THE OTHER FUNDAMENTALISTS, OR, THIS POST IS NOT ABOUT ALBERTO GONZALES
I’ve been delving into the case for public investment. One thing I tried was reading a leading text in development economics by Parkins, Radelet and Lindauer. This book alternately bored and annoyed me. The authors are at some pains to distinguish themselves from a traditional and prevalent view that they dub “capital fundamentalism.” I don’t think they succeed. The whole dismal story looks like yet another effort to push everything through the meat-grinder of conventional theory.
There are few things more vital. As Robert Lucas said, “I do not see how one can look at figures like these without seeing them representing possibilities. Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia's or Egypt's? If so, what exactly? If not, what is it about the "nature of India" that makes it so? The consequences for human welfare involved in questions like these are simply staggering: once one starts to think about them, it is hard to think about anything else.”
The literature on economic growth harkens back to the tale of the blind men and the elephant. Economists cannot tell you why economies grow: a significant, unexplained gap spills out of their econometric models.
In the welter of competing theories, the default position, amplified by the interests of people with money, is capital fundamentalism: the basis for growth and eternal happiness is private investment. The Republican variation is, you get more private investment with tax cuts for “the investing class” (sic). The Democratic-Clintonian version is you provide more funds for investment with deficit reduction, the latter made possible by tax increases and cuts in Social Security, Medicare and Medicaid.
Problem is, the literature does not support the prevalent political emphasis on private investment, nor the wonderfulness of balanced budgets. One missing ingredient in the growth equation is public investment, including the finance of infrastructure, research and development, and education. A more exotic explanation from the “new growth theory” (not so new anymore, actually) is that some investments provide inordinately high returns. A new scientific discovery, for instance, can be exploited by untold numbers of people. That’s a high return.
Public finance is one potential source of such investments. There is empirical evidence of the impact of public investment on productivity and even in leveraging private investment. Over and above economic efficiency, there is the matter of equality. Putting more resources into public education is a fairness issue – choosing to augment the ‘human capital’ of those who would otherwise be condemned to a lifetime of low wages, rather than the international investment portfolios of the well-off. Which side are you on?
Presently public investment takes up a modest share of the humongous Federal budget. It has stagnated in recent decades. Rejuvenating it would be a cheap date with potentially enormous benefits. Once we get past the madness of King George, the investment agenda will merit some dedicated attention. Unfortunately, the prospects are not great.
The Democratic majorities in Congress betray little sensitivity to the priority of public investment, choosing instead to hoist the old battle flag of the balanced budget, yammering about the national debt. Capital fundamentalism holds sway in the nation’s fiscal policy, as we await a new enlightenment.
What distinguishes "public investment" from "pork"? It seems that some of the most visible incidents of pork-barrel spending could fall into one of the public investment categories that Max Sawicky lists. (I'm thinking, for example, of the Alaskan bridge project that was whacked.) I don't mean that public investment isn't a good thing or that it might not bring much greater returns than private investment. But how do we determine where to invest? Which states get the infrastructure? Which companies get the R&D? And couldn't the argument for public investment become fairly promiscuous in what it perscribes?
March 27, 2007 11:29 AM | Reply | Permalink
I agree in general with the idea that public investment doesn't get the credit it's due.
But then you have to say this:
Why does this always have to be framed as a matter of taking sides? If I really believe in the trickle down theory ( I don't BTW ) then improving the investment portfolios of the well-off isn't taking the side of the wealthy, it's doing what's best for everyone -- even though it may not appear that way on the surface (i.e. to the uneducated masses).
You start from the presumption that the wealthy are the enemy, but the dividing lines aren't that clear. In the last election, Democrats won the majority of voters in the $100,000-$150,000 tax bracket and they won over 60 percent of those making from $150,000-$200,000.
These are people with portfolios. Nor do people like the Gates' and the Warren Buffet's of the world necessarily disagree with you. So stop seeing everything in such black and white terms.
