Making it dramatically more expensive to drive (and conduct) business in America
Bookworm on May 03 2011 at 6:41 am | Filed under: Taxes
The administration’s newest scheme to slow the recovery and, just coincidentally I’m sure, to put monitoring ankle bracelets on all citizens: Make all possible roads toll roads, and mandate that drivers have toll reading devices on their cars (which are, after all, tracking devices):
The White House last week began circulating its legislative proposal for transportation reauthorization that included provisions to add toll booths to existing freeways and impose a tax for every mile driven. The “Transportation Opportunities Act” for the first time gave the Obama administration’s full approval to the concept of an added charge on drivers for the use of roads throughout the country, including on existing, untolled freeways in major metropolitan areas.
“This section [2217] amends existing law to include two new options that provide more flexibility to finance new construction or capacity, and manage congestion, through the imposition of tolls,” states the proposal’s official summary. “The first option focuses on metropolitan congestion reduction and permits state and local governments to impose tolls on existing interstate and non-interstate facilities for the purposes of improving or reducing congestion in metropolitan areas with populations over one million people. Under this option, tolls may be imposed on specific lanes, whole facilities, or a network of facilities within the metropolitan area.”
The plan would require that commuters be charged higher rates during peak morning and evening periods and that the revenue generated be used for capital improvement projects near the toll facility. A second “interstate system improvement” plan would allow tolling in smaller areas so long as the project included new capacity. Electronic transponders would be required for toll collection on the new lanes.
I actually have a toll device on my car for the Bay Area Bridges — but I put it there voluntarily, because of the convenience factor. It was a CHOICE, a concept that seems remarkably alien to this administration.
Email This Post To A Friend
280 Responses to “Making it dramatically more expensive to drive (and conduct) business in America”
Leave a Reply
You must be logged in to post a comment.
They’re going to do their best to wreck this country and all the lemmings on the Left will gladly join Obama in celebrations.
There’s a _reason_ they’re called _free_ ways…as opposed to _toll_ways.
So…have we had an accounting recently of the funds collected as gasoline taxes – which are _supposed_ to be for the building and maintenance of the federal highway system?
Would I be accused of being unreasonably cynical if I suspected that like the Social Security funds, they’ve just been sucked into the general funds account?
And also…ditto to Y’s comment about killing the economy.
The Obama thugs got the idea from Illinois, where we have an extensive tollway system. Originally, the tolls were to be dedicated to highway maintenance and repair. Then they were to be dedicated to education “it’s for the children”. Now they are just part of the general political slush fund.
This is just part of Illinois political gangsterism going nationwide.
Forty-five different blends of taxed fuel by the Feds and the States for the purpose of maintaining the highways. What have they done with all the money? The article should have been entitled, For Whom the Roads Toll. They toll for the Wreck & Dreck Act.
The original link also provides an additional linked article (below). Toll devices, such as Bookworm’s choice or here in Pa. the EZ Pass are options. I opted out and returned the device after Pa. decided to charge the owner a monthly fee, whether or not it was being used. Dollars to donuts, it’s only a matter of time before all vehicles will not have the option of GPS or some gadget to track mileage and be charged.
The US Court of Appeals for the Seventh Circuit ruled yesterday in favor of police officers who attach GPS tracking devices to vehicles without first obtaining a warrant.
http://www.thetruthaboutcars.com/2011/04/federal-court-endorses-warrantless-gps-tracking/
Perhaps I’ve been living on another planet, but it seems to me the people they want to make pay for the roads and bridges are the people who already pay for the roads and bridges, are they – we – not? As a taxpayer, I just find myself wondering: how many times am I supposed to pay for this goddam bridge? I pay county taxes every year, I pay city taxes every year, I pay sales taxes every thirty seconds, I pay taxes in every gallon of gas I buy, I pay a toll every time I’m unwise enough to actually go over the goddam thing – how much is enough? Is there such a concept as “enough” with these bastards?
And having been a commuter in New York for decades, I can assure you that commuters are already paying the highest rates there are: for tolls on roads and bridges; parking the car in the city, if you’re dumb enough to take it there; and even if you don’t drive, the commuter railroads and bus lines nail you much harder during “peak” hours than they do during the “non-peak.” (And they still lose their ass every year because of all the executives riding the train every morning and afternoon, the most highly paid individual on the thing will be the union member who sits at the front end and drives it. The next four highest paid people on it will be the dingbats who look at your ticket, and try to remember where the hell they are so they can shout out the name of the stops when the train pulls up to them.)
What jerks we all were, wasting time in school!
Great points, JJ.
As far as mandating that drivers have toll reading devices on their cars, this is more than a taxing scheme. This is another quest to capture information on citizens. While I’m not paranoid enough to believe that anybody cares about the travels of little ol’ me, it’s a grand accumulation of information that the government will have its disposal if and when it chooses to use it on a given citizen. Will they use this information to analyze drivers’ car travel and harass citizens they feel have traveled too much? And I haven’t forgotten the foray into Joe the Plumber’s personal info by three separate state employees after he dared to ask Obama an inconvenient question. Will one’s travels be reviewed if you give a politician too much trouble?
First, to call this a “scheme to slow the economy” is not only disingenuous, it is a bit mean-spirited. This would imply that Obama wants the economy to only slowly recover. This would further imply that Obama wants American families to continue to suffer economically. And it would imply that he is too dumb to understand the key success factor to reelection (“it’s the economy, stupid,” to quote Carville). Clearly that is far too much to assume, but partisanship and ideological rigidness color reality and thinking a bit much at this site… The reality is that this scheme is to more properly cover the cost of non-rail ground transportation, rather than to hurt the economy.
Second, as a means of internalizing externalities, the scheme is sound. The apparent complaint here–in the body of the comment, as opposed to the headline–is that the system would not be voluntary. However, governmental imposition of taxes to internalize externalities are never voluntary and never could be imposed in that manner. The reality is that there are myriad costs associated with auto transportation that are not captured in the cost of gasoline at the pump and on the free highway system, which should be. This is actually Economics 101 and even the great conservatives Milton Friedman and Friedrich von Hayak would not dispute the idea that market externalities (e.g., costs of air pollution or the war on terror) should be included in the price of gasoline if such costs are incurred as part of the provision of that good, nor would they contest the idea that a system that could price traffic on a highway according to fluctuating demand (against fixed supply) would be an acceptable idea even if it meant requiring that people actually had to comply with that pricing system and the means of supporting it. If the roads were privatized, then perhaps the complaints here would go away, but given taht the government already allows for differential pricing and required metering upgrades for government regulated utilities, it seems strange that the key question for government-owned roads should be any different. Perhaps I am missing something. Or perhaps other folks should brush up on the economics of externalities. I think they will not only find that this is well accepted within the context of free market economics, but actually may reduce the cost of roads and our ability to enjoy those assets.
Dang, abc, is that sneer congential? Thank God Obamacare will provide the operation you need!
PS: It’s von Hayek, not Hayak.
I forgot to mention, the fact that the money collected from the taxes is not going toward its logical and initially-ordained purpose is a huge problem, but not an indictment on such systems. Rather, it is a problem with the accountability of governments administering them, which should require much more transparency. The same has happened for cigarette taxes, for example. But rather than focusing on the proper solution, which is to redirect the flow of those taxes to their legitimate purposes, people here are decrying the system itself, which is a mistake. I understand th frustration, since I share it–especially on the roads of So Cal–but one doesn’t dissemble the military just because it has occasionally been used for bad purposes, nor outlaw cars or guns just because they happen to kill tens of thousands of Americans each year in unintended accidents. The politics and governance need reform, but the economics is sound.
Martel, if I had a spell checker and more time to proof read. i’d do it. But spelling errors hardly undermine the argument, so please save those criticisms for a third grader.
abc, it’s hard to take a man seriously who can’t be bothered to wipe his own arse. Sorry, but if you’re going to come in here pontificating to us knucklewalkers, at least show some respect for language and make a decent effort to not wear flip flops at the dinner table.
Martel, please tell me that you have more of a rebuttal than that. And please check the last word of your first sentence in comment 8. Ears ringing yet? I broke my rule. I won’t do it again.
ABC cheerfully volunteers, “The reality is that this scheme is to more properly cover the cost of non-rail ground transportation, rather than to hurt the economy.”
Yup! That’s exactly what they said in Illinois. Charlie Brown, meet Lucy and the football.
Good luck with reforming what government does with your money, ABC. You apparently haven’t learned much yet about human nature. The corruptibility of human-designed systems and the unforeseen consequences thereof ARE the indictments of the system.
You put your finger on it though: the realization was one of the great defining points between Keynes and the Austrial School economists. But then, Keynes dreamed up his ideas in the sterile environs of academic faculty lounges, whereas the Austrian School economists learned their lessons in the post-apocalyptic crucibles of the 1920s-1930s Germany and Austria. And now, entering on cue….comes Z… in three, two, one…
Touche, abc. I am congentially disposed to admitting my airers. I hope you are, too.
Regarding the imposition of tolls and taxes on drivers, what you are seeing is a sortie by the Administration to accomplish two goals:
1. To impose new taxes under the guise of improving transportation without explicitly increasing middle-class income taxes in a recessionary economy. (Much of the monies derived from tolls and mileage fees will be used to set up new bureaucracies, which are the raison d’etre of the welfare state.)
2. To further push the idea that the automobile should eventually be replaced by mass transit.
The claim that the taxes on drivers will be used to improve transportation is disingenuous. The levies will morph into payments for such “improvements” as buses, ferries or rail. This is what happened with the Golden Gate Bridge. Starting in the 70s, ostensibly to relieve bridge congestion, the bridge district plowed toll revenues into a bus and ferry fleet that almost instantly started hemhorrhaging money. This required higher tolls, which discouraged drivers, which led to higher tolls to make up for less revenue to finance the money-losing fleets, which discouraged drivers, which led to higher tolls, etc.
So, mission accomplished—the bridge isn’t as congested as it used to be, but the toll is now $6, the fleets still bleed money, and the bridge district is millions in the red.
(How would the Feds, who are SNAFU masters par excellence, avoid replicating this scenario?)
The unintended consequences of not thinking through electric car policy. Ooops! Where did all the gas tax money go? California did that with cigarettes – dedicate tobacco taxes to healthcare while taxing the smokers into quitting and the revenue stream dried-up. But, it really was for the kids.
Electric cars can be recharged for less than two dollars with only a fraction of a penny for tax and no viable way to levy a larger use tax other than miles tracking to be billed directly from the government to the user over an as yet undetermined time frame. All the while, as electric car and hybrid use goes up, demand for gasoline goes down, and the cost of gasoline continues to increase on those least able to purchase the new fangled machines.
The poor will take up walking forcing the government to tax the shoes. No shoes? They’ll tax your feet. Workers will not get to work, they will become layabouts, getting fat, and die of heart attacks from not being able to afford the penalties imposed for lying-about and having heart attacks resulting from not exercising on a daily basis as the First Lady has ordered.
We’re going to get it in the end no matter what.
Danny, it’s funny how you can infer my emotions based upon text, and funnier how you cannot do this with your like-minded conservatives when they use much more rude language than I. Such selective ESP is remarkable.
Danny continues: ”You apparently haven’t learned much yet about human nature. The corruptibility of human-designed systems and the unforeseen consequences thereof ARE the indictments of the system.”
Right, so you are calling for anti-capitalistic measures since the massive boom-bust cycles of unregulated capitalism (e.g., ’07-09, ’29, etc.) are increasingly inescapable. Or apparently, it was Pelosi that forced Lehman, Bear Stearns, Morgan Stanley and Goldman to lever up to 30 to 1… Like your observations about my emotions and “cheeriness,” I think you have selective observations on which failed systems to defend and which ones not. Please tell me you have more nuance than this…
But Danny goes on: “You put your finger on it though: the realization was one of the great defining point between Keynes and the Austrial School economists. But then, Keynes dreamed up his ideas in the sterile environs of academic faculty lounges, whereas the Austrian School economists learned their lessons in the post-apocalyptic crucibles of the 1920s-1930s Germany and Austria.”
Yes, and Einstein had merely a patent office in back-water Europe to rewrite our view of the universe… I hardly think that Keynes had less insight than von Hayek because of where and when he wrote. He’d seen how government could serve as a counter-cyclical balance and how it alone could generate growth in certain limited economic situations–something that even the Austrian/Chicago School great, Milton Friedman acknowledged when he noted that “we are all Keynesians now.” And indeed, the very methods and variables used to collect data on the economy, used around the world, reflect Keynes’ influence. But go ahead and ignore him because he didn’t witness the particular economic conditions that you deem so important. That makes perfect sense…
Danny has merely proved that he knows less about Keynes then he thinks, apparently, and that the conflicts between his ideas and the Austrian school lie not where he claims. Either way, he’s done little to explain why you throw the baby of externality internalization with the bath water of imperfect government, and explanation that ought to also explain why we ought not throw out (at the very least) unregulated derivatives markets and the repeal of Glass-Stiegel with the imperfect Wall Street CEOs.
Martel, you came back with substance. Kudos. Obviously, I disagree but welcome the elevated discussion. You could be right that the plan will lead to funding for non-transportation related projects, but at least we know what to watch for. But to reject the program before we have those details seems like a bad idea. Dynamically priced roads in LA would be a great idea, and the city missed out on $150M in federal matching funds because they thought that requiring tolls on roads was not a progressive idea. If it allows us to move traffic more intelligently on those roads, you can always supply a subsidy for the needy while not foregoing the cash in the same allocation that Palin apparently approved for a bridge to nowhere before she opposed it. Sorry, I couldn’t resist… Either way we are going to have to have a government, and we’ll need to address better accountability. You cannot simply say they are all corrupt and I want no government. That isn’t a solution. And barring that solution, you need a government administering externalities. Now, you can have the courts do it or the legislature to it, or you can implement technology and opt for a market solution. This plan has that potential, although more details need to come out. Until I see them, I wil keep an open mind.
abc, you have to be as careful as you caution Danny to be about making the sweeping generalization. Nobody here is opposed to government or the need for it. But based on our historical experience, big government at the very least breeds inefficiencies and at the very worst huge intrusions into the economy and private life. Thus the almost instinctive response among most here to yet another “solution” that will most likely produce yet a new host of problems:
You did not address the direct—I have to use my car to commute 25 miles to work—or indirect taxation angle—consumer costs will go up as truckers and other heavy users pass along their toll expenses. Where does all of this money come from? Or are toll roads expected to help us recover from a deep recession by encouraging an uptick in commerce?
When it comes to people who can’t directly pay for toll roads, how do we a.) qualify who’s “needy” and b.) how do we pay for their neediness?
There will be some element of compulsion and intrusion at work. The government, in the name of efficiency, will at some point require onboard devices for billing purposes, allowing it to track the travel habits of the middle class. Assuming the “needy” will get some form of highway food stamp, it will certainly make it convenient for the government to know where all the impoverished drivers are just in case they ever need another program to help them out.
As for “knowing what to watch for” when it comes to redirecting monies that we will be assured will go only toward improving highways, I’m not sure what difference that will make. I recall many people protesting the Golden Gate Bridge board’s headlong rush into empire building and insolvency, and it didn’t make a whit of difference. You are seriously proposing that distant, unelected bureaucrats with a gigantic source of funding are going to give a damn that we knew what to watch for?
ABC cheerfully burbles on and on and…”Yes, and Einstein had merely a patent office in back-water Europe to rewrite our view of the universe… I hardly think that Keynes had less insight than von Hayek because of where and when he wrote.”
Einstein truly was writing about abstractions that could not be tested in real life. Economics, however, is a social (i.e. behavioral) science, subject to empirical testing.
ABC’s temperament appears to get positively bunker-busting explosive at this point in his/her erudition, “Right, so you are calling for anti-capitalistic measures since the massive boom-bust (are you being “uncivil” with such threatening language?) cycles of unregulated capitalism (e.g., ’07-09, ’29, etc.) are increasingly inescapable.”
Schumpeter’s point was that boom-bust cycles were a natural part of the creative destruction in healthy capitalist societies and that, moreover, economies would righten themselves more quickly and less painfully if governmental nabobs would just stop interfering. The tech boom and bust was enormous, but the “ka-boom” changed our world forever and for the better.
After wildly and willfully skewering conservative commentators to the right and right on this blog…uh, make that all conservatives…for squawking to each other in right-wing echo chambers that selectively filter out dissonant data, ABC sallies forth with a profoundly thoughtful reference to Friedman that demonstrates how the Left selective bowdlerizes data in order to make their points…
“He’d (i.e., Keynes) seen how government could serve as a counter-cyclical balance and how it alone could generate growth in certain limited economic situations–something that even the Austrian/Chicago School great, Milton Friedman acknowledged when he noted that “we are all Keynesians now.”
Milton Friedman’s full quote, “In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.” (written in 1966). Friedman further clarified his remark in 1968 as follows: “”We all use the Keynesian language and apparatus; none of us any longer accepts the initial Keynesian conclusions”.
BTW – I don’t recall mentioning that I ever supported Glass-Stiegel…ah well, must be early onset dementia. After all, ABC must have been there.
I’m with you, JJ, we’ve already been paying and continue to pay for the roads. What moron ever claimed that they were “free”?
I think that if we are going to tax the heaviest users of government services that we’ve already paid for, we should tax people on welfare.
“abc, you have to be as careful as you caution Danny to be about making the sweeping generalization.”
I cautioned him about selective enforcement regarding civility, rather than basing it merely on whose opinions and ideologies he agrees with. i think that is an important distinction, although guarding against generalities is a sentiment I share.
“Nobody here is opposed to government or the need for it. But based on our historical experience, big government at the very least breeds inefficiencies and at the very worst huge intrusions into the economy and private life. Thus the almost instinctive response among most here to yet another “solution” that will most likely produce yet a new host of problems.”
A solution to correct for the abuse of free goods and the underpricing of gasoline and road use in light of uncaptured costs is not yet another solution of big government. It is the legitimate role of government, which, if you are earnestly saying that you and others here recognize the need for it, would seem an odd poster child for the abuse that you are citing. There are plenty of bridges to nowhere, juvenile prisons without kids in them, incapable public school teachers collecting wages or pensions. You do not need to take a program that actually has sound basis in economics and hold it up as proof that Obama intentionally seeks to ruin the economy.
“You did not address the direct—I have to use my car to commute 25 miles to work—or indirect taxation angle—consumer costs will go up as truckers and other heavy users pass along their toll expenses. Where does all of this money come from? Or are toll roads expected to help us recover from a deep recession by encouraging an uptick in commerce?”
Do you know what the costs of our war on terror are? What the RAND Corporation estimated the real costs from air pollution are to productivity and GDP just in So Cal? What the estimated costs of revamping our aging infrastructure are? These are figures that run in the hundreds of billions of dollars and up. And none of it is being captured where it should. At the pump and on the road. Now, I didn’t attempt to engage in a debate over what the right levels of taxation are, since that is a whole other and larger discussion, but the idea that you link costs to usage is Econ 101, so I would propose that you offset the imposition of taxes at the pump or on the road with taxes on income, which is how some (although not all) of these costs are currently covered, and only to the extent that we are covering our current spending with adequate taxation levels (which is a debatable point). To argue, as many have, that because a gas tax will hurt consumption and thus the economy, so we shouldn’t do it (as if there is every a happy time to levy a tax), is kind of like arguing that we should not stop running up the debt that our kids and grandkids will pay because it will hurt the economy. While a very weak economy should not be subjected to middle class tax hikes or other potential threats to a recovery, and we might still be at this point, that argument cannot carry water during normal economic times. Those costs cannot be ignored.
“When it comes to people who can’t directly pay for toll roads, how do we a.) qualify who’s “needy” and b.) how do we pay for their neediness? ”
You ask that as if we don’t do it now. We set tax brackets and rates on the basis of what we consider needy or at risk. We do the same in terms of qualifying for welfare, Medicaid and other benefits. Public universities do this when they dole out financial aid. We need not reinvent the wheel.
“There will be some element of compulsion and intrusion at work. The government, in the name of efficiency, will at some point require onboard devices for billing purposes, allowing it to track the travel habits of the middle class. Assuming the “needy” will get some form of highway food stamp, it will certainly make it convenient for the government to know where all the impoverished drivers are just in case they ever need another program to help them out. ”
Just like Apple and Google know where you are. So write privacy laws for that separate problem. But a proper element of compulsion is fine. The government already compells me to drive below a certain speed, carry insurance, have a car that has been approved and legal for our roads. Again, this is not new…a government compelling you to exercise your privilege of driving by following mandatory rules.
“As for “knowing what to watch for” when it comes to redirecting monies that we will be assured will go only
toward improving highways, I’m not sure what difference that will make. I recall many people protesting the Golden Gate Bridge board’s headlong rush into empire building and insolvency, and it didn’t make a whit of difference. You are seriously proposing that distant, unelected bureaucrats with a gigantic source of funding are going to give a damn that we knew what to watch for?”
They are a necessary evil. They also overspend on giant foreign bases and embassies and charge the tax payer $800 for a toilet seat. But conservatives rarely call out the wasted spending on programs that they love. The point is that if we stop making bogus arguments that a program is too big or designed to destroy the recovery and instead make nuanced arguments about how we can make the government more transparent and accountable, we shift from scoring partisan points to actually solving problems, from alienating other people who aren’t completely like-minded to learning from them and they from us and learning to work together. We get the government we deserve. And the crummy government we have now reflects a total breakdown in the voters’ understanding of and demand for intelligent solutions, prudent management and the like. I am not naiive enough to think that this changes overnight, but I also am not so ideologically blind as to think that if we just got all th liberals out of office, we’d have a utopia. It starts with holding people equally accountable not based on party or ideology but on the facts that are reasonably attainable and pretty uncontested. We have a problem with our highways, traffic, fossil fuel externalities, and we know that toll roads and gas taxes will help solve them. This is not really contested in the economic literature. As for honesty in administering the funds, if you accept that government is a necessary evil that one must watch and constrain, then write the laws and elect the leaders that will administer it properly. Watching Bell, California’s recent experience with graft, I think the proper line to draw isn’t between big vs. small government, but between competent vs. incompetent government.
abc…
Do you know what the Cloward-Pivens theory is? and what its intent is?
Either way, he’s done little to explain why you throw the baby of externality internalization with the bath water of imperfect government, and explanation that ought to also explain why we ought not throw out (at the very least) unregulated derivatives markets and the repeal of Glass-Stiegel with the imperfect Wall Street CEOs.- abc
What? And it’s Glass-Steagall.
“A solution to correct for the abuse of free goods and the underpricing of gasoline and road use in light of uncaptured costs is not yet another solution of big government.”
I’m sorry, I must have missed where you made the case that “free goods” (paid for by taxpayers) were being abused and that gasoline is underpriced (by what criteria?). Could you repeat them?
“You do not need to take a program that actually has sound basis in economics and hold it up as proof that Obama intentionally seeks to ruin the economy.”
I didn’t say that. Your argument is with Book. One of your generalizations again.
“Do you know what the costs of our war on terror are? What the RAND Corporation estimated the real costs from air pollution are to productivity and GDP just in So Cal?”
This is evasion. Please prove the argument I asked for above before performing sleight of hand. I have no more idea what the war on terror costs than you have about the cost of “abuse of free goods and the underpricing of gasoline.” As for air pollution in SoCal, the air is vastly cleaner than it was 40 years ago when there half as many cars in the LA Basin. You could ban the auto entirely and Cabrillo’s “Bahia de las Fumas” would still have crappy air quality.
“The point is that if we stop making bogus arguments that a program is too big or designed to destroy the recovery and instead make nuanced arguments about how we can make the government more transparent and accountable, we shift from scoring partisan points to actually solving problems, from alienating other people who aren’t completely like-minded to learning from them and they from us and learning to work together.”
I say this as civilly as possible: You may consider our arguments bogus and un-nuanced, but you are in no position to declare them so and expect us to say, “Geeze, abc is right! Let’s bow to his description of this room’s dynamics!” You will recall that you first entered this room declaring all here to be close-minded denizens of an echo chamber. How does that square with not alienating people who don’t think like you?
“We have a problem with our highways, traffic, fossil fuel externalities, and we know that toll roads and gas taxes will help solve them.”
No, we don’t know that. You believe that, which is fine. The problem is that you have yet to make us believe it.
Danny thinks he is clever by continuing the “observations” of my emotional state, so he sees me smiling when I read his posts…
“ABC cheerfully burbles on and on and…”Yes, and Einstein had merely a patent office in back-water Europe to rewrite our view of the universe… I hardly think that Keynes had less insight than von Hayek because of where and when he wrote.”
Einstein truly was writing about abstractions that could not be tested in real life. Economics, however, is a social (i.e. behavioral) science, subject to empirical testing.”
Einstein’s theories were tested empirically and required knowledge of Newtonian physics and a differentiated view of the world to create the miracle that he created. Similarly, Keynes didn’t need to see the particular outcomes in Austria in order to develop important insights into the role of government during economic freefalls. He’d seen other such crises, even from a privleged perch in academia. Incidentally, he also engaged in the “dirty” profession of stock trading, producing returns in his own portfolio that many believe would put him amongst the ranks of Gross, Pzena and Lynch today. To characterize him a clueless academic beyond the real world of experience doesn’t comport with the facts. But I digress…
“ABC’s temperament appears to get positively bunker-busting explosive at this point in his/her erudition, “Right, so you are calling for anti-capitalistic measures since the massive boom-bust (are you being “uncivil” with such threatening language?) cycles of unregulated capitalism (e.g., ’07-09, ’29, etc.) are increasingly inescapable.”
Schumpeter’s point was that boom-bust cycles were a natural part of the creative destruction in healthy capitalist societies and that, moreover, economies would righten themselves more quickly and less painfully if governmental nabobs would just stop interfering. The tech boom and bust was enormous, but the “ka-boom” changed our world forever and for the better.”
It is true that Schumpeter believed in the “creative distruction” of capitalism, but there is no proof that he believed that the government served no role during the kinds of crises that occurred during his lifetime, including the 1930s. In fact, while Schumpeter disagreed with Keynes on many matters, he agreed with him on the importance of credit, so it seems unlikely that he would have objected to the expansion of money and the injection of government funds onto the balance sheets of key institutions that provided money–recall that in ’08, the CP market had shut down and it was government intervention and only government intervention that got it going again. I think you are reading too much into Schumpeter, who I believe is an underrated economist, largely because he was not a mathematician like many of the great ones in history. More importantly, his critique of government meddling was around preserving the ability of entrepreneurs to innovate rather than around rescuing legitimate and necesary actors in the economy at a point in time when no other actor besides the government could back stop the supply of credit. As for the tech boom, there is no doubt that we obtained great positives from their innovation, which was built upon the basic research of our government, you forgot to note. However, the tech bust is not a bust in the ’29 or ’07 sense of a crisis, since it was largely limited to one particular sector and didn’t impact aggregate demand, employment or prices in the way that the ’07 collapse did. That you cite it as an example is rather curious and hardly establishes that Schumpeter would have argued against TARP to reignite the supply of credit.
“After wildly and willfully skewering conservative commentators to the right and right on this blog…uh, make that all conservatives…for squawking to each other in right-wing echo chambers that selectively filter out dissonant data, ABC sallies forth with a profoundly thoughtful reference to Friedman that demonstrates how the Left selective bowdlerizes data in order to make their points…
Milton Friedman’s full quote, “In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.” (written in 1966). Friedman further clarified his remark in 1968 as follows: “”We all use the Keynesian language and apparatus; none of us any longer accepts the initial Keynesian conclusions”.”
All of that is true. Friedman’s focus was on the crowding out effect of government spending, which causes capital to cost more than it should and makes business interest expenses higher than normally they should be. He also argued that the cause of the Great Depression was the lack of credit and the collapse in the supply of money. He argued that had the Fed done then what Bernanke did in ’08 and on–he read Friedman carefully, afterall–then we would not have seen the big crisis that occurred in the 1930′s. But Friedman also wrote that beyond the crowding out effect, it didn’t matter how the government injected liquidity into the system, just that it did so, and there is no evidence to suggest that he thought Keynes entirely wrong about the case in which a central finds himself “pushing on a string.” He merely believed that this was a special case. The problem is that this was exactly the special case we found ourselves in during ’08-’09. With nominal interest rates at zero, there was no way to lower them further, so injecting cash into the economy through direct government action was the only thing left to do. This didn’t amount to a dangerous crowding out, since those funds were not going to be used by companies that, barring government action were going belly-up anyway because of a lack of credit (remember the frozen CP market?). In short, there is nothing in Friedman’s writings to suggest that he wouldn’t have supported the actions taken by Bernanke–with the notable exception of funds for GM and Chrysler. Art Laffer, an important student of Friedman, has stated as much.
Bottom line: neither Schumpeter nor Friedman would object to employing the government to close a market externality. Their critique of government intervention in the economy (Schumpeter: rise of a corporatist government that hampers competition from the innovative entrepreneurial class; Friedman: concerns over absolute spending levels crowding out productive use of capital by the private sector) do not apply to the case of a market externality, nor to the unrelated case (which Danny brought up) of solving a major crisis like ’29 or ’08 where monetary options are off the table.
BrianE, I thought it was Jonathan Glass Seagull. Si?
BrianE, sorry, but I don’t respond well to the spelling critique as a substitute for reasoned discussion.
Martel,
“”A solution to correct for the abuse of free goods and the underpricing of gasoline and road use in light of uncaptured costs is not yet another solution of big government.”
I’m sorry, I must have missed where you made the case that “free goods” (paid for by taxpayers) were being abused and that gasoline is underpriced (by what criteria?). Could you repeat them?”
So I do not mean free as in unpaid for. Clearly, tax payers have paid for collective goods in our society. The problem with collective goods is that they can be abused. I do not pay each time I enter the 101 here in LA, so it is “free” in the sense that there is no per use cost, which means that I do not signal my willingness or utility in using that road at 8am, as opposed to 12:30pm. Hence, the road can become congested and “abused” in that people who could be off the road at that time are on it anyway. When gas prices are high or, better, when a higher toll is assigned to that road during rush hour, you can eliminate this problem, causing the road to move more efficiently and lost productivity to be avoided. The case of air pollution is a clearer case. Here you have people putting harmful stuff in the air and not paying for the damage that is done, from asthma to lost work days, as RAND has quantified. Finally, you have the issue of overconsumption of gas because the true cost of the substance, including the cost to deal with terrorism to ensure its uninterrupted supply, which the US tax payer is disproportionately paying for, is not factored into the cost of that product. I do not have the numbers on this, but the idea that one should have to account for those costs in each gallon of gas, thereby lowering consumption while raising funds for the purpose of defending that supply are sound economic ideas.
““You do not need to take a program that actually has sound basis in economics and hold it up as proof that Obama intentionally seeks to ruin the economy.”
I didn’t say that. Your argument is with Book. One of your generalizations again.”
Agreed. I was merely clarifying the remark.
““Do you know what the costs of our war on terror are? What the RAND Corporation estimated the real costs from air pollution are to productivity and GDP just in So Cal?”
