Tag Archives: economic growth

a new “science of progress’

Leave a reply

This article in the Atlantic says we need a “new science of progress”. It’s an interesting philosophical question – the universe is all around us, its secrets there for us to reach out and understand. The knowledge that exists to discover is not changing, and yet we seem to only be able to discover it in fits and starts. Are there things we could do to discover it faster? Well, there is something called the scientific method. There is something called technology. The field of economics certainly tries to study progress in a systematic way. How best to educate and train human beings is a perennial field of research. Maybe we need to mash all these together somehow, then add hefty doses of system thinking and data science? Or maybe we just need to find the really smart, innovative, unconventional thinkers and figure out how to harness their genius better?

This is exactly what Progress Studies would investigate. It would consider the problem as broadly as possible. It would study the successful people, organizations, institutions, policies, and cultures that have arisen to date, and it would attempt to concoct policies and prescriptions that would help improve our ability to generate useful progress in the future.

Along these lines, the world would benefit from an organized effort to understand how we should identify and train brilliant young people, how the most effective small groups exchange and share ideas, which incentives should exist for all sorts of participants in innovative ecosystems (including scientists, entrepreneurs, managers, and engineers), how much different organizations differ in productivity (and the drivers of those differences), how scientists should be selected and funded, and many other related issues besides.

The Atlantic

September 2020 in Review

Leave a reply

Most frightening and/or depressing story:

  • The Covid recession in the U.S. is pretty bad and may be settling in for the long term. Demand for the capital goods we normally export (airplanes, weapons, airplanes that unleash weapons, etc.) is down, demand for oil and cars is down, and the service industry is on life support. Unpaid bills and debts are mounting, and eventually creditors will have to come to terms with this (nobody feels sorry for “creditors”, but what this could mean is we get a full-blown financial panic to go along with the recession in the real economy.

Most hopeful story:

  • The Senate Democrats’ Special Committee on the Climate Crisis had the courage to take aim at campaign finance corruption as a central reason for why the world is in its current mess. I hate to be partisan, folks, but right now our government is divided into responsible adults and children. The responsible adults who authored this report are the potential leaders who can lead us forward.

Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both:

  • If the universe is a simulation, and you wanted to crash it on purpose, you could try to create a lot of nested simulations of universes within universes until your overload whatever the operating system is. Just hope it’s backed up.

James K. Galbraith on the coronavirus economy

Leave a reply

Here is how James K. Galbraith, an economist at the University of Texas, explains the effects of coronavirus on the U.S. economy.

  • The global market for U.S. exports has shrunk drastically. The U.S. exports high-tech capital goods like airplanes and weapons.
  • The U.S. oil industry is pretty much shut down because hydraulic fracturing is not cost-effective at current prices, which are caused by low global demand.
  • Car sales are down because people are driving less, and their cars are going to last longer.
  • The service economy is largely shut down. He says it will not reboot quickly because many services are basic luxury goods, things people have been convinced to want but don’t necessarily need, and things that people can do at home if they really want or have too. To certain extent, people have gotten used to doing things at home, and there is also the problem that many people have lost jobs (in the service industry) and will not have extra income to spend on luxury goods.
  • The service industry business model typically depends on very high occupancy (i.e. crowding) to be viable. Businesses are starting to fail and will continue to fail. Once commercial districts start to have high vacancy, they tend not to come back quickly.
  • Unpaid bills and debts are starting to mount, and this will eventually become a problem for creditors and investors.

Here are his solutions, along with my thoughts in parentheses.

  • Redirect idle industries that export capital goods to internal goods such as public infrastructure. (Makes sense, although it’s not necessarily the same people and equipment. Retooling and retraining would be necessary.)
  • A federal jobs guarantee in industries like teaching and home health care. (Makes some sense, but it makes sense to let the private sector lead in markets that are functioning well. The trick is identifying which sectors like education represent genuine market failures.)
  • Nationalization (or the local government equivalent) of some firms and industries that can’t survive at the reduced volumes. (yuck, in general, but maybe industries where this already exists to some extent, like utilities and transportation.)
  • Domestic manufacturing (maybe, but makes sense to focus on industries where we have a competitive advantage, plus those with value for risk management, resilience, robustness – certainly food, medical equipment, etc.)
  • Just have a universal health care system like all other advanced countries. (For crying out loud, just do it now!)
  • Debt forgiveness, especially student and medical debt. This transfers some wealth from creditors to debtors. He says this will occur in either a controlled or uncontrolled way, so we might as well pick controlled. He says major financial reforms might be necessary, like turning banks into public utilities. (Sounds good to me, but can’t happen without major campaign finance reform.)

Richard Florida’s plan for Philadelphia

Leave a reply

Richard Florida and another dude I hadn’t heard of (but he’s local) have a plan for post-pandemic Philadelphia, and it goes something like this:

  • Focus heavily on medical and biotech R&D and startups, where we are a major center.
  • Upgrade workforce skills to participate in this industry.
  • Local procurement policies, especially from minority businesses.
  • Do something to fill vacant store fronts.
  • Do something about poverty.
  • Raise the minimum wage.
  • Develop “concrete actionable strategies” to do these things.

