Regardless of where you place yourself on the political spectrum, I urge you to read Nicholas Eberstadt’s recent essay on the state of the United States in the 21st century at Commentary, “Our Miserable 21st Century”:

On the morning of November 9, 2016, America’s elite—its talking and deciding classes—woke up to a country they did not know. To most privileged and well-educated Americans, especially those living in its bicoastal bastions, the election of Donald Trump had been a thing almost impossible even to imagine. What sort of country would go and elect someone like Trump as president? Certainly not one they were familiar with, or understood anything about.

Whatever else it may or may not have accomplished, the 2016 election was a sort of shock therapy for Americans living within what Charles Murray famously termed “the bubble” (the protective barrier of prosperity and self-selected associations that increasingly shield our best and brightest from contact with the rest of their society). The very fact of Trump’s election served as a truth broadcast about a reality that could no longer be denied: Things out there in America are a whole lot different from what you thought.

Yes, things are very different indeed these days in the “real America” outside the bubble. In fact, things have been going badly wrong in America since the beginning of the 21st century.

I think he makes a pretty good case that something has gone seriously awry, producing economic and health evidence to support it.

Reasonable people can differ in their opinions on the explanation for this. My own view is that significant proportions of the American people have rejected the heretofore prevailing mythology and ethos of America, without which, since we don’t have ties of blood or shared history, there isn’t much left of America.

Additionally, roughly a sixth of Americans arrived here from somewhere else. As I’ve documented here previously, immigrants may not arrive on our shores with much in the way of material possessions but they do carry their myths and their ethos with them and, with the loss of confidence in our own myths and ethos, they don’t see any compelling reason to change.

Keep in mind that when John Dewey laid the foundation for the American public school system more than a century ago it was under conditions that resemble our present ones more than any time in the intervening years. The explicit object of that system was to cultivate that shared mythology and ethos and inculcate it into the children of immigrants. How can you inculcate in others something in which you do not believe?

I presume the retort to Mr. Eberstadt’s observations will be that at least we have NetFlix, Facebook, and Google.

I said I’d write some more about higher education today and this is it. The table below lists the percent of the population with college degrees, the gross state product, and labor productivity for six states not exactly taken at random.

Why did I pick those states? Because the three West Coast states I picked are frequently held up as examples of the future of the economy and I just happened to know that the Upper Midwest has a very strong tradition of higher education, bolstered by the large number of small public and private colleges in those states. Basically, lots of farmers send their kids to college in Iowa, Minnesota, and Wisconsin.

If this were a doctoral dissertation rather than a blog post I’d go to the trouble of listing all 50 states rather than just a 6 state sample. If there is a relationship between a state’s percentage of college educated individuals, its gross state product, or it labor productivity, it’s not an obvious straight-line one.

Labor productivity is defined as the gross state product divided by hours worked. I couldn’t find that reported by state so I calculated it myself. I’m going to admit right off that in calculating the labor productivity factors I’ve made all sorts of assumptions so it can’t be anything more than the crudest of approximations. But here’s the thing. If there were a relationship among any of those things, you’d expect to see something even in a crude approximation. In a vague analogy with the Michelson-Morley experiment, that table is significant because of what it fails to reveal rather than what it does.

If you’ve got some compelling proof beyond average incomes that higher education increases income, GDP, or labor productivity, show it. The income differentials between different sectors of the economy and different jobs within sectors are so enormous that averages tell us nothing. A couple of hundred MBAs who just happen to be CEOs of Fortune 500 companies skew the results of the tens of thousands of English majors working at minimum wage jobs too much.

Sources:
U. S. Department of Education
Overflow Data (based on Census Bureau Community Survey)
Bureau of Economic Analysis

I see that the editors of the New York Times have finally gotten wise to something I’ve been pointing out for years:

Blaming robots, though, while not as dangerous as protectionism and xenophobia, is also a distraction from real problems and real solutions.