This is evasion. Please prove the argument I asked for above before performing sleight of hand. I have no more idea what the war on terror costs than you have about the cost of “abuse of free goods and the underpricing of gasoline.” As for air pollution in SoCal, the air is vastly cleaner than it was 40 years ago when there half as many cars in the LA Basin. You could ban the auto entirely and Cabrillo’s “Bahia de las Fumas” would still have crappy air quality. ”
Sorry. I didn’t mean to seem evasive. The war on terror, which includes two wars and loads of other costs measured by increased budgets for military and intelligence exceed $2Tn. Just air pollution in So Cal was estimated to run into the tens of billions of dollars per year, according to the RAND Corp, so you’ll have to multiply that times maybe 10x for the entire US. Depending on how one estimates the costs of global warming, you’d probably have to add those, as well as the cost of mercury poisoning, which has impacted fishing. I am not trying to present exact numbers, but merely communicate the orders of magnitude here, which are not captured in fossil fuel prices, nor in electricity prices (remember that coal is dirtier than gasoline, and it will power all those electric cars like the Volt). Yes, the air quality was worse 40 years ago, when you couldn’t see the San Gabriel Mountains from the 10 freeway in Rosemead, but that isn’t the point. The point is that costs need to be included in prices, lest people overconsume.
““The point is that if we stop making bogus arguments that a program is too big or designed to destroy the recovery and instead make nuanced arguments about how we can make the government more transparent and accountable, we shift from scoring partisan points to actually solving problems, from alienating other people who aren’t completely like-minded to learning from them and they from us and learning to work together.”
I say this as civilly as possible: You may consider our arguments bogus and un-nuanced, but you are in no position to declare them so and expect us to say, “Geeze, abc is right! Let’s bow to his description of this room’s dynamics!” You will recall that you first entered this room declaring all here to be close-minded denizens of an echo chamber. How does that square with not alienating people who don’t think like you?”
Let’s be honest for one second. If you polled ten random people what they thought of the claim that a program designed to cut down on overconsumption of roads that do not carry per-use fees was really a deliberate attempt to slow the US economy or impose secretly a welfare state, how many would find those claims nuanced or sincere? I do not attempt to offend, but I also don’t pretend that highly partisan and charged claims are anything other than what they appear to be. I would also note that my comments were not directed generally at all commentary here, including your more thoughtful responses once you got passed the catty comments over spelling, but at the more oafish comments that have been directed my way. If it seemed that I painted with too broad a brush,then I apologize. But don’t ask me to sugar coat commentary on posts that are clearly unnuanced, just because you happen to share an ideology with the author of such posts. That shouldn’t stand. And if you think I am wrong in my assessment that a particular post is unnuanced, then present the counter factual evidence. it’s not like I have become offended when Danny has come back with a rebuttal…
“”We have a problem with our highways, traffic, fossil fuel externalities, and we know that toll roads and gas taxes will help solve them.”No, we don’t know that. You believe that, which is fine. The problem is that you have yet to make us believe it.”
I’ve presented data from the RAND Corp, which agrees wih me. I’ve presented the economic theory, which you’ll find in any introductory college text book. If you think that ignoring air pollution costs in the price of gasoline is okay, and if you think that government subsidies for US petroleum E&P activity does not distort the market, then I cannot help you. But you would be in a fairly small minority. I’ll concede that I don’t have all the data on all the costs, but I can assure you that it would be a stupendous coincidence if the national average tax on gas actually coincided with the cost of the externalities associated with the use of the product. Or maybe you could share the data that you have, so I can learn where I am wrong…
Suek, thanks for the question. I do. But it doesn’t apply here. They are speaking of welfare. I am speaking of market externalities. Big difference.
“The case of air pollution is a clearer case. Here you have people putting harmful stuff in the air and not paying for the damage that is done, from asthma to lost work days, as RAND has quantified. Finally, you have the issue of overconsumption of gas because the true cost of the substance, including the cost to deal with terrorism to ensure its uninterrupted supply, which the US tax payer is disproportionately paying for, is not factored into the cost of that product.”
Several questions related to the above and other of your responses:
Does RAND ascribe the bulk of LA Basin air pollution to the automobile? Do you recall that percentage?
Who determines “overconsumption?” Who has that authority, and what are the criteria?
We do not depend on the Middle East for our oil. (Yes, yes, I know American military power protects the ME oil supplies of the spineless Europeans and Japanese.) Canada and other closer countries are our main suppliers. Is the fact we’re sitting on (Rockies) or near (Alberta) a coupla trillion barrels of shale and tar-sand oil relevant to the discussion?
“The true cost of gasoline” strikes me as disingenuous. Here you propose a socialist solution, which is to tax the relatively affluent to pay for an ever-growing list of “hidden costs” that bureaucrats get to name (but, of course, the “needy” will be excused). Only you won’t call it a tax, and while you’re not calling it by its real name, you claim that it will somehow increase our wealth.
You use the term “global warming” in one of your responses. I assume you know that in wake of the East Anglia scandal that the correct term is now “climate change?”
You say that some people on 101 at 8 a.m. don’t really belong there. How do you know that?
“If you polled ten random people what they thought of the claim that a program designed to cut down on overconsumption of roads that do not carry per-use fees was really a deliberate attempt to slow the US economy or impose secretly a welfare state, how many would find those claims nuanced or sincere?”
This is not an argument. It’s a surmise that you are hoping we will accept as a fact or consider to be a persuasive response.
Finally, please, could you go just two posts without using the words “nuanced” or “externalities?” If you do, I promise to quit using “disingenuous” and “Jane, you ignorant slut.”
Alas, ABC provides us with such a cornucopia of half-baked delicacies, that one is forced by the unshakable laws of time and space to pick an choose just a few juicy morsels at a time whereby to critique z chef. Let’s begin….
“The war on terror, which includes two wars and loads of other costs measured by increased budgets for military and intelligence exceed $2Tn. Just air pollution in So Cal was estimated to run into the tens of billions of dollars per year, according to the RAND Corp, so you’ll have to multiply that times maybe 10x for the entire US. Depending on how one estimates the costs of global warming, you’d probably have to add those, as well as the cost of mercury poisoning, which has impacted fishing.”
Let’s see, War on Terror (even if true…as I don’t have the time to verify the number(s) at this time) at $2t divided by 10 years, so…about $200b per year. That’s certainly manageable. Especially when it relates directly to our survival.
Straight-line projections of air pollution in the Southern Cal basin to the rest of the U.S…nah, bad science. Air’s pretty clean by comparison here in Illinois. There’s statistics, there’s damn statistics…but that kind of math would make it an outright lie.
Costs of global warming? We might as well be discussing the costs of unicorns, but we’ve been well over this territory on this blog. Frankly, here in flyover country as well as in California’s fruit belt, we’ve been more concerned about global cooling. Global warming? We can only hope.
Let’s see mercury poisoning in fishing…a perfect case of conflating non-related issues to fit the enviro-lunatic meme. High mercury contents in top-of-food-chain fish occur from natural mercury sources in ocean and lake waters that first collect in algae and then concentrate in fish as they work their way up the food chain. People in the food and fishery industries have known about this for decades, but such a meme doesn’t generate the huffery and puffery needed to get good-hearted, hard-working people to open their wallets to the parasites that proliferate the non-regulated enviro-scare industry.
ABC’s typical Euro-Lefty response to goods and services: “if they are in short supply, tax and restrict their use.” A conservative would say, “make more of it.”
Guess which world view creates new wealth and which one destroys it.
“Several questions related to the above and other of your responses: Does RAND ascribe the bulk of LA Basin air pollution to the automobile? Do you recall that percentage?”
The study did not evaluate the sources, but those can be quantified. I am not aware of who has done it.
“Who determines “overconsumption?” Who has that authority, and what are the criteria?”
You are asking a legal question. I was referring to an economic outcome occuring when a price is set below its total marginal cost. I believe that conservtives have discovered and accepted this concept when it applies to things like minimum wage or rent control. Same idea.
“We do not depend on the Middle East for our oil. (Yes, yes, I know American military power protects the ME oil supplies of the spineless Europeans and Japanese.) Canada and other closer countries are our main suppliers. Is the fact we’re sitting on (Rockies) or near (Alberta) a coupla trillion barrels of shale and tar-sand oil relevant to the discussion?”
Oil is a global commodity, so if Iran blocks the Strait of Hormuz, prices go up in Nebraska and Nanjing. Alberta/Canada’s vast reserves are economic if private companies believe that long-term oil prices will stay above $60-80 for the sustainable future.
“”The true cost of gasoline” strikes me as disingenuous. Here you propose a socialist solution, which is to tax the relatively affluent to pay for an ever-growing list of “hidden costs” that bureaucrats get to name (but, of course, the “needy” will be excused). Only you won’t call it a tax, and while you’re not calling it by its real name, you claim that it will somehow increase our wealth. ”
What is socialist about a gas tax? It hits the lower class the hardest since it is a regressive tax.
“You use the term “global warming” in one of your responses. I assume you know that in wake of the East Anglia scandal that the correct term is now “climate change?””
Please tell me what was learned during the fake controversy concerning East Anglia emails that undermined the scientific research? There were six studies done looking into the integrity of the data, and all concluded that there was no undermining of the research, just unfortunate examples of rude scientists unwilling to share data with propagandists. Fox covered the controversy loudly, but never mentioned any of those six studies’ or their vindicating (to the scientists) conclusions. Funny that.
“You say that some people on 101 at 8 a.m. don’t really belong there. How do you know that?”
When did I say that? I said that some people at 8am have a higher willingness to be there than others, and at higher prices (either driven by spiking Chinese demand for oil, or higher gas taxes) those with relatively lower willingness to be there would get off the road. i also implied that dynamic pricing of the road at that time is better than a crude instrument like a gas tax.
And the poll of 10 Americans is a supposition. I’ll grant you that. But while folks on this site are continuing to carp at Obama, his poll numbers jumped 10 points. So do not think that the majority opinion here is the majority opinion in America. But enough about polls. Sound policy is rarely set via popularity contests. Afterall, we continue to overspend and undertax because we make popular the politicians with the most bogus economic arguments…on both the left and the right.
Either way, he’s done little to explain why you throw the baby of externality internalization with the bath water of imperfect government, and explanation that ought to also explain why we ought not throw out (at the very least) unregulated derivatives markets and the repeal of Glass-Stiegel with the imperfect Wall Street CEOs.- abc
BrianE, sorry, but I don’t respond well to the spelling critique as a substitute for reasoned discussion.-abc
Just read the sentence. What?
Anyway, to your point. Given the fact that the government does such a poor job with regulating markets, you want to increase our reliance on the government? The government doesn’t fairly administer the Highway Trust Fund– awarding winners and loser among the states, externalities aside. And you’ll need to demonstrate to me that the gas tax (both federal and state) isn’t a proxy for all those externalities you allude to but have failed to identify (unless pollution and the war on terror are the only two you wish to include). Over consumption is a value judgement.
But that’s what government does. It rewards winners and losers. The problem is that it picks the winners and losers, and sometimes quite arbitrarily and often without any consideration of what’s best for anyone but the government.
The repeal of Glass-Steagall, set in motion by the Clinton administration (just so we understand it’s not a partisan issue) may not have been the underlying problem, but the Consolidated Supervised Entities Program, which was a reaction to the Basel II accord.
As to unregulated derivitives trading, you wouldn’t get an argument from me. But then I have never been a fan of AIG.
>>They are speaking of welfare. I am speaking of market externalities. Big difference.>>
Not a big difference. It doesn’t matter if you overwhelm the system with welfare or purchasing big ticket items – overwhelmed is overwhelmed.
Even the requirements on the military. We have an all volunteer military – not a draft. The country would not stand for a draft at this time, and the military doesn’t want one. If you overload the military so that they fail in the assigned tasks, that is a major catastrophe as well. If you want the system to fail in order to do an “AHA”, even good things can become bad.
If you earn 100K per year, and buy a 1000K house with a 90% mortgage, the house may be a super bargain, but it will put you in the poor house – which is also very large, but not nearly as desirable…
Having thought about the concept of making it “fair” to use public highways by levying fees based on use, it seems to me this could be applied to everything the government touches.
Just imagine the possibilities of healthcare for example.
BrianE, the problem is that you assume that the imperfections of government intervention are always worse than the market, but that is simply not always true. You take it on faith that it is, despite the counter evidence. The ’07-’09 crisis was NOT caused by too much government, but too little government. China is making tremendously good decisions on its economic development, in contrast to India and other developing countries, with much more government intervention.
Suek, you are assuming a motive that you cannot prove, so you should be careful with that. Also, failing to pay for costs that the market fails to account for (i.e., an externality) is hardly the same thing as intentionally overloading a system with welfare claims that need not be paid. One is a legitimate cost that must be paid, while the other is a voluntary transfer that we don’t have to do. The consequence is that there is a natural limit to how much you can tax people for those externalized costs, whereas there is no theoretical limit to the welfare piled on to sink the system. So there is a HUGE difference, and I hope you can see that.
In healthcare, the externalities of obesity, a sedentary lifestyle, and poor diet certainly factor into the national cost of health care.
It’s only right to re-coop these externalities and achieve national goals at the same time.
The ’07-’09 crisis was NOT caused by too much government, but too little government.- abc
I would suggest it was not from too much or too little government but from too much bad government. By that I mean public policy driving markets into excess.
BrianE, I agree with the health care point, which creates a great tension in me. On the one hand, I do not think we should let people die outside the ER doors of a hospital, since we choose to acknowledge that people have more value than cattle. Yet, I have problems with giving people who can be dependent on that health care subsidy unlimited rights to become as fat as they want. Our democracy will have to determine what the right balance should be, with no satisfying solution. As for the crisis, sometimes bad government is the one that decides on too little regulation, as Greenspan, Rubin, Summers, Bernanke, Paulson and Geitner, among others, did. Just one example: there was no way that Christopher Cox could meaningfully regulate derivatives when his staff at the SEC had been cut so deeply.
There is no such thing as always assuming when we are given concrete policies and disastrous actions like Obama Care. That isn’t all the time, that’s this time. Pay attention to the difference between abstract fantasy speculations and reality here.
CDS were a problem. Over-leveraging was a problem. Inept or corrupted ratings agencies using bad computer modeling were a problem.
These things can be fixed. Did the last 1500 page financial regulation bill focus on these issues or meander (or pander) into consumer issues?
But when a trainload of debt is the driving force behind an economy, train wrecks are inevitable.
BrianE, I agree with the health care point, which creates a great tension in me. On the one hand, I do not think we should let people die outside the ER doors of a hospital, since we choose to acknowledge that people have more value than cattle. Yet, I have problems with giving people who can be dependent on that health care subsidy unlimited rights to become as fat as they want. Our democracy will have to determine what the right balance should be, with no satisfying solution.
A lot of hyperbole and misdirection here:
We don’t let people die outside ER doors. Haven’t, don’t, won’t. This is a MacGuffin. (By the way, I can’t recall a single cow or steer that has died outside an ER door waiting for treatment.)
“Unlimited rights” to become fat is an interesting locution. We’re back to the dispensation of rights by government, one of the most repellant notions of statism. Again, abc, who are these sage ones who will compile and administer our “rights?” After watching Pelosi ram thorugh Obamacare, you can understand my lack of confidence in my or anybody’s ability to guard the guardians.
“Our democracy will have to deternine the right balance” is best exemplified by the force-through of Obamacare, so the “no satisfying solution” is statese for “You’ll take it, chumps, and you’ll like it.” Statists love to pretend to fret about making sure we’re all involved in deliberations before imposing their solutions on us.
BrianE, Elizabeth Warren taught my bankruptcy class, so maybe I am biased, but her focus on preventing another key cause of the crisis, the inability of many borrowers to evaluate the risks of the loans that they got into, is hardly an unworthy endeavor. Moreover, my understanding is that regulation of derivatives is also part of the legislation. As for the overleveraging, you DO understand that the Republicans and many Dems are fighting the ability to set limits on capital structure, which is why it isn’t in the bill. But perhaps you do not know enough finance to understand why…
Senior banking executives get paid with stock options and cash bonuses that are tied to multiple metrics, the most important of which is return on equity (ROE), which can be significantly goosed by adding debt. When you limit the amount of leveraging, you are directly limiting their compensation opportunity. So with 5 lobbyists for each member of Congress, what do you think these guys are doing right now? And this is not a problem with government, but with capitalism corrupting government–a meme that is lost on many conservatives.
abc, when you get a chance, ask Bookworm her thoughts about Warren. I guarantee an interesting discussion.
Also, again, please, can you stop with the sneering? “As for the overleveraging, you DO understand that the Republicans and many Dems are fighting the ability to set limits on capital structure, which is why it isn’t in the bill. But perhaps you do not know enough finance to understand why…”
Look, I work in finance, so I expect to know more in this area than a layperson. Why is that sneering? I know a lot less about neuroscience, so I just asked someone on this blog to supply more data if they have it. I think you read more mal intent into what I write, knowing that I am less conservative than one, than what is really there. This is a common problem on blogs of one political stripe or another. People set a short fuse for the comments of the other side and then quickly get bent out of shape on alleged breaches of civility, when they should keep their eye on the ball (i.e., facts and logic and substance). Just my opinion. All I can do is repeat that there is no intent to offend or condescend.
“preventing another key cause of the crisis, the inability of many borrowers to evaluate the risks of the loans that they got into, is hardly an unworthy endeavor.” - abc
Hadn’t we already passed a law making the fine print larger?
What you claim is an “inability to evaluate”, I would characterize as “foolish behavior”. It’s not that they couldn’t evaluate the risk– it that they didn’t take the time to learn the risk. Is there any personal responsibility in understanding an investment you’re going to make– whether it’s a stock or a house?
I, for one, have preached that your home is not an investment, but a place to keep you warm and dry, even if it may have financial benefits.
Financing a home with nothing down, or worse, interest only, is no different than buying on margin. There are tremendous risks in both.
Senior banking executives get paid with stock options and cash bonuses that are tied to multiple metrics, the most important of which is return on equity (ROE), which can be significantly goosed by adding debt.- abc
Is it your point that this is the reason for the increased leverage in 2004? Personal financial gain? No other reason?
abc: Charles remarks about an interesting conversation, because I had the dubious pleasure of having Warren as my Banking Law professor. She was an extremely nice lady — and utterly incoherent. She ranks in my memory as one of the least capable teachers I’ve ever had. Aside from disagreeing completely with her politics, I simply do not believe that anyone as incapable of clear thought as she was back then should be in charge of anything at all, let alone a large segment of our financial system.
ABC warbles lyrically and with gay abandon about the fabulous wonders of Shangri-La…er, “China”, cheep-cheeping and chirping that, ”China is making tremendously good decisions on its economic development, in contrast to India and other developing countries, with much more government intervention.”
Could it be China high-speed rail system that has ABC in such a swoon?
http://www.washingtonpost.com/opinions/chinas-train-wreck/2011/04/21/AFqjRWRE_story.html
Or, maybe it’s their government’s shovel-ready projects:
http://www.timesonline.co.uk/tol/news/world/article2537279.ece
http://www.scientificamerican.com/article.cfm?id=chinas-three-gorges-dam-disaster
Of course, we can’t overlook China’s bubbling, centrally planned real estate sector:
http://boingboing.net/2011/04/18/chinas-housing-bubbl.html
http://www.ibtimes.com/articles/135633/20110418/china-housing-bubble-collapse-crash-beijing-government.htm
Wait! It must be China’s enlightened environmental policies. That’s it! After all, this is where they make the solar panels and the windmills we use in good ol’ USA!
http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/
Fortunately, also, China’s enlightened and centralized government can provide necessary safeguards to its citizens like no other country can:
http://www.reuters.com/article/2009/03/02/us-china-food-idUSTRE5210EP20090302
It’s quite true what they say, that not nearly enough Americans get out of their comfortable U.S. bubbles and experience the real world out there!
One thing I do appreciate about the Z cohort is that, although I/we may not agree with them on much, they do their homework before sharing their opinions.
Well, she is the highest paid professor at HLS and did a fine job teaching my bankruptcy course. Furthermore, there are many academics that I have encountered that are not great as teachers, but who are absolutely brilliant as researchers, consultants, etc. So I do not follow the logic taking you from a bad banking law course to bad policy on credit card and mortgage lender disclosures, and I think that the administration at HLS must disagree with your assessment, given her tenure and high pay over there.
Danny, you forgot to mention that China has put up higher GDP growth rates over a 30 year period than any economy in human history, including the US, Germany, Japan, Taiwan and Korea. India was languishing until China, a key strategic threat with whom it shares a border, zoomed past. If you think that American style democracy matters so much, then you’ll have to explain the emergence of Korean, Taiwan and Singapore. And if you think that state directed capitalism doesn’t sometimes succeed–although I would argue only during a catch-up phase–then you are letting your ideology trump your fair treatment of economic facts. This is not your father’s China. The Great Leap Forward was a disaster in many respects, but the last 30 years represent a much more positive example of government involvement. It is far more decentralized, market oriented and risk aware. But it still is much more government-centric than what the US ever undertook, and the results have been faster growth and greater wealth creation. You can criticize many aspects of it, but to deny its positives makes it seem as though you are treating the subject with more abandon than I am. Tell me, have you ever lived there? Do you speak the language? What sources, besides, non-specialists writing in generalist publications, do you rely upon for this enlightened view of yours? I’d love to obtain a bibliography from you at some point…
ABC, it really is a question of perspective. China’s “real” GDP statistics have always been in question. Plus, you have to remember the very low base from which they grew. I work closely with an individual in Manchuria, which is one of China’s most productive and economically developed areas. He does not consider China a model for development.
I’ve seen studies that suggest that only about 10% of China’s population has really benefitted from this economic development, which has largely been focused on the coastal areas. The other 90% in the hinterlands are very unhappy.
Also, we weren’t talking about democracy. We were talking about centralized, state planning in economic development. Those are two different things.
BTW…I gave you a lot of links. That’s a good place to start.
bad policy on credit card and mortgage lender disclosures- abc
Are you suggesting that was the cause of the financial meltdown, bad credit card disclosures? Really? We were talking about the government regulations in response to the financial crisis.
And for that we needed a 1,500 page bill?
That’s the problem with statists, it’s always a head-fake away from more control of everything.
Having said that, I’d have no problem with limiting credit card interest to 1% per month. That would do more to help people that can’t afford debt than one more disclosure– even if that disclosure were to be in 18 pt type and said something like- “Warning- debt is hazardous to your health and you will forever be beholden to these scum that fully intend to keep you in their clutches, bleeding you just short of death.”
abc: And if you think that state directed capitalism doesn’t sometimes succeed–although I would argue only during a catch-up phase–
That’s right. The process of industrialization is fueled by the movement of people from low-GDP agricultural work to urban factories. Once this process is more-or-less completed, then China’s growth rate will drop to more normal levels of growth. Meanwhile, they are experiencing the very same growing pains other industrializing nations have experienced, pollution, crowding, dislocation, and the very real threat of boom-and-bust.
BrianE,
“Are you suggesting that was the cause of the financial meltdown, bad credit card disclosures? Really? We were talking about the government regulations in response to the financial crisis.”
No, but adding them to a financial reform bill that tackles a similar problem with mortgage lending actually makes sense.
“And for that we needed a 1,500 page bill?”
Still smaller than the Education Reform bill passed under a GOP Congress and signed by Bush. Were the GOP leaders “statists” too? My tax professor in law school used to say that the discussions about complexity in the tax code ignore something important–the massive complexity of the US economy. But maybe you would like your Boeing 747 to have fewer moving parts as well…
“That’s the problem with statists, it’s always a head-fake away from more control of everything. Having said that, I’d have no problem with limiting credit card interest to 1% per month. That would do more to help people that can’t afford debt than one more disclosure– even if that disclosure were to be in 18 pt type and said something like- “Warning- debt is hazardous to your health and you will forever be beholden to these scum that fully intend to keep you in their clutches, bleeding you just short of death.””
Wow. All Elizabeth Warren wants to do is force disclosure so that market participants can accurately price debt and financial services on an apples to apples basis. Recognizing that information symmetry is a requirement for free markets, she seems rather pro-market in this regard. Meanwhile, you claim to be more free-market, less “statist” by comparison, but then say you would support price caps on lending. Now I’m really confused with what you are arguing…
“Tell me, have you ever lived there? Do you speak the language? What sources, besides, non-specialists writing in generalist publications, do you rely upon for this enlightened view of yours? I’d love to obtain a bibliography from you at some point…”
Sauce for the gander time, abc. Have you, do you?
Danny,
“ABC, it really is a question of perspective. China’s “real” GDP statistics have always been in question.”
Interesting. Burton Malkiel is one of the most senior economics profs at Princeton, and he has adjusted the GDP numbers and still concludes China grew faster than any economy in human history. Should I trust your gut more than his analysis??
“Plus, you have to remember the very low base from which they grew.”
Any period in human history. Should we take the first 30 years of America, when its economic base was far more backward than China?
“I work closely with an individual in Manchuria, which is one of China’s most productive and economically developed areas. He does not consider China a model for development. I’ve seen studies that suggest that only about 10% of China’s population has really benefitted from this economic development, which has largely been focused on the coastal areas. The other 90% in the hinterlands are very unhappy.”
Manchuria, known officially as Inner Mongolia, is not a coast region, yet its per capital GDP is 20% higher than the average for China. So is it in that 90% of unhappy people? Qiongqing is the fastest growing city in China and is also in the “hinterlands,” but polling there shows people are actually happier with their lives and government than in the coast cities of Shenzhen and Shanghai. Please explain. Also, Manchurians live in a semi-autonomous zone and are not always supportive of China because they prefer to be independent, so you should be careful that your friend is not letting non-economic factors color his view of Chinese development. In any case, unless you have something beyond the well-known fact that development is further along in some parts of China than others–which was also true of the US 150 years ago–it is tough to comment intelligently on your most recent post.
“Also, we weren’t talking about democracy. We were talking about centralized, state planning in economic development. Those are two different things.”
I know, but the question is whether more state intervention cannot sometimes produce better economic results than more laissez-faire approaches, which are more common (and almost exclusively found) in democracies.
“BTW…I gave you a lot of links. That’s a good place to start.”
I read on China far more broadly than the sources you provided. I was hoping that you could broaden the list further than those initial links you supplied, since they are cherry-picked to only support a negative view of China’s development. They are not reflective of a balanced view, in my opinion. But perhaps reading a few non-specialists and a single friend in an autonomous zone is enough…
Yes. And yes.
abc, well, I grew up in the East Los Angeles barrio. Therefore, when we discuss any issues related to that location, you must defer to me. Because my personal experience trumps any thoughts, however well considered, that you may have about the place.
Danny, you are not permitted to discuss China’s real estate bubble, looming high-speed train debacle, demographic unsustainability, total lack of civil rights (something the Americans managed to retain while they were growing their economy), unrigged polls* or the fact that “semi-autonomous” Manchuria would have its semi-autonomous ass immediately handed to it were it ever to take semi-autonomy seriously. They are off the table because you don’t read the journals I read or know all the people in high places that I know.
* Say I run a totalitarian government that tries to exert total control over the media and public opinion. Say I also preside over a rapidly expanding economy that has mainly benefited my coastal areas. One happy exception is Chongqing, an inland city that has long been a manufacturing and transportation hub. Now, say I want to encourage restless inlanders to stay put because my infrastructure really can’t stand many more migrants to the coastal cities. Why, I’ll arrange a poll, where people in Chongqing can report their happiness (never mind the people living 100 miles and beyond further inland) and I’ll “balance” it with reports from the coastal burgs that things aren’t so hot. Phew! That’ll help keep them down on the farm.
touche, abc. Did I really press the send button on that?
I’ve revealed my utter disdain for banks. I think they are parasites, but even parasites serve a purpose– and there are folks with a legitimate need for high priced money.
Limit the price of money and you limit who can buy it.
But I’m just being compassionate for the little folks, looking out for them. You see, there is no end at what kinds of regulations our compassion may produce and all of it with consequences.
What were we debating anyway.
As to your anecdote about China, I had a Chinese engineer sitting next to me for a few weeks a month or so ago. Our company opened a manufacturing plant in Changzhou and he was here learning some processes. Nice kid, married with a daughter. He commutes to work on an electric bicycle and hopes within a couple of years to be able to afford a car– not an imported car, but a small Chinese made car.
Yes they’ve made huge leaps, but I suspect they still have a rather small middle class (though a big number given the population).
But you’re making a huge leap to conclude it has because of the state capitalist model. Roll back our regulations we’ve placed on industry 100 years and then compare. I find it odd when the left holds up China as any sort of model for anything.
So, ABC…are you Chinese or of Chinese extraction?
Interesting. Burton Malkiel is one of the most senior economics profs at Princeton, and he has adjusted the GDP numbers and still concludes China grew faster than any economy in human history. Should I trust your gut more than his analysis??
Hmm. Nice appeal to credentialed authority. Still, I suppose that it is an improvement over your previous appeal to the authority of Michael Moore in a separate thread.
Reminds me about all those highly credentialed Ivy League authorities that pontificated on the growing economic strength of the Soviet Union, just before its collapse. Or, for that matter, fellow Princetonian Paul Krugman pontificating on the joys of the British healthcare system or Paul Ryan’s roadmap.
It also reminds me, as Z and others have found, why we at this blog don’t take credentialed authorities and name dropping at face value. We like to think for ourselves and debate points on their own merits.
That being said, keep it up! You’re doing just fine.
BrianE, I understand the sentiment. Wall Street will steal anything that isn’t bolted down, and some regulations to protect the vulnerable and uninitiated is definitely called for, in my opinion. But price caps are too much. Better to force disclosure. I lean left, but I don’t hold up China for ideological reasons. I hold it up because what they’ve done is astounding, and people ought to appreciate it since it is clearly measurable. I think our system is still better, but I think we can learn much from China. Separately, I don’t think regulations are the big problem. Lack of demand and mean-reverting productivity are bigger problems, not to mention an over-leveraged consumer and unfair foreign trade practices. I could go on, but to reduce the problem to overregulation is really silly. And do we really want melamine (or worse) in our water and milk in order to keep Intel fabs in the US? Finally, China isn’t the only model I hold up. Look at Germany or Denmark. They have much to teach us as well.
Danny, so many suppositions about me personally, and so many errors.
I understand the fallacy of appeal to authority, but that is only a fallacy when the authority really isn’t one. In the case of Malkiel, the research he conducted on China was economic in nature, so his expertise is not apparent but real. Also, he worked with two credentialled economists from China, so again, they are worth listening to. What worries me, more than almost anything about America, is the idea that because we live in a democracy all people are equally qualified to comment on all things. Even in America, experts matter. And their superior knowledge and experience ought to be respected rather than attacked with a rent-an-expert with a view that I like better. I understand that the ability for money to corrupt the views of experts, people have a healthy skepticism of all of them; however, if we really go down the road of saying that all opinions are equally valid, then there are no experts, and then the idiot’s opinion is worth as much as the learned expert. Unless you plan to have your plumber undertake your heart surgery, I seriously doubt that you like this state of affairs. And while I don’t recall ever placing stock in Michael Moore for much of anything, I do think that Krugman is a better authority than Paul Ryan on the economy and budgetary matters. And while big money has corrupted much of the economics profession, even the corrupted economist has to stay within certain bounds whereas a politician can act and talk like a total quack and it’s not going to hurt him. But enough about this, why don’t you explain which part of Krugman’s attack on Ryan’s plan is incorrect, in light of facts and economic history?
Danny Lemieux: It also reminds me, as Z and others have found, why we at this blog don’t take credentialed authorities and name dropping at face value.
