rule. Didn't the Shakers in their heyday prove unusually productive, despite their collective commune living?

It's said that they came up with a lot of inventions.

Then again, the Shakers, unlike the Kibbutzim, were completely celibate. Maybe given their complete celibacy, that inventiveness reflected the redirection of their reproductive energies elsewhere, rather than the absence of any dulling effect on inventiveness of collectivism.

Married people may be more stable than single people, and thus have a higher median income, but all that energy being devoted to child-rearing, and risk-averseness that results from family life, may discourage inventiveness.

And time spent looking for a mate may end up consuming time that would otherwise be spent inventing something.

Jack said:

"I'm not a fan of socialism nor really any "ism"".........

Nihilism?

Does the socialism fail? What is the criteria for this kind of judgement? You can never say feudalism fails only because it seldom exists on this planet anymore. Circumstances change, the best suited system will change. Success and failure means whether you can fulfill the original objective or not. I am a Chinese. I donot know much more about Israeli kibbutz. But the socilist practise in China is quite different with the conceptive version of socilism in Marxism. It is rather a special phenomenon resulting from a special circumstances.
Let's see the objective function of Chinese people in 1949 first. Private goods and public goods (security or safety) are both in the utility function of Chinese people. There is a great need for the government to protect the people from outside world, mostly from America and sometimes from the former Soviet Union. But the army force are quite underdeveloped which can be seen clearly from the Korean War from 1950-1952. So there is a need for the development of the national defense industry.
But the Chinese economy is a rural one which means the price of labor is low and the price of capital is rather high, and the most part of govenment income comes from the agriculture. The problem is the development of defense industry demands a great deal of capital. The only solution is the control of the rural part and collect rural products as much as possible to exchange critical technology or machines in the world market. The market system cerntainly does not work here, for the labor is cheap and the capital is expensive, no self-interst entreprenare would like to develop the heavy-industry or the defense industry. There is also a free-rider problem in the provision of pulic goods.
That is true that the planned economy lowers the incentive for workers or peasants. But the critical point is that this can enable the government collect money as much as possible and guarantee the minimum living standard for its citizens. In other words, planned system guarantees the minimum consuming private goods and helps the government to direct the limited resources for the development of its heavy-industry or defense-related industry. The incentive problem may move the production possibilities curve inward, but not necessarily achive a lower welfare state.
Then, when the government has the strategic nuclear weapons, the securtiy concern is largely relieved. The planned economy never fits anymore and it comes the era of transformation.

Does the socialism fail? What is the criteria for this kind of judgement? You can never say feudalism fails only because it seldom exists on this planet anymore. Circumstances change, the best suited system will change. Success and failure means whether you can fulfill the original objective or not. I am a Chinese. I donot know much more about Israeli kibbutz. But the socilist practise in China is quite different with the conceptive version of socilism in Marxism. It is rather a special phenomenon resulting from a special circumstances.
Let's see the objective function of Chinese people in 1949 first. Private goods and public goods (security or safety) are both in the utility function of Chinese people. There is a great need for the government to protect the people from outside world, mostly from America and sometimes from the former Soviet Union. But the army force are quite underdeveloped which can be seen clearly from the Korean War from 1950-1952. So there is a need for the development of the national defense industry.
But the Chinese economy is a rural one which means the price of labor is low and the price of capital is rather high, and the most part of govenment income comes from the agriculture. The problem is the development of defense industry demands a great deal of capital. The only solution is the control of the rural part and collect rural products as much as possible to exchange critical technology or machines in the world market. The market system cerntainly does not work here, for the labor is cheap and the capital is expensive, no self-interst entrepreneur would like to invest in the heavy-industry or the defense industry. There is also a free-rider problem in the provision of public goods.
That is true that the planned economy lowers the incentive for workers or peasants. But the critical point is that this can enable the government collect money as much as possible and guarantee the minimum living standard for its citizens. In other words, planned system guarantees the minimum consuming private goods and helps the government to direct the limited resources for the development of its heavy-industry or defense-related industry. The incentive problem may move the production possibilities curve inward, but not necessarily achieve a lower welfare state.
Then, when the government has the strategic nuclear weapons, the securtiy concern is largely relieved. The planned economy never fits anymore and it comes the era of transformation.

Apologies to Mr/Ms Zhang, but Red China (for that it remains) offers no realistic economic prescription.

"Jack knows Jack" and Ian:

"Jack", I sorta liked your "Mom working to pay taxes theory" but, alas, upon checking it appears that Federal taxes of the 50's hovered around 17% of GDP, and today? about 17% of GDP. And...... I suppose that given the annual shortfall and the grim prospect of funding the interest payments on the D E B T that taxes are more likely to rise than lowered for a very long time.

http://carriedaway.blogs.com/carried_away/2003/10/us_government_s.html

........... sooooo, I guess it's back to the drawing boards for the explanation of the flat wages and living standards, eh?

Ian....... The word "nihilism" covers quite a broad range of meanings, so I had to look it up to see if it might apply to me in any way. I found one meaning that came fairly close:

"The belief that destruction of existing political or social institutions is necessary for future improvement."

Yup! I'd say the very "democracy" we're offering the "infidels" as a panacea and the "capitalism" it should be managing for the benefit of its people, is in dire need of maintenance that borders on a complete rebuild.

Juxtaposing the problems we discuss (or ignore?) everyday, against a bankrupted Treasury that's in DEBT to the tune of 65% of GDP (the highest since WWII) in a nation of increasing trade deficits ($600 billion? or more this year?) would seem to point up a need to call upon a working democracy to make quite a few rational decisions W/O wasting too much time.

Any suggestions? Me, I like to look at the big chunks first and quickly note that we are spending TWICE the percentage of GDP on "medical care" (insurance company "care?") as do our competing nations, even before our boomers retire and add significantly more costs. Surely we're not doing "the best" by spending so much and deriving a less healthy or long lived populace in which medical costs are named as the #1 cause for bankruptcy.

What do my fellow capitalists here think about the blatant price collusion of oil companies of five and even ten times the cost of production? As the US uses/wastes the most energy of any nation, surely letting the oil producers hold us up in concert harms us more than it does European and other nations which use less than half as much per capita. (In the mean time, I live in Alaska where quite a few benefits accrue to our small population including that of averting an income tax we were considering before the ......... ummmm? "crisis?" but it doesn't strike me as a good thing for the nation.)

Oh! nearly forgot! What do those against socialism think about the government having indemnified Big Pharma from the very "global competition" that is apparently so good for, well, " theothers?" Or for that matter ANY competition at all? Do we think it something of a good deal to pay for all the research here and sell our drugs on the 65% off counter to the rest of the world? Perhaps I'm wrong but this strikes me as combining the very worst aspects of "socialism" and jettisoning all the strengths of capitalism.

Anyway, continued hopes of muddling through, Jack

Jack, you are repeating the exact same points you made six months ago on this blog. Nothing you have posted here is on topic. And you have the chutzpah to accuse gator of not addressing details.

Jack,

First I want to thank you for implying that I have 'spokesmen.' I tried to get them to answer for me but I couldn't find them.

Second, this post was about the decline of the kibbutz and the signals that sends about socialism. I happen to think this is an interesting and relevant insight into human nature and why certain economic systems succeed or fail.

