King for a Day, Fix the USA

BN, a question, if you don't mind.

You and I seem to agree to a surprising extent when it comes to policy, especially economic policy. Over the past several months, we've broadly agreed on, off the top of my head, regulation of the financial sector, tax policy (our differences here are comparatively minor -- I'd be perfectly ready to get behind your "close the loopholes and slap a 20% tax on every dollar above $25k" system), trade policy, ways to get out of the increasingly misnamed SUBprime mess, infrastructure investment, and now Joe Stiglitz's article on the strategic direction the US economy should take.

Yet we have completely different ideas on what it means in the coming elections.

Put another way, from where I'm at, the Republicans have pursued policies that are just about the exact diametrical opposites of what either of us is advocating, and however hard I look, I can't see *any* signs from John McCain that he intends to change anything about that. The Democratic/Obama economic platform isn't perfect either (for example, some things he's been saying sound worryingly protectionistic), but on by far most counts it's light-years closer to the kind of stuff we're agreeing about. Broadly, Obama's economic policy looks a lot like Clinton's economic policy, and Clinton's economic policy is much closer to what we've been talking about than any Republican administration's economic policy since Nixon at least.

So... how come you still think McCain and the Republicans would do a better job? What is it about them -- their record, their stated policy objectives, their stated ways of achieving said objectives -- that make you trust them more?

Ideas are hard to eat, PJ. I'll be the rust belt dumbass dinosaur, but we're not so much smarter than the Chinese (or the Euros or the Arabs or the Brazilians, for that matter) that they have to buy our ideas. For that matter, given their "flexibility" with patents and copyrights, we're largely giving our ideas away for free when we send the blueprints over the pond to get the ideas built into reality. We are better than the Chinese at manufacturing high-value-added products because we've been doing it a lot longer. At the end of the day, somebody somewhere has got to make a product to sell. Sure, we should make more spaceships and less shovels, but at the end of the day you only sell an idea once; you sell manufactured products over and over and over.

Prime Junta said:

So... how come you still think McCain and the Republicans would do a better job? What is it about them -- their record, their stated policy objectives, their stated ways of achieving said objectives -- that make you trust them more?

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That's a good question! I would say that it is not that I trust them more per see, but rather that I trust Obama less.

My political views probably go closest to the Libertarian party, which is closer to what Republican's traditionally were like.

Obama gained some traction in my book by picking up Biden, because Obama's lack of foreign policy experience scares me. However, I still have a (maybe irrational) fear of hard core liberal policies. I like social policies that have a realistic attempt to make people's lives better by enabling them, not the ones that are straight handouts.

From some of Obama's speeches, he's a little too much on the handout side for my taste. A few things from his acceptance speech really boiled my blood in that regards. I also really dislike the fact that he wants to raise taxes on the top end, but then lower them on the middle and bottom ends. I think that boils down to class warfare and I don't like it. If he wants to close loopholes, I'm all for it.

I also dislike that he does NOT plan to reduce government spending (outside of any savings from exiting Iraq).

I could go into it more, but you get the drift.

So what about McCain? Well, without going into too many details, I'll say this:

1) He is the only candidate with a realistic approach to immigration. In short, he gets it and he's willing to address it. I think immigration is key to the future economic health of our country, especially given our entitlement issue with SS and Medicare.

2) I think the people that claim McCain is Bush's third term are way off base. People often say they like the 2000 McCain, but not the 2008 McCain. Now maybe he really has changed over the last 8 years, but personally, I think after the thrashing he took in the 2000 primaries (Manchurian candidate, etc.), that he decided that if he had any hope of the 2008 nomination, he had to get in step with Bush. That may not have been the best thing for the country, but I think that is what happened. As such, I don't think he'll continue all, even most, of Bush's policies.

3) McCain was a key part of the Newt Gingrich Republicans that did a great job in Congress in the 90's. Clinton's legacy benefited from having them in Congress.