You don’t have to, but just waving your hands doesn’t constitutes a valid argument. If someone points to a valid study concerning an economic measurement, saying “Is not!” doesn’t undermine the cite.
There is no doubt that some Chinese assets are overvalued. But China has accumulated $3 trillion in cash reserves, and can plunk down $0.5 trillion on a financial stimulus. That’s real money. You simply can’t pretend China doesn’t have a powerful economy. China has a huge and rapidly expanding middle class, as well.
“Even in America, experts matter. And their superior knowledge and experience ought to be respected rather than attacked with a rent-an-expert with a view that I like better.”
Danny, I’ll translate:
My experts: Have superior knowledge and experience.
Your experts: Are rented.
Charles, let’s be fair. Who is your expert? If I put Uwe Reinhardt or Burton Malkiel or Paul Krugman in one corner, who are you putting in the other one? Please don’t say Paul Ryan. I might fall out of my chair laughing. But beyond the experts, is anyone going to defend a plan that assumes that we can take discretionary spending to 3% of GDP–the last time we did this was 1909–and still have the government services that people in the US say that they want? Or we can just ignore the facts and have an argument about whether your experts–that you still haven’t named–actually know what they are talking about…
Look at Germany or Denmark. They have much to teach us as well.- abc
Germany is certainly an economic machine. It appears to me being a net exporter is one of the keys. For years I’ve wondered how we can send the wealth out of this country without consequences.
ABC doesn’t like Ryan’s Plan. Better to do like Krugman suggests, keep building up trillion dollar-plus deficits because it has worked out so well thus far.
Re. Ryan’s Plan, I hate to sound like Z, but why don’t you look at the CBO’s evaluation thereof.
abc, they’re your experts, eh? Pride of ownership is a big thing with you, no? You own a highly placed friend in the OMB and in the military, you own the acquaintance of a Chinese economist or two, you own fluency in Mandarin, and I’ll bet you own a credential from an Ivy or an Ivy clone.
My aside to Danny was just to remind him that your m.o. is to sweetly call for all of us to reason together, while chiding us that only you are qualified to decide which expert opinion counts: “. . .rather than attacked with a rent-an-expert with a view that [you] like better.”
It’s Danny’s pissing contest to get into with you. My observation was about your recurring contempt toward us, not your particular playing marbles.
For years I’ve wondered how we can send the wealth out of this country without consequences.
Stop importing Chinese dreck for starters?
BrianE, you reminded me of the huge neon banner across a bridge in NJ – TRENTON MAKES AND THE WORLD TAKES [circa 1935]. Once upon a time … we made steel and televisions and shoes and cars that we wanted to drive. Hell, we even made light bulbs.
Short Sadie story:
My grandmother came to America in 1929 (yeah, I know, she picked a great year for travel, but that’s not a short story). She had a cousin in Philadelphia, who owned a knitting mill that made sweaters. My Nana, checked them for ‘seconds’ (not a perfect). Fast forward to 1980 and my grandmother and I went shopping. I guess it had been awhile since she went shopping and she turned to me and said, “Everything is made in China. I want to buy American.” I suggested to her, she would be hard put to find a blouse made in the USA and she had three choices: buy Made in China, wear the old, or go naked. My poor Nana, was really upset, but decided against China and being naked.
We did do a lot of our own manufacturing, but truth be told, much of it was crap. In the 50s, most of us were rich enough to buy a Ford or Chevy, drive it for two years until it began falling apart, then trade it in for a new jalopy. That was the postwar deal: We manufactured cheap (and cheaply made) goods that most of us could afford.
Most foreign goods had huge domestic markets to satisfy. The ones that did reach us, such as Japan’s, were jokes at the time. But when their quality became clearly superior to ours, hitched to low prices, we were in trouble. Just when it became obvious that quality should have been something we focused on, it became cheaper to export manufacturing. In the case of Detroit, it was easier to pretend that the UAW’s parasitism was a better thing to tolerate than having to discard the old ways.
This isn’t so say that don’t make incredibly good things when we choose to. I think Boeing aircraft are clearly superior to Air Buses, and our computer technology is unmatched. Ditto with our medical technology.
Don’t say anything bad about the Airbus, Charles. I am due to fly on one in the next few months and flying on something ridiculously huge and relatively untried already has me in a tizzy. I am, as some of you know, a terrible flyer (I hold the planes up with the force of my white knuckles) and am completely unnerved by the fact that my flight will be on an Airbus, rather than a nice, reliable Boeing.
Martel, you really don’t play fair. I don’t own anybody, but I do agree with what those guys say, since they are experts and they all are saying the same thing even though their ideologies do not all lie to the left. I guess I shouldn’t hold my breath to hear who the experts defending Ryan are, since I haven’t seen any credentialled economists that are strenuously doing so. But if playing semantic games is more fun that confronting economic facts, then by all means… One thing you should understand, however, is that I don’t hold anyone here in contempt. I am tough on arguments but easy on people. To do otherwise, is really mean-spirited and as bad for my mental health as anyone whom I might hate. Finally, I don’t disagree with the comments on the auto industry, although US product in the 50s and 60s was actually pretty good compared to foreign products; however, to blame the underperformance exclusively on the unions doesn’t seem right to me. Afterall, the German products were very high quality, and their union rules were (and are) stiffer than our own. Meanwhile, we lost out in memory and televisions although our plants were not unionized. As always, the real answers are more complex than the partisan narratives…
While flying is vastly safer than driving, the following site has up to date data on which planes (by mfr) are safest:
http://www.fearofflying.com/resources/safest-airliners-and-airline-safety.shtml
When analyzing battlefield data and attempting to fabricate the best operations plan with the highest chance of success, I realized a couple of things.
1. Most people are wrong either through systematic perspective issues or through personal biases.
2. Proper analysis of data requires good methodologies and efficient methods.
3. The process is never ending and always on going.
4. A plan has no import when there are no people to carry it out, if everyone is too incompetent to execute the plan, or if the leader is too incompetent to implement the orders required for the plan.
Thus the truest path to discerning the truth isn’t to start out picking experts for your team hoping to win a victory of expertrition. Regardless of how many experts there are, who they are, or how accurate they are, their views are theirs, never yours. There’s no way to evaluate what is going on simply by listening to what other people say. One must take that information in, use the brain to analyze it, and decide on an action and consequence. There are a manifold number of different interpretations and models, but no single one is correct. No single human knows enough data to encompass even a majority of reality. In order to produce a more accurate model and a better operations plan, humans must use what is called the “brain” to do something called “thinking”, which is defined as processing data from external or internal stimuli and analyzing it utilizing human values.
The person making the claim here are not the experts. Humans lie all the time, even if you assume they haven’t made a mistake. Not only do humans make mistakes in making their own judgments, they also lie to cover up their mistakes. When extended to lying about other people’s statements and being mistaken about the position of experts, this margin of error increases exponentially with the number of experts they use. In fact, the more experts people use to replace having to think, the more wrong they become.
Epistemology has questioned and produced answers to just such questions. Questions of how to think correctly and how to believe in what is true rather than believe in what is false. This requires a return to the true traditions of human thought, which is called independent thought rather than derivative plagiarism or copying the opinions of other people. By honing the accuracy and perception of each individual’s capacity to think and analyze data, the results will be a several fold increase in the accuracy of that individual’s judgment. Which would include judging the views of experts.
In a short and concise conclusion, people who don’t know black from white can’t judge what is or isn’t right about the views of experts. In order to utilize experts, one must achieve expertise in something equally challenging. Equals speak as equals. They do not bring in children and ask for their opinion equivalent to those of what they would call their peers. Since humans are infinitely varied, this brings together many different conflicts as not everyone can be said to have experienced the same thing in terms of difficulty and challenge. It is just as erroneous to utilize experience, where it is irrelevant to the task, as it is to not utilize experience that is relevant to the task. Two examples of this for readers to digest.
1. People often ask those who have fought a lot how to defend themselves from violence, meaning not win it but to avoid it. Thus the popular refrain is “you don’t know how to fight because you haven’t been in as many fights as this street fighter over there”. The wiser explanation would be this instead, “if you want to avoid fighting and protect yourself, don’t listen obsessively to people who have demonstrated that the only thing they are good at is creating fights and being attacked by violent people”. In this sense, experience can be an irrelevant or even negative factor, as it is experience doing what won’t aid your goals. Surely a gang banger knows more about fighting and killing then your average sub-urban mom, but if you wish to live in a peaceful and lawful society, you might want to avoid listening to a particular type of experience, even if it is abundant in nature.
2. People constantly and irrevocably believe that being right is based upon an individual talent, such as intelligence. This is cultural as well as being an ideological meme, because I hear this all the time from Californians, Berkley peeps, Ivy Tower freaks and fakes, as well as East Coast LibProgs but not Southern Bible Belt survivalists. Being smart=being right. What this tends to mean is that those people think being smart trumps being experienced. Given human history, that’s just not true. The level of human intelligence required to supersede human experience is something you only ever see once a century. It is as rare as military geniuses. Even still, experienced generals have outfought talented but inexperienced amateurs. Even for the intelligent, experience is necessary to develop their talents. Being smart is useless without having data to process. 0 is 0, regardless of whether the person calculating it has an idiot’s savant IQ of 300 or if the person has an IQ of 60. If an idiot savant has zero, it equals the zero from the idiot. Only when you have more data in the form of formulas and equations to process can the genius demonstrate superior processing ability. That’s because no matter how smart someone is, the human decision cycle works the same way and surprise events will disable the smart as well as the stupid. In fact, the stupid are more resistant to surprise anyways, since they don’t register it as fast. So, no, in retrospect being smart does not equal being right. Intelligence just makes people faster. And if their actions are wrong, they’ll just do the wrong things faster.
The strategist must process all data, without bias or preconception, utilizing individual talent and judgment to discern what is or is not important, in order to generate a conclusion and operations plan that has the highest chance of success in reality. This requires the process called “thinking” and “calculation”. Thinking and calculation has recently been on the decline in the Obamanation for some reason. The strategist trusts no one’s judgment other than his own. 2 experts do not equal the strategist’s judgment. 20 experts do not equal the strategist’s judgment. The strategist judges the infinite quantity of all possible existing experts: at once.
Thanks for the flying data, abc. The fact is, my fear of flying is so visceral it manages to defy any logic placed in its path. Despite having flown thousands of miles over the past 30 years, I still refuse, at some level, to accept that planes can actually fly.
abc, as I said, your pissing contest is with Danny, not with me. He more than holds his own. [pregnant pause] I was simply pointing out how you like to position other people as you engage them.
Thanks for the agreement on 50s American goods. I could have been clearer: by today’s standards, they were sturdy enough, but nowhere near as high in quality. Once the Japanese and Germans figured out the quality angle, we took way too long to respond.
Yes, German unions had strict rules, but they never saddled the automakers there with the out-of-control benefits burdens that the UAW did with U.S. manufacturers. I don’t recall any German contract that had workers paying absolutely nothing toward their health care, not even co-pays.
Book, I’m almost with you about planes. I can’t tell you how many times I’ve been using the loo and have thought to myself, “Well, Chuck, here you are, a monkey in an aluminum tube hurtling 600 miles per hour seven miles above the earth, casually taking a whiz. Is that possible?”
Still, I look at flying the way I do at going to the dentist. Don’t like it, but don’t really think about all that much before, during or after. What I hate about flying these days is encounters with the minimum-wage idiots our moral and intellectual superiors in the federal government have hired to “protect” us from yesteryear’s attacks.
I use plan * X’ for both events – the dentist and flying.
Xanax
SADIE, I half wish that Judaism, Christianity, your spouse and my spouse did not hold plural marriage in such low regard. I’d cook your dinner and tuck you in at night forever.
China has a huge and rapidly expanding middle class, as well.- Zachriel
7-10% of Chinese might be considered middle class. What is it with statists? You’re so in love with top down government control and it seems to affect your judgement.
BrianE, Zach is notorious for running to Wiki and similar boilerplate for his patter. It’s what he does. Just cut him some slack because it never is going to get better.
Zachriel: China has a huge and rapidly expanding middle class, as well.
BrianE: 7-10% of Chinese might be considered middle class.
That would be about 125 million people, huge and rapidly expanding group. Within a few years, that number can be expected to increase to about 300-400 million, each wanting good jobs, cars, electric lights, air conditioning, internet, education, a better future for their children.
BrianE: What is it with statists? You’re so in love with top down government control and it seems to affect your judgement.
Not a statist. As we have stated numerous times on this blog, the most successful systems are mixed systems, that is, those that have power diffused through a variety of structures, from local to global. Those systems that try to stifle local organizations, from clubs to citizen groups to independent businesses, are less free and less economically successful.
BrianE observes: 7-10% of Chinese might be considered middle class.
Slurping dry sherry in close camaraderie (only the best), the Z team observes sagely “That would be about 125 million people, huge and rapidly expanding group. Within a few years, that number can be expected to increase to about 300-400 million, each wanting good jobs, cars, electric lights, air conditioning, internet, education, a better future for their children.”
Because, you see, BrianE, history moves in straight-line projections. It’s all so neat and precisely defined, if only you knuckle draggers would get out of the way.
BrianE continues:
“What is it with statists? You’re so in love with top down government control and it seems to affect your judgement.”
Z rushes to reassure,
No,no, no,…
“Not a statist. As we have stated numerous times on this blog, the most successful systems are mixed systems, that is, those that have power diffused through a variety of structures, from local to global. Those systems that try to stifle local organizations, from clubs to citizen groups to independent businesses, are less free and less economically successful.”
This one needs translation, though: what Z is trying to tell you, Brian E, is that they are only half-pregnant.
Danny Lemieux: Because, you see, BrianE, history moves in straight-line projections.
Misrepresenting someone’s position, in order to attack it, is not only a fallacy, but impolite.
The political expression of altruism is collectivism or statism, which holds that man’s life and work belong to the state—to society, to the group, the gang, the race, the nation—and that the state may dispose of him in any way it pleases for the sake of whatever it deems to be its own tribal, collective good.- Ayn Rand
The statists’ epistemological method consists of endless debates about single, concrete, out-of-context, range-of-the-moment issues, never allowing them to be integrated into a sum, never referring to basic principles or ultimate consequences—and thus inducing a state of intellectual disintegration in their followers. The purpose of that verbal fog is to conceal the evasion of two fundamentals: (a) that production and prosperity are the product of men’s intelligence, and (b) that government power is the power of coercion by physical force.
Once these two facts are acknowledged, the conclusion to be drawn is inevitable: that intelligence does not work under coercion, that man’s mind will not function at the point of a gun.- Ayn Rand
Just so we’re on the same page, Rand’s conception of statism. Since Zachriel spent much time reminding us of the coercive power of the state, I thought he was defending it, not warning us of its danger.
I lean left, but I don’t hold up China for ideological reasons. I hold it up because what they’ve done is astounding, and people ought to appreciate it since it is clearly measurable. I think our system is still better, but I think we can learn much from China. Separately, I don’t think regulations are the big problem. Lack of demand and mean-reverting productivity are bigger problems, not to mention an over-leveraged consumer and unfair foreign trade practices. - abc
The problem, once again, with the argument lauding China’s strides is ignoring the failures, which we’ve barely touched on in this blog. Empty buildings, airports that serve no one, pollution worse than anything imagined by any historical standard (possibly with the exception of 19th century London)– these are also the consequence of the top down model.
Most of China lives in poverty, and yes there is a small middle class and yes it’s growing, but as messy as the invisible hand is, as messy as market cycles are, I trust the market to serve my needs more than I trust a bureaucrat in Washington. Because no matter how noble their intentions, no matter how altruistic their attitude, they believe they know what’s best for me. I will trust a mechanism– even a mechanism of self-interest, before I would ever trust a bureaucracy that hides behind its regulations.
And yes, we do need regulations. We do need to keep the market honest. But each time a regulation is implemented their is a cost. The debate in Washington rarely focuses on that cost, but on the political ramifications of the regulation. Our media filters are so enamored with the power in Washington, they ignore the effects of that power.
No, over-regulation didn’t cause the last bubble to burst, mis-application of power caused it. The fed kept money too cheap too long. Government, (both R and D) were so caught up in the ownership society they ignored simple market principles and yes, the greed of the likes of Wall St. tried to capitalize on the former.
I agree there were insufficient regulators in the SEC, and moving the banking system to Wall St. away from banking regulators was ill advised, but it is my understanding, given thee pressure by the Europeans to wrest supremacy of the markets away from New York was as much a cause of the meltdown as anything else.
BrianE: Just so we’re on the same page, Rand’s conception of statism.
Rand is quite the outlier.
Rand: The political expression of altruism is collectivism or statism, which holds that man’s life and work belong to the state—to society, to the group, the gang, the race, the nation—and that the state may dispose of him in any way it pleases for the sake of whatever it deems to be its own tribal, collective good.
We reject that.
BrianE: Since Zachriel spent much time reminding us of the coercive power of the state, I thought he was defending it, not warning us of its danger.
There is great danger in an overpowerful state, much more so than what someone like bin Laden can do. That’s why the U.S. should keep good courage. Americans must maintain their freedoms while working with other countries against the threat.
Zachriel: Not a statist. As we have stated numerous times on this blog, the most successful systems are mixed systems, that is, those that have power diffused through a variety of structures, from local to global. Those systems that try to stifle local organizations, from clubs to citizen groups to independent businesses, are less free and less economically successful.
BrianE: This one needs translation, though: what Z is trying to tell you, Brian E, is that they are only half-pregnant.
So, let’s consider this strawman in light of our actual position. While pregancy is either-or, not so does supporting a central government make one a statist, that is, “hold that man’s life and work belong to the state.”.
“In order to form a more perfect union…” Words from the Preamble of the U.S. Constitution. Certainly, some people (mostly from slave states) thought that this federal governing structure was tyrannical. However, that same central government ended slavery, enforced civil rights, defeated fascism, and made important strides in science and space exploration. The power of the central government is kept in check by a freely elected legislature, an independent judiciary, but also by citizen groups that work independently of any government entity. In the U.S., this right to assemble and peacefully petition the government, is protected by the Bill of Rights. All modern democracies have similar structures. It’s the complex tapestry of power at all levels that results in a stable republic.
Very “on the money” quotes from Ayn Rand, BrianE.
Z…thou dost protest f-a-a-a-ar too much. You provided a projection of “300 – 400 million” Chinese joining the middle class “within a few years”, based on no evidence provided, only your own suppositions.
It has long been an observation among conservative circles that Liberal/Lefties, from “AB..to Z” tend to think in straight-line projections, be it pollution, population growth, economic trends, carbon dioxide in the atmosphere, food production, or the Marxist view of history, etc (regression formulas). Look at your own “AB..to Z” obsessions with “regressions” in previous comments, for example (such commentaries which, I hasten to mention, I read assiduously), or your self-affiliation with “progressivism” (a straight-line projection).
Conservatives tend more to think in terms of cycles and actions and reactions (sine and cosine equations) and see “change” as multi-variable functions (calculus), instead of the product of poorly defined abstractions (e.g., “hope”). We conservative thinkers just believe that such perspectives provide much better insights into how the world works.
I suspect that we conservatives are just better at math, which goes a long way to explaining the chasms in our country’s current budgetary debates. But, we understand: math is hard, and Liberal/Lefty education policies haven’t helped in this regard. What’s the solution? I don’t know….any ideas?
Z brightens and bridles at the same time, “Rand is quite the outlier.”
OK, we really do inhabit separate universes.
http://www.aynrand.org/site/News2?page=NewsArticle&id=22869&news_iv_ctrl=2485
Corrected attribution:
Danny Lemieux: This one needs translation, though: what Z is trying to tell you, Brian E, is that they are only half-pregnant.
I suspect that we conservatives are just better at math- Danny Lemieux
What an interesting theory.
But my wife still can’t balance the checkbook….wait, come to think of it– she’s not all that conservative.
You might have something there!
Danny Lemieux: You provided a projection of “300 – 400 million” Chinese joining the middle class “within a few years”, based on no evidence provided, only your own suppositions.
Not our own suppositions. A number of studies, such as by the McKinsey Global Institute, confirm that there are millions joining the Chinese middle class (defined in terms of discretionary spending) every year. China is already the largest market for TVs and cell phones, and the 2nd largest for cars and computer.
Danny Lemieux: It has long been an observation among conservative circles that Liberal/Lefties, from “AB..to Z” tend to think in straight-line projections, be it pollution, population growth, economic trends, carbon dioxide in the atmosphere, food production, or the Marxist view of history, etc (regression formulas).
Strawman. In fact, there is a high probability that the Chinese economy is overreaching, and many problems that have been ignored will eventually put a stop to the expansion, at least temporarily. If so, this will result in significant changes in the way Chinese economy and government is structured. Overall, development will continue until they are more-or-less fully industrialized, at which point, growth rates will be more similar to other developed countries.
Danny Lemieux: Conservatives tend more to think in terms of cycles and actions and reactions (sine and cosine equations) and see “change” as multi-variable functions (calculus), instead of the product of poorly defined abstractions (e.g., “hope”).
That’s funny. It is true that conservatives, properly defined, are more likely to have their feets firmly planted on the ground. (This excludes right-wing ideologues, of course.) But others “have a dream.” Most people are not purely one thing or the other.
Danny Lemieux: OK, we really do inhabit separate universes.
Book sales are not an indicator of scholarly influence. They’re not even always a good indicator of popularity, as small, but dedicated minorities can drive up book sales.
Danny Lemieux: We conservative thinkers just believe that such perspectives provide much better insights into how the world works.
If your positions are “conservative,” then no, as is clear from your commentary. A conservative, properly defined, is willing to face facts. In fact, the Chinese economy is surging. In fact, the Chinese have a horde of cash, including U.S. securities. In fact, the Chinese middle class (defined in terms of discretionary income) is surging, and by BrianE’s own estimation represent a population as large as the entire population of France and the U.K. put together. In fact, this population is surging, and millions more are expected to join the Chinese middle class over the next ten and twenty years.
But this is a good thing. Though the U.S. won’t be the only player in the world economy, the overall size of markets will increase with plenty of opportunities (and challenges) for everyone.
Zachriel, if you don’t like Rand’s definition of a statist, what’s yours?
If I’m going to throw around claims that you’re something or the other, we should at least agree on what the term means. Chances are we won’t agree, but at the least, understand what we’re claiming the other person is.
You do have a definition?
BrianE: Zachriel, if you don’t like Rand’s definition of a statist, what’s yours?
Though the dictionary doesn’t always include the nuance, it’s usually a good place to start.
statism, concentration of economic controls and planning in the hands of a highly centralized government often extending to government ownership of industry.
http://www.merriam-webster.com/dictionary/statism
Rand’s definition is crafted to her particular purpose, such as applying it only to altruistic philosophies, when it clearly applies to non-altruistic dictatorships, as well. She describes a *type* of statism, in this case, her pet peeve. In any case, we responded to her definition of statism, so that should have covered the bases.
We reject holding that a man’s life and work belong to the state (Rand). We also reject concentrated economic control in a highly centralized government, and government ownership of industry (Merriam-Webster). So we reject statism under both definitions.
This illustrates the divide well:
01/11/10 Bethesda, Maryland – The news this morning tells us that markets are rising. Investors are bullish because China’s exports are recovering, says the new analysis.
Meanwhile, celebrated short-seller Jim Chanos says China is going to blow up. It’s going to be “Dubai times 1,000,” he says.
Our old friend Jim Rogers disagrees. He thinks Chanos hasn’t looked long enough or deeply enough into the China story. He thinks China is a buy.
And what do we think?
We don’t think. We listen:
“Something like 50% of Chinese economic growth – if you can believe the numbers – is based on capital investment,” said a dinner companion last week. “You can’t invest that kind of money without making some pretty major mistakes.”
If we were forced to bet on it…we’d bet that Chanos is right. We don’t know anything about China or the Chinese economy. But you don’t go from third-world communist hellhole to the world’s second major economy without some serious bust-ups…especially when the communists are still in control.
Barely had we touched down in the USA than we were invited to a dinner party in Georgetown. In keeping with the Chatham House Rules, we won’t mention any names, but we were in distinguished company. These were America’s elite of movers and shakers, ambassadors, lawyers, policymakers, people who reflect and shape the opinions – and actions – of the US empire.
We were invited to answer questions; instead, we asked them.
We began by mentioning the failure of the economics profession. Never had an unarmed group done more damage to the wealth of a society, we suggested. Economists helped create a huge bubble, ignored it until it blew up, and then gave the wrong advice about how to fix it. Bailouts and boondoggles were all they had to offer.
But wait a minute, said a fellow diner: ‘I’m an economist…we couldn’t let the whole banking system collapse.’
“Why not?” we asked.
‘Because unemployment would go up to 14% or more…’
“How do you know what the proper rate of employment should be?” we wanted to know.
‘But you can’t just ignore people when they are out of work…and you can’t ignore an economy when it goes into a depression, can you?’
“Why not?” we repeated our first question.
What we notice in our brush with America’s intellectual and political elite is that they are very smart, very well informed, but too busy to stop and think.
They are thinkers. They are always thinking about what to do. But they cannot afford to think radically…about why they should do anything at all. If they did, they would be as marginalized as we are… How much more fun it must be to be at the center of power…pulling the levers…turning the knobs…making the world a better place!
The presumption of all elites is that they can do a better job of running things than people who are less well educated, less informed, or less intelligent. In a sense, this is obviously true. In the administration of commonly held assets, for example – such as a municipal sewage-treatment plant…or an art collection – a person with taste, culture and education is likely to do a better job than a numbskull. (We admit that even this is a dubious assertion…but we will presume it is true for the sake of this argument…)
But the elites go a major step further…they claim to be able to do a better job of administering privately held assets too…things that belong to other people.
Take the Cash for Clunker program. Auto sales went down. But so what? How many cars SHOULD be bought and sold? Nobody knows. And it’s really not for anyone to say…other than the buyers and sellers themselves. But the elite think they know better.
The fellow with an old pick-up truck may have judged his truck good for another six months of service. But with the lure of a federal bribe before him, he junked the truck six months early. Any sensible person can see that this is a waste. A valuable asset has been lost – six months of truck service.
But the elite economist thinks he has saved the auto industry. Because the “demand for trucks has been stimulated.” Jobs have been saved. Detroit has been given a boost.
What kind of nonsense is this?…
Read more: Why Not Let the Whole Banking System Collapse? http://dailyreckoning.com/why-not-let-the-whole-banking-system-collapse/#ixzz1LUQZLvje
Z thinks, rubs his/their head(s) and sagely comments that:
“If your positions are “conservative,” then no, as is clear from your commentary. A conservative, properly defined, is willing to face facts. In fact, the Chinese economy is surging. In fact, the Chinese have a horde of cash, including U.S. securities. In fact, the Chinese middle class (defined in terms of discretionary income) is surging, and by BrianE’s own estimation represent a population as large as the entire population of France and the U.K. put together. In fact, this population is surging, and millions more are expected to join the Chinese middle class over the next ten and twenty years.”
Z..this may shock you, but I actually agree with your take on China, in large part. However, in contrast to ABC’s position, I don’t see China’s continued growth as occurring without major hiccups, including major reversals. Let’s not overlook black swan events and major push-backs from the disgruntled masses, of which there China has many. If you want examples of about how quickly things can reverse course, look at Iceland and Ireland today…or Argentina after Peron. Besides, China’s history provides an excellent example: around 1400 AD, China in the Ming Dynasty was at the top of the world’s civilizations (recall its famed Treasure Fleet?). Then, virtually overnight, it folded in about itself and fell asleep and so deteriorated into third-world squalor.
I’ve had some run-ins with the McKinsey people: not impressed. They provide excellent examples of straight-line thinking. But there’s no denying, they make an awful lot of money doing it.
BTW, thanks for the link to MLK, one of my true American heroes and a Republican, to boot.
BrianE …what an interesting link. Let me savor just a few juicy snippets.
We began by mentioning the failure of the economics profession. Never had an unarmed group done more damage to the wealth of a society, we suggested. Economists helped create a huge bubble, ignored it until it blew up, and then gave the wrong advice about how to fix it. Bailouts and boondoggles were all they had to offer.
At which point, famed Nobel Prize economist and ENRON advisor Paul Krugman’s face turned beet red.
The presumption of all elites is that they can do a better job of running things than people who are less well educated, less informed, or less intelligent. In a sense, this is obviously true. In the administration of commonly held assets, for example – such as a municipal sewage-treatment plant…or an art collection – a person with taste, culture and education is likely to do a better job than a numbskull.
Whoops! False premise. I would rather trust the management of a municipal sewage treatment plant to an operator that knows the business inside-out. My own experience of too many people “taste, culture and education” is that they are too often woefully ignorant about what happens outside of their art and cocktail salons.
BrianE (quoting): Something like 50% of Chinese economic growth – if you can believe the numbers – is based on capital investment,” said a dinner companion last week. “You can’t invest that kind of money without making some pretty major mistakes.
There are huge misalignments in China’s economy, and the internal contradictions will eventually lead to a major disruption in their growth. Lack of robust mechanisms of accountability will inhibit their long-term growth.
BrianE (quoting): But you can’t just ignore people when they are out of work…and you can’t ignore an economy when it goes into a depression, can you?’ “Why not?” we repeated our first question.
Because it’s wrong to let people starve. Because an economy in collapse won’t self-correct. And if that’s not enough of an answer for the royalists among you, because extreme deprivation leads to political instability.
Danny Lemieux: BTW, thanks for the link to MLK, one of my true American heroes and a Republican, to boot.
There is no evidence that King was a Republican, though there were liberal Republican at that time, and many blacks were Republicans in opposition to the conservative segregationist Democrats of the day. King supported Kennedy and Johnson, though, and he was certainly a liberal by any reasonable definition.
Danny Lemieux (quoting): Never had an unarmed group done more damage to the wealth of a society, we suggested. Economists helped create a huge bubble, ignored it until it blew up, and then gave the wrong advice about how to fix it. Bailouts and boondoggles were all they had to offer.
Running two wars while cutting taxes. Running huge deficits while the economy was expanding. Cutting regulatory authority and allowing a shadow market to run amok. That’s not economics, but ideology.
BrianE (quoting): But you can’t just ignore people when they are out of work…and you can’t ignore an economy when it goes into a depression, can you?’ “Why not?” we repeated our first question.
Because it’s wrong to let people starve. Because an economy in collapse won’t self-correct.- Zachriel
Leaving aside the reason Rand focused on altruistic philosphies, even though that’s the one you focused on– who said anything about people starving? It’s just like a leftist to make the argument that unless you support people at the level they decide is adequate, anything short of that is callous. In the last 50 years, social spending in this country has gone from 6% of GDP to 12%. I think we can sustain it at 9% and still keep people from starving.
Instead of providing unemployment benefits at 80% of working salaries, maybe 60% is sufficient. We’re really arguing at the margins here– but hardly deserves your characterization of “letting people starve.”
As to an economy self-correcting, I think you’re ignoring a sea change in economies. Do you remember a time before the personal computer? Or cell phones?
We are living in an age of instant communication. Applying economic theories that were still being formed from the turmoil of the 1800′s ignores where we are today. All the Keynesian stimulus in the past 40 years hasn’t prevented the business cycle, only indebted us.
Could the duration or depth of the cycles been ameliorated as much by that heightened information flow as to Keynesian stimulus?
People use Keys as an excuse to loot other people’s money at the point of the government’s gun. Nothing more to it.
