Max is on to something
With respect, I'd add a sixth to Max's wise five lessons of economic populism: It's micro, not macro, stupid.
Well I add the 'stupid' because of Carville's great, election-winning slogan, but the macro folks aren't stupid. They are just too entranced by their math and their determinism. When markets are open to the possibilities of creative destruction, unpredictable new entrants with unimaginable productivity enhancements happen. Macro doesn't predict what does occur in micro, and yet all we see around us is the aggregate of micro.
The response to China, then, is not only the macro move of currency adjustment, but the micro move of, paradoxically, opening American markets to easy, alarmingly rapid, broad, deep, and immensely disruptive new entry. As in the case of, say, American Idol, the intense competition will produce the few winners for whom we will thank our lucky stars for years to come. American workers should want those winners to be employers in America: that can happen if we move quickly to open our most closed markets, keep open those that this Administration wishes to allow to close, and cause to be born again the allegedly mature and ossified markets of the past. Energy, health care, and communications loom as obvious candidates.
Reed, in your estimation what are America's most closed markets and those that this Administration wishes to allow to close?
Larry Martin
December 11, 2006 6:21 PM | Reply | Permalink
hoosiertransplant
Like Red Planet, I'm not exactly sure which closed American markets you're referring to - maybe agriculture? Anyway, I think globalization of the economy is prety much a given, now. If it wasn't, I might find some of the protectionist arguments more appealing.
What I think we need to do is concentrate on dealing with the mirco effects of globalization like unemployed factory workers and outsourced IT guys (and gals). What, exactly, I'm not sure but I'd love to hear some ideas.
December 12, 2006 5:07 AM | Reply | Permalink
Computer software.
There are, at present, about 100,000 software and process patents in existence. Any programmer setting his/her ideas to code is likely in violation of someone's patent. Usually the patent's owner is a big company that doesn't notice our little piece of a bigger system.
Until we make some money. Then our violation of their intellectual property is big news for everyone.
Given how much outsourcing there is, software people are under huge pressure to deliver now and fast. We do not have time to figure which of those 100000 patents we need to stay away from.
Microsoft has just been granted, in the last few weeks, their patent on using a general purpose computer as a telephone. There are probably special claims, and it may be possible to get around it, but they can afford more lawyers than I can, by about 4 orders of magnitude.
SBC/AT&T claim to have a patent on the concepts of the "frames" in the HTML world, though they seem not to be exercising it.
Here's a nice one: The GIF patent story Forgent's purchased patent on several aspects of the JPEG image compressions algorithms were finally tossed out a few weeks ago (that was a win, but note that it was already a well-known format with some big hitters behind getting it squashed).
Research in Motion, the blackberry guys, have just settled with a small group of people for violation of their patent on the idea of routing email messages through a variety of means to get them delivered to remote devices. The owners of the patents were even running a business based on their ideas, but their business wasn't very large, and the RIM folks just implemented what they thought was their idea. It wasn't until they had huge success running the "crackberry" business that the patent was asserted.
It's the death of a thousand cuts, and the patent problem which affects my work directly, is only one of the examples.
December 12, 2006 6:42 AM | Reply | Permalink
I think you have it backwards. Normally, the highly personified micro theory is the conservative argument for doing nothing. Thus, "If the government makes me pay my workers $7 an hour, I will have to hire less of them." Just like hiring the neighbor kid to mow your lawn.
However, macro evidence fails rather dramatically to bear any of this out. So the second half of the conservative argument has to involve something other than that their assumptions were disconnected from reality.
-- "Good people can have honest differences of opinion. Bipartisanship is impossible so long as Republicans are neither."
December 12, 2006 12:35 PM | Reply | Permalink
For the past 40 years policy in the US has been guided by a series of economic "theories". These include trickle down and the Laffer curve, a "rising tide lifts all boats", lower taxes yields higher government revenue, reduced government regulation improves business efficiency, and markets are free (or open) and can regulate themselves.
The results of this series of nostrums has been a continual stream of downsizing, outsourcing, salary cuts, fringe benefit givebacks, and working class economic stagnation. On the other side of the coin businesses have seen their profits rise and have accumulated vast amounts of money in their capital reserves.
This money has not been used for starting new enterprises or infrastructure improvements, but as payouts to top officers and as the source for an unprecedented rise in corporate take overs and other financial games. The results are in today's paper. Goldman Sachs has reported record earnings which are about double last year's. The minimum bonus expected to be paid to partners is $600,000.
Why there has been no rise in populism given this skewing of the economic landscape remains a puzzle to me. However, things are starting to look more like 1929 every day.
--- Policies not Politics
Daily Landscape
December 13, 2006 6:45 AM | Reply | Permalink
rdf's summary of what could characterize populism other than the things I distrust about it is very helpful. Indeed, it makes me wonder even more what Max is up to. If that's his populist program, it'll take a little refinement before it resonates without anyone. That's partly because, small as it is, it reads like the policy laundry list we're always concerned might not suffice and partly because it also reads not so much as prescriptions as things not to worry about. Social security? Not a problem. Health care? Not a problem, except for minor details (oh, like equity, universality) we can mention in passing.
Debunking "the end is near" sentiments on social security has been an ongoing left and center objective for some time and occupied much of Josh's attention, although it thus isn't all that obviously populist, and a populist, one might think, might still wish to raise the cap so as to soak the rich a bit. As for the rest, definitely needs work. William Jenning Bryan's oratory, for better or for worse, it's not. Indeed, a liberal program it's not.
John
http://www.haberarts.com/
December 13, 2006 11:04 AM | Reply | Permalink