You seem to have been set off, though. You claim not to be ideological but, my god, look what you've written! Capitalism needs to be regulated, Marx was right, our standard of living is based on exploiting 3rd Worlders earning 'sub-living wages,' 'Big Pharma,' 'Big Oil,'....blah, blah, blah! What do these have to do with kibbutzim??Sorry to break it to you, Jack, but you're ideological! And your ideology is anti-capitalist. Why not admit it?

Oh, and also you are very negative, your glass is half empty, you see a cloud in every silver lining, and the sky is probably falling.

Professor Becker gave us an empirical example about the flaws in a socialist system. Does that mean everything else is perfect, capitalism has no flaws, let's go play sudoku? No, and that wasn't the intended message.

Interesting string of comments.
I recently visited a kibbutz where I had worked for a few months in 1974. I had a tour of the place with an old man I had kept in touch with.
I don't know whether this is typical, but that modern kibbutz has the following features:
Graded salaries according to value of work.
Staff recruited for special expertise.
Houses rented to outsiders when they are not needed by members.
So it is an employer and a landlord too!
But, the members don't only pay their taxes to the government. They also contribute to a fund so that the poorer members can be assisted. So there is nobody without a reasonable standard of living.
And there is another fund for special help for one-off emergency needs.
So the kibbutz members still help each other out. Though I doubt whether it would be invented - without the existing institution to modify.
Incidentally, I agree about the optimum size - you need to know everyone by their first names.
More on my blog - http://alfredsdomain.blogspot.com

Including the ultimate kibbutz experience - involving a roomful of boys and girls and a heap of trousers.

Gator, thank you for your spirited reply that is still lacking in the details mentioned. Is "leftist rant" your best stuff?

First I want to thank you for implying that I have 'spokesmen.' I tried to get them to answer for me but I couldn't find them.

.......... Hmmmm, did you check Heritage.Org?

Second, this post was about the decline of the kibbutz and the signals that sends about socialism.

........... Indeed! And the profs appear to be holding up our version of "capitalism" as the benchmark to be attacked by the "failure" of the "socialist" kibbutz? Which is in fact a commune independent of the state.

I happen to think this is an interesting and relevant insight into human nature and why certain economic systems succeed or fail.

......... I think it an interesting insight as well. And perhaps? may explain why some forms of organization would at during some phases of development and morph into other forms as the nation, community or technology changes. I simply point out that our system too is morphing; apparently into socialistic protectionism for the industries mentioned and a devil-take-the-hindmost feudalism pitting low wage workers against even lower wage workers for those not connected enough to purchase favorable terms from Congress or the Admin. Surely no one familiar with capitalism would think the core businesses of oil, insurance, or Big Pharma operate under the general rules of capitalism??

You seem to have been set off, though. You claim not to be ideological but, my god, look what you've written! Capitalism needs to be regulated,

........... is there doubt? Can you point to any era of history where unregulated capitalism did not crash?

Marx was right,

........ a cheap shot, as I don't subscribe to the body of work nor his solution to the excesses of unregulated capitalism. Last time it broke and communism nearly filled the void, we did pretty good at propping it up by fixing the worst of its flaws. But! old Marx is working on begin right at least twice in the split between the haves and nots ultimately tanking the system ala the last rounds of a Monopoly game.

our standard of living is based on exploiting 3rd Worlders earning 'sub-living wages,'

........ is there any doubt????

'Big Pharma,' 'Big Oil,'....blah, blah, blah! What do these have to do with kibbutzim??

.......... Well, despite the problems of the kibbutz such as "carrying the slackers" et all there are not cases of the Head Kibbie taking 500 year's worth of average kibbie pay for starters. Nor would they think much of being charged the five and ten times production cost prices charged by oil. My guess is they'd not long tolerate the rapacious double dipping of Big Pharma either.

Sorry to break it to you, Jack, but you're ideological! And your ideology is anti-capitalist. Why not admit it?

......... No. I'm simply a mechanic who has said nothing negative about the basic engine but has pointed out a few very serious mechanical problems. You do understand the engines only work efficiently due to proper regulation? and that capitalism is such an engine. BTW if you were to read a book on economic principles they all begin with "what is to be produced, at what price, and for whom" a subject that can not help but be related to our founders and "developing our resources for the benefit of OUR people".

Oh, and also you are very negative, your glass is half empty, you see a cloud in every silver lining, and the sky is probably falling.

......... Sorry, but my name is not Pollyanna and I'm not good at all at applying lipstick on a pig. Are their some benefits involved? BTW have you noticed that how much respect has come recently to those once thought to be a boring pain in the backside for pointing out the negligence of doing the routine maintenance on our crumbling infrastructure?

Professor Becker gave us an empirical example about the flaws in a socialist system.

........ Well, maybe. As mentioned they are talking about small scale communes of which several experienced posters have indicated, rely upon being on a small, first name basis, scale, as were our own agrarian era towns.

Does that mean everything else is perfect, capitalism has no flaws, let's go play sudoku? No, and that wasn't the intended message.

....... Eh? and if it wasn't just a yarn about his view of the "failure" of a religion based kibbutz, which has been refuted here several times, what do you suppose was the "intended message?" Is it valid?

Well thanks again for the reply and a discussion board would hardly be a discussion board w/o differing views, Jack

Ben! Great pun to use "chutzpah!" But, truth is, it doesn't require much when the fact is that "leftist rant" isn't much more than a schoolyard taunt that is perhaps indicative of getting too much talk radio into one's diet.

BTW I note you've included no detail either. Does that mean I've stepped upon your ideology somehow, but you really DON'T want to address such issues as our spiraling trade deficits? Or the D E B T? and the Admin/Majority having established a post WWII record for expanding the size and cost of the federal government in their first term? Anyway, if you see some great positives in these fundamentals or what they say about our ability to "compete" in the "global economy" perhaps you can detail them soon? Jack

"Jack, you are repeating the exact same points you made six months ago on this blog. Nothing you have posted here is on topic. And you have the chutzpah to accuse gator of not addressing details."

Jack - whatever the problems of the US, millions of people still want to move there, life expectancies are rising and unemployment is low. There's no sign of people moving away from the US or other capitalist countries like they moved away from kibbutzes and communist countries (or tried to move away from communist countries).

I don't think capitalism is dependent on access to resources at very low costs - Japan has prospered greatly despite having very little in the way of natural resources. Wages are low in many places around the world because productivity is low - the US still manages to trade with countries like Germany where wages are high because productivity is high. If a Chinese worker costs 10 c/hour and produces goods with a value of $10 each hour after all other costs and taxes (or in other words a net benefit of $9.90 once you take off his salary), and a German worker costs $10/hour but produces goods of a value of $20 each hour after all other costs and taxes (or a net benefit of $10 once you take off his salary), then it makes sense to trade with the German guy as the German guy is producing more value. As productivity rises in China, Chinese wages will go up and they will be able to buy more American goods (or possibly they will choose to buy more Indian goods and the Indians will therefore be able to buy more Mexican goods and the Mexicans will therefore be able to buy more American goods - there's no reason for trade to be bilateral).

