Sunday, March 14, 2010

Report Card -- Not spouting off enough

I have received a few comments from friends that I am not spouting off enough. Since it is nearly spring and I set my clocks ahead today I will try to sprout a little more. Ha ha. You meant spout and not sprout.

I thought I was spouting off -- I made a big point about useless and misleading data reports. I also tried to make a point about politicians being too short-term oriented and not focusing on the real issues. But you want more -- so here goes.

I think some of you people are living in the old world -- a world where left and right ideology are important. Like many good things that outlive their usefulness, this dichotomy is not only less productive than it used to be but it is downright damaging. You don't have to meditate and say Ohhhmmm three times a day to see how today's difficult challenges reflect our inter-connectedness. It is our overlaps that matter more than our differences. I listened to a labor leader pontificate the other day -- his mantra is unchanged from the 1960s and focuses on the separate and paramount goals of workers. Firms and their leaders, according to him, are selfish and gain only by stepping on the backs of the workers. I hear plenty of talking heads on television ridiculing people who ask Congress to do more to help those whose situations have eroded over the last decade. There is plenty of finger-pointing and derision. A few minutes watching any news program easily and vividly supports the notion that ugly and mean spirited accusations dominate the news. Listen carefully -- there is VERY little said about the real causes of our problems. There is very little time devoted to honestly debating the impacts of various solutions.

Don't kid yourself -- this is not business as usual. And one side is not going to win. There are three things that are missing today. First, there is no real discussion of cause and effect. There is no serious debate about the most important issues. Even some scientists lie and exaggerate. And we let them do it. We have chosen our teams and whenever the "good-guys" say anything we jump to their side and their defense. We don't even listen to the "bad-guys". Second, once we get into cause-effect analysis we will clearly see that the solutions to problems require shared burdens and shared misery. We don't think that way now. We are not going to do better as a nation or as a world until we realistically evaluate the ways in which we can share the burdens of the solutions. Once we start REALLY CARING about the plight of others, the more they will care about ours. Funny thing -- this sounds a lot like the moral philosophical statement -- Do unto others as you would have them do unto you. You don't have to be in any particular religion to believe in that idea -- most religions and many variants of atheism see Do unto others as a pretty logical way to live. Third, we lack leadership. Some of you think I am out of my gourd, but those of you who don't think all this is too crazy should be looking for leaders who are reaching across the famous aisles or looking for ways to create coalitions that transcend obsolete idealogical silos.

Whether the present healthcare policy passes into law or not; Whether we get an energy or new stimulus or a financial reform bill -- it doesn't really matter. The losing side will find a way to regroup and challenge again in the coming year or years. It is good to have this kind of competition in government. BUT THE PROBLEM is that this competition is wrong-headed and motivated by sad, pitiful, close-minded extremism. Extremism is a form of sadistic pleasure- seeking that gains only at the expense of others. Real analysis is, on the contrary, pretty hard and dreary work. After working all day, who wants to come home and listen to talking heads discuss and debate the details of our many issues?

As the tsunami comes closer to our sadly weak and short seawalls, we will become clearer about our common and interdependent fates. Real debate and solutions will sound a little sexier. As the baby boom hits the shores of retirement in bigger numbers over the next decades, we will see the end of extreme ideology and the rise of seriousness about evaluating and solving our biggest challenges. Let's hope we don't wait too long.

Was that enough spout?


  1. Larry, I did not realize you were so smart!
    I am going to advise my across the hall neighbor, who is the head of the IMF, to follow your blog!

  2. I is vary smart. I is a prowd gradiate of CGHS!

    Or more seriously -- thanks for the nice compliment and please feel free to spread the blog address with anyone who might enjoy this kind of interchange.

  3. Todays assignment is to read this book before you comment on this rant

  4. Why not just pop your insight in a comment? Why should we read this book? How does it relate to my posting?

  5. Here is the blurb from Amazon about the book

    "An extraordinarily good and lucid examination of current economic difficulties." -- John Kenneth Galbraith, The New York Review of Books

    Product Description

    A classic in economics from the three-time New York Times best seller. Written during a period of acute economic stagnation in 1980, The Zero-Sum Society discusses the human implications of economic problem solving. Interpreting macroeconomics as a zero-sum game, Thurow proposes that the American economy will not solve its most trenchant problems-inflation, slow economic growth, the environment-until the political economy can support, in theory and in practice, the idea that certain members of society will have to bear the brunt of taxation and other government-sponsored economic actions. As relevant today as it was twenty years ago, The Zero-Sum Society offers a classic set of recommendations about the best way to balance government stewardship of the economy and the free-market aspirations of upwardly mobile Americans.

