14 September 2011

Jobs and The Great Doubling

This week's Economist has a (ultimately somewhat disappointing) special report on the future of jobs.  It includes the figure above which is really provocative -- the world has added 800 million jobs over the past 20 years.  That is a lot,  of course, but the world (or more accurately, large parts of it) is presently seeing high rates of unemployment.

I thought that it would be useful to compare the growth in jobs to the growth in global GDP over the same period and here is that data:
The data shows that using either MER or PPP global GDP data, growth in the global economy has far outstripped the growth in jobs by a large amount.  This indicates that at the global level, the world economy has become far more productive at generating wealth and the make up of the global economy has shifted to less job-intensive wealth generation. While both of these factors have strong positives (increasing global wealth foremost among them) they have also had the effect of leaving some people behind.

In an important essay, Harvard labor economist Richard B. Freeman explains trends in employment in recent decades as the "great doubling," a reference to the doubling of the global workforce in the 1990s.  He writes (here in PDF):
What impact might the doubling of the global workforce have on workers? To answer this question, imagine what would happen if through some cloning experiment a mad economist doubled the size of the U.S. workforce. Twice as many workers would seek employment from the same businesses. You do not need an economics Ph.D. to see that this would be good for employers but terrible for workers. Wages would fall. Unemployment would rise. But if the nation’s capital stock doubled at the same time, demand for labor would rise commensurately, and workers would maintain their economic position. In the simplest economic analysis, the impact of China, India, and the former Soviet bloc joining the global economy depends on how their entry affects the ratio of capital to labor in the world. This in turn depends on how much capital they brought with them when they entered the global system. Over the long run, it depends on their rates of savings and future capital formation.
He backs up this analysis with the following data (graph from here in PDF) that shows the ratio of capital to labor before and after the "great doubling":
 Freeman explains:
[I]t will take about three decades to restore the global capital/ labor ratio to what it had been before China, India, and the former Soviet bloc entered the world economy, and even longer to bring it to where it might have been absent their entry. For the foreseeable future the United States and other countries will have to adjust to a relative shortfall of capital per worker and to the power this gives to firms in bargaining with workers. This will affect workers in different parts of the world differently.
For the United States and other "advanced countries" Freeman explains that the new context means that a competitive advantage in skilled labor is no longer assured:
The model that economists use to analyze trading patterns between advanced countries and developing countries assumes that the advanced countries have highly educated workers who enable them to monopolize cutting-edge innovative sectors while the developing countries lack the technology and skilled workforce to produce anything beyond lower-tech products. In this model, American workers benefit from the monopoly the United States has in the newest high-tech innovations. The greater the rate of technological advance and the slower the spread of new technology to low-wage countries, the higher paid are U.S. workers compared with workers in the developing countries.

But the spread of higher education and modem technology to low-wage countries can reduce advanced countries’ comparative advantage in high-tech products and adversely affect workers in the advanced countries. In 2004, when many engineers and computer specialists were troubled by the offshore transfer of skilled work,

Paul Samuelson reminded economists that a country with a comparative advantage in a sector can suffer economic loss when another country competes successfully in that sector. The new competitor increases supplies, and this reduces the price of those goods on world markets and the income of the original exporter. Workers have to shift to less desirable sectors—those with lower chance for productivity growth, with fewer good jobs, and so on. Some trade specialists reacted negatively to Samuelson’s reminder. What he said was well-known to them but irrelevant. In the real world it would never happen.

Samuelson is right, and his critics are wrong. The assumption that only advanced countries have the educated workforce necessary for innovation and production of high-tech products is no longer true.
And this returns us back to the issue of what constitutes an "educated workforce" and hints at the role of the workforce in innovation and competition. In his piece, Freeman falls back on the well worn call for more scientists, engineers and basic research from US universities. It is my view that conventional call for more science and engineering this is not enough (indeed, Juan Lucena documents how calls for more science and engineering education have been the received solution to every major national problem since at least Sputnik).

As this post is getting on in length, I will return to Freeman's essay in a subsequent post, and critique his good and bad scenarios.

