9 ms·

The way ahead

75 points by blahi 10y ago

pdog 10y ago
> The profit motive can be a powerful force for the common good, driving businesses to create products that consumers rave about or motivating banks to lend to growing businesses. But, by itself, this will not lead to broadly shared prosperity and growth. Any proponents of free market capitalism (or libertarianism) wish to chime in on this essay?
- blahi 10y ago
  I don't think any non-radical person would be a proponent of 0 regulation capitalism. That is basically anarchism. The problem is not with radicals, they will always exist. The problem is that people in the middle are getting tripped up and supporting radical measures. The problem, and why I felt I had to submit this, is that there actually is a threat to capitalism. Things are better than ever, and at the same time people feel wronged. So wronged that Obama actually thinks that there is a real threat to capitalism and we might be at the verge of changing political and economic systems. This is very frustrating and scary. And I see no way to make people realize what they are doing.
  - amelius 10y ago
    We can always change economic systems with a dial, and turn the dial back when things turn bad.
    - eloff 10y ago
      You make it sound simple, painless. It's not. There could be decades of suffering and chaos. People would literally die. Look at Venezuela for an example.
      - amelius 10y ago
        That is an unfair comparison, because they didn't implement the change continuously.
        eloff 10y ago
        I'm not sure I agree with that, but any comparison would be unfair because all situations are different and the real world is very messy. But that's just the problem.
    - AnimalMuppet 10y ago
      No, we can't. It's Congress that's going to have to do the changing. That means each iteration of your "changing it with a dial" is going to be larded with pork, poorly-thought-through rules and regulations, general incompetence, and political grandstanding. Then it's going to be frozen in time for a year or a decade or a century, until Congress decides to tackle it again.
  - psyc 10y ago
    Do you believe the poor and lower middle class are mistaken in being discontent with table scraps and a clearly disproportionate struggle? How should they react to perpetual promises of change that never materializes for them? Assertions that prosperity is rising ring hollow to this large segment, and rightly so. "The system is working; you just can't see it."
  - badsock 10y ago
    If you're talking about the median American, and about essentials such as housing, education, medical care, and job security, I don't think you can claim that things are better than ever.
  - jnbiche 10y ago
    > Things are better than ever, and at the same time people feel wronged... And I see no way to make people realize what they are doing. This right here is why Trump has a fighting chance to win this election, much to my chagrin. So many people in wealthy East and West coast cities have no idea how much the majority of the country is suffering still. The recovery has not touched the majority of poor and lower-middle class Americans.
    - blahi 10y ago
      I am talking in terms of much longer spans of time than 5 years.
  - matt4077 10y ago
    For many, probably most, people, times aren't the best they have ever been. Part of it is inequality in the distribution of the spoils of growth in productivity. Another part is that subjective well-being isn't perfectly correlated with economic facts. Maybe it's the fact relative wealth has more psychological impact than absolute wealth. Maybe they see others struggling and are empathetic. Many middle-class people may suffer from the constant fear that the loss of a job could mean an immediate and permanent drop in social standing and quality of life. Usually, countries can react to common problems: if people are willing to forgo some income for security they can strengthen social system etc. In the US, for some reason, people with identical experiences came to two different conclusions. The left advocates for policies "kicking up" - basically redistribution from top to bottom. The right chose to "kick down", basically trying to strengthen their competition by eliminating the competition from those considered lower than them. These sides have fought each other to an almost perfect standstill, thanks to a few quirks in the constitution like first-past-the-post-voting and a three-legged legislative. As nothing happens, people get more frustrated etc. pp. rinse repeat.
- lobotryas 10y ago
  What's there to comment on? As phrased, the sentence is correct. If we want "broadly shared prosperity" then capitalism alone can't deliver because without an external influence (socially conscious leader of a private company, government regulation on wages, etc), business will always try to optimize for higher profit at almost any cost. The debate is around the words "broadly shared". How broad do we go? What level of prosperity is targeted?
- bcherny 10y ago
  To quote Milton Friedman: > “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government-- in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” (from https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton-Friedman/dp/0226264211 https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton...) Specifically addressing antitrust: > My own views about the antitrust laws have changed greatly over time. When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all, if we could get rid of them. But we do have them. > Under the circumstances, given that we do have antitrust laws, is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process, that by the time this suit is over, who knows what the shape of the industry will be. Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It's a waste! But beyond that, you will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicidal impulse of the business community. (from http://object.cato.org/sites/cato.org/files/serials/files/policy-report/1999/3/cpr399.pdf http://object.cato.org/sites/cato.org/files/serials/files/po...)