Capitalism has been getting by with "fixes" and "patches" for all of known human history - this appears to be a far more effective way of improving matters than all the grand schemes of fixing everything up in one great sweep. Humans are too complex to be fixed in one great sweep - no human brain can comprehend the complexity of the economy. Instead we tinker, we see what the feedback is from the tinkering, we tinker again, we maybe go 0.9 steps back for every 1 step forward, but we get there. Meanwhile big grand sweeps have lead to dictatorships and the killing of millions.

Trade across people and across countries has always been vital to economic prosperity. Americans may have produced their own cars, shoes, clothing and other consumer goods back 50 years ago, but that doesn't mean every single American produced their own car, shoes, clothing, and other consumer goods. Instead some Americans spent their days designing cars, or spray-painting the doors on cars, or sewing soles onto leather uppers for shoes, or raising cows to make the leather for the shoes, or raising cotton, or weaving cotton into fabric, or designing new dresses, or washing dishes by hand, and they all traded with each other so each had more cars and shoes and clothes and food than they would if they had constructed every single car and shoe and clothes and raised all their own food by themselves. How come you think adding people in other countries to this division of labour makes Americans worse off?

Government deficits are a problem of political will, not of capitalism per se.

The trade deficit is because millions of non-Americans want to invest in America. If you want to initiate a trade deficit with me I am happy to let you do so - please send me lots of goods and I promise not to reciprocate. I will even endure the pain of consuming more goods than I have produced. It's tough, but I'll endure it. :)

The problem of people using government power to benefit themselves is far more significant under communism or socialism or feudualism than it is under capitalism.

As for GDP per capita - the gaps between the countries aren't that large in the OECD. Sometimes one country grows faster, sometimes another does. I hardly think 8th in the world is something to be tearing your hair out over.

Tracy Thanks for the reply. A few comments:

Jack - whatever the problems of the US, millions of people still want to move there, life expectancies are rising and unemployment is low.

........ Polyanna? Translated: "There are worse places in the world than the US" "Life expectancies in the US are no longer in the top 5 nations....... but.......... what the heck? "It's "good enough". And......... I guess the "low unemployment" is supposed to offset the fact of 20 years of flat wages despite the accumulated 50% increase in productivity? "All is well??"

There's no sign of people moving away from the US or other capitalist countries like they moved away from kibbutzes and communist countries (or tried to move away from communist countries).

.......... This is QUITE a lump! Did people "move away from kibbutzes or matriculate into other endeavors? I point out that the US and what remains of our "capitalist" system has some very big problems to solve. Are the problems of the communist nations relevant???

I don't think capitalism is dependent on access to resources at very low costs -

........ That one is just silly. Consider the ease with which we feed our people from our ideal farmlands and produce rice here at less than one third the costs of the Japanese farmer. Or? consider that when we produced 80% of our oil that the all the money circulated in our economy and the taxes from that circulation fed our Treasury rather than the "good works" of the Saudi royal family.

Japan has prospered greatly despite having very little in the way of natural resources.

....... Indeed. By working VERY hard and very wisely.

Wages are low in many places around the world because productivity is low - the US still manages to trade with countries like Germany where wages are high because productivity is high.

....... What do we buy from Germany? A few specialized tools? gourmet cheeses, white wine and specialty beers?

If a Chinese worker costs 10 c/hour and produces goods with a value of $10 each hour after all other costs and taxes (or in other words a net benefit of $9.90 once you take off his salary), and a German worker costs $10/hour but produces goods of a value of $20 each hour after all other costs and taxes (or a net benefit of $10 once you take off his salary), then it makes sense to trade with the German guy as the German guy is producing more value.

.......... The concept is right.

As productivity rises in China, Chinese wages will go up and they will be able to buy more American goods (or possibly they will choose to buy more Indian goods and the Indians will therefore be able to buy more Mexican goods and the Mexicans will therefore be able to buy more American goods - there's no reason for trade to be bilateral).

.......... so goes the "theory" but to steal a note from Perot who stole it from someone else; "the devil is in the details" and it will take a VERY long time to employ the immense labor surplus of China and India which borders on the infinite. And.... as their economy matures, ala Korea, what is it that they are likely to buy from the US that could not be better supplied to themselves at their wage rates? Note that one of our strong suits is the very labor intensive building of airplanes. Soon China will have VERY cheap electrical energy from their huge hydropower dams. Aluminum is in essence electricity turned into metal. Once the aluminum is there in plentiful supply will Boeing and Alcoa who are already in China find it sensible to send it to the US to be crafted at our high wage rate?

Capitalism has been getting by with "fixes" and "patches" for all of known human history - this appears to be a far more effective way of improving matters than all the grand schemes of fixing everything up in one great sweep.

........ Probably true, and I've had some buildings and cars that "got by" in a similar manner. My original lament here is that there ARE a LOT of fixes that NEED to be done NOW or our future will be QUITE bleak. Certain posters here appear to think any recommendation to fix it before it breaks means that one is a "socialist" or "commie". Such is not the case.

Humans are too complex to be fixed in one great sweep - no human brain can comprehend the complexity of the economy. Instead we tinker, we see what the feedback is from the tinkering, we tinker again, we maybe go 0.9 steps back for every 1 step forward, but we get there. Meanwhile big grand sweeps have lead to dictatorships and the killing of millions.

........ Unfortunately, today the talk, the debate, the conclusions, end up in a stagecoach headed for DC. But, along comes a band of highly skilled and paid lobbyists favoring special deals and PORK and the stagecoach is held up and robbed before it gets inside the beltway.

Surely, those who claim to be "conservatives" here must be quite disappointed that once their "reps" got all the gavels they proceeded to, again, junk any "starve the beast" tax cuts policy and set records for both spending and the accumulation of, option tanking D E B T.

Trade across people and across countries has always been vital to economic prosperity.

.......... so it is said, and I'm well familiar with the concept of relative advantage. But, sadly, as most "things" can be produced anywhere this has turned into a wholesale rush to the lowest cost producer. In fact, much of our "immigration problem" is due to China undercutting the low wages of Mexico which have fallen since the implementation of NAFTA which, we hoped?? would bring wages and employment opps up in Mexico.

Americans may have produced their own cars, shoes, clothing and other consumer goods back 50 years ago, but that doesn't mean every single American produced their own car, shoes, clothing, and other consumer goods. Instead some Americans spent their days designing cars, or spray-painting the doors on cars, or sewing soles onto leather uppers for shoes, or raising cows to make the leather for the shoes, or raising cotton, or weaving cotton into fabric, or designing new dresses, or washing dishes by hand, and they all traded with each other so each had more cars and shoes and clothes and food than they would if they had constructed every single car and shoe and clothes and raised all their own food by themselves. How come you think adding people in other countries to this division of labour makes Americans worse off?

......... In theory, I don't. In practice I would again point out our spiraling trade deficit and the one thing Gspn said without his usual vagueness was "it is not sustainable". So, far our "leaders" (carny barkers?) have championed the falling worth of the US dollar as "the thing" that would, finally, make us "competitive" in the global arena. It's hrsht of course as, for one example, we keep buying pricey oil that is very profitable "over there" to use to grow and transport marginally profitable, and highly subsidized, crops. Worse? since the ADM scam of using corn in a triple subsidize manner to power our own fuel hogs, we've priced the rest of the crops beyond the affordability of those who once bought them.