March 27, 2007 11:40 AM | Reply | Permalink
I agree to a great extent. I nearly went into hysterics a few months ago when someone suggested to me that the commercial airlines and pharmaceutical companies were models of how a company should achieve without government support. Both, of course, are the benficiaries of mind-bogglingly huge public investments.
viviane above makes a good point that a lot of public investment is essentially pork. The difference, I would say, lies in a maxim that is probably not terribly unique to me, but I came up with it independently, so for now let's call it the Bacon Principle (perhaps fitting, since it involves pork): private investment always follows public investment, but in what amount largely depends on the quality of the public investment. The $200 million bridge in Alaska assuredly would have brought increased private investment to the island and the mainland that it connected, but enough to merit the cost? New interstate loops and bypasses around cities always bring development, but again, at what cost? On the other hand, the Bush administration gutted the NSF budget, which I'd say over the past 40 years, along with its NIH cousin, has provided some of the biggest returns on public investment in the history of the country.
I don't, however, agree with your rather glum assessment of Democratic focus on it, or your assertion that current outlays for public investment are small. First, while I don't think budget deficits are the be all and end all of economic development, the size of the Reagan/Bush debt is so enormous, it has to be dealt with proactively. Large public debt leads to higher interest rates (that is, unless the Chinese continue to bail us out), which in turn reduces the private response to the public investment. Goosing the private sector with low interest rates only gets you so far, but I'd argue that Congress shouldn't turn a blind eye to it.
Secondly, while there's been precious little in the past 6 years as the GOP has taken the public coffers and dumped them into the pockets of Iraq contractors, much public investment slips into the budget in disguise. I wish the political case for public investment were made more often, but as it is, two of the most important public projects of the 20th century -- the interstate system and the development of DARPA's initial TCP/IP network -- were hidden as military preparedness projects.
I'd really like to see a federal initiative to massively upgrade our railroad infrastructure. It could spawn development in the way the interstate system did, while providing stimulus for both the manufacturing sectors in the areas hardest hit by globalization, and provide more energy efficient transportation. It's a tall order to sell it politically right now, though.
March 27, 2007 12:22 PM | Reply | Permalink
Whether it is spending on education for the masses, craterless roads, universal health care or publicly sponsored scientific research, the broad issue is one of redistribution. Investment capitalism has no problem with public investment through direct subsidies or indirect tax breaks as long as it is paid to the right people. Recent budgets provide abundant proof. It is investment in the form of redistribution of wealth (but increase the commonwealth)that causes rashes to break out.
March 27, 2007 12:35 PM | Reply | Permalink
The only thing that distinguishes pork from beneficial public investment is good management. It can't be THAT hard to distinguish a project that saves money, adds value for citizens and businesses, addresses a market failure, or advances equality from a project that's just a handout. We have huge government departments that, prior to the Bush Kleptocracy, were substantially devoted to implementing and studying such policies. We have tons of advocacy organizations that also study potential policies or propose better ones. And academia is practically overflowing with quantitative models of how to Get Things Done. It's hard to believe that government could not quantify the costs and benefits of its various projects the way that virtually every private business does.
The really crazy thing is that pork has exploded even as public investment has stagnated. If we spent half as much on education as we did to bail out mismanaged corporations or encourage idiotic, small-bore make work projects (I have no problem with a job creation program, but if we're going to do that, let's systematize it), we would the most brilliant society on the planet.
March 27, 2007 12:46 PM | Reply | Permalink
Putting more resources into public education is a fairness issue . . . . msawicky
Allow me to put words in the mouth of MiracleMax.
Max implies that as a society and for the purposes of our economy, we are already sufficiently (overly?) educated, that is, additional investment in education will not generate a competitive (competitive with what, you ask? -- just economists' talk) economic return. And I think he's correct; we currently turn out many more college graduates than the economy requires (not that employers don't love the sorting done for them by colleges).
So . . .
Other than a few dollars here and there to support research and development, where do we put this investment?
March 27, 2007 12:54 PM | Reply | Permalink
I also don't think it's fair to say that we're overeducated simply because we're turning out too many college graduates. A bachelor's degree doesn't mean a person has skills relevant to the economy. We're still facing shortages in many professional classes (doctors, engineers, even lawyers(!)), especially outside of major urban areas. Also, the sudden importance placed on college hasn't translated into more technical workers such as welders or machinists, who are still important to the economy.
Finally, there are many local economies in this country where the problem isn't a lack of college educated employees but high school educated ones (or high school graduates without the expected/appropriate skill level). Our public education system provides superlative service to certain neighborhoods (or towns), but sucks for others. Federal funding could bridge that gap.
March 27, 2007 12:57 PM | Reply | Permalink
While no work force is ever optimum and thus, there is always some room for improvement of skills and habits, additional education funding (i.e., "investment") seems designed merely to rearrange the deck chairs -- a worthy goal vis-a-vis fairness concerns but not likely to grow the economy -- which growth is the subject of Sawicky's post.
