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June 29, 2010

The folly of letting the international investor community make public policy
Posted by Teresa at 04:00 PM *

First, read the Paul Krugman column Patrick sidelighted as “The intellectual phoniness of ‘hard-headed’ ‘fiscal realism.’

Onward to today’s story in the NYTimes: In Ireland, a Picture of the High Cost of Austerity:

DUBLIN — As Europe’s major economies focus on belt-tightening, they are following the path of Ireland. But the once thriving nation is struggling, with no sign of a rapid turnaround in sight.

Nearly two years ago, an economic collapse forced Ireland to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.

“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.

Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed—those out of work for a year or more—have more than doubled, to 5.3 percent.

Now, the Irish are being warned of more pain to come.

“The facts are that there is no easy way to cut deficits,” Prime Minister Brian Cowen said in an interview. “Those who claim there’s an easier way or a soft option—that’s not the real world.”

Malarkey. In the real real world, the one based on facts, deficit-driven austerity budgets are not the only way to deal with economic downturn, and there’s solid evidence that they do more damage than good.
Despite its strenuous efforts, Ireland has been thrust into the same ignominious category as Portugal, Italy, Greece and Spain. It now pays a hefty three percentage points more than Germany on its benchmark bonds, in part because investors fear that the austerity program, by retarding growth and so far failing to reduce borrowing, will make it harder for Dublin to pay its bills rather than easier.

Other European nations, including Britain and Germany, are following Ireland’s lead, arguing that the only way to restore growth is to convince investors and their own people that government borrowing will shrink.

The Group of 20 leaders set that in writing this weekend, vowing to make deficit reduction the top priority despite warnings from President Obama that too much austerity could choke a global recovery and warnings from a few economists about the possibility of a much sharper 1930s style downturn. …

At bottom, this isn’t terribly complicated. In a capitalistic system, your neighbor’s prosperity becomes your own, and their downturns and recessions likewise become yours, because we all sell goods and services to each other. The point of economic stimulus programs is to get prosperity started again. If you can do that, it’ll generate vastly more real wealth than you spent on the stimulus program.
Politicians [in Ireland] have raised taxes and cut salaries for nurses, professors and other public workers by up to 20 percent. About 30 billion euros ($37 billion) is being poured into zombie banks like Anglo Irish, which was nationalized after lavishing loans on developers.

The budget went from surpluses in 2006 and 2007 to a staggering deficit of 14.3 percent of gross domestic product last year—worse than Greece. It continues to deteriorate. Drained of cash after an American-style housing boom went bust, Ireland has had to borrow billions; its once ultralow debt could rise to 77 percent of G.D.P. this year.

There’s money enough to bail out horrendously mismanaged banks—in effect paying a huge retroactive subsidy to the cynical and in some cases criminally negligent housing and mortgage industries that were the beneficiaries of the banks’ loans—but there’s not enough money to get your business’s customers working and earning again?

Don’t you believe it.

Note: If there’s anything I keep wishing the economic bloggers would explain in terms comprehensible to the general public, it’s that taxes are not the only way that government policies can cost them money.

Comments on The folly of letting the international investor community make public policy:
#1 ::: abi ::: (view all by) ::: June 29, 2010, 04:37 PM:

Relevant to this: Rendering unto Krugman on Slactivist, particularly the Parable of the Dime.

#2 ::: Fragano Ledgister ::: (view all by) ::: June 29, 2010, 04:45 PM:

We will be told,over and over again, as economies stagnate, that unemployment is a moral fault. Even as unemployment numbers stay high, and the numbers of permanently discouraged rise. I wonder how the people who produce that rot manage to do so?

#3 ::: Lori Coulson ::: (view all by) ::: June 29, 2010, 04:52 PM:

To add insult to injury the Republicans just blocked passage of a bill that would have helped provied homes for homeless veterans.