This all sounds pretty good to me. It’s short on specifics of course. We need to grow the economy and create professional jobs somehow without alienating the anti-gentrification crowd. Then tax revenue could increase and just maybe you could do something about poverty. Poverty is the tough nut to crack because there may just not be enough money to go around within a single political jurisdiction, although there probably is plenty to go around in the metro area as a whole, and certainly in the state and country as a whole.

I think professional management of city services would also help. Philadelphia should be a first class international city, but in addition to the income and education inequities it is held back by a personality that is too accepting of amateurism and mediocrity, and too unwilling to look at what is working elsewhere and adapt it. This is not such a tough nut to crack, in my view. Government, businesses, educational institutions, and the public worker unions could get together and probably come up with a plan to upgrade services significantly while saving money, building skills, and creating jobs in the process. This would be a win-win-win for everyone.

The Republican Party Doesn’t Stand for Anything!

Leave a reply

I said I was going to look at the Republican Party Platform.

I have voted for Republican candidates at the state and local level at times in the past. I am sympathetic to pro-business, pro-growth arguments at times. I think that some countries have overreached in terms of taxation and regulation at times. I tried to give the Republican Party the benefit of the doubt. BUT…

Today I confirmed that THERE IS NO REPUBLICAN PARTY PLATFORM. They didn’t meet to discuss one, and didn’t adopt one, in 2020. They are for whatever Trump says, and against whatever Obama and the Democratic Party say. They have no ideas, no policy proposals. They simply don’t stand for anything! This is not propaganda. I am not making this up. This is what their website literally says. Just to make sure I wasn’t missing something, I went to the Republican National Committee website, and clicked on the link to the party platform from there. Here’s what is says:

WHEREAS, The RNC has unanimously voted to forego the Convention Committee on Platform, in appreciation of the fact that it did not want a small contingent of delegates formulating a new platform without the breadth of perspectives within the ever-growing Republican movement…

WHEREAS, The RNC, had the Platform Committee been able to convene in 2020, would have undoubtedly unanimously agreed to reassert the Party’s strong support for President Donald Trump and his Administration

WHEREAS, The RNC enthusiastically supports President Trump and continues to reject the policy positions of the Obama-Biden Administration, as well as those espoused by the Democratic National Committee today; therefore, be it

RESOLVED, That the Republican Party has and will continue to enthusiastically support the President’s America-first agenda;

RESOVLVED [sic], That the 2020 Republican National Convention will adjourn without adopting a new platform until the 2024 Republican National Convention

The Republican Party

Okay, fine, let’s look at the 2016 platform then, and compare it to the policy priorities of my pretend party platform.

  • Anti-corruption? No! They are literally against any limits on the purchasing of influence by the rich and powerful. p. 12.
  • A major childcare, education, and training commitment? No! The health and welfare of children is a paramount responsibility of the government…right up to the point where they are born. From that point, childcare is up to parents alone, preferably two heterosexual parents, and the government will not and should not interfere. Parents should have a choice of schools, which sounds reasonable, but in practice this means defunding the universal public education system. Make sure white people are not discriminated against in college admissions. The government should not provide student loans and higher education should be privatized as much as possible.
  • A major public infrastructure and private capital investment commitment? A major research and development commitment? They talk about technology. They talk about startups. I’ll give them some points for talking about the electric grid, which Democrats don’t mention. They don’t really see an active government role in any of these things, let alone an active funding role. They are maybe open to some funding for R&D in the private health care industry.
  • Universal health care? No! Continue to rely on the failed private market place that provides poor outcomes at the world’s highest prices, for those who are able to obtain care at all.
  • A major risk management program? No, but remember I didn’t give the Democrats a high score on this. I’ll give them some points for talking about food security. I’ll give them some points for talking about cybersecurity. They talk a lot about coal. I wonder if they would still talk about coal so much if they adopted a new platform? They state that the IPCC is a political body, not a scientific one. They reject international agreements on carbon emissions. They want to double down in the war on drugs. They are generally for more military spending, more nuclear weapons, and against arms control agreements. Iran, China, and maybe Russia are the enemies. They are just generally against much involvement in international organizations.
  • New revenue to support investment? No, they’re just generally against taxes.
  • Unemployment, disability, retirement? No, they want to monkey with social security.

I tried to be objective and read the document with fresh eyes. I am generally disgusted by it. This is a party with no ideas for improving the country, and I would not entrust them with leadership of anything. I hope they crash and burn in 2020, and reemerge as a more moderate, pro-business and pro-growth party.

Doughnut Economics

Leave a reply

Doughnut Economics is a new attempt to communicate the goal of an economy that works for humans while not exceeding the natural limits of the planetary system it is embedded in. You want to be in the dough part. If you are in the hole, you are within planetary boundaries but you are poor, starving, unwell, or otherwise not benefiting from the economy that is working for at least some other people. If you are outside the doughnut entirely, you are outside planetary boundaries and the planetary system will not be able to continue supporting the economic system (including you, and everyone else) indefinitely.