Government deficits are a problem of political will, not of capitalism per se.

.......... I find it not possible to separate the two. Geez I hate to quote Marx again as his name seems to inflame many here, but then it WAS he who predicted that "capital" was much stronger than labor and that those with capital would rig the game against labor until the workers had no recourse but to revolt. Have we not seen Big oil getting subsidies just as they've had record profits of their own? Haven't we seen Big Pharma indemnified from most forms of competition? Haliburton? "Bridges to Nowhere" in my own state of Alaska where "our" Don Young also earmarked a road through wetlands in FL for a fundraising pal? $40k in donations for a pay-off or a $10 million road to the fellow's proposed subdivision?

The trade deficit is because millions of non-Americans want to invest in America.

...... Ye've the cart before the horse laddie! The Chinese and others, are dumping their excess dollars back here so that the "current account" will come closer to balancing and that the dollars don't erode so far that we can't continue to buy their goods. Also? what happens when money is invested here? Well, the investment is in hopes of a future return from the bonds, stocks or shopping center, toll road purchases. So... ultimately the investment become a further OUTflow of dollars to their countries. Those who've inherited a farm can not party indefinitely by selling off the back forty to pay for the partying.

If you want to initiate a trade deficit with me I am happy to let you do so - please send me lots of goods and I promise not to reciprocate. I will even endure the pain of consuming more goods than I have produced. It's tough, but I'll endure it. :)

......... Oh? And will you leave your bonded debt to your "heirs" to pay off?

The problem of people using government power to benefit themselves is far more significant under communism or socialism or feudualism than it is under capitalism.

....... Again, I'm not comparing our mixed economy to other systems, but favor fixing it up again. Hopefully prior to sinking. A start might be to harness the best of all to lower health care costs before that bill alone tanks the economy. Also, do you see any way that "capitalism" is likely to curtail the selling of oil at over 5 times the costs of production? (Please, do not come back with half-baked hopes of any "alternatives" showing up in our lifetimes.)

As for GDP per capita - the gaps between the countries aren't that large in the OECD.

........ True. And puzzling considering the inherent wealth or our nation by comparison to that of the UK, France, Japan. IF "capitalism" is SUCH a strong system for building efficiency and deploying capital, why do you suppose that the, quite socialist, workers of France are as productive as are US workers? And? why do you think our dollar is falling by contrast to the Euro, looney, and yen?

Sometimes one country grows faster, sometimes another does. I hardly think 8th in the world is something to be tearing your hair out over.

......... When we were first to begin with? But, now, can't or won't pay our Federal bills? Short a trillion or so on infrastructure maintenance? And, running larger trade deficits EVERY year? And have FLAT wages for those below median income? Does your complacency stem from a confidence that we'll soon find a way to sell $600 billion worth of stuff w/o increasing our imports? Once we've armed the Saudi's and those made nervous by the Saudi build up, what do you suppose we'll sell? The rest of our manufacturing plants and equipment?

Conclusion: If we're selling democracy and capitalism, it's time to pretty them both up for the show. Jack

Jack's last couple of posts have left me very depressed. No, it's not his doom and gloom outlook on life. The first reason is that he didn't get my joke about having spokesmen. I shouldn't be surprised. My kids have been telling me for years that my jokes aren't funny.

Second, he seems to have WAY more time on his hands than I do. He gets about 50 words in for every one someone else writes! I need more spare time!

Gator, sorry 'bout not finding time to comment on your witty retort and the kids not chuckling at your jokes, but are you lifting your material from those prone say things like "leftist rant??" Now you have me wondering why there are so few (any?) humorists among the hucksters of the whack-right, though I do find the somber, funereal, straight-man act of Orin Hatch a hoot.

BTW as for spare time, the efficient engine of a functioning capitalism should bring us time and wealth in spades. For much of our history productivity HAS moved along at just under 3% per year. As you know 3% yields a doubling time of 24 years. Thus, if JFK were still around to insist that a "rising tide lift all the boats" the median household should have the option to work half a week or to enjoy a doubling of their income.

But....... curiously? purchasing power for median incomes, and below has been, well, flat, or down. So, if we'd like to honor the hopes of JFK we'd better get crackin' and we'll need something on the order of 7% of real, after inflation, gains each year. Oh, and were that to take place the "unsolvable problems" of SS and healthcare would return to being quite manageable. There may be some costs, however, for example, CEO gleanings might not rise by the 2000% that it has over the last 25 years. Do you think they'd still get out of bed when the alarm rings if we capped 'em at the current level of 500 times what the working folk earn? Do you think raising the min wage by one of our emaciated bucks is likely to "tank the economy?"

"Between 1995 and 2004, U.S. output per worker grew at a 2.9% annual rate, even faster than the impressive pre-1973 pace."

Cheers, and wondering why you find taking a look at our economic engine gloomy? Often, as Churchhill pointed out, "America does the right thing after trying everything else". So, take heart, we've put a lot of wrong things behinds us! Jack

To Jake:
Maybe you mean Red China is not special. Special and peculiar and even mysterious phenomena are always valuable pratical background for great economic thought. I kind of disagree with your opinion. Gold needs to be dug out of the dark world. Maybe China only lacks those excellent diggers like Mr Becker.

To Jake:

Maybe I am not clear about my opinion. Suppose there are two families. The first one has some kind of advanced weapon. The second one hasn't Period 1, the first family beats the second one badly. Period 2, the second family may allot a large amount of its income in investment of this advanced weapon. If its income is quite small compared with the income of the first family, then this investment in security will affect greatly the living standard of the second family. Anyway, the advanced weapon is developed. Period 3, the second family can allot most of its income in private goods again.

Then suppose the same thing happens between two clubs. Period 1, the second club is badly beaten. Period 2, the commitee of the second club is determind to invest in this weapon. This commitee may want to do this through taxing its members. But if the members are very poor, the personal contribution needed is, say 70%. It has a too huge impact on the living standard of the club members. Enough taxes can hardly be collected. Then the commitee tries to publicize the desirability of socialism. Then all the income belongs to the club commitee, and it allots 70% in the weapon investment and at the same time gurantees the minimum living standard of its members. So socialism here is more like some kind of implied taxing. The point is the commitee acts in the best interest of its club members. Period 3, everything just turns normal.

Please explain
Club One is beaten (ignore that China was an ally in WWII.)
Step One kill millions of your own people to impose a new order.
Step Two imprison some of the most gifted members of your society and make sure benefits go mostly to loyal party members.
Step three corruption becomes such a way of life that new socialism becomes a joke.
Step four people grow tired of deprivation and start to cheat on margins
Ruling elite realize they either must again kill millions or accept a higher living standard based on capitalism.
Things start to turn normal.

Of look at the Iran model, prepare to millions in the name of a new world order based on their vision of the one true faith

What I am saying is that the socialism in China is not about true faith but about the security concern. More than 20 millions Chinese people was killed in the war against Japan only from 1937 to 1945. Maybe you mean the civil war during 1946-1949. But first,during the period from 1949 to 1952, China was not a socialist country and there was little planning and collective life at that time. Second, there are always wars between conflicting parties. I am not sure about one party or the other should be blamed the most. Also, if there was no support for one party from America, that war may not last so long.