29 comments:

  1. The other important factor is the role played by advances in information and communication technologies:

    These are finally beginning to increase the amount of production that can be managed by a relatively unskilled 'worker'. The net effect is that fewer workers (skilled and unskilled) are needed to satisfy the demands of the marketplace. But this lowers the ability of the underemployed to participate in the marketplace – and things get worse for both individuals and the economy.

    Perhaps the only solution is a decreasing work-week and corporate taxation increases to 'almost' cancel the technological increases in productivity; with the taxes distributed to the 'workers' as a new kind of welfare?

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  2. I understand Freeman's argument and agree with the basic notion. However, the actual mechanisms associated with the creation of new jobs is a gross over-simplification which Freeman has elsewhere acknowledged. Labor and capital are not fungible in anything like the time needed to address some major disruption in the business cycle. Increasing "capital" desperately needs to be operationlized in meaningful and concrete terms. This is, IMHO, the fundamental flaw in Keynesian and most macroeconomic viewpoints. It leads to really silly policy ideas that politicians of all stripes love like the equivalent of breaking windows to increase effective demand, reducing the length of work weeks, government retraining programs and, of course, ideas akin to the really, really stupid notion of central planning. We live in a global and competitive economy: inflation and inefficiencies spell death to many US industries. Ideas like rebuilding schools and infrastructure are akin to the drunk looking for his keys under the lamp post: these options are advocated because the policy makers are totally disconnected from the real economy, are captive of a few very large government contractors and unions and cannot think of anything else. The current administration's previous and current efforts to stimulate the economy are perfect examples: They are magic wand solutions that will not work except to create inflation and massive inefficiencies and waste. You need to balance manipulations of monetary and fiscal levers with enabling entrepreneurs to find and pursue genuine and sustainable sources of profit through the more efficient production of existing goods and services and the introduction of new goods and services that are not simply more expensive substitues for existing goods and services.

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  3. I am not an economic theorist at all but people tend to look at manufacturing and products from the standpoint of current or past experiences. Go to any electronics store and tell me how many of the items in the store you wanted 20 years ago. Look at the way houses are built. The average size 40 years ago was much smaller than today, even if you consider today's houses a bit large. Then there are products that come and go, records, tapes, CD's, MP3's and cloud storarge for music. Video has followed the same trends. And 100 years ago, personal photographs were not available, companies built up to where they were prosperous for several decades and now with digital tech, they are struggling. And how will vehicles change as the push to efficiency improves? My point is in 20 years we'll all have to have something that has not even been dreamed up today and the type of car we drive or home we live in will likely be very different and companies will come and go to meet our needs. I also predict that the items we buy will be taylored more to our personal needs, a lover intensive endeavor that's not easiliy outsourced. Perhaps the thing that's obsolete is our belief in stable employment with the same company all our lives doing essentially the same thing. Those days are over.

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  4. The concept of a job stifles thoughtful analysis. Teach kids that the key to economic success is to meet the needs and wants of other people. Everyone who gets paid has to do it. Maybe for one employer, maybe for thousands of customers, but everyone does. Once a whole generation of kids grows up to understand that a "job" is an antiquated concept, we'll have to worry a lot less about whether they have one.

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  5. It is an interesting article, but PPP comparisons or even MER comparisons are a more than a bit suspect.

    PPP is primarily for equalizing exchange rates between 2 countries, but doesn't capture overall inflation rates - for example what 1 dollar would buy in 1913 vs. 2011

    MER is identical to PPP in philosophy, merely different calculation method.

    The general point isn't necessarily bad, but using PPP and MER surely distorts GDP and capital as compared to jobs - 1 job today is still equivalent to 1 job 100 years ago.

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  6. Hi Roger,

    I was actually thinking you would be commenting on this article: http://www.economist.com/node/21528593

    "In light of all this, the NCI expressed its concern about what was going on to Duke University’s administrators. In October 2009, officials from the university arranged for an external review of the work of Dr Potti and Dr Nevins, and temporarily halted the three trials. The review committee, however, had access only to material supplied by the researchers themselves, and was not presented with either the NCI’s exact concerns or the problems discovered by the team at the Anderson centre. The committee found no problems, and the three trials began enrolling patients again in February 2010."

