I agree with this post by Nathan Lewis at Forbes. Automation isn’t our real problem. Low savings and investment rates are:

Thus, an economy needs a high level of capital investment, to create new, high-productivity, high-wage jobs. This high productivity is practically in the math of capital itself. If you invest a million dollars of capital per person, for example some kind of business that has 100 employees and $100 million of investment, then each person must generate perhaps $100,000 of profit per year to justify the investment. This can only happen with high productivity per person.

Among emerging markets, this was often called a “bicycle economy:” you had to keep pedaling or it would fall over. Mechanization of agriculture and transport would generate millions of rural unemployed migrating to cities in search of a new way of life. Without a high level of capital investment and job creation, the situation could become politically explosive. Asia’s leaders knew they had to keep on pedaling. During their best growth years, Asian countries often had savings rates and capital investment in excess of 20%–sometimes, in excess of 30%.

China, however, beat them all, with sustained rates of savings and investment on the order of 50%, an astonishing result not only because of the high number, but that it was achieved on such a gigantic scale, with a population 300 times larger than Singapore. With such a tsunami of capital, it was probably inevitable that much of it would be squandered and stolen. But, it didn’t matter – China could piffle away 10% of GDP, a figure the U.S. hasn’t seen in generations, and the remaining 40% would still have been better than anyone else had ever achieved.

Our low rates of saving and business investment don’t just produce the stagnation in productivity we’re seeing. They also exacerbate our balance of trade and are a factor in increasing income inequality.

Rather than perseverating on “robots stealing our jobs”, a problem which, while we may have it some day we don’t have now, we should focus much more attention on the problems we actually have now especially since the solutions are so obvious.

I love this suggestion from Carl Cannon, articulated at RealClearPolitics. Play the charity baseball game on Thursday as scheduled. However:

Here’s a modest idea. Instead of Democrats competing against Republicans, how about choosing up sides the way American kids do on the schoolyard? Each team captain would pick a player, in order, and they must alternate picks, one Republican, then one Democrat. Don’t play against the other party, play with them—for this one night.

The Congress used to be a very collegial place. It should be a very collegial place in public as well as in private. Casting the disagreements between Democrats and Republicans as the Final Battle between good and evil may garner a few votes in your district or encourage some highly partisan donors from outside your district to contribute to your re-election campaign but it isn’t doing or facilitating the doing of the people’s business.

The editors of the Washington Post weigh in on the maltreatment of American Otto Warmbier by the North Koreans:

Now it appears that Mr. Warmbier may have been gravely ill for much or all of that time. His parents told The Post that North Korean representatives suddenly informed U.S. officials last week that the student was in a coma. He was said to have lost consciousness after contracting botulism and taking a sleeping pill — an account that strains credulity.

and recommends sketchily-defined “sanctions” against the regime:

The United States should also move quickly to step up sanctions on the regime of Kim Jong Un, which has been racing to develop missiles that can reach the United States with a nuclear warhead. A new report by the research group C4ADS shows that by cracking down on a relatively small number of interlinked Chinese companies and individuals, the pressure on Pyongyang could be greatly increased. According to the Wall Street Journal, the Trump administration has asked China to act against some 10 entities; if Beijing does not respond promptly, the United States should act unilaterally.

I have sympathy for Mr. Warmbier and his parents on a purely human basis. However, the reality is that much of the world is a cruel, harsh place and North Korea is distinctively so. The State Department already warns Americans that they shouldn’t travel to North Korea. When they do so, they’re on their own.

We already have about as much in the way of sanctions against North Korea as we can and until and unless we’re willing to risk whatever relationship we presently have with China any American who does what Mr. Warmbier did can expect to get what he got.

At Japan Times Yoichi Funabashi crafts a strategy for Japan reacting to an increasingly bumptious China:

First, maintain and strengthen our commitment to an open and liberal international order. For that purpose, reform the World Trade Organization. In the near future, even the U.S. will come to find it difficult to restrain an all-too-powerful China. If the U.S. ignores the WTO, an even more powerful China is certain to ignore the WTO as well. The WTO must overhaul its guidelines concerning subsidies, industrial policy and cyberspace. Moreover, both Japan and the U.S. must learn to make better use of the WTO.

