I am going into isolation for a bit to rewrite the last chapter in my UN book, “Returning to Earth: When and How the United States Should Engage, and Not Engage, with the United Nations” – a chapter on the end of the human rights era at the UN. But I wanted to wish everyone a happy new year. And thank people for the excellent comments on cost-benefit analysis and the “line in the sand” question – please keep any comments coming in, particularly as relevant to the issue of how CBA deals, or does not deal, with deliberately arbitrary lines, in a form of analysis arising out of marginal incrementalism. (I am less interested in debates over particular issues to which CBA might be applied; I’m trying to understand it as a conceptual form and, if you like, something of its intellectual history and pedigree.) And, finally, to commend to you this essay by Jim Manzi, “Keeping America’s Edge,” at National Affairs journal – curious to return and see what people thought of it.
Sammy Finkelman says:
Are you looking for comments about the Manzi article, or about Cost Benefit Analysis?
About the Manzi article, the biggest problem is that he is obsessed with one or two ideas or arguments and I am not sure his facts are all correct. There are no numbers in it, or even really anecdotes, and he comes to no conclusion. It’s just talking around an issue. I think basically he’s read other articles, accepted one or two conclusions as truth – accepts them so much that he doesn’t even bother to lay out for the reader what exactly he believes to be true.
Now the thought that seems to disturb him, is the idea that the number of low pay jobs has gone down (proportionally) because of technical innovation perhaps, and furthermore that that is responsible for all sorts of problems. In the past – meaning 1910 or so, yes this argument attempts t explain the difference between 1910 and say 1965 – nothing recent at all – this is a mistake he makes – a mistake somewhat easy to make but still a big flaw – in the past people could support themselves without a lot of skills, but now they can’t and that’s why we have a lot of crime.
I don’t beleive there any real association between poverty and crime and so this whole argument fgalls down. I don’t beleive that there is such a great shortage of jobs, but the real cause of teenage unemployment and places with nobody working is the much too high minimum wage. There should be jobs going begging. There also should not be penalties for working, especially the kind created by Medicaid, where someone earns a little bit more and falls off a cliff.
Manzi cites one statistic that is misleading and was exploded maybe a few years ago. That is the increasing income inequality or the decline in average household income. Household income is lower because families are smaller!! Futhermore this is always income before government help. And it is formal income – that recorded on W-2 forms.
Abpve all there is a complete lack of historical persepective he talks like this is a problem for the future, but it overwhelmingly a problem of the past. Whatever was going to happen as a result of technological change has already happen. He some how doesn’t realize this thing. All the ideas refelected in his essay were originally thought up as an EXPLANATION for two different trends – innovation – and social pathology. But I don’t think they are related. And only if you don’t care about what decade some events happened can you really link the two.
Now about Cost Benefit analysis. The problem here is that you are comparing apples and ranges. You can’t really match costs against benefits uness you assign some arbitrary value to benefits. And on top of that it is very difficult to estimate costs accurately. What you can do is compare costs to costs (Cost of Choice A vs Cost of Choice B) and benefits to benefits always bearing in mind that you have to use your own judgement or it works best when you try.
January 1, 2010, 2:55 pmSammy Finkelman says:
By the way my experience on this blog is that editing does not work. You *can* edit a post after saving it, but the changes never get saved.
January 1, 2010, 2:57 pmptt says:
Editing works for me. You might try refreshing the page afterwards… could be you’re looking at a cached page.
January 1, 2010, 3:01 pmChrisTS says:
Perhaps the editing function depends on length of comment?
January 1, 2010, 4:11 pmAlan Gunn says:
A lot of the things that bother Manzi are attributable to our load of government programs intended to help low-income people. One effect of just about all of these programs is to create effective marginal “tax” rates that add up to 100% for low-income workers. For instance, consider a single parent with two kids (these are Virginia figures; they’ll vary some from state to state). If this person earns $15,000 a year (not counting all the benefits from government programs, earning $20,000 more would not get her a single dollar of increased purchasing power, because as earnings increase, the benefits of the various programs to “help” her are reduced. (See http://gregmankiw.blogspot.com/2009/11/poverty-trap.html). Furthermore, these programs almost all carry huge penalties for being married; two low-income single parents who marry each other will lose many thousands of dollars in benefits. Not surprisingly, low-income working people (and non-working people, too) tend not to get married very often any more. I recently saw a statement by someone who runs a tax-preparation clinic for low-income people saying that hardly any of her clients are married, because it would cost them too much money in taxes and lost benefits.
If the health-insurance thing goes through, the total implicit marginal tax rates for the poor will be even higher; probably a good bit over 100 percent in some cases. I don’t know what it will do for marriage penalties.
Does anybody, of any political persuasion, think it’s good public policy to discourage marriage and to take all the extra money a low-income worker with children earns?
January 1, 2010, 4:35 pmArrowSmith says:
Why does it matter for America to be #1? That’s a very chauvinistic attitude. Let Burundi be #1 out of fairness.
January 1, 2010, 5:31 pmNick says:
Think of those South American soap operas about middle class mores. Or Ugly Betty. Or the first two seasons of Lost, and the model set by Walt’s dad. Can any politician do as much as some anonymous TV scriptwriter can to encourage the virtues deadbeat dads do not have? That the unskilled do not have?
The virtue, to start with, of wanting to get ahead, and not be unskilled. To get out and watch less TV.
In America you can be poor and be fat. In fact the poor are the fat. When you make money in America you work out, you go to the gym, you care enough to keep trim. It’s a middle and upper class thing. What can politicians do that The Biggest Loser, or Oprah, can’t do better than them?