Corruption is not a severe problem during 1953-1976. And there are no benefit going to the royral party members, actually there are no royal members at all. Corruption does be a severe problem now. But I do not think the new socialism is real socialism. There is much more corruption in Russia which is now a capitalist country. So I would rather think corruption has not a causal relationship with socialism. And also, I do not think joke is an appropriate word for a country or system which experiences a more than 8% growth rate during the last twenty-nine years.

By "turns normal", I mean people do not need to reduce much consumption for the concern of security. Maybe you misunderstood that purposely.

There is no need for the ruling party to kill anyone. There do exist some problems now in China. But can you find anywhere in this planet without any problems? All my classmates and friends agree that the government is quite wise on most of its decisions. Or at least, it is on the right road.

I do not know Iran. What does the life look like there? How do the Iran people think about themselves? These things are critical to judge what they really want. You can not decide for them.

Zhang, Interesting post, and one that points up the attraction of the NK or Iran and Chinese approach: These nations with but a tenth or less of the US GDP can not hope to compete "on the open field" with conventional strength. Thus the best way is for them to join the "MAD" (Mutually Assured Destruction) Club by ginning up at least a few nukies and the means to lob one at "someone". (or deliver it by satchel? or cargo van?)

That's why I, and many RETIRED Generals have advocated getting rid of ALL nuclear weapons and declaring all equipment for refining weapons grade uranium as contraband.

Today, with the net, the military version of google-earth we should be able to find any enrichment plants and with the blessings of the international community simply lay waste to them and go on. Once ALL nukies were considered contraband we'd also get help from regular folk as it would be hard to recruit the numbers needed w/o hiring someone who'd, annonymously rat them out on the net.

For the US, since we are FAR stronger in conventional arms, getting rid of ALL nukies would enhance our military advantage rather than weaken it.

As for "what if" a "rogue" nation, or individual DID manage to get one off? To which, I would ask what would we do now with all our nuclear might? "Nuke" a bunch of starving peasants and poison the land and atmosphere for the sins of a dictator?

In addition to the obvious advantages, the savings in the world's military budgets would feed all those who are not being fed tonite. Jack

Jack:

I admire your opinion. Nuclear weapons and those military spending are pure cost. These costs come from the self-interest human nature. I mean there are two ways to make a good living. One is to produce and exchange with others. The other is to rob other people. People will use the more cost-effective way. So there comes the military competition. But reducing the military spending through commitment or some kind of contracting is always a good way worth to try.

Actually, there is another way to lower these pure costs. If different nations are more cosely interrelated with each other economically, the cost of war between them will be greater. If America has so much direct investment in China, and if American high technology is so desirable for China, then neither of these two likes to be in conflict. So maybe globalization does have some positive effect in this respect.

Talking about "MAD", I have a little disagreement. I would rather think that extremely military-directed or security-concern-directed economy is based on the rationality. It does result in the despotism and some really bad concomitant effect with it. That is the exact "MAD" part.

Zhang Thanks, and little disagreement here either.

Interesting though that in terms of one "robbing the other" that China's use of artificially low exchange rates is, for now, something of a gift to the wealthy consumers of the US. Perhaps, unilaterally, (some) in China are happy to get the contract, and US consumers, (others than those whose jobs disappeared) are happy to get the cheap goods. But, I'd imagine there are others such as SK or Mexico who aren't so happy about being undercut through rigging the currency. Perhaps Clinton was a tad too hasty in signing permanent MFN as it would seem better to have some leverage regarding human rights and work rules. But! history tells us that large trade deficits and artificial exchange rates don't last forever. Sadly, I suspect the situation is like earthquakes; the longer we go without releasing the pressure through small tremors and adjustments, the worse it will be when it's no longer sustainable for either nation or the other trading nations.

Yes... MAD was perhaps all that could have been managed during the era when the USSR was strong (and thought FAR stronger than it was) and a closed society. I suppose it will take us a quarter century to reflect the changes in our own policy. But, considering that perhaps NK or Iraq were the most closed societies and that, still, we largely knew what was going on there, it seems time to begin anew on a nukie build down and eventual ban. In keeping with your "trade makes good neigbors" I think the time for any nation to be "closed" is past, and that membership in the global trading community would require at least the degree of openess to allow for WMD inspection. I'd go further than UN inspectors only and allow any nation to inspect any other nation, though perhaps with the host nation being allowed a veto or two as long as they promptly allowed some inspectors.

I'm thinking how easy the next "NK" or "Iran" situation would be were ALL nukes considered contraband. Instead of the five years of brinksmanship an inspection of the suspected installation would be scheduled. If refused, once some group decided the risk was real, NATO, SEATO, UN, etc. notice would be given to get their people out, and the installation would be destroyed. No war, few hard feelings, don't take if personal, it was contraband and now it's rubble, welcome to the civilized world.

While this may seem naive, consider how hard it will be to avoid allowing Iran or others to join the nukie club. In fact how can the US browbeat Iran when we make sure Israel is armed to the teeth with the latest weapons and sporadically demonstrate they are not shy about using them?

Jack

I would not turn a blind eye to the evils of Mao and the communist past. 2 to 5 million people killed as Mao consolidated power another 1.5 million sent to education camps. Millions more starve to death from failed agricultural collectivist "reforms". You want to see the Kibbutz idea gone really mad, look at Chinese agricultural reforms that the communist in China tried.

Want to see what China would look like without a turn to free markets? Look at North Korea, is that a model to follow. Pursue military might while people starve and make false claims that it is for their own good.

Russia is hardly capitalism. It is more like cronyism floating on oil revenues.

Corruption is a drain on all societies. For some, like the US, it becomes a nuisance tax. In Nigeria it becomes a way of life that blocks development. View corruption as a tax, then ask if the corruption occurs because of a market failure or because that is the way the government funds itself indirectly.

I suggest you read Robert Barro (and Gary Becker) on what may generate real economic growth

Iran shows a strong desire to become a regional military power that will move aggressively against it's neighbors. The Iranian people suffer deprivation and loss of liberty as Iran's leaders impose a fascist state cloaked in religion. The Iranian view of the correct world order should scare people around the world. The purges that the current Iranian rulers would like for the middle east would repeat the mass killings of Mao and Stalin.

Jack is a hollow drum - he makes a great noise with little substance. His quirky mix of leftist, populist, protectionist, and conspiratorial world order views can be mildly amusing. He is the guy in the bar who complains about everything but offers solutions that are worse then the disease. So have a little chuckle when you read Jack and know that in the US we tolerate a wide spectrum of views.

The failure of socialism in the Soviet Union, China, Cuba and North Korea might be excused on the grounds that the founders were not really idealists committed to the promise of socialism. Instead, they were thugs bent on domination of their fellow countrymen and unearned privileges for themselves.

The kibbutz movement in Israel actually was an experiment based upon good faith intentions. It's failure is therefore the most damning to the socialist ideal.

About "2 to 5 million people killed as Mao consolidated power ", I think I need more proof here. I never heared that from my father or my grandfather or those old professors in our school. I will be very thankful if you can show me more evidence. "Millions more starve to death from failed agricultural collectivist "reforms"", I knew that. And also I have heared many miserable stories from my mother. Natural disater, collective reform and the deteriration of the relationship with USSR are all the reasons, not just the collective reform. Here the problem is you need to choose between two evils, the threat from outer world or the despotism resulting from the planned system. So you should calculate first how many people were killed in war or by opium from 1840-1945. Plus, Mao never chase his own good to starve those people.