  - matt4077 10y ago
    To quote me: > Just because Milton Friedman says it, it doesn't mean it's not idiotic. Government is the embodiment of a collected conscience. And just as it would be immoral for you to watch someone suffer when you could easily help, it is unconscionable for government to remain passive when any of its subjects suffer.
- jnordwick 10y ago
  It seems to me to be an economically illiterate statement that overly conflates profit motive, capitalism, and competition. But this does come from the pen of President Obama, so my hopes aren't that high. I seriously don't see the US as having a problem with too much competition, profit motive, or capitalism. Our biggest problems are in our most highly regulated industries. And as regulation grows regulatory capture becomes a far larger problem. If anything, I think we are suffering from a terrible lack of capitalism.
  - matt4077 10y ago
    The current crisis was mostly caused by real estate and the financial industry. And while there's a lot of regulation in the financial industry, I doubt anybody argues that lehman brothers was forced into it's business by oppressive regulation. Concerning other industries, those most regulated are those that tend to natural monopolies such as energy or telecommunications. Nobody can seriously advocate for a return of the old telephony monopoly, so I'd say these industries suffer despite regulation, not because of iy.
- tbrownaw 10y ago
  From memory: "A free market is an excellent way to provide almost anything, except for a free market". People doing whatever works best for themselves can be good or bad, depending on how closely their own self-interest is aligned with the collective good.
- davidw 10y ago
  Policies that are market friendly, rather than business friendly, as proposed by Luigi Zingales here: "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" - http://amzn.to/2d6rUIi http://amzn.to/2d6rUIi I found it pretty convincing, even if I am not a libertarian.
DubiousPusher 10y ago
One of the strangest things about our work culture right now is the way it sees factory work as a more moral or honorable than service work. In history this wasn't always so. Factory jobs were first considered unskilled positions whereas many service jobs required something akin to finishing school to acquire. Now we put manufacturing jobs on a pedestal and deem them worthy of high wages whereas service jobs are lowly and what you do until you can get a real job. Unions, with all their problems uplifted those jobs in the American consciousness. And whatever your politics unions and wage controls are how almost every country in the world guarantees high incomes.
- AndrewKemendo 10y ago
  It's not really strange, if you map maslows heirarchy to a corresponding job (either the outputs or the individual worker satisfaction) then it makes sense to make these moral/honorable distinctions. The world's Basic needs are realized through industry and agriculture The worlds Psychological and Self Fulfillment needs are further up and are realized through services.
  - dragonwriter 10y ago
    IIRC, while popularly referenced and in some ways intuitively attractive to many people, Maslow's hierarchy of needs is basically speculation that has never been born out scientifically. So the fact that if one assumes it models reality, then certain observed distinctions people make about jobs are sensible doesn't actually make those distinctions sensible. (Also, psychological and self-fulfillment needs are realized through industry or agriculture [pretty much all luxury products of either kind], and a some Basic needs are realized through services.)
    - Kevin_S 10y ago
      True, but I think that the people's perception is what we are discussing here, not what is actually scientifically correct. Students are taught Maslow's hierarchy as fact, so I think it can be assumed that the perception argument is fair here.
omegaworks 10y ago
> Why have some on the far left and even more on the far right embraced a crude populism that promises a return to a past that is not possible to restore—and that, for most Americans, never existed at all? We know who he's referring to on the far right, but who on the far left? When did populism become a dirty word? >Decades of declining productivity growth What decline of productivity is he talking about? The decoupling of productivity from wages is the issue. Productivity has continued to rise while real wages have stagnated. [0] >In the past, differences in pay between corporate executives and their workers were constrained by a greater degree of social interaction between employees at all levels—at church, at their children’s schools, in civic organisations. That’s why CEOs took home about 20- to 30-times as much as their average worker. The reduction or elimination of this constraining factor is one reason why today’s CEO is now paid over 250-times more. This is a ridiculous rationalization straight out of little house on the prairie. CEO pay is out of control because our values have shifted? Because we are childless atheist heathens? Seriously? He is clearly ignoring rule shifts in the system[1] that biased us toward this outcome. >While the top 1% of households now pay more of their fair share Laughable from the president that made the Bush tax cuts permanent. [2] What reality is he living in? 0. http://www.theatlantic.com/business/archive/2015/02/why-the-gap-between-worker-pay-and-productivity-is-so-problematic/385931/ http://www.theatlantic.com/business/archive/2015/02/why-the-... 1. http://www.npr.org/sections/money/2016/02/05/465747726/-682-when-ceo-pay-exploded http://www.npr.org/sections/money/2016/02/05/465747726/-682-... 2. http://www.epi.org/blog/bush-tax-cuts-stay/ http://www.epi.org/blog/bush-tax-cuts-stay/
