Economic Recovery, Economic Miracle, and Colonialism

View 809 Tuesday, February 04, 2014

 

“Transparency and the rule of law will be the touchstones of this presidency.”

President Barack Obama, January 31, 2009

The locusts have returned and we still do not have our heating system fixed, although yesterday we did get the heat turned back on in one room. Not having internal heat in California is not the disaster it is for those in the Northeast and Midwest. The coldest nights only require another set of covers or another dog on the bed. But it is annoying, and to make things more annoying I seem to be having an energy-consuming relapse, complete with more aches and pains and chills; I am trying to ignore all that.

Meanwhile, I have this:

The Exhausted US Economy, and a Lesson for Republicans

Jerry

In a piece on The Exhausted US Economy, and a Lesson for Republicans, Spengler says, “We no longer have high-tech companies: we have instead aging monopolies run by patent lawyers:”

The Exhausted U.S. Economy, and a Lesson for Republicans

http://pjmedia.com/spengler/2014/02/04/the-exhausted-us-economy-and-a-lesson-for-republicans/

In highlighting “The problem now is obstacles to investment: the highest corporate tax rate in the world, onerous regulation, the crazy quilt uncertainty of Obamacare” he seems to be echoing you.

The whole piece is worth reading.

Ed

I have always thought The Great Recession was far from over, and thus I agree with most of his conclusions, including the Republican strategy advice. When more people left the work force than jobs were created, it did not seem to me much of a recovery. And, as I keep insisting, the abysmal state of the American education system is doing nothing to help long term problems. The only engine we have for creating new jobs is small business, but new regulations make it harder and harder to start a small business.

My remedy would be that of General Lucius Dubignon Clay, our proconsul in Germany after World War II when he allowed Erhard to go on the air and proclaim the end of economic regulations and virtually an unrestrained capitalistic market economy. The result was the German Economic Miracle, which was so successful that even after its termination – the German economy is certainly regulated now – West Germany, although bombed flat in the war (a bit worse than a Recession) grew so rapidly that she was able to absorb the economically failed Eastern Germany after the USSR collapsed and Germany was allowed to unify.

Failing that – politically I don’t suppose it’s possible, although if things get bad enough it may yet happen under martial law – I have long suggested doubling the exception numbers: that is, regulation that apply to all employers of more than ten will not apply until there are twenty, fifty (when Obamacare becomes mandatory) becomes 100, etc. This will not free the engines of freedom, but it will give them a chance to operate better than they do now. Coupled with the rise of the new technology, new industries will arise. Capital is easy to come by just now: the problem is what to do with it. At the moment it is absorbed by institutions like the universities, who raise their prices to capture the increased resources thrown at them, and of course by government.

Long ago Possony and I, working on The Strategy of Progress, concluded that the natural course of government is bureaucracy, and the natural course of bureaucracy it so convert its output into structure, until there is so much structure that change is nearly impossible. Sometimes events happen so fast that the Bureaucracy can’t keep up. The New World is discovered, and there is a flood of new capital. There is a rapid rise in productivity, and for a while there is freedom. Eventually the bureaucracy catches up, regulations are crafted, and the structure grows again. Comes the Industrial Revolution there is another period of freedom and productivity. Of course each of these produces a new ruling class; these events correspond to Pareto’s “circulation of elites”.

The Computer Revolution with Moore’s Law produced that brief period of freedom again, but it is getting to be well under control now. I confess I once saw the small computer as The Great Equalizer, giving power to the competent, and to some extent it does; but the structure is growing again. We escaped Net Neutrality but the regulations creep forward.

Between Obamacare and the nationalization of student debt the entire middle class has been subjected to rarely escaped bondage; that that trend will continue. There are ways to escape, but the best way would be through an economic miracle. Alas, few in the establishment want such a revolution. If you were among the rulers, would you?

For more on The Strategy of Progress, see http://www.jerrypournelle.com/view/2011/Q1/view662.html#progress; there is also “How to make a weak economy worse http://www.jerrypournelle.com/view/2010/Q1/view608.html. And there’s http://www.jerrypournelle.com/view/2010/Q1/view611.html#Wednesday.

Finally, if you’re still curious, there is http://www.jerrypournelle.com/archives2/archives2view/view432.html#Iron which looks at another example.

I am sure this was recommended to me but I seem to have lost the message. It is well thought out, and a good statement from one of the descendants of colonialism.

The myth of Neo-colonialism

By Tunde Obadina

http://www.afbis.com/analysis/neo-colonialism.html#top

His conclusion seems irrefutable on both logical and empirical grounds: the existence of Western Civilization will always, by its nature, have a devastating impact on African traditional civilization, in ways that the coming of Islam never did. Those who do not understand this are doomed. And of course Marx saw this a long time ago.

Aviation pioneer in Africa

As former member of the aviation industry, you’ll certainly appreciate the sheer genius of this guy.

http://www.youtube.com/watch?v=SVqQKF7xgTQ&feature=youtu.be

Guaranteed to bring a smile. Certainly gives one a new appreciation of Obama’s Kenyan heritage.

Cordially,

John

I found this informative. Thank you.

 

Economics by the Shovelful (Comment on a message at the bottom of last night’s mail)

The high school economics exercise mentioned by Karl (a different Karl) has an easy solution on the surface. It may be harder to convince people to implement because the apparent costs are so low.

Person A can shovel 10% faster than person B. (Does 1.1 jobs in the time it takes person B to do 1 job.)

Shovel 1 can move 10% more stuff than shovel 2. (Moves 1.1 times the amount of material per shoveling than shovel 2.)

If we give person A shovel 1, he produces at the rate of 1.1 X 1.1 = 1.21 jobs per unit time.

Person B has shovel 2, producing 1 X 1 = 1 job per unit time.

Total number of jobs per unit time = 2.21.

Now we switch shovels.

Person A has shovel 2 and does 1.1 X 1 = 1.1 jobs per unit time.

Person B has shovel 1 and does 1 X 1.1 = 1.1 job per unit time.

Total number of jobs per unit time = 2.2

(This ignores interaction effects between person and shovel, along with a host of possible real-world effects on productivity.)

If productivity is the goal, we give the better shovel to the better worker.

If fairness is the goal, we switch the shovels.

Now the difference is tiny: 10/12 of a percent. With a difference this small, we can usually afford to be fair. In most cases, it gets lost in the noise, and we can say, to a good approximation, there is no cost to being fair.

However, over the long run*, or in cases where the difference between the best and the worst is larger**, it can wind up costing us a great deal, and we might never spot it if we’ve convinced ourselves not to look anymore.

* If productivity is somehow compounded, at the end of 100 time periods, the more productive arrangement will have out-produced the less productive one by a 130%

** If we bump the numbers up to where A is 50% faster and shovel 1 is 50% better, the difference in productivity increases tenfold.

………………..Karl

Thank you for the more complete analysis.

And that should be enough for the day.

Freedom is not free. Free men are not equal. Equal men are not free.