The rise of modern robots is the latest chapter in a centuries-old story of technology replacing people. Automation is the hero of the story in good times and the villain in bad. Since today’s middle class is in the midst of a prolonged period of wage stagnation, it is especially vulnerable to blame-the-robot rhetoric.

And yet, the data indicate that today’s fear of robots is outpacing the actual advance of robots. If automation were rapidly accelerating, labor productivity and capital investment would also be surging as fewer workers and more technology did the work. But labor productivity and capital investment have actually decelerated in the 2000s.

While breakthroughs could come at any time, the problem with automation isn’t robots; it’s politicians, who have failed for decades to support policies that let workers share the wealth from technology-led growth.

So far, so good. Unfortunately, they lurch from there into proposing the usual suspects:

When automation on the farm resulted in the mass migration of Americans from rural to urban areas in the early decades of the 20th century, agricultural states led the way in instituting universal public high school education to prepare for the future. At the dawn of the modern technological age at the end of World War II, the G.I. Bill turned a generation of veterans into college graduates.

When productivity led to vast profits in America’s auto industry, unions ensured that pay rose accordingly.

Corporate efforts to keep profits high by keeping pay low were countered by a robust federal minimum wage and time-and-a-half for overtime.

Fair taxation of corporations and the wealthy ensured the public a fair share of profits from companies enriched by government investments in science and technology.

IMO the problem is much simpler than that. Slow wage and productivity growth are being caused by a slack labor market which in turn has been produced by importing large numbers of foreign workers.

Chasing the will o’ the wisps of education or unionization won’t get you anything except higher wages for college administrators and union officials. Unionization was an effective way of producing higher wages during a period when the labor market was tight not slack. In other words it was the labor market not the unionization.

More on higher education later.

There’s one sentence in Scott Winship’s post at RealClearPolitics, ostensibly a review of Ed Conard’s book, The Upside of Inequality, that caught my eye. Here it is:

As Conard notes, “It is illogical for a CEO managing five employees to earn the same pay as one managing fifty thousand employees.”

I agree. That’s why I want there to be thousands more companies with five employees and fewer with fifty thousand employees. Especially when those companies with 50,000 employees got that way through crony capitalism, rent-seeking, federal bailouts, government-granted monopolies, or government contracts. I think you’d be surprised at how frequently that’s the case.

Remember that John D. Rockefeller founded his enormous fortune on war profiteering sales to the Union Army during the Civil War.

I hate to break it to Carl Bild, who, in his paean at Project Syndicate to globalization, longs to “restore faith” in it:

The strong will always manage, but the weak will bear the burden of a nostalgic protectionism that erodes the benefits of globalization. At the World Economic Forum’s Annual Meeting in Davos this year, Chinese President Xi Jinping was the one extolling the virtues of globalization, while many Western business leaders wandered the halls trying to sound concerned for the supposed losers of the process.

The communists are keeping the globalization faith; but the capitalists seem to have lost theirs. This is bizarre – and entirely out of sync with past performance and current facts. We have every reason to be confident in a process that has delivered more prosperity to more people than anyone could have dreamed of just a few decades ago. We must not be shy in defending globalization and combating reactionary nostalgia.

We can have a brighter future – but only if we don’t seek it in the past.

but it’s not faith that globalization needs but empirical evidence. And the line isn’t drawn between “communists” and “capitalists” but within “communist” countries or within “capitalist” ones.

Consider my little diagram above. What actually happened in globalization? Let me define a few terms. “Zero sum” means that whatever is lost by one participant is gained by another. “Egalitarian” means more or less evenly distributed within the economy or society of a participant.

A lot depends on what actually happened. I think there’s mounting evidence that globalization largely consisted of redistributing wealth from poor or middle income people in rich countries to rich people in poor countries or rich and secondarily the poor in poor countries. Whether you think that’s a benign process may depend on whether you’re a rich person or not.

It makes a huge difference whether globalization has been non-zero sum and egalitarian or zero sum and non-egalitarian.

