Jimmy went
in for his annual physical with Dr. Nolan. The doc shook his head and explained
to Jimmy that he was going to have to change a lot of his habits: "Jimmy, you
have a lot of things wrong with you. You are vastly overweight, anemic,
diabetic, you smoke and drink too much, and your knees are about to go out under
all the stress." Dr. Nolan suggested that Jimmy solve all those problems in one
big bang. He would have to cut down on his visits to the Varsity, quit eating Key Lime
pie, eliminate his 5 pm JD, quit smoking, and most important, eat more spinach,
do more burpees, and have two knee replacements.
Jimmy was
stunned. While he was willing to change his lifestyle over time, moving quickly
on these fronts seemed impossible. How can one eat more spinach and not follow
it with at least a tiny mouthful of luscious pie? And how can a human being cut
out a daily ration of chili dogs without at least one puff on a cig or washing
it down with a little JD? Worse, how does one do burpees without fully
operational knees?
Dr. Nolan was
insistent. "Jimmy, all these vices are connected. If you make headway on one, then you will just fall backwards on another unless you attack them simultaneously.
Sure it will be rough for a while. But once you get past the first days, you
will begin to feel like Melissa McCarthy on steroids." Jimmy replied, "Yes, Doc, but trying all
that stuff at once might just demoralize me, and I might not even make it to my
next appointment. And by the way, Melissa McCarthy is a woman."
Enough
foolishness? I don’t think so. The idea of big bang versus gradualism is worth
discussing in light of our new government’s volley of shots aimed at our
country’s problems. I don’t have to repeat it all here but we have seen and
heard policy announcements in many areas – healthcare, bank regulation,
environmental regulation, tax reform, infrastructure, and so on. The rationale is that we have
deep problems that are worsening. The explanation is that we cannot wait to attack
these problems. Since many of these problems are related, it makes no sense to
prioritize, because failure to move in one area means new policies in other
areas will not succeed.
Is policy in
2017 like building a house wherein one must start with the foundation before
erecting the walls? Or is policy more like making an omelet where you throw
in all the fillings more or less simultaneously?
Much was
said about a big bang after the Soviet Union fell. Many countries were freed
from Soviet policies and decided to move away from a socialist economic framework
to one that was more capitalist. Some, like Poland, wanted to move quickly on
many fronts. Hungary took a more gradual approach. (Hungary and Poland were not in the Soviet Union but were under its influence.) Others went even slower. I just
read some of the economic analysis of these programs and policies and now have
a headache. As you might expect there is no silver bullet to transformation.
How one approached economic transformation depended on a lot of things including the
nature of each country’s specific problems, its culture, and its history
with socialism.
Countries
that moved quickly and forcefully experienced very negative short-run effects
including large recessions and high unemployment. Some that took gradual approaches
avoided some short-term pains but followed a slower path to eventual stronger growth. It has been a quarter century
since all that started, and the truth is that transformation goes on in most of
the former Soviet sphere. The Baltic countries (Latvia, Lithuania, and
Estonia) and Russia are the only countries to have annual real per capita GDPs of close to
$20,000 per year. The rest are much lower.
The radical
changes necessary to move from Soviet to market economies dwarf the changes
going on today. Nevertheless, the experience of big bang is helpful. First,
while there is some precedent for moving quickly on many fronts, there is also
the recognition that gain may follow considerable pain. So one question is
whether or not America in 2017 can tolerate a step backward. Second, much
depends on the severity of the problems. Severe problems may be more entrenched
and difficult to dislodge. A second question, then, is how bad are today’s
problems in the USA? Third, results depend on history and culture. A past with
experience in competitive markets helped places like the Baltic countries
once they were freed from the Soviet Union. A third question: do US voters
want to return to less government and more reliance on markets?
Are our economic
problems in the USA today bad enough that people are willing to take a step
backward to move the economy forward? Or do we even think these new policies
are on the right track? It looks like a new big bang is about to start.
We have lost the largest purchasing engine which enabled the US to keep growing government and private business to keep growing domestic business. The how we lost the engine was displacement by technology and immigrants. That has left a huge amount of underemployed at wages significantly lower than they were making in the last 20 decades and the government with less funds to grow on there by forcing higher taxes and more debt. There is no end in site since the population outnumbers by far the employment opportunities. A new generation of youth is not being properly trained to work in the new workforce structure but people from India and the rest of Asia seem to do very well. Regardless of who the politician is the facts remain the same and some of the solutions are contrary to either party....then again there are always roads and bridges...sort of a temporary solution and cost more tax supported funds since the state nor Federal government seem to handle asset depreciation the same as private business.