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  7. -6-Tom Fuller

    Thanks, related:

    http://rogerpielkejr.blogspot.com/2011/08/surging-retractions-in-scientific.html

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  8. There is another factor not described in the article. Traditional white collar jobs are being automated. Teh business process is being automated with all of the major enteprise companies like IBM, Oracle etc offering business process and business analytics software. Secondly even highly skilled professional jobs are being automated. As an example, x-rays can be interpreted automatically and those requiring more expert analysis cna be transmitted electronically to a fully qualified radiologist in India.

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  9. In case my comment (#1) was not understood:

    By "information and communication technologies" I of course meant to include their use for all sorts of automation that increase productivity – the SAME issue dljvjbsl is raising.

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  10. Thought experiment:
    I am a venture capitalist in the US, say Massachusetts, charged with finding and investing in small businesses that are scalable and/or easily sustainable(potential Stars or Cows, so to speak). I have a lot of money, i.e., Capital, to invest because interest rates on safe investments are painfully and pitifully low. I do, however, have to protect my investors so I have to avoid "bad" investments where significant loss of principle are likely. I must have realistic and feasible business plans.
    You are unemployed or under-employed. If you can come up with a reasonable business plan, then not only can you become employed or more productively, you are likely to employ others.
    This is the current situation. The primary difficulty is that it is always difficult to come up with a persuasive business plan that meets VC requirements. You will likely need to know more about something than your potential customers or have access to those who do. It is even more difficult to come up with a realistic business plan in the present economy with cyclical downturns in key sectors, very strong competition from low wage economies, a relative lack of new technologies and few emerging new demands. Government spending (e.g. Solyndra) and fiats are not sufficient to solve this problem. Renewed and encouraged "Animal spirits" or entrepreneurial spirits can but it will take time and it will require a distinct change in attitude and expectations in the pool of people who could come up with such business plans.

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  11. bernie said:

    "I am a venture capitalist in the US, say Massachusetts, charged with finding and investing in small businesses that are scalable and/or easily sustainable(potential Stars or Cows, so to speak)."

    While venture capital can be a source of capital, the reality is that the vast majority of VCs are simply playing a numbers game - i.e. the traditional bankers game.

    By insisting on 30x or 40x potentials, a VC can be thoroughly incompetent in terms of assessing technology or business but can still profit by focusing on 'hot' sectors.

    VCs can offer lots of value via funneling either direct or referred experience or people to a budding company, but in reality the maneuvers are far more often about control.

    I speak of this as someone who has been on the other side of the VC table several times.

    And from my perspective - the best way to benefit employment is to reduce the cost of the living wage.

    A lower living wage lets the family breadwinner with 2 kids take a risk as opposed to stick in the corporate job for health care and stability reasons.

    A lower living wage presents a lower penalty when failing - whether it be a startup or a layoff.

    A lower living wage allows more savings, as opposed to paying banksters via mortgage, credit card fees, student loans, ad infinitum.

    The best way to lower the living wage is to reassert the primacy of government regulation over FIRE (finance, insurance, and real estate), in contrast to the opposite situation today.

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  12. Khan,

    The primacy of government regulation???

    Once upon a time when there were still elevator operators, the wages paid to an elevator operator was sufficient for him to support a family on a single income. There wasn't much government regulation then as compared to now. So how is government regulation supposed to lower the living wage when it's the wedge effects of things like Social Security, Unemployment Insurance and Workers Compensation laws that made it uneconomical to employ elevator operators.

    Roger,

    At least your bot check doesn't ask me to enter Greek letters like RealClimate sometimes does. Although it's not clear that entry of the Greek letters is actually required.

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  13. @Dewitt

    You said: "Once upon a time when there were still elevator operators, the wages paid to an elevator operator was sufficient for him to support a family on a single income. There wasn't much government regulation then as compared to now. So how is government regulation supposed to lower the living wage when it's the wedge effects of things like Social Security, Unemployment Insurance and Workers Compensation laws that made it uneconomical to employ elevator operators."

    Simply because there was less regulation 100 years ago or more (presumably the era you refer to) doesn't correlate living wages with regulation.

    There are numerous things which also didn't exist back then including: civil rights, FDA, EPA, urbanization under 50%.