That there is, as Manzi says, “an increasingly crude and corrosive popular culture,” doesn’t mean there has to be, right? Some shows are bad for the economy, but not all of them are. If you want to change things, you have to work in TV.
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January 1, 2010, 9:07 pmJim Manzi says:
Sammy Finkelman:
I’m sorry you did not like the piece. It certainly has its weaknesses, but not the ones that you assert.
I’ll start at the beginning of your comments.
You say:
“About the Manzi article, the biggest problem is that he is obsessed with one or two ideas or arguments and I am not sure his facts are all correct. There are no numbers in it…”
Really, no numbers? Other than this paragraph:
“This dynamic is often easiest to see at a distance. Consider, for instance, our country’s transition from an agricultural to an industrial economy. In 1800, America was a nation of farmers: About three-quarters of the labor force worked in agriculture. Since then, this share has been in almost continuous decline. By the eve of the Civil War, it was a little over half; by 1900 it was about one-third. Today, agriculture employs less than 3% of the work force. This has been great for consumers: Farming is now incredibly efficient, and food is cheaper and more plentiful in real terms than ever before in human history. American agriculture today is also a successful industry; in 2007, the U.S. exported more than $75 billion in agricultural products, and it has maintained a positive trade surplus in food for decades. But agriculture is no longer an industry that can provide employment for very many people.”
Or this one:
“But it is important to see that this robust growth means only that America has not lost ground in global economic competition, not that it has gained much. From 1980 through today, America’s share of global output has been constant at about 21%. Europe’s share, meanwhile, has been collapsing in the face of global competition — going from a little less than 40% of global production in the 1970s to about 25% today. Opting for social democracy instead of innovative capitalism, Europe has ceded this share to China (predominantly), India, and the rest of the developing world. The economic rise of the Asian heartland is the central geopolitical fact of our era, and it is safe to assume that economic and strategic competition will only increase further over the next several decades.”
Or this one:
“Child-rearing has seen a similar split. In 1965, almost no mothers with any level of education reported that they had never been married. Today, this still holds true for mothers who have finished college: Only 3% have never been married. But that figure stands in stark contrast with the nearly 25% of mothers without high-school diplomas who say that they have never been married. In fact, last year, about 40% of all American births occurred out of wedlock. And about 70% of African-American children — as well as most Hispanic children — are born to unmarried mothers. But this situation obtains for low-wage, non-college-educated whites as well: It is estimated that about 70% of children born to non-Hispanic white women with no more than a high-school education and income below $20,000 per year were born out of wedlock.”
Or this one:
“Perhaps the best illustration of these pressures — to innovate and deregulate without coming apart at the seams — is found in widening economic inequalities. It has often been noted that American society has become increasingly unequal in economic terms over the past 30 years. As Federal Reserve chairman Ben Bernanke noted in a 2007 speech, “the share of income received by households in the top fifth of the income distribution, after taxes have been paid and government transfers have been received, rose from 42% in 1979 to 50% in 2004, while the share of income received by those in the bottom fifth of the distribution declined from 7% to 5%. The share of after-tax income garnered by the households in the top 1% of the income distribution increased from 8% in 1979 to 14% in 2004.” A typical senior partner in a high-end investment-banking, corporate-law, or management-consulting firm can now expect to make upwards of $1 million per year. In the stratosphere of the economy, the increases in wealth have been mind-boggling: Even after the recent market meltdowns, there are about 30 times as many American billionaires today as there were in 1982.”
I’ve heard lots of critcisms of my writing, but I have to admit, this is the first time I’ve been criticized for not using enough numbers. I guess readers of the article will have to decide whether or not the article is limited to “one or two ideas”. If you are going to assert that my facts are incorrect, please cite the specific facts that are incorrect.
You go on to say:
“….and he comes to no conclusion”
You mean other than the partwhere I state what I believe to be America’s key challenge in one sentence, and follow it with ~1,200 words outlining four specific recommendations for what I think ouught to be done about it.
You go on to say:
“Now the thought that seems to disturb him, is the idea that the number of low pay jobs has gone down (proportionally) because of technical innovation perhaps, and furthermore that that is responsible for all sorts of problems. In the past — meaning 1910 or so, yes this argument attempts t explain the difference between 1910 and say 1965 — nothing recent at all — this is a mistake he makes — a mistake somewhat easy to make but still a big flaw — in the past people could support themselves without a lot of skills, but now they can’t and that’s why we have a lot of crime.”
“I don’t beleive there any real association between poverty and crime and so this whole argument fgalls down.”
Please cite where I assert that such an economic dislocation casues crime.
You go on to say:
“Manzi cites one statistic that is misleading and was exploded maybe a few years ago. That is the increasing income inequality or the decline in average household income. Household income is lower because families are smaller!!”
Perhaps you missed the paragraphs where I address exactly this concern (among the other complexities in evaluating changes in family incomes over the past thirty years):
“Evaluating the real change in economic circumstances of a typical American family over the past 30 years is extremely complicated. To begin with, the typical family is smaller than it was three decades ago. Further, how we adjust for inflation has an enormous impact on any comparative calculations. Finally, family budgets must increasingly account for previously unpaid work — like child care, or attending to sick relatives.”