Next, we can advance the regional integration and liberalization of trade and investment in the Asia-Pacific region by spreading the standards agreed on in the Trans-Pacific Partnership deal surrounding norms and rules. Japan must assist with the regional integration of the Association of Southeast Asian Nations members and the construction of a regional architecture that includes India and adheres to the principles of an “open and liberal international order.”

Finally, Japan can use the momentum of the current economic dialogue with the U.S. as a form of “gaiatsu” (foreign pressure) for promoting domestic structural reforms — the “third arrow” of Abenomics. After all, we should not forget that utilizing gaiatsu to achieve reform and liberalization has long been a Japanese specialty.

I think this is a sure instance of too little, too late. The Chinese very clearly view multi-lateral trade agreements in general and the World Trade Organization in particular in a strictly instrumental fashion. They’ll enforce them when doing so furthers their goals and ignore them otherwise. The reality is that China doesn’t have the civil infrastructure, in particular the robust system of civil law, to live up to the obligations it assumed when it joined the WTO and it certainly has neither the inclination nor the ability to enforce intellectual property law, the U. S.’s key trade goal (foolishly in my opinion). You can’t fight Chinese mercantilism with trade organizations of which China is a member.

As far as the TPP goes, the U. S. simply can’t tolerate two major economies pursuing mercantilist policies against it let alone four or more of them. China, Japan, and Germany are forcing the U. S. into a more mercantilist direction for reasons of political if not economic survival.

The editors of the Wall Street Journal are complaining about the management shakeups at Uber:

Uber said Tuesday that CEO Travis Kalanick will take an indefinite leave from the company he built, a day after chief business officer Emil Michael stepped down. The moves followed a unanimous vote by Uber’s board—which consists of private investors—to adopt reforms to its “workplace culture.” The San Francisco-based startup enlisted former U.S. Attorney General Eric Holder’s law firm Covington & Burling after several women complained that Uber executives ignored sexual-harassment allegations.

Workplace culture often flows from the top, and the internal analysis seeks to correct lapses in executive judgment. In 2014 Mr. Michael floated a plan to dig up details about the private lives of journalists critical of the company. Earlier this year Mr. Kalanick was caught on camera berating a driver.

Yet Uber would never have achieved what it has if not for Mr. Kalanick’s hard-charging attitude. The company has had to break through regulatory barriers backed by the taxi lobby in city after city, and it didn’t do that by bowing at the first sign of resistance. Uber’s innovation has greatly improved the lives of millions of urban travelers, and that breakthough has in turn invited competitors like Lyft, Via and Gett. There’s no guarantee that Uber will emerge as the Facebook of this pack.

Let’s go to the box scores. Uber requires regulatory intervention simply to exist. You can argue whether the regulations should have existed in the first place but that’s a fact. And it’s not a “growing pain”. That Uber’s corporate culture is malignant isn’t a growing pain, either, unless you assume that sexual harrassment is the only way a start-up can operate. Not growing pains, either.

Add that none of the ride-sharing companies is operating at a profit. That sounds to me more like failure of business model than growing pains. Maybe “disruption”, the Silicon Valley shibboleth du jour, just isn’t as great a strategy as the geniuses think it is. Keep in mind that Amazon, the paradigm of disruption as a business model, just doesn’t make much money in retail. They’re making a fortune because they created a brand new product category.

Could it possibly be that innovation is more important than disruption as a business model and that innovators and disrupters are different sorts of people? Don’t tell the editors of the WSJ that. They’re hoping for a big IPO.

The editors of the Wall Street Journal respond to the shooting responsibly as well:

Politically motivated attempts at mass murder aren’t common but they do happen and too often they’re exploited for partisan ends. The good news is that on Wednesday most political leaders rose to higher ground.

President Trump offered gracious condolences to the wounded, praise for the officers, and a call to national unity. Speaker Paul Ryan and Minority Leader Nancy Pelosi united to denounce the attack, and Mr. Sanders disavowed and denounced Hodgkinson. Mr. Ryan said the baseball game will go on as scheduled—to a thunderous ovation.

