I’ve just published a couple of foreign policy-related posts at Outside the Beltway:
The Eurozone Crisis Won’t Just Go Away
Despite what appear to be the fond hopes of European central bankers for it all just to go away, something must be done. But what?
There’s More Than One Kind of Anthropogenic Climate Change
Let’s not lose track of the possible damage done by localized anthropogenic climate change. Has the Three Gorges Dam caused the drought going on in China’s central provinces?
I won’t delve into the sequence of thoughts that made me start thinking along these lines but I am astonished at how impoverished our society is in terms of experience. The interest in artificial experiences of all sorts whether reality shows or video games suggests to me that there’s a real hunger out there. I, personally, have no interest in being a car thief, a rock star, or a professional athelete but, clearly, there are lot of people who do. My tastes run more to being a wandering rascal who lives by his wits and saves kingdoms from wicked sorcerors and beautiful maidens from dragons. Heck, I am a wandering rascal who lives by his wits. The surroundings may not be quite as romantic but I have saved some companies from going belly-up and kept a few reasonably attractive young people from losing their jobs.
My point here is that I really wish our society were less geared towards having and much more oriented towards doing. Acting on stage, playing in a band, cooking in a restaurant, running a business are all fun, at least they’ve been fun to me even if I’m not Laurence Olivier, Louis Armstrong, Jacques Pepin, or Jack Welch. A handful of superstars who make phenomenal amounts of money is good; I have no problem with it except to the extent that they crowd out the thousands of potential actors, musicians, cooks, and business owners (and use their power and influence to limit access to future competitors as is all too often the case these days). We’ve preserved the product but lost the experience.
Much of the crowding out has been the result of technological change. Recording crowded out first musicians, then actors. Movies, radio, and television crowded out live performers of all sorts. Today you can watch and listen to the greatest actors, singers, instrumentalists, and performers of the last century but the opportunities to act, sing, play an instrument, or juggle are growing ever more limited.
Despite the potential capability for synthetic experience to fill the void from my vantage point it, too, is amazingly claustrophobic. You can get something of the experience of being a professional golfer or race car driver with a pretty fair degree of reality. Can you get the experience of being a surgeon, architect, lawyer, chemist, etc. with much verisimilitude?
I guess the response is that those are boring. Who would be interested in them? But they aren’t; they’re all fascinating. They’re fun. They’re experiences worth having, if only synthetically. As G. K. Chesterton put it, anything worth doing is worth doing badly. Somewhere in the world, even if its in the artificial worlds of video games, there should be a place for doing things badly.
As I think I have made clear over the last several months, I don’t think we’re just “going through a bad patch” as I am being relentlessly told. I think that demographics and poor policy choices have come together to reduce growth below what it otherwise might be. That is the unfortunate nature of time-shifting future growth. Eventually the future shows up and if growth is not as robust as you thought it might be when you took the steps that resulted in the time-shifting the results can be pretty bleak.
The financial sector is far too large; the healthcare sector is far too large; the education sector is far too large; the military-aerospace sector is far too large; the construction sector is far too large. An enormous amount of capital is tied up in these sectors.
The sources of future growth are frighteningly opaque.
If the federal government is bound and determined not to decrease the cost of healthcare, the only other practical strategy is to cut everything else to pay the rising healthcare costs. I think that’s a sucker’s game but there you have it. It is fantastical to expect a weakening private sector to support ever-higher federal spending.
There will be an irresistible groundswell of pressure for economic engineering to turn things around. The impulse to “do something” will be overwhelming, especially as election year approaches. That’s next year if you haven’t been paying attention.
Government is inherently status quo-ist. The future’s industries have no lobby. That’s why we’re still desperately trying to reinflate the bubble, an effort that I believe is not only futile but counterproductive.
There are things that could be done which I doubt we will do. For example, the federal government could engage with state and local governments to produce a uniform code of environmental, banking, insurance, etc. regulations analogous to the UCC to make it easier to start and operate businesses. There are trade liberalization agreements languishing for lack of attention. We could also stop trying to prop up failing companies, industries, and business models.
When things aren’t going well it’s hard to have confidence in the future and the uncontrollable and unplanned developments of the market but IMO those are where our best hopes reside. The very fact that they are uncontrollabel and unplanned is why they are hated by would-be economic engineers and central planners.
ADP is reporting an increase of 38,000 private sector jobs in May. If you’re not aware of it, ADP is the nation’s largest automated payroll processor. They process payrolls for thousands of companies, large and small. 38,000 is a fraction of what was expected.
The payrolls of large businesses (the ones to which most of the subsidies and bailouts go) actually shrank by 19,000 jobs. Construction shrank, too.
Manufacturing is slowing practically everywhere, even in China.