In the end, I dislike them both, but I'll take the devil I know (McCain) vs. the one I don't (Obama).

I also think that making comparisons between different administrations is a bit misleading. There have only been two Democratic admins since Nixon, and Carter was a complete failure. There have been 3 (not counting Ford, he wasn't around long enough to have much impact) Republican and all three were different.

Reagan cleaned up the tax code, but spent massive amounts trying to run the Soviets out of business.
Bush I raised taxes, but that probably needed to be done given the budget at the time. He likely would have been re-elected if we hadn't entered a minor recession just before the election
Bush II lowered taxes (which I didn't fully disagree with), but then found himself in the middle of a Holy War and faced with (at this point) the worst increases in medical expenses in twenty years.

I dislike Clinton personally, but many of his policies were sound. But are they really Democratic in nature? He reformed welfare, the baby of LBJ. He also benefited from the post-Soviet era and was able to drastically reduce the military (which was a mixed bag of results). Would he have favored so well if he had served during the height of the Cold War, or if September 11th had happened in 1993 instead of 2001? I don't know that he would have been able to do the things he did with the budget in those scenarios.

Clinton wasn't really a liberal, he was really a moderate by the time he left office. I'm not sure I see the same thing happening with Obama.

So essentially, I don't think one administration's actions are necessarily predictive of another.

I'll probably end up voting 3rd party anyway, just so I can complain whoever gets elected!

dteowner said:

Ideas are hard to eat, PJ. I'll be the rust belt dumbass dinosaur, but we're not so much smarter than the Chinese (or the Euros or the Arabs or the Brazilians, for that matter) that they have to buy our ideas. For that matter, given their "flexibility" with patents and copyrights, we're largely giving our ideas away for free when we send the blueprints over the pond to get the ideas built into reality. We are better than the Chinese at manufacturing high-value-added products because we've been doing it a lot longer. At the end of the day, somebody somewhere has got to make a product to sell. Sure, we should make more spaceships and less shovels, but at the end of the day you only sell an idea once; you sell manufactured products over and over and over.

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All that's true -- but irrelevant. You currently employ 9% of your population in manufacturing. Germany, which heads the list of advanced countries in this respect, employs about 22%. Britain and France employ about 15%, give or take a few per cent. And as for eating, you employ 2% of your population in food production, and produce a massive surplus for the world market.

The point is that the degree of automation today means that you just don't need all that many people to manufacture as many physical goods as the market can absorb. And this trend is only going to continue: I wouldn't be surprised if, 20 years from now, advanced industrial economies would employ less than 5% of their workforce in manufacturing -- while simultaneously increasing the output of goods.

On the other hand, services account for 80% of your economy.

That means that if you manage to increase the productivity of manufacturing by 10%, your GDP -- the wealth you produce -- will grow by less than 1%. But if you do the same to services, it'll grow by 8%. Or, conversely, if you're talking job creation, and assuming an actual (as opposed to statistical) unemployment rate of about 10%, to reach full employment by manufacturing only (i.e., unemployment of about 3%), you would have to nearly double your manufacturing capacity. Do you seriously think the American or even world markets could absorb that many goods? You're already the biggest manufacturer in the world. Do you think the market's growth potential is realistically, what, 70%, over the next few years?

No, dte -- that won't work. It makes for a great, rousing speech in Detroit, but it's not realistic. It's going backwards, not forward, and turning the clock backwards just isn't possible.

@BN, thanks for your explanation. It makes sense, kinda, but I think you're estimating the odds rather... well, oddly. Both candidates are pretty much known quantities in terms of economic policy, IMO -- McCain is toeing the Bush line very carefully, whereas Obama is very close to the Clintons.

Even during the primaries. I see no real indication that either would suddenly repudiate all of that should they get elected. When you look at who they've picked for economic advisors, what said advisors are saying, and what links they have to their respective establishments, I wouldn't really expect any big surprises from either of them. And since we already know what Bush's economic policy has achieved -- the weakest recovery, the biggest deficits, and the worst financial crisis since WW2 --, what reason is there to think that McCain's would work out any better?

