Bloomberg has tabulated the best economic forecasters over the period of the last two years and ranked them. Here’s the prediction of one of the champs, Maury Harris of UBS:

The U.S. economy will expand 2.2 percent in 2012 and 2.5 percent the following year, according to the median estimate of 63 economists surveyed by Bloomberg from Nov. 4 to Nov. 9.

Harris this week revised down his forecast for U.S. growth next year, to 2 percent from 2.3 percent, citing projected weakness in both the euro zone and the global economy.

I agree with that. Barring catastrophe or major error we’ll see slow growth. Two observations. First, since 2011 GDP is likely to top the peak in 2007, it is clearly expansionary. I doubt that will persuade folk Keynesians that we should be running surpluses. Second, the reason they won’t be persuaded: that rate of growth is at or below the historic trend. That’s not high enough to bring the unemployed back to work or boost animal spirits. IMO anybody who thinks we will see 4% or high real GDP growth in the U. S. for the foreseeable future is engaging in wishful thinking.

Michael Lewis has a droll and sad column at Bloomberg that you might want to take a look at. The column is written in the form of a memo from the Strategy Committee of the 1% to the membership. It contains a number of pointed and, I think, correct observations. However, in the context of my occasional observations here about visualcy this section in particular caught my eye:

The second threat is in the unstable mental pictures used by Lower 99ers to understand their economic lives. (We have found that they think in pictures.)

For many years the less viable among us have soothed themselves with metaphors of growth and abundance: rising tides, expanding pies, trickling down. A dollar in our pocket they viewed hopefully, as, perhaps, a few pennies in theirs. They appear to have switched this out of their minds for a new picture, of a life raft with shrinking provisions. A dollar in our pockets they now view as a dollar from theirs. Fearing for their lives, the Lower 99 will surely become ever more desperate and troublesome. Complaints from our membership about their personal behavior are already running at post-French Revolutionary highs.

That, in turn, led me to reflect on some questions. Let’s assume, for a moment, that the long term trend I’ve suggested towards visual communication is, in fact, taking place. I think that to some extent that explains what some (including me) have found so frustrating in the OWS demonstrations, e.g. the lack of a clear agenda. Using the visual communication alone

What do you think the OWS demonstrators intend to communicate and to whom do they attend to communicate it?

What do you think the OWS demonstrators are actually communicating and to whom?

There’s an extensive discussion going on at Amba’s place about a project that’s been undertaken by a friend of hers:

Jesse Kornbluth, a magazine, book, and Web journalist and the host of a spirited, personal cultural tip sheet called Head Butler (and an old friend of Jacques’), has a new enterprise: stripping down style-heavy classics, starting right now with Dickens’s A Christmas Carol, to something that today’s distracted, attention-deficient kids—and adults!—can and will read. Why?

He tried reading it to his daughter, she found it boring, so he decided to cut out all of the extraneous description and clunky old language. An example follows in the post.

I suspect he’ll be disappointed with the result. As I’ve mentioned here before the transition to visualcy rather than literacy doesn’t just mean relying on pictures rather than written descriptions and shorter attention spans. It also points to a requirement for a more agonistic presentation and greater difficulty in understanding abstractions and following abstract reasoning.

In the particular case of the works of Dickens when you eliminate the lengthy descriptions, you eliminate London, its inhabitants, and their lives, and the work becomes impersonal. You lose Dickens.

As a craft (rather like découpage in which you cut one thing up and repurpose it as something else) I have no particular problem with this. As an alternative to reading the classics, I find it horrifying for any number of reasons. For one thing I don’t see how one could possibly avoid editing the works according to one’s own sensibilities. Thomas Bowdler, from whose name the word “bowdlerization” was derived, did that with the works of Shakespeare to make them more acceptable to 18h and 19th century readers, particularly ladies. Hey! Let’s give Hamlet a happy ending!

To make a film analogy, think about editing Casablanca or The Maltese Falcon into a 15 minute short. You can digest the plots and characters into that. But you lose the movies themselves. They become uninteresting. Come to think of it, why not just flesh out the trailers a bit?

Or why not just revive Classics Comics/Classics Illustrated? Add some additional titles beyond the 160 some-odd originally published. More female authors (who were rather short-changed in the original CI). Add more 20th century works. More works by Asian and African authors. I can imagine A Farewell to Arms or Of Mice and Men as Classics Comics. I’ll admit I have a bit more difficulty imagining The Sun Also Rises or East of Eden in that format. Not to mention Rabbit, Run.

No, if you’re really going to introduce the younger generations to literary classic it will need to be in video form and heavily edited. Not only will you need to chop Moby Dick into a 30 page comic (which was actually done and did, indeed, lose Moby Dick while preserving the basics of the plot) but into a 20 minute cartoon. Or maybe a series of 30 second vignettes.