BrianE: Leaving aside the reason Rand focused on altruistic philosphies, even though that’s the one you focused on– who said anything about people starving? It’s just like a leftist to make the argument that unless you support people at the level they decide is adequate, anything short of that is callous.
Because it is intrinsic to the question, ”But you can’t just ignore people when they are out of work…and you can’t ignore an economy when it goes into a depression, can you?” Did you forget already?
BrianE: In the last 50 years, social spending in this country has gone from 6% of GDP to 12%. I think we can sustain it at 9% and still keep people from starving.
That wasn’t the question.
BrianE: As to an economy self-correcting, I think you’re ignoring a sea change in economies.
Economies are largely self-correcting. Modern economies are far larger, and have far more complexity, than the economies of the last century. Nevertheless, when the banking system froze, it was still capable of dragging the global economy into collapse.
BrianE: All the Keynesian stimulus in the past 40 years hasn’t prevented the business cycle, only indebted us.
For most of the last 40 years, the U.S. has not applied Keynesian theory in any consistent manner. Don’t you remember Reagan and supply side economics? Don’t you remember “deficits don’t matter”? That’s not Keynesianism. That’s ideology masquerading as economics. Even then, the business cycle had been evened out considerably, that is, until the Bush Administration started believing their own propaganda, and led the world into a financial meltdown.
Zach says it’s wrong to let people starve. How is it wrong? So far he has shown yourself incapable of articulating a coherent moral standard. Why would anybody pay attention to what he has to say about right and wrong when he can’t even define it?
Since Zachriel spent much time reminding us of the coercive power of the state, I thought he was defending it, not warning us of its danger.
Leftists like to be hypocritically self-centered in proclaiming their own elite status and self-righteousness.
I’m not sure if I was reading a translation of a Japanese or English interview, but it made the comment that a Japanese company tried to make deals with the West in order to supply electronic goods. Of course, during the time, “Japanese made” was synonymous with Trash in the West. The Japanese are very self-motivated, if only because they hate losing face and respect in public, so they turned that around with pure hard work.
If it’s wrong to let people starve, then why do Leftists do less charity work and contributions compared to their better conservative superiors?
Hypocrites.
BrianE: Could the duration or depth of the cycles been ameliorated as much by that heightened information flow as to Keynesian stimulus?
In a healthy market, when prices drop, buyers move in to take advantage of the discounts. But when there is a financial panic, people rush to sell. This causes the price to drop further, impelling more people to sell. People won’t buy, if they think they can get it cheaper later. This causes a downward spiral, which can cause a drop in business activity. People lose their jobs. Consumption plummets. This forces the market even lower. Eventually, the economy comes to a halt, and no one will invest. Why should they invest when their money is safer in a mattress. Something has to break the cycle to avoid a prolonged and painful period of reduced economic activity, and lost opportunity.
After a brief interlude with lucidity, Z veers back into unicorn land:
Running two wars while cutting taxes. Running huge deficits while the economy was expanding. Cutting regulatory authority and allowing a shadow market to run amok. That’s not economics, but ideology.
The wars contributed relatively little to our national debt. For most of the Bush administration, the Debt:GDP ratios were well within historical levels and were in decline until we hit the economic crisis.
http://blog.heritage.org/?p=4210
BTW – Knowing what I know about the details of the melt-down, I agreed with the one-time Bush/Obama TARP intervention in 2009. However, it was a one-time injection of funding that for the most part has already been repaid.
So, here’s a few questions, Z…I know we disagree w/ regard to Iraq, so there’s no reason to retrace old ground.
However, your response to 9/11 would not have involved a war in Afghanistan? What, then, would it have been.
You blame the financial crisis on Bush’s reduction in regulatory authority. Can you share with us which regulatory authority, specifically?
“Shadow markets” is a term better associated with MoveOn.org drivel. Perhaps you could be more specific?
I’ve never quite understood the progressive perspective that believes increasing taxes benefits economic activity. Using straight-line projections, therefore, a 100% tax rate should get our economy positively booming.
Charles Martel: Zach{riel} says it’s wrong to let people starve. How is it wrong? So far he has shown yourself incapable of articulating a coherent moral standard. Why would anybody pay attention to what he has to say about right and wrong when he can’t even define it?
That was addressed to those who might agree. If you don’t agree, feel free to ignore that aspect of our discussion.
’ve never quite understood the progressive perspective that believes increasing taxes benefits economic activity. Using straight-line projections, therefore, a 100% tax rate should get our economy positively booming.
A centralized authority is better at distributing money in an economy then individual desires, would be the LEftist idea. That’s what nationalization is, 100% rates on the income via 100% control. They are thinking of 100% control so they think 100% taxation is a figment of our imagination, but 100% control is 100% taxation.
Z says he isn’t a statist, of course. That he’s some kind of “mixed” fence sitter, a moderate traditionalist like O’Reilly.
In terms of personal biases, increasing the government’s ability to control economic gains would absolutely increase the wealth of government patsies, politicians, bureaucrats, and hanger ons. In their view, this has increased the economic worth. If hundreds of millions in the rest of the country suffer, do you really think Obama or his lackey Z here, cares much about that?
Why should they invest when their money is safer in a mattress.- Zachriel
Because most people really don’t want their money in a mattress. They want it earning a return. That’s pretty obvious even in the delicate economic situation we find ourselves. Where’s Gross putting his money?
Information is king.
Ymar and Danny, it would be fair to Zach to remember that he has stated several times that he is not a believer in the top-down economic system that Obama and the left are reaching for. Rather, a balanced system of judicious government intervention and an otherwise free market are the best ticket. (I’m assuming he has something like the more robust European economies in mind.)
OK: Then why don’t we ask him to describe in more detail the workings of such an economy? It would force him to desist from the platitudinous Chance Gardener-type prescriptions he’s always throwing at us and tell us just how a wonder economy would work. Discuss unions, tax rates, abc’s “externalities,” deficit-reduction strategies, etc.—not theoretically, in his deadpan, Wiki-derived, Dukakis drone, but actual fleshed-out, Zach-generated proposals.
I hope he’ll answer, although my take on his m.o. is that he can’t and won’t. But at least it’ll be there on the table for everybody to see: Just what was it you were thinking, Zach, that you couldn’t articulate?
Totalitarian Leftists see no reason why they should trust individuals to use their own money wisely. It is much better to tax and collect that money into a mutual national safety fund, so that it can be used for better things than being stuffed into a mattress.
Danny Lemieux: The wars contributed relatively little to our national debt.
The trillion spent so far on the wars isn’t nothing. In any case, you’re confusing debt with stimulus. Cutting taxes even while running a war helped overstimulate the economy.
Danny Lemieux: For most of the Bush administration, the Debt:GDP ratios were well within historical levels and were in decline until we hit the economic crisis.
Much of the growth wasn’t real. The current deficits are primarily due to the recession that ensued from the financial meltdown.
Danny Lemieux: However, your response to 9/11 would not have involved a war in Afghanistan?
Yes, it probably would have involved war, though more narrowly targeted at bin Laden, and quickly withdrawing. The key to military power is flexibility. Being forced to occupy Iraq and Afghanistan reduced the very flexibility necessary in the fight against terror. Consider how powerful the U.S. appeared to the world after the Gulf War, and after the initial toppling of the Taliban in Afghanistan. If they had immediately left the Afghans to themselves, it would have left the U.S. with the image of invulnerability. Instead, by being bogged down in Iraq, it allowed the enemy to determine the weaknesses of the U.S. military, while draining them of resources and resolve.
Indeed, conventional forces are the least effective means in the war on terror. Old-fashioned investigative work to interdict attacks, along with international cooperation, is what is required. The key is to extend the international rule of law, and only use military force when absolutely necessary.
Danny Lemieux: “Shadow markets” is a term better associated with MoveOn.org drivel.
That’s why so many people don’t understand the causes of the financial crisis. They don’t even know that there was a huge and largely unregulated and demand-driven market in securities. It amounted to trillions of dollars in transactions. There is plenty of scholarship on the shadow market in securities, and its relationship to the financial crisis, but you might start with teh Wiki.
“By June 2008, the U.S. shadow banking system was approximately the same size as the U.S. traditional depository banking system. The equivalent of a bank run occurred within the shadow banking system during 2007-2008, when investors stopped providing funds to (or through) many entities in the system.”
http://en.wikipedia.org/wiki/Shadow_banking_system
Danny Lemieux: I’ve never quite understood the progressive perspective that believes increasing taxes benefits economic activity. Using straight-line projections, therefore, a 100% tax rate should get our economy positively booming.
As a general rule, taxes *decrease* economic activity. There are some exceptions, though. If there is limited available capital, and the government is borrowing heavily, then increased taxes can actually free up credit elsewhere in the economy. This was the reasoning underlying the Clinton economic plan of 1993.
“but you might start with the Wiki.”
QED. ROFL!
Zachriel: Why should they invest when their money is safer in a mattress.
BrianE: Because most people really don’t want their money in a mattress. They want it earning a return. That’s pretty obvious even in the delicate economic situation we find ourselves.
We’re talking about an economic collapse where the government doesn’t take remedial action. When markets collapse, prices deflate. With the same money, you can buy more tomorrow than you can today. The value of money in a mattress *increases* in value. If you put it in the bank (assuming we dispense with the Keynesian idea of FDIC), then there is a risk. If you do put it in the bank, why should the bank lend it, when holding it increases its value, and lending is so risky when the economy is collapses. Why put it in the stock market when the stocks will be cheaper tomorrow. Everything out there is risk. The best and most rational option is to hoard cash.
Charles M, “the platitudinous Chance Gardener-type prescriptions he’s always throwing at us”.
Ah, the perfect descriptive phrase that has eluded me. Thanks, Charles M!
Drawing on vaste historical perspectives, Z proposes “Consider how powerful the U.S. appeared to the world after the Gulf War…”
It seems to me that 9/11 came well after the Gulf War. What you don’t understand is that asymmetric warfare techniques of a global Jihad is that they does not lend itself to limited, surgical actions in response. Whether it was intended or not, the Iraq War did much to destroy Al Qaeda by a) destroying a major terrorist supporter and b) drawing in Al Qaeda into a killing field (the “flypaper strategy”). Besides, these people aren’t impressed with U.S. “power”. Remember, god is on their side.
The U.S. strategy is to destroy their Jihadi sanctuaries to deny them rest or comfort and to relentlessly pursue them wherever they are in the world. To this end, the U.S. has military units in about 130 countries fighting the global Jihad. That costs money. And it won’t be over soon.
Speaking of “Jihad”, this sounds like good news: jihadi bases on the U.S. – Mexico border?
Regarding the terrorism threat on our border, here is the link:
http://www.10news.com/news/27780427/detail.html
Soon, coming to a neighborhood near you.
Ymarsakar: I just want to call to your attention the fact that you forgot to give yourself a shout-out for being the 100th commenter on this thread. Ten lashes of the wet noodle for you, dude!
Charles Martel: QED. ROFL!
That’s “teh Wiki.”
Danny Lemieux: What you don’t understand is that asymmetric warfare techniques of a global Jihad is that they does not lend itself to limited, surgical actions in response.
Of course it’s assymetrical. By its very nature, you can’t eliminate all sources. You can’t allow states to supply WMD to terrorists, of course, but terrorists can plot almost anywhere, even in the United States. You have to interdict, destroy the networks, and remove the sources of recruitment, which are almost always ideological.
Danny Lemieux: Whether it was intended or not, the Iraq War did much to destroy Al Qaeda by a) destroying a major terrorist supporter and b) drawing in Al Qaeda into a killing field (the “flypaper strategy”).
It clearly exasperated the problem. Though the Iraqi people are surely more than happy that you consider their lives to be your flypaper.
Danny Lemieux: Besides, these people aren’t impressed with U.S. “power”. Remember, god is on their side.
Terrorists aren’t, but state actors are. The idea isn’t to intimidate, but to provide a better model. A light footprint provides a much better model, than one where you destroy the entire infrastructure of Iraq and send millions of people fleeing. Fortunately, the Arab spring is providing a new model. The Egyptian examples is especially heartening. Perhaps the Americans can learn from this.
A light footprint provides a much better model, than one where you destroy the entire infrastructure of Iraq and send millions of people fleeing. -Zachriel
We didn’t destroy their entire infrastructure, Saddam …………..ah, forget it.
Fortunately, the Arab spring is providing a new model. The Egyptian examples is especially heartening. Perhaps the Americans can learn from this. - Zachriel
Aren’t you supposed to use a smiley face after a statement like that?
Zach, I corrected your misspelling as a courtesy.
“It clearly exasperated [sic] the problem. Though the Iraqi people are surely more than happy that you consider their lives to be your flypaper.”
Actually, the flypaper was U.S. troops. Also, perhaps Zach can show how he knows what thoughts the entire Iraqi population was having when the U.S. successfully flushed out the “insurgents?”
“A light footprint provides a much better model, than one where you destroy the entire infrastructure of Iraq and send millions of people fleeing.”
Where does he get this hyperbolic fantasy? I need to visit MoveOn and other Soros-funded sites to get Zach’s latest thinking. “Destroy an entire infrastructure?” Does Zach ever edit?
I’m not sure why Z thinks his version of warfare, which destroys the entire infrastructure of a nation after occupying it, is somehow going to cost less than Bush’s version of events in Iraq and Afghanistan. Anyone have an idea yet?
Speaking in terms of tactical, strategic, and logistical considerations, Z here is missing a lot of the fundamental keystones in operations planning and sustainment. There is zero possibility of obtaining any information or conducting any operations concerning OBL or AQ without on site bases, FOBs, refueling stations, logistical pipelines, and intel hub aggregators.
His idea of visiting Afghanistan and then retreating in order to provide this mythology of American invulnerability, is patently foolish as well as ignorant. Neither AQ nor Osama would have been hurt in the least by this operations plan. But even if they were, it would become impossible to continue the fight given the total landlocked logistical situation the US would have faced trying to continue operations in Afghanistan and Pakistan without any local bases. Where are the helicopters going to launch from and return to? Have them fly over Pakistan, while enduring enemy fire, and then land on carriers? It is patently ridiculous. Not even the dumbest strategist in history would try to launch an offensive operation without at least one base within range. And yet post modern armchair generals think they can just drop whole armies on the ground, pick them right back up, and then fly out of there.
The US didn’t have the logistical pipelines available to field more than the troops they deployed to Afghanistan in 2001. This idea that you can whip reality to your personal shape by shouting to the Heavens your wishes is too much akin to childish tantrums. Since Z isn’t bothered by the Communist victories in Cambodia or Vietnam, it makes sense for him not to care about the local conditions on the ground in Afghanistan. Retreating before securing any territory or defending any of the local allies, sounds good to a betrayer, but militarily it’s not going to work if one plans to conduct further operations in that region. Without local bases, without local allies, without local intelligence, without local supplies of resources, there is no such thing as an operation.
How much ignorance does Z have on Iraq, Afghanistan, Pakistan, Vietnam, and Cambodia anyways?
Funny reminder, Book, since I didn’t notice.
it would be fair to Zach to remember that he has stated several times that he is not a believer in the top-down economic system that Obama and the left are reaching for.
As I have often said, I don’t believe a word coming out of any Leftist, including those who call themselves conservatives, fiscal conservatives, or Republicans.
What they say and what they do, are very different.
Does the Left believe in America? They would say yes. I would say, given their actions, no. Does the Left believe in having the moral high ground and not torturing people? They would say yes, but I would say no given their actual behavior over torture and assassinations of people they don’t like.
That’s really a beautiful world that you inhabit, Z.
Why didn’t we think of it? Let’s see, we need to smile more and remember to leave only light footprints, so that they will truly, truly come to like us. Give them more money, too, since that’s what those poor deluded natives really want. Hmm…hmm!
I am starting to believe that Walt Disney truly was a pernicious influence on our psychological culture.
BrianE,
“The problem, once again, with the argument lauding China’s strides is ignoring the failures, which we’ve barely touched on in this blog.”
The successes far outweigh the failures, and the failures you point to that are of significance largely stem from the legacy of Mao, not Deng and everyone that followed him.
“Empty buildings, airports that serve no one…”
As a percentage of what has been added, the empty buildings are actually rather small. I don’t have the exact figures right now, but when you are adding the equivalent of NYC every 2-3 years, you cannot point to 20 buildings and declare failure. That would be normal inventory, given the size of construction being undertaken.
“…pollution worse than anything imagined by any historical standard (possibly with the exception of 19th century London)…”
Pollution is bad. THere is no doubt, but it hasn’t been bad enough to disrupt the economic growth, nor cause meaningful increases in public outcry to create a meaningful threat going forward. The happiness of being able to afford food and white goods far outweighs the frustration with bad air, based upon polling data in China. China’s government is the most popular adn loved by its own people in the entire world.
“…these are also the consequence of the top down model.”
Interesting. We had massive overbuilding of homes in the US, and we’ve seen our share of horrible pollution in the US during a rapid industrialization phase (read Upton Sinclair, remember Cleveland’s lake catching on fire, analyst the chromium levels in water in the rust belt, etc.), and all of that came because of a bottom-up industrialization model. If you think that corporations were no free of corruption and willingness to pollute adn not tell, as opposed to the government, then I have corporate owned beachfront property in Nebraska to sell you… These are consequences of industrialization, regardless of whether it is corporate or government directed.
“Most of China lives in poverty, and yes there is a small middle class and yes it’s growing, but as messy as the invisible hand is, as messy as market cycles are, I trust the market to serve my needs more than I trust a bureaucrat in Washington.”
Classic example of faith over facts, ideology over empirical analysis. China has moved more people out of poverty and at a faster rate than any democracy or any capitalist system in the traditional Western sense in the history of the world. That is what the data shows. Now, this is an inconvenient thing to recognize, so you ignore it and say that you still trust the market to serve your needs better. And in your case or mine, I would agree with that sentiment. But surely you can understand how millions of Chinese would take a different point of view, and how millions of other people living in poverty might find the China model enticing. When ideology blinds us to facts, it no longer serves a good purpose. You ought to be careful what you have faith in when the facts, built over 30 years, so something a bit different.
“Because no matter how noble their intentions, no matter how altruistic their attitude, they believe they know what’s best for me. I will trust a mechanism– even a mechanism of self-interest, before I would ever trust a bureaucracy that hides behind its regulations.”
The government in China is using market mechanisms and devolving power to the regions, so it is not the black and white, dictator or invisible hand dicotomy that you describe. Having said that, the Chinese can build high speed rail and huge dams and other public goods that will not yield positive ROIs and can overcome zoning issues or hold-out problems or grandstanding populist politicians or provincial special interests in doing so. This means that they now have the infrastructure to zoom ahead of India and become the lowest cost factory to the world. No private companies in the US, which, according to you, care more about your interest than a government, can do this. What is funny is that our own experience with massive infrastructure builds followed NOT the atomistic capitalist model that you describe, but the top-down approach that China uses. Do you know the history of transcontinental railroad construction? It entailed massive government involvement and subsidies. How about our current interstate highway system? Same deal, justified for cold war purposes. I think you ought to study your economic history in the US before passing disparaging judgment on china for following the same path.
“And yes, we do need regulations. We do need to keep the market honest. But each time a regulation is implemented their is a cost. The debate in Washington rarely focuses on that cost, but on the political ramifications of the regulation. Our media filters are so enamored with the power in Washington, they ignore the effects of that power.”
It goes beyond regulations to all laws. It is much easier to pass than to repeal them, since each law carries/affords power to some group, and they often entail funding that no one wants to give up. Conservatives like to focus on entitlements and regulations, while liberals like to focus on defense spending and backward social legislation. But the mechanism you describe is a problem. No doubt.
“No, over-regulation didn’t cause the last bubble to burst, mis-application of power caused it. The fed kept money too cheap too long. Government, (both R and D) were so caught up in the ownership society they ignored simple market principles and yes, the greed of the likes of Wall St. tried to capitalize on the former.”
Forget the last bubble. The conditions for that one remain and are being defended by the monied elites again. And neither the Dems nor the GOP are sufficiently independent of the lobbies to do anything about it. ANd the average citizen is not sophisticated enough to raise the issue. He’s barely keeping his head above water.
“I agree there were insufficient regulators in the SEC, and moving the banking system to Wall St. away from banking regulators was ill advised, but it is my understanding, given thee pressure by the Europeans to wrest supremacy of the markets away from New York was as much a cause of the meltdown as anything else.”
Europe was more willing to regulate bankers than NY or London, but it is easier to attack investment bankers when your country’s historic power base lies with commercial bankers who never were paid 1/10th as much.
So Obama, being a monied elite, is supposed to crack down on the monied elites?
BrianE, I actually do think that it would be astounding not to see some sort of correction in China. Middle economies often go through more extreme boom-bust cycles since they have less sophisticated means of allocating capital. So I guess I sit between Chanos’ extreme pessimism and Rogers’ unshakable optimism. And I also understand that a lot of China’s investments are questionable, yielding very poor ROI’s (in contrast to India). However, the fact remains that China is creating infrastructure to continue to migrate up the value-add chain as a workshop to the world. Meanwhile, it’s currency and per cap wealth will rise, allowing more and more of its citizens to consume products, increasing the share of the economy driven by the consumer to continue to grow. Nothing you have pointed out, nor Chanos, suggests that this overall arc of history will be broken. They could have hiccups, like our recent financial crisis, but they will keep on. Heck, they now have a much better balance sheet than we do to weather those unforeseen financial challenges with a level of flexibility not seen since the height of UK’s power.
I didn’t really like the rest of the discussion around bailing out the banks and the fault of the economists. We had to bail out the banks. The system would have collapsed irretrievably, as it did in the 30′s. We could not suffer through 20%+ unemployment if there was another way, and bailing out the banks was that way. As it happens, it didn’t cost very much either, since they have paid much of the money back that was lent. And while the free money that they have received, not to mention the bonuses, has people worried about inflation, even Milton Friedman would have applauded the massive expansion of the Fed’s balance sheet in a time of crisis. Go read his history of monetary policy in the US if you don’t believe me. As for the economists, I agree that they were a key enabler and caused much damage, but not for the reasons that your article describes. The reason that they resisted regulation of derivatives, allowed the SEC to raise the capital limit on the banks, and looked the other way when the FBI started raising alarms about mortgage fraud, was because Greenspan, Rubin, SUmmer, Bernanke and others believed in their free-market, laissez-faire, Ayn Randian religion of keeping all regulations at bay at all cost. They did this because they likely believed those ideas, but they also did it because they and hundreds of other economists like them got paid lots of money to take those positions. Martin Feldstein, former head of Harvard’s economics department and Reagan’s chief economist, has made millions consulting to the very financial institutions that got us into trouble, and he is not alone. Glenn Hubbard, who now is head of Chicago B-school and was in Bush’s economics team, or Summers, former Pres of Harvard and the key economist in the Clinton WH…all of these guys make millions sitting on boards and consulting. They are not objective, and they have yet to admit the failure of their ideas to account for what happened, nor can they now explain how they jettisoned those ideas at the height of the crisis, essentially socializing the losses of their paymasters, but then returning to die-hard capitalism’s religion now that the CP market is running again and the balance sheets of the Wall Street banks are largely healed. This breathtaking silence about how their system created a crisis, was jettisoned to solve the crisis, and now is being defended again is mind-boggling to me.
So when your article characterizes the mistake as being one in which these economists lost their mental strength and decided to not throw 20%+ of American workers–the vast majority of whom don’t work on Wall Street and were not involved in, much less the cause of, the crisis or events leading up to it–I view that account as totally off-base and ignorant of the many facts that I know. Those economists did not and still do not care about the unemployment rate in the US, but they very much care that they can continue to make $300K a pop for the board seats that they occupy, and they will continue to charge $250K per academic paper arguing how great laissez-faire economics are and how job-killing any kind of regulations are–I know this, since they have already written loads of these papers, without even having the decency of admitting that they were paid so much for their authorship. If I, as a sell side analyst, recommend a stock to the public, then I have to admit whether I already own the stock, have family members employed there, etc.; however, these guys do not admit the obvious conflict of interest and would not deign to answer the question if you were to ask. You are too far beneath them. But if you want to believe that it was their concern for the downtrodden that was the problem, then by all means, hold fast to that fantasy, but try to recognize it for what it is…
Obama is part of the monied elite, with the special interest of Wall Street preventing reform. There is no difference between his administration and the four that preceded it…
“The government in China is using market mechanisms and devolving power to the regions, so it is not the black and white, dictator or invisible hand dicotomy that you describe. Having said that, the Chinese can build high speed rail and huge dams and other public goods that will not yield positive ROIs and can overcome zoning issues or hold-out problems or grandstanding populist politicians or provincial special interests in doing so. This means that they now have the infrastructure to zoom ahead of India and become the lowest cost factory to the world.”
Isn’t the failure of public goods to not yield positive ROIs an example of “externalities” that the authorities must somehow fix? How would they do it? The great mass of Chinese still live at below poverty level, so how does China actually pay for the damages to the environment from a Three Gorges, or a money-hemhorrhaging high-speed rail system, or virtually empty new cities (not “20 buildings”).
One hand giveth: “devolving power to the regions” and one taketh away: “provincial special interests.” Hard to tell what’s really up. And hard to not see the veiled admiration for the heavy hand: ”…and can overcome zoning issues or hold-out problems or grandstanding populist politicians or provincial special interests in doing so.”
This is the template the developing world should follow? The wholesale ignoring of local populations’ concerns? The imposition from above of massive projects? The goal to become a low-cost factory that churns out drek?
abc, it’s always a pleasure to read your comments, but could you throw in a few more paragraph breaks? Speaking as an alte kocker, it’s just harder for me onscreen than it is on-page to plow through a long discussion without some visual rests. Thanks.
Wow. This discussion has been facinating. And to think, if we could just revert back to the economic policies of the Carter administration, we would be humming along at “normal” levels of unmeployment and inflation.
Anyone computed the Misery Index recently?
Speaking of “Jihad”, this sounds like good news: jihadi bases on the U.S. – Mexico border?
Danny, do you think it’ll effect the housing market in San Diego. Okay, snark aside, this is not good. The headless bodies in Mexico’s drug war have made their unsightly appearance in the last few years was a sure sign of double teaming. Unless, we want this thread to go to 200 posts, it’s a discussion worthy of a separate thread. The link between poppy fields in Afghanistan funding the Taliban or the use of ‘little blue pills’ in other places bodes badly. It’s the eclectic blend of jihadis and dope pushers and users or the morphing of the Caliphate and crack that makes me shudder.
SADIE, I forget where you located, but the California border no longer really exists. If there are Taliban or Al Qaeda sleepers out there, you can rest assured that many of them have already crossed into this state. (If you want to read a real downer, check up on Victor Davis Hanson’s chronicles of the destruction of California’s Central Valley and its devolution into a third-world s**thole.)
Just a few hours ago in San Francisco, the ditz called “Sheriff” announced that he thinks it’s unfair to forward IDs and fingerprints of felony arrestees to La Migra to see in they’re in the country illegally. If/when some 72-virgin-loving mass murderer does his thing in S.F., do not fear, it somehow will be the fault of the Tea Party/Bush/racists/homophobes.
That’s no sheriff – that’s a Federale on the payroll.
Well, it looks like abc isn’t part of the Obamanation. That is clear even if nothing else is.
“Isn’t the failure of public goods to not yield positive ROIs an example of “externalities” that the authorities must somehow fix?”
Not really. Here’s how I think about it. ROIs that accrue to an investor EXCLUDE the public benefits associated with the investment. So, if I start building schools for girls in Afghanistan, since local leaders won’t do it for whatever reason (and all of them bad), then I can calculate a value in terms of expected future tuition, net of variable costs, to recoup my investment. The problem is that this calculation ignores the tremendous public externalities associated with educating women in Afghanistan, like a higher quality workforce, better family planning, etc. The country will get benefits that I cannot capture as the private investor, so it is better for the government to undertake that investment in that situation, in most cases. Or, to put it another way, the government should have a higher willingness to build that school than the local private investor would. Similarly, China’s government is undertaking projects that no private investors would undertake because they see the public benefits of such investments that cannot be captured by private enterprise, but which will enhance the value of China post the investment. These projects generally relate to infrastructure projects.
“How would they do it? The great mass of Chinese still live at below poverty level, so how does China actually pay for the damages to the environment from a Three Gorges, or a money-hemhorrhaging high-speed rail system, or virtually empty new cities (not “20 buildings”).”
Electricity and river commerce made possible by Three Gorges should have a tax on it to cover those damages, including the loss of property by the many people displaced. I suspect that China is providing inadequate taxation on this, since they tend to under compensate for the property taken, and the country continues to subsidize its energy to drive development. These are market distortions, but they help China and hurt other developing countries (and probably us too), so they will continue in all likelihood going forward. The money-losing trains will continue to run since the fancy infrastructure attracts foreign investment and encourages migration into cities in a more efficient way. The money lost on those rails is probably partially recouped in lost productivity avoided (check out the traffic on roads in Shanghai when you are trying to meet multiple clients across town) and partly viewed as a signal of modernization to attract foreign investment. It also is a mechanism to facilitate technology transfer, just as the Koreans got tons of German and French know-how for highspeed trains after contracting for a major project in the 90′s. Those other factors need to be weighed as well, but a strict private company analysis of the ROI of the project would correctly ignore them.
“One hand giveth: “devolving power to the regions” and one taketh away: “provincial special interests.” Hard to tell what’s really up. And hard to not see the veiled admiration for the heavy hand: ”…and can overcome zoning issues or hold-out problems or grandstanding populist politicians or provincial special interests in doing so.”
The Chinese are pragmatic people, like most Americans. While they did fall into the trap of communism, they did so amidst war, invasion and starvation. America, which has resisted the strict ideologies of Western Europe–our greatest philosopher is William James, arguably–and other places, has been as lucky as virtuous to not fall into the traps of communism, fascism, theism, etc. As long as the good far outweighs the bad, which the economic data bears out, then I think most Chinese will forgive the problems of development, many of which we’ve undergone in American history. I see one hand giving a lot more than the other hand gives away, and the giant sucking sound of capital rushing to China, as well as the high marks its citizens give its government, are proof of this.
“This is the template the developing world should follow? The wholesale ignoring of local populations’ concerns? The imposition from above of massive projects? The goal to become a low-cost factory that churns out drek?”
The Africans and Indians and Haitians would give their eye-teeth for the opportunities that exist in China. So yes. And there is no wholesale ignoring of concerns of the local population. The rate of wealth creation, pulling them out of poverty, is unprecedented in scale and speed. Also, the amount of corruption and graft is remarkably low in light of the massive government interventions, since the leadership is acting in an enlightened and nationalistic way. Plus, the penalties for corruption are far greater than in the US. If the hooker-starved, cocaine-addicted, hopelessly corrupt hitters on Wall Street were in China, not only would they have been charged (which they were not, except in two cases of rapid acquittal), but they would have been executed. Now, I am not an advocate of the death penalty, but you can see why they might have less corruption than we do…
I don’t mean to sound starry-eyed about China. I travel there frequently and know the place fairly well, and I know about many of their risks and problems. But in the context of this group and the prevailing viewpoint here, I think that I need to accentuate the positives and strengths since they are often given shortshrift since the country is not following our path of development strictly, nor is it an unquestioning ally of the US. But if you set aside your home bias for a second, you will quickly be able to acknowledge their remarkable accomplishments, however begrudgingly.