March 27, 2007 1:28 PM | Reply | Permalink
Ellen please allow me to spit out those words.
I did not mean that returns to education are lacking. In fact the research indicates they are the best investment society can make (especially early childhood). I would say the priority is K-12 and secondary ed below the elite university level.
I did mean that education investment is also a fairness issue.
In the R&D and infrastructure fields, my faves are mass transit and passenger rail, energy renewables, universal broadband, & biotech.
March 27, 2007 1:43 PM | Reply | Permalink
Permission granted; expectorate away! :-)
But I still want your view (and argument?) concerning whether investment in education in a first-world economy will grow the economy at a rate such that it will throw off returns which can justify the investment?
Boy, was that ever wordy!
March 27, 2007 2:16 PM | Reply | Permalink
The difference between government spending and pork is the process. Pork is a project sponsored by a single legislator or a small group with regional interest. The decision to spend the money is based upon cronyism and political favoritism.
Real government spending goes through a vetted approval process with the relevant agencies making recommendations or using panels of experts to do so. This is the model used at NIH and NSF, it works quite well. When done properly the panels insulate the agency from undue political influence. That this mode has been hijacked recently doesn't mean that it can't be made to work again.
The elephant in the room that everyone is ignoring is our runaway militarism. This is now over 50% of the federal discretionary budget ($650+ billion next year). This has two pernicious effects: First, it makes it impossible to fund other deserving areas without running up a deficit and/or raising taxes. Second it distorts spending priorities so that money that would go into things like R&D or health research are diverted to creating more instruments of death.
The effect is indirect. A bright person graduates with an advanced degree in some scientific discipline and looks for a job in research. Because of the shift in funds allocation grants are going to those who can appeal to the military. The student becomes an expert is some aspect of militarism rather than in some other discipline because that's the only place they can find a job. (I have extensive personal knowledge of this.)
This is slightly off topic, but the same thing is happening because the country is focused on financial manipulation instead of basic science. There are a significant number of Ph.D. physicists and mathematicians working on Wall Street using their analytic training to help their firms make money instead of using their training as intended. They are so common that they have a pejorative nickname, "quants" (for quantitative analyst). It's pejorative because the traders think they are suckers since the only make $100K+ while the traders make 10+ times as much.
Norquist discovered that he couldn't shrink government by diverting money from the civilian to the military sector - congress just ran up a deficit. So he has changed course and is trying to accomplish the same thing by draining social programs through militarism. The goal is the same - to eliminate government social services.
One of the beliefs of the neo-cons is that the USSR was brought down by Reagan forcing them into an arms race that bankrupted Russia. They fail to see that the US is on the same path - militarism is causing a hollowing out of our infrastructure and lessening our ability to compete with emerging nations.
--- Policies not Politics
Daily Landscape
March 27, 2007 2:33 PM | Reply | Permalink
What is the goal of public investment? Broadly speaking, it is developing infrastructure that most benefits the economy and the common good. Do we have infrastructure needs? Yes, we have a massive deficit in infrastructure investment going back at least a generation. Generally speaking, since Nixon we've taken the opposite approach that FDR did.
FDR set up a regulatory regime and directed investment to foster growth in cheap and widespread electricity (TVA, Municipal power systems), recovery of agriculture (soil conservation, water projects, farm price supports), building of dams, locks, bridges, etc. Private investment followed, as private money will flow into the corridors of the best general infrastructure and the best workforce.
Today, because of the recent past's disinvestment in infrastructure, many of these same areas are in need of an infusion of capital to rebuild what has been lost or degraded.
For example, our electric grid, having been deregulated and looted by Enron, et. al., is in severe disrepair. Our deregulated rail and air transportation sectors are disappearing (in rail's case) or bankrupt (in air's case). Our waterways, primarily the Missouri/Mississippi/Ohio system, is hugely in arrears in needed repairs and upgrades.
The government could, in sympathy with an updated FDR-outlook, take the following steps that would direct credits and re-regulation to cause a beneficial cycle of investment, increased employment (with good wages) and increased govt revenue:
-Help the domestic auto industry to retool. There is a glut of autos and auto makers out there. The domestic car companies will just continue to downsize and the US will lose its vital machine tool capacity, all things proceeding along their present course. Direct credit to get them to build high-speed electric rail systems, including magnetic levitation systems and light rail mass transit systems. In parallel, they could retool some capacity to building modular, third generation nuclear power plants.