Consider the evidence I produced a few weeks ago about the results of NAFTA. If that analysis was true Mexico benefited substantially by it while the U. S. benefited hardly at all. But who in Mexico benefited and what actually happened in the U. S.?

If poor or middle income people in Mexico did not benefit nearly as much as Mexico’s rich did, it would go a long way to explaining why NAFTA did not stem the flood of illegal immigration from Mexico to the United States as its proponents claimed it would. And, if there was little net benefit in the pact to the United States but poor and middle income Americans were hurt while rich Americans got even richer, that’s a reasonable explanation for what we’ve actually seen.

So, produce your evidence. Don’t ask us to take it on faith.

I think that Joel Mokyr’s analysis at Aeon of how Europe became rich while, say, China or India did not is largely nonsense. It has several problems.

The most serious is that Europe didn’t become rich. Parts of Europe became rich but other parts didn’t. The Netherlands became rich. Russia didn’t. Germany became rich. Greece didn’t. Rather than looking at “political fragmentation” look at the differences among the fragments.

But another problem is that his article certainly appears to draw a dividing line sometime in the 17th or 18th century, but the United States isn’t Europe, it became rich, too, and by the 18th century it had already differentiated politically and socially from Europe.

Frankly, I find Jared Diamond’s guns, germs and steel hypothesis better.

If you think that the difference is between Europe and the United States on the one hand and Asia on the other is Christianity, try explaining why the experiences of Protestant Europe, Catholic Europe, and Orthodox Europe were so different. They were all Christian.

What I think happened is that the Netherlands, Britain, and the United States all adopted some very specific economic and social reforms mostly related to banking and money and they became rich. Wherever the Netherlands, Britain, and the United States invested became rich, too. Where they didn’t invest or, worse, disinvested (like Africa) became poor.

For which state do exports comprise the largest percentage of state GDP?

The answer, helpfully supplied by the Census Bureau, is Texas.

Most of the pictures that my dad took that I’ve reproduced here at The Glittering Eye so far have been family photos—mostly pictures of my mom, my dad’s favorite model in the early days of their marriage. I thought it might be fun to post something that’s a change of pace. You can click on the picture for a larger version. Be warned! It’s big.

The billboards (starting from the center of the picture and moving right) are a Coca Cola ad, a Ford ad, a Griesedieck Bros. beer ad, a Missouri Pacific (?) ad, and a Tip-Top Bread ad.

I believe the picture above to have been taken looking towards midtown St. Louis in the 1940s, probably from Market Street. IIRC the US 40-66 overlap ended on Market Street. Judging by the billboards and the vehicles I’d say 1945 or 1946.

Notice the cobblestones on the cross street.

Many of the buildings that formed the St. Louis skyline in that long ago time no longer exist so I’d say this picture is of at least a little historical significance. From left to right the buildings that I can identify are the Hotel Coronado and the Masonic Temple. I’m not sure what the building under construction is.

Speaking of California, the pie chart above is a simplified representation of the California economy. The source for the data is the Bureau of Economic Analysis. As you can see government forms a very large component of the state’s economy (especially when you include upwards of 50% of health and education as government) as does real estate. Manufacturing is a smaller proportion of the California economy than it is in many states.

Here’s the corresponding pie chart for the U. S. as a whole:

Same source. When you take into account how large California’s economy is (a little less than an eighth of the U. S. economy) and that the U. S. pie chart includes California, it highlights how greatly different California is from the rest of the country.

I don’t believe that demographics is destiny. I don’t even believe that demographics plus economics is destiny. But I do believe that they’re a reasonably good first order approximation.

Consequently, rather than criticizing the political attitudes of Californians or, if you live in California, those of the rest of the country, keep in mind that the view from California is different.

BTW, if you’re wondering what state is most like the U. S. as a whole demographically and economically, that would be Illinois, something that should give you pause. The country as a whole has a much higher percentage black population than California, a higher percentage of whites, and a much lower percentage of Hispanics.

An interesting question would be what state is the most average, the most representative in demographics and economy, excluding California? I don’t know but I’m guessing Missouri.