- lobotryas 10y ago
  On the far left? Maybe People who 'member Unions and being able to support a large family doing relatively unskilled factory work. Populism became dirty around the time nationalism (or just being proud of your country/where you were born) became dirty. Maybe it's a response to some people in the West wanting to be seen as "unique, individual thinkers" (to put it politely) instead of a part of a bigger whole.
  - omegaworks 10y ago
    > On the far left? Maybe People who 'member Unions and being able to support a large family doing relatively unskilled factory work. This seems like the wrong interpretation since later in the article he states "Unions should play a critical role." harkening back to that era where relatively unskilled labor could support a middle class lifestyle. (You say this like it's a bad thing.) Not sure how much of this article is playing the politics game and how much of it is grounded in the facts that he actually believes.
GuiA 10y ago
So, in a nutshell: 1- fewer people than before live in "extreme" poverty, this is good 2- income inequality is higher than it was, this is bad 3- productivity is lower than before, this is bad 4- joblessness is higher than before, this is bad 5- wall street has gone off the rails, but we're fixing that, this is good 6- we need to get our shit together regarding climate change With the general overarching message that Capitalism is mostly a positive force in the world. I agree with some, but take issue with some. 1: this is a fine line to walk. How do you define extreme poverty? Does moving out of a tiny farm village in rural China to work at a factory in Shenzhen count as getting out of extreme poverty, and who does it really benefit? In "Geek Heresy", Kentaro Toyama gives the example of trade in southeast Asia that historically took place via narrow waterways navigated by boats. During the dry season, these canals dry up, and productivity goes way down - but it's fine, because it's a known cycle, so people are prepared for it and get a large chunk of freed up time. When this gets replaced by roads and trucks, sure you get a 24/7 transport system, the economy etc. goes up, but now people don't get 6 months a year for festivals. In that case, that might count as getting out of poverty by western centric economic standards - but is it really a gain? 3 and 4 seem kind of inversely correlated, which is problematic if you want to optimize for both. It takes a single digit percentage of the population working in agriculture to address the food needs of an entire country, when 500 years ago it took 99% of the population. As our tools make us more productive, there is less need for individual workers. Obama's point on better benefits, community colleges, etc. all stand - but at some point we probably need to embrace the fact that in a modern society, there will probably never be enough jobs to put the entire population at work. That's something that must be dealt with, and something along the lines of basic income seems inevitable if one wants to address that problem well. He also says that "In 1979, the top 1% of American families received 7% of all after-tax income. By 2007, that share had more than doubled to 17%", but then says " Without a faster-growing economy, we will not be able to generate the wage gains people want, regardless of how we divide up the pie". The problem here seems to be more the fact that the top 1% gets more of the pie, rather than that the economy needs to grow faster. Finally, I wish 6 got more than just a small paragraph at the end. It is a Big Deal®, and the less we do, the more we will exponentially pay.
- rmah 10y ago
  With regard to #1, most definitely yes. Over the last 30 years or so, real wages for factory (inflation adjusted) workers have gone up by about 10x in China. Today, it's about $4,000 to $6,000 per year for unskilled/semi-skilled labor. Still quite low, but a HUGE improvement. 30 years ago, your typical person in china was a subsistence farmer or worked for about $500/yr (in today's money). What that meant was that they were dirt poor and under threat of famine in bad weather years. Dirt poor means no shoes for your children, no radio or TV, no bike or scooter, meat is a treat instead of a part of your daily diet. Real poverty still exists in China, but is now confined to a fraction of the population instead of being the typical lifestyle. Quite an improvement by anyone measure, IMO.
icc97 10y ago
A couple of interesting points from it: - the number of women in employment started falling for the first time since 1948 in 2000. Where as male employment had been falling for a long time, women had been growing. Shows how big the impact of the down turn was on female emplyment. - America even with Bush in charge and refusing to sign the Kyoto Protocol managed to cut carbon emissions since 2000
- akhilcacharya 10y ago
  #2 was probably because higher gas prices meant more efficient new cars. The last 16 years have also seen higher emissions and efficiency standards, as well as more electric cars and hybrids on the road than ever before.
  - matt4077 10y ago
    It's mostly energy generation that changed. Industry & transportation only contributed a fourth aas much each: https://www3.epa.gov/climatechange/ghgemissions/inventoryexplorer/#allsectors/allgas/econsect/all https://www3.epa.gov/climatechange/ghgemissions/inventoryexp...
    - neuromancer2701 10y ago
      Yeah, Almost all of the gains came from switching from coal to natural gas in power plants.
    - aries1980 10y ago
      My perception is different when I stuck behind buses in the morning jam.
evo_9 10y ago