    The reason elevator people could support families with mere 'elevator staff' wages is precisely due to low living wages.

    The effects of multiple decades of FIRE manipulation of government regulations towards its own interests is the problem, not regulation per se.

    Certainly the libertarians argue the only remedy is to remove all regulation, but I'd prefer not to live in a society where there is no counterbalancing force whatsoever to multinationals, banksters, lobbying associations, and so forth.

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  14. -13- Khan,

    "Certainly the libertarians argue the only remedy is to remove all regulation, but I'd prefer not to live in a society where there is no counterbalancing force whatsoever to multinationals, banksters, lobbying associations, and so forth."

    The bigger problem, as libertarians will tell you, is that the government is more of a partner to those parties than any sort of a "counterbalancing force."

    I had to laugh about your inclusion of lobbying associations. Those exist precisely because the government is willing and able to make those regulations. Consider, that without the payoff of friendly regulation or stifling of competitors, the multinationals and banksters and so forth would spend their money in more productive ways.

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  15. @Matt

    You said: "The bigger problem, as libertarians will tell you, is that the government is more of a partner to those parties than any sort of a "counterbalancing force."

    I had to laugh about your inclusion of lobbying associations. Those exist precisely because the government is willing and able to make those regulations. Consider, that without the payoff of friendly regulation or stifling of competitors, the multinationals and banksters and so forth would spend their money in more productive ways."

    This is true today, but this has not been true throughout history.

    The libertarian argument is in the order of "We had to destroy the village in order to save it", because government is what gives us roads, schools, clean water supplies, sewage services, fire fighting, electricity, and on and on.

    I'd further note that you've still not responded to the original point: what other entity can resist the mass of power via money of the multinationals, banksters, lobbying associations, and the like?

    Even if you were to remove government with some magic wand, these institutions still exist.

    The problem today isn't abuse of government regulation - though I fully agree that exists.

    The problem today is the unwillingness of those in government to fulfill their fiduciary duties, and equally so the failure of the voting public to punish those who abuse their positions.

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  16. -15- Khan,

    Nice straw men you have there. I suppose there might be some libertarian fever swamp that was as fond of anarchy as you seem to think.

    You've yet to define the "mass power via money" of these shadowy entities. What am I supposed to reply to?

    It's not like any of these entities operate as a single block. Multinationals will compete with each other, as will "banksters," whatever those are. So at a minimum, they'll face competition from each other.

    I don't have anything against lobbying associations per se. The problem is that they aren't about petitioning the government about grievances, but for rent seeking.

    I agree that the voting public needs to throw the bums out. Still, the next crop is likely to be just as bad. Bureaucracies eventually always serve their own ends. Allowing government so much power as to ban light bulbs and fishhooks is always going to lead to such a conclusion.

    The problem today is government regulation. There is no practical way for a person to keep up with all of the regulation to know if he's breaking the law.

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  17. @Matt

    You said: "Nice straw men you have there. I suppose there might be some libertarian fever swamp that was as fond of anarchy as you seem to think."

    and:

    "The problem today is government regulation. There is no practical way for a person to keep up with all of the regulation to know if he's breaking the law."

    Interesting - I made no mention whatsoever of anarchy. I posited a large number of examples of what government does provide: both physical and intellectual benefits.

    While I understand the desire to rein in bureaucracy and over-regulation, at the same time there are all sorts of proven methods to accomplish this within the existing system.

    The primary reason these methods are not being used very successfully is the presence of lobbying by special interests. Special interests are the ones who want and benefit from complexity.

    @Matt

    You said: "It's not like any of these entities operate as a single block. Multinationals will compete with each other, as will "banksters," whatever those are. So at a minimum, they'll face competition from each other."

    While this can be true, in fact it is not always true. The entire real estate industry, for example, from the real estate agents/brokers, to the mortgage brokers, to the appraisers, to developers, to the national organizations like the NAR all have the same goal: to promote real estate purchases.

    Where are the competing multinationals, banksters, or whatever you might name?

    Equally so in the recent global financial crisis, it is abundantly clear that the entire perverted chain of liar loan, to MBS, to CDS was aided and abetted up and down the chain by all of the bankster players.