“Despite these complicating factors, a few trends still emerge rather clearly. First, average living standards have continued to rise since 1980. Second, the real hourly wages for a typical non-supervisory job have not increased very much over this period. Third, this wage stagnation is at least partly explained by the rising costs of health care — which, because of the American system of employer-based health insurance, are usually deducted implicitly from what workers see as wages. Fourth, personal indebtedness has risen dramatically over the same period and accelerated rapidly during the past decade — so that at least some of the increased consumption was simply borrowed. And last, income mobility — the likelihood of an individual’s moving up the relative income distribution — appears to have declined slightly over the past three decades, according to multiple studies by the Federal Reserve Banks of Boston and Chicago.”
You go on to say:
“Abpve all there is a complete lack of historical persepective he talks like this is a problem for the future, but it overwhelmingly a problem of the past. Whatever was going to happen as a result of technological change has already happen.”
I guess we’ll just have to leave it at the point that we disagree that technological change will have no future effects.
Best regards,
January 1, 2010, 9:32 pmJim Manzi
American Psikhushka says:
Jim-
I tend to agree with your statement of the situation and your proposed solutions.
Between innovation/growth and “social cohesion” as you put it I would favor innovation/growth – with the wealthy and prosperous soicety it would provide any discontents would have to be working pretty hard at being discontented with all the jobs and opportunities available. In any scenario, what would be your recommendation for attempting to address social cohesion? Perhaps it is simply a matter of education, if those opposing innovation/growth understood that it made everyone better off perhaps social cohesion would not be a problem.
January 2, 2010, 12:16 amChrisTS says:
Alan Gunn:
Although I suspect we have different positions on many of the pertinent matters, my answer to your question is a qualified, “I don’t know.”
I do not think these are good policies. On the other hand, my impression is that they are the product of political compromises between those who want to help the poor (especially children) and those who think this is either not the government’s role or not appropriate. So, we end up with these strange programs that aim to help the poor, but only the ‘deserving poor,’ or only to an extent, and so on.
One would hope that intelligent and well-intentioned legislators could sit down and hammer out policies that are effective means to the stated ends. One would hope.
January 2, 2010, 12:20 amJoe says:
A dizzying but delightful trip to the woodshed.
January 2, 2010, 12:22 amRosooki says:
It is naive to think that economic growth alone will fix all the social problems the US has. The problems are complicated, multifaceted problems that will require several generations to solve. Just getting us all to agree on the reasons for the gap, and the causes of poverty alone, seems like a bridge too far.
The US is rapidly slipping into a third-world morass of a permanent underclass. What makes it permanent is not the economic system or lack of opportunity, but the extraordinary cultural gulf between those who read a blog like this and many of those included in the term “underprivileged.” How are you going to get them to be competitive? They don’t even care about what you think they should care about – and the reasons for that are just as complicated – ranging from everything from being unable to see the light at the end of the tunnel to no positive role models to complete and utter poverty of confidence. They aren’t you and you aren’t them and they know that. They aren’t listening when you speak. They aren’t believing what you say when they do listen. They aren’t taking any of it to heart. Spend some time there and you’ll realize it is not a place where the language is different. It is a different planet.
Many of the underprivileged people got that way because they had neither the the tools nor the mindset to compete from the very beginnings of their lives. They didn’t miss Harvard in high school, they missed it in the womb. Poverty is not lack of money – lack of money is surmountable. Poverty is lack of nutrition, lack of safety, lack of love, lack of trust, lack of knowledge, lack of power, lack of discipline, lack of surety, lack of confidence, lack of hope.
Families and communities used to provide these things for young minds, some more effectively than others. Now, for a large part of the population, they don’t. Fixing these issues is what is really required to fix the problem, and that takes a long long time. Economic policies can put a few extra dollars in people’s pockets, but they can’t fix the real problems that make people able to stand on their own two feet and compete with a world hungry for American jobs. Fixing that is going to take a complete cultural revolution.
January 2, 2010, 2:05 ameyesay says:
Jim Manzi has some good insights, and also some that are not as good.
Right. The biggest criminals of the past decade or so come from the top strata of American society, including Bernie Madoff, Jack Abramoff and his bribe-acceptors, the leadership of Enron and Worldcom, the political leaders who rushed into Iraq under false pretexts and with inadequate preparation, and the corporations who profited from the Iraq war in part through stinginess in protecting their employees from local weaponry.
Conservative fret endlessly about welfare but ignore the greater spending that benefits wealthy corporations not poor and working people. The Iraq war is a trillion-dollar rat-hole that doesn’t benefit America’s poor but does benefit certain wealthy corporations immensely.
Ronald Reagan’s brilliant technological idea was the Strategic Defense Initiative, an unworkable idea that failed every major test and could never have protected us from an all-out attack on the part of the Soviet Union. It was Democratic leaders in Congress that paved the way for the Internet. Republican ideas of “innovation” seem to focus on removing the regulations that would have prevented the corporate fraud of Enron, among other things.
Which would be a good thing, since essentially all of the economic growth under Republican leadership has gone to the top 10% and the bottom half haven’t seen any of it.
Innovation comes from corporate employees who have great ideas and strike out on their own. One of the biggest barriers to this is the cost of health insurance on individuals. Conservatives have stonewalled health insurance reform for a century, and now it appear that liberals are succeeding in establishing significant reforms, that, while incomplete, will make it easier for people to obtain health insurance, so they can strike out on their own.
No mistake. We need to re-regulate the financial industry to prevent it from creating bizarre derivative instruments that result in the need for trillion-dollar bailouts to prevent financial collapse.
Liberals including Barack Obama and Paul Krugman don’t favor slowing down the rate of innovation, they favor speeding it up! For example, they favor investing in energy efficiency and new sources of energy that would pollute less, and related ideas known as “green technology.” The Chinese are doing it, and if we don’t get started we are going to get left behind.