What worries me most about reading this is the section about Capitalism and how it's the reason America is great and essentially the key to moving forward. I don't disagree that in the past this was one of the key drivers of America's success, but today, hard to see it that way. In fact, in many ways capitalism is the root problem America now faces. In theory capitalism is great until you get far enough along its timeline and your reach present-day America. In present day America we have reach Capitalisms ultimate iteration and unfortunately unfettered, fully realized Capitalism is really greed run amok. The way forward is going to require a new way of thinking about how a country like America is structured at a fundamental level and I can't help but think Capitalism is holding us back and causing more harm now than good.
- rconti 10y ago
  America hardly has fully realized or unfettered Capitalism. It has Capitalism influenced by countless tweaks, patches, regulation, and special interests. Many regulations are necessary, but that does not mean that they were all well-implemented, well-thought-out, or still necessary.
- blahi 10y ago
  So what's the solution?
- jwtadvice 10y ago
  Capitalism isn't "one thing" - it has many implementations. From the Fascists in Europe in the early half of the last century, to 'dollar diplomacy', to "neoliberalism": Capitalism and state power have interacted in many different ways and forms. Today the interaction of state power and private market competition: * suppresses young and small businesses (small, non-multinational businesses don’t increase state power) * protects and subsidizes industries with strategic value, from foreign policy protectionism (e.g. TPP) to state espionage support (e.g. BP), to huge endowments of taxpayer dollars (news media for information warfare, boeing etc for military weaponry, agriculture industry so other nations starve without America) * circumvent each others restrictions by partnering closely and trading access to private and public arenas of law
- 10y ago
davidf18 10y ago
> "The anti-immigrant, anti-Mexican, anti-Muslim and anti-refugee sentiment expressed by some Americans today echoes nativist lurches of the past—the Alien and Sedition Acts of 1798, the Know-Nothings of the mid-1800s, the anti-Asian sentiment in the late 19th and early 20th centuries..." They are mostly anti illegal immigrants. Obama has been trying to legislate the legalization of illegal immigrants. Legislation is the job of Congress. The Executive (Obama) is supposed to enforce those laws. Obama is not enforcing the laws. These illegal immigrants take jobs away from Americans. Plumbing and electricians are licensed jobs in states and they have Americans working in these jobs as a result. Carpenters and bricklayers are not licensed and as a result illegal immigrants have taken these jobs as well as driven down wage rates. Edit: Also not noted, is the growth of (legal) immigrants from about 9 million in 1970 (less than 5% of the population) to 43 million today (about 14% of the population). Add to this 11 more illegal immigrants and this increases immigrants to 54 million. Moreover, a major cause of inequality is the high cost of rent in cities such as SF, NYC, Boston, DC, LA (and also for example London) is "rent-seeking" of local laws which create artificial scarcity of housing through zoning density restrictions. This transfers income and wealth from tenants to landlords (property owners). Donald Trump holds a large position in Manhattan real estate so he benefits from these unfair laws that benefit special interests e.g., wealthy landlords. The markets can do an efficient job but parties that favored landlords getting more money for their property favor these zoning laws.
- polyfractal 10y ago
  > These illegal immigrants take jobs away from Americans. Eh, this argument gets trotted out a lot, but it isn't exactly clear-cut. The economy isn't a zero-sum game. Sure, illegal immigrants do show up and undercut some jobs. Some percentage of people will find themselves working at a lower wage, or lose their job and need to find a new one. But plenty of other people will find their business increased, higher wages, more profit, etc. All these immigrants require services and commodities too, and have to buy them from somewhere. They need to buy groceries, get hair-cuts, purchase mattresses, buy cars. Illegal or not, they contribute to the economy too. Planet Money did a good piece on the cuban migrations to Miami in the 80's. It was the perfect microcosm to study the phenomenon: many immigrants, contained geographical region, etc. http://www.npr.org/2015/10/01/444912593/when-cuban-migrants-flooded-miami-what-did-it-do-to-the-local-economy http://www.npr.org/2015/10/01/444912593/when-cuban-migrants-... Money quote at the top of the episode: SMITH: So 80,000 refugees came to Miami, and there was no effect on the economy? CARD: You couldn't detect any strong evidence of an effect one way or the other. SMITH: No effect, not on wages, not on unemployment rates. Card says this is because there is not a fixed number of jobs in an economy. When a bunch of new people come, yes, they get jobs. But they also start buying stuff, getting haircuts, going to the grocery store, which means you need more barbers and more grocers. That creates more jobs.
tekni5 10y ago
I think the last decade is a sign we are living in end stage Capitalism, perhaps it’s just the beginning and we will only see further economic stagnation, lower productivity, fewer jobs and a further increasing wealth gap. Finally there will be a series of economic failures, causing governments to make fundamental changes to the global economic system. Reassessing the parameters that define progress, productivity and advancement. I envision that a new system will no longer rely on speculative market forces, but instead go back to command style economies powered by artificial intelligence. There might even be a rise of a new monetary system, which integrates harm reduction in some form.