ABC ruefully acknowledges: “Pollution is bad. THere is no doubt, but it hasn’t been bad enough to disrupt the economic growth, nor cause meaningful increases in public outcry to create a meaningful threat going forward.”
Good to know it doesn’t disrupt the economy in China. Not like in southern California, where ABC ruefully bewailed the tremendous “cost of pollution” on the economy that wasn’t being recovered by user fees.
Just in case there is any doubt, however, ABC assures us “China’s government is the most popular adn loved by its own people in the entire world.”
THAT’S JUST NOT TRUE. The most popular and loved government by its own people is North Korea. Just ask them!
BTW, ABC, you should check before making flinging “facts” off the top of your head, such as “beach front property in Nebraska”. http://www.boatingamerica.com/states/nebraska/nebraska.htm. Par for the course so far, though.
And, finally,…under Mussolini the trains ran on time. When ABC pontificates to others about “classic example of faith over facts, ideology over empirical analysis”, then…pot meet kettle: this is getting beyond farcical!
It is ironic that perhaps the best example the world has ever seen regarding the successes of laissez-faire capitalism is in fact in China – Hong Kong! I recall asking a Chinese friend of mine when Hong Kong passed from the British to the Chinese, “Do you think China is taking over Hong Kong or will Hong Kong take over China?”, he just smiled and nodded.
SADIE – I am resigned to the fact that our country is already full-loaded with Jihadi cells that are ready to wreak havoc on us at a moments notice. We have already had some attacks, although the MSM has been a co-conspirator in silence on this. I suspect that we will soon experience several waves of attacks. My only advice is to be careful and…lock and load!
Whoops, I almost missed this …from ABC:
“Now, I am not an advocate of the death penalty, but you can see why they (China) might have less corruption than we do…”
Sheesh! Now I know that ABC is flying blind…
http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results
“ABC ruefully acknowledges: “Pollution is bad. THere is no doubt, but it hasn’t been bad enough to disrupt the economic growth, nor cause meaningful increases in public outcry to create a meaningful threat going forward.”
Good to know it doesn’t disrupt the economy in China. Not like in southern California, where ABC ruefully bewailed the tremendous “cost of pollution” on the economy that wasn’t being recovered by user fees.”
Africa and Haiti don’t have a lot of air pollution, but I didn’t advocate avoiding industrialization to keep things pristine. You have me confused with a tree hugger. And I don’t recall saying that China shouldn’t set up the same taxes to avoid negative externalities around pollution that we have. You are putting words in my mouth to make me look like I am contradicting myself, but that hasn’t occurred. I will repeat: China has its problems, but to throw their record under the bus because they have pollution while ignoring our problems or acknowledging that we had the same problems in a similar stage of industrial development is just nonsense. Nothing Danny has written here makes me think otherwise, notwithstanding his continued use of colorful adverbs.
“Just in case there is any doubt, however, ABC assures us “China’s government is the most popular adn loved by its own people in the entire world.”
THAT’S JUST NOT TRUE. The most popular and loved government by its own people is North Korea. Just ask them!”
Good point. I forgot about North Korea. But seriously, the Chinese do love their government and are more nationalistic than they have been in years. If you haven’t been there, then you don’t understand this. North Korea will not let you even meet their citizens. China is extremely open by comparison.
“BTW, ABC, you should check before making flinging “facts” off the top of your head, such as “beach front property in Nebraska”. http://www.boatingamerica.com/states/nebraska/nebraska.htm. Par for the course so far, though.”
So I have a buyer…
“And, finally,…under Mussolini the trains ran on time. When ABC pontificates to others about “classic example of faith over facts, ideology over empirical analysis”, then…pot meet kettle: this is getting beyond farcical!”
What is farcical? What does Mussonini’s train schedules have to do with infrastructure investment in China or the public externalities associated with collective goods? Are you making a point or setting up a punchline? Please tell me you have a little more than this…
“It is ironic that perhaps the best example the world has ever seen regarding the successes of laissez-faire capitalism is in fact in China – Hong Kong! I recall asking a Chinese friend of mine when Hong Kong passed from the British to the Chinese, “Do you think China is taking over Hong Kong or will Hong Kong take over China?”, he just smiled and nodded.”
Have you been to HK recently? All the growth has migrated to the mainland. Hong Kong was as dead as I’ve ever seen it when I last travelled there in August. All the tycoons in HK have moved to China, and all the production has long since left HK for Shenzhen or places farther north. The only thing that is still there is the financial services sector, but that will move to Shanghai over the next 10 years, now that the laws have been written and capital flows are loosening. HK definitely had a laissez-faire version of capitalism that served the city well, but without China, they would have been badly hurt during the last three financial crises to hit them. More importantly, they are now a shell of their former selves, now that all the action is in China. But you’ll find an anecdote from 14 years ago more compelling that the reems of economic data right under your nose. Curious.
China’s economic growth is on the coast, starting with Hong Kong. A bunch of people fled Hong Kong when they knew China was going to repossess the location. And they aren’t going back any time soon.
China’s political power is concentrated in the north east, however, thus we have a class struggle as well as a cultural struggle. Northern China speaks Mandarin and Southeastern China speaks a different dialect. The difference can be seen in how kung fu is pronounced. In Beijing Mandarin, kung fu is kung fu. In the southeast, it is Qong fu.
While there are many reasons for why commerce is dispersing from Hong Kong, the primary two I would list would be the migration of much of the capital wealth carried off by the residents with enough cash and influence to get out while they could and because China has a version of corruption even more authoritarian than America’s Democrat Unions.
The unions keep commerce with them and kill all commerce that would compete or interfere with their extortion racket. When Chinese politicians came to be able to command Hong Kong, they redistributed the commercial capacity to their own provinces, such as Shanghai, because that’s where their power is and what benefits their city, benefits their clique of interests and corporate executives.
We’ve already seen how government power works to keep American unions in power by preventing businesses from moving to where the best markets are. The Chinese version is even more authoritarian and effective.
abc, in many ways you’ve laid down a good case for China in the sense of explaining the dynamics, as well as the accomplishments, of its economy. I mostly agree with your argument that concerns like pollution and money-losing infrastructure projects are prices you pay now to establish the basis for future wealth.
But there are still questions you haven’t answered or claims that you make that trouble me.
For example, I still don’t know what pages out of the Chinese book we should take in addressing our own economic problems. As I’ve said before, an attitude that flirts with outright admiration for China’s heavy-handed development tactics slips out in your discussions in several places.
There is a puzzling willingness to tout the love of the Chinese people for their national government, a claim that seems to be based on your personal contacts with a (privileged) few out of 1.2 billion people, or citations of dubious polls that look to me to border on willful naiveté about how a totalitarian government controls the flow of information. In some ways, your reportage reminds me of the travelers to the Soviet Union in the 1930s who returned to the West with glowing reports of how the Russian people loved their new owners. I’ll come back to that.
“The rate of wealth creation, pulling them out of poverty, is unprecedented in scale and speed.”
I agree. The scale and scope are enormous. However, as Danny commented on this in a reply to Zach, the tendency to believe that an economic growth trend is permanent sooner or later enters the realm of make-believe:
· Assuming a middle class of 300 million people (generous figure), and excluding the wealthy government and military Mafioso at the top, China must still grow enough to lift an additional 800 million people out of poverty. What is going to be the source of the prodigious increases in productivity necessary to do that?
· As the global economy stumbles, what combination of customers will continue to stoke the country’s growth? While China is sitting on a pile of dollars, it is looking askance at the U.S. as we careen toward financial ruin. The Chinese cannot be pleased by Obama’s qualitative easing, the classic ploy by profligate, nearly bankrupt governments to inflate their way out of debt. How does it affect China’s prospects for growth if the IOUs (dollars) it is partially relying on to finance it are bleeding value daily?
· The country has less arable land than the similarly sized United States, and is converting farm land to non-agricultural uses at a high rate. As many farmers and rural workers come to the cities (despite the internal passport system dedicated to making sure they don’t), how will the country feed itself? By continuing to hotwire the environment? (Tibet, for example, has been almost totally despoiled by breakneck logging, mining and hunting.) Paying huge amounts for fertilizer and miracle grains?
· Another demographic problem: Thanks to the frantic abortion of female babies, the country has an approximate ratio of 120 young men to 100 young women—a classic set-up for unrest as youths see no ability to form families in a famously family-oriented culture. Add to that a rapidly aging population as in Japan and Europe, with not enough wealth to create a social safety net.
· One way the Chinese have sustained their high growth rate is through prodigious construction of high rises, public buildings, and housing, much of it in so-called “new cities.” The problem is that, just like what we Yanks did to ourselves with the housing bubble, China is running out of buyers. Where will the new buyers who can take up the rapidly increasing slack come from? Europe? India?
Back to China’s government:
“Also, the amount of corruption and graft is remarkably low in light of the massive government interventions, since the leadership is acting in an enlightened and nationalistic way.”
Here is the problem with that statement: There is no way to establish it in fact. If you are depending on government statistics or polls to prove it, there is no way for you to know if the figures cited are true.
The Chinese government is basically a criminal syndicate—bear with me on this comparison. That isn’t to say that it isn’t a fairly enlightened criminal enterprise in the sense that it knows when not to put protection racket screws on people, and to launder its money by investing in legitimate fronts. (I include the People’s Liberation Army among the syndicate’s members.) And like all well-established criminal enterprises, people will tolerate it as long as it doesn’t kill too many of them in broad daylight and delivers a modicum of (gradually improving) services.
However, like all criminal enterprises, the government is a law unto itself. As long as the guy who owns the donut shop stays out of mob business and doesn’t cheat the runners who come to pick up the protection money, he can live a fairly decent, hassle-free life. But if he crosses the mob, he can be dispatched very quickly. Because there is no real rule of law under a criminal syndicate.
So, if there is no real rule of law (codices set up to impress impressionable westerners notwithstanding), and I own the means of creating and disseminating information, I can decide who is “corrupt.” I can pretend that everything in the country is hunky dory and that the people I execute for corruption are very important examples, even though they’re really just little punks and not the big boys who actually run the system. On the rare occasion when a big boy is hanged or shot, I refer you to mob etiquette as described in “The Godfather.”
Those are just a few of the problems I have with China. That is not to gainsay that country’s genuine material progress. But the prospect of a radiant future that I sense is being sold here is a no sale for me.
Ymarsakar,
Could you please name the unions in HK that you think are responsible for the decline of the economy there? I have no idea how to respond, when I am not even aware of the problematic group to which you are referring. It was my understanding that there was little unionized labor in HK, but it went overseas anyway… Unlike in Germany, where there are stronger union rights than in the US. Very curious theory you are raising, so I’d like to hear more.
I did not claim there were unions in hong kong. I made the statement that unions in the US are corrupt, and thus China has their version of corruption, and it is most likely not called by the name “union”.
Martel,
“I still don’t know what pages out of the Chinese book we should take in addressing our own economic problems…”
The lessons apply more toward developing countries that are playing catch-up (read India); however, recognizing their playbook is not merely ineffective Communist rule or free-reign capitalism does suggest many things that we need to focus on. For example, seeing the myriad subsidies and state interventions that distort markets in ways that hurt our economy much more than theirs suggests that blind commitment to free trade is not a viable solution anymore. That is but one example of many one could raise.
“an attitude that flirts with outright admiration for China’s heavy-handed development tactics…”
I was very clear that China should be properly compensating individuals for property takings, and for internalizing the externalities associated with pollution via taxes. You are putting words in my mouth. My comments relate more toward the massive differences in infrastructure quality in India versus China as a result of the former country’s inability to get big projects done due to highly inefficient government. Gridlock precludes building the necessary roads and power plants for India to compete with China. And while conservatives say very small government is ALWAYS good, the reality is that had prior generations agreed with them, we’d have no interstate highway or transcontinental railroad in this country. That is not admiration, but a recognition that such projects require big government. An inconvenient fact, but one well supported by the historical record nonetheless.
“…citations of dubious polls that look to me to border on willful naiveté…”
Is it naive to say that a President’s reelection campaign is more vulnerable when the economy is bad? So why is it naive to rely on polling data across Asian and other countries, including China, that show the same thing? You dismiss out of hand polls that you haven’t read, but which make conclusions that conflict with the narrative that you prefer. Please state what about the polls you don’t like. And don’t say that it’s because people are afraid to respond honestly. I’ve spent enough time in China to know that people speak freely about their government. Never mind that the government could not possibly censor the polls, given the methodology.
“…tendency to believe that an economic growth trend is permanent sooner or later enters the realm of make-believe.”
Agreed. I make a lot of money betting on reversion to the mean when dumber investors extrapolate the present ad infinitum. But when did I say that China would continue to grow at 10-12% for another 30 years? You are again putting words in my mouth. China has already done what was though impossible and unprecedented, but I never extrapolated that into the future. Heck, I even admitted that future corrections are likely.
Also, you listed some potential problems for China, but you offer few figures to support your case. If there is a housing bubble, then what is the excess inventory and what is the demand growth rate? If you don’t know that, then you cannot imply that it is worse than what we are facing in America. And remember, the original claim was that because they don’t do capitalism as we do, they will face bigger problems, but our housing bubble appears more egregious, based upon the numbers involved. Please give some numbers so we can have an intelligent discussion.
Japan has less arable land than China, but became the second largest economy with less than one-half the population of the US. And the male-female imbalance will lead to economic disaster because… Would love to understand why you think that China’s current path will suddenly change even though they continue to increase their value add in manufacturing and are now starting to increase consumer-driven demand as well. The future still looks bright, and your pointing to male-female discrepancies looks like a grasp for straws. Are you saying China’s economy will slow to 8% or that it will collapse to 50% of its current size? Your argument is not very clear.
“However, like all criminal enterprises, the government is a law unto itself. As long as the guy who owns the donut shop stays out of mob business and doesn’t cheat the runners who come to pick up the protection money, he can live a fairly decent, hassle-free life. But if he crosses the mob, he can be dispatched very quickly. Because there is no real rule of law under a criminal syndicate. ”
I think you have China confused with North Korea. Major US companies have committed billions of dollars in investments in the country because there has been major legal reforms. They still lack the full protection of a known legal system like the one in the US or UK or Australia or Canada, but it is not the kind of system that you describe. There are courts and judges with a large degree of independence. The politically powerful do make a mockery of the system, but can you state with a straight face that Dick Cheney and you would face the same legal outcomes? What about a Hollywood celebrity and a steel worker? I think you have the US system confused with a utopia and the Chinese system confused with a Godfather movie. Both are fantasies.
As for the graft, it is hard to hide massive graft. We know it occurs in African nations, despite their “documentation” to the contrary. And we know that it is relatively minor in China compared to the massive amounts of money involved in these projects. Do the children of PLA elites get great positions? Of course. But how is that different than Chelsea Clinton getting a great job in a NYC hedge fund? I am talking about $8B of US taxpayer money delivered in cash to Iraq and disappearing. That happens much more often in India, where graft is how government officials supplement their paltry salaries, than it does in China. Talk to anyone who does business in both countries and you will understand.
“the prospect of a radiant future that I sense is being sold here is a no sale for me…”
China has been the richest country in the world for at least 5 of the 6 millennia that we have had civilization with cities. As I said, I believe in reversions to the mean, and history speaks clearly on what the “normal” position of China is on this earth. Even at a modest growth rate, China will pass the US in size in your lifetime, and the tendency of global trading nations to achieve at least rough parity in wages means that China’s standard of living will converge on ours over a longer period of time, so how this process doesn’t seem inevitable to you is beyond me. Perhaps you should take comfort in the fact that China’s poliitical and social systems will likely become more liberalized as wealth increases, as has been going on since 1978. You should go visit the country. You will not feel as though you are being watched or afraid to speak openly with people on political topics. Heck, I had such conversations right outside of Mao’s mausoleum with about a dozen Chinese who were very happy to hear from an American, learn about our fears of and hopes for them. And they were also happy to share their views, which were not monolithic at all. China has changed much, but your view resembles my experience with it not one iota.
Ymarsakar, so please tell me again why the economy in ueber laissez-faire HK is flagging while it is going like gangbusters to the north in Communist-controlled China? I thought unions had something to do with this… I guess I misunderstood.
This was already covered in 143-144. What didn’t you get?
Charles Martel: As the global economy stumbles, what combination of customers will continue to stoke the country’s growth?
The Chinese themselves.
Charles Martel: The Chinese cannot be pleased by Obama’s qualitative easing, the classic ploy by profligate, nearly bankrupt governments to inflate their way out of debt.
The U.S. is hardly bankrupt, but you are right that it may tend to devalue their assets.
Charles Martel: How does it affect China’s prospects for growth if the IOUs (dollars) it is partially relying on to finance it are bleeding value daily?
They also hold huge assets in other currencies. In any case, it’s better to hold assets than owe them.
Charles Martel: As many farmers and rural workers come to the cities (despite the internal passport system dedicated to making sure they don’t), how will the country feed itself?
The bigger problem is the change in diet. Meat and other animal protein sources require far more resources than plants.
Charles Martel: Where will the new buyers who can take up the rapidly increasing slack come from? Europe? India?
As China’s wealth increases, they will eventually become one of the biggest consumers in the global economy.
Charles Martel: The Chinese government is basically a criminal syndicate—bear with me on this comparison. But if he crosses the mob, he can be dispatched very quickly. Because there is no real rule of law under a criminal syndicate… “The Godfather.”
Quite the contrary, The Godfather is an example of ‘lawful’ behavior. Punishments are meted out only when necessary and only when justified under the code they live under. Of course there are good kings and bad kings, wise and cruel kings. But kings nonetheless.
With regards to China, there is a big boss, and you better not cross him. But if you don’t buck the system, then you can manage, and even seek justice for transgressions against the boss’s code. Within reason, of course. Because the boss doesn’t like to be bothered.
Charles Martel: But the prospect of a radiant future that I sense is being sold here is a no sale for me.
What is happening is a process of industrialization. People are moving from low GDP work in agriculture to much higher GDP work in the city factories. This results in rapid growth, along with an increase in the boom-and-bust tendencies in the economy. Many problems, such as pollution and crowding, are put aside in the mad rush. Centralized government can help rush through these changes, though there are, no doubt, many mistakes being made. And there is a real possibility of a huge bust at some point due to all the contradictions latent in the system. Inflation is already becoming worrisome, and some areas are choking on pollution.
Once industrialization is more-or-less completed, then China will enter a new phase, the consumer society. People will demand changes so that government and the economy are more responsive and productive. And there is a real possibility of those changes occurring because the people demanding the changes will have vast economic and political power.
abc: I was very clear that China should be properly compensating individuals for property takings, and for internalizing the externalities associated with pollution via taxes.
Yes, you were.
Eminent domain in China has many of the same problems as in the U.S.
http://joshspear.com/item/chinese-couple-will-not-move-out/
China is a nation of laws, even if we may reject some of their laws as repressive or unwise.
Ymarsakar writes:
” the primary two I would list would be the migration of much of the capital wealth carried off by the residents with enough cash and influence to get out while they could…”
Those residents left for Canada, Australia and the US, among others. And they left before 1997. How does that account for the much more recent declines in the economy in HK due to people leaving for CHINA??
“…and because China has a version of corruption even more authoritarian than America’s Democrat Unions….The unions keep commerce with them and kill all commerce that would compete or interfere with their extortion racket. When Chinese politicians came to be able to command Hong Kong, they redistributed the commercial capacity to their own provinces, such as Shanghai, because that’s where their power is and what benefits their city, benefits their clique of interests and corporate executives.”
So the Chinese (PRC) government commanded textile and light manufacturing industries to relocate to the mainland? When and how did that happen? And does that mean that the lower wages and highly efficient infrastructure outside of Shenzhen, Guangzhou, Shanghai, or Qiongqing, to name just a few, had nothing to do with it? Why didn’t those capitalists go to Malaysia instead? You’ll have to fill me in on the nationalization of HK assets that wasn’t reported in the press… And you’ll have to explain how this behavior that wasn’t represented in the press is similar to collective bargaining rights of unions, since i am still failing to see the similarity. Sorry about that.
Zachriel,
Do you consider crony communism (or communist-managed markets) and crony capitalism (managed capitalism) to be morally equivalent?
I’m not sure why this conversation has gotten so fixated on China. Both abc and Zachriel say they aren’t putting up China as an example on one hand and then extol the virtues of its managed economy on the other. You get the feeling your having a conversation with Friedman.
“Obama is part of the monied elite, with the special interest of Wall Street preventing reform. There is no difference between his administration and the four that preceded it…” – abc
So far, in my mind, this is the money quote of the conversation. Because the distinction between managed capitalism and crony capitalism is semantics. This is not a partisan issue. abc says it is capitalism corrupting government, but I would submit what has happened in the financial markets is crooks corrupting capitalism.
abc took exception with some of the Bill Bonner piece, maybe he’ll agree with this:
“I believe we no longer have free market capitalism and we no longer have a democracy,” says David Stockman, the blunt-talking former Michigan Congressman and Director of the OMB during the Reagan administration.
What now exists at the heart of the U.S. economy, Stockman argues, is “crony capitalism” – a system that benefits and even rigs the system in favor of America’s banks and bankers at the cost of average Americans. It’s a system built on the back of government-issued bailouts and free money. “The Fed is the great enabler” through its free money policies, which “generate results the market wouldn’t otherwise provide for,” he says.
For example, banks – which caused the 2008 economic and financial crisis – are enjoying profits once again as so-called “risk assets” reflate. Meanwhile, well-meaning members of the middle class intent on saving cash continue to get “savaged” (Stockman’s word) when they keep money in low-yielding savings accounts and rely on a dollar that continues to lose value.
When Bernanke & Co. allow banks to borrow money at no cost for so long it turns “capital markets into a rip-roaring casino that really is not productive for the real main street economy and is generating windfall gains for to a very limited number of people for no good purpose,” Stockman tells Dan Gross in the accompanying interview.
These policies are nothing new, Stockman says, but “crony capitalism” hit new levels of absurdity in the recent past with the bank bailouts and the auto bailouts.
How do we get back on track?
According to Stockman, the Fed should raise rates immediately and end the possibility of more bailouts.
http://finance.yahoo.com/blogs/daily-ticker/david-stockman-crony-capitalism-killed-free-market-democracy-120004233.html
It’s my understanding that the fed is drawing back from QE2.
abc, a response:
“And while conservatives say very small government is ALWAYS good, the reality is that had prior generations agreed with them, we’d have no interstate highway or transcontinental railroad in this country. That is not admiration, but a recognition that such projects require big government. An inconvenient fact, but one well supported by the historical record nonetheless.”
I would appreciate it if you could link me to the source that says conservatives believe that very small government is ALWAYS good. (You have this regrettable tendency to make blanket pronouncements about political movements you dislike but don’t quite understand.)
Also, there is a difference between a government that enables and a government that directly owns. The federal government enabled the construction of the transcontinental railroad but did not claim ownership or management thereafter. That government did not consume 22% of GDP and was not led by a president who wanted to manage traffic flow by taxing people for “externalities” that he and other ideologues decided should now be addressed.
“You dismiss out of hand polls that you haven’t read, but which make conclusions that conflict with the narrative that you prefer. Please state what about the polls you don’t like. And don’t say that it’s because people are afraid to respond honestly. I’ve spent enough time in China to know that people speak freely about their government. Never mind that the government could not possibly censor the polls, given the methodology.”
I wasn’t the one who cited favorable polls, so the burden is not on me to produce them. I simply pointed out that under a totalitarian government, truth is the first fatality and accurate information becomes a guarded, monopolized commodity. I’m sure the Chinese government conducts polls that generate real information, such as the level of discontent in rural provinces or urban factories. I just don’t believe that any data from those are what reaches the rest of us. Anyway, I would appreciate it if you could link me to the polls you’ve described. If you rightly ask me for numbers and sources to back up my assertions, I think I’m justified in asking you for the same. Goose, gander, sauce, and all that.
“But when did I say that China would continue to grow at 10-12% for another 30 years? You are again putting words in my mouth. China has already done what was though impossible and unprecedented, but I never extrapolated that into the future.”
My reference was clearly to Zach’s fantasies, which are common among statists.
“Japan has less arable land than China, but became the second largest economy with less than one-half the population of the US. And the male-female imbalance will lead to economic disaster because…”
Regarding the environmental pressures on China, including the rapid despoliation of Tibet, not a word from you.
Japan, population 120 million, is prosperous enough to buy food from overseas. China, population 1.2 billion, has always had difficulty feeding itself (that’s not to say that its modern manifestation hasn’t done a good job of it). Nevertheless, a country has to feed itself somehow. Is Chinese agriculture going to become super-efficient like U.S. agriculture, with lots of machines and fertilizers, producing food for four times the population on less arable land? I simply wanted to know how that is going to be done. Referring to Japan is not an answer.
As for pooh-poohing the female-male imbalance (“looks like a grasp for straws”), you’ve got be kidding. You don’t see any repercussions from having young men running around who see themselves as essentially having no future because they can’t start families? I realize sterility is a virtue in the non-Mexican parts of Southern California, but doubt that it’s held in as high a regard in China.
“Would love to understand why you think that China’s current path will suddenly change even though they continue to increase their value add in manufacturing and are now starting to increase consumer-driven demand as well. Are you saying China’s economy will slow to 8% or that it will collapse to 50% of its current size? Your argument is not very clear.”
Words in my mouth. Didn’t at all say China’s current path will suddenly change, and didn’t offer the figures you’d have liked me to say so that you could argue with yourself.
“They still lack the full protection of a known legal system like the one in the US or UK or Australia or Canada, but it is not the kind of system that you describe. There are courts and judges with a large degree of independence. The politically powerful do make a mockery of the system, but can you state with a straight face that Dick Cheney and you would face the same legal outcomes?”
You dislike it when I don’t produce proof of my assertions. Perhaps you could provide proof (and a definition) of “a large degree of independence?” As to whether Dick Cheney (ah, invoking the Bogeyman!) and I “would face the same legal outcomes,” I’m not sure what you mean. Are you referring to China’s fondness for executions?
“As for the graft, it is hard to hide massive graft. We know it occurs in African nations, despite their “documentation” to the contrary. Do the children of PLA elites get great positions? Of course. But how is that different than Chelsea Clinton getting a great job in a NYC hedge fund? And we know that it is relatively minor in China compared to the massive amounts of money involved in these projects.”
How do you know this? I was not referring to the Chelsea Clintons of China when I mentioned the PLA. There is a difference between being a don and being the child of a don. One runs the enterprise, the other gets to enjoy the fruits of the enterprise in a position where she can do little harm.
“Even at a modest growth rate, China will pass the US in size in your lifetime, and the tendency of global trading nations to achieve at least rough parity in wages means that China’s standard of living will converge on ours over a longer period of time, so how this process doesn’t seem inevitable to you is beyond me. Perhaps you should take comfort in the fact that China’s political and social systems will likely become more liberalized as wealth increases, as has been going on since 1978.”
I remember as boy being told with total seriousness by an old Marxist man I was debating in Pershing Square that the triumph of communism was “inevitable.” Surely I could see that? Years later, I’m being told by a China fan that I should accept the inevitability China’s emergence as the wealthiest nation on earth, and that such wealth will be spread thanks to a political and social system that likely will become more liberalized.
Funny about that liberalization: True, the roving bands of savages that Mao set loose during the Cultural Revolution are gone, and making money is permitted, but the Chinese authorities have retained some of their more endearing practices: they still keep political prisoners, Falun Gong and Christianity are actively persecuted, the country sells the organs of executed prisoners on the international market, the Internet is heavily patrolled and censored, the newspapers are almost a big a joke there as here, compensation for people forced off their lands is pennies on the dollar, and there are tens of thousands of spontaneous demonstrations nationwide each year against government and economic corruption. Liu Xiaobo, the winner of the 2010 Nobel Peace Prize, couldn’t attend the award ceremony in Oslo because he was in prison. At this rate of liberalization, I’m sure some brave soul will propose a Bill of Rights by 2557.
So forgive my doubts about the Great Leap Forward. You know how it is with us conservatives—we tend to restrict our faith to religion.
BrianE, I completely agree with Stockman. If he had been saying the same thing one or two years ago, I would disagree, although he likely appreciated the need to expand the Fed’s balance sheet and flood the economy with liquidity in the midst of a crisis–the exact time when Keynesian theory applies–and would not call for today’s medicine then. But the cure he is calling for now should go well beyond increasing rates. The level of regulation on Wall Street has to go up significantly, and the size of the institutions needs to be addressed. If they are too big to fail, then they either get regulated, cut in size or both. There are a lot of other things that need to happen as well, and the Citizens case did not help, but I agree with the diagnosis of the disease and his prescription of at least the start of a cure.
Martell,
There have been multiple polls and comments on the polls, for example:
http://www.worldpublicopinion.org/pipa/pdf/sep09/BBCEcon_Sep09_rpt_final.pdf
http://pewresearch.org/pubs/1945/chinese-may-not-be-ready-for-revolution
(According to 2010 Pew Survey, “China is clearly the most self-satisfied country. Nearly nine-in-ten Chinese are happy with the direction of their country (87%), feel good about the current state of their economy (91%) and are optimistic about China’s economic future (87%). Moreover, 64% of Chinese have a very favorable view of their own country, a self regard that exceeds that among Americans (48%), Russians (43%), Germans (12%) and Brazilians (31%).”) http://www.chinausfocus.com/political-social-development/egypt-and-china-the-difference-is-leadership-and-economic-results/
(“Polls show Chinese citizens pretty happy with their lot by international standards, although there’s some doubt about how meaningful these polls are. My hunch is that if the Communist Party did hold free elections, it would win by a landslide — especially in rural areas.”) http://www.nytimes.com/2011/05/01/opinion/01kristof.html
http://www.cnngo.com/shanghai/life/goal-cppcc-make-people-happy-124157
Also, there are a number of factual inaccuracies in your last post:
1. the US government DID own the Transcontinental RR for a long time. They were forced to GIVE AWAY to tycoons like Huntington lots of land around the RR in order to convince them to undertake the risky project, but the government did not give up ownership of the RR until much later.
2. the 22% of GDP is not “consumed by government” in the sense that you mean; rather, 22% of GDP became driven by government when the non-government sector collapsed during an economic crisis. Only a fraction of that amount is related to specific policies of the Obama administration. I’ve watched conservatives like Palin imply that the entire amount is new spending, but that is not true.
3. comparisons to Marxist Russia are totally off the mark. China has been the largest economy and richest country in the world for most of human history, while Russia (under Tsars or Comrades) has been far less rich or powerful. There are really no similarities at all in economic or historical terms.
4. Japan, Korea and Taiwan have become very rich without a Bill of Rights. You confuse political liberalization with economic liberalization, and you assume that if your country lacks a US style democracy, then your economic development is jeopardized, but history shows that is hardly the case.
5. there is no proof that the male-female imbalance is causing instability that will threaten development. Please show proof of this or stop raising it as a sideshow.
6. The despoilation in Tibet is actually far less than in other parts of the country with higher levels of industrialization, so it is inappropriate to focus on that area unless your issue is politics rather than environment or economics.
7. China is agriculturally independent currently.
Also, could you please clarify the following:
1. Do you think that powerful political figures or rich Hollywood stars receive the same treatment under the law as the average citizen?