The cherry on the sundae? John Boehner (R-OH) thinks we should cut Social Security, raise the full retirement age to 70 (for those who'll retire in 20 years), and use the funds to pay for the two wars we're waging.

Would someone explain to this man that Social Security has its own income stream, and that cutting benefits won't give him the money for his wars?

#4 ::: Stefan Jones ::: (view all by) ::: June 29, 2010, 05:12 PM:

"I wonder how the people who produce that rot manage to do so?"

Because it feels really, really good to do so.

Also, if you're just a touch above being unemployed yourself, feels really, really good to hear it.

Making people feel good in that way can win elections.

Q.E.D.

#5 ::: Emma ::: (view all by) ::: June 29, 2010, 05:33 PM:

Is it me, or have we seen this all before? Does anyone remember Argentina in the 1990s? The Great Depression right here at home? How do these people keep on getting their idead implemented after they have been proven wrong again and again?

#6 ::: will shetterly ::: (view all by) ::: June 29, 2010, 05:34 PM:

Another response to the same article: A Tiny Revolution: Money Is Not Real.

#7 ::: ddb ::: (view all by) ::: June 29, 2010, 05:36 PM:

Will@6: It appears to say that I'm not allowed to read that site. (No attempt to technically impede me that I can see, but I didn't look past the notice near the top of the first page.)

#8 ::: Emma ::: (view all by) ::: June 29, 2010, 05:36 PM:

And I meant ideas...

#9 ::: abi ::: (view all by) ::: June 29, 2010, 05:40 PM:

Fragano @2:
We will be told,over and over again, as economies stagnate, that unemployment is a *moral fault*. Even as unemployment numbers stay high, and the numbers of permanently discouraged rise. I wonder how the people who produce that rot manage to do so?

Remember our recent guest on our Being Poor thread, who was so sure that the line between poverty and "laughing all the way to the investment advisor and travel agent" was (a) knowing the true cost of things, and (b) growing your own food? He was sure he knew why people were poor, and why he himself would never be. It's a form of safety blanket.

In the same way, the "blame the unemployed" crowd have a model of unachievable perfection of character and energy, and anyone who falls humanly short of that deserves the consequences of that failure. This is notwithstanding whatever shortcomings they themselves have committed at work, which are clearly not significant, because here they are still employed!

In a funny, goofy way, it reminds me of something that I was discussing recently in another context: a definition of the theological concept of original sin that Patrick posted a few years ago:

It's worth noting that the belief that social problems can be solved "if people just tried harder" carries its own load of social toxins. Among other things, it provides the fortunate with a fabulous defense against the sting of conscience: the less-lucky must simply not have tried as hard. Personally, theology aside, I've always found the idea of "original sin" to be deeply sane: it's a model of the human condition in which it's understood that everyone screws up sometimes because out of the crooked timber of humanity no straight thing was ever made. When that's understood, it's a lot easier for us to forgive one another and move on.

Would that there were some form of economic grace to bridge that gap.

#10 ::: Fragano Ledgister ::: (view all by) ::: June 29, 2010, 05:41 PM:

Why is it that I'm getting an wish to see John Boehner humping a rifle in the Hindu Kush?

#11 ::: Fragano Ledgister ::: (view all by) ::: June 29, 2010, 05:51 PM:

abi #9: I've been unemployed. I've had to pinch pennies, cut corners and so on. I've worked some truly crappy jobs. I've seen people have a much harder time than me too, none of whom seem to be lazy or not trying. I just get very tired of all the people who think that some elbow grease and effort, and a few simple solutions are all that's required to fix systemic problems.

#12 ::: Mattathias ::: (view all by) ::: June 29, 2010, 05:59 PM:

Fragano @2: Those writing that rot have a skill that's always in demand: writing whatever rich people with agendas want people to read. Those having that skill, and few enough scruples to use it, cannot understand that one who is or good character and highly skilled can still be unemployed if those skills are not in demand, as their own skills are always in demand. Auto assembly workers are not so lucky.