75 points by blahi 10y ago

pdog 10y ago

> The profit motive can be a powerful force for the common good, driving businesses to create products that consumers rave about or motivating banks to lend to growing businesses. But, by itself, this will not lead to broadly shared prosperity and growth. Any proponents of free market capitalism (or libertarianism) wish to chime in on this essay?

blahi 10y ago
I don't think any non-radical person would be a proponent of 0 regulation capitalism. That is basically anarchism. The problem is not with radicals, they will always exist. The problem is that people in the middle are getting tripped up and supporting radical measures. The problem, and why I felt I had to submit this, is that there actually is a threat to capitalism. Things are better than ever, and at the same time people feel wronged. So wronged that Obama actually thinks that there is a real threat to capitalism and we might be at the verge of changing political and economic systems. This is very frustrating and scary. And I see no way to make people realize what they are doing.
- amelius 10y ago
  We can always change economic systems with a dial, and turn the dial back when things turn bad.
  - eloff 10y ago
    You make it sound simple, painless. It's not. There could be decades of suffering and chaos. People would literally die. Look at Venezuela for an example.
    - amelius 10y ago
      That is an unfair comparison, because they didn't implement the change continuously.
      - eloff 10y ago
        I'm not sure I agree with that, but any comparison would be unfair because all situations are different and the real world is very messy. But that's just the problem.
  - AnimalMuppet 10y ago
    No, we can't. It's Congress that's going to have to do the changing. That means each iteration of your "changing it with a dial" is going to be larded with pork, poorly-thought-through rules and regulations, general incompetence, and political grandstanding. Then it's going to be frozen in time for a year or a decade or a century, until Congress decides to tackle it again.
- psyc 10y ago
  Do you believe the poor and lower middle class are mistaken in being discontent with table scraps and a clearly disproportionate struggle? How should they react to perpetual promises of change that never materializes for them? Assertions that prosperity is rising ring hollow to this large segment, and rightly so. "The system is working; you just can't see it."
- badsock 10y ago
  If you're talking about the median American, and about essentials such as housing, education, medical care, and job security, I don't think you can claim that things are better than ever.
- jnbiche 10y ago
  > Things are better than ever, and at the same time people feel wronged... And I see no way to make people realize what they are doing. This right here is why Trump has a fighting chance to win this election, much to my chagrin. So many people in wealthy East and West coast cities have no idea how much the majority of the country is suffering still. The recovery has not touched the majority of poor and lower-middle class Americans.
  - blahi 10y ago
    I am talking in terms of much longer spans of time than 5 years.
- matt4077 10y ago
  For many, probably most, people, times aren't the best they have ever been. Part of it is inequality in the distribution of the spoils of growth in productivity. Another part is that subjective well-being isn't perfectly correlated with economic facts. Maybe it's the fact relative wealth has more psychological impact than absolute wealth. Maybe they see others struggling and are empathetic. Many middle-class people may suffer from the constant fear that the loss of a job could mean an immediate and permanent drop in social standing and quality of life. Usually, countries can react to common problems: if people are willing to forgo some income for security they can strengthen social system etc. In the US, for some reason, people with identical experiences came to two different conclusions. The left advocates for policies "kicking up" - basically redistribution from top to bottom. The right chose to "kick down", basically trying to strengthen their competition by eliminating the competition from those considered lower than them. These sides have fought each other to an almost perfect standstill, thanks to a few quirks in the constitution like first-past-the-post-voting and a three-legged legislative. As nothing happens, people get more frustrated etc. pp. rinse repeat.
lobotryas 10y ago
What's there to comment on? As phrased, the sentence is correct. If we want "broadly shared prosperity" then capitalism alone can't deliver because without an external influence (socially conscious leader of a private company, government regulation on wages, etc), business will always try to optimize for higher profit at almost any cost. The debate is around the words "broadly shared". How broad do we go? What level of prosperity is targeted?
bcherny 10y ago
To quote Milton Friedman: > “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government-- in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” (from https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton-Friedman/dp/0226264211 https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton...) Specifically addressing antitrust: > My own views about the antitrust laws have changed greatly over time. When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all, if we could get rid of them. But we do have them. > Under the circumstances, given that we do have antitrust laws, is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process, that by the time this suit is over, who knows what the shape of the industry will be. Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It's a waste! But beyond that, you will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicidal impulse of the business community. (from http://object.cato.org/sites/cato.org/files/serials/files/policy-report/1999/3/cpr399.pdf http://object.cato.org/sites/cato.org/files/serials/files/po...)
- matt4077 10y ago
  To quote me: > Just because Milton Friedman says it, it doesn't mean it's not idiotic. Government is the embodiment of a collected conscience. And just as it would be immoral for you to watch someone suffer when you could easily help, it is unconscionable for government to remain passive when any of its subjects suffer.
jnordwick 10y ago
It seems to me to be an economically illiterate statement that overly conflates profit motive, capitalism, and competition. But this does come from the pen of President Obama, so my hopes aren't that high. I seriously don't see the US as having a problem with too much competition, profit motive, or capitalism. Our biggest problems are in our most highly regulated industries. And as regulation grows regulatory capture becomes a far larger problem. If anything, I think we are suffering from a terrible lack of capitalism.
- matt4077 10y ago
  The current crisis was mostly caused by real estate and the financial industry. And while there's a lot of regulation in the financial industry, I doubt anybody argues that lehman brothers was forced into it's business by oppressive regulation. Concerning other industries, those most regulated are those that tend to natural monopolies such as energy or telecommunications. Nobody can seriously advocate for a return of the old telephony monopoly, so I'd say these industries suffer despite regulation, not because of iy.
tbrownaw 10y ago
From memory: "A free market is an excellent way to provide almost anything, except for a free market". People doing whatever works best for themselves can be good or bad, depending on how closely their own self-interest is aligned with the collective good.
davidw 10y ago
Policies that are market friendly, rather than business friendly, as proposed by Luigi Zingales here: "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" - http://amzn.to/2d6rUIi http://amzn.to/2d6rUIi I found it pretty convincing, even if I am not a libertarian.

