304. notes

January 31, 2010 § 1 Comment

Stuck in Neutral? Reset the Mood, by Robert Shiller, Commentary, NY Times: The United States and other advanced economies may be facing a long, slow period of disappointing growth

He argues that

The fears themselves are an integral part of the problem. Economists have a tendency to assume that everyone’s behavior is rational. But post-boom pessimism is a factor driving the economy, and it is likely to be associated with attitudes that may be enduring. …

The implication here is that it is attitude. Nowhere do i see in the article that it maybe that we just have nothing to make that anyone wants (overstated by significant). H wants to make the agument.

After World War II, there was rapid growth in labor productivity until sometime around the early 1970s. But then there was a major break, roughly coinciding with three events of 1973-74: the oil crisis, a huge stock market tumble and the first significant depression scare since the Great Depression itself.

According to the Bureau of Labor Statistics, annual growth of business output per labor hour averaged 3.2 percent from 1948 to 1973, but only 1.9 percent from 1973 to 2008.

He then refers to an econoist/ social thinker I really like

Ever since the long-term productivity slowdown became visible, the economist Samuel Bowles, now at the Santa Fe Institute, has said that its causes are to be found as much in the loss of “hearts and minds” of workers and investors as in technology.This month at Yale, in lectures titled “Machiavelli’s Mistake,” he spoke of the error of thinking that a high-performance economy could be based on self-interest alone. And he warned of the overuse of incentives that appeal to individual gain.

But look how we are replacing economic analysis )in the best sense of raw materials to quality of life) with psychology.

In their coming book,… George Akerlof … and Rachel Kranton … argue that an economy works well when people personally identify with it, so that their self-esteem is tied up with its activities. … [A] relatively uninterested, insecure work force is unlikely to bring about a vigorous recovery.

Mark Thoma responds

I always find Shiller’s psychology-based explanations less than fully convincing, but listen anyway because he has a pretty good track record at predicting emerging bubbles. But I will say this. Aggressive, effective job creation policy by the government — putting people to work — would go a long way toward repairing any problems in the hearts and minds of workers.

As for investors, their hearts and minds would be best repaired through strong regulatory measures that prevent the type of behavior that got us into this mess, or that substantially reduce the consequences when hearts and minds work together to cause this to happen again despite our efforts to prevent it.

The implication is that good work could exist. I question that.As for investors, there are those who made out well in the bubble, and those who did not. Obviously those who did are not dispirited in the same way as those who did not.

The failure to look athe the more fundamental physical/ technological/ competitive enviornment s really striking, and tells us lots about current economics that continually wants to see the economy as cyclical.


Note that the 2001 and current curves are much smoother than earlier ones. It is possible the big jumps in earlier represent interference in the numbers, but i suspect that the smoothness comes from the larger number of factors causing the losses. If we take out 1948 with its quick sharp dip (labor strikes?) then the current curve has no parallel.. Also it still looks down.

All talk i have with people who are employed or employ is that they are much more likely to see more loss and no gain. Each lost job is a multiplier by its effect on other jobs – purchases of services and hard stuff – because the workers can’t buy. Where will new purchases come from?

Bill McBride adds

And the graph is before the annual benchmark revision that will be announced next Friday, and is expected to show the loss of an additional 824,000 jobs.

Let’s turn to Reich who seems the best these days.

The President wants businesses that hire new employees this year to get $5,000 per hire, in the form of a tax credit. That will come to about $33 billion. It’s good step. He’s also supporting a cut in the capital gains tax for small businesses. That makes sense; after all, small businesses generate most jobs.

My take is that these “breaks” only help existing and lager businesses. You have to be paying taxes to get any benefit.Reich helps understnd this.

But here’s the problem. Both of these measures, and many of the other tax cuts he’s proposing, give ammunition to supply-siders who think the way out of this awful economy is simply to cut taxes on businesses

The answer, of course, is that across-the-board supply-side tax cuts for businesses don’t increase the demand for the things businesses produce

But then he adds

They’re useful only to the extent businesses are confident consumers are out there, able and willing to buy. Carefully targeted — as are the cuts the President is proposing — they can give businesses an extra nudge to hire. But without adequate demand, they’re useless.

which says there has to be demand, but what about the ability to produce anything somebody (or organization) wants?