The US service industry is largely internal, that is, the US largely services itself (yeah, I meant it that way, too). Remember, the original requirement was to generate new wealth. A ten-fold increase in service activity will create roughly $20 of new wealth. Lots more money changing hands certainly, but no new money added to the pot. Unless you're now buying into the "multiplicative effect of spending", which I seem to remember being a rather important pillar of trickle-down economics. (And really, that has no bearing anyway, since again that is not "new wealth")

Prime Junta said:

And since we already know what Bush's economic policy has achieved -- the weakest recovery, the biggest deficits, and the worst financial crisis since WW2 --, what reason is there to think that McCain's would work out any better?

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You deeply enjoy claiming direct causation for Dubya's failure versus Willie's success. Put Dubya's policies in 92-2000 and maybe we get different results (maybe not). Put Willie smack in the middle of 9-11 and it's nearly certain we get different results (perhaps not). Dubya presided over a dismal performance, without a doubt. Assuming some lefty would have done better is an assumption at best and blatant misrepresentation at worst.

dteowner said:

Ideas are hard to eat, PJ. I'll be the rust belt dumbass dinosaur, but we're not so much smarter than the Chinese (or the Euros or the Arabs or the Brazilians, for that matter) that they have to buy our ideas. For that matter, given their "flexibility" with patents and copyrights, we're largely giving our ideas away for free when we send the blueprints over the pond to get the ideas built into reality. We are better than the Chinese at manufacturing high-value-added products because we've been doing it a lot longer. At the end of the day, somebody somewhere has got to make a product to sell. Sure, we should make more spaceships and less shovels, but at the end of the day you only sell an idea once; you sell manufactured products over and over and over.

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I don't fully disagree with you, but the key is that you have to be maneuverable, and American manufacturing resists change like no one else.

Best advice I've heard on manufacturing came from a guy in the electronics industry:

"Never develop a specialty product today that you can't sell as a commodity product tomorrow."

The Chinese, Indians, etc. kick our asses as manufacturing commodity products because their costs are so much lower.

Since this is one of the few threads not initiated by dataswammi (that's a lot of data there, swami), I guess I'll jump in and give this a try. I'll respond in the spirit that I think it was intended by really pouring it on and trying to be creative.

The first thing I'd do is sieze control of the oil business. It's vital; it's screwed up, and it really ought to be regulated. Someone smarter than me would have to come up with a way to do it right. Put a Ross Perot in charge of it, and shoot the Ralph Nader's on sight if they come anywhere close.

The next thing I'd do is start a Peace Corps kind of organization for wealthy retired MBAs who never have to work again and are bored. I'd put them to work helping small businesses. For example, they could help solar-panel installers understand and crunch their numbers so they could reach out to potential customers and deal with them more effectively.

Then I'd implement a program to promote intelligent, rational thinking, not as an attempt to limit anyone's choices, but to enable everyone to more easily avoid the kinds of mental pitfalls that plague our society today. Special emphasis would be put on trying to reach those who have suffered from the effects of abuse and addiction.

dteowner said:

The US service industry is largely internal, that is, the US largely services itself (yeah, I meant it that way, too). Remember, the original requirement was to generate new wealth. A ten-fold increase in service activity will create roughly $20 of new wealth. Lots more money changing hands certainly, but no new money added to the pot. Unless you're now buying into the "multiplicative effect of spending", which I seem to remember being a rather important pillar of trickle-down economics. (And really, that has no bearing anyway, since again that is not "new wealth")

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Please define "new wealth," because from what I can tell, it appears to be pretty far removed from the standard definition used in econo-speak.