-A related goal is to build the capacity to produce hydrogen on a mass scale (which can be accomplished with the cheap electricity and waste heat from adjoining nuke plants), and the infrastructure for distributing the hydrogen to a new fleet of hydrogen autos.
-Invest in rebuilding our locks, dams, canals and ports. Water transport is the cheapest, most efficient means of moving components, finished goods and agricultural product, followed by rail.
- Invest in the R&D for the development of nuclear fusion technology, which will not only provide the means to unlimited clean energy, but will open the horizon to a new isotope economy beyond the imagining of Mathusians everywhere.
By such means we can bring about the end of the petroleum economy, saving oil resources for fertilizer and chemical feed-stocks, reduce pollution, create jobs, raise living standards and raise govt revenue for other needed investments, such as univeral healthcare.
We don't have the money to do this, but we do have the unique constitutional system which allows us to generate credit, ala the reconstruction corporations of FDR. Are we waiting for a general depression to begin this work? It is coming, if we don't start now.
UA
March 27, 2007 3:08 PM | Reply | Permalink
Republicans were surprised in several up-scale suburbs and towns like Rochester, MN (IBM/Mayo Clinic) when they lost due to health and education issues.
Democrats don't do a good enough job selling quality of life issues in the suburbs where parents want their kid in graduate school not in the Marines.
March 27, 2007 3:44 PM | Reply | Permalink
At least in the fifties and sixties, there were some not-too-well-known government investments in infrastructure. The example I have in mind, which was hardening the then-regulated-monopoly AT&T Long Lines Department, the core of long-distance communications, against nuclear attack. AT&T routinely built switching and related stations to withstand natural disasters and power outages, but not to take near-miss nuclear blasts or power surges. Such hardening, however, was part of the overall national preparation for Cold War threats.
TCP/IP technology that led to the Internet, incidentally, was not intended directly as military infrastructure, but as military-funded basic research. The nuclear command and control networks built in the seventies did not use TCP/IP technology, although newer military networks such as NIPRNET, SIPRNET, and JWICS do.
Another example is the Federal Y2K project, which involved considerable government as well as industry investment. I was the network architecture consultant for the national Y2K information center, so saw the intensity of this effort. In retrospect, it was both very necessary and very well done by government and industry, with worldwide involvement.
It's a little more subtle than disrepair. Deregulation introduced different incentives and economics into an industry that had operated, when regulated, on fixed rate of return for capital investment. When deregulation came in, the economics moved from rate of return to short-term stock value.
Having rate of return as a criterion encouraged the construction of generation capability, especially at a time where interconnecting various grids was an unusual event. Deregulation caused a counterincentive to building generating capacity if power could be bought from utilities with low costs of generation, such as those significantly based on hydroelectric power.
In and of itself, buying power is not a terrible idea, as long as power through interconnection is as reliable as locally generated power. The older grid interconnection technology, using alternating current (AC), however, is not as reliable. Unless characteristics of the generated electrical waveform (i.e., frequency and phase) are matched exactly when interconnecting, dangerous surges can flow between the unsynchronized grids.
Long-distance direct current (DC) transmission and interconnection, using supervoltage lines, is a relatively recent technology. Since DC does not have frequency and phase, there is no matching problem when interconnecting DC grids. The Electric Reliability Council of Texas (ERCOT) coordinates the interconnects as one system, and has demonstrated considerable reliability compared with other regional interconnects.
AC remains completely appropriate for distribution to customers within a utility. DC cannot conveniently be changed from the high voltages preferred for generation and transmission, to the lower voltages needed for use.
Electrical interconnection is one of the most developed economic entities that treat Canada, the US, and Mexico as a single system. Without going into the detailed evolution of interconnection in North America, I'll simply note that the first really serious coordination effort resulted from the Northeast blackout of 1965, and helped mitigate the spread of the New York blackout of 1977.
The Northeast (also called Ohio Valley) Blackout of 2003, however, showed vulnerabilities in the interconnection system, affecting both Canada and the US. Again without delving too deeply into the technical aspects, which have been reported at great lengths, a key factor was that the System Control And Data Acquisition (SCADA) computer network was not fast enough, due to assorted errors, to isolate the problem areas and stop the propagation of AC surges.
