The Wailing and the Gnashing of Teeth

I am genuinely astounded at the lamentation that has accompanied the United Kingdom’s referendum of yesterday. There are lots of interesting takes but I think that these remarks from Jean-Michel Paul at Bloomberg deserve consideration:

Globalization, and immigration, promote growth. But neither can benefit the majority over the longer term unless the state invests in physical infrastructure and human capital. Unfortunately this isn’t happening. Accounting rules that assimilate investment into budgetary spending ensure that investment spending is crowded out of budgets. Focused on balancing budgets and believing austerity to be an unqualified virtue, Britain failed to invest in its future and sowed the seeds of the current divisions that produced Thursday’s dramatic referendum result.

The implications reach beyond the U.K. The answer isn’t redistributive welfare policies, but investing in physical infrastructure, though large public works projects and investing in education and skills-training. The more generous the welfare system, the lower the comfort threshold for immigration.

The emphasis is mine. I’m struggling to come up with an analogy that explains why I think that advice is almost completely wrong.

Imagine a world of medieval guilds. Now imagine that the weavers’ guild is capturing an increasing percentage of the national income, frighteningly so.

Would the solution to that be to give more people the training to become master weavers? Certainly not. Not everyone has the peculiar set of skills, patience, and tenacity necessary to become master weavers. And it takes decades to become a master weaver.

No, the actual solution is the Jacquard loom. It completely displaces master weavers, renders them largely obsolete.

There is no amount of investment or training that’s going to enable ordinary people to become neurosurgeons or air traffic controllers or petroleum engineers or pharmacists. But it is possible to create systems and devices that enable people with much less training and skill to perform jobs that don’t even have names yet that come into being because neurosurgeons, air traffic controllers, petroleum engineers, and pharmacists have become obsolete.

36 comments… add one
  • ... Link

    Globalization, and immigration, promote growth. But neither can benefit the majority over the longer term unless the state invests in physical infrastructure and human capital.

    Wow. The Blank Slatanism behind this statement is astounding. Does he really think the people coming from Somalia (avg IQ 68) and Syrian (avg IQ 83) and Afghanistan (avg IQ 84) and Mexico (avg IQ 88) are bringing any human capital with them? Especially given that on the whole it does seem to be either the dregs of a society that immigrate, or those that are moving because they lost the war and face extermination for their acts of utter savagery in the home country? (Look for YouTube videos of American troops trying to teach Afghani recruits jumping jacks if you want to see what these numbers can mean in real life.)

    They aren’t bring the ability to be neurosurgeons, or even the ability to learn to be effective clerks in the offices of neurosergeons. They are bringing things like the idea that having their sons rape five year old girls is a good idea, as well as FGM, clanishnish that breads high levels of consanguinity, and, God help us, soccer.

    Really, lets start some reverse immigration and start sending all the First World people that want more Third World problems to the Third World, instead of importing the Third World to the First.

  • They are bringing things like the idea that having their sons rape five year old girls is a good idea, as well as FGM, clanishnish that breads high levels of consanguinity, and, God help us, soccer.

    Going off on a tangent, St. Louis has had professional soccer teams since the 1820s. My high school history teacher who, as it worked out, was also the soccer coach, wrote his doctoral dissertation on the history of soccer in St. Louis. Ask me anything about the history of soccer in St. Louis.

  • Just as a casual observation there have been several referenda on the EU taken in various countries over the years. No “Leave” vote has ever resulted in a country leaving the EU. The elites have always found an undemocratic way around the referendum.

  • Really, lets start some reverse immigration and start sending all the First World people that want more Third World problems to the Third World, instead of importing the Third World to the First.

    Armchair philanthropists in the First World want to import Third World people to the First World because they can be philanthropic in comfort that way.

  • Here’s an interesting little snippet from Bloomberg:

    The London-based Political Studies Association surveyed members, journalists, academics and pollsters from May 24 to June 2. Every group got it wrong.

    Overall, 87 percent of respondents said Britain was more likely to stay in the EU, 5 percent said it was likely to leave, and 8 percent said both sides had an exactly equal chance.

    The predicted probability of Britain voting to leave the EU: academics, 38 percent; pollsters, 33 percent; journalists, 32 percent; other, 38 percent; mean, 38 percent.

    The question is why were they wrong? A lot of people are attributing it to the “Pauline Kael phenomenon” but I think there’s more to it. I think it’s more like the “Bradley effect”.

  • ... Link

    Ask me anything about the history of soccer in St. Louis.

    How could we keep it from spreading?

  • It’s too late. The increase in U. S. Hispanic population, the decline in participation in youth baseball and football (and likely rapid decrease in youth football in the future), and likely future immigration all contribute to increasing interest in soccer in the U. S.