Consumer confidence has fallen to a six month low. Most of what you buy is more expensive (a predictable outcome of quantitative easing) and wages are, essentially, flat. It’s not hard to explain why confidence has dropped.
Get a load of this chart of financial and construction activity. Both are moving sideways—not entirely unexpected since both were affected by the housing bubble.
Standard & Poors/Case-Shiller have released their latest update on home prices in the 20 major markets and overall for the first quarter of 2011:
Data through March 2011 … show that the U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.
The following markets showed increases or remained the same: Phoenix, Detroit, Los Angeles, Washington, Atlanta, Dallas. The remainder showed decreases; some, e.g. Minneapolis, showed sharp decreases. The national index has reached a new, post-bubble low.
Don’t expect housing to contribute to a recovery any time soon.
The Chicago Purchasing Managers Index dropped significantly more than expected. May, April, and March were each lower than the prior month. The current index suggests a slowing economy and a neutral level of activity.
From the Consumer Metrics Institute:
The importance of the price deflater used by the BEA cannot be overstated. In calculating the “real” GDP the BEA continued to use an overall 1.9% annualized inflation rate, which is substantially lower than the inflation rates being reported by any of the BEA’s sister agencies. The mathematical implications of the deflater are simple: a lower deflater creates a higher “real” GDP reading. If April’s CPI-U (as reported by the Bureau of Labor Statistics) of 3.2% year-over-year inflation is used as the deflater, the reported 1.84% annualized growth rate shrinks to a 0.56% annualized rate, and the “real final sales of domestic products” is actually contracting at a 0.63% rate. If instead of the year-over-year CPI-U we were to use the annualized CPI-U from just the first quarter (5.7%), the “real” GDP would be shrinking at a 1.82% annualized rate, and the “real final sales of domestic products” would be contracting at a recession-like 3.01%.
I want to draw your attention to a report from the Peter G. Peterson Foundation on ways and means to address the fiscal crisis we face. The report contains proposals from
quite a diverse group. The organizations participating found agreement on several points:
The various organization have dramatically different views of acceptable levels of revenue, expense, deficit and how to accomplish them. I am skeptical that any of the proposals for controlling healthcare costs, whether the market-oriented approaches (similar to the Ryan plan) espoused by the Heritage Foundation or the AEI or the bureaucratic strategies favored by the BPC, CAP, EPI, and RICN (similar to those in the PPACA) will be effective and controlling healthcare costs is the sine qua non of fiscal reform. In my view a market-based strategy that only considers the demand side is doomed to failure while a truly free market on both demand and supply sides of the equation would have such dire public health consequences as to be intolerable. The IPAB and other cost control strategies in the PPACA have severe time inconsistency problems as has been pointed out not only by me but by the CBO and the Medicare Trust Fund actuaries.
Read it and weep. In all likelihood we won’t address even the subjects on which the various organizations have substantial agreement until the hazunga has already hit the fan.
Hat tip: Greg Mankiw
I won’t link to Paul Krugman’s column in which he pitches the idea of an updated Works Projects Administration. Again. I won’t link to it because of the NYT’s tallying and paywall, not due to any antipathy to linking to him. If you want to read the original article you can swing by there yourselves.
In the article Dr. Krugman repeats something he’s written before, namely that we should create jobs for the unemployed fixing and building roads, bridges, etc. While that might increase aggregate demand I have serious doubts that it would result in better roads or bridges. We no longer build roads by rounding up a couple of hundred men and giving them shovels. We use a few workers and a lot of machines, the machines require at least semi-skilled labor, and I doubt that the International Union of Operating Engineers will look kindly on the activity. Add to that the laborers’ union, Davis-Bacon wages, and a host of other considerations and the net result is no more roads built or repaired than are being repaired right now.
Unless you restrict these jobs to the hard-core unemployed (somehow), won’t the higher wages they’re paying attract workers who already have jobs and reduce private sector employment?
These jobs also won’t give the presently unemployed workers skills useful in future jobs (unless you believe that the jobs of the future will involve operating heavy machinery).
My modest proposal is to give the unemployed jobs as economists or New York Times columnists.
Seriously, however, why would the proposed updated WPA be better than extending unemployment benefits? Than just writing checks?
This might be a good day to read or re-read Andrew Olmsted’s last post. Eternal rest grant unto him, O Lord, and may perpetual light shine upon him.
Before it was Memorial Day, a day on which we remember and venerate those who have died in war in the service of our country, it was Decoration Day. Decoration Day was specifically a commemoration of the Civil War dead and, as David Blight reminds us in the New York Times, possibly the first Decoration Day was when freed blacks in Charleston, South Carolina reburied Union soldiers and, a year later, paraded to remember their sacrifice.