#13 ::: The Raven ::: (view all by) ::: June 29, 2010, 06:04 PM:

As I said in another context, it is not enough, seemingly, for our wealthy and powerful to be rich and powerful beyond the wildest dreams of any wealthy class in previous history: all who are not members are to be reduced to abject poverty. That seems to be the bottom line, though it doesn't make any sense. Who would want to rule an impoverished world?

"If there’s anything I keep wishing the economic bloggers would explain in terms comprehensible to the general public, it’s that taxes are not the only way that government policies can cost them money."

I've done my time in those fields. The idea just--slides right off people's understanding. It's an interesting problem in behavioral economics, but it would be nice to have a solution.

#14 ::: The Raven ::: (view all by) ::: June 29, 2010, 06:07 PM:

Oh, yes. Missed this. Emma, #5, "Is it me, or have we seen this all before?"

Yes. You are observing economic cycles. Your eyes are open. Good for you!

#15 ::: Teresa Nielsen Hayden ::: (view all by) ::: June 29, 2010, 06:08 PM:

Fragano, I have a brother who stopped speaking to me when I pointed out that government assistance included the programs that helped raise, educate, and mainstream his autistic daughter. His brain is so thoroughly washed that he thought I was insulting everyone who's the parent of an autistic child. Apparently he's no longer capable of grasping the idea that we, as a people, can legitimately decide to spend our own money assisting our own citizens when they've suffered a spell of bad luck.

I swear, he didn't start out that stupid.

#16 ::: Rick York ::: (view all by) ::: June 29, 2010, 06:08 PM:

I came across this article last year during the debate about the stimulus package:

http://www.ourfuture.org/blog-entry/2009020603/fdr-failed-myth

It pretty well debunks the "FDR accomplished nothing only World War II ended the Depression" crap.

We seem doomed to repeat the errors of our past. Germany is historically terrified of inflation because of the Weimar Republic. Unfortunately, for any number of reasons, Germany dominates the EU and, its fears become the EU's fears.

In addition, at least for the last 35 years, the Right in the USA has consistently persuaded people to vote against their own self interest. 250,000 people per week will now be losing their unemployment benefits as a direct result of Republican actions. Just guess who will get their votes in November?

Thomas Frank nailed it in "What's the Matter with Kansas?".

I just don't know how we can help people see how self-destructive their voting is.

The ignoble experiment of libertarian free market capitalism will once more be upon us. I feel truly awful for the people who will suffer under this "The deficit is the only thing that matters" policy.

Or in the words of a great song of my generation: "When will they ever learn?"

#17 ::: Teresa Nielsen Hayden ::: (view all by) ::: June 29, 2010, 06:10 PM:

Raven, there was nothing stupid about Emma's comment.

#18 ::: Emma ::: (view all by) ::: June 29, 2010, 06:26 PM:

Raven, no I'm not watching economic cycles. I'm watching a bunch of powerful bastards who either are in love with discredited economic ideas to such an extent that they cannot even realize they are discredited or are simply using them to continue to maintain their power no matter the price paid by the working classes (including what we now laughingly called the middle class).

#19 ::: The Raven ::: (view all by) ::: June 29, 2010, 06:26 PM:

Sorry, Teresa, Emma. I think Emma made a very smart comment & I didn't make that clear. Thing is: we have all these smart, educated people who *can't* see what Emma sees, even though it's right in front of their faces. So good for Emma!

Better?

#20 ::: The Raven ::: (view all by) ::: June 29, 2010, 06:31 PM:

Emma, #18: oh, I see. But it happens over and over: that's what boom and bust are, when there aren't actual shortages of critical resources, or dramatic expansions of real wealth. Maybe we will eventually step off the cycle. But clearly we have not, yet, despite all hopes.