    Where then was the countervailing interest?

    My point stands: government is the only entity which can represent the public interest.

    @Matt

    You said: "I don't have anything against lobbying associations per se. The problem is that they aren't about petitioning the government about grievances, but for rent seeking.

    I agree that the voting public needs to throw the bums out. Still, the next crop is likely to be just as bad. Bureaucracies eventually always serve their own ends. Allowing government so much power as to ban light bulbs and fishhooks is always going to lead to such a conclusion."

    I agree that there are and probably always will be abuses in the system.

    There are more ways to fix this problem, however, than just doing away with government.

    For example: making it explicitly illegal for anyone but individuals to contribute money for political purposes - whether campaigning or gifts or whatever.

    Of course you cannot stop this, but on the other hand even obstructing the explicit money for political benefit quid pro quo is worth pursuing.

    But rather than go towards this path, in fact the United States is going the other way.

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  18. -17 Khan,

    You certainly did mention anarchy when you said, "Even if you were to remove government with some magic wand."

    "...there are all sorts of proven methods to accomplish this within the existing system."

    Proven, eh? When and where have they worked?

    "Equally so in the recent global financial crisis, it is abundantly clear that the entire perverted chain of liar loan, to MBS, to CDS was aided and abetted up and down the chain by all of the bankster players."

    You forgot the statutes and other government regulations and regulators. Not to mention Fannie and Freddie.

    "My point stands: government is the only entity which can represent the public interest."

    Except, uh, the public? When a company does something you don't like, you can buy from someone else. When the government does things you don't like, if you're lucky, I suppose you can emigrate.

    "Of course you cannot stop this, but on the other hand even obstructing the explicit money for political benefit quid pro quo is worth pursuing."

    Sorry, but you're 100% wrong. Once again, confusing cause with effect, not to mention that this requires restraint of free speech. And not the collateral free speech of art or pornography, but political speech, the main reason to have free speech in the first place.

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  19. @Matt

    You said: "Proven, eh? When and where have they worked?"

    Theodore Roosevelt came to office on a raft of campaign contributions from the likes of J.P. Morgan, Fricke, and so forth as well as insurance companies.

    He, in no small part due to political pressure from his opposition, chose to promote and pass a law restricting such campaign contributions - a law which recently was largely vacated by the Supreme Court decision on corporate political donations as free speech.

    In this arc you can see the full circle.

    Andrew Jackson, in turn, chose to break the 2nd Bank of the United States because it was asserting too much influence over the US economy.

    FDR and his allied Congress in the 1930s, along with Pecora and his hearings, led to Glass Steagall, a law prohibiting the joining of speculative finance with domestic banking - a law also vacated by a Republican Congress and approved by the Democratic President Clinton.

    3 well known instances right there.

    You can add others like the Magna Carta in the feudal era.

    @Matt

    You said: "You forgot the statutes and other government regulations and regulators. Not to mention Fannie and Freddie."

    Quite correct. But Fannie and Freddie were only components - they weren't the cause.

    Fannie and Freddie didn't make loans, they were consumers of liar/NINJA loans as were banks in Europe, the US, pension funds, etc etc.

    So while you might desire to lay off the real estate bubble and global financial crisis on government, you will need to do a much better job of backing up this assertion.

    @Matt

    You said: "Except, uh, the public? When a company does something you don't like, you can buy from someone else. When the government does things you don't like, if you're lucky, I suppose you can emigrate."

    When the government does things you don't like, you can change the government.

    When a corporation does things you don't like, you can only choose something different if that choice is available. If an entire economic sector chooses to do things you don't like, where then is your alternative?

    You still haven't answered the original assertion: there are no entities even theoretically capable of providing a counterbalance to rogue economic sectors, multinationals, etc etc.

    @Matt

    You said: "Sorry, but you're 100% wrong. Once again, confusing cause with effect, not to mention that this requires restraint of free speech. And not the collateral free speech of art or pornography, but political speech, the main reason to have free speech in the first place."

    You keep repeating this, but you've yet to provide any evidence behind these statements.

    Are you saying that corporate influence over politics is shrinking? That the reason the House of Representatives, Financial Services committee has 61 members - over 14% of the entire House of Representatives is just coincidence?