Basically, from the economic point of view, it doesn't make any difference if a good is material or immaterial. Immaterial goods (services) can and do produce efficiencies and are worth money to people. Producing them increases wealth exactly the same way as producing hard, tangible goods.

dteowner said:

You deeply enjoy claiming direct causation for Dubya's failure versus Willie's success. Put Dubya's policies in 92-2000 and maybe we get different results (maybe not). Put Willie smack in the middle of 9-11 and it's nearly certain we get different results (perhaps not). Dubya presided over a dismal performance, without a doubt. Assuming some lefty would have done better is an assumption at best and blatant misrepresentation at worst.

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Assuming that "some lefty" or "some rightie" will do better or worse is an assumption -- but that's an assumption you're asked to make, come November.

The fact is that Bill Clinton employed a crack team of economists as his economic policy advisor group, *and took their advice.* Surprise surprise, the USA experienced its strongest period of growth since the oil crisis and racked up a budget surplus.

The fact is that George W. Bush employed economic advisors whose theory predicted the exact opposite -- that Clinton's policies would yield weaker growth, and that Bush's policies would yield stronger growth. That didn't exactly happen, did it?

Now, I understand something of the theory behind this. Both theories, actually. And I understand them well enough to see that the supply-side theory is bullshit, while the other theory -- call it "mainstream economics" -- isn't. This is borne out by what actually transpired, both in the USA, and in many other countries.

In other words, of course it's an assumption -- but it's an assumption that agrees both with economic theory as it's understood today, *and* with the empirical reality of what is known to have actually happened.

Now, I like to base my assumptions on well-established, well-researched, and well-argued theory that has been tested empirically. What do *you* base your assumptions on?

Addendum: @dte, there's a delicious irony in your love with manufacture of physical goods, you know.

It's pure Marxism.

Marx only considered the production of physical, tangible goods to contribute to real wealth. "Capitalist" economists didn't, and don't. I find it terribly sweet that you unknowingly carry on the torch of Lenin's "Electrification plus Soviet power equals Communism" or Mao's Great Leap Forward.

Prime Junta said:

Please define "new wealth," because from what I can tell, it appears to be pretty far removed from the standard definition used in econo-speak.

Basically, from the economic point of view, it doesn't make any difference if a good is material or immaterial. Immaterial goods (services) can and do produce efficiencies and are worth money to people. Producing them increases wealth exactly the same way as producing hard, tangible goods.

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First off, I stated quite clearly that ideas can be sold, and I'll add (I thought it was plainly implied) that such a sale could produce "new wealth". The problem is that once you sell an idea (particularly if that guy uses your idea to produce a commodity), it generally has no future value, ie you can't turn around and sell it again because the horse is already out of the barn. If the Chinese are involved, they probably opened the barn door and lit the horse's tail on fire for good measure.

You'll have to excuse my terminology. While I'm not as illiterate as you like to think, I'm not in your league by any stretch, either. "New wealth" would closely follow foreign trade balance, with some complications based on national money supplies. Boiled down, if I buy a hamburger from McDonalds, there is no wealth generated because that's money moving from one US pocket to another. I suppose, if you dig deep enough, Akbar al Opec made a fraction of a fraction of a penny for the oil to produce the plastic to produce the industrial-sized bottle for the ketchup, but I think you get the point. If I buy a Sony DVD player, that actually produces "new poverty" as a significant portion of that money has moved from a US pocket to a Japanese pocket. If I come up with the ultimate mousetrap and sell the idea to some Chinese widget factory, there is a small initial gain (my fat licensing fee) followed by a large loss (me and all my neighbors sending money to China to buy a dozen mousetraps each).

Last I checked, the theory of economics as a zero sum game was abandoned along with mercantilism a long time ago.

Prime Junta said:

Addendum: @dte, there's a delicious irony in your love with manufacture of physical goods, you know.

It's pure Marxism.

Marx only considered the production of physical, tangible goods to contribute to real wealth. "Capitalist" economists didn't, and don't. I find it terribly sweet that you unknowingly carry on the torch of Lenin's "Electrification plus Soviet power equals Communism" or Mao's Great Leap Forward.