#21 ::: C. Wingate ::: (view all by) ::: June 29, 2010, 06:32 PM:

re 15: Funny you should mention that: there's a discussion going on right now about education funding in a conservative Christian forum which is in the process of turning into a pitched battle between parents of autistic and retarded kids against the forces of "money spent on public education is wasted". The usual neocon faction is getting hammered because there are plenty of people whose, um, calves are being gored in this.

Reading Krugman's article, the solution he seems to be offering, by default, is for the PIGS to get it over with and default. Meanwhile in the USA: I'm more or less a Keynesian, but it seems to me that if running a deficit is your normal mode of operation (see "every Republican administration from Reagan onward") it is less likely that stimulus spending is going to have the desired effect, because there has to be some limit to how much of debt load the system can support, and we've been eating away at the for thirty years. Or to put it another way: Keynesian stimulus more or less amounts to borrowing from future prosperity to pull up the economic lows; but you do have to pay the future back. That's what scares me: putting on the brakes is obviously wrong, but the eventually the debt levels are going to put the brakes on anyway.

#22 ::: P J Evans ::: (view all by) ::: June 29, 2010, 06:37 PM:

21
There's a lovely chart out there that breaks down the verious sources of the deficit as it is now. The biggest chunk of it is due to the Bush tax cuts and his two wars; without them, the deficit would be quite a bit smaller.

#23 ::: C. Wingate ::: (view all by) ::: June 29, 2010, 06:50 PM:

re 22: Actually a great deal of it also traces back to running such a big deficit for so long starting from Reagan's first term, as interest on debt has gotten to be one of the biggest single items in the budget.

#24 ::: John Mark Ockerbloom ::: (view all by) ::: June 29, 2010, 06:54 PM:

"The cherry on the sundae? John Boehner (R-OH) thinks we should cut Social Security, raise the full retirement age to 70 (for those who'll retire in 20 years), and use the funds to pay for the two wars we're waging.

Would someone explain to this man that Social Security has its own income stream, and that cutting benefits won't give him the money for his wars?"

I'm afraid that Social Security already has been giving him the money for his wars. Or, at the very least, *lending* the money, due to the fact that we collect more in Social Security taxes than we pay out in benefits, and the surplus gets allocated to the general fund.

In theory that money's supposed to be paid back into Social Security benefits once Social Security benefits exceed revenues (as expected, when the Boomers age). Until recently, that was expected to be a few years away, but reports in March indicated that, due to the economic downturn, the surplus may end *this year*.

And so, since the surplus is gone as a revenue source, Boehner basically is trying to get it *back*, since cutting benefits and keeping taxes the same would re-establish the surplus. Put another way, he's basically proposing that we break the promise we made to workers who had paid more in SS taxes in exchange for adequate benefits when they needed them.

Watch closely for more shenanigans of this kind over the next few years, as the promissory notes for Social Security come due.

#25 ::: Madeleine Robins ::: (view all by) ::: June 29, 2010, 07:06 PM:

First thing I thought of this morning when I saw the Times article was the Krugman op-ed. Then I started thinking of all the dystopic near-future novels in which the world goes to hell economically, not because of a bomb or a plague. Then I got brain overload went and cuddled the dog for a bit.

The absolute rock-bottom-religious certainty with which Boehner and his fellows believe that the only One True way to deal with economic crisis is to stop spending money and suck it up (always someone else doing the sucking, of course) is inspiring. In a bad way.

#26 ::: Summer Storms ::: (view all by) ::: June 29, 2010, 07:26 PM:

ddb @7: I saw that message at the top, too, but I think it's facetious, as I simply scrolled down and read the [very good] article.

#27 ::: Stefan Jones ::: (view all by) ::: June 29, 2010, 07:27 PM:

World War II getting us out of the Depression, translated:

"High taxes and the government going into massive debt to fund stimulus spending are OK as long as it involves blowing things up."