    In contrast the House committee on Appropriations - i.e. control of the purse - has only 50 members.

    http://financialservices.house.gov/About/Members.htm
    http://appropriations.house.gov/About/Members/

    Or how about the role of political contributions in Presidential campaigns? That the 2008 election was the most expensive ever with a total of $5.3 billion in spending, $1.6 billion for just the Presidential race alone, which in turn represents a doubling of what was spent in 2004?

    Please, by all means educate me.

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  20. -19- Khan,

    I think the history of the last century has shown that previous campaign contribution limits certainly didn't prevent lobbying and rent seeking. The Magna Carta is an interesting example, which is in line with my claim, that the answer is to remove power from government to prevent other misbehavior. Decentralization of power can be effective, too. That's what the Magna Carta did, and that's what the US Constitution originally did.

    Fannie and Freddie didn't make loans, but they sure made it easy for loan originators to keep making them, whether the loans made sense or not. I suppose you can bury your head in the sand about that, but why didn't other countries (e.g., Canada, Australia) that didn't have such boneheaded policies crash like the US did?

    You may disagree, but I'm saying that entities within those sectors, plus new entrants, plus substitutes provide competition. Sure, there are some natural monopolies where this doesn't work, but I got the impression you weren't worried about the tyranny of the water utility.

    I can't imagine how you think I'm saying that corporate influence over politics shrinking. As the power of government grows, the incentives to lobby those with their hands on the levers can only grow. No amount of campaign contributions legislation can possibly prevent this.

    My point is that you're focusing on a symptom rather than the cause. If the government has the power to legislate you out of existence, then you must hire lobbyists to prevent that outcome. Likewise, if you can get an edge over competitors via the government, you have to hire lobbyists, if only to defend yourself from the lobbying of your competitors.

    What would be the point of lobbying government if there were no return on your money? Corporations may be a lot of things, but they've never been accused of being ungreedy.

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  21. @Matt

    You said: "I think the history of the last century has shown that previous campaign contribution limits certainly didn't prevent lobbying and rent seeking. The Magna Carta is an interesting example, which is in line with my claim, that the answer is to remove power from government to prevent other misbehavior. Decentralization of power can be effective, too. That's what the Magna Carta did, and that's what the US Constitution originally did."

    Rent seeking is a logical behavior from those who want to extract economic rent. As such it is never going to disappear.

    The role of government is to restrict this behavior when it negatively impacts the nation as a whole.

    Removing power from government removes any ability to restrict this behavior. Regulation cannot be done by private parties - there is no profit motive whatsoever in regulation.

    @Matt

    You said: "Fannie and Freddie didn't make loans, but they sure made it easy for loan originators to keep making them, whether the loans made sense or not. I suppose you can bury your head in the sand about that, but why didn't other countries (e.g., Canada, Australia) that didn't have such boneheaded policies crash like the US did?"

    You chose 2 resource export countries as examples, but ignored: Spain, Ireland, the UK, and numerous other smaller European nations like Latvia. None of these nations have the equivalent of Freddie or Fannie, nor in fact performed significant amount of mortgage securitization.

    In the case of Latvia, it wasn't even Latvian banks, it was Swedish banks.

    Thus again you've failed to show any evidence backing your belief that it was government or even GSEs which were responsible for the housing bubble and subsequent global financial crisis.

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  22. @Matt

    You said: "You may disagree, but I'm saying that entities within those sectors, plus new entrants, plus substitutes provide competition. Sure, there are some natural monopolies where this doesn't work, but I got the impression you weren't worried about the tyranny of the water utility."

    New entrants are irrelevant when the entire sector is motivated by the same behavior. How does a new entrant into residential home lending have any different a motivation than the existing home lender? The "revolution" behind the residential housing bubble was the fraudulent repackaging of NINJA/liar loans as AAA securities via MBS securitization - and this was something which the entire real estate industry was engaged in.

    There are many areas where competition can arise due to new entrants, but even these are subject to distortion due to monopoly or oligopoly.