About Russia, I only heard there are two system, capitalism and socialism. What category does the "cronyism floating on oil revenues" belong? Or maybe you have more narrow definition about capitalism. Please explain.

So you say corruption in America is different with that in other countries. How about India? Is it a capitalist country? Isn't it corruptive? Then how about America in early 1900s? Isn't corruption at that time more popular and severe than now? Is America at that time capitalism? There must be some other variables which can explain this phenomenon, but it is not capitalism or socialism. I suggest you read some historical books. Plus, I do read some papers of Gary Becker and Rober Barro, I do not see where their views are in conflict with mine. I just say maybe there is no causal relationship between corruption and socialism. Is that problematic? Please show me.

I do not think I am prepared enough to talk about Iran. But I am quite uneasy when you say Mao is a mass-killer.

You do not need to worry about my chuckle. I am glad someone agree with me, there is no shame.

I assume you have easy access to the internet. Research Mao on your own and decide. Then be thankful that people like someone like Deng Xiaoping was able to change the path. (And remember that Maoist turned his son into a paraplegic by throwing him out a window because of the father's views.)

The failed collectivist efforts were the direct unambiguous cause of the mass starvation. The rest is noise.

The outside threat is a common myth used by despots to gain control. And not to be cynical but Mao doesn't look like he lost much weight while millions starved to death. Perhaps he had a slow thyroid.

On Russia I can refer you to a recent Economist cover store.

Socialist countries are more prone to bribes, black markets, etc. then capitalist countries. When formal legal markets are unable to allocate resources, secondary informal markets form. Socialist economies create more market distortions which leads to more secondary, often illegal markets.

When US laws prevent the drug trade, secondary markets step in. When discrimination is allowed, secondary labor markets step in. When the government distributes profitable contacts, absent a profit motive, politicians will allocate based on political advantage or sometimes bribes. etc.

“Peking has two fundamental objectives in its economic planning: first, to maintain an adequate level of food and clothing for the growing population; and second, to develop a modern industrial base that, while small, will be capable of supporting a strong military force.”

U.S. Congress, Joint Economic Committee, Allocations of Resources in the Soviet Union and China-1976(Washington, D.C.: Government Printing Office, 1976), p.25.

“And Samuel told all the words of the LORD unto the people that asked of him a king.
And he said, this will be the manner of the king that shall reign over you: He will take your sons, and appoint them for himself, for his chariots, and to be his horsemen; and some shall run before his chariots.
And he will appoint him captains over thousands, and captains over fifties; and will set them to ear his ground, and to reap his harvest, and to make his instruments of war, and instruments of his chariots.
And he will take your daughters to be confectionaries, and to be cooks, and to be bakers.
And he will take your fields, and your vineyards, and your oliveyards, even the best of them, and give them to his servants.
And he will take the tenth of your seed, and of your vineyards, and give to his officers, and to his servants.
And he will take your menservants, and your maidservants, and your goodliest young men, and your asses, and put them to his work.
He will take the tenth of your sheep: and ye shall be his servants.
And ye shall cry out in that day because of your king which ye shall have chosen you; and the LORD will not hear you in that day.
Nevertheless the people refused to obey the voice of Samuel; and they said, Nay; but we will have a king over us;
That we also may be like all the nations; and that our king may judge us, and go out before us, and fight our battles.”

Chapter 8, Samuel, Bible

I agree with you that in Socialist China, nearly all the prices are distorted. This distortion is exactly for the development of a industrial base which can support a relatively strong military force(compared with the past, of course).

In rural China, the price of capital is high and the price of labor is low. But the heavy-industry-directed investment needs a lot of capital. If it is a market economy, the interest rate may go too high and this investment can not be sustained. So the heavy-industy development strategy is the real cause of the planned economy which purposely lower the price of capital. This view is actually held by Justin, yifu, Lin in our school. He has a lot of papers published in some top economic journals, maybe you can find some.

Dan.....

I would not turn a blind eye to the evils of Mao and the communist past. 2 to 5 million people killed as Mao consolidated power another 1.5 million sent to education camps. Millions more starve to death from failed agricultural collectivist "reforms". You want to see the Kibbutz idea gone really mad, look at Chinese agricultural reforms that the communist in China tried."

.......... Dan, I don't think anyone here is "for" military dictatorships and that we've agreed that the voluntary formation of kibbutz or communes as a choice in a free society is much different from one dictated under totalitarian governments.

Want to see what China would look like without a turn to free markets? Look at North Korea, is that a model to follow. Pursue military might while people starve and make false claims that it is for their own good.

......... Hmmm........ "military might" at the expense of the people is hardly unique to socialist nations, consider, the good ol' US spends more on military than all the other nations combined.

Russia is hardly capitalism. It is more like cronyism floating on oil revenues.

.......... cronyism seems an apt description of much of what is going on in the US these days too.

Corruption is a drain on all societies. For some, like the US, it becomes a nuisance tax. In Nigeria it becomes a way of life that blocks development. View corruption as a tax, then ask if the corruption occurs because of a market failure or because that is the way the government funds itself indirectly.

............ Well, in the US, I'd say the "government" does not profit from the corruption; it seems more of an industry of trading pork in return for preserving public power of our "elected" "representatives". My guess is the feedback loop is FAR more costly than most of us think.

I suggest you read Robert Barro (and Gary Becker) on what may generate real economic growth

...........Currently, since the US and much of the world is suffering from OVER-capacity of which the flip side is too little demand, the pump priming would be that of getting some discretionary income into the hands of those of median wage and lower, who have the highest propensity to spend to fulfill their unmet needs. Bush would have been FAR better off, in terms of spurring the economy and creating jobs to have implemented a strong program to address the problem of our crumbling infrastructure than to have cut taxes for the upper income group. Today, it's a huge problem, as "job creation" w/o government spending more than they take in, would be zipnada, and we're too broke to continue the "spurring". Trickle down just doesn't seem to work and just leaves us with a pile of unpaid bills and a weakening dollar.

Iran shows a strong desire to become a regional military power that will move aggressively against it's neighbors. The Iranian people suffer deprivation and loss of liberty as Iran's leaders impose a fascist state cloaked in religion. The Iranian view of the correct world order should scare people around the world. The purges that the current Iranian rulers would like for the middle east would repeat the mass killings of Mao and Stalin.

.... Indeed, they are much like us in that a high percentage of the people do not favor a government "cloaked in religion" but they have one anyway. I'd hoped that looking closely at the messes of the M/E would highlight the risks in the US of confusing government with religion. As fuzzy as it can be, at times, the separation of church from state is one of our strongest assets.

Jack is a hollow drum - he makes a great noise with little substance. His quirky mix of leftist, populist, protectionist, and conspiratorial world order views can be mildly amusing. He is the guy in the bar who complains about everything but offers solutions that are worse then the disease. So have a little chuckle when you read Jack and know that in the US we tolerate a wide spectrum of views.