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I'm disappointed, PJ. I can rely on you to point out my ignorance, but it's been a very long time since you made the mistake of assuming it.

If you've been paying attention, you'll have noticed that a large percentage of the "improvements" I offer up would fit pretty comfortably on a lefty platform. Marx actually had quite a few excellent ideas. We'll get to the core problem in a moment. If you really look at it, there's not terribly much difference between the goals of the left and the goals of the right--what's the old saying, "A chicken in every pot and a car in every driveway" or some such? I often think politics is more of a ring than a spectrum (yeah, there are some problems with that idea, but it's not as crazy as it sounds if you take a while to ponder it), with the "far left" and the "far right" actually being awfully similar over there on the dark side of the moon. The difference lies in the assumptions you make to determine the appropriate path.

Communism hinges on the assumption that man is innately good and that, given a choice, man will choose "greater good" over "good for me". What a load of feel-good crap, eh? Fascism hinges on the assumption that man is little more than an animal that must be dominated into relinquishing "good for me" so that "greater good" pops to the top. Yep, sounds like God's honest truth to me.

As I've said a few times, US politics is a centrist mash now. The goals are largely the same, and neither side does a good job of consistently sticking to "their creed" any more. We like to complain about the elections being a popularity contest, but with ideologies largely thrown in the sink with the dirty dishes and subject to complete reversal at the drop of a hat, there really isn't much left to differentiate candidates beyond personal charisma.

So, to bring the ramble around... I identify with the right because I don't believe you can count on people to do the right thing. I identify with the right because (and this is where the whole Communism thing goes boink for me) I believe that the quickest, most efficient way to make progress is to allow it to be "good for me" and get the hell out of the way. I don't identify with the left because I don't think you deserve so much as a crumb of bread--but (going back to the previous point) everyone should have a chance to get their own frickin loaf. (Aside- we could admittedly have some good left/right debate over what defines "chance", which we've dallied with before)

KazikluBey said:

Last I checked, the theory of economics as a zero sum game was abandoned along with mercantilism a long time ago.

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I don't think that's what I said, since "complications" was mentioned even in a one paragraph summary. I do think that it's a lot closer to "zero sum" than "infinite possibility", though. As global population grows, global consumption grows, which means global economy must also grow. While the pie might be bigger, we're talking how big each nation's slice is.

edit- and, really, let's say I'm a hopeless rube. Let's say in the past 200 years, we've gotten infinitely smarter, and such theories that I hint at are "quaint foolishness". Have you taken a look around the world? Based on where we're at today on the whole, I'd challenge you to prove that we're not fucking morons, and fancy theories be damned.

1. Closing all foreign military bases. 700+ bases in 140+ countries?? nuts!

2. Eliminate Federal income tax, people can spend or invest their own money. "government provides ____". I have never heard anything more insulting to taxpayers.

3. Stop tempering with the money supply. Ban the FED(central bank) for the third time in history.

mudsling3 said:

2. Eliminate Federal income tax, people can spend or invest their own money. "government provides ____". I have never heard anything more insulting to taxpayers.

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Even die-hard libertarians agree that the federal government needs to supply a few basic services such as the national defense and the federal judiciary. How do you propose to pay for those if you wipe out income taxes? Corporate taxation (unless you're planning on some oppressive changes there) is insufficient to foot the bill.

dte wrote:

So, to bring the ramble around... I identify with the right because I don't believe you can count on people to do the right thing. I identify with the right because (and this is where the whole Communism thing goes boink for me) I believe that the quickest, most efficient way to make progress is to allow it to be "good for me" and get the hell out of the way. I don't identify with the left because I don't think you deserve so much as a crumb of bread--but (going back to the previous point) everyone should have a chance to get their own frickin loaf. (Aside- we could admittedly have some good left/right debate over what defines "chance")

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That really explains a lot about you dte and I appreciate you posting it because you puzzle me all the time. I'm alternately totally in tune with your positions or totally freaked by them. It's this perception that the right provides an incentive for people to work and the left takes it away. In a true Communist state--(using the definition I was taught in a Cold War American schoolroom, which is the State trumps the individual) that may be true.

