Monday, August 22, 2011

A Letter to Sam Harris on the Economy

Dear Mr. Harris-

You have requested that economists in particular contact you in regard to the 08-19-11 Addendum to your blog post "How Rich is Too Rich?"  I am not an economist, but I follow economics very closely.  I'm an engineer by degree and run a construction company, so it is perhaps in my nature, as well as required of my position, to know what's happening in the world, economically.  I hope you will take a few minutes to think about my take on your ideas, however, because admittedly this is long, I will not be surprised or disheartened if you do not.

First, I will assess your first idea:

Future breakthroughs in technology (e.g. robotics, nanotech) could eliminate millions of jobs very quickly, creating a serious problem of unemployment.

In a very broad sense, I think that the creation of a massive robotics industry causing large scale unemployment would perhaps be akin to the fear once upon a time that the rise of the automobile industry would have caused large-scale unemployment due to their replacing horse-drawn carriages.  To shamelessly steal from DeVito's speech in Other People's Money, there was once a company that made the world's best buggy whips, whose employees surely found themselves eventually unemployed due to the rise of the automobile.  But as those people lost their jobs due to the rise of an industry that made their profession nearly obsolete, so too did a new industry arise whose ability to employ massive numbers far surpassed the ability to employ of carriage-makers, horse farmers and buggy whip makers combined.  In the aggregate, employment rose.

Will robotics eliminate jobs?  Of course, it has already eliminated thousands upon thousands of jobs, from the automobile industry to the airplane manufacturing industry to the construction even of submarines.  Many welds on the newest submarines, for instance, require accuracy that only robotics can achieve.  This means that welders that worked on submarines are out of that particular work.  But they are still welders.  They just need to weld elsewhere.  Perhaps they might even go to work for the company that is manufacturing the robots.

If we look to the future of robotics, the scenario that kills millions and millions of jobs is the perhaps Asimov's Foundation series scenario, or more recently, the scenario in the movie, Surrogates, where robots become so commonplace, there is nearly one robot, or more, for every human being.

But who makes the robots?  Surely for the smaller components and the excessively detailed work, there are other robots.  But there are still going to be assembly line jobs.  There are going to be jobs for the people who need to supply the materials, all the way back to the original mines they came from.  Robots won't do everything.  All along the way there will need to be people to do the work.  Perhaps this is best explained easily in Leonard Read's pamphlet, "I, Pencil."  If the industry grows to such a magnitude as you suggest, then yes, surely it will create massive unemployment in other currently existing industries, but it will create massive employment in a new, growing industry.  Such is the nature of capitalism and economic progression.

But many of your readers responding to you have already covered this basic idea, and you are looking for something more.

I am suggesting, however, that there is nothing that rules out the possibility of vastly more powerful technologies creating a net loss of available jobs and concentrating wealth to an unprecedented degree.

To this I would suggest that there is and always has been this possibility, however the missing piece of the equation is necessarily the rate of population growth.  It did not used to be uncommon for families to have 4, 6, 8 or even 10 or 12 kids.  When our economy was largely driven by agrarian life, it was economically necessary for a family to have as many workers as possible to work the farm.  Given the rise of mechanical farming equipment, the farm family has gotten smaller over the years.  In the early-to-mid 20th century boom in manufacturing, we saw our population skyrocket as we had an economy that we were comfortable still having several children per family, as factory workers would have assumed that their kids could eventually go to work in the factory, if nothing else.  I would suggest to you that as many manufacturing jobs have moved overseas, families have trended to get smaller as a response, with families focusing on grooming their children for white collar work, whether as engineers, academics, or businessmen.

The moving of blue collar manufacturing positions overseas has also been a response to the market.  Union contracts in the United States grew to the point that the manufacturing of goods locally has in large part become untenable.  I would put this largely on the unsustainable nature of a pension model for retirement, moreso than the wage rates themselves, but this is another topic altogether.  So if we are talking about a "serious problem of unemployment" I assume we are talking about it locally in the United States, because technically speaking, the jobs haven't disappeared, they have gone elsewhere, where the labor can be had for significantly less money.

I make this point because, if we were to see such a significant rise in robotics, it would be not only because the manufacture, sale and maintenance of the robots was that much cheaper than American labor, but also that much cheaper than rock-bottom foreign labor.  Looking at it macro-economically, taking the world market as a whole, and taking employment to be a worldwide phenomenon, because it is a worldwide phenomenon, I feel the possibility of a rise in robotics to replace employment of human labor to such an extent that all levels of human employment are made economically obsolete to be something that is probably a few hundred years down the line, should it ever happen.  There's an entire world's worth of cheap labor to exploit before a saturation of robotics seems likely to even begin to take place.