2. Do you think that there is a difference between Chelsea Clinton getting an enviable hedge fund job because of her well-connected parents and the son of the Chinese Premier getting funded for his hedge fund for the same reason?
3. On what basis (including perhaps dollar figures) do you conclude that China is far more corrupt than the US in terms of governmental graft, corruption and the like? Given that you have called it a criminal syndicate, it seems obvious that you think the level of theft is much greater than in Western democracies. (By the way, the Chinese government has been returning property seized during the Cultural Revolution to their historical owners, so I wonder how that development impacts your views…)
4. How should I interpret statements like Grover Norqvist saying he wants a government small enough to drown in the bathtub as meaning anything other than conservatives do not like big government. if mine is a blanket statement, then please explain that comment, the “Don’t Tread on Me” signs, the rhetoric of conservatives and Tea Party folks and th rest of it. I don’t make this stuff up, and I really try to understand the opposing viewpoint, but with all of that data, I am sincerely confused to hear that it is a blanket statement to say that conservatives don’t like big government ever.
5. What exactly are you saying about China. They appear on a path to prosperity, but you said that you don’t believe they have a radiant future. But for that to be true, then you have to assume that growth suddenly slows very dramatically or reverses, or you will think their future less than prosperous despite wealth because they don’t have our Bill of Rights. That’s an okay view, but it has little to do with my argument that other developing countries ought to adopt their economic policies, although Larry Summers would advise them instead to follow the free market only. So please explain what you are trying to say. I must be a little dense today, since I don’t really have it.
I think the bottom line is that reality is more complex than your account of the country, just as you claim my view of conservatives’ feelings about big government. I’d like to learn more about the latter, and hope you can keep an open mind on the former…
BrianE: Do you consider crony communism (or communist-managed markets) and crony capitalism (managed capitalism) to be morally equivalent?
It’s hard to compare generally, but we might look at history. Communists have, for ideological reasons, attempted to undermine the individual in service to the state. Crony capitalists are usually content to let the people be, as long as they don’t attempt to organize, in which case, they often react violently.
BrianE: I’m not sure why this conversation has gotten so fixated on China.
Because it represents an economically successful economy that has a large degree of central planning.
BrianE: Both abc and Zachriel say they aren’t putting up China as an example on one hand and then extol the virtues of its managed economy on the other.
Don’t know where you read that. It is an example, but our point is that it is an instance of a developing country and rapid industrialization. Some degree of centralized planning is obviously beneficial, though post-industrial economies require strong markets, as well.
BrianE: abc says it is capitalism corrupting government, but I would submit what has happened in the financial markets is crooks corrupting capitalism.
The way we read abc was that there is a very close relationship between business and government in the U.S. which undermines rational reform, not that one corrupts the other, but that they both collude. There is some element of truth to that, but we disagree that Obama is not different in any respect. Rather, he has to work within the existing political system, which includes people that strongly disagree with that reform, often for ideological, rather than rational reasons. Obama is no socialist, but he would govern more to the left, if that is where the political center was.
Charles Martel: My reference was clearly to Zach{riel}’s fantasies, which are common among statists.
Indeed, our position is quite the contrary. You might want to try and read more carefully. Thank you.
Charles Martel: Regarding the environmental pressures on China, including the rapid despoliation of Tibet, not a word from you.
Pollution is some areas of China is already becoming a serious obstacle to productivity, as well as creating political instability. This is one of the latent problems that have to be addressed if China is to continue its economic development.
Charles Martel: Is Chinese agriculture going to become super-efficient like U.S. agriculture, with lots of machines and fertilizers, producing food for four times the population on less arable land?
Another huge issue. As the middle class grows, people expect a higher quality diet, including more protein. That will inevitably put a strain on resources. Energy and carbon-emissions are another problem that needs to be addressed. Though China will have to become much more open, and allow greater political expression, some sort of centralized planning will be necessary to approach these problems.
Charles Martel: Funny about that liberalization:
Funny thing about liberalization. In the twentieth century, you could get shot in America, just for advocating the end of segregation. But things changed.
You’re right that we shouldn’t just assume China will inevitably liberalize. But there will be great pressures for change, because wealth and power will become concentrated, not in a few political masters, but in the rising middle class.
abc, I’ll respond at greater length later. Thanks for asserting what you have repeatedly asserted here, namely that your statements are standalone truths (“China is an agriculturally independent country,” [therefore I don't have to answer your questions about how it's going to feed itself in the future]) but I am required to supply proofs for every assertion I make about the country.
Zach, don’t be disingenuous. Your comparison of the era of segregation to the current repression of the Chinese people simply doesn’t work. The people doing the shooting in those very few cases where anybody was shot for advocating integration were not agents of the federal government. See the difference? In any case, the number of people who died in the South because of segregationist racists is miniscule compared to the number of people that the Chinese government murders every year. Please try to find a more apt analogy.
Charles Martel: Your comparison of the era of segregation to the current repression of the Chinese people simply doesn’t work. The people doing the shooting in those very few cases where anybody was shot for advocating integration were not agents of the federal government.
No, they were protected by State governments, which were then overlooked by the central government under the notion of States’ Rights, a distortion of Federalism. Furthermore, Jim Crow was the law of the land in Southern states.
Charles Martel: See the difference?
Yes, there are differences, but they were both official oppression. The similarity is that change can and will come, even if the reformers are imprisoned or intimidated. The Chinese have already come a long way in just a generation, and though we shouldn’t ignore their various problems, especially violations of civil liberties, we also shouldn’t ignore what has been accomplished, or the real possibility of continued change.
We pointed to specific reasons why change will come: The rising middle class will become increasingly powerful, and will insist on a say in their futures.
Charles Martel: In any case, the number of people who died in the South because of segregationist racists is miniscule compared to the number of people that the Chinese government murders every year.
You don’t have to lynch a lot of people. Just a couple usually does it in a small community. In any case, how many people per capita does China currently execute for political crimes?
One of the issues ignored about China is its manipulation of its currency- pegging the yuan to the dollar.
Off topic (like this entire discussion hasn’t been off topic). Isn’t it interesting that the balance of trade deficit since 1975 is $10 trillion in current dollars and the US national debt is $14 trillion?
Martel: In any case, the number of people who died in the South because of segregationist racists is miniscule compared to the number of people that the Chinese government murders every year.
Zach: You don’t have to lynch a lot of people. Just a couple usually does it in a small community. In any case, how many people per capita does China currently execute for political crimes.
Chuck Martel throws his hands up in the air in exasperation. He can’t quite figure out what Zach means when he says, “You don’t have to lynch a lot of people. Just a couple usually does it in a small community.” How the heck does Zach know that, Martel asks himself? That statement comes from out of nowhere. It also makes no sense to compare a local action, intended to intimidate a local populace, to a nationally publicized execution.
The question, “In any case, how many people per capita does China currently execute for political crimes?” is asked as though China dispenses accurate statistics regarding its political oppressions as freely as Zach’s neighbors give him candy at Halloween. (Estimates of how many people are executed in China annually vary from 1,000 to 5,000. Martel thinks the Amnesty International estimate of 1,700 would be palatable to the leftists here.) Political prisoners are not explicitly executed for political crimes, but can die from neglect, exposure to hazardous substances and torture in the Chinese concentration camp system (http://www.wcl.american.edu/hrbrief/07/2laogai.cfm).
Also, Martel cautions Zach to not head down the slippery slope of utilitarianism, a philosophy that often leads to too easy an acceptance of gulags and repression. It would not matter a whit if the unknowable per-capita rate of Chinese political executions were miniscule. The fact that you are dealing with a government that would even commit one such crime is all you need to know.
A substantial portion of the Chinese farmers are living a subsistence lifestyle. Maybe people who don’t understand what subsistence means thinks they are agriculturally independent but those in the know would not put that label on them just yet.
Abc, I’ll discuss the poll results separately.
“Also, there are a number of factual inaccuracies in your last post: The US government DID own the Transcontinental RR for a long time. They were forced to GIVE AWAY to tycoons like Huntington lots of land around the RR in order to convince them to undertake the risky project, but the government did not give up ownership of the RR until much later.
You’ve confused ownership of the right of way with ownership of a physical railroad. The U.S. government never owned the Union Pacific or the Central Pacific. That’s why you can’t say that the government owns the railroad on one hand, then say that it has to give away land in order to get it built. How can you own something that doesn’t exist, then have to give it away to make it exist?
As for being “forced” to give away remote Nebraska grasslands and Utah desert to incentivize the tycoons, I really doubt that the feds were forced to do anything. Ceding cheap land to get a bunch of risk-taking fools to link the two coasts seems like a no-brainer to me.
“The 22% of GDP is not “consumed by government” in the sense that you mean; rather, 22% of GDP became driven by government when the non-government sector collapsed during an economic crisis. Only a fraction of that amount is related to specific policies of the Obama administration. I’ve watched conservatives like Palin imply that the entire amount is new spending, but that is not true.”
Is “driven by the government” the new euphemism? Thanks for introducing me to it.
“Comparisons to Marxist Russia are totally off the mark. China has been the largest economy and richest country in the world for most of human history, while Russia (under Tsars or Comrades) has been far less rich or powerful. There are really no similarities at all in economic or historical terms.”
I forgot. China was never under Marxism and never acquired or replicated the Soviet taste for mass terror and murder. (Yes, it is better now and you’ll get no argument from me that it isn’t.) The problem is that China retains its historical disdain for anybody who doesn’t have power. It has subjects, not citizens. The argument about China’s historic wealth is interesting, but irrelevant. If China in 1500 AD has .5 pigpens per capita compared to France’s .1 pigpens per capita, whoopdidoo. Under both regimes the common people were miserable.
“Japan, Korea and Taiwan have become very rich without a Bill of Rights. You confuse political liberalization with economic liberalization, and you assume that if your country lacks a US style democracy, then your economic development is jeopardized, but history shows that is hardly the case.”
=SIGH= You keep insisting on having me say what I haven’t. I have not said that political liberalization is a precondition for economic development. Look at what China’s mentors in Moscow were able to attain through torture and mass murder! For awhile, the USSR had one of the largest economies on the planet. I have simply pointed out that at some point China might want to pursue a more civilized form of politics, one that does not depend so heavily on censorship, intimidation, imprisonment, mendacity and government cronyism.
“There is no proof that the male-female imbalance is causing instability that will threaten development. Please show proof of this or stop raising it as a sideshow.”
Here are a few easily found URLs that discuss what has been a known issue for several years now:
http://www.msnbc.msn.com/id/…/china-grapples-legacy-its-missing-girls/
en.wikipedia.org/wiki/Human_sex_ratio
http://www.euthanasia.com/china-ra.html
http://www.scribd.com › Research › Business & Economics
“The despoliation in Tibet is actually far less than in other parts of the country with higher levels of industrialization, so it is inappropriate to focus on that area unless your issue is politics rather than environment or economics.”
That was just a test, abc. I always like my map of China apologists to include an inset of their take on Tibet. I can see that it just doesn’t register with you. (Truth be told, while I think the Chinese gutting of Tibet is lamentable, there’s nothing I can do about it, so I’m with you.) As for “inappropriate,” I have to laugh. You are always setting these conditions for what you will allow to be discussed here. Gosh, I feel like a 15-year-old wannabe slut who’s living with Carrie’s mother.
“China is agriculturally independent currently.”
That’s nice, but that’s not what I asked. If you feel it is inconvenient to answer a question about how the country will feed itself with fewer farmers and less arable land, kindly say so. I promise not keep after it if you don’t feel you’d like to/can’t answer it.
“Do you think that powerful political figures or rich Hollywood stars receive the same treatment under the law as the average citizen?”
I just put in a call to Lindsay Lohan. I’ll let you know what she says.
“Do you think that there is a difference between Chelsea Clinton getting an enviable hedge fund job because of her well-connected parents and the son of the Chinese Premier getting funded for his hedge fund for the same reason?”
You’re right, there’s no difference between the two sets of parents. Just like the Chinese premier’s kid, Chelsea can have her parents arrange arrests or diplomatic incidents like naval provocations in the Yellow Sea, or show massive financial favoritism toward certain enterprises.
“On what basis (including perhaps dollar figures) do you conclude that China is far more corrupt than the US in terms of governmental graft, corruption and the like? Given that you have called it a criminal syndicate, it seems obvious that you think the level of theft is much greater than in Western democracies. (By the way, the Chinese government has been returning property seized during the Cultural Revolution to their historical owners, so I wonder how that development impacts your views…)”
You seem think that a sophisticated criminal enterprise engages solely in overt and explicit acts of theft associated with Chicago street punks. That’s not how they work. Theft can be hidden behind a deliberate undervaluing of the nation’s currency, the expropriation of labor from farm workers forbidden to leave their villages, the forced abortion of second children, the stealing of patents and technology from abroad. (Forgive me, I have to laugh when you so earnestly point out that the government is now returning the property that it stole back in the 60s. “Yo, Don Corleone regrets having borrowed your house and now generously is giving it back. Of course he reserves the right to snatch it up again, depending on his mood.”)
“How should I interpret statements like Grover Norqvist saying he wants a government small enough to drown in the bathtub as meaning anything other than conservatives do not like big government. if mine is a blanket statement, then please explain that comment, the “Don’t Tread on Me” signs, the rhetoric of conservatives and Tea Party folks and the rest of it.”
Gosh, now I’m charge of helping you interpret what one man says about the size of government as though I’m responsible for that man? This is the kind of thinking that leads to guilt by association and class warfare (kind of Chinese, don’t you think?) By the way, the “Don’t Tread on Me” signs that you find so chilling were first flown by people who were advocates of limited government, not no government at all.
“What exactly are you saying about China. They appear on a path to prosperity, but you said that you don’t believe they have a radiant future.”
Interesting—a conflation of prosperity with a radiant future. (By the way, “radiant future” was coined by Russian novelist Aleksandr Zinovyev as a jape at Communism) The Italians are prosperous, but they don’t have a radiant future because their population is collapsing. The Swedes are prosperous but are being overrun by Muslims. See how the two are not the same thing?
“But for that to be true, then you have to assume that growth suddenly slows very dramatically or reverses, or you will think their future less than prosperous despite wealth because they don’t have our Bill of Rights.”
More words in my mouth, not to mention the fallacy of a false choice. Growth could drop to 5 percent per year (dramatic by current standards), which would be considered superb anywhere else but would get the fat cats in Beijing worried about staying ahead of the unrest that will erupt out if breakneck growth does not continue.
Charles Martel: Chuck Martel throws his hands up in the air in exasperation. He can’t quite figure out what Zach means when he says, “You don’t have to lynch a lot of people. Just a couple usually does it in a small community.”
Sorry. We thought Charles Martel might be somewhat familiar with American history. From the end of Reconstruction until the passage of civil rights legislation, it was common to make examples of blacks who violated one of the Jim Crow codes.
Charles Martel: It also makes no sense to compare a local action, intended to intimidate a local populace, to a nationally publicized execution.
Many such executions were public events.
http://mypages.netopia.com/museum/nss-folder/pictures/Lynching.jpg
Charles Martel: (Estimates of how many people are executed in China annually vary from 1,000 to 5,000. Martel thinks the Amnesty International estimate of 1,700 would be palatable to the leftists here.)
That’s the total number of executions, most of which were for violent crimes or drug trafficking. That’s about the per capita rate of the U.S. in the 1930′s.
Charles Martel: Also, Martel cautions Zach to not head down the slippery slope of utilitarianism, a philosophy that often leads to too easy an acceptance of gulags and repression.
In fact, we reject that position. The lack of due process in China is a significant problem that should not be overlooked. China should abandon the death penalty entirely.
Chuck Martel detects a whiff of snark in Zach Hive’s answer. He wonders if the Desnarkizer (whose secrets the Zachs will not share) is on the fritz again.
Martel knows about the sorry history of lynchings from the 1870s through the 1950s. But he still wonders how the Hive can leap from raw numbers of murdered blacks to a confident assertion of how many hanged people it takes to completely intimidate a small town.
True, many lynchings were public, thus their power of intimidation. But they were not publicized or disseminated widely until after the fact. A modern government like China’s can plan an execution (which is not the same as a lynching) well beforehand for maximum psychological effect. Big difference between sophisticated manipulators and easily angered, knucklewalking, pre-meth-besotted, idiot white racists.
Chuck agrees with The Swarm that China should do away with the death penalty.
Charles Martel: True, many lynchings were public, thus their power of intimidation. But they were not publicized or disseminated widely until after the fact.
They even made the photos into postcards. Lynchings and other acts of terrorism were devised to intimidate. Not sure why you would argue against such an obvious point.
Is there an extra-special award given for “200″ ???
Chuck Martel chuckles because he can’t understand what the Zach Herd is arguing above. He thinks that perhaps the Hive sometimes disputes just to dispute.
Oh, well: Sobre los gustos, no hay disputos.
You mean something like the Indie 500 – let’s call it the Bookie 200!
30 more to go!
Marching on to 200…
http://pajamasmedia.com/zombie/2011/05/06/seiu-drops-mask-goes-full-commie/
And besides, I think it’s relevant to this thread, even if only somewhat.
He thinks that perhaps the Hive sometimes disputes just to dispute.
Ahh…contrary. In Hebrew the word is ‘dafka’ rhymes with Kafka.
This one is definitely on topic:
http://rightwingnews.com/china/how-much-would-an-apple-ipad-cost-if-it-werent-made-by-suicidal-slaves-in-china/
Well…for the thread now, maybe not when it started…
The SEIU is about as subtle as Hitler marching through Poland.
There are approximately 2million people in prisons. Why isn’t this population considered a viable work force? Why haven’t manufacturers considered opening on site plants for iPads or other ‘safe’ products. I mean, I don’t want those incarcerated for murder on a machine gun assembly line, but there must be a million prisoners, who could be pulling their own weight instead of lifting it.
Just a suggestion.
SADIE and suek, I want to think you for advancing this threat significantly closer to the 200 mark.
Charles Martel: Chuck Martel chuckles because he can’t understand what the Zach{riel} is arguing above.
That’s because you keep losing focus on the issue. The original question was the value of centralized planning, with China being an example. It’s clear that China’s economy has expanded very rapidly under centralized planning. The primary driver of the expansion is the process of industrialization through a coordinated, national effort to create an export economy that moves agricultural workers into manufacturing. All developed nations went through a similar process of industrialization, including the U.S., though the degree of central planning varied considerably.
You correctly point out that China is an authoritarian society. However, by conflating modern China with Mao’s excesses, you refuse to acknowledge the great social strides they have made over the last generation, and the possibility of continued liberalization. We pointed to the factor of the rapidly increasing middle class as the driver of future social progress. This is not an inevitability, but as the middle class expands, the pressure to change will become stronger, and political power will shift.
Central planning doesn’t equate with authoritarianism. Democracies can plan as nations, too. The most successful developed nations all have some aspect of centralized planning, as well as robust markets and private political and social organizations. Aspects of central planning in the U.S. include the transcontinental railroad, the interstate highway system, the space program, and the vast expansion of the scientific infrastructure since WWII.
China is top-heavy, which works best during industrialization. They have already ceded control, though, over many aspects of the economy. As they advance to a consumer society, the central government will have to cede even more authority in order to allow for continued development, and people will certainly make those demands.
SADIE: There are approximately 2million people in prisons. Why isn’t this population considered a viable work force?
The Chinese agree with you, and most of their prisoners are required to work as part of their rehabilitation. The U.S. used to have chain gangs, but they were subject to abuse and largely abandoned. Many U.S. prisoners work, though, within the prisons or on government property. Oddly enough, there are about the same number of prisoners in the U.S. as in China, even though China has a much larger population.
Z, I am American. Are you? I am well aware of chain gangs in the 19th century and first half of the 20th, but I wasn’t alluding to chain gangs and I am also aware that ‘certain’ prisoners work for the State. I am not aware about Federal prisoners. Having said that, my point was that the iPads could be made in the US.
Oddly enough, I wouldn’t trust the Chinese government to provide accurate records. Remember, they used to charge the family for the cost of a bullet for executions.
Chuck Martel realizes that The Swarm doesn’t realize that The Slayer of Mohammedan Invaders was referring to the teensy-eensy bit about lynchings where The Hive wanted to dispute what The Hammer had said but wound up essentially agreeing with the Magnificent Frankish Monarch.
Zach Nation must learn to read more carefully. Now that it is beginning to show a rudimentary sense of humor, it must understand when not to take bait.
Ooops, this just in: A flotilla of Moorish warriors has been spotted off the Riviera at the height of Nekkid Breast season! Martel dashes off to mount a defense of the infidel women there.
>>I want to think you for advancing this threat significantly closer to the 200 mark.>>
I’m depending on the indefatigable (if monotonous) commenting skills of a – z to fill in the gap for us.
Surely they won’t fail us…
SADIE: I am not aware about Federal prisoners.
Federal Bureau of Prisons: Sentenced inmates are required to work if they are medically able.
http://www.bop.gov/inmate_programs/work_prgms.jsp
Due to travel commitments, I’m a bit late getting back into the thread and am only getting caught up with all the interesting commentary.
I think it is kinda cute that youthfully enthusiastic A-Z express such gushing rapture over the glories and efficiences of central planning.
It does evoke a certain nostalgia for the early-1930s, also a time of economic depression, when innocent, starry eyed American “intellectuals” returned from their adventures abroad with glowing reports of the efficient, planned societies in Stalin’s Russia, Hitler’s Germany and Mussolini’s Italy. Why, under Mussolini, even Italy’s trains ran on time. Certainly, after all the creative destruction of the roaring 20s, these centrally planned societies were the wave of the future.
Those that learn the lessons of history are condemned to watch others repeat them.
“..starry eyed American “intellectuals” returned from their adventures abroad with glowing reports of the efficient…”
Ahh…the birth of the Nanny Nation. Upstairs Downstairs on a grand PBS/BBC scale.
Danny Lemieux: I think it is kinda cute that youthfully enthusiastic A-Z express such gushing rapture over the glories and efficiences of central planning.
It’s as if you didn’t bother to read our position before restating it incorrectly.
Um..yes, Z. We have read your positions…it’s just that they are so nuanced that you all seem to want to have it all ways.
You’re statists but your not, it goes either way, depending upon the slight semantic twists you put on your posts. Another way to say it is, “having your cake and eating it, too”.
That’s why we are forced to conclude, “If it quacks like a duck, looks like a duck, walks like a duck…then it’s probably a Statist!”
Danny Lemieux: We have read your positions…it’s just that they are so nuanced that you all seem to want to have it all ways.
Well, have fun combating your straw man. (If you decide to address our actual position, we would be happy to engage that discussion.)
Did Z say he was a tin man not a straw man?
RE: 178,
Since when has Z ever acknowledge the great social strides made by Americans, not just for the last generation but for the last 10 generations?
Ymarsaker, we have to remember that we are dealing with the Chomsky generation and its semantic distortions of language.
There was a comment posted by Ziontruth on Neo-Neocon ( http://www.neoneocon.com ) recently that perfectly encapsulates the Chomsky style of discourse, so I reproduce it here with a link:
Somehow it’s appropriate for a theoretician on linguistics to carry the torch of undermining Western civilization. The Marxists’ tool in that goal has not been primarily violence, which would have failed in the U.S.-backed West, but cultural subversion, most prominently in the form of perverting language.
“War is not the answer!” So how does this square with supporting Islamic suicide-murderers? “That’s not war, that’s resistance.”
“Colonialism is evil.” So how about condemning the Muslims’ colonization of Europe? “That’s immigration, you racist!”
“Ethnic exclusivism must be stamped out.” So were you up in the arms when Seri Nusseibeh said a future “Palestinian” state would not admit any Jews in its midst? “It’s an indigenous right to be free of settlers.” (”What about the indigenous of Europe?” See previous point.)
And overarching them all, “Racism is the greatest evil of our age.” So did Brazilian leader Da Silva commit the greatest crime of age when he said the world’s economy was held in thrall to “blond, blue-eyed people”? “That’s just the truth, and anyway, non-whites have the right to rail against their colonial oppressors.”
The Gramscian way is the way of war by means of linguistic definition; whereby the deck is cognitively stacked against all opposition by framing that opposition as the embodiment of evil, and the converse as all good.
…read it all here: http://neoneocon.com/2011/05/07/noam-chomsky/#comment-244656
Does this remind us of anything?
The more narrowly that we pin down our opponent’s dialectic positions, the more mystical they wax. When we demand specificity, they respond with non-sequiturs and other diversions (“straw man” arguments being one such popular tactic). They are nebbish in the nebulousness. When they provide links, they provide them often pitifully read, replete in omissions and totally out of context. Thus can they so freely propose Statist solutions when convenient, but duck any Statist identification when called out for it.
No, we won’t play this game!
It’s the Gramsci-Chomsky generation and I believe they will do great damage to society and humanity before their time is done. But it won’t be with our acquiescence.
Danny reminded me of when one of my best friend’s Marxist sister was praising her brain-dead 18-year-old son for his daring reading habits.
“He reads Howard Zinn! That takes some guts!” she proclaimed.
“Wow, pretty brave to read a communist historian in a communist household.” I replied. “Let me know when he reads some Paul Johnson or Robert Conquest.”
Totally over her head, the way so much of what we tell the statists here is.
Ymarsakar: Since when has Z ever acknowledge the great social strides made by Americans, not just for the last generation but for the last 10 generations?
Many times. Americans have accomplished a great deal in their short history: Declaration of Independence, the Revolution, Constitution, Bill of Rights, Emancipation Proclamation, abolition, the fight against fascism, Marshall Plan, holding steady against communism, the Civil Rights Movement, environmentalism, plus all the technological and scientific innovations from space exploration to medicine.
Danny Lemieux: When we demand specificity, they respond with non-sequiturs and other diversions (“straw man” arguments being one such popular tactic).
You misrepresented our position, then waxed on about it.
Danny Lemieux: Ymarsaker, we have to remember that we are dealing with the Chomsky generation and its semantic distortions of language.
In other words, even after it was pointed out, you continue to fight your straw man rather than engaging the discussion, or even being on-topic for that matter. These are the points we raised:
China has experienced very rapid economic growth.
This growth is primarily due to industrialization.
China has used central-planning to accelerate this process.
China is authoritarian, but has liberalized considerably since Mao.
Central-planning will be less effective going forward.
China has a large and rapidly expanding middle class which will increasingly expect political change.
Charles (#193): Maybe she meant it takes some guts because Zinn’s writing is so paralytically boring? Nah. To the believers, it seems to be the revealed truth.
“I think I can
I think I can
I think I can…”
We are approaching the magic moment!
And the winner is….
Charles,
I have to address the misstatements, since they appear systematic, and based on the defense of a particular viewpoint, rather than innocent.
1. China’s population is projected to shrink since its one-child policy is one generation old. If it is self sufficient now, then it likely will continue to be, given that demographic fact alone. Nevermind the advancements in agriculture that are behind us but ahead of them, which will cause farming to shrink from roughly one-third of its economy to 3% over the next few decades. Certainly, if you are knowledgeable enough about China to continue debating the issues this way, then I do not need to spell this out. It is surprising that someone who is confident enough to discuss the country doesn’t know these basic facts. Quite surprising actually.
2. The so-called Big-Four that took over the TransContinental RR project when its visionary, Judah, went bankrupt were already fantastically wealthy men with great political connections. They made more money off the land that was ceded to them than they did off of the railroad itself, since the railroad created much demand for shops and other services along the railroad, for which they collected rent as landowners. The real value of the RR was not in the metal, but in the land under and around those tracks. And that was given away to those four tycoons, much like Slim-Helu in Mexico, now the richest man in the world, was given the assets, land and rights of way for TelMex, or how the tycoons in Russia were given special bidding rights to amass empires in mining and timber. If you see this as different than the wealth creation in China, that is your right, of course, but it doesn’t really fit with the facts. The big property owners and developers in China, the largest set of billionaires there, were in a privleged position to get those government deals, so history repeats itself. But you can claim that the Big Four were fools. I’m sure that you have already endowed a major US university and have a house as large as the one on Huntington Gardens in San Marino, CA…
3. “Driven by the government” is not a euphemism. it is accounting 101. You are aware what the “G” stands for in the following formula, correct? GDP = C + G + I + X – M
4. “China’s historic wealth is interesting, but irrelevant…” I don’t see how. China sent its Confucian culture, language and innovation to the rest of the world. The differences in wealth were actually quite large, although both the rich and the poor of 2,000 years ago would appear very poor to us today. However, in another 2,000 years, the differences between the US and Haiti will appear the same way, but which country would you rather live in from an economic development stand point? Your opinions fly in the face of the facts, but you NEED to assert them anyway. Strange.
5. Who are the “some” that say that China ought to be less repressive? Certainly not people who are simultaneously saying that at this point it threatens their economic development. Without names and sources, it is hard to discuss…
6. The links establish a sociological problem, like inner city crime in the US. But it doesn’t seem to rise to the level of threatening economic development. Now, I can give you a laundry list of problems in the US that do not seriously threaten our economy, nor take away from our accomplishments in this area, but what does it prove? Same for China.
7. “Theft can be hidden behind a deliberate undervaluing of the nation’s currency…” So why hasn’t Bernanke been tried for theft? What about the GOP Congress that voted for Medicare Part D and the President that signed it? Nixon’s Treasury Sec’y (and billionaire) Pete Peterson estimates that bill alone will cost $32 TRILLION over its lifetime…
8. On conservatives wanting small government, I’ve now politely asked and you’ve danced around the issue. Until you provide evidence rather than rhetoric, let’s just assume that any big government spending done by Democrats is bad and job-killing, while the same or larger amounts of spending undertaken by the GOP is okay. Not sure what else to assume, based upon your incoherent comments on this…
9. “The Italians are prosperous, but they don’t have a radiant future because their population is collapsing. The Swedes are prosperous but are being overrun by Muslims. See how the two are not the same thing?” I think you have confused your OPINION of a “radiant future,” which many if not most would disagree with, with the FACT of one. I am trying to stick with positivistic statements rather than normative ones, while you may not be able to differentiate between them. I used to live in Italy and have loads of friends there, and they would not trade their radiant lives for a growing population at all, nor would my friends in Japan or Switzerland, which also have declining populations. But, according to you, they must be fools, since they disagree with your OPINION of what defines a “radiant future.” Curious.
10. I don’t mean to put words in your mouth, and I still do not understand what your issues with China are, since they switch from predictions about failure (based upon things that are not viewed by trained economists or sinologists as threatening issues) to arguments that they are somehow failures even if they do continue to post record-setting growth. It seems that you start with the premise that you don’t like the Chinese or China or their economy or their government or anything about them (except maybe their food), and then you put together strange arguments after the fact to justify that sentiment. This is how most people think and argue, but it is not very satisfying or useful as a method of deducing reality. I’m going to leave it here, since this dialogue has exhausted me…even after a 3 day break from it.
China has experienced very rapid economic growth.
This growth is primarily due to industrialization.
China has used central-planning to accelerate this process.
China is authoritarian, but has liberalized considerably since Mao.
Central-planning will be less effective going forward.
China has a large and rapidly expanding middle class which will increasingly expect political change. - Zachriel
Therefore……
Are you making a point, or merely posting unrelated opinions (some of which may even be factual)?