As well as the industry's analysis, Homeland Security investigated this event, the largest blackout to date. While there was no suggestion of terrorism, just old equipment and computer errors, it became obvious that a small number of terrorists, who could infiltrate operations and engineering, could cause massive disruption of electrical power.
I've seen estimates of $20 to $30 billion to harden the grid, by making the interconnects DC and increasing the reliability of SCADA. Since these investments will not improve stock value, the industry has no incentive to do them.
The estimate for hardening is, coincidentally, roughly that of the bill for the Ground-Based Midcourse system for national ballistic missile defense. That system could defend against a small number of missiles, as from North Korea should they develop them, against the Pacific states and provinces. Which is a more likely threat -- ICBM attack from North Korea or China, or terrorist engineers quietly getting jobs in the electrical power industry?
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
March 27, 2007 4:41 PM | Reply | Permalink
Ellen wrote
Which implies what with respect to those student
loans they've assumed ?
March 28, 2007 6:08 AM | Reply | Permalink
Never having had the benefit of an economics course, if we have all the college graduates we need , why are we importing Science/Engineering PhDs?
It is cheap foreign labor, lack of sufficient US Science/Engineeeing PhDs, or other factors?
March 28, 2007 6:36 AM | Reply | Permalink
It depends substantially on whether the investment in education results in broad based learning. An investment in credentialing is spending money on a zero sum game, once the acquisition of the credentials requires either more or different skills or capacities than the occupation for which the credential is intended.
However, investment in raising the baseline level of literacy and numeracy of the typical "unskilled" worker could well be a factor in strengthening a nation's international competitiveness, given the US as the primary example of a high income nation that has a lower baseline investment in K-12 education than its main rivals and at the same time experiencing current account deficits in excess of 6% of GDP.
March 28, 2007 6:56 AM | Reply | Permalink
It's important to understand that the single biggest complaint the American people have re: public schools is that they do not produce an educational 'product' of sufficiently high quality. In some respects, the education industry is like any other industry. Quality products cost more because either more inputs are required or inputs are required that are relatively scarce and are therefore more costly.
In education, the number one resource that teachers require in order to produce a higher quality educational product is time. The smart kids do not require the same time investment that marginal students require in order to achieve improved results. With more time to spend on the marginal students, average test scores would improve.
How do we give teachers more of the key resource they need in order to produce a higher quality educational product? Shrink the size of classrooms. There can be little doubt that dramatic improvements would be realized if we could shrink classrooms to a ratio of maybe 10 students to every teacher. This is a basic investment that the Federal government could execute by simply providing school districts with the funds they need to hire more teachers and build more classrooms.
Economically speaking, improvements in educational quality can be achieved through investments that provide teachers with the resources (time) that they need in order to produce the results that society wants. Of course, the question then becomes who are you going to tax in order to achieve our educational goals as a society? If the wealthy want to benefit from a 'more educated' populace, then they should be willing to spend the money that will be required in order to produce the outcome they want.
Maybe that's the fairness issue Max was referring to.
March 28, 2007 7:07 AM | Reply | Permalink
Did you not just answer your own question?
BTW it is not just Ph.D. engineers that we are importing and somehow you left out medical doctors.
Now if we could just export a few lawyers and economists...
When I used to visit universities years ago in my position with an Air Force research lab, the graduate students I met were universally furriners. I would bet nothing much has changed.
Best, Terry
March 28, 2007 7:37 AM | Reply | Permalink
Something of both, as well as problems of qualified but underemployed people in the US.
First, there are relatively fewer US students going into the hard science and engineering programs. MBA programs, for example, seem to offer better financial return. One of my computer science mailing lists has been debating whether "computer science is dead", killed by commodity software. Certainly, I've noticed much less interest in the books I've written on network design, while sales rise on the cookbooks to get Microsoft and Cisco certifications.
Second, there is a complex situation about cheap foreign labor. In general, I don't think the Department of Labor really checks most H1B visa applications.
Another trend has been that US companies won't pay relocation, once a traditional corporate benefit. If a company sets up an operation where there are few people with the appropriate credentials or experience, they can say there is a shortage, and suggest there is no prevailing wage or claim it is a low one.
That company could relocate US citizens, who may not have the cash to do so. Experienced US personnel also may have higher salary expectations based on their history, although they may be unemployed or underemployed -- they still have a mortgage, college bills, etc.
