Offshoring, Robots, Rising Seas, and an economic stress test.

View 824, Tuesday, May 13, 2014

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

President Barack Obama, January 31, 2009

If a foreign government had imposed this system of education on the United States, we would rightfully consider it an act of war.

Glenn T. Seaborg, National Commission on Education, 1983

I opened this morning’s paper. The first thing I saw was an enormous spread on Don Sterling, with many pictures, all giving the impression of a confused elderly man under pressure from a reporter to justify his existence. He seemed at a loss. He talked about his many charitable gifts, and his efforts on behalf of NAACP, and why does everyone so hate him now. I didn’t read the rest, but looked for better news. There were two front page articles that caught my attention:

US Jobs Returning As Offshoring Ebbs.

After decades of exodus, companies returning production to the U.S.

Don Lee

In 2001, Generac Power Systems joined the wave of American companies shifting production to China. The move wiped out 400 jobs in southeast Wisconsin, but few could argue with management’s logic: Chinese companies were offering to make a key component for $100 per unit less than the cost of producing it in the U.S.

Now, however, Generac has brought manufacturing of that component back to its Whitewater plant — creating about 80 jobs in this town of about ‎14,500 people.

http://www.latimes.com/business/la-fi-returning-jobs-20140513-story.html#page=1

Note well: Four hundred jobs were exported to take advantage of cheaper labor. Years later, the market for the gizmos improved – and so had the machinery for making them. So now the widgets will be made in the United States, and eighty people will be hired to make, not the number being made when the jobs were exported, but many more to service the new and expanded market.

It is not an isolated instance. Jobs that required human labor were exported, because the labor costs were too high, and the machinery to automate the jobs had not been invented, or the capital costs of the tools to make the machinery to automate that job cost too much. Years later the automation becomes affordable, and the products are to be made here again, because fewer people with robots can make more widgets than the original workforce ever could have. This is economic progress, and we should all cheer; but we do need to give a little thought to the 320 people who used to make those widgets and are not needed. Some, perhaps many, will find other lines of work, or places in a factory that makes a competing widget – and now will face competition from their old employer who has bought robots.

Now this is the story of Creative Destruction, which is a necessary part of the capitalist process as Schumpeter has shown. It is an argument for great improvement in skill training in the schools. It will also be used as argument for long term – indeed permanent – unemployment compensation. There are (or can be) benefits to a society to have a number of people who were socialized and trained sufficiently to have been employed, and are now unemployed and have become permanent wards of the state and who owe the state some service for their living. Indeed far too little thought has been given to the kinds of public service that might be expected as a return for a pension for life (and of course whether the state is entitled to any return on those unemployment payments). And how liable is the former employer? Will this be an incentive to buy the robot in the first place so you won’t have to contribute to a lifetime living for anyone who once worked for you?

The second front page story on today’s LA Times that faced me at breakfast was that the glaciers are now past the point of no return:

Irreversible collapse of Antarctic glaciers has begun, studies say

By Scott Gold

A slow-motion and irreversible collapse of a massive cluster of glaciers in Antarctica has begun, and could cause sea levels to rise across the planet by another 4 feet within 200 years, scientists concluded in two studies released Monday.

Researchers had previously estimated that the cluster in the Amundsen Sea region of the West Antarctic Ice Sheet would last for thousands of years despite global climate change. But the new studies found that the loss is underway now as warming ocean water melts away the base of the ice shelf, and is occurring far more rapidly than scientists expected.

http://www.latimes.com/science/environment/la-sci-0513-antarctic-ice-sheet-20140513-story.html

10 Feet of Global Sea Level Rise Is Now Guaranteed

By Brian Merchant

At least 10 feet of sea level rise is now guaranteed worldwide; it’s all but inevitable, a done deal. An ice sheet two miles thick has collapsed in West Antarctica—glaciologists have been dreading this moment for decades, though in recent years, it was more of a question of when than if—and there is nothing that can stop it from melting now.

NASA scientists say so, glaciologists say so, researchers who’ve spent their entire careers studying the slow and increasingly inevitable melt of our planet’s permanent ice stores say so. They say so in two new studies debuting this week; one in Science and one in Geophysical Research Letters. They are all saying we should begin getting comfortable with sea levels that lap up 10 feet higher on our shores in a matter of decades.

http://motherboard.vice.com/read/10-feet-of-global-sea-level-rise-now-inevitable

We are hearing the same message on the radio and in the TV programs. If you live near the coast, pack your bags. It’s over, a done deal, and there is nothing to be done.