........... Oh? One of the things I've noticed is that of the "right" (faux conservatives?) and their "talk show hosts" who never dare to host anyone, IS that of never proposing any solutions to our myriad problems. Come to think of it, neither have your posts.

....Want to try? Health care was 12% of GDP when Pres Clinton said "the worst thing we can do is continue doing what we're doing", and 30 million were w/o health insurance. Today? HC consumes 18% of GDP and over 45 million are w/o insurance. And this is before the boomers retire and pile onto Medicare. Do you see something of a trend? Other nations care for all of their people for 8% - 10% of their, typically, smaller per capita GDP. Do you think this is just fine? Do you think we can even hope to "be competitive" in a global economy while diverting 10% more to a health care system that is not even top ranked? Do you have any suggestions?

Cheers, and perhaps listen more closely to the sound of the drums? Jack

Zhang: You say "to build a relatively strong military". I wonder why they think it wise to spend heavily, (or virtually at all?) for military? China has never been successfully invaded. While, perhaps a superpower could "invade", but what would they do with it? It would take most of the US population to even try to occupy China and what would be the reason?

As for hegemony in Asia? Other than nukie brinksmanship, they'd have to engage in a Soviet style arms race and still come out second best. Doing so would seem to risk any number of their advantageous trading agreements with Western nations. They'd be wise to take heed from Ike, who advised that "every dollar taken for military uses" is a dollar not available for schools and domestic uses. I assume it's the same in yuan! Jack

Jack
Now you compare North Korea and the United States and shrug that all countries spend money on the military. Then you equate the participation of conservative christians in a democratic government to what the fascist leaders in Iran want to do. Obscene

So you can rant against the United States all you want. You can attack free markets all you want. It is clear that an honest debate with you is hopeless.

Zhang

The failed policies of Mao is the reason China is now on a different path. Communism failed. It always fails.

If you want to look at a different model look at the Mejii restoration in Japan. Imperial Japan was able to build a very powerful military without resorting to the starvation of the population.

Zhang

BTW Justin Yifu Lin seems to be a very good economist

Yeah, I think so.

This is QUITE a lump! Did people "move away from kibbutzes or matriculate into other endeavors? I point out that the US and what remains of our "capitalist" system has some very big problems to solve. Are the problems of the communist nations relevant???

Yes - they put the problem of the US into perspective.


Wages have been flat because health insurance has been rising and that is not counted in wages.


Americans produce great swathes of grain from their farmland due to capitalism, not due to access to low-cost resources.

Japan and America and every other rich country prospers because people work very wisely. What's your point?


Germany is one of the largest suppliers of high-quality engineering equipment in the world. Also vehicles, iron, steel, coal and cement. Sadly, America does not buy enough speciality cheeses from outside due to dairy quotas.


The labour supply of China and India does not border on the infinite. Infinity is not a number. It is a concept. A series may approach infinity, but the population of China and India will not. Look at it this way - the combined population of China and India is less than 3 billion people. There are a lot of numbers larger than 3 billion. For example, a google is 1 followed by 100 zeros. The combined population of China and India is less than 1% of a google. Therefore their population does not border on infinite. And please study the concept of comparative advantage. The Chinese and the Indians may be able to produce everything cheaper than the US, but it would still make sense for them to concentrate on the things that they produce most efficiently, and pay Americans to do the things they do least efficiently.


And, then, lets imagine that this doesn't happen, and that as the Chinese and Indians get richer, they have nothing they want to buy from Americans. Will Americans therefore turn up their toes and die? No, I have far more faith in Americans than that. Instead, Americans will make do with their own resources, and go back to apparently what you regard as the golden age of trading only within the USA.



My original lament here is that there ARE a LOT of fixes that NEED to be done NOW or our future will be QUITE bleak.


People have been saying this for as long as we have widespread written records. I don't see anything special about now.


France's productivity per hour worked is high because they work less hours. As a non-politically correct academic of my acquaintance put it - how do the Americans get such great productivity growth while hiring morons?


I don't know why the dollar is falling comparatively to the yen and euro (except in the extremely general sense that on average traders in the dollar believe that returns will be higher from yen and euro investments), but these things happen from time to time. And then they go the other way.


Does your complacency stem from a confidence that we'll soon find a way to sell $600 billion worth of stuff w/o increasing our imports?


Yes, since the dollar is falling. US exports are worth more, imports become more expensive, so people will import less and export more.


Please read the European newspapers - every country in the world has a long list of problems they worry about. French unemployment is near 9% compared to the US's 5%, the government debt is 65% of GDP - about the same as the US's Germany's public debt is slightly higher at 67%. Japan's public debt is at 176% of GDP, and they have a far more aging population than the US. Oh, and their Prime Minister has just had to step down due to scandals. (CIA Worldfactbook figures).


Once we've armed the Saudi's and those made nervous by the Saudi build up, what do you suppose we'll sell? The rest of our manufacturing plants and equipment?


Healthcare services, financial services, high-tech designs, Hollywood movies, top-quality university degrees, software, American wines, wheat and other crops, and probably a million other things I don't know about.


Oh, and the next generation of weapons to the Saudis most likely.



There's nothing special about the US's economic or political problems - everywhere in the world faces them. And people *always* worry about some oncoming economic and/or political crisis, there's nothing special about now. Please get a sense of proportion. If you only look at the US you get a weird distorted sense of the world and blow things up into far bigger problems than they actually are.

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Tracy.... sorry to be the bearer of news about our fundamentals and laying it out in such a lumpy manner.

This is QUITE a lump! "Did people "move away from kibbutzes or matriculate into other endeavors? I point out that the US and what remains of our "capitalist" system has some very big problems to solve. Are the problems of the communist nations relevant???"

Yes - they put the problem of the US into perspective.

............... Ahh! That's a tactic I may have tried on my parents! "Well...... Pops, a C- is better than an F.

Wages have been flat because health insurance has been rising and that is not counted in wages.

............. Hardly.

Americans produce great swathes of grain from their farmland due to capitalism, not due to access to low-cost resources.

......... Oh? perhaps we can mention that to farmers in Japan or Europe and sell them a lot of combines designed for our broad prairies?

Japan and America and every other rich country prospers because people work very wisely. What's your point?

......... Resolved: That given US natural advantages in resources that if we're even tied with Japan, Norway, France and the like, WE are NOT working very wisely. And! really ought review our game. Closely.

Germany is one of the largest suppliers of high-quality engineering equipment in the world.

............OK.

Also vehicles, iron, steel, coal and cement. Sadly, America does not buy enough speciality cheeses from outside due to dairy quotas.

......... or coal and cement, and one would hope we are not importing coal to Hibbing, Mn. Ah! distortive farm policies? Aren't "their" big Merc's and Beemers produced in our own low wage states? Can you find other built-in drags on what's left of our "capitalist" economy? Price fixing for Big Pharma? BTW can you think of any commodity, other than oil, which sells for over 5 times the costs of production?

The labour supply of China and India does not border on the infinite. Infinity is not a number. It is a concept. A series may approach infinity, but the population of China and India will not.

.......... Indeed! My usage was conceptual, and perhaps it was Keynes who quipped "In the long run, we're dead." Given that we're a nation of 300 million and say the developed world, population is a billion or so, how long do you suppose it might take to sop up the unemployment overhang of the other 5 billion? and for wages to "equalize?"