DubiousPusher 10y ago

One of the strangest things about our work culture right now is the way it sees factory work as a more moral or honorable than service work. In history this wasn't always so. Factory jobs were first considered unskilled positions whereas many service jobs required something akin to finishing school to acquire. Now we put manufacturing jobs on a pedestal and deem them worthy of high wages whereas service jobs are lowly and what you do until you can get a real job. Unions, with all their problems uplifted those jobs in the American consciousness. And whatever your politics unions and wage controls are how almost every country in the world guarantees high incomes.

AndrewKemendo 10y ago
It's not really strange, if you map maslows heirarchy to a corresponding job (either the outputs or the individual worker satisfaction) then it makes sense to make these moral/honorable distinctions. The world's Basic needs are realized through industry and agriculture The worlds Psychological and Self Fulfillment needs are further up and are realized through services.
- dragonwriter 10y ago
  IIRC, while popularly referenced and in some ways intuitively attractive to many people, Maslow's hierarchy of needs is basically speculation that has never been born out scientifically. So the fact that if one assumes it models reality, then certain observed distinctions people make about jobs are sensible doesn't actually make those distinctions sensible. (Also, psychological and self-fulfillment needs are realized through industry or agriculture [pretty much all luxury products of either kind], and a some Basic needs are realized through services.)
  - Kevin_S 10y ago
    True, but I think that the people's perception is what we are discussing here, not what is actually scientifically correct. Students are taught Maslow's hierarchy as fact, so I think it can be assumed that the perception argument is fair here.

omegaworks 10y ago

> Why have some on the far left and even more on the far right embraced a crude populism that promises a return to a past that is not possible to restore—and that, for most Americans, never existed at all? We know who he's referring to on the far right, but who on the far left? When did populism become a dirty word? >Decades of declining productivity growth What decline of productivity is he talking about? The decoupling of productivity from wages is the issue. Productivity has continued to rise while real wages have stagnated. [0] >In the past, differences in pay between corporate executives and their workers were constrained by a greater degree of social interaction between employees at all levels—at church, at their children’s schools, in civic organisations. That’s why CEOs took home about 20- to 30-times as much as their average worker. The reduction or elimination of this constraining factor is one reason why today’s CEO is now paid over 250-times more. This is a ridiculous rationalization straight out of little house on the prairie. CEO pay is out of control because our values have shifted? Because we are childless atheist heathens? Seriously? He is clearly ignoring rule shifts in the system[1] that biased us toward this outcome. >While the top 1% of households now pay more of their fair share Laughable from the president that made the Bush tax cuts permanent. [2] What reality is he living in? 0. http://www.theatlantic.com/business/archive/2015/02/why-the-gap-between-worker-pay-and-productivity-is-so-problematic/385931/ http://www.theatlantic.com/business/archive/2015/02/why-the-... 1. http://www.npr.org/sections/money/2016/02/05/465747726/-682-when-ceo-pay-exploded http://www.npr.org/sections/money/2016/02/05/465747726/-682-... 2. http://www.epi.org/blog/bush-tax-cuts-stay/ http://www.epi.org/blog/bush-tax-cuts-stay/

lobotryas 10y ago
On the far left? Maybe People who 'member Unions and being able to support a large family doing relatively unskilled factory work. Populism became dirty around the time nationalism (or just being proud of your country/where you were born) became dirty. Maybe it's a response to some people in the West wanting to be seen as "unique, individual thinkers" (to put it politely) instead of a part of a bigger whole.
- omegaworks 10y ago
  > On the far left? Maybe People who 'member Unions and being able to support a large family doing relatively unskilled factory work. This seems like the wrong interpretation since later in the article he states "Unions should play a critical role." harkening back to that era where relatively unskilled labor could support a middle class lifestyle. (You say this like it's a bad thing.) Not sure how much of this article is playing the politics game and how much of it is grounded in the facts that he actually believes.