In reaction to last week’s employment report and the handwringing about labor force participation that followed, Bill McBride has a post on labor force participation that is worthy of your attention. Here’s the meat of the post:

The employment-population ratio really increased in the ’70s and ’80s for two reasons: 1) favorable demographics as the baby boom generation moved into their prime working years, and 2) a rising participation rate for women. But that trend was about to change even if there hadn’t been a severe recession.

This ties in well with a point that I have made repeatedly here: a lot of the economic growth we’ve seen over the last 60 years has been dependent on demographics. The Baby Boomers started to become “prime age workers&148; in 1971; they began to cease being “prime age workers” in 1999 and will continue to do so for the next several years; they began to retire in numbers in 2011.

That dovetails neatly, too, with the post-war history of real housing prices other than during the bubble. Since WWII real housing prices have increased at a fairly constant and modest rate of 1.5%. To return to that trend at this point requires nearly a 50% decline in prices.

Prior to the war, even prior to the Great Depression, housing prices had been trending down. There was a bump-up contemporaneous with the arrival of the Baby Boomers after the war, another bump-up when the Baby Boomers started to become “prime age workers”. As Baby Boomers age it shouldn’t be surprising if housing prices decline not merely to the post-war trend but to below the post-war trend.

I missed this post from Lynne Kiesling last week but it certainly sounds a chord:

The cost saving-focused mindset has prevailed in regulated industries for over a century, slowing innovation in the process. In electricity, regulation that bases firms’ profits on cost recovery erects market barriers by recognizing only a business model that involves providing a specified product (110v power to the home) transported over a monopoly network. Even in 2011, well into the third decade of the digital revolution, this narrow focus and cost-saving mindset persists, and it fetters smart grid-enabled economic growth by emphasizing cost recovery and ignoring value creation.

In fact, one of the main reasons why smart grid investments face regulatory and political opposition is that focus on cost recovery (among others). I think this Greentech Media article gets the story right: the ways that smart grid investments can lead to cost savings are limited. We’ve discussed this idea here at KP quite a bit — a limitation on the benefits of transactive technologies and dynamic pricing is the fact that for most people, electricity bills are not a large share of their annual expenses, so even saving 15% on the electricity bill may not be a salient enough benefit to induce a lot of people to make technology investments. In other words, smart grid may or may not lead to cost savings for a lot of residential customers.

She then makes the argument that the better reason for smart-grid technology is value creation.

As I mentioned in another context last week, can anyone think of a company or an industry that propelled its way to greatness via cost control? I can’t.

I continue to be completely without interest in the contenders for the Republican candidacy for president of the United States. There’s a simple reason for this: I’m a Democrat, I vote in Democratic primaries (in Illinois that’s essentially what being a Democrat means), and I will only have the opportunity to vote for one of these contenders. There will be plenty of time to examine that contender more closely when it actually means something to me.

At this point Romney and Huntsman are the only contenders I can stomach. That’s not particularly surprising considering that they’re the candidates most appealing to moderates and non-Republicans, generally. It must be dismaying to be a moderate Republican and survey that group.

Yesterday evening my wife asked me when the U. S. Postal Service would be abolished. That was in reaction to this story:

WASHINGTON (AP) — Unprecedented cuts by the cash-strapped U.S. Postal Service will slow first-class delivery next spring and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day.

The estimated $3 billion in reductions, to be announced in broader detail later Monday, are part of a wide-ranging effort by the Postal Service to quickly trim costs and avert bankruptcy. They could slow everything from check payments to Netflix’s DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines delivered by postal carrier to far-flung suburban and rural communities.

My answer to her was “never as long as it’s the only institution that provides a necessary service”. Since it remains the only way of delivering physical mail and packages anywhere in the United States, that means the USPS is likely to remain around in some form for the foreseeable future.

My immediate reaction to this story was that the move was sure to gain the USPS new customers. The USPS has several problems including declining demand for its services due to email, text messaging, and social networking; too high a cost basis; rising costs. Slowing first-class delivery is apparently a move aimed at reducing the cost basis but it is pretty likely to come at the expense of volume of first-class mail. I can’t help but wonder if the USPS wouldn’t accomplish more by abolishing standard mail. First-class mail is what supports the Postal Service. Standard mail is a money-loser. According to the Lexington Institute the USPS would require $1.65 of additional standard mail to compensate for a loss of $1 of first-class mail.

That sounds to me very much as though the Post Office is acknowledging defeat.

What is the fascination that the liberal intelligentsia has with China? For some time there’s been an undercurrent of it but recently there’s been a virtual tsunami.