Now, on to your next idea:

The federal government should levy a one-time wealth tax (perhaps 10 percent for estates above $10 million, rising to 50 percent for estates above $1 billion) and use these assets to fund an infrastructure bank.

You do, strangely, caveat this by ultimately saying "Leaving aside fears of government ineptitude, please tell me why it would be a bad idea for the rich to fund such a bank voluntarily."

Let me first point out that these are two wildly different things.  The federal government descending upon the rich and absconding with 10-50% of everything they own from behind the barrel of a gun is not the same thing as our country's 400-something billionaires voluntarily pooling their money together to charter a new bank that would be used to fund infrastructure projects.  To insinuate anything of the kind is disingenuous.

The latter would most certainly not be a bad thing, though let's remember that the structure of such an entity would be as a bank, loaning money out to municipalities and states and the federal government to fund infrastructure projects.  This money would have to be paid back with interest, and that this is really not any different than how this already happens, except for the fact that this bank would be something like another Federal Reserve style central bank dedicated solely to infrastructure, though, I would assume and hope, not allowed to print money.  To that effect, I guess I don't really understand the point of it, other than that it's an accounting trick to move debt out of treasuries and into another entity.  The debt still grows, only it doesn't affect the country's balance sheet.  At some point it becomes another Fannie/Freddie-type of entity, with so much debt that it doesn't even know how much of it is even good anymore.

This is to say nothing of the point, also, that if the super-rich are the ones funding this bank, they are getting even richer because of it, thereby increasing the wealth gap you are hoping to close.

If you have taken the time to read through all of this, thank you.

Paul Kroenke

Thursday, August 18, 2011

I Do Not Think It Means What You Think It Means

Gateway Pundit finds a story so absurd you know a Democrat has to be at the center of it.

Democrat Representative Michael Sturla has made the ludicrous claim that fracking causes the spread of STD's "amongst the womenfolk."

While it's refreshing to see that someone has picked up John Murtha's mantle of severely bigoted Pennsylvania Democrat, perhaps even more refreshing is Sturla's response to criticism of his bigotry.

“This is in the heart of the drilling area” said Sturla, as he read from the report.  “Other issues: an increase in sexually transmitted diseases.  One of the recommendations: increased Department of Health availability of services related to STDs and substance abuse.” 
“I don’t make this stuff up,” said Sturla.  “Should we not have drilling in the state because of that?  No, but it’s one of those impacts that we need to deal with.  In the Marcellus Shale Commission report, it says we should deal with it.”
Bigoted Comedy Gold.

Oh, and as an added bonus, (based on Ed Schultz's criteria) he's a racist!
“It’s just you can’t whitewash it and say it doesn’t exist,” said Sturla.
Fracking?  Drilling?

Tuesday, August 16, 2011

Ron Paul is The One

Great timing on this video as a response to his being deemed the "13th floor of a hotel" by the media in general.

Brett Baier at Fox News may be rolling his eyes and smirking away in neocon hell, but there are plenty of people who recognize Ron Paul as The One.

Fair (and unbalanced) to Say

John Stewart on the media's continuing ludicrous blackout on any coverage related to Ron Paul.

What can we really say? For someone who has forced himself to the forefront of the national debate since the primaries four years ago, the media still treats him like a crazy person. Here is a man whose ideas have driven the groundswell of libertarianism in America, who other candidates are taking seriously this time (they treated him with the media's same level of derision last time, openly laughing at his responses on stage and never debating him), and even Fox News, the guys that are supposedly the leaders of the Vast Right Wing Conspiracy are acting as if he's irrelevant.

It occurs to me that Michele Bachmann has been something of an economic understudy of Ron Paul's over the past four years.  I wonder if, as Mike Huckabee joined forces with John McCain last time around to freeze Romney out of the primaries in the south, perhaps Bachmann (because let's face it, she can't and won't win) has been handpicked to pull libertarian minded social conservatives away from the Ron Paul camp so that the likes of Romney and Perry can battle it out without having to worry about debating Paul on actual ideas.