GuiA 10y ago

So, in a nutshell: 1- fewer people than before live in "extreme" poverty, this is good 2- income inequality is higher than it was, this is bad 3- productivity is lower than before, this is bad 4- joblessness is higher than before, this is bad 5- wall street has gone off the rails, but we're fixing that, this is good 6- we need to get our shit together regarding climate change With the general overarching message that Capitalism is mostly a positive force in the world. I agree with some, but take issue with some. 1: this is a fine line to walk. How do you define extreme poverty? Does moving out of a tiny farm village in rural China to work at a factory in Shenzhen count as getting out of extreme poverty, and who does it really benefit? In "Geek Heresy", Kentaro Toyama gives the example of trade in southeast Asia that historically took place via narrow waterways navigated by boats. During the dry season, these canals dry up, and productivity goes way down - but it's fine, because it's a known cycle, so people are prepared for it and get a large chunk of freed up time. When this gets replaced by roads and trucks, sure you get a 24/7 transport system, the economy etc. goes up, but now people don't get 6 months a year for festivals. In that case, that might count as getting out of poverty by western centric economic standards - but is it really a gain? 3 and 4 seem kind of inversely correlated, which is problematic if you want to optimize for both. It takes a single digit percentage of the population working in agriculture to address the food needs of an entire country, when 500 years ago it took 99% of the population. As our tools make us more productive, there is less need for individual workers. Obama's point on better benefits, community colleges, etc. all stand - but at some point we probably need to embrace the fact that in a modern society, there will probably never be enough jobs to put the entire population at work. That's something that must be dealt with, and something along the lines of basic income seems inevitable if one wants to address that problem well. He also says that "In 1979, the top 1% of American families received 7% of all after-tax income. By 2007, that share had more than doubled to 17%", but then says " Without a faster-growing economy, we will not be able to generate the wage gains people want, regardless of how we divide up the pie". The problem here seems to be more the fact that the top 1% gets more of the pie, rather than that the economy needs to grow faster. Finally, I wish 6 got more than just a small paragraph at the end. It is a Big Deal®, and the less we do, the more we will exponentially pay.

rmah 10y ago
With regard to #1, most definitely yes. Over the last 30 years or so, real wages for factory (inflation adjusted) workers have gone up by about 10x in China. Today, it's about $4,000 to $6,000 per year for unskilled/semi-skilled labor. Still quite low, but a HUGE improvement. 30 years ago, your typical person in china was a subsistence farmer or worked for about $500/yr (in today's money). What that meant was that they were dirt poor and under threat of famine in bad weather years. Dirt poor means no shoes for your children, no radio or TV, no bike or scooter, meat is a treat instead of a part of your daily diet. Real poverty still exists in China, but is now confined to a fraction of the population instead of being the typical lifestyle. Quite an improvement by anyone measure, IMO.

icc97 10y ago

A couple of interesting points from it: - the number of women in employment started falling for the first time since 1948 in 2000. Where as male employment had been falling for a long time, women had been growing. Shows how big the impact of the down turn was on female emplyment. - America even with Bush in charge and refusing to sign the Kyoto Protocol managed to cut carbon emissions since 2000

akhilcacharya 10y ago
#2 was probably because higher gas prices meant more efficient new cars. The last 16 years have also seen higher emissions and efficiency standards, as well as more electric cars and hybrids on the road than ever before.
- matt4077 10y ago
  It's mostly energy generation that changed. Industry & transportation only contributed a fourth aas much each: https://www3.epa.gov/climatechange/ghgemissions/inventoryexplorer/#allsectors/allgas/econsect/all https://www3.epa.gov/climatechange/ghgemissions/inventoryexp...
  - neuromancer2701 10y ago
    Yeah, Almost all of the gains came from switching from coal to natural gas in power plants.
  - aries1980 10y ago
    My perception is different when I stuck behind buses in the morning jam.