    Simply reasserting the "invisible hand" over and over lacks all semblence of credibility given what has openly transpired in the United States in the past decade - starting with the Internet bubble and moving on to the residential real estate bubble. The Internet bubble was about fleecing naive stock market investors, while the residential real estate bubble was about fleecing naive home owners and naive pension funds.

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  23. Sorry for the multiple posts - for some reason trying to do this as one is failing in Blogspot.

    @Matt

    You said: "I can't imagine how you think I'm saying that corporate influence over politics shrinking. As the power of government grows, the incentives to lobby those with their hands on the levers can only grow. No amount of campaign contributions legislation can possibly prevent this."

    Legislation never prevents all occurrences of any type of reprehensible behavior. The purpose of legislation and regulation is to create penalties for such behavior as well as provide a desire to examine it.

    Simply stating that a law can't stop funneling of money into politics is ridiculous; are you seriously trying to tell me that making PACs illegal won't affect the billions of dollars presently going into election campaigns?

    This is the same ridiculous argument used by those seeking drug legalization: you can't stop it, therefore why bother? The point isn't that you can stop drug use, the point is will legalization be accompanied by a huge increase in the number of users and the societal negative impact in turn escalate.

    @Matt

    You said: "My point is that you're focusing on a symptom rather than the cause. If the government has the power to legislate you out of existence, then you must hire lobbyists to prevent that outcome. Likewise, if you can get an edge over competitors via the government, you have to hire lobbyists, if only to defend yourself from the lobbying of your competitors.

    What would be the point of lobbying government if there were no return on your money? Corporations may be a lot of things, but they've never been accused of being ungreedy."

    If corporate money has always been a major factor in government behavior, then why is it only recently that we've seen a surge in corporatism in government? Corporatism had periods in the past where it was as emergent in government behavior as it is today: the Teapot Dome scandal for example.

    I do find it highly amusing that you term lobbying to be "protecting corporations" from government. If there is any "protecting" going on, it is corporations protecting themselves from other corporations' lobbying.

    There are numerous public examples of this, the latest being T. Boone Pickens vs. the Koch brothers: http://online.wsj.com/article/SB10001424052702303654804576343690189528836.html

    What's missing here? A coherent government policy.

    The point is the same: it is perfectly understandable that a corporation would seek to further its interest in any way possible - hopefully even legal.

    It is equally perfectly understandable that there should be an instrument by which these one way interests can be countered - one which already exists as a representative of the overall population and society.

    You keep saying that we don't need to rein in the former, but we need to remove the latter.

    Makes no sense to me whatsoever.

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  24. -23- c1ue,

    You've missed the point, too. If the type of rent seeking is beyond the power of the government, then you're a lot less likely to have rent seekers for that sort of thing.

    Here's an obvious example for the US. Suppose the government had a well established power to regulate speech. You would then have businesses (e.g., restaurants) that would attempt to regulate, suppress, etc, reviews in newspapers, TV or the internet. You could eliminate bad reviews, plus new entrants couldn't get free publicity when the local food critic reviewed them. As an established restaurant, you'd have an advantage.

    Your claim (and Khan's) is that it would be better if the government simply regulated restaurants in how they lobbied the government to prevent this sort of behavior.

    Other companies' lobbying is worthless by iteself, except as far as it can influence the coercive power of the government.

    You're essentially arguing that the sun comes up because it gets light outside.

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  25. clue-23,

    "This is the same ridiculous argument used by those seeking drug legalization: you can't stop it, therefore why bother? The point isn't that you can stop drug use, the point is will legalization be accompanied by a huge increase in the number of users and the societal negative impact in turn escalate."

    So I assume you would have been opposed to the passage of the 21st amendment to the Consitution to repeal Prohibition. One could and did make exactly the same argument then about alcohol that you are making about drugs. The consequences of making drugs illegal is a loss in tax revenue, a major source of revenue for organized crime(which was not much of a problem before Prohibition),a huge enforcement expense and what amounts to civil war in northern Mexico. But it's worth it so people can't get high. Except it doesn't work very well at all. So we have all the negative consequences with hardly any benefits.

    From about 1850 to the early 20th Century, cocaine and opium based elixirs, tonics and wines were broadly used by people of all social classes. Society didn't collapse.