I’ve complained here before about columnist Thomas Friedman’s admiration of China’s new roads, airports, and civil infrastructure. Of course China has new roads, airports, and civil infrastructure. They didn’t have them before and didn’t have the money to produce them or, due to the official policy of autarky which kept most of China’s population among the world’s very poorest people, the need. Now they do. It will be interesting to see what they look like in forty or fifty years since the heroic age of American infrastructure building is now roughly forty or fifty years ago. Should we slavishly imitate the Chinese? My minority view is that we need fewer highways and airports and much better traffic and air traffic management. Essentially, we should need fewer airports and roads rather than build more.

A few days ago Andy Stern, former president of the Service Employees International Union, a major union representing public employees, had an op-ed in the Wall Street Journal in praise of China’s economic system:

While we debate, Team China rolls on. Our delegation witnessed China’s people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader—Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily—including, our delegation was told, 700,000 units of public housing annually.

Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.

This admiration is not merely misplaced, it is unhinged. Not only does a third of China’s population live below the the international povery line of $2 per day, in China there is no right to organize labor, no right of representation, no right to form a union. Were Mr. Stern to have engaged in the practices by which he earned his living until recently in China he would either have been imprisoned or placed in a mental institution.

My friend, Rick Moran, has commented on Mr. Stern’s op-ed at substantially greater length.

Now comes Steve Rattner, President Obama’s “auto czar”, with yet another gushing piece on China in the New York Times:

But after a recent visit to China, I remain staunchly optimistic that it will continue to be the world’s greatest machine for economic expansion. While developed countries bump along with little growth, China’s gross domestic product is expected to increase by 9.2 percent in 2011 and an equally astonishing 8.5 percent next year.

The country pulses with energy and success, a caldron of economic ambition larded with understandable self-confidence. Visit the General Motors plant on the outskirts of Shanghai and watch Buicks churned out by steadily moving assembly lines almost indistinguishable from those in plants in Michigan.

My own view of China is that we should have affection and admiration for the Chinese people and their country while despising its system and the authoritarian thugs who created it and control the country, keep too large a fraction of its people in poverty, and ensure that they and their families garner an outsized share of the country’s wealth.

As to the meat of Mr. Rattner’s op-ed, neither he nor I have any idea of what will happen in China. Its authorities have been unable to restrain inflation. Food inflation over the last year was around 14%. In a country in which people pay 50% or more of their wages for food that is serious, indeed. Housing prices are crashing. Nobody, probably including the Chinese authorities, really knows what’s going on in China’s famously opaque state-owned banks. Anything could happen.

Is there something about “system” that these people don’t understand? You can’t pick and choose among the features of a system; the system works as a whole. Would they prefer to live in a country that started from a very low base, has millions of people who are desperately poor, is still largely a command economy, controls the number of children you can have, and lacks nearly all freedoms we consider basic?

Shouldn’t we use the same analysis that the White House economists when talking about the effects of the president’s stimulus package on employment? How much more would China have grown if the country had abandoned its command economy entirely and engaged in complete political and economic reform?

I don’t recall whose wisecrack it was but somebody remarked that no American wants to live under a Stalinist regime but any number of Americans would like to run a Stalinist regime. Maybe that explains it.

By nature I’m a very emotional and sentimental person. Notwithstanding that or, possibly, because of that I try to govern my life by reason. That may be why I find the present state of the world, of our country, distressing.

This morning on CBS’s Sunday Morning they had a feature on conflicts within the American Catholic Church with a focus on the case of a nun who headed a Catholic hospital that approved a therapeutic abortion. The mother’s compromised health was in danger and the fetus was incapable of surviving without the mother. The bishop of the diocese declared that the hospital was no longer a Catholic hospital and excommunicated the nun.

When I took Catholic moral theology, the decision would have been considered licit. Indeed, a hypothetical example very close to the actual case was used as an illustration of a difficult moral dilemma. I found the bishop’s decision not only cruel, as averred by one of those commenting on the case, but unhinged. His grounds weren’t that the decision was wrong but that the decision created scandal. In other words he thought that the woman’s life should have been sacrificed to make a point.

If creating scandal were grounds for excommunication how many American bishops would already have been excommunicated? The scandal involving child sexual abuse by Catholic priests that is ongoing and has been for nearly a generation is only one of the serious moral failings of bishops. My complaint is not one of hypocrisy. It is cognitive dissonance. Dissociation, even. They’ve lost their minds.

This problem isn’t limited to Catholic bishops. I’m seeing it in politicians, economists, journalists, financiers, labor leaders, business leaders, and on and on, a broad spectrum of American life but, particularly, those in positions of influence and power.

They appear to be in the position of OJ Simpson, ranting about the “real killer”. The problem isn’t that they’re lying or hypocritical. They’ve convinced themselves there actually is a real killer out there.