Prove to me America’s productivity lead comes from Reagan’s policies and not, for example, policies of President Clinton. America’s economy is the largest because we are big, but our domination and prestige are declining, in significant part because we devote our resources to military misadventures that do not add anything to our standard of living or quality of life.
Who are we defending ourselves against? The Soviet Union collapsed almost 20 years ago; China is not going to nuke us; Cuba is not planning to invade; for over 8 years terrorists have shown their utter incompetence at attacking U.S. aviation. Folks, we don’t need to be spending anywhere near as much on the military as Mr. Manzi seems to think.
This glosses over a more insightful view that would show many low-income people who are good citizens and work mighty hard to raise their children to be good citizens too; and that some of the worst crimes of the past decade were done by some of our country’s richest.
Traditional cultural mores supported by conservatives that women should not be allowed to abort, that gays should not be allowed to do what they want consensually in private, that a woman’s place is in the home and that women should be subservient to men, do not promote long-term economic success.
Growing inequality was the intent and natural outcome of Republican policies that reduced income taxes on the rich much more than on the poor; as for payroll taxes, the richest are largely exempt.
Not. It was the “reforms” of the recent past that caused the financial meltdown that is the root of the worst recession in the United States since the Great Depression.
I’ll stop here.
January 2, 2010, 2:22 amAmerican Psikhushka says:
Rosooki-
The US is rapidly slipping into a third-world morass of a permanent underclass. What makes it permanent is not the economic system or lack of opportunity, but the extraordinary cultural gulf between those who read a blog like this and many of those included in the term “underprivileged.” How are you going to get them to be competitive? They don’t even care about what you think they should care about — and the reasons for that are just as complicated — ranging from everything from being unable to see the light at the end of the tunnel to no positive role models to complete and utter poverty of confidence. They aren’t you and you aren’t them and they know that. They aren’t listening when you speak. They aren’t believing what you say when they do listen. They aren’t taking any of it to heart. Spend some time there and you’ll realize it is not a place where the language is different. It is a different planet.
Many of the underprivileged people got that way because they had neither the the tools nor the mindset to compete from the very beginnings of their lives. They didn’t miss Harvard in high school, they missed it in the womb. Poverty is not lack of money — lack of money is surmountable. Poverty is lack of nutrition, lack of safety, lack of love, lack of trust, lack of knowledge, lack of power, lack of discipline, lack of surety, lack of confidence, lack of hope.
A society that is poor, with a stagnating or shrinking economy and few jobs, is going to be less likely to have even a chance at solving these problems. Focusing on innovation/growth at least provides a healthy, growing economy and job market so those that do “see the light” and want to do better will have jobs and opportunities to go to, even unskilled ones. Look at what happens to employers when the job market in certain areas gets tight – they start to train unskilled and/or unexperienced workers on their own. The trucking companies that train unexperienced drivers, for instance.
January 2, 2010, 1:07 pmAmerican Psikhushka says:
eyesay-
Conservative fret endlessly about welfare but ignore the greater spending that benefits wealthy corporations not poor and working people. The Iraq war is a trillion-dollar rat-hole that doesn’t benefit America’s poor but does benefit certain wealthy corporations immensely.
Some conservatives might. But most libertarians want all this spending cut too.(Along with commensurate tax reductions.)
Republican ideas of “innovation” seem to focus on removing the regulations that would have prevented the corporate fraud of Enron, among other things.
Have a link on this? There are many different ways companies can mislead.
Which would be a good thing, since essentially all of the economic growth under Republican leadership has gone to the top 10% and the bottom half haven’t seen any of it.
This is largely inaccurate. First of all, much of the bottom half don’t pay any income tax, so cutting taxes isn’t going to benefit them directly.(The hidden tax of inflation still slams them, however.) They do benefit in higher standards of living, more jobs and opportunities available, a more dynamic and growing economy, and the like.
Innovation comes from corporate employees who have great ideas and strike out on their own. One of the biggest barriers to this is the cost of health insurance on individuals. Conservatives have stonewalled health insurance reform for a century, and now it appear that liberals are succeeding in establishing significant reforms, that, while incomplete, will make it easier for people to obtain health insurance, so they can strike out on their own.
No, the initiatives you mention are going to be incredibly expensive. So individuals are going to have less disposable income to save up to provide their venture capital. The higher rate of taxation and expense is also going to hamper the economy, so the rest of society is going to have less money to spend on the future entrepeneur’s products and/or services. And that’s not even getting into the expansion of government, loss of freedoms, etc.
No mistake. We need to re-regulate the financial industry to prevent it from creating bizarre derivative instruments that result in the need for trillion-dollar bailouts to prevent financial collapse.
No, we just need to stop bailing out.(The financial collapse language is highly suspect. Some countries have dealt with stock market and even currency collapses without armageddon.) The government would spend less, taxes could be cut, and the economy would grow. Corporations and individuals would pull their money out of banks and investment companies that took wild risks. If Joe Sixpack can go bankrupt and lose the plumbing company he started Joe Investment Banker can too.
Liberals including Barack Obama and Paul Krugman don’t favor slowing down the rate of innovation, they favor speeding it up! For example, they favor investing in energy efficiency and new sources of energy that would pollute less, and related ideas known as “green technology.” The Chinese are doing it, and if we don’t get started we are going to get left behind.