But if the public learns the wrong set of lessons — that tax cuts for businesses are good, and deficit reduction starting now is good — there’s no hope for getting wise policies out of Congress. The debate is framed all wrong.

That would be amazing because I thought understanding deficits had gone deeper. But maybe, if the government is broke? Now, can it be? If the country is active, the country has wealth. How to increase that wealth (compliant with sustainability) is the task. It means rethinking what we make.

The only way to get them work when businesses aren’t hiring is for government to prime the pump.

With what pump? Where would the money go that would be semi-useful? The obvious are two

1. green tech

and 2, well Reich says it

One final lesson I wish he’d teach: The best and fastest way for government to prime the pump is to help states and locales, which are now doing the opposite. They’re laying off teachers, police officers, social workers, health-care workers, and many more who provide vital public services. And they’re increasing taxes and fees. They have no choice. State constititions require them to balance their budgets. But the result is to negate much of what the federal government has tried to do with its stimulus to date.

Shifting now to law and the legal status of corporations, a very good bried I can’t quote because not yet published. It will be a book Next year Pantheon.

Which leads me to

The task of liberating thought is to extend decency and compassion, rights and rules, opening society to deeper empowered individuals.



303. Best climate counter argument

January 31, 2010 § Leave a comment

This looks serviceable. Hard work.  Does it make sense, or  make serious errors?


It is important to read outside the comfort zone.

302. . neuroscience

January 25, 2010 § Leave a comment

what is oft forgot is that between the brain as we know it and thought there may be ten layers of quasi independent activity (like a chess board on wood). The assumption that it is one step, and a step with mapping , seems very limited and a block to better science.

301. From Rifkin

January 23, 2010 § Leave a comment


300 . Myth to sustainability

January 18, 2010 § Leave a comment

Getting from myth to sustainability requires that we understand both ends of the time line. Sustainability requires a view as broad and as deep as any in our 150,000 year cultural history. It must touch on our experience of the cosmos  and reach in to our deepest experience of self, community, nature and meaning.  Of Life and death, of the planet, the species and our culture and our self. Sustainability requires as much or more myth than our origins.

299. Goverenance and economy

January 15, 2010 § 1 Comment


Rethinking governance..

Economy has become so powerful because, in the absence of the political ideas to reform government to deal with the real issues of the world, economy emerges as a way to cope with 6 billion people. Not a good way, because the costs to many are so high, but a way nevertheless. Economy has become a form of governance. The result is a way of life based on dollars and what dollars can buy, which is not so much meaningful goods but stuff. And even then we blame consumption on ordinary people when in fact their car, computer and cell phone are not discretionary, but essential for work and getting children to school.

In this process what government we do have has been an instrument of the economy and not the other way around. Economics has reduced itself from the broad reach of discipline of political economy to a paltry economic specialty of the mathematics of flow between things, but does not include the things themselves. One might expect economics to describe how we get from the real wealth of nature to the real wealth of civilization, but it does not. Economics does not speak meaningfully if at all about resources, ownership, invention , distribution, nor the resulting wealth and quality of life.

The result is that we do not really have a governance of society. We have a governance of the society via economy and a governance of economics through the narrow interests of its major participants. Hence the real needs of society are not taken as the task of government. The well being of the people has been replaced by the well being of the economy, which, to make the rich yet richer, has chosen to eliminate people as a cost to the economic engine. Society is left without governance. This can be seen in the inability to respond to climate, population, oceans, poverty, nor education. It can be seen in the Haitian crisis where government has not taken on the task (at local or world level) of providing the infrastructure to respond to crises, either immediate like an earthquake or hurricane, nor long term as in decline of the environment, or the erosion of the quality of life for a majority of the world’s people.

This brings to mind "When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another ….

In fact since it is clear that government cannot respond, we are left on our own to rethink the basic arrangements necessary for a governance of society beyond the narrow needs of an anti-social economy..

298..Tech and compassion

January 9, 2010 § Leave a comment

Their combination is key to a better future.

And wisdom. perhaps time to bring back wisdom, civilization

Where Am I?

You are currently viewing the archives for January, 2010 at Reflections on GardenWorld Politics Douglass Carmichael.