Sable down a bit; Condolezza Rice; and we need to make bigger pies

View 732 Friday, July 13, 2012

Sable wouldn’t eat her breakfast this morning. That’s alarming. Breakfast is her most important meal, and she has a ritual of eating it fast so she can beg PetTab vitamins and anything else she can get while we eat breakfast and read the morning papers. This morning she just wanted water.

Then she heard her friend the pool man and got up the energy to go outside, but she still didn’t eat, and we found what has to be the cause: during the night she seems to have found a number of tomatoes and managed to eat them after which she threw them up. Then she drank water and vomited that. And did that again. Clearly time for the vet. By the time we got to the vet she had done more drinking water and vomiting and had perked up a bit but she still passed her uneaten breakfast on the way out the door.

Bottom line she’s been left at the vet. It’s likely the tomatoes and her drinking a purging has probably taken care of much of it but she’ll spend the day there, leaving us worried as you’d imagine so don’t expect any sense from me today. We hope to pick her up this afternoon and get back to normal. And store the tomatoes in the refrigerator in future. But for now we worry.

The rumors are flying about Condoleezza Rice as a possible VP candidate with Romney. The rumor began with Drudge. Juan Williams loves the idea. Surprisingly, Sarah Palin says Ms. Rice would be a wonderful candidate. Others worry about her position on abortion, which appears to be mildly “pro choice” but is never anything she really wants to discuss.

She certainly has experience, and her foreign policy views tend to moderation, and to the conservation of American power. She comes from Stanford which has a number of liberal professors, but she’s a fellow of the Hoover Institution which was an intellectual power center for cold warriors – Possony and Richard Allen were both Hoover Fellows. It isn’t easy to characterize her. She gets along with the Republican establishment but she certainly can’t be said to be an Establishment Republican. She learned her policy trade during the Cold War but she wasn’t really a Cold Warrior.

All of which is probably not really important. Actually I would be astonished if she could be induced to leave her academic security for the political maelstrom with all the journalistic focus on every possible interpretation of every discoverable statement or action in her personal life, from her failed engagement in the seventies to her statements about abortion. She is clearly concerned about the country, and clearly feels it a duty to do what she can to assist the Republican cause; which says a lot about her opinion of the Obama Administration. I think she prefers academic life out of the spotlight, and her recent political activities show an unusual motivation; that should be significant to thoughtful people.

I don’t believe she is seriously considering running for Vice President. I do believe she will support whomever is chosen to be a candidate.

I see that academics but not politicians are beginning to notice that there are fewer workers every year, and more and more people living off entitlements. Fewer children are being born. That means that in future years more and more entitled people will live off the production of fewer and fewer workers.

This limits political alternatives. Austerity – cut entitlements, cut spending. Deficits, but the trend lines are toward more entitled vs. fewer workers, meaning a very unattractive environment to loan into. Revenue enhancement, which is more taxes, which generally lowers productivity and investment and more and more capital becoming annuities for rentier classes – unproductive rich.

There is an alternative, and everyone pays lip service to it, but few seem to take it seriously. That is: it is much easier to divide a large pie than a small one. Increase productivity, preferably by orders of magnitude. Charlie Sheffield and I gave a bit of a vision of that in HIGHER EDUCATION. Of course to divide a pie you must make a pie, and if your notion of productivity is ever more complex financial derivatives and every faster ways to move money in circles, there may come a time when people who actually make something will decide they don’t need your ‘service’ economy. For someone to have a house to live in, someone must have built that house – or at least have made the steel for a prefab. For people to eat bread, someone must grow, harvest, ship, and process grain, and someone else must bake that into bread. If the baker discovers he doesn’t need or can’t afford your financial services, you may have some problems.

I note that much productive machinery is for sale used in America, cheap. And China now makes 46% of the world’s steel. The US manufactures 6%. Contemplate those percentages in the earlier days of Communism and Capitalism.  It wasn’t all that long ago that Stalin hoped to bring Russia’s steel production up toward America’s. He chose central planning as the means to get that. The Five Year Plans would do the job.

America now seems to have adopted the Soviet system of central regulation, and while our productivity per worker is high, we aren’t so big in the world economy as we used to be. In 1950 about 10% of Americans worked in manufacturing, mining, and logging. Now it’s about 4%. Those 4% are highly productive per worker – but there are many unemployed workers, and there is a great deal of idle productivity machinery for sale in the used markets. Some try to take advantage of that but the regulatory environment isn’t what it was in 1950. It takes not only capital but non-productive compliance officers to start a manufacturing business, and the business must be able not only to pay its real expenses but also for non-productive people required by regulations. The result is that many prefer to invest their money elsewhere. In South East Asia, or in China.

Just some things to think about.

We know how to create employment and productivity. We knew that in 1950. It wasn’t five year plans. And if we had any doubts, we could observe the German Economic Miracle.

All right, we won’t try the German Economic Miracle of simply ignoring the regulations and encouraging people to hire anyone willing to work and go make money. Could we at least try increasing the small business exemptions? It would take about a week for Congress to say that in all federal regulations, exemptions that now apply to businesses with x or fewer employees now apply to businesses with x + y% employees. I’d make y 100%, which is to say the exemption is now 2x: if you are exempt from a regulation by dint of having 10 or fewer employees, it is now 20 or fewer; if 40 it is now 80; if 50 it is now 100. And so forth. Easy to understand, no complicated language needed – and it would result in a lot of companies buying some of that used manufacturing equipment and hiring people to use it; it would result in making a bigger pie. Perhaps it would result in less need for regulators, but most of them are aging and will be pensioned soon enough anyway.

And we’d have a bigger pie.

I don’t expect anyone to pay attention to this. But I have never heard a good argument against it.