#28 ::: Summer Storms ::: (view all by) ::: June 29, 2010, 07:28 PM:

(gratuitous extra post to allow me to re-save my posting info, as ML appears to have "forgotten" it)

#29 ::: David Goldfarb ::: (view all by) ::: June 29, 2010, 07:28 PM:

ddb@7: That notice appears on every page, not just that one.

It's a joke. Jon fancies himself a humorist, and the book is a collection of humor pieces. He in no way intends the notice to actually deter anyone from reading his blog.

In order to be 100% sure of this, I just spoke with him on the phone. I specifically asked him, "Is it okay if this person I know from Making Light reads your blog?" and he said it was.

#30 ::: Fragano Ledgister ::: (view all by) ::: June 29, 2010, 07:54 PM:

TNH #15: I decided I'd been dropped into bizarro world when I watched Pete DuPont say seriously, twenty-two years ago, that public education needed to be abolished, in essence because it was a form of socialism. Not a single one of his fellow Republicans suggested to him that he should walk out of a party dedicated to the idea of a republic and form his own Oligarchic Party.

Time and again, I watch as turkeys willingly vote for both Thanksgiving and Christmas, because it means that the undeserving will get it in the neck. The fact that they are going to fall into that category in short order somehow escapes them.

#31 ::: Constance ::: (view all by) ::: June 29, 2010, 08:33 PM:

#10 Fragano Ledgister

"Why is it that I'm getting an wish to see John Boehner humping a rifle in the Hindu Kush?"

Honey, considering what you commented elsewhere in response to my own observation of people's music that was f****** too loud ....?

Smoochies, as ever!

Love, C.

#32 ::: j h woodyatt ::: (view all by) ::: June 29, 2010, 08:54 PM:

Emma @ 18: "I'm watching a bunch of powerful bastards who either are in love with discredited economic ideas to such an extent that they cannot even realize they are discredited or are simply using them to continue to maintain their power no matter the price paid by the working classes (including what we now laughingly called the middle class)."

A third possibility is that the powerful bastards in questions are deliberately and methodically pursuing the best available policies for discrediting economic and political liberalism, and to crush whatever remains of the democratic impulse from among the population. Governance will be so much less of a chore when it no longer requires the consent of the governed, and an aristocracy can be restored to a position properly at the apex of the caste hierarchy. Though, to be fair, a goodly size fraction of the powerful bastards probably just enjoy punching the dirty f'ing hippies too much to count the costs.

#33 ::: P J Evans ::: (view all by) ::: June 29, 2010, 08:55 PM:

One of the points I try to make about this is that the people pushing deficit reduction the hardest are also people who have more than enough money to live in comfort for the rest of their lives - they'll never need Social Security. (ISTR that these are also the people who pushed 'trickle-down economics' and tax cuts in earlier years.)

#34 ::: heresiarch ::: (view all by) ::: June 29, 2010, 09:07 PM:

Fragano Ledgister @ 2: "We will be told,over and over again, as economies stagnate, that unemployment is a moral fault."

It's so weird how many people become moral failures during recessions! Well, the recession is probably their fault: if they just found a job like everyone else then our country would be suffering like this!

Stefan Jones @ 4: "Also, if you're just a touch above being unemployed yourself, feels really, really good to hear it. Making people feel good in that way can win elections."

I don't know. I think "people who are unemployed brought it on themselves" works a lot better when the majority of people can convince themselves that working hard does lead directly to prosperity. It's a lot harder to convince people of that when they've just lost their job because their company went out of business, and there's a lot of that going around these days. Ten percent unemployment--that's a lot of people with a strong incentive not to believe that having a job is a matter of worth, and a lot more people who know them.

I feel that this hysteria over debt and the conviction that paying that debt down is the only path forward is largely an elite phenomenon. Surveys tend to show that people are more worried about jobs and the economy than about the national debt (though debt is depressingly high up there.) This makes a lot of sense, because the people who would really be hurt if the US (or any other country) defaulted on its debt are the people who lent the government that money, i.e. the rich. (Well, and China, but China quite literally has more money lying around than is good for it.) For everyone else, default would be fairly irrelevant.