  6. Zero sum game theory is classic. The issue is how do human react when they can only gain when others lose. Your "spout" seems to imply human nature needs to change to solve current economic problems; something I doubt will happen.

    If economics is a zero sum game then "do unto others" could be described more like "I get mine before you get yours"; not as "turn the other cheek".

    I hope your optimism works out; but when governments consistently spend more money than they have the result can be hyper inflation like post WW I Germany. As I posted earlier todays news was not good

  7. Thanks for elaborating.It is more fun this way.

    First, while Lester Thurow and JK Galbraith may think economics is a zero-sum game -- most economists do not. So this is debatable at least. Notice that productivity is very important. If productivity increases -- we get more output per worker. If the work population grows at least as fast as the overall population, then productivity implies a rising standard of living -- the average income per person increases. While this is not alone sufficient to overturn he idea of a zero-sum game -- it points out that higher productivity is a way to escape zero-sums.

    Second, I am not sure that "do unto others" is so unrealistic -- especially when we see the full costs of selfishness. As we face up to higher inflation and huge government debts, I think there is a fighting chance that people will see their interconnectedness. The seeming impotence of US government today may be spawning a voting block of middle-roaders who will no longer tolerate the self-destructive behavior we see now. In a similar vein after nearly a decade of nationalistic protectionist arguing -- it will become clear that postponing the Doha Round and neglecting the passage of free trade agreements has been costly for most nations that trade.

    Finally -- the news you mention is not good precisely because reason does not win out in government discussions about inflation. Before long as we understand that we all pay the price, we may actually get our collective butts in gear and elect people who stand up for sensible policy.

  8. It is not so much what economists claim about economics being a zero sum game; but rather how most peeps in the economy make their economic decisions. Union workers in the US and party officials in China both seem to be following a zero sum decision making process from what I can tell; and probably lots of other folks as well. This is rather like the prisoners dilemma problem; where most of the time people don't make the best "overall decision". Instead people look out for number one.

    Higher productivity also has its own problems which to some extent were pointed out by in this book

    At some point productivity can increase so much that the work population decreases as a portion of the overall population. There seems to be real over capacity in the current auto industry to name just one example. The GM bailout puts the current administration (and to some extent the American voter) in some what of an anti free trade position. TV, camera, computer, and dozens of other industries have left America to a great extent due to free trade.

    I am not trying to argue against free trade, and to a great extent agree with Milton Friedman that it is good for a country to buy products elsewhere if the cost is lower than what it costs for that country to produce them. The problem is the disallocation this can cause internally often results in the election of protectionists.

    While I hope you are right about electing good peeps my gut tells me Tocqueville may be the go to guy about who we will wind up electing.

  9. Larry,

    I believe that you can never spout off too much. I agree with your comment about the need to get more sensible people in Congress. I would also add to that, the presidency. When I listen to many of the current members of Congress/President I wonder how many of them could even be successful in a mid level management position in most fortune 500 companies. I do believe that there are enough competent, ethical people in our country that would be able to contribute in a positive way in Washington. I also can understand why they sit on the sidelines not wanting participate in such an envrionment. I would love to see us adopt more of a Jeffersonian approach to government. Serve and get out. If you are ever searching the future for a topic for your next blog, think about the merits of term limits for members of Congress.

  10. Thanks for the Spout LD, Well done.

  11. Alan -- Nice to see you joining the group. I look forward to your comments

    Bob -- interesting points all but I am going to try to stick to my background -- Macro. If I start pontificating about political science topics then I am out of my comfort space. I do have opinions about such things are term limits -- but I don't think I really add anything to the conversation.

    Mikey -- keep up the good work.

  12. ALL RIGHT, Larry ... this is the kind of debate I was hoping your posts would generate. Sorry I've been out of the loop for a while.