ReplyDeleteI disagree. The engine was not lost because of technology nor immigration. The engine was lost because we as a nation don't care about the engine. We are on to higher order needs.
DeleteYes we have forgotten the engine but productivity, invention and technology created good paying jobs and technology replaced people ...good paying jobs were lost. The paycheck dictates spending which in turns creates a dollar turnover for other products and services before leaving the community. Taxes are the same but spent very inefficiently. People with less pay spend less or get into credit trouble and spend even less. Black market, shadow, underemployed are the new economy minus a lot of the middle class. It is part of the transition. However, thousands of people as caught in the transition without knowledge of how to do better...also known as a good education.
DeleteSounds like Abraham Maslow has struck again.
ReplyDeleteI just can't get that guy out of my mind. Did we learn about Maslow from Dr. Sisk at Tech?
DeleteI don't remember Dr Sisk, but I definitely heard about Mazlow him at Tech. Probably a class in organizational theory. I hear about him so much, I want to throw a rock through Johari's Window.
DeleteSisk was one of the worst teachers I ever had. He would sit at a desk and turn on a tape recording of himself reading from a book he wrote. That was his lecture. He also told racist jokes in class. He was supposed to be teaching sociology.
DeleteDear LSD. The mention of key lime pie got my gills a-quivering. The U.S. cannot afford (not monetarily but nationally) to baby-step DJT’s agendas to MAGA. Too many problems and as you say they are interconnected—like the hand bone connected to the arm bone to the shoulder bone, etc. I like my omelets slow-cooked so the eggs, onions, sausage, green and jalapeno peppers, mushrooms, and cheddar and Swiss cheeses all blend together in a moist, tasty, and easily chewable edible—something like the synergistic effect. Cooking each ingredient individually would take too much time and consume extra energy.
ReplyDeleteAssuming the following assumptions: DJT as a biz/developer guy knows how to coordinate many moving parts to produce a finished product (but more in the sense of modular housing and not your example of building a stick house from the foundation up); he knows how to hire competent managers and that they are a necessary and sufficient condition for a successful project; and his Cabinet picks are proven competent managers (maybe a stretch here, TBD). But I think he’s got the ingredients to make a tasty omelet.
I’m not sure about JG’s loss of our purchasing engine due to technology and immigrants—too many unemployed folks who can’t meet job requirements due to lack of education, basic skills and related work experience, and social/family/substance/and penal issues—some due to unfortunate circumstance; others due to self-inflicted wounds. I say those are significant contributing domestic social and cultural issues that encumber filling job openings and creating new jobs. And, of course, one big elebunt in DJT’s living room is trade resulting in ‘merican jobs sailing away. That govomit has had “less funds to grow on” is simply not accurate—the last federal fiscal year saw the largest-ever tax receipts and national debt thanks to China’s willingness to finance it—heck, we’re flush with cash. The solidarity of the problem is not insufficient funding but too much spending—making the wrong omelet with the (too expensive) ingredients you got to work with. Fortunately, the last cook in the kitchen has been fired.
I think the Donald has begun to re-order the needs to a more conventional set—albeit complex—of needs, such as focusing on job creation via tax and reg reduction, strengthening education, “investing” in military and infrastructure, etc. I think he knows about strategery—getting all the parts lined up and moving together—some will progress faster (likely job creation and military/infrastructure spending); others, like education will take longer, difficult to edukate folks from K-12 to college for job readiness in two terms. Nope, no big bang . . . just a slow-cooking, gradual finish to a fine omelet.
The other big elebunt in Donny’s room is the debt. Don’t know how he’s gonna tackle it, but let’s eat first. Tender omelet followed by key limy pie . . . yum, yum.
Nice work Tuna -- too much to discuss here but we definitely agree on the debt challenge. I am afraid that Trump will say debt doesn't matter and that might work for a while. But it is very risky. As for employment I predict one thing. If the economy gets juiced up a bit and wages signal a tight labor market -- the participation rate will rise and we will see that some of these labor mismatches will have been grossly exaggerated. By then we will be in the middle of the next inflation and the Fed will predictably react by sending us into a recession. Have a nice day. :-)
DeleteI agree with Tuna but cannot type that much in one day. That is the transition. Regulations strangle business but create jobs for regulators. Call your Social security Administration in your area. You get a computer the right button and talk to the computer to make an appointment....same for all of government agencies. almost any private business.
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