It may be much cheaper to import someone that will send much of their money back home, where it is a fortune but less than real prevailing US wage. Such people often are willing to live austerely, to save the most money for what they expect is not a career, but a brief engagement for high reward.
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
March 28, 2007 7:40 AM | Reply | Permalink
Now if we could just export a few lawyers and economists...
I agree with the economists
We may need some lawyers to attend to the aftermath of BushCo.
My next economic dunce question
If we don't view homegrown Science/Engineering/Medical/Nursing degrees as important and home grown factories aren't important, all because foreign labor is cheaper both imported and overseas, what will we be spending our time doing, except playing with the stock market and buying bonds in case the market has a downturn?
March 28, 2007 7:52 AM | Reply | Permalink
Let me share my favorite conspiracy theory, with its many levels of cover plans. A good deal of gold of the Empire of Japan was never found.
At the first level of deception, it was said that the gold was used to send kamikaze pilots, who had not yet flown a mission, to become cab drivers in Boston and New York. Further investigation showed that was untrue: they had been sent to become driving instructors.
But that, too, was a cover. The real, fiendish plan of the Japanese militarists was to use the gold for the long-term utter destruction of the United States. Most of it was used for contributions to law schools and MBA programs.
Seriously, you raise a very serious questions, with many ramifications. There are many things where we should look at other than the short-term financial benefits to corporations of outsourced work.
Some, for example, are political. The State of Indiana contracted for a new unemployment computer system. Reporters then discovered that the system to pay unemployment to Indiana citizens, presumably including unemployed programmers, was going to be built in India (i.e., without the "na"). That contract was quickly cancelled.
There are security and privacy considerations for things that are not "critical infrastructure." One data entry contractor had the medical records for a large number of military dependents, which, in the US, would have the legal protections (including felonies for disclosure) of HIPAA. In a billing dispute, the contractor threatened to put the records onto the Internet. There was no way to use US law enforcement.
It's fair to say that some countries, especially in the EU, do have as stringent or more stringent privacy laws than the US. This isn't necessarily true of the lower-cost countries. Think of the implications of medical records, or your credit card back room, moving to a place where US law enforcement has no jurisdiction and the country's privacy laws are weak.
There is also the aspect of both offshoring and imported labor for critical systems, such as the electrical power grid, that are not national security sensitive. I'm not looking for a terrorist under every bed and behind every PC, but a very small number of terrorist engineers could low-bid some industrial control system software, and rig trapdoors through which they could subsequently attack them.
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
March 28, 2007 10:19 AM | Reply | Permalink
What the heck is this supposed to mean:
India's economic growth rate for the past 3 years has been over 8%. Its average growth rate since 1996 has been over 7%. Indonesia's economy retracted 13% in 1998 due to the Asian Economic Crisis and has since averaged growth of 5%. Egypt's economy grew a total of 23% from 2000 to 2005, while India's grew over 40%. Whatever the "something" is that could cause India to grow faster than Indonesia or Egypt, India seems to have done it at the beginning of the '90s, and that would appear to be abandoning anti-trade import-substitution-oriented policies for pro-trade free-enterprise ones.
Or is the question whether there is something India could do to make its economy collapse like Indonesia's in the late '90s, or grow as slowly as Egypt's? That also seems pretty easy to answer.
"All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." - I.F. Stone
March 28, 2007 7:45 PM | Reply | Permalink
Never having had the benefit of an economics course, if we have all the college graduates we need , why are we importing Science/Engineering PhDs?
It is cheap foreign labor, lack of sufficient US Science/Engineeeing PhDs, or other factors?
Anyone smart enough to get a science or engineering PhD is smart enough to realize that it's a very bad deal financially, and that they would be far better off going to medical school instead.
Why would anyone want a career that features mediocre pay, grueling hours, fierce competition (including from cheap overseas labor), and rampant age discrimination? Who wants to be washed out of the field at age 50, when you're busy raising a family and when your counterparts in medicine or law or accounting are just hitting their peak earning years? That's the current state of the IT field. Frankly, the miracle is that anyone in America thinks they can make a career out of it.
March 28, 2007 8:38 PM | Reply | Permalink
Is unrestricted growth the answer?
It strikes me that in a finite world, there may be functional limits to growth.
Ah, but that's crazy talk. Ignore me as you cut down the last tree, piss in the last stream, shit on the last shred of anything pure. I'm sure that whoever dies with the most junk will be loved in heaven.