You alluded to the “Arab spring” as evidence that a similar effect will occur, IIRC. No sure the two can be correlated. Circumstances are too different. And even if China’s middle class increases, you’re suggesting they will want change– but what kind of change? I assume you’re hinting at liberalization, but maybe they’ll double down on authoritarianism, since that’s what got them all that progress in the first place.
You’re suggesting that central planning will become less effective as the current iteration of Chinese society matures, but then are hinting that we would do well with a dose (or more) central planning.
As for the crisis, sometimes bad government is the one that decides on too little regulation, as Greenspan, Rubin, Summers, Bernanke, Paulson and Geitner, among others, did. Just one example: there was no way that Christopher Cox could meaningfully regulate derivatives when his staff at the SEC had been cut so deeply.- abc
I think we can agree that the SEC ended up with too much on its plate, but the SEC budget grew under Bush.
Administration
Annualized SEC
Budget Growth
(not inflation-adjusted)
Annualized SEC
Full-Time Staff Growth
Jimmy Carter
9.3%
-1.2%
Ronald Reagan
7.5%
1.4%
George H.W. Bush
15.3%
6.7%
Bill Clinton
6.8%
1.4%
George W. Bush
11.3%
1.0%
As the table shows, clearly the person who hated the free-wheeling market most was the first President Bush, followed up by his son. And especially when we consider the high inflation rate, it’s obvious that Jimmy Carter was a laissez-faire ideologue. Bill Clinton, in contrast, had the same attitude towards speculators as Ronald Reagan.
Naturally we can quibble with these conclusions. Maybe Bill Clinton’s numbers would have been a lot higher had Newt Gingrich remained a history professor. Maybe George W. Bush used the Enron scandal to beef up the SEC’s budget, while he gave orders behind the scenes to use the cash for pizza and beer rather than enforcement.
But whatever the excuse, it just proves my point: it is foolish to give the task of ensuring financial integrity to DC politicians. The SEC was supposedly retooled after the Enron fiasco in order to do its job. And it failed miserably. Some heads may roll and budgets balloon, but if history is any guide, there will be another huge financial fraud within another decade.
http://mises.org/daily/3273
Separately, I don’t think regulations are the big problem. Lack of demand and mean-reverting productivity are bigger problems, not to mention an over-leveraged consumer and unfair foreign trade practices. I could go on, but to reduce the problem to overregulation is really silly. I could go on, but to reduce the problem to overregulation is really silly. And do we really want melamine (or worse) in our water and milk in order to keep Intel fabs in the US? – abc
I was sloppy in my reasoning. Much of the regulation stifling economic growth in this country deals with Main St. I think we can control melamine in our water without stifling economic growth. Let’s start by rolling back portions of the ESA. And just because we now have the technology to measure parts per billion doesn’t mean it offers an environmental advantage to the regulations coming from that technology.
Forget the last bubble. The conditions for that one remain and are being defended by the monied elites again. And neither the Dems nor the GOP are sufficiently independent of the lobbies to do anything about it. ANd the average citizen is not sophisticated enough to raise the issue. He’s barely keeping his head above water.- abc
Here we agree, I think. Do you think the last financial regulation bill addressed some of the root problems? What would be a few of your solutions to the problems you’ve identified?
BINGO!!!
Darn.
Thought for sure I’d slip in there…
BrianE: Are you making a point, or merely posting unrelated opinions (some of which may even be factual)?
We were discussing centralized planning using China as an example. In order to understand why centralized planning has been so effective in China, it’s necessary to describe the basic forces and development of China.
BrianE: You alluded to the “Arab spring” as evidence that a similar effect will occur, IIRC. No sure the two can be correlated.
That was a side discussion which started with Danny Lemieux blaming economists for the financial crisis. That veered into a short discussion of the U.S. response to terrorism. However, if the Arab Spring results in stable democracies, those nations will probably benefit economically over the long run.
This brings up an important point. Libya has centralized planning, but much of the wealth is siphoned off by the leadership. Democratic institutions are more likely to end up with rational planning.
BrianE: And even if China’s middle class increases, you’re suggesting they will want change– but what kind of change?
Short of a catastrophe, China’s middle class will increase. They will insist upon more of a say in their lives and the direction of their country.
BrianE: I assume you’re hinting at liberalization, but maybe they’ll double down on authoritarianism, since that’s what got them all that progress in the first place.
Market liberalization was an important component of their success, along with central planning. Don’t make the mistake of thinking that one precludes the other. All systems are mixed.
BrianE: You’re suggesting that central planning will become less effective as the current iteration of Chinese society matures, but then are hinting that we would do well with a dose (or more) central planning.
Hadn’t discussed the U.S., but it’s clear that market forces alone are not sufficient to prepare the U.S. for the new energy future, or that allowing vast, teradollar shadow markets to boom-and-bust is wise.
Sorry suek. You snooze, you lose.
Better luck at 300.
Brian, I have some questions for you, on the basis of your last post:
1. “it is foolish to give the task of ensuring financial integrity to DC politicians…”
Who should we give it to instead?
2. “The SEC was supposedly retooled after the Enron fiasco in order to do its job. And it failed miserably. Some heads may roll and budgets balloon, but if history is any guide, there will be another huge financial fraud within another decade.”
Or sooner. But how can you ignore the massive resistance to reform that we are seeing out of the financial services industry, supported by the politicians (all on the right and many on the left) to scuttle any reform? You are aware that the body responsible for regulating futures and derivatives was quashed by Larry Summers at Treasury and Alan Greenspan at the Fed? You do know that Christopher Cox, head of the SEC under Bush, was against regulating these products as well, correct? It is remarkable what key aspects of the story you are totally ignoring, in order to preserve the fantasy that lack of regulations and massive special interest money to ensure that lack of regulation wasn’t the key cause of the crisis. Why do you not account for this? How would you address this going forward? I guess it relates to question #1…
3. “I think we can control melamine in our water without stifling economic growth. Let’s start by rolling back portions of the ESA.”
The US saw growth slow dramatically after Clinton, so which policies enacted by Congress or overly-agressively enforced by the ESA at the end of Clinton’s second term contributed to the dramatic slowdown that caused Bush to fail to generate net job growth or similar levels of GDP growth? What changed under Bush or Obama to cause ESA, which I thought had won the major regulations in much earlier decades, to cause that slowdown?
Also, what role did 30 years of spending more than we earn, as measured by consumption growth outstripping GDP growth since 1980, play in causing future sales and growth to be pulled forward using debt? Isn’t the current slowdown a function of us reverting back to a normal relationship of consumption to production, which, in the current short-term, likely involves consumption being outstripped by production growth? Why do you link this to the contribution of regulations when the major changes in regulation do not correspond to the slowdown in growth?
It is interesting that Otellini, CEO of Intel, DID say that environmental regulations, among other things, had caused US growth to slow. About four months ago, he loudly said that regulations are keeping them from building a new fab in the US, since it costs $3B to build it in China or Malaysia and $4B to build it in the US. But then when pressed for details, he talked about environmental regulations and lack fo government free money as being the delta between those two figures. In other words, Intel wants to put heavy metals into the groundwater with impunity, and wants the federal government to give them tax holidays, free land, etc–as they do in the Far East–to attract that fab. This doesn’t sound like capitalism. It sounds like corruption and not playing by the same rules. It also isn’t the kind of bailout that conservatives usually support, but perhaps when it goes to a large company it’s okay. It’s just when the unemployed get such a benefit, we become upset about it. Or maybe, just maybe, people need to know the facts.
You asked for my opinion. I think that it will always be a challenge for regulators to keep up with perps in the complex world of high finance, but I think that there are a number of very rich retired folks that should be brought into government, along with the best and the brightest with adequate resources, to do a much better job than has been done. The Chairman of the Fed, whose job IS to regulate the markets, as well as the Treasurer, should not be doing the banks’ bidding, but should be highly skeptical of them. The key is to take the money out of it. You cannot consult for or be paid to write papers for the industry, as his common practice. And the ability to lobby should be sharply curtailed. Citizens United is a terrible ruling and should be overturned by Congress, so we don’t have 5 lobbyists from Wall Street for every person in Congress. And when the FBI starts raising alarm bells about mortgage fraud, the heads of Treasury, the Fed and the SEC ought not turn their heads. Take the money out of the system, reset the capitalization limits and outlaw practices like multiple insurance policies on a particular underlying security (e.g., a CDO). All of these are no-brainers, but many in Congress won’t even let these common sense solutions go through. I could go on, but you get the idea.
abc, I understand your exhaustion. The sheer energy that you had to put into your patented condescension and evasiveness must have been monumental. (Or maybe not—you’re a lawyer, no?) I addressed each of the points you had raised, and you either squirted a mass of verbal ink by not really talking about them, or you ignored them, or you spent your time showing your Technicolor bonafides by beating up on my intelligence.
The issue is a simple one: You really believe that you are comparing apples to apples when it comes to the United States and China, and that in this case one apple is ever so much better than the other in terms of its radiant future. It’s easy to see why you think it—all of the indicators seem to point toward the inevitable rise of China as a superpower. Unfortunately, the country has some deep-rooted problems that you, in the Zach Swarm’s apt phrase, wave a hand at. Deteriorating environment? Massive new wealth will rescue it. Male-female population imbalance? Been taken care of. Civil unrest in the provinces? No way. A BBC poll says the Chinese looove their government! Centripetal economic forces between coast and interior? Hey, the existence of Chongqing answers that! Repressive political system and cronyism? Man, you should have seen how high the bodies were piled when Mao was here! Not to mention Chelsea Clinton, Chelsea Clinton!
And drearily on and on. When the unsavory aspects of the regime are raised, again, they are waved away. Things are so much better now (I only beat my wife once a week instead of daily), and the ironclad lessons of history say that all of the monumental problems facing China will inevitably give way. I hope they do. Despite your sneery surmise about my thoughts or motivations, I wish China and the Chinese no ill will. The difference between us—and perhaps it’s the essential difference between conservatives like me and lovers of state power like you—is that I despise bullies, strongmen and power junkies. I’m sure that even you, an open apologist for the regime that rules China, could agree to at least one of those descriptions.
Wow. I am condescending, and I wave my hands a lot. That’s all you have? How about answering the specific questions that I have, and not with evasion, but with numbers or economic data of some type, or even just referring to the economic work of others who are qualified and in the field? No, you can just hide behind total falsehoods and misstatements and appear (therefore) to be impervious to facts. Now that is a sad state of affairs, but then to claim that I condescend when I point out these factual inaccuracies, well that is totally rich.
And the misstatements go on and on:
1. “The issue is a simple one: You really believe that you are comparing apples to apples when it comes to the United States and China…”
I CLEARLY stated that China is not in the same economic phase of development as the US, and that China’s model would appeal to other countries similarly situated, like in Africa or India or the rest of the emerging marekts. I SPECIFICALLY stated that the issues for the US are about how to react when you are confronted with state-driven capitalism, which might require modification of our traditional laissez-faire view on trade. You have totally ignored this argument, because it is easier and more fun to make up what I said. Straw men are the work of lazy minds. On this point alone, one should not take your writing seriously.
2. “… and that in this case one apple is ever so much better than the other in terms of its radiant future.”
Again, putting your words in my mouth. I didn’t start with the radiant future bit. You did. I talked of GDP growth numbers and the numbers of people coming out of poverty. You dont’ like to talk numbers, since you can be pinned down. So you use words like “radiant future,” so you can continue to subsitute empty rhetoric and shift the goal posts, rather than facing and admitting the reality of China’s economic ascendancy, occurring at unprecedented speed. Please stop with the words and start citing economic stats. Else, it is not worth listening to you.
3. “It’s easy to see why you think it—all of the indicators seem to point toward the inevitable rise of China as a superpower. Unfortunately, the country has some deep-rooted problems that you, in the Zach Swarm’s apt phrase, wave a hand at.”
Hardly. I am familiar with all of these problems, but have concluded, as many other specialists with even more knowledge than I have, that they are not going to stop China from becoming the most powerful economy in the world. Just because I have reached another conclusion doesn’t mean that I am waving a hand at it. I can site a dozen economists, investors and F500 companies that agree with me and not you, and who, unlike you, have put more than empty and cheap words behind their assessment. THey have put real money there. But please go on and insult them as well for concluding that environment degradation, a male-female mismatch and lack of a Bill of Rights are not going to derail the Chinese economy. Your omissions are as revealing as your alleged worries, by the way, since those knowledgeable with China are more concerned with spiking energy and food prices than with the factors you point to. But it was clear long ago that you know far less about china than the experts whose opinions you disparage.
4. “The difference between us—and perhaps it’s the essential difference between conservatives like me and lovers of state power like you—is that I despise bullies, strongmen and power junkies. I’m sure that even you, an open apologist for the regime that rules China, could agree to at least one of those descriptions.”
The truth comes out. You falsely assume that I like state power, and you hate it so much that you are willing to misrepresent the historical and economic record in order to avoid reaching the inevitable conclusion that sometimes it produces better results than a democracy with less state-centralized power. Enjoy the fantasy, but anyone who lives in the world of facts and figures knows what China has done versus India, the largest democracy in the world. You can ignore the past and point to silly threats in the future, but the reality is that China could already have a per cap GDP of double our rate and you’d be saying the same thing. The facts do not matter, just the ones that point to your a prior determined conclusion. It is impossible to discuss or debate with someone like you, since you have a vested ideological interest in ignoring certain inconvenient facts. I am different. I am not committed to state-run capitalism at all. I view the problem like a biologist, taking in as much detail as possible, and trying to see patterns in the data. You start with a pattern and ignore everything that doesn’t fit. Confirmation bias is a terrible disease. My condolences.
“On this point alone, one should not take your writing seriously.”
847 words to dismiss my writing! abc, I am honored to be such a small pebble in your shoe.
Charles, once again you place rhetoric over facts, form over substance…
Don’t count your chickens before they are roasted.
A journey of a thousand li begins with one step, Marty.
That means if you make him sprain his foot on the first step, you won’t have to beat him via racing to the destination.
Nobody likes state power. It’s not a person or even an idol of a god. What people like are the personal benefits they get from power, state or otherwise.
economic record in order to avoid reaching the inevitable conclusion that sometimes it produces better results than a democracy with less state-centralized power.
So yea, statists are people who want to benefit from “better results” produced from “state-centralized power”. It’s not that complicated people. An individualist is someone who believes in their own hands and the power of their own will and accomplishment. Completely different things.
I am condescending, and I wave my hands a lot.
That actually comes from Zachriel. Marty is making an in joke by copying it.
Many times. Americans have accomplished a great deal in their short history: Declaration of Independence, the Revolution, Constitution, Bill of Rights, Emancipation Proclamation, abolition, the fight against fascism, Marshall Plan, holding steady against communism, the Civil Rights Movement, environmentalism, plus all the technological and scientific innovations from space exploration to medicine.
You don’t even believe in what the Constitution says. Nor is going out of your way to mention all of these things going to erase your previous behavior of not mentioning them.
You think your one liners all disappeared because you put up another spam liner here. Really.
For example, let’s take one of the specifics “holding steady against communism”. You’re one of the ones who cheered on the Cambodian and North Vietnamese/Chinese massacre of our allies in the Southeast Asian. That’s you. The Zreak.
That’s your view of “holding steady against communism”, to support the Communist invasion of Vietnam and Cambodia.
Your word is no good here, Z.
I’m buried in work this week, so responding is difficult. However, you all provide such a target-rich environment that I will just have to pick and choose a few gems here and there.
Z – what makes the Z team frustrating is to morph and distort at will while simultaneously accusing others of doing that which the Z team does so well (e.g., creating straw-men arguments). For example, Z (above) says, “That was a side discussion which started with Danny Lemieux blaming economists for the financial crisis.”
Danny Lemieux, for the record, doesn’t recall ever blaming economists for the financial crisis. Implementation of wrong-headed policies, yes. Perhaps Z can offer a specific quote? No, I suspect that is exactly the type of semantic distortions that Chomsky developed as part of the Progressive dialectic, as referenced in #192.
In classic style, Z then proceeds to claim allegiance to pablum statements about whatever topic (e.g China) that are on their face irrefutable, claiming such to summarize their postings as follows:
1) China has experienced very rapid economic growth.
2) This growth is primarily due to industrialization.
3) China has used central-planning to accelerate this process.
4) China is authoritarian, but has liberalized considerably since Mao.
5) Central-planning will be less effective going forward.
Yeah, but that isn’t really what we’ve been discussion, is it? What we have been discussion is the nature of centralized planning and its impact on China and other countries. One could easily flip the 5 points above around and say:
1) China was authoritarian and believed in central planning.
2) China has become less authoritarian and done less central planning.
3) As a consequence of (1) and (2), China’s industrialization and economic growth have taken off.
Nonetheless, we have offered plenty of examples of the profound problems that China continues to incur due to central planning (bankrupt high-speed rail, environmental disasters, the Three Gorges Dam, etc.), only to have them waived off as minor irritants to the glorified image of central planning. So, so 1930s!
W/ regard to ABC – Frankly, I don’t how and where ABC draws their information and reasoning skills, but he/she provides such a tangled thicket of half-truths, distortions and false premises that it is, frankly, very difficult to untangle when not totally incomprehensible. Some of it appears to be the same youthful idealism that animated a starry-eyed Cole Porter to write sonnets praising Mussolini (for example), but the rest…well…who knows?
Let’s just take a few examples:
ABC argues near the beginning of this thread that China has no corruption (my response was to link the world transparency index that indicates otherwise – made no impression!). So, just for argument’s sake, let’s review: on the global corruption index, Denmark has the least corruption (score 9.3), U.S. falls down at 7.1, Taiwan at 5.8, Cuba at 3.7 and China at 3.5 (tied with Greece).
http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results
Then ABC adds, “ I could go on, but to reduce the problem to overregulation is really silly. I could go on, but to reduce the problem to overregulation is really silly. And do we really want melamine (or worse) in our water and milk in order to keep Intel fabs in the US?”
Well, ABC, the melamine issue is a very Chinese issue. It is consumer fraud that ended up killing many, many people and animals. Melamine is a nitrogen compound that was added to water-diluted milk in order to fool the authorities into thinking it was whole milk (the nitrogen in the melamine fooled the analytical tests into measuring the nitrogen from the melamine in adulterated milk as milk protein). The Chinese government threw up its arms, executed a few functionaries and said, “problem solved”. Not so, my sources in the know tell me that this type of fraud is still very much rampant in China.
So much for China’s central planning Utopia.
As regards ABC’s peculiar recounting of the history of the trans-continental railroad…good Lord!
Danny, it’s not corruption unless somebody else’s pockets are being filled. So long as it is their own pocket, it’s not corruption.
Ymarsakar: You don’t even believe in what the Constitution says.
Other than the Preamble, especially the first three words, the Constitution is not a statement of principles, but a social contract. In any case, the U.S. Constitution is a seminal document. The other documents we mentioned are also of profound influence.
“In 1908, in a wild and remote area of the North Caucasus, Leo Tolstoy, the greatest writer of the age, was the guest of a tribal chief ‘living far away from civilized life in the mountains.’
“Gathering his family and neighbors, the chief asked Tolstoy to tell stories about the famous men of history. Tolstoy told how he entertained the eager crowd for hours with tales of Alexander, Caesar, Frederick the Great, and Napoleon.
“When he was winding to a close, the chief stood and said, ‘But you have not told us a syllable about the greatest general and greatest ruler of the world. We want to know something about him. He was a hero. He spoke with a voice of thunder; he laughed like the sunrise and his deeds were strong as the rock…His name was Lincoln and the country in which he lived is called America, which is so far away that if a youth should journey to reach it he would be an old man when he arrived. Tell us of that man.’ ”
Ymarsakar: Nor is going out of your way to mention all of these things going to erase your previous behavior of not mentioning them.
It’s rather difficult to believe how often our position is misunderstood on this forum.
www{dot}bookwormroom{dot}com/2011/01/20/a-perfect-parallelism/#comment-113087
Ymarsakar: You think your one liners all disappeared because you put up another spam liner here. Really.
You asked a specific question: ”Since when has Z ever acknowledge the great social strides made by Americans, not just for the last generation but for the last 10 generations?” The answer is right now and right then.
Danny Lemieux? Aren’t you the admiral who repulsed the Muslims at Lepanto? Or am I thinking Pepe Le Pew?
Danny Lemieux: Danny Lemieux, for the record, doesn’t recall ever blaming economists for the financial crisis.
Danny Lemieux: BrianE …what an interesting link. Let me savor just a few juicy snippets. “We began by mentioning the failure of the economics profession. Never had an unarmed group done more damage to the wealth of a society, we suggested. Economists helped create a huge bubble, ignored it until it blew up, and then gave the wrong advice about how to fix it. Bailouts and boondoggles were all they had to offer.” At which point, famed Nobel Prize economist and ENRON advisor Paul Krugman’s face turned beet red.
Helped create it, blew up.
Danny Lemieux: One could easily flip the 5 points above around and say: 1) China was authoritarian and believed in central planning. 2) China has become less authoritarian and done less central planning. 3) As a consequence of (1) and (2), China’s industrialization and economic growth have taken off.
This was the very black-and-white fallacy we said you should avoid. China did decentralize many aspects of the economy, but they are still far more centrally controlled than the U.S., yet have expanded over decades at far greater rates. We offered reasons why this is so, but you haven’t addressed them.
Danny Lemieux: Nonetheless, we have offered plenty of examples of the profound problems that China continues to incur due to central planning (bankrupt high-speed rail, environmental disasters, the Three Gorges Dam, etc.), only to have them waived off as minor irritants to the glorified image of central planning.
In fact, we did no such thing. Numerous problems are being incorporated into the new economy, some because of bad planning, some because of no planning, but mostly because they are putting off resolution as long as they can in the mad rush to grow. If they don’t address these problems, though, they will eventually limit their future growth. The best way, long term, to address these problems is to implement democratic reforms. But again, democracy doesn’t mean nations can’t have central planning. It just means there is more accountability to the people whose lives are affected. And once the middle class reaches critical mass, power will shift, and there will be great pressure to change.
“It’s rather difficult to believe how often our position is misunderstood on this forum.”
Chuck Martel suggests, with all due respect, that perhaps the Zach Collective has a problem making itself clear, therefore creates the chronic misunderstandings it alludes to? Or perhaps the Zach Swarm’s meanings are all too clear, leading to the considerable mirth they generate here, and it is the hive that misunderstands what it is saying?
Mon cher Charles M…zat was my couzeene, Pepe!
Danny criticizes my misinformation but lays whoppers that make me look rather good by comparison:
1. “ABC argues near the beginning of this thread that China has no corruption (my response was to link the world transparency index that indicates otherwise – made no impression!). So, just for argument’s sake, let’s review: on the global corruption index, Denmark has the least corruption (score 9.3), U.S. falls down at 7.1, Taiwan at 5.8, Cuba at 3.7 and China at 3.5 (tied with Greece).” Wow, I never said that China has no corruption. There is no record of it anywhere on this blog. This is the strawman to beat all strawmen… And please take a look at the corruption figures for emerging world countries before criticizing China. As I said before, given the opportunities for graft, the country has done remarkably well. I stand by that statement.
2. Not sure what the melamine tirade is about. Recall the original argument: that overregulation in the US is not suddenly a problem that is killing jobs, since the regulations for environment, labor and other key issues haven’t really changed that much under Obama or Bush or the end of the Clinton administration to explain slower growth rates, but that is always held up by the right. Otellini, CEO of Intel, brought this up, but later, we learned that what he really wants are more lax environmental rules–so he can put heavy metals in the ground water rather than cleaning up–and so he can get free incentive money from the government. I’ve already explained this in greater depth elsewhere, but the fact remains that if you believe the CEO of Intel, loosening the regs will stimulate growth, just as poor or nonexistent environmental rule enforcement in China is why the melamine threat continues even after the death of several infants. Thanks for proving my point. As I said, we shouldn’t have to have melamine in our milk or heavy metals in our water to enjoy growth.
3. Good Lord! is hardly a rebuttal. Care to refute the fact that the project could not have happened without tons of government aid? Or perhaps you want to maintain the myth that atomistic producers built our infrastructure in this country without the government, and boy we are better off because of it…
Bottom line: central planning produces no utopia, but neither does decentralized oversight when such oversight is at least as ineffective.
That’s rich, Z (re. #219): attributing a quote to me when it was a quote that I was referencing from someone else.
Regarding your third point (which references my response to ABC), you really do confirm, therefore, that your collective is in fact “from A to Z” and that we should consider your responses one and the same going forward.
“Care to refute the fact that the project could not have happened without tons of government aid?”
Danny, notice how our comrade has rewritten Bookworm Room history. He clearly asserted that the U.S. government owned the transcontinental railroad, supposedly for a considerable time after its completion. When it was politely pointed out to him that there is a world of difference between ownership and subsidy, why, Your Honor, we now have this new fact! (Never mind that everybody else in this room agreed with him on it days ago.)
Chuck Martel: Driving Toward 300!
Danny Lemieux: That’s rich, Z (re. #219): attributing a quote to me when it was a quote that I was referencing from someone else.
We didn’t attribute the quote to you in either comment that referenced it. Rather, you quoted it as a “juicy snippet,” implying your approval. You can, of course, resolve any discrepancy by simply stating your actual position.
Danny Lemieux: Regarding your third point (which references my response to ABC), you really do confirm, therefore, that your collective is in fact “from A to Z” and that we should consider your responses one and the same going forward.
Have no idea what that means. Our third point in the last comment concerned your statement directed to Zachriel about “profound problems” that were “waived off as minor irritants to the glorified image of central planning.” That did not fairly represent our stated position.
ABC in #138:
The Africans and Indians and Haitians would give their eye-teeth for the opportunities that exist in China. So yes. And there is no wholesale ignoring of concerns of the local population. The rate of wealth creation, pulling them out of poverty, is unprecedented in scale and speed. Also, the amount of corruption and graft is remarkably low in light of the massive government interventions, since the leadership is acting in an enlightened and nationalistic way. Plus, the penalties for corruption are far greater than in the US. If the hooker-starved, cocaine-addicted, hopelessly corrupt hitters on Wall Street were in China, not only would they have been charged (which they were not, except in two cases of rapid acquittal), but they would have been executed.
read a little further and ABC warbles on with, “Now, I am not an advocate of the death penalty, but you can see why they might have less corruption than we do…”
As far as the transcontinental railroad, yes…it was built on land ceded by the government to the railroads.
Then, land was cheap and in relatively unlimited supply. It cost the taxpayer nothing for the government to cede those lands. The railroad barons took the financial risks of building the railroad, which opened the West up to settlement and investment, thereby increasing the returns to the U.S. government and the wealth of the people. Judah was the visionary who made it happen. It was built with private investment. Yet, somehow, you use it as an example to illustrate the importance of government central planning. Go figure.
It really isn’t any more complicated than that. In fact, it isn’t really all that different from the U.S. government opening up bandwidths to the cell phone industry when that industry got started.
Charles, correction. The government continued to own much of the land over which the TCR ran. And given that the challenge in infrastructure projects isn’t the operation of the asset, but the considerable capital and organization required to build it, your point seem beside the point. Don’t you think?
As for Bookworm Room’s history, the point she misses is that in the case of externalities it is precisely the job of government to internalize the costs that the market misses. Similarly, there is a big role for government in the construction of public/collective goods like infrastructure. Even taking your belief, that the TCR was a privately operated affair, you cannot escape the fact that the majority of its value was controlled by the government, that the government needed to supply massive amounts of aid, etc. You have failed to disprove the notion that big government is necessary in two cases: 1) addressing market externalities, and 2) building very large and risky infrastructure projects that carry more public than private benefit. Notice that the latter is actually another subset of the former, but it usually is associated with positive rather than negative externalities. None of your rhetoric changes this, since it is established economic theory borne out by the historical record.
ABC, you are completely off mark on your transcontinental railroad history. Perhaps a better example would have been the U.S. interstate highway system, initiated under Eisenhower. It was motivated in large part for strategic military reasons but funded through public rather than private funding and, yes, it was centrally planned. Similar to the GPS system, this was a prime example of government centrally planning an infrastructure for military reasons that overlapped with civilian use. Ironically, in may places, parts of the interstate are being sold off to private concerns (as toll roads) because it was deemed to be more efficient (and the government(s)) needed the money.
One area in which I will not argue with you the merits of strategic planning is military defense. However, that was one of the key roles of government first enumerated in the Constitution.
Danny,
“you can see why they might have less corruption than we do…”
Good point. That should have read: “less corruption than we think they do…” It is factually incorrect to assert that China has less overall corruption than the US–as hard as that is to believe sometimes–but accounting for the differences in economic and legal development, they are doing quite well. As I said, just compare them to other countries at a similar level of development, whether they have a Marxist or capitalist past.
“It cost the taxpayer nothing for the government to cede those lands.”
Really? Lands owned collectively by the tax payer and given away for less than their value cost the taxpayer nothing? Surely, you see how that statement makes no sense. If the government had taken that land from the companies without paying, would that similarly be viewed as an economically “fair” outcome?
“ The railroad barons took the financial risks of building the railroad, which opened the West up to settlement and investment, thereby increasing the returns to the U.S. government and the wealth of the people. Judah was the visionary who made it happen. It was built with private investment.”
Why do you connect the public externalities of this project with the private investment, which was a fraction of the public investment that went into it? They are totally unrelated. If the US government had built it alone, as they did with the interstate highway system, merely employing private firms as contractors, it would create no fewer public goods as a result. Your logic makes no sense here, sorry to say. And you are wrong in saying it was built with private investment, since the public investment was the much larger piece.
“ Yet, somehow, you use it as an example to illustrate the importance of government central planning. Go figure. ”
Again, private investors capture the private benefits only, while public investors capture the public benefits as well as the private ones. So the willingness to build is greater for the public entity than the private one. Also, the public entities under consideration have greater ability to build, since they have better balance sheets, lower cost to borrow, etc. You’ve done nothing to disprove what is really Econ 101. Why do you try to contest established economic theory??
“It really isn’t any more complicated than that. In fact, it isn’t really all that different from the U.S. government opening up bandwidths to the cell phone industry when that industry got started.”
Except that the US government held competitive auctions for spectrum and raised hundreds of billions of dollars from this, unlike the giving away of land in the TCR example. Also, if you have ever looked at the public filings of cell phone operators, you would know that they are far less capex intensive than railroad companies or toll roads or other infrastructure players. You give yourself away as lacking key knowledge with such examples…
Z pouts and pithers, saying “Rather, you quoted it as a “juicy snippet,” implying your approval.”
You read way to much into my prose – all it means is that a “juicy snippet” is one such point that begs to be addressed.
And, Danny, I did mention the interstate highway example earlier. You imply that I had not, which is not true.
More CRA. They just can’t seem to help themselves.
There is no doubt in my mind that some in the financial industry should be prosecuted and thrown in jail. Nevertheless, when you have the government telling bankers they have to loan money to people who are almost positively going to default on that loan, you almost can’t blame them.
http://sweetness-light.com/archive/obama-demands-more-bad-loans-for-poor
300…Onward and Upward!!!
If so, ABC. I forgot that you did. My mistake. Point still holds, though.
And, speaking of the merits of enlightened planning, today’s WSJ highlights the details of this enlightened “progressive” Administration’s brilliantly conceived railroad plan, guaranteeing that 19th century technologies will continue to survive into the 20th Century.
http://online.wsj.com/article/SB10001424052748703730804576312870609295848.html?mod=WSJ_hp_LEFTTopStories
Living in Illinois, I am beside myself with delight. Imagine, soon I and many other Ill-annoy-ans will soon be able to savor the pleasures of tourist jaunts to delightful Detroit or Sultry St. Louis, all for a taxpayer subsidized fee. Hooo-ah!