But the American left began primarily as a labor movement at the very bottom rungs of society, not as some academic elitist 'enabling' booshwah in the universities as it's practised now. I'm not historian enough to give a good lecture, but the point has never been that people innately deserve a handout. The point was that people deserve the fruits of their labors. That those who are productive--that produce the goods and grow the food and mine the ore--should be able to feed themselves and their families, have a decent work environment and not starve when they became incapable of working, while those who owned the shop were made wealthy on their backs. That's the left I grew up with. That's the FDR stuff. That's an incentive to work, the hope that you'll earn a decent life for yourself and your family.

To me it's all gotten out of hand on both sides of the spectrum. The left is full of some very unrealistic do-gooders, it's true, but the right can be pretty unrealistic in the opposite direction. The left may say people should do a little bit too much for each other, but the right is saying that if you don't have the resources to do the right thing--make money and succeed on your own-- it's your own fault.

My problem with the right is that they think it's all about working hard. Every janitor that scrubs floors, every cleaning woman that gets up at 4:00 AM to ride a bus out of the slums to the suburbs, every immigrant running a weedeater or mowing a lawn works hard. I've been there. Hard work alone does not make you rich. That's not a problem for most blue collar workers--it's that hard work and plenty of it, does not even make you moderately secure.

These are the people the right are lumping in with the crackhead welfare moms, and it's a fear thing. When you have more than others, you think they all want to take it away--human nature. But it really isn't that simple. People are perfectly satisfied not to be millionaires or have $300,000 outfits like Cindy last night. They just want to be able to fill up the gas tank and pay the bills. It's ridiculous that you should have to have a college degree and/or inherited wealth to be able to do that, and that's the direction the country is going in.

Face it, both parties are going to tax us. Like it or not, we have to pay taxes if we want government. You can use them to get all your buddies jobs in Iraq building self-electrocuting showers, or you can use them to provide infrastructure and health care and some kind of system wherein hard work does not just grow the already sizable wealth of the top 5% of the population.

Sorry-I seem to have produced yet another novel. Someday someone needs to publish these forums.

I used to be frothing-at-the-mouth anti-union after seeing good companies offering lots of people a good living go belly-up because the union wasted a lot of time defending total slugs and constantly grabbing more and more and more, to the point of killing the golden goose.

A few grey hairs down the road, I now split the blame for that failure 50/50. Unions and management are supposed to be opposing forces that drive the result toward a middle ground that works for everyone. Yes, the unions got silly and needed a good spanking. (example: To bust a worker for taking "double lunches", HIS supervisor had to visually document times for leave and return--DUH! the workers would just come in a different door and then brag about it, day after day after day; eventually a few bad apples like that ruined the good workers) However, management failed to uphold their end of the balance for over a decade. Thru the late 70's into the early 90's, times were good enough that management rolled over and played dead time after time. Without the necessary counterbalance, it should be no surprise that unions like the UAW and Teamsters ran wild.

Henry Ford realized a well-paid work force was ultimately "good for me". Obviously, that's rare vision for an owner. These days, corporations are run for the benefit of the stock holders, which often has no tie to the long-term health of the company. That means it's practically impossible for that vision to show up. That's why unions serve a necessary function today. Management no longer has a vested interest in the company, so labor needs a stronger voice to have some leverage in getting what's "good for me" for workers.

Democrat playbook material, wouldn't you say?

My disjoint with the lefties is that I don't favor that out of some sense of entitlement for the working man. A happy, healthy workforce with a decent check in their pocket is good for business and good for the national economy, which, ultimately, is "good for me".