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  26. @Matt

    You said: "Here's an obvious example for the US. Suppose the government had a well established power to regulate speech. You would then have businesses (e.g., restaurants) that would attempt to regulate, suppress, etc, reviews in newspapers, TV or the internet. You could eliminate bad reviews, plus new entrants couldn't get free publicity when the local food critic reviewed them. As an established restaurant, you'd have an advantage.

    Your claim (and Khan's) is that it would be better if the government simply regulated restaurants in how they lobbied the government to prevent this sort of behavior.

    Other companies' lobbying is worthless by iteself, except as far as it can influence the coercive power of the government."

    Besides the silly straw man you've created regarding government regulating free speech - a fine outgrowth of corporate sponsored libertarian advocacy of corporate money "as" free speech - I am unclear why you consider lobbying to be any different from advertising.

    Whether it is an oil company, or Greenpeace, or MADD, or a parent-teacher association - lobbying of the government as well as lobbying of the population (advertising) clearly works on both government and people.

    However, government is supposed to be the collective representation of the people. Corporations aren't people, NGOs aren't people, MADD isn't people, and parent-teacher associations aren't people. These institutions are composed of people and each of these people has the right, indeed the duty, to express their views.

    However, the emergent organizations known as corporations, as NGOs, as MADD, as the PTAs themselves should not because quite simply they cannot fully represent each of their component's full views. These emergent organizations as they function today in the lobbying/advertising sense are simply a way to aggregate money and influence, not a way to enable each respective member.

    Your ultimate argument is still identical: because we can't do anything about abuse, we should Samson smash the mechanism of government.

    Well, I've provided numerous examples where abuses can and have been curbed by government.

    I've provided full arcs where the will of the people as expressed by government went full circle.

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  27. -26- Khan,

    Your advertising analogy is not bad. If the advertising doesn't work, eventually it will stop. If spending money on lobbying doesn't produce results, then the spending will stop.

    Still, a big difference between advertising and lobbying is the desired outcome. Advertising seeks to sway an opinion and produce some voluntary behavior (e.g., buy a product). Lobbying is attempting to change the way the government uses its lawful powers of coercion. Convincing me to buy a cheeseburger is a very different proposition than convincing the government to outlaw cheeseburgers made with a certain type of cheese.

    "Your ultimate argument is still identical: because we can't do anything about abuse, we should Samson smash the mechanism of government."

    I'm not sure why you have such a difficult time with this concept, but that's not at all what I'm saying. Treating the symptoms, as you are arguing, does nothing but perpetuate the problem.

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  28. @Matt

    You said:"Your advertising analogy is not bad. If the advertising doesn't work, eventually it will stop. If spending money on lobbying doesn't produce results, then the spending will stop.

    Still, a big difference between advertising and lobbying is the desired outcome. Advertising seeks to sway an opinion and produce some voluntary behavior (e.g., buy a product). Lobbying is attempting to change the way the government uses its lawful powers of coercion. Convincing me to buy a cheeseburger is a very different proposition than convincing the government to outlaw cheeseburgers made with a certain type of cheese."

    Indeed, lobbying is merely a form of advertising, albeit C2G.

    My point, however, is that advertising is intended to sway the behavior of individual people. In most cases, advertising is used because there are many alternatives which are roughly equivalent.

    Government, however, is neither a multitude of people nor are there alternatives. Special interests are a prime example: some industry seeking a perk to help itself is rarely opposed by another industry.

    While your view is to remove the role of government in this equation - one which I do understand where you're coming from - the solution isn't to remove government's ability to act.

    The solution is to limit and regulate the lobbying.

    This could be as simple as having responsible people in government, but failing that there are lots of regulatory ways to limit this.

    We have laws against bribery, collusion, and other forms of anti-competitive or coercive behavior.

    I just don't see why it is fundamentally impossible to have laws for this specific type of anti-competitive behavior (lobbying).

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  29. -28- Khan,

    "I just don't see why it is fundamentally impossible to have laws for this specific type of anti-competitive behavior (lobbying)."

    Hmmm, you can't see why we shouldn't be able to petition the government? Sorry, I'm all out.


    Special Interest n. Something other people are interested in

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