My family has been extraordinarily fortunate. No member of my family, my lineage, has died in war in centuries. Indeed, no one in my immediate lineage has served in the military since the Civil War. It wasn’t for lack of trying. My dad volunteered for the Army, Navy, Coast Guard, and even the FBI during World War II. He was rejected by all of them.
My grandfathers were both too old for World War I, both my Schuler and Blanchard grandfathers too young for the Spanish-American War, their fathers too old.
My great-great-grandfather David Schuler (for whom I am named) arrived in this country after the Civil War. In his forties at the time he would have been too old to serve even had he been here, my great-grandfather too young.
My great-great-grandfather Charles Wagner served from 1861 to 1865 in the 59th Illinois Infantry. He enlisted as a private and rose through the ranks to captain. The 59th Illinois saw considerable action taking part in battles in Chaplin Hills, Lancaster, Nashville, Nolensville, Murfreesboro, Tullahoma, and the siege of Chattanooga where they led the charge up Missionary Ridge in the Lookout Mountain campaign. In 1864 they took part in the campaign against Atlanta and in the Battle of Nashville.
Despite his youth my great-great-grandfather Flanagan enlisted in the Union Army. Twice. I’ll tell the whole story another time but after serviing for some time he just up and left. The War Department eventually decided that he hadn’t deserted because he’d never been properly mustered in (he left because he wasn’t being paid).
My great-great-grandfather McCoy served in the Provisional Missouri Militia, affiliated with the Union Army. They saw no action.
I have reason to believe that my great-great-grandfather Fischer served in the Union Army but I’m still on his trail. I know nothing of my great-great-grandfather Bader. My great-great grandfather Schneider was too young to have served in the Civil War and would have been too old for the Spanish-American War even if he’d lived.
My closest relative to have served in the military war my mother’s uncle, my great-uncle Ed Schneider. Ed was one of the fortunate few to have been called up in World War II, Korea, and Vietnam. He was pretty darned old for Vietnam but his skills were needed to keep an old ship running. At least that’s the story that I was told.
Yesterday evening I watched the movie Ip Man streaming on Netflix. I think that the phenomenon of streaming has the potential of changing motion pictures in some basic ways (just as video rental did before it). More on that subject in a later post.
Ip Man is a beautifully crafted, highly sanitized and fictionalized biography of a real person, Ip Man, a master of the Chinese kung fu style known as Wing Chun, notable among other reasons for having been Bruce Lee’s teacher. The directing is good, the editing is first rate. The portayal of the title character by the veteran Hong Kong action star Donnie Yen is excellent, restrained, and compelling. I strongly suspect we’ll see more of him here in the West.
I won’t go into details of the plot or point out just how it was sanitized and fictionalized. Just see the picture (particularly if you’re a Netflix subscriber and streaming is available to you).
Fight choreography was by Sammo Hung and Tony Leung Siu-hung. To my eye far too much of the fighting in Hong Kong action movies looks like dance. I find it nearly unwatchable. Although this movie preserved some of the more exaggerated conventions of the genre, I found that the sparring and fighting looked more like their real life counterparts than is frequently the case. I will admit prejudice: I thought that the portrayal of Japanese martial arts was only fair—they had a distinct Chinese flavor.
I found the scene in which Ip Man faces and defeats ten Japanese martial arts practitioners reminiscent of a similar scene in Yojimbo. A great fight scene.
Although I give the picture an enthusiastic thumbs-up, if you have a limited appetite for Chinese nationalist propaganda you may find this picture difficult to watch. Not to put too fine a point on it but it is strongly anti-Japanese.
The action of the picture takes place between 1937 (just before the Japanese invasion and occupation) and 1944 with a footnote telling us that the war ended and what happened afterwards. The diction is strange, something to the effect that “on August 15, 1945 the Japanese surrendered and we won”. While I recognize that I view history through an American lens, I think that’s a pretty eccentric formulation. In particular I don’t see how you can talk about the end of the 2nd Sino-Japanese War (AKA WWII in China) without mentioned, in particular, the Soviet Union or Britain.
When the war ended in China the Japanese had occupied a considerable portion of the country for seven years. They occupied many of the cities but had been forced to a stalemate in the countryside. Without the British and Indian campaign from Burma Japan’s Operation Ichi-Go would doubtlessly have been more successful in pacifying the countyside and in all honesty I don’t see how the Chinese would ever have gotten the Japanese out without the million man Soviet Army, battle hardened, experienced, and successful having transferred their attentions from Europe to the East. The U. S. island-hopping campaign (necessitated by the failure of the Chinese to face down the Japanese successfully) pressed the Japanese from the East and South, the Soviets pressed the Japanese from the West and North, and the use of the atom bomb on the Japanese homeland delivered the coup de grâce.
The aforementioned notwithstanding it’s certainly interesting to see the story of the Japanese occupation told from the Chinese point of view.