The problem is they are using tax money to do it. The higher taxation is, the more the economy is slowed down and weakened. Often government research money is directed in areas that are unrealistic or not economically feasible.(Otherwise the private sector would likely be funding it.) It would be better to leave the tax money in the hands of the individuals and corporations that earned it – the economy would be stronger and faster growing, there would be more jobs created, and you would still have research into more economically viable green technology. The thing with a global economy is that technological advances spread quickly. What are the Chinese – or anyone else – going to do, not sell their best technology to the largest market in the world? With a low taxation rate we would have a strong economy that would provide more technological advances on its own, and also be able to purchase or license the best technology developed elsewhere.
Prove to me America’s productivity lead comes from Reagan’s policies and not, for example, policies of President Clinton. America’s economy is the largest because we are big, but our domination and prestige are declining, in significant part because we devote our resources to military misadventures that do not add anything to our standard of living or quality of life.
The thing is both Republicans and Democrats have been bad on spending. Reagan, for example, cut some taxes but did spend a lot on defense, the necessity of this is somewhat debatable.(Although hindsight is 20/20, the actual threat the USSR presented was difficult to get a handle on.)
But it is a fact that what the government has it has to take from the individuals and corporations that earn it. So beyond a relatively low level of taxation for essential services – courts, emergency services, some national defense, etc. – you are weakening the economy and slowing down economic growth with each dollar you take from the private economy.
We are agreed on most US military interventions.
This glosses over a more insightful view that would show many low-income people who are good citizens and work mighty hard to raise their children to be good citizens too; and that some of the worst crimes of the past decade were done by some of our country’s richest.
Probably a fair criticism.
Note on Madoff and other wealthy frauds though: Regulation wouldn’t have helped. A guy from the investment industry sent the government a very long letter outlining his suspicions about Madoff many months, if not years, before he was caught. It would likely be better to restructure the investment industry so that it is less policed by government and industry regulation and more policed by private litigation.
Growing inequality was the intent and natural outcome of Republican policies that reduced income taxes on the rich much more than on the poor; as for payroll taxes, the richest are largely exempt.
See my response above. A large portion of the lower half of income earners do not pay income taxes. You can’t cut income taxes below zero, so they aren’t going to be effected by tax cuts. But they do benefit from increased living standards, a stronger and faster-growing economy, and more jobs and opportunities.
The statement that “growing inequalities” was the “intent” of Republican policies is sort of unusual and in my opinion implies evil that isn’t there. Republican politicians are politicians as well, so why would they intentionally hurt a large group of potential voters? That’s not logical or likely.
Not. It was the “reforms” of the recent past that caused the financial meltdown that is the root of the worst recession in the United States since the Great Depression.
Unfortunately the cause, in my opinion, is actually more hidden and ingrained: It is government intervention, especially the devaluation of the currency through the creation of money and credit by the Federal Reserve. But that’s a topic for another thread.
January 2, 2010, 2:45 pmTwirip says:
That makes no sense. Household income is lower because families are smaller? Household income depends on a number of factors, but the size of the familiy is not one of them.
The wage of the median American male worker has been stagnant since the mid 1970′s. That’s not open to dispute. Top earners make more, in proportion to the earners at the bottom. Again, that’s just the reality. Why that is so is open to some debate.
I believe the question can be explained by our two tier economic system. Some occupations are subject to foreign competition – manufacturing jobs, construction jobs, engineering, etc. Other occupations are not – government jobs, jobs in acadamia, jobs in the legal profession, many jobs on Wall street. We have a combination of a guild system for some occupations and laissez faire for others. Those jobs subject to the competitive influence of the market tend to lose out over time to the jobs within the guilds. Hence, rising income inequality.
January 2, 2010, 3:08 pmTwirip says:
It staggers the mind to realise that there are still Democrats out there who buy into this 1930′s vision of the GOP as the party of the rich and the Democrats as the party of the workers. The great majority of America’s multi-billionaires support the Democratic Party. And the Democratic Party returns the favor – take a close look at who benefited from the stimulus package and the bank bailouts, and who will benefit from the proposed “heathcare reform”.
You have became that which you hate. You ARE the party of rent-seeking businessmen, and that is why you’r not seeing the progressive revolution you expected even with huge majorities in Congress.
January 2, 2010, 3:14 pmTwirip says:
Actually those Republican policies removed huge numbers of people from the tax rolls entirely. Poor people no longer pay Federal income tax, they get tax credts instead. And even much of the middle class now pays little or no money in income tax to the Feds. The percentage of the total tax burden paid by the rich has been increasing for decades now, and the bottom 50% of earners get a free ride.
January 2, 2010, 3:24 pmTwirip says:
The assumption here is that innovation and growth will lead to a wealthy and prosperous society. Manzi is arguing that it will not (if I’m reading him correctly), that the contrary is true – that you need social cohesion to have a wealthy and prosperous society
January 2, 2010, 3:29 pmlgm says:
One of America’s challenges, in the past and now, is calling out stuff like Jim Manzi’s (armchair Limbaugh with four syllable words) piece for the crap it is. Eyesay has deconstructed some of it — the equating “innovation” with deregulation and short sighted Reaganomics (unfunded tax cuts for the rich), the almost racist view that poor people have lower moral standards than rich people, etc.
One more quibble: America’s agricultural export surplus largely is due to Republican driven protectionism of big agriculture. We have price supports and import quotas on sugar and other foods. Joseph Stieglitz could set you straight on this.
But I was personally touched by the slime on unmarried mothers. In northern Europe there is a marriage optional approach to child rearing that leaves (for example) Sweden with plenty of social coherence. Here in America, my two upper middle class out of wedlock children are happily contributing to our competitiveness in the capital of American innovation, Silicon Valley.