This should give the poverty tourism industry a huge boost. Imagine all the horse carriage business this should create to help tourists savor the finer points of Detroit’s genteel historic neighborhoods before they to the torch. Brilliant, I say. Brilliant!
I see the future and it is ….rust!
More central planning, I say. More, more, more, more!
Whoops, I left out the money quotes (also known as “juicy snippets”, Z):
“Companies expected to compete for contracts include General Electric Co. of the U.S., Siemens AG of Germany, Alstom SA of France, Bombardier Inc. of Canada, and Patentes Talgo SL of Spain.
Amtrak spokesman Steve Kulm said the projects funded Monday won’t significantly reduce trip times but are necessary to eventually bring high-speed rail to the U.S.”
Other than Democrat Donors, American companies need not apply.
Chuck Martel: Driving Toward 300!
Do not stop for teleprompters.
Beware of progressive pedestrian crossings (they cog up the engine).
Avoid the Kool Aid Motel chain (they serve chickens crossing the road).
Yield for puns.
Look out for the Great Divide.
And don’t pick up any kvetch-hikers (they’ll bore you into slumber).
Danny, notice how our comrade has rewritten Bookworm Room history. He clearly asserted that the U.S. government owned the transcontinental railroad, supposedly for a considerable time after its completion.
Ahem. Change the definition of ownership all you want. abc. You are proving to be a past master at that.
SADIE, I will take your advice.
Danny, you have been sternly warned: You are not to give yourself away with your lack of knowledge compared to abc’s. Must I take three days out of my schedule to Amtrak to Illinois to discipline you on this?
61 to go. Woo hoo!
Danny, so the fact that I can take the train between Beijing and Shanghai faster than I can fly, and consume far less energy doing it. And these benefits could also accrue to people who make the trip from SF to LA or from LA to SD, so but for some intelligent infrastructure investment, we’d have the same benefits that Germany, France, Korea and Japan, et. al., have.
However, you provide the grand retort: these benefits are chimera because you are calling trains a 19th century technology, is that right? I am at a loss to understand the argument. Last I checked, trains go much faster today and operate far differently than the19th century trains you’re talking about.
A little hint for you… Do NOT start with the ASSUMPTION that anything the government does is bad and then cherry pick data to support that conclusion. That is not a good way to reach solid conclusions about reality. Start instead with the facts, as well as the costs and the benefits, and please use the numbers. Then, let the reader reach the conclusion that a given investment, made by public or private dollars is good or bad. Then let the reader determine whether the facts point to cases in which public money ought to be allocated. Your logic is backwards, so it is no wonder that the conclusions seem forced and wrong. No offense, but we all deserve better.
There are tons of public benefits from the modernized infrastructure in Germany, Korea, Japan and France. The government must play a role, since private enterprise cannot capture those public benefits. You are not allowed to ignore them, just because it kind of explodes your argument and melts the false dicotomy between central planning and decentralized/private control. Reality is more complex than your framing of the issue.
Charles, you are better at catching spelling errors, engaging in rhetorical flourishes and playing semantic games, than in attempting to talk substantively about the issue. Why is that. If the government owned, upon completion of the TCR, a greater value of the total project, as measured in the land it had retained, even after giving tons of it away to the Big Four, then who really owns the RR? Private companies might have operated it, but the key point here was the constructing of it. So, for the second time, I am asserting that your point is of no consequence. Form over substance…once again.
ABC…”A little hint for you… Do NOT start with the ASSUMPTION that anything the government does is bad and then cherry pick data to support that conclusion. ”
No need to pout in the middle of a huff, ABC.
I don’t recall ever saying that “anything the government does is bad and then cherry pick data to support that conclusion”. In fact, I distinctly remember only recently raising the issue of interstates and defense.
As far as high-speed rail, I already provided you a link about what a disaster it has been for China. I could also explain why it is such a high-price financial disaster in Europe (and way to expensive for the average person). But, what’s the point – you ignore this information because it does not fit your template.
Incidentally, it is very easy to get tripped up in definitions here. The Obama Administration’s “high speed” rail that was supposed to link Milwaukee – Madison, Wis. (a 1-hour drive) was supposed to operate at a top speed of 70 mph – or, about what people drive on the freeway link between the two cities at a fraction of the price.
Fortunately for Wisconsin, their governor killed it.
suek #233
Fannie Mae announced its first quarter earnings (strike) loss numbers on Friday. About $11 billion in credit losses on the firm’s giant mortgage portfolio led to a fresh $6.5 billion loss in the quarter. Ultimately, it needs another $8.5 billion from taxpayers to stay afloat.
Prosecution and prison – you’re too kind.
Drawn and quartered should set the example.
abc, I appreciate the backhanded compliment. You are correct, I am a better rhetorician and logician than you, and just as soon as I can return a kudos, I will.
PS: When the government-owned Central or Union Pacific railroads decided to sell shares in their enterprises, which agency of the federal government arranged those sales and printed up the stock certificates?
Charles, I didn’t speak of logic, just rhetoric. And I was referring only to the bad kind that hides the truth for political reasons, rather than the good kind that follows truth and accuracy wherever it might lead. You continue to put words in my mouth.
To answer the question, the government eventually sold the land beneath the tracks to Central and UP, but until they did, the value of the shares did not reflect the full value of the land underneath the tracks, since they didn’t own all of it. What does this have to do with the contention that you wouldn’t have a transcontinental railroad without the government, but you could have had one without private enterprise? Just as we had an interstate highway system without private investment. Don’t lose sight of the forest for the trees, my first-rate logician…
Danny, how could i be pouting? I haven’t broken a sweat yet…
“I don’t recall ever saying that “anything the government does is bad and then cherry pick data to support that conclusion”. In fact, I distinctly remember only recently raising the issue of interstates and defense.”
Fair enough. So to be clear, will you concede that big infrastructure requires government? That this is not central planning in the derogatory sense of the word, but simply economic necessity? If not, why not? You claim not to say something that your rhetoric clearly appears to point toward, so some clarity would be welcome–lest you start sounding like Charles.
“As far as high-speed rail, I already provided you a link about what a disaster it has been for China. I could also explain why it is such a high-price financial disaster in Europe (and way to expensive for the average person). But, what’s the point – you ignore this information because it does not fit your template. ”
I only read your last posted link about the West Coast lines. Please tell me why China and Europe have seen financial disasters from rail transport, and please account for the repeated governmental bailouts of our “private” airlines when you make that claim, with dollar comparisons, if possible, for each. Also, I trust that you will include the public benefits of those rail systems, as measured by productivity saved since one is not sitting in traffic on a snarled highway instead. And finally, please explain why those investments in rail in China and Europe are bad but the TCR and the interstate highway system in the US were not. I think such an explanation would set me back on track, no pun intended.
“Incidentally, it is very easy to get tripped up in definitions here. The Obama Administration’s “high speed” rail that was supposed to link Milwaukee – Madison, Wis. (a 1-hour drive) was supposed to operate at a top speed of 70 mph – or, about what people drive on the freeway link between the two cities at a fraction of the price. Fortunately for Wisconsin, their governor killed it.”
The existence of a bad infrastructure project proposed by a self-interested member of Congress hardly refutes the idea that government investment in public infrastructure is a bad idea. Surely you know this…
Sorry, last sentence should read “is a good idea…”
“What does this have to do with the contention that you wouldn’t have a transcontinental railroad without the government, but you could have had one without private enterprise?”
Whose contention, Don Quixote? Certainly not mine.
Oh, damn, logic again!
(Apologies to this room’s true DQ, who knows the difference between a windmill and a chimera.)
Charles is evading again. That was my contention, not Don Quixote’s, and your question about what assets were linked to Union Pacific stock had nothing to do with it, although I had the decency to answer the question anyway. I wish you would show the same courtesy.
The Left are full if ignorant tools. Not even Global Warming and Green movement cannbalism can get rid of them faster than they can regenerate.
Danny Lemieux: The railroad barons took the financial risks of building the railroad, which opened the West up to settlement and investment, thereby increasing the returns to the U.S. government and the wealth of the people. Judah was the visionary who made it happen. It was built with private investment.
Total land grants totaled more than the size of Texas. That’s an odd definition of private investment. It took years of effort in Congress, but the Pacific Railway Acts provided extensive tracts of land, gave low-interest government bonds, determined the route, mandated a building schedule, even set the gauge.
what added value comes from knowing the individual course grades beneath that overall average?
Propaganda is composed of the truth hiding the deception.
Statistical polls are broken into demographics and sampling sizes as well as sampling demographics. Thus a poll of 90% Republicans will produce a different result than a poll using 90% Leftist radical feminists.
Without the underlying individual data, the “overall average” is meaningless.
You can never believe data that has been managed, massaged, and altered by the hands of strangers. And if you do, that’s what is called incompetence in intelligence analysis.
Centralized authority has opposite and opposing benefits and advantages vs de-centralized hierarchies.
While A and Z here may know the theoretical definitions of these benefits and advantages, they haven’t shown a markedly acceptable degree of adapting that theory to practical applications.
It’s not that hard to notice the disadvantages of China’s centralized authority or the inconsistency with which China attempts to embrace the new while still teaching kids to worship Mao’s Great March. Humans can keep deluding themselves forever, but reality gives no care for the desires of humans, however deluded they become on their own cocaine.
Nor are the advantages of centralized authority put on display through the demonstration of A or Z’s perspective and individual judgment on China. There are certain advantages but they are not the ones A and Z focuses on. However many advantages there are to centralized authority, that does not make acceptable A and Z’s mistakes concerning the history of economic progress in China or the US. Nor are the advantages of centralized authority superior in length and power compared to de-centralized hierarchies.
It took years of effort in Congress, but the Pacific Railway Acts provided extensive tracts of land, gave low-interest government bonds, determined the route, mandated a building schedule, even set the gauge.
Here Z makes the critical mistake of believing the government of now is the same as the government of that time. That if they could make it work, somehow creating Robber Barons, that the government of now can do it even better, make success without creating Robber Barons. This is a flimsy and shabby foundation upon which to rest the hopes 330 million American lives. It’s not enough. It’s not nearly enough given Z’s demonstrable lack of competence on the issues.
ObamaCare, his death panels, and their supporters like Z are only going to crash the economy and destroy people’s lives, using healthcare and insurance even.
Up against that, do they even need Robber Barons and government subsidies?
Zachriel: It took years of effort in Congress, but the Pacific Railway Acts provided extensive tracts of land, gave low-interest government bonds, determined the route, mandated a building schedule, even set the gauge.
Ymarsakar: Here Z makes the critical mistake of believing the government of now is the same as the government of that time.
The comment you quoted doesn’t say that. Please quit misrepresenting our position.
Ymarsakar: It’s not nearly enough given Z’s demonstrable lack of competence on the issues.
Ad hominem is not a substitute for addressing the points raised.
OK, Z…I’ll respond (back from a meeting):
“Total land grants totaled more than the size of Texas” This reflects a total lack of perspective.
The land at the time, no matter how big the tracts, was nearly worthless undeveloped land that was given away to those that would develop it. The government also gave huge tracts of land away for free to individual squatters, in exchange for commitments to develop the land. The government had a self-interest in having private enterprise (whether individual or collective) develop the land using private capital resources. This is what happened.
As Ymarsaker points out, those were very different times and the issues of government control and centralization paled by comparison to today. The very fact that you make comparisons between our government today and a historically totalitarian China proves that point. You could not have made such a comparison at the time the railroads were being built.
ABC – “Fair enough. So to be clear, will you concede that big infrastructure requires government? That this is not central planning in the derogatory sense of the word, but simply economic necessity?”
Yes, I will agree with that. There are times when government does fulfill a need in the development of infrastructure: examples are defense networks (GPS and interstate highways) and the space program. The government fulfills a valuable role because it can make the huge, high-risk up-front investments that do not make economic sense for private industry, as private industry might have trouble ever getting a return-on-investment. However, the high up-front risk requirements of such large public investments require that the risks be justified with sound return-on-investment analysis, which is really around which this thread’s conversation has revolved.
The argument we make is that government, because of its internal corruptions and lack of accountability, is prone to make bad investments that are horrendously damaging to societies and often defy sound economic sense (does the “Erie Canal” trigger any memories?). Another classic example is the self-serving investments of Louis IV in France, which ended bankrupting the economy, eventually leading to revolution. Similarly, Napoleon also made grand capital investments (the redesign of Paris, for example) that ended bankrupting the country and (if you include his military adventures spurred in part to pay for those investments), untold misery to the rest of Europe. To a bright-eyed naive American tourist today, of course, those capital investments seem like a splendid idea, photogenically anyway.
OK… you want a specific. I mentioned the disaster in China’s railroad system, highlighted in this and many other papers. Here it is again (4th time I’ve presented the link, I believe…maybe you will read it this time): http://www.washingtonpost.com/opinions/chinas-train-wreck/2011/04/21/AFqjRWRE_story.html
Read the line “at a cost of $46 million per mile”.
Let me give you another example – the Brussels to Paris high-speed line. Beautiful train, comfortable with good service. My cost was about $440 round trip, for a trip that would have taken a 1.5-hour drive by car. Small wonder that the highways we passed were packed with traffic and the train was virtually empty. Despite the high cost of fares, the line is a huge money loser. The people living in the little houses we passed in the country were helping to pay my ticket. Given a choice of train or car, which makes more economic sense? For the average person, of course, such high-speed rail fares are simply out of financial reach. It benefits only the well-to-do elites.
BTW – please don’t go on about how “interstate travel costs are not recaptured by the economic system”. Sure they are. I have yet to see a good study that measures the cost versus benefits of our transportation network. Frankly, I suspect the government would be too embarrassed to release it.
However, I would have to include the value of defense and tax-generating commerce among those benefits, so include the tax-revenues from the value-added commerce among the “user fees” generated. Also going toward paying for this infrastructure is a multitude of federal, state and local taxes on vehicles, transportation, gas purchases and user fees. You know as well as we do that the sum total of these government revenues does not go back into maintaining this infrastructure but is instead siphoned off to fund other government programs (we in Illinois sadly know all about this).
So, to sum up, you and we don’t agree on the role of central government planning, not because we don’t believe in it but more because we believe that it has to be done with great care and accountability. That kind of accountability is not something that happens in totalitarian, top-down societies. We are also very right to be suspicious of our government’s motives to “invest” in boondoggles, such as the proposed high-speed rail program that will only benefit well-to-do elites and favored government constituencies (i.e., labor unions) at huge economic cost to the rest of us average people. Seriously, can you really argue that the solution to Detroit’s economic problems is a high-speed rail link to Chicago?
We know a pig-in-a-poke when we see it!
Danny, this is a sidebar, but perhaps a telling one nonetheless. My sister-in-law and her husband, even at 70, are inveterate travelers. Usually they travel by air, or if they’re on the East Coast by car (between Sarasota, Fla., and Boston).
Recently my wife and I met them in Oregon for a visit, and they later drove down to stay near us for a few days here in California. Bill is entering a terminal cancer stage, and one of the disease’s symptoms is severe swelling in the legs. We were all concerned that he could be in mortal danger flying cross-country in a jet’s low-pressure atmosphere.
So, he and his wife scoured the Internet looking for a rail connection to Chicago or Minneapolis, from where they could hazard a reasonably short flight to Boston.
Total cost for a one-way, 46-hour rail trip from Oakland to Chicago: $646 for two. More than twice what it would have cost to hop on a plane for a 4-hour trip.
When you consider that Amtrak is a small-potatoes, backwater utility, it’s understandable that there are no economies of scale to control its costs, no competitors to help it rein in its fares, and no real reason to sell or hustle given that the taxpayers will subsidize it no matter what.
So, should I be expected to think that a massive system of new high-speed rail lines would really be any different? There still would be no economies of scale, no competitors, and endless government subsidies to suck on. And why would Americans be any different from the Europeans you saw avoiding rail traffic en masse?
My sister lives in Central Oregon. To fly from there to here takes about 2 hours each way, at a cost of about $400 dollars for the round-trip.
By taking the train, she saved about $150 dollars, which is a big deal for her. It also took her 24 hours one way to make the same trip: a 2+ hour bus ride to the train; a 5 hour delay because there was an accident on the track and the union members insisted on leaving their shift and bringing in new employees; a 12 hour train ride (I think that’s right); and then a 1+ hour bus ride from the East Bay to San Francisco. (The return trip, without the 5 hour delay, took a “mere” 19 hours.)
One of the things that the Euro-train lovers fail to recognize is that America is a vast country, especially when compared to Europe’s itty-bittiness.
When my Mom and I visited Holland about 30 years ago, we were in Utrecht and wanted to visit the Open Air Museum in Arnhem (a visit I highly recommend). By the time we got this bright it idea, it was about noon, so we asked a young woman if we could still make it there with our rental car. “Oh, no,” she replied. “It’s way too far away. There’s no way you can drive there in time to get to the museum before it closes.” Mom and I looked at the map, looked at each other, got in the car, and drove the 45 minutes to Arnhem. We then spent a lovely afternoon at the museum.
Whenever I think about Europeans, cars, fuel and trains, I think of that 45 minute drive the young woman assured us was “too far.” We are not Europe. We are America. Our relationship to space (not Outer Space, but our own American geographic space) cannot be compared to the European experience — and we get little to no benefit from European solutions.
Book, you just reminded me of a contest Amtrak held years ago to name the train that goes at night between Sacramento and Los Angeles—a distance of 360 miles that typically takes 14 hours (average speed, 26 mph).
I forget what flowery name the contest organizers evetually decided upon, but I have it on good authority that their overwhelmingly favorite entry was the one that read: Night Crawler.
Danny Lemieux: The land at the time, no matter how big the tracts, was nearly worthless undeveloped land that was given away to those that would develop it.
Of course the land was worth something. The Gadsden Purchase was for $10 million (~$250 million in today’s dollars), from an unstable Mexican government starved for cash.
Danny Lemieux: The government had a self-interest in having private enterprise (whether individual or collective) develop the land using private capital resources.
Now you got it. Giving land to those who will develop it can be a public good. It’s an aspect of central planning.
Danny Lemieux: There are times when government does fulfill a need in the development of infrastructure: examples are defense networks (GPS and interstate highways) and the space program.
Finally. That’s the point, of course. “We were talking about centralized, state planning in economic development.”
Central planning is essential in any advanced economy, just as are robust markets. Those who claim that central plans are inevitably bad for growth ignore the example of China, which has experienced phenomenal growth over the last generation. (We’ve provided several caveats above.) Those who attack such plans simply because the government is involved are undermining an important component of economic development. Central planning is part of U.S. history, and its even more important today. Knowing where to draw the line is important, but it’s not an either-or decision.
Z…you are using straw man arguments. Nobody every said on this blog that there is no role for government in economic development. The argument has always been about “how much” government. The arguments about central planning have focused on its dangers.
Anyway, enough! I can’t play anymore as I really do need to earn a living.
Danny Lemieux: Let me give you another example – the Brussels to Paris high-speed line. Beautiful train, comfortable with good service. My cost was about $440 round trip, for a trip that would have taken a 1.5-hour drive by car.
One way 164 miles (264km) as the crow flies, or ~110 mph (176 kph) That last mile into Paris down rue Lafayette must be very exciting. Anyway.
First Class. Second class is about half that, and Leisure class even less (though not always available). If you drive your own car, there’s still a cost for depreciation and fuel, but you will have relatively easy transportation when you get there, though you still have to park. Basically, if you car pool (e.g. family trip), then a car may be the better option. If you travel alone (e.g. on business), then the train may make sense. Or if you don’t have a car (e.g. a tourist).
Danny Lemieux: So, to sum up, you and we don’t agree on the role of central government planning, not because we don’t believe in it but more because we believe that it has to be done with great care and accountability.
Yes, it should be done with great care and accountability.
Danny Lemieux: That kind of accountability is not something that happens in totalitarian, top-down societies.
That would imply that there is never any accountability or economic expansion in non-democratic societies, which isn’t the case. There have been good kings and bad kings. Accountability is crude, but can come through the nobility and other vying powers. In Communist societies, it filters up through the various party organizations. The problem is the distance between the streets and the leadership is so great that accountability can become detached. Even the best leaders can become isolated from the concerns of the people. Britain is an interesting example, where a parliament acted to provide some measure of communication between the people (the rich ones anyway) and the monarchy.
As for modern China, they have slowly been able to implement the rule of law. Though democratic accountability is the stronger system, the rule of law still provides a viable mechanism for economic expansion, and a mechanism for continued political reform.
Ah, you’re right: my fingers worked faster than my brain, Z. Travel time is 2-1/2 hours.
I thought centralized obama planning was going to give you a living, Danny?
I’m not willing to join the Eloi just yet, Ymarsaker.
36 to go.
Zach 258: Central planning is essential in any advanced economy, just as are robust markets.
That appears to be a flawed logical construct. It’s similar to: “Socialism is an essential aspect of any modern economy, just as is money in everyone’s pockets.”
Or, “Love is essential to a happy life, as are well-starched handkerchiefs.”
The two parts *appear* to relate to each other because they’re joined in the same sentence; yet they have absolutely NOTHING in common. The existence of robust markets has NOTHING in common with the existence o centralized planning as a part of your economy. They do not belong to the same category of idea at all. You *can* claim that more centralized planning LEADS to robust economies, or to less robust economies. But the “just as are” construct, implying equivalency of worth and nature – belonging to the same category of idea – is ridiculous.
But it’s slickly done, I’ll grant you that. Have you been sitting with Obama lately? This is the kind of pure snake oil BS he slides right into people’s brains, harming them, all the time. Every word he says is as wrong as this – in his case, deliberate and highly malicious – yet it slides into the cortex so very smoothly – it sounds SO right while being so wrong – and nests deep in there, like a novocaine worm exuding the slime of its poisons.
It’s like saying food is essential for the health of a human being, but does that mean you should eat 4,000 calories a day while doing nothing but sit at the office and on the couch at home?
The meaningless ambiguity of Z’s claims belie the critical importance of detail and application. Ideas are worthless when the people who quote others cannot do anything to make their idea into reality.
Obama does a hypnotic suggestion like saying “things are horrible and we need change”. Technically, that is true, but in application and detail, it isn’t the change Obama will bring. The assumption on the part of people who heard that was that Obama was going to change things for the better. In reality, it was different. Obama made no claim that he was going to make people happier, only that his wife and himself would make the people work harder. While his wife and himself lived a life of luxury and ease.
But since the assumption went into people’s head as an a priori, they never questioned it. They never questioned the truth content behind “things are horrible and we need change” or “we are the ones we have been waiting for”.
Danny, heh Time Machine.
Speaking as a Morlock, my problem with the Eloi is that there isn’t enough meat on their bones. We often sit around at night in our subterranean homes after a delectable serving of Eloi Saltimbocca listening to our wise ones tell us about the past. One of them says that in the long ago, before Morlocks and Eloi became separate species, parasites called the “Grins” or “Greens” persuaded vast numbers of people that fat, beer, salt and meat were not good for them.
Those fools became the Eloi.
Those people who continued to grill, guzzle and grow their girth became Morlocks. As the Eloi took control of the food supply, and eliminated the traditonal sources of Morlock nutrition, we Morlocks had no choice but to turn to the Eloi as our main source of protein.
Charles Martel: That appears to be a flawed logical construct. It’s similar to … “Love is essential to a happy life, as are well-starched handkerchiefs.”
You need to work on your logic. There’s no logical flaw in stating that love and well-starched handkerchiefs are essential to a happy life. You may disagree, due to whatever inurbane notions you may have, but it’s not logically flawed.
“The two parts *appear* to relate to each other because they’re joined in the same sentence; yet they have absolutely NOTHING in common.”
Interesting description, MikeD. What you describe is very much like the “salad talk” symptoms of schizophrenia. Could explain a lot.
Chuck Martel thinks the Zach Collective has too much of that glorious old refrain, “Charles on My Mind” on its minds.
Martel thinks that the Zach Blob might want to direct its comments at Mike Devx since he is the one the Kibbutz is contending illogic against.
Mike Devx: That appears to be a flawed logical construct. It’s similar to … “Love is essential to a happy life, as are well-starched handkerchiefs.”
That comment should have been attributed to Mike Devx.
Bookworm,
You are correct that Europe has higher population density and closer proximity between many cities, but that is not true everywhere in Europe (e.g., Spain, France). More importantly, no one is recommending trains for those parts of the country (i.e., here in the US) that are sparsely populated. Rather, trains should be used in places where the density and city-proximity is closer to Europe. You find this on the West Coast from SF south, and on the East Coast from D.C. north. China, like the US, is a large country, with cities that are farther apart, but the use of train links between major hubs (e.g., Beijing to Shenyang or Beijing to Shanghai are very popular) and those linking closer cities (e.g., Beijing to Tianjin) are convenient as well. These links are analogous to NY-Chicago and NY-Boston linkages. The sizes of those cities are larger than Europe’s equivalents, even though they are somewhat smaller that China’s. So your argument is correct, but only for areas where no such high speed trains are proposed.
You shouldn’t chew on Nancy PillowC, Marty McFry. That might send you back to the time you came from given the quantum shock.
abc, have you traveled from SF south (or north, for that matter)? The song that springs to mind is “I’ve got plenty of nothing, and nothing’s plenty for me.” Even in slightly more densely populated corridors, such as the Bay Area to Sacramento corridor, the train is usually empty and always running at a deficit. The car is faster, cheaper, easier, and more flexible. Why take a train?
I think both A and Z here would say that Chicago and Detroit aren’t corrupt. That if only more centralized authority came to be on the scene, that Detroit would grow out of being a feudal serfdom and Chicago would become efficient.
Does that sound about right, given how people like Danny have seen first hand Chicago’s glaringly obvious decadent fat cats and union corruptocrats?
Why take a train?
Because unions need more jobs to parasitically suck off of in order to grow their cult, Book. Why else.
Btw, given how they like to force people to buy healthcare insurance and to force people to pay for other people’s abortions, I predict that soon they will force you to sell your car and take the train. Or else you’ll be “penalized” for 10% of your earnings. That gives people the “freedom to keep their car if they like it”, you see. Just like they were free to keep their doctor and healthcare package if they are satisfied.
I’d say that the Boswash corridor makes great sense for high-speed rail because of the European-like population densities involved. Not as sure about NY-Chicago, since that is a 700+-mile distance, equivalent to going from Vienna to Rome. Plausible, but still questionable in light of a 90-minute air flight.
As for the West Coast, Book is right to point out the great empty spaces that lie between California’s northern and southern metro areas. While a 3-hour portal-to-portal trip between the Transbay Terminal in San Francisco (yet to be built) and Union Station in Los Angeles might be attractive to some, there are significant drawbacks to the dream:
—Acquiring right-of-way between Union Station and points south, such as Santa Ana and San Diego, that can accommodate high-speed trains would be very expensive.
—Would the builders add spur lines that go out to other SoCal population hubs, such as Riverside-San Bernardino, or Long Beach, or rely on LA’s slowly expanding and underused Metro Rail system for connections?
—Who would pay to condemn the land near Union Station to accommodate rental car companies, since rail passengers would need autos if they want to access the 90 percent of the L.A. metro area that isn’t served by fast public transportation?
—Would hotels outside of downtown Los Angeles want to run expensive shuttles to Union Station? If somebody takes the train to downtown L.A. but is staying in Westwood, what would be the design of the connection that would entice him to board the train in the first place?
The problem with the L.A. connection is that the while city is very dense on a population-per-square-mile basis, it is also very spread out and has nothing like the one great central core area you’ll find in New York, Boston, Philly, Baltimore, or Chicago. Union Station is one travel destination among a plethora. Air travelers, on the other hand, can get much closer to their SoCal destinations by choosing to land at LAX, Burbank, Ontario, Long Beach, John Wayne, or Lindbergh, not to mention the smaller airports in places like Van Nuys, west Los Angeles, and the Inland Empire. Each of those locations has car rental places and a far larger, more affordable assortment of hotels than downtown Los Angeles.
Basically, the high-speed system that Californians have obligated themselves to piss away $30 billion on will be a magnificent “Me, too!” tribute to the empty European trains alluded to by another poster here. It will never, ever recoup the cost of building it, and it will become one more bright, shiny nail in the coffin of the state’s economy.
Some time ago abc asked me who should regulate the markets. Each time we pass new regulations for the previous scandal or crisis, there is a new one never anticipated before. We could reduce leverage of the largest banks, separate investment from commercial banking– but I don’t think either of those options were in the newly passed financial regulation bill.
Let me ask you a question. Given your assessment that neither democrat nor republican controlled congresses and the last four administrations, both democrat and republican have failed to address adequate regulation of new financial products, why do you think it’s going to be any different the next time?
Do you really think wise old rich guys or anti-capitalist zealots will do a better job?
When BISTRO was introduced to the market in the late 90′s, the holy grail of credit risk had been discovered, risk was tamed. But wasn’t some of what happened already illegal, and shouldn’t we be seeing perp walks with the regulations that already existed.
I find it hard to believe I’m in the camp with Robert Rubin, Larry Summers and Alan Greenspan. I’ve never considered them free market capitalists– more managed-market, big-government capitalists, since it appears to me the FED has been managing the economy for some time now.
You’ve made a couple of remarks about Cox and his tenure at the SEC. The SEC budget wasn’t cut during the Bush years and number of employees rose during that time period.
Cox voted against the Credit Futures Modernization Act when he was a Congressman in 2000, so I’m not sure how you can claim he was against regulating OTC derivatives, since that bill exempted derivitives
You could just as easily criticize Barney Frank for opposing Republican attempts to reign in the GSE’s in 2004, since there was an implicit understanding that the Federal Government would bail them out.
In 2006 Congress passed reform of the rating agencies, based on studies done by the SEC, but it was too late to save the system.
As I’ve said before, it wasn’t too little regulation, but bad policy and a confluence of policies that each by themself wouldn’t have produced the disaster we experienced. At the time CDO’s represented a small portion of the market. Weren’t CDO’s necessary to meet the growing subprime and Alt-A market, necessary because of social policy?
One place we might agree is requiring skin in the game for the CDS market.
Liberals keep saying that the free market failed, but we’ve been managing the economy for a long time- and the distortions of fiscal and monetary policy management are compounding our problems, IMO.
abc said:
Also, what role did 30 years of spending more than we earn, as measured by consumption growth outstripping GDP growth since 1980, play in causing future sales and growth to be pulled forward using debt? Isn’t the current slowdown a function of us reverting back to a normal relationship of consumption to production, which, in the current short-term, likely involves consumption being outstripped by production growth? Why do you link this to the contribution of regulations when the major changes in regulation do not correspond to the slowdown in growth?
Fiscal and monetary distortions. We’ve used debt to mask the drain our trade deficit has had on national wealth. I’m not sure the correlation you’re trying to make between consumption and production growth, since production growth has come with a paralleled increase in income. I suppose if you consider that consumption has come from debt, we have a double whammy of national and personal debt being at the tipping point.
The incessant growth of regulation has been a drag on growth, since some or much of it has come at the expense of productivity growth. If I find a way to demonstrate the correlation I’ll be back to show it. At this point it’s part anecdotal, and part common sense.