evo_9 10y ago

What worries me most about reading this is the section about Capitalism and how it's the reason America is great and essentially the key to moving forward. I don't disagree that in the past this was one of the key drivers of America's success, but today, hard to see it that way. In fact, in many ways capitalism is the root problem America now faces. In theory capitalism is great until you get far enough along its timeline and your reach present-day America. In present day America we have reach Capitalisms ultimate iteration and unfortunately unfettered, fully realized Capitalism is really greed run amok. The way forward is going to require a new way of thinking about how a country like America is structured at a fundamental level and I can't help but think Capitalism is holding us back and causing more harm now than good.

rconti 10y ago
America hardly has fully realized or unfettered Capitalism. It has Capitalism influenced by countless tweaks, patches, regulation, and special interests. Many regulations are necessary, but that does not mean that they were all well-implemented, well-thought-out, or still necessary.
blahi 10y ago
So what's the solution?
jwtadvice 10y ago
Capitalism isn't "one thing" - it has many implementations. From the Fascists in Europe in the early half of the last century, to 'dollar diplomacy', to "neoliberalism": Capitalism and state power have interacted in many different ways and forms. Today the interaction of state power and private market competition: * suppresses young and small businesses (small, non-multinational businesses don’t increase state power) * protects and subsidizes industries with strategic value, from foreign policy protectionism (e.g. TPP) to state espionage support (e.g. BP), to huge endowments of taxpayer dollars (news media for information warfare, boeing etc for military weaponry, agriculture industry so other nations starve without America) * circumvent each others restrictions by partnering closely and trading access to private and public arenas of law
10y ago

davidf18 10y ago

> "The anti-immigrant, anti-Mexican, anti-Muslim and anti-refugee sentiment expressed by some Americans today echoes nativist lurches of the past—the Alien and Sedition Acts of 1798, the Know-Nothings of the mid-1800s, the anti-Asian sentiment in the late 19th and early 20th centuries..." They are mostly anti illegal immigrants. Obama has been trying to legislate the legalization of illegal immigrants. Legislation is the job of Congress. The Executive (Obama) is supposed to enforce those laws. Obama is not enforcing the laws. These illegal immigrants take jobs away from Americans. Plumbing and electricians are licensed jobs in states and they have Americans working in these jobs as a result. Carpenters and bricklayers are not licensed and as a result illegal immigrants have taken these jobs as well as driven down wage rates. Edit: Also not noted, is the growth of (legal) immigrants from about 9 million in 1970 (less than 5% of the population) to 43 million today (about 14% of the population). Add to this 11 more illegal immigrants and this increases immigrants to 54 million. Moreover, a major cause of inequality is the high cost of rent in cities such as SF, NYC, Boston, DC, LA (and also for example London) is "rent-seeking" of local laws which create artificial scarcity of housing through zoning density restrictions. This transfers income and wealth from tenants to landlords (property owners). Donald Trump holds a large position in Manhattan real estate so he benefits from these unfair laws that benefit special interests e.g., wealthy landlords. The markets can do an efficient job but parties that favored landlords getting more money for their property favor these zoning laws.

polyfractal 10y ago
> These illegal immigrants take jobs away from Americans. Eh, this argument gets trotted out a lot, but it isn't exactly clear-cut. The economy isn't a zero-sum game. Sure, illegal immigrants do show up and undercut some jobs. Some percentage of people will find themselves working at a lower wage, or lose their job and need to find a new one. But plenty of other people will find their business increased, higher wages, more profit, etc. All these immigrants require services and commodities too, and have to buy them from somewhere. They need to buy groceries, get hair-cuts, purchase mattresses, buy cars. Illegal or not, they contribute to the economy too. Planet Money did a good piece on the cuban migrations to Miami in the 80's. It was the perfect microcosm to study the phenomenon: many immigrants, contained geographical region, etc. http://www.npr.org/2015/10/01/444912593/when-cuban-migrants-flooded-miami-what-did-it-do-to-the-local-economy http://www.npr.org/2015/10/01/444912593/when-cuban-migrants-... Money quote at the top of the episode: SMITH: So 80,000 refugees came to Miami, and there was no effect on the economy? CARD: You couldn't detect any strong evidence of an effect one way or the other. SMITH: No effect, not on wages, not on unemployment rates. Card says this is because there is not a fixed number of jobs in an economy. When a bunch of new people come, yes, they get jobs. But they also start buying stuff, getting haircuts, going to the grocery store, which means you need more barbers and more grocers. That creates more jobs.

tekni5 10y ago

I think the last decade is a sign we are living in end stage Capitalism, perhaps it’s just the beginning and we will only see further economic stagnation, lower productivity, fewer jobs and a further increasing wealth gap. Finally there will be a series of economic failures, causing governments to make fundamental changes to the global economic system. Reassessing the parameters that define progress, productivity and advancement. I envision that a new system will no longer rely on speculative market forces, but instead go back to command style economies powered by artificial intelligence. There might even be a rise of a new monetary system, which integrates harm reduction in some form.