March 28, 2007 9:03 PM | Reply | Permalink
Optimism; imagination; creativity! Let those juices flow, Valdron! I just know they're in there somewhere.
March 28, 2007 9:18 PM | Reply | Permalink
Despair, cynicism, weariness and occasional spurts of rage. These juices don't need to flow, m'dear. The less flow the better.
These days, I'll settle for the occasional bit of sardonic humour, and perhaps a bit of irony.
March 29, 2007 6:54 AM | Reply | Permalink
You may be interested in reading the work of ecological economist Herman Daly. He lays out your points in great detail. One of his first thoughts was to find a new measure of "success" instead of GDP. He and is colleagues worked on creating a measure of happiness instead. Since their work 30+ years ago several others have tried to develop the concept as well.
Here are two short essays to get you started:
Steady-State Economics
Sustainable Development
And here is one of mine on the types of changes to our present economic model that would need to take place if we were to live within the planet's means:
Planning for a Steady State Economy
--- Policies not Politics
Daily Landscape
March 29, 2007 7:21 AM | Reply | Permalink
Don't assume medicine is such a good alternative. A very substantial proportion of primary care physicians, although they love their vocation, would not recommend a career in medicine to their children, and, knowing what they do, would make that choice again.
To give some perspective, there was a letter to the editor, in the New England Journal of Medicine, demonstrating that the stress-induced heart stimulation of a pounding exercise test on a treadmill could be matched by 10 minutes' discussion of managed care. Seriously, physicians are both earning less and feeling that their best judgments are constantly challenged by unqualified people, as a result of managed care. The earnings drop, for people in private practice, come from the combination of greater administrative cost to meet the demands of the managed care process, plus decreases in compensation rates by benefits managers that use the leverage of removing providers from their networks.
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
March 29, 2007 8:05 AM | Reply | Permalink
brooksfoe
lucas wrote that in 1988, hence it sounds odd today when, as you note, india is doing awfully well relative to the other two.
josh bivens
March 29, 2007 8:07 AM | Reply | Permalink
Non economist point
1) Income of wealthy far outstripping middle class
2) Middle class jobs outsourced and workers being laid off.
3) Ex: Circuit City lays off most experienced workers. Hires new workers for lower wages. Circuit City will "allow" fired workers to be hired back at the lower wage.
Someone should write an essay.
March 29, 2007 3:24 PM | Reply | Permalink
Go into the trades; electrician, carpentry, plumbing/heating. Get a few years of field experience, save some capital, start your own business. Let the engineers fight their way to the bottom.
March 29, 2007 3:58 PM | Reply | Permalink
The economy, or the 'con-me', depending on your pronounciation, is also subject to the ethical whims and personal/collective ethics of the people empowered/charged with its' general oversight. If you have crooked or incompetent government, your economy will tend to largely benefit the deep-pockets patrons, those people who historically have no problem with buying favor with your friendly neighborhood elected officials, the basic concept of: it's not what you know, it's who you know, etc.
The basic concept of any economy is that it will give everyone with enough life in em to go forth to their daily labors, whatever they might amount to, at least a snowball's chance of supporting themselves in some recognizable fashion. To that end, there's some regulatory oversight required, so as to preclude the
genesis of things like predatory lending practices, usury, and so forth. You can't 'win' if the 'game' is rigged.
Public education is also a 'componement' of all of this, because if the public is ignorant of certain key things, they will ultimately end up being 'owned', either by slumlords, credit-card sharks, local government(which has proven itself just as dirty and crooked as Enron in previous times, do your homework on Chicago etc. there), as well as foreign economic interests who will enjoy a cold beer while reading about your neighbor's economic demise with a Big Smile on their faces. In short, globalization ain't all it's cracked up to be, and there's a lot more transparency needed to have some kind of a guarantee of at least a semi-level economic playing field for citizens(note I didn't call em 'consumers', that's on purpose). Citizens' advocacy groups that seek out fraud and corruption in the wonderful world of business
are very much part of any successful economy,
as they help to 'keep things honest', a concept and principle that has been visibly and readily abandoned in favor of higher profit margins, not just in our own country, but in other countries as well. Restoring such ethical standards in our economy is pretty important, and can also serve to set a good standard and example for other countries with similar problems.
April 1, 2007 2:06 AM | Reply | Permalink
Howard just showed how ludicrous it is to say; "We fight them over there so we don't have to fight them over here."
April 1, 2007 5:46 AM | Reply | Permalink