January 2, 2010, 4:21 pmBrett says:
It generally doesn’t work that way. Go read up some social and economic history from the turn of the century (late 19th/earlier 20th). Business was significantly less regulated and the like, but what it resulted in was a great degree of economic suffering and chaos – this was the era of great labor riots, anarchists blowing stuff up and setting bombs (read up on the history of the mining industry in the western states, in particular), vigilante violence, and wholly unlawful violence from state authorities.
The Manzi article is interesting, if not entirely original. I do find it annoying, though, when he just throws something out there as if it’s totally accepted and supported, like “expansion of social programs helped undermine the family structure in the lower class” and the like. Let’s take a look at some of it-
Make sure to include administrative reform in that as well. One of the problems with the current system is that without the rather heavy-handed teachers’ union, the administrators have next to unlimited power and tend to turn into petty tyrants. They could get away with that to some degree 100 years ago, when most teachers were women with few other job prospects, but it won’t work today.
More importantly, be very careful with education reform. Remember that if you screw up the system for a couple of years, you end up with a bunch of kids with a screwed-up education – you can’t just write off bad decisions.
He acts so casually about this. They’ve already clamped down pretty heavily on the southern border compared to how it was historically, and I don’t see how you can take it much further than putting up a wall without incurring human rights issues. The real root of Latin American migration has always been economic (wages are considerably higher in the US than in most of Latin America, and you’ve got a nearly 10-fold wage disparity along the US-Mexico border), and if you want to stop the flow of low-wage, unskilled workers from this area into the US, you have to target the source of jobs. That means seriously going after employers who hire them, across the economic board, and will almost certainly result in lost economic output. I question whether Manzi actually has the willingness to do that.
Moreover, if you’re trying to stop permanent immigration from Latin America of low-wage, unskilled workers, then it’s actually counter-intuitive; clamping down on the border, per se, actually encourages more long-term immigration. Look at the period from 1964 (when the Bracero Program broke down), to 1986 (when a whole bunch of immigration reform clamped down) – you had 28 million Mexican come into the US, and 23.5 million of them went back.
There’s still considerable issues with both of these policies, and both countries deal with illegal immigration. Moreover, it’s not enough to simply bring skilled workers to the US; they have to be able to make use of their skills and credentials, and that is actually much harder than it seems (for one thing, how do most employers check their references, unless they did the actual recruiting abroad themselves?).
Aside from that, there is a bigger issue. I understand where Manzi is coming from this, but doesn’t he see the problem with this? For one thing, it’s encouraging “brain drain” from the poorer nations, which reduce their economic vitality and encourages more migration. For another, it makes competition for skilled positions (the type of people who make up the professional class in the US) more competitive, with an affect on job wages and stability (which are the real foundation of the bourgieous values he notes in the American upper-middle class, I suspect).
It all depends on where you want to make your commitments. I suspect that Manzi isn’t willing to give up or scale-back American influence abroad.
Well, sort of. If you look at the actual trends from the BLS, there’s some interesting stuff. After a very long period of declining real wages, hourly compensation for the lowest quintile of American earners actually rose significantly from 1994-2000, and there were lesser rises in the other quintiles (but rises nonetheless). But since then? Nothing. Wage stagnation across the board except at the very highest level of earners (top 1% and the like).
The problem was that the system didn’t shift towards this as well. Constantly shifting jobs creates a great deal of economic flexibility in the greater economy, but it also demands that workers have some sort of income outside of the jobs in order to stay afloat (this is usually savings, investments, and unemployment insurance), as well as constant re-training over the lifetime. This in turn demands that the “age = undesirable” paradigm on labor change.
The problem is, most of those changes didn’t occur. Re-training is difficult, there is still a significant problem with age discrimination in the workplace, and unless you want to raise unemployment insurance or use regulatory behavior to encourage savings (like jacking up the interest rate and restricting credit, which would probably lower living standards but shrink personal debt), you’re going to have a hard time getting that interregnum income when many workers have little marginal to save.
I’m somewhat skeptical of this, considering that out-of-wedlock pregnancies were occurring. He needs to post some actual statistics.
January 2, 2010, 4:37 pmAmerican Psikhushka says:
Twirip-
The wage of the median American male worker has been stagnant since the mid 1970’s. That’s not open to dispute.
I assume you mean real wages.
This is why economic education is such a problem in this country. We have raised minimum wage what – 10-15 times – since the mid 70s and yet real wages have gone nowhere. And yet when you state that minimum wage is a farce (which is true) everyone claims you are some kind of sociopathic monster. Certain parties benefit greatly from keeping large portions of the population economically ignorant, and it is absolutely disgusting. Large portions of the population think increasing the minimum wage means things are improving when they are not.
January 2, 2010, 8:51 pmAmerican Psikhushka says:
Twirip-
The assumption here is that innovation and growth will lead to a wealthy and prosperous society. Manzi is arguing that it will not (if I’m reading him correctly), that the contrary is true — that you need social cohesion to have a wealthy and prosperous society
My take was that Manzi thinks focusing on innovation and growth is the only way to go, but that some kind of attention has to be paid to “social cohesion”. I asked what he thought needed to be done for social cohesion but I haven’t heard back.
January 2, 2010, 9:13 pmTwirip says:
You are as irrational as ever, lgm. Your anecdotes aside, there is a mountain of statistical evidence which demonstates that out-of-wedlock births are a bad thing for society. This isn’t something dreamed up by crazy reich-wingers. It’s science.
January 2, 2010, 9:17 pmTwirip says:
I do.