  • ... Link

    The question is why were they wrong? A lot of people are attributing it to the “Pauline Kael phenomenon” but I think there’s more to it. I think it’s more like the “Bradley effect”.

    There’s no reason it can’t be both. I would also add that I don’t think academics, pollsters (ironically), or journalists (shamefully) have any respect for anyone outside the small circles of elite wannabes that they inhabit, and automatically dismiss everyone that disagrees with them as Nazis or worse. So they shun all outside views. They really can’t conceive of a world in which anyone might have a legitimate reason for disagreeing with them.

  • ... Link

    It’s too late. The increase in U. S. Hispanic population, the decline in participation in youth baseball and football (and likely rapid decrease in youth football in the future), and likely future immigration all contribute to increasing interest in soccer in the U. S.

    Yeah, and that’s why I say it isn’t my country anymore. At the poker game with my friends last Saturday, half of them spent most of the night watching the goddamned Copa on various devices instead of playing their cards. I understood the guy from Peru doing so, but the rest had no business doing it. They hadn’t even played soccer when they were kids! (Other than the Peruvian everyone at the table had grown up together.)

  • PD Shaw Link

    This link has a couple of interesting charts to argue that the EU approval rating dropped as the result of tightening monetary policy in 2008-2011.

    http://macromarketmusings.blogspot.com/2016/06/brexit-euroskepticism-and-ecb-policy.html

    The first chart suggests the recession was the first, and perhaps most important cause for people in various EU countries to look less favorably on the EU, but there appears to be a second surge in the last year or two as a result of the refugee crisis.

    The second chart seems to show a correlation between EU approval rating in countries based upon economic recovery (or lack thereof), but the UK is the only country that recovered, other than Germany. Again, it seems like the only thing keeping the EU together might be not having votes on it.

  • Guarneri Link

    “Ask me anything about the history of soccer in St. Louis.”

    Who won the game played on June 21, 1887, and won by what score?

  • Guarneri Link

    It’s worse than you think, ice, people are actually taking a liking to, uh, ice hockey.

  • ... Link

    Look, there have always been ice hockey fans in this country. That’s because most of the country turns into fucking Siberia for several months of the year, and people become brain damaged as a result and start liking ice hockey and taking their shirts off outside when it’s -200 degrees Fahrenheit. So I get that.

    I just don’t understand why I have to have hockey in Florida and freakin’ Nevada. I can see the Stanley Cup Finals now, between Tampa Bay and the Las Vegas Mobsters, when it’s 95 degrees with 90% humidity for the Tampa games and 117 degrees for the Las Vegas games. It’s just plain old stupid to have ice hockey in that weather.

  • ... Link

    Just don’t get me started on friggin’ la crosse….

  • Guarneri Link

    Fear not, ice. We pasted the “Bolts” in their brief moment in the sun. Back to alligator wrestling…….

  • ... Link

    You seem to forget that the Bolts won the Stanley Cup. Remember what happened next?

  • Guarneri Link

    I do remember that lonely Cup. Although dinosaurs were roaming when that happened, and they resumed their rightful place in the cellar. We in Chicago like to collect them in 3s. You know, Bulls too. 😈

  • ... Link

    I’m referring to the fact that a Florida team won the Stanley Cup, and the league promptly shut down for a year. I could care less how many titles the Blackhawks have won, or the Lightning. But it was quite funny that every time a Florida team won a hockey championship, that league had to shut down. (Orlando won titles in three leagues, I think it was, and each shut down immediately.) I think Florida was 3.5 for four in that regard. (Since the NHL didn’t shutter forever like the others, we’ll call it a draw.)

    But count on you to miss the point completely.

  • ... Link

    Which is to say, any gods that look over hockey understand that hockey should not be played in frickin’ Florida in frickin’ June in 9-+ degree heat, and they’ve given you hockey people plenty of signs, and you’re still too brain dead to figure it out.

    Cold weather makes people stupid.

  • bob sykes Link

    Your analogy of the Jacquard loom is misleading. In a protectionist economy, the loom stays home. In a free trade, globalized economy, the loom moves to another country.

    Of course, that is exactly what has happened over the last 30 years. The result is that the working and middle classes suffered actual economic loss, and all the benefits of growth, plus a share of what the working and middle class already had, has gone to the elites.

    I will not dispute that free trade and open borders might result in greater economic growth (though I doubt it), but it cannot be argued that they benefit working class and middle class people. The historical evidence is clear that these policies benefit only the elite.

  • But that’s not the problem we have. We have several interrelated problems. Our economy is overly oriented towards creating low-skill, low-wage jobs, we’re importing low-skill, low-wage workers, and our system grants artisanal craftsmen, e.g. physicians, control over their own sector.

    My analogy wasn’t perfect but, as I noted, I’m struggling to come up with one that describes our situation better.