Monday, August 15, 2011

A Would-Be Nobel Laureate

That's what I am.  If only someone would nominate me for my prescience.  Two-and-a-half years ago I wrote the following:
Why is it that these people think that if they do the exact same things wrong, only bigger and bigger, somehow in the end it will ever turn out right? 
After a world-wide house of cards collapses, what will they do then? 
Their only hope for another 30 years down the road will be to have imperialized space to the same extent as they have this planet, so they can ruin economies at a universal level as well!
Now, Nobel Prize Winner in Economics and "economic journalist" for the New York Times Paul Krugman has jumped on my bandwagon of crazy.

Ladies and gentleman, stand in awe of the intellect of a Nobel Laureate!

Wednesday, August 10, 2011

Rick Perry and Federalism

I love  Very often they do some of the best libertarian-based analysis of any issues that are offered around the intertubes.  Today, however, Jacob Sullum strides to the plate with the confidence of Casey at the bat, and like Casey, screws himself into the ground with a huge swing and a miss at Rick Perry.   

I was much more offended by the alacrity with which Perry, who is expected to announce his candidacy for the Republican presidential nomination next Saturday, abandoned his avowed federalist principles to embrace the legislative agenda of the Christian right. It took less than a week.

"Our friends in New York," Perry told GOP donors in Aspen on July 22, "passed a statute that said marriage can be between two people of the same sex. And you know what? That's New York, and that's their business, and that's fine with me. That is their call. If you believe in the 10th Amendment, stay out of their business."

It soon became clear that Perry, who wrote a book championing federalism, does not really believe in the 10th Amendment. In a July 28 interview, he assured Tony Perkins, president of the Family Research Council, that he supports amending the Constitution to declare that "marriage in the United States shall consist only of the union of a man and a woman." So much for letting states define marriage as they see fit.

Perry did a similar about-face on abortion. On July 27 he told reporters in Houston he favors overturning Roe v. Wade, which would leave states free to set their own policies in this area. "You either have to believe in the 10th Amendment or you don't," he said. "You can't believe in the 10th Amendment for a few issues and then [for] something that doesn't suit you say, 'We'd rather not have states decide that.'"
Two days later, Perry's spokeswoman told The Houston Chronicle he "would support amending the U.S. Constitution…to protect innocent life." Most versions of the Human Life Amendment would ban abortion throughout the country, even in states that want to keep it legal.

On its face, this seems like an anti-federalist about face, but really, it's federalism at its core.  How can mandating this or that at the federal level be federalist, you ask?  The answer is simple.  Amendments to the constitution are not fly-by-night mandates on the people a-la Obamacare's mandate that we all buy health insurance or face stiff fines.  Amendments to the Constitution represent one of the most federalist processes we have to govern ourselves.

First, an amendment must be introduced in Congress, go through the rigorous process of debate and revision and whatnot, and then be passed by a 2/3 majority in both the House and the Senate.  After this happens, the amendment is then sent to the states to be voted on, where it must be approved by 3/4 of all of the states to be added in as part of the Constitution.

This is not some top-down, anti-federalist ignoring of the 10th amendment to further ones agenda.  This is the process by which a massive, massive majority of the country decide that we are going to fundamentally change the laws under which we live.

In supporting amendments to the constitution, Perry is indeed supporting the federalist process.  While his support of an amendment like the Human Life Amendment, which limits the freedom of people anywhere to have an abortion, even in states that wish to keep it legal, would appear to be anti 10th amendment, it's not really anti 10th amendment if the massive majority of all the states, and thereby the people, voted to change our laws in this manner.  The point of federalism is for states to decide what is best for themselves.  Amending the constitution would be a case of all of the states deciding for themselves.

I take Sullum's point to heart, even though his argument is technically incorrect.  I like Rick Perry for his economics.  I don't particularly like Rick Perry's social politics.  I don't think it's any government's place, local, state or federal, to have any place in deciding who can marry whom.  Nor is it any government's place to decide whether or not a woman should be able to decide whether or not to have a baby, or whether or not we should be mandated to pay for birth control or abortions for that matter.  These are places where no matter the opinion on the issue, government just needs to take its nose out of our personal business and let us live as we will.

However I see this for what it actually is: Rick Perry playing to his evangelical base during the primaries.  A candidate needs the base in the primaries.  Neither of those amendments will ever see the floor of Congress, much less be passed by 2/3 majorities in both houses, and you can forget 3/4 of the states ever ratifying.  Come the general election, Perry will be dancing on the head of a pin to articulate the reasons why his positions are indeed not anti-federalist, but if he speaks the plain truth, that amendments are a federalist process, he should get through to the likes of Jacob Sullum.

We don't have to enjoy or even agree with Perry's social politics.  But let's not intimate the man is a power-hungry emperor-in-waiting when that is clearly not the case.