The majority of intelligent and educated people on the planet do not understand these concepts. We need a critical mass of people, certainly leaders and decision makers, to understand the problem before we have much hope of solving it. I support new and novel attempts to communicate these ideas. This one doesn’t quite seem fully coherent to me in terms of stocks and flows, and I think if we taught children about stocks and flows from a young age they would grow up better able to understand systems in terms that aren’t so dumbed down.

automatic stabilizers are not boring!

Leave a reply

Slate says automatic stabilizers are boring, and then follows up with a long article on how great they would be. They would have kicked in for both the 2008 recession and the current one, without the months of arguing and lost time.

Things like unemployment insurance are obvious, but I like to think about opportunities for making investments we know we need to make anyway. Like infrastructure investments, capital investments, research and development, childcare and education and training. All of these create jobs now while providing payoffs in the future. When the private sector falters, the public sector kicks into a higher gear and carries the ball for awhile. Then the private sector recovers and debts can be paid back, or a surplus can even be built up. But once again, it’s too late to do it right this time around. It’s time to start planning for the next time around.

June 2020 in Review

Leave a reply
In current events, the coronavirus crisis in the U.S. is spinning out of control as I write this in early July. I made a list of trackers and simulation tools that I have looked at. Asian countries, even developing countries, pretty much have it under control, Europe is getting it under control, and the U.S. and a few other countries are melting down. Some voices are very pessimistic on the U.S. economy’s chances to come back. So of course I’m thinking about that, but I don’t have all that many novel or brilliant ideas on it so I’m choosing to write about other things below. Most frightening and/or depressing story:
  • The UN just seems to be declining into irrelevancy. I have a few ideas: (1) Add Japan, Germany, India, Brazil, and Indonesia to the Security Council, (2) transform part of the UN into something like a corporate risk management board, but focused on the issues that cause the most suffering and existential risk globally, and (3) have the General Assembly focus on writing model legislation that can be debated and adopted by national legislatures around the world.
Most hopeful story:
  • Like many people, I was terrified that the massive street demonstrations that broke out in June would repeat the tragedy of the 1918 Philadelphia war bond parade, which accelerated the spread of the flu pandemic that year. Not only does it appear that was not the case, it is now a source of great hope that Covid-19 just does not spread that easily outdoors. I hope the protests lead to some meaningful progress for our country. Meaningful progress to me would mean an end to the “war on drugs”, which I believe is the immediate root cause of much of the violence at issue in these protests, and working on the “long-term project of providing cradle-to-grave (at least cradle-to-retirement) childcare, education, and job training to people so they have the ability to earn a living, and providing generous unemployment and disability benefits to all citizens if they can’t earn a living through no fault of their own.”
Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both:
  • Here’s a recipe for planting soil using reclaimed urban construction waste: 20% “excavated deep horizons” (in layman’s terms, I think this is just dirt from construction sites), 70% crushed concrete, and 10% compost

IMD World Competitiveness Ranking

Leave a reply

The United States fell from 3rd to 10th in the IMD World Competitiveness Ranking this year, after being 1st just a couple years ago. Asian tigers (Singapore, Hong Kong) and Scandinavia/Northern Europe (Denmark, Switzerland, Netherlands, Sweden, Norway) make up most of the top 10, when Canada and UAE making the cut, and Taiwan just edged out at #11.

For the second year in a row, the USA failed to fight back having been toppled from its number one spot last year by Singapore, and coming in at 10th (3rd in 2019). Trade wars have damaged both China and the USA’s economies, reversing their positive growth trajectories. China this year dropped to 20th position from 14th last year.

IMD

City-states tend to do well, so my quick reaction is that it might make more sense to compare Singapore and Hong Kong to, say, the New York City or Toronto metro areas rather than the U.S. and Canada as a whole.

house of cards

Leave a reply

James K. Galbraith has a very pessimistic view of the U.S. economy going forward.

America’s economic plight is structural. It is not simply the consequence of Trump’s incompetence or House Speaker Nancy Pelosi’s poor political strategy. It reflects systemic changes over 50 years that have created an economy based on global demand for advanced goods, consumer demand for frills, and ever-growing household and business debts. This economy was in many ways prosperous, and it provided jobs and incomes to many millions. Yet it was a house of cards, and COVID-19 has blown it down.

Project Syndicate

Slow, underlying trends can undermine the resilience of a system, without obvious impacts on the surface. Then, when a crisis hits, whether or not that crisis is related to the underlying trend, the system is not able to bounce back the way it would have without the trend. Imagine rising temperatures and invasive species very slowly putting pressure on a healthy forest or water body. The ecosystem can resist these pressures, maybe for a long time. But then one day, a major storm, fire, or drought comes along. Absent the underlying pressure, the the ecosystem could have rebounded to its original state, but with the underlying pressure, it rebounds to something short of its underlying state. Even if the shock is less than catastrophic and the system rebounds to something just a little short of the original state, successive crises over time can lead to a long, slow slide that might only be obvious in retrospective. Or, if the shift is very slow, “shifting baseline syndrome” sets in, where the people involved lose their memory of what the system used to be like, and don’t fully realize what has been lost.