  • ... Link

    In this case I’m not sure analogies are as helpful as stating the problem as simply as can be. An example of how to do so would sound a little something like this:

    We have several interrelated problems. Our economy is overly oriented towards creating low-skill, low-wage jobs, we’re importing low-skill, low-wage workers, and our system grants artisanal craftsmen, e.g. physicians, control over their own sector.

    I would add that politics has become merely a sport to decide how the spoils get split, that the public “marketplace of ideas” has effectively become monopolized with ideas lacking the approval of the ruling elite being classified as CRIMETHINK, and a general lack of managerial competence at most/all levels of society.

  • PD Shaw Link

    This passage from Reihan Salam’s explanation of Brexit resembles Dave’s point:

    Martin Ruhs, an expert on international labor migration based at Oxford University, argued that free movement across the European Union is greatly complicated by the fact that different member states have different approaches to labor market regulation and the welfare state. First, countries with lightly regulated labor markets are generally more attractive to less-skilled immigrants than countries with tightly regulated labor markets, because high minimum wages and rigid limits on work hours tend to price less-skilled workers, native- or foreign-born, out of jobs. This is why there are so many less-skilled, non-European immigrants desperate to enter Britain from France—a country no less prosperous or safe than Britain— where it is far harder for immigrants to get on the labor market’s bottom rungs.

    Second, there are some European countries with welfare states that demand years of contributions before one can start drawing benefits and others where prior contributions are not generally required. Less-skilled immigrants to countries with noncontributory welfare states can start drawing benefits fairly quickly, regardless of their contribution. Britain is one such country

    Basically, Britain was facing touch choices between restricting labor markets and welfare benefits, which would harm UK voters, or attracting all of the unskilled or out-of-work citizens across the EU, including any refugees allowed to become citizens.

  • Guarneri Link

    From everything I’ve read mass immigration was more the last straw in a long process of frustration with the economy etc. it will go down in the history books as a giant misread by the pols.

    But what do I know. Dumb hockey fan, who can’t see conspiracies before my very eyes.

  • steve Link

    The EU was set up to fail, largely because of the common currency. It was disaster waiting to happen. We had the disaster in 2008/2009. The high levels of unemployment and the lack of growth through most of the EU meant it wasn’t going to last. Add in the immigration crisis by Germany looking for cheap labor and those least committed to the EU are going to leave. The UK is just the first.

    I have not followed this so closely. If the UK did not sign the Schengen agreement, how is this going to change immigration for them?

    Steve

  • PD Shaw Link

    @steve:

    Around 45% of net immigration to the UK in 2014 was from within the EU, of which the UK has no control over. The 55% coming from outside the EU are subject to a points-based immigration system (initiated in 2008). Getting out of the EU would give the UK the ability to make EU immigration subject to the same standards.

    The longterm issue is that as long as UK was within the EU, it would ultimately have to accept any person any EU country decided to give citizenship. Maybe speculative, but the incentives exist to get rid of refugee camps by giving them citizenship eventually, and international human rights law encourages normalizing long-term refugees.

  • Add in the immigration crisis by Germany looking for cheap labor and those least committed to the EU are going to leave.

    I don’t think that it’s actually cheap labor that the Germans are looking for. I think it’s flexibility. Firing a German national is pretty darned difficult.

    The German unemployment rate is between 6% and 8%, depending on how you calculate it. The Germans have this system of microjobs that really confuses things.

  • Ben Wolf Link

    Dave,

    If you hadn’t seen this yet I thought it might be of interest. What we can probably expect for four years of a Clinton administration.
    http://coreyrobin.com/2016/06/25/neera-and-me-two-theses-about-the-american-ruling-class-and-one-about-neera-tanden/

  • Thanks, Ben. Being bullied for thoughtcrime by ignorant, incompetent, arrogant henchmen of the Clintons is probably the most benign thing we have to look forward to. I expect a frenzy of fund-raising for the Clinton Family Foundation unequalled in world history. There’s a very simple reason for it: this is their last chance. Hillary Clinton’s presidency will end eventually and at that point the gravy train will dry up.

  • PD Shaw Link

    Yoda: “No. There is another.”

  • ... Link

    No, there isn’t, PD. Chelsea has all the worst features & characteristics of her parents. She’ll go nowhere in politics.

  • PD Shaw Link

    What you think, this is.

  • PD Shaw Link

    If you strike the Clintons down, they will become more powerful than you can possibly imagine.

  • Quite to the contrary I don’t think there’s any there there.

  • steve Link

    Uhhh, they were arguing over eye rolling. We are really going to take this seriously?

    Steve

  • Ben Wolf Link

    steve, the issue is a woman expected to become chief of staff who continues to deny her presence at a meeting after video is presented establishing said presence; aka Clinton’s version of Rahm Emanuel.

    If anyone not in politics did this we’d say they were crazy.

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