All right. Then I’ll argue that social cohesion is neccessary for a wealthy and prosperous society. Or any society, for that matter.
January 2, 2010, 9:21 pmAmerican Psikhushka says:
Brett-
It generally doesn’t work that way. Go read up some social and economic history from the turn of the century (late 19th/earlier 20th). Business was significantly less regulated and the like, but what it resulted in was a great degree of economic suffering and chaos — this was the era of great labor riots, anarchists blowing stuff up and setting bombs (read up on the history of the mining industry in the western states, in particular), vigilante violence, and wholly unlawful violence from state authorities.
Don’t think you can lay the blame for this on laissez faire economics. There were all kinds of other forces at work – industrialization, urbanization, mass immigration, the westward expansion, lingering fallout from the Civil War, etc.
In modern times in developed countries generally lower levels of taxation and regulation lead to strong economic growth and often innovation. See the Economic Freedom Index.
January 2, 2010, 9:30 pmDustin says:
The article was well-argued, if overlong, but re-tread the same ground as an earlier one this year penned by Michael Porter in US News and World Reports, also pushed by David Brooks. I agree with both, but neither seems especially novel–yes, education needs reform; entitlements need updating. I’m fairly libertarian, but some of the anti-health care reform rhetoric seemed out of place, given its growing strain on the economy. If you’re going to be a technocratic, you should drop all your ideological preferences (including opposition to a universal mandate), and not just go after teachers and public sector employees (who are certainly legitimate targets).
January 2, 2010, 9:57 pmDustin says:
I’m also liberating, I suppose, but meant to write “libertarian”.
January 2, 2010, 10:04 pmAmerican Psikhushka says:
Twirip-
All right. Then I’ll argue that social cohesion is neccessary for a wealthy and prosperous society. Or any society, for that matter.
Then I’ll ask you how you are defining and measuring it, because the Top 20 Countries in the 2009 Economic Freedom Index don’t seem ultra-”cohesive”.
January 2, 2010, 11:20 pmAmerican Psikhushka says:
Dustin-
I’m fairly libertarian, but some of the anti-health care reform rhetoric seemed out of place, given its growing strain on the economy.
Well if healthcare reform is going to be very expensive and increase taxes and expenses – putting more strain on an already strained economy – there’s your explanation. There are also concerns about decreased effectiveness, expansion of government, loss of freedoms, etc.
January 2, 2010, 11:29 pmMark N. says:
The Economic Freedom Index seems to give a number of social-democratic countries with strong welfare states pretty high marks. Of the top 20, Canada has a single-payer health-care system, the UK, Australia, New Zealand, Denmark, and probably a few others have substantially government-run health-care systems, Belgium has the OECD’s highest level of income tax, etc.
January 3, 2010, 12:42 amAmerican Psikhushka says:
Mark N.-
The Economic Freedom Index seems to give a number of social-democratic countries with strong welfare states pretty high marks. Of the top 20, Canada has a single-payer health-care system, the UK, Australia, New Zealand, Denmark, and probably a few others have substantially government-run health-care systems, Belgium has the OECD’s highest level of income tax, etc.
Yes, but they spend a lot less than the US does on defense.(Not faulting them, the US spends a lot on defense in addition to other areas.)
Don’t know about the others, but there are numerous horror stories about healthcare in Canada and the UK. Coming over to the US to get MRIs, etc. Plus the regulation and micromanagement of the populations’ lives and losses of freedom – everything becomes the government’s business because “we’re all paying for your healthcare”.
January 3, 2010, 4:34 amDavid Nieporent says:
One of those factors is the number of wage-earners, which depends on the size of the family. (Perhaps you’re thinking, when you hear “size of the family,” solely of the number of children, rather than the number of adults. (That having been said, the number of children may affect income too, by affecting the number of hours a person is willing to work.))
January 3, 2010, 4:54 amBrett says:
It’s mostly anecdotal bullshit, particularly the claims about large groups of people coming over the border from Canada to get treatment in the US. As for regulation of citizens’ lives, Canada’s system actually gives you more choice for the stuff covered by the plan – you can see any doctor who will take. That’s not like a lot of plans in the US, where you get stuck in networks and the like.
First off, there’s no such thing as pure “laissez faire economics”, so don’t pretend that you can somehow separate it from the other phenomena that occurred at the same time and were tied into it. Industrialization, urbanization, mass migration – all of these things were tied into that system, and the laissez faire aspect meant that the companies could basically dismiss, fire, and generally treat their workers like crap as long as they had a fresh supply of them (like I said, just read up on the history of the mining industry in the western states around the turn of the century). This, in turn, led to quite a bit of labor-related violence and rioting.
Mark N. answers your point about the economic freedom index pretty well.
Maybe in America, with your paper-thin safety net and lasting legacy of impoverished inner city populations.
January 3, 2010, 5:15 pmJim Manzi says:
Brett:
Thanks for taking the time to make so many very thoughtful comments. I can’t react to all of it, but here are few things that I think are most interesting.
“Make sure to include administrative reform in that as well.”
Check.
“They’ve already clamped down pretty heavily on the southern border compared to how it was historically, and I don’t see how you can take it much further than putting up a wall without incurring human rights issues.”
I believe that we need to take whatever measures are necessary to re-establish control over our borders, up to and including militarizing it. This is a fundamental task of government.
“For one thing, it’s encouraging “brain drain” from the poorer nations, which reduce their economic vitality and encourages more migration.”
While true, this is extremely second-order versus the benefits that would be derived by the US from having those brains move here and participate in our economy.