Look at it this way - the combined population of China and India is less than 3 billion people. There are a lot of numbers larger than 3 billion. For example, a google is 1 followed by 100 zeros. The combined population of China and India is less than 1% of a google. Therefore their population does not border on infinite.

......... your math is impeccable.

And please study the concept of comparative advantage. The Chinese and the Indians may be able to produce everything cheaper than the US, but it would still make sense for them to concentrate on the things that they produce most efficiently, and pay Americans to do the things they do least efficiently.

........... I have indeed. And recall the example of the UK perhaps having a 3-1 disadvantage in growing tomatoes, and a 7-1 disadvantage in growing wheat, still they are better off growing tomatoes to trade for their wheat. But! the sad part is that having too many disadvantages does not bode well for living standards. Do you think we might reverse the nasty trend of our trade deficit via the hind teat so graciously offered by the Chinese in your example?

And, then, lets imagine that this doesn't happen, and that as the Chinese and Indians get richer, they have nothing they want to buy from Americans.

......... then Americans had BETTER remember how to do for themselves as we'd have no foreign exchange with which to buy from them, unless, of course, we found a hot new market for? "services?" or the other products of the "information age". BTW I'm noticing that the big chunks of my expenditures are still, housing, vehicles and energy, medical care and food. Perhaps I'll look for some "info tech" this W/E.

Will Americans therefore turn up their toes and die? No, I have far more faith in Americans than that. Instead, Americans will make do with their own resources,

............. really? Wouldn't shoes and clothing be pretty spendy after we bought back our factories and had to train folks how to sew again?

and go back to apparently what you regard as the golden age of trading only within the USA.

............. I'm all for trade, but! am concerned about our flabby version of "capitalism" ginning up ever deepening trade deficits, and not "creating jobs" (or more importantly wealth and health care for working folks) despite massive DEFICIT spending. Also, it really irks me when those "socialists" of Europe and Canada laugh at my DEBT backed script. (Though the inability to travel in the pricey nations DID give us a tourism windfall here in Alaska this year.)

My original lament here is that there ARE a LOT of fixes that NEED to be done NOW or our future will be QUITE bleak.

People have been saying this for as long as we have widespread written records. I don't see anything special about now.

.......... Hmmm, Is this ideology? Has there been DEBT this high other than during WWII? What is the reason for running DEFICITS of such a magnitude? If we ARE going warmongering shouldn't those flying "Support our Troops" decals on their gas hop pitch in to pay for it? At least? Are you aware of what happens to those who spend more than the earn? ie our worsening trade deficit? If we weren't The US we'd soon be called "just another economic basket case".

France's productivity per hour worked is high because they work less hours.

......... I stated it in per hours worked. But, why? do you think Americans work so many hours that they are relatively ineffective for enough hours that "those socialists" in a crowded and resource scarce nation can match our productivity?

As a non-politically correct academic of my acquaintance put it - how do the Americans get such great productivity growth while hiring morons?

........... Hmmm, what does your academic friend think about his contribution to producing "morons?"

I don't know why the dollar is falling comparatively to the yen and euro (except in the extremely general sense that on average traders in the dollar believe that returns will be higher from yen and euro investments), but these things happen from time to time. And then they go the other way.

........... And a peek behind the curtains would show REFORMS! Not ever larger trade deficits and federal D E B T.

Does your complacency stem from a confidence that we'll soon find a way to sell $600 billion worth of stuff w/o increasing our imports?

Yes, since the dollar is falling. US exports are worth more, imports become more expensive, so people will import less and export more.

........... Hmmm, so the theory goes; any products in mind? We've a pretty good shot at selling airplanes and military hardware regardless of the exchange rates. Will discounted Fords and Chryslers become a hot item? Anywhere? And now that the scammers have mandated that we try to fuel our gas hogs with corn, I suspect it will be priced out of the world market for its traditional use as food. Geez I can't help but wonder what a Mexican kid, going to be w/o a tortilla thinks about his neighbors using them to power their gashogs.

Please read the European newspapers - every country in the world has a long list of problems they worry about. French unemployment is near 9% compared to the US's 5%,

............ I'd take a closer look, as French policy makes unemployment less onerous than it is in the US. For starters they'd still have health care.

the government debt is 65% of GDP - about the same as the US's Germany's public debt is slightly higher at 67%. Japan's public debt is at 176% of GDP, and they have a far more aging population than the US. Oh, and their Prime Minister has just had to step down due to scandals. (CIA Worldfactbook figures).

......... geez and here I had you pegged as a "conservative!" Man! do you remember when conservatives were the strongest voice for paying our bills and maintaining the value of the dollar? Does the foibles of those "socialistic" nations give blessings to increasing our DEBT by 28% of GDP in the last 6 years?

Once we've armed the Saudi's and those made nervous by the Saudi build up, what do you suppose we'll sell? The rest of our manufacturing plants and equipment?

Healthcare services,

........... at our prices? Well, perhaps drugs, but as you know "those" nations beat us down on price so there is little profit and our .......... suckers? pay for the research and even larger advertising costs.

financial services,

.......... Oh?

high-tech designs,

......... Well, perhaps, but ..."don't look back" as we've no longer a lock on "tech".

Hollywood movies,

.......... yeah......... that seems to be working still but is only a few billion dollar industry. Not much help on the 700 billion trade deficit there.

top-quality university degrees,

.......... Aren't those U's always looking for handouts from their alumini? or the states that subsidize public colleges?

software, American wines, wheat and other crops, and probably a million other things I don't know about.

......... great! But............ here we are again, 600 billion shortfall last year, 700 billion this year.

Oh, and the next generation of weapons to the Saudis most likely.

......... Despite Haliburton's gleanings warmongery in the M/E just doesn't look very profitable to me. I DID see a CBO projection for a "phased withdrawal" over ten years which would cost our government just at One Trillion atop what has been spent/wasted there so far. If we got a real good talker as Pres do you think we might suck some other nations into participating in the sinkhole? Just why do those fools not see what a threat to the world those A-Q's are and pitch in?

There's nothing special about the US's economic or political problems - everywhere in the world faces them.

........... What is and has LONG been special is that we are still the king-daddy of markets and if we screw it up they'll all have MANY more problems.

And people *always* worry about some oncoming economic and/or political crisis, there's nothing special about now. Please get a sense of proportion.

.......... One very good way to do that is to look at some graphs and pie charts. Isn't it great how those hockey stick shapes of the Fed Deficit and the Traded Deficit kinda mirror each other? Like seeing a mountain range reflecting in a lake? Only steeper? Well you COULD use log paper to flatten things out for a pony show, eh?

If you only look at the US you get a weird distorted sense of the world and blow things up into far bigger problems than they actually are.

.........Hmmm I think I see what you're getting at, if all of us "advanced nations" whether "capitalistic" or "socialistic" swamp themselves in D E B T and run massive trade deficits with the "producer/saver" nations, perhaps they'll still be nice to us and lend us more money to pay our credit card minimums.......... because? our guns are bigger? they're afraid to stop because the game will be over?

Anyway, thanks, and I do wish I could be as complacent too; do you think the best way is one or more of those drugs they advertise so heavily on TV? or are there any blind faith workshops that might help? Jack