Actually I find that a more comforting message than the usual Global Warming oops Climate Change messages, which hold out a hope that we could yet be saved if we just take heroic measures to curb our carbon emissions and somehow persuade China, Africa, Europe, and Russia to do the same. And stop the Arabs from selling oil on a black market where it can be burned.

But to stop the rest of the world from burning all that coal and oil we will have to have a big military force because we will be demanding that they wreck their economies. Or we can bribe them. But in order to be a military superpower that can dictate industrial policy to the world (and police the seas for smugglers selling oil) while compensating the world with goods made in the US, we will need to expand our economy – just now and for quite a while in future we can’t afford to do that without building more oil refineries and expanding our fossil fuel energy economy.

Or maybe we need to rethink the whole situation.

When Arrhenius analyzed Global Warming back at the end of the 19^th Century, he found the temperature would rise, and that would be a Good Thing. Growing seasons would be longer, winters milder, and conditions for mankind just plain better. But that was a 19^th Century Swedish Nobel (two actually) prize winner. Few think that now.

But if the sea level rise is inevitable, is it not time to start thinking about how we can live in a warmer world? And what ought we invest our energy resources in for this new future? Surely someone ought to be looking at this.

Rather unhappy with the Times I turned to my Wall Street Journal, and on the editorial page I found

The Paradox of Financial Crises

Aggressive government intervention will lead to a stronger financial system less dependent on the taxpayer.

By Timothy Geithner

During the terrifying autumn of 2008, when I was serving as president of the Federal Reserve Bank of New York, my team was on a conference call with Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke debating whether the administration should ask Congress for stronger weapons to confront the crisis. Meg McConnell, a colleague, pressed the mute button on the speakerphone and pleaded with me to tell them that if they didn’t go to Congress now, "there will be shantytowns and soup lines across the country."

Why did she fear that? We were in the midst of a classic financial panic—similar to the bank runs in the Great Depression. But most people did not yet feel the impact of the run. The losses suffered on Wall Street seemed welcome and deserved, and of no consequence to the vast majority of Americans.

There was little memory of how panics kill economies, but the panic was already killing ours. American households lost 16% of their wealth in 2008 alone, several times as large as the losses at the start of the Great Depression, during which unemployment rose to 25% and total output fell more than 25%.

http://online.wsj.com/news/articles/SB10001424052702304885404579552430842061834

It is in fact worth reading. As an account by one who was there and more or less in charge of the government’s actions to end the crisis of 2008-2009. Of course Mr. Geithner has a new book on the subject (Stress Test; Reflections on the Financial Crisis) which he hopes you will buy, which will be an even better explication, but this is a summary of an important system of economic beliefs that pretty well run this nation.

I invite your comments on this article.

I have written before about the dangers of needlessly provoking the President of Russia.

ISS Drama

It has begun:

<.>

Russia is to deny the US future use of the International Space Station beyond 2020 and will also bar its rocket engines from launching US military satellites as it hits back at American sanctions imposed over Ukraine crisis.

Russia’s deputy Prime Minister Dmitry Rogozin announced a series of punitive measures on Tuesday against the US in response to sanctions imposed after Russia annexed Crimea.

The two countries have long cooperated closely on space exploration despite their clashes in foreign policy.

The Space Station is manned by both American and Russian crew, but the only way to reach it is by using Russia’s Soyuz spacecraft.

The US is keen to keep the $100 billion (£600) ISS flying until at least 2024, four years beyond its original target.

</>

http://www.telegraph.co.uk/news/worldnews/europe/russia/10828964/Russia-to-ban-US-from-using-Space-Station-over-Ukraine-sanctions.html

This country is so schizophrenic that I don’t even know where to begin. I’m just glad the Russians haven’t been rude about this. The original commitment was 2020; the Russians seem to be in a position to honor that commitment, but will not go beyond it under the circumstances. I don’t want our guys held hostage and the policy failures of the past two administrations have put our people in harms way, once again.

To put this in terms a 10 year old internet troll could understand, in case we need to communicate with that cohort later: "fail policy is fail".

—–

Most Respectfully,

Joshua Jordan, KSC

Percussa Resurgo

And it is now time for me to finish paying my bills and do other chores.

And I have this:

: Maher: "Who Wants To Live In A World Where The Only Right To Privacy Is In Your Head?" | Video | RealClearPolitics

How often are you and Bill Maher on the same page?

http://www.realclearpolitics.com/video/2014/05/10/maher_who_wants_to_live_in_a_world_where_the_only_right_to_privacy_is_in_your_head.html