“For another, it makes competition for skilled positions (the type of people who make up the professional class in the US) more competitive, with an affect on job wages and stability (which are the real foundation of the bourgieous values he notes in the American upper-middle class, I suspect).”
Just so. I see this as a feature rather than a bug. It strikes me as far more equitable, and will create a natural political constituency that will maintain realistic limits on immigration levels, as opposed to the really terrible system we have now.
“I suspect that Manzi isn’t willing to give up or scale-back American influence abroad.”
Not true. I have advocated for exactly this.
“I’m somewhat skeptical of this, considering that out-of-wedlock pregnancies were occurring. He needs to post some actual statistics.”
This is sourced to the 2002 academic paper “The Spread of Single-Parent Families
January 3, 2010, 5:43 pmin the United States since 1960″ by David Ellwood and Christopher Jencks, both at Harvard KSG.
American Psikhushka says:
Brett-
It’s mostly anecdotal bullshit, particularly the claims about large groups of people coming over the border from Canada to get treatment in the US.
The average person can get an MRI within a week in the US. I’ve heard of waiting lists running months in Canada. If true, that’s pretty serious in regard to the types of things MRIs are used to diagnose.
As for regulation of citizens’ lives, Canada’s system actually gives you more choice for the stuff covered by the plan — you can see any doctor who will take. That’s not like a lot of plans in the US, where you get stuck in networks and the like.
I was mainly referring to government intervention and intrusion into citizen’s private lives and choices. I’ve heard most of the complaints from the UK, I’m not sure about Canada.
First off, there’s no such thing as pure “laissez faire economics”,
There certainly is a continuum, and the side closest to “purity” as you put it tend to be wealthier, have less unemployment, etc. There is often starvation at the other end of the continuum.
…so don’t pretend that you can somehow separate it from the other phenomena that occurred at the same time and were tied into it. Industrialization, urbanization, mass migration — all of these things were tied into that system,…
They certainly can be separated because they were significant historical phenomenon. Industrialization and the urbanization were unprecedented historical events – most historians, historical texts, and history courses separate them out because they were different and significant. Same with the westward expansion and settlement of the US, that is something that only happens once.
…and the laissez faire aspect meant that the companies could basically dismiss, fire, and generally treat their workers like crap as long as they had a fresh supply of them (like I said, just read up on the history of the mining industry in the western states around the turn of the century). This, in turn, led to quite a bit of labor-related violence and rioting.
Contrast this with today’s phenomenon in many “social democrat” countries that companies do not hire new workers – even though there is work to do – because they will not be able to easily fire them if they are bad, unproductive, etc.
I’m not saying that the “robber barons” at the turn of the century were all great guys – a lot of them did have shady, dishonest, immoral, and even criminal practices – but they were largely taking advantage of unique historical circumstances. A lot of them wouldn’have been able to do the things they did in big cities of even that time – because there were other places to go for work.
Mark N. answers your point about the economic freedom index pretty well.
Not quite. Within the Top 20 the higher you get the lower tax and regulation rates are generally. Plus the US spends more on defense than anyone on the planet.(Cut defense and some other government spending and then cut taxes commensurately as well and it would probably pop up at least a couple spots, and be a lot better off.)
Maybe in America, with your paper-thin safety net and lasting legacy of impoverished inner city populations.
Odd, the rest of your comment was directed to my statements but this was directed to someone else’s. Oh well, I’ll address it anyway:
As opposed to true socialist/communist countries where the impoverishment is nearly univeral, except for the political elite.(All animals are equal, some are more
equal than others….) If you can draw extreme comparisons so can I…
Note there are a fair amount of rural poor in the US as well. The US isn’t perfect, but it is still one of the wealthiest and most innovative countries in the world. With some cuts in government spending and matching cuts in taxation it could be better.(Which would increase employment and reduce poverty at the same time.)
January 3, 2010, 11:38 pmHarry Springer says:
I see different cause-effect pathways than Mr. Manzi sees.
There is a close relation between unsustainable bubble economies and so-called innovation.
Whereas the introduction of appliances like washing machines & refrigerators led to a domestic revolution that persisted for 100 years, the introduction of digital innovations creates much shorter commercial success runs, often a year or less… to date none lasting an entire decade.
A 100 year sustained market for hard goods enables predictable lives to center on their production, and around their use, building society.
A mere single year sustained market lacks the power to uphold lives, and can be rightly called a fad.True, a series of interlocking fads, each of short duration, but in total sustaining over several decades, can appear in aggregate similar to the former revolutions, but with each promotion lacking the longevity that could create universal kept wealth, it becomes clear the “digital revolution” is nothing more than a series of induced bubbles.
Inured to a repetitious series of bubble promotions, society loses cohesion not over wealth disparities, or ethnic disparities, but rather over the inability of the ordinary citizen to develop lifeways teachable to younger generations, younger generations seeing only the latest bubble as relevant, and all other aspects of life as less relevant.
Assaulted on all sides by the trivially new, younger generations hear no message of persistence, sacrifice, dependability… and discount these qualities as being of no merit. With no teaching of forebearance in any of its aspects, society drifts to the rags-to-riches paradigm as a root mythos, generating reality TV stars by the sickening dozens, millionaire athletes lacking basic socialization skills, and politikoes dedicated to the art of pandering to the delusions of the naive.
Rather than the putative “National Guilt” described by Mr. Manzi, I see the driven search for “Bubble Next” as the main acid dissolving society from the middle down, creating a gated wealth-world for stars & bubble kings, and a paltry desert of hand-held digital trinkets for all the impoverished rest.
January 5, 2010, 3:24 pm