These are divisive political times, when verbal abuse and physical harassment are all too frequent against political opponents. The duty of political leaders and the rest of us is to keep the divisions in the perspective of our shared values of free debate and democratic consent. One way to contribute to a better political climate would be to stop claiming as a reflex that victory by the opposing party is illegitimate, and another would be to stop portraying political assassination as entertainment.

This places them in contrast with the editors of the New York Times and Washington Post who did not.

I didn’t post on the shooting incident in Alexandria, Virginia yesterday in which several Congressmen and staffers were injured because I didn’t think that flash reactions were appropriate, that waiting until most of the facts were in was the best response. In my opinion Sen. Bernie Sanders, reacting to the news that the shooter had worked on his campaign, responded well:

“I have just been informed that the alleged shooter at the Republican baseball practice is someone who apparently volunteered on my presidential campaign. I am sickened by this despicable act. And let me be as clear as I can be. Violence of any kind is unacceptable in our society, and I condemn this action in the strongest possible terms. Real change can only come about through nonviolent action, and anything else runs against our most deeply held American values.

My hopes and prayers are that Representative Scalise, congressional staff and the Capitol Police Officers who were wounded make a quick and full recovery. I also want to thank the Capitol Police for their heroic actions to prevent further harm.”

Those who went an inch beyond that statement to promote their own political agendas are contributing to a problem which is already, obviously, growing out of control. Angry, inflamed, inappropriate rhetoric should stop on all sides. We are not on a good path.

How Obama Dismantled U.S. Intel Capabilities To Appease Iran 

 Dangerous Women 

 Attention, California gun owners with high-capacity standard magazines!  

Here’s a post that conjoins two of the topics of recent posts: pensions and Medicare. Here in the United States and Europe we’re working as hard as we can to rack up bills and pass them along to the coming generations. Satyajit Das declaims at Bloomberg View:

This growing burden on future generations can be measured. Rising dependency ratios — or the number of retirees per employed worker — provide one useful metric. In 1970, in the U.S., there were 5.3 workers for every retired person. By 2010 this had fallen to 4.5, and it’s expected to decline to 2.6 by 2050. In Germany, the number of workers per retiree will decrease to 1.6 in 2050, down from 4.1 in 1970. In Japan, the oldest society to have ever existed, the ratio will decrease to 1.2 in 2050, from 8.5 in 1970. Even as spending commitments grow, in other words, there will be fewer and fewer productive adults around to fund them.

Budgetary analysis presents a similarly dire outlook. In a 2010 research paper, entitled “Ask Not Whether Governments Will Default, But How,” Arnaud Mares of Morgan Stanley analyzed national solvency, or the difference between actual and potential government revenue, on one hand, and existing debt levels and future commitments on the other. The study found that by this measure the net worth of the U.S. was negative 800 percent of its GDP; that is, its future tax revenue was less than committed obligations by an amount equivalent to eight times the value of all goods and services America produces in a year. The net worth of European countries ranged from about negative 250 percent (Italy) to negative 1,800 percent (Greece). For Germany, France and the U.K., the approximate figures were negative 500 percent, negative 600 percent and negative 1,000 percent of GDP. In effect, these states have mortgaged themselves beyond their capacity to easily repay.

In the United States statistically workers receive slightly less in benefits from the Social Security system than they pay in as payroll taxes. The situation is reversed for Medicare. We receive much more in benefits from the program than we ever paid in. Or, more precisely, our health care providers receive more in benefits than we paid in. Our own benefits vary widely.

One of the proposals for rectifying the problem, importing a labor force, is just another form of kicking the can down the road. Unless those foreign workers are here illegally and not paying into the Social Security or Medicare programs, eventually they’ll be eligible for benefits, too, saddling future generations with an ever-larger tab. There’s a better argument for legal workers who earn right around FICA max but that’s still problematic.

Sshhh! If we’re very careful, maybe the younger generation won’t notice.