#35 ::: C. Wingate ::: (view all by) ::: June 29, 2010, 09:38 PM:

re 34: I don't think that survey says what they are hoping it says, because I think a lot of the people who answered "jobs" operate under the dogma that current "high" taxes and government "interference" are causing a reduction in the number of jobs. Most of the guys I know who are devotees of this economic religion are not poor, but are definitely working for a living; they don't have any investments. All the genuinely well-off people I know either aren't talking about it or are outspoken liberals.

#36 ::: Henry Farrell ::: (view all by) ::: June 29, 2010, 09:44 PM:
I'm watching a bunch of powerful bastards who either are in love with discredited economic ideas to such an extent that they cannot even realize they are discredited or are simply using them to continue to maintain their power no matter the price paid by the working classes (including what we now laughingly called the middle class).

The Irish story speaks to this too. Fintan O'Toole's Ship of Fools is worth reading on this - a very angry book. For the cliff notes version, I have a review essay here.

#37 ::: John Mark Ockerbloom ::: (view all by) ::: June 29, 2010, 09:48 PM:

I like the graphs on the deficit and factors contributing to it. While it has a definite point of view-- someone with different political priorities could pick different factors to include in the deficit contributions-- it's at least a basis for comparison with other proposals for cutting spending (or raising taxes).

Has anyone done something similar with long-term deficit and economic projections under different policy assumptions about overall spending and tax levels? A lot of this debate seems to swirl around gut feelings of the relative dangers of overextending indebtedness vs. not doing enough stimulus to get the economy moving. At that gut-feeling level, I'm willing to trade off deficit spending for effective stimulus in the still-dire present economic state of affairs-- but at a certain point, I think we *do* need to tighten up budget discipline, if we want to keep debt manageable over the long term.

But I'd rather not just go on gut feelings (since those are easily manipulated) about when to switch between loose and tight budgets. I'd like to see what can be expected to happen under different specific switching strategies. What happens, for instance, if we use 7% unemployment (to pick a statistic out of a hat) as the median crossover point between tight and loose budgets, compared to using other criteria?

(I realize that any projection of this sort is going to involve various other assumptions, and is therefore also subject to manipulation. But it'd be nice to have at least *some* plausible example scenarios to consider; and it's easier to tell the difference between manipulation and sound historical assumptions when the data and formulas are made explicit.)


#38 ::: Ken Houghton ::: (view all by) ::: June 29, 2010, 10:07 PM:

If you assume the market is relatively efficient--consistent in its beliefs, that is--then a month or two ago, it was projecting a moderately strong recovery over the next ten years, most of it more than three years out.

Then all the "austerity" measures went into effect, and that same market now sees tepid to flat growth over that same period--and the recovery may be starting later.

As a variation on the old joke, I sent you unnaturally high unemployment, a shifting yield curve, and a clear need to increase Aggregate Demand. What are you doing here?

#39 ::: Ingrid ::: (view all by) ::: June 29, 2010, 10:24 PM:

#13 The Raven "Who would want to rule an impoverished world?"

I am not trying to be facetious when I say that the response that most of the Wealthy and Unscrupulous would give is "Who WOULDN'T want to rule an impoverished world?" Power over the helpless is an unparalleled drug.

#22 P J Evans

Fantastic chart. Thank you for pointing it out! That will help me out, personally, in some sticky arguments.

#40 ::: Earl Cooley III ::: (view all by) ::: June 29, 2010, 11:23 PM:

"Blame the unemployed" sounds like it would be a founding tenet of secular prosperity gospel. Next, of course, would be the laying on of invisible hands of the market to faith heal the economy (for the wealthy). Praise Madoff, patron saint of affinity investment!

#41 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: June 30, 2010, 12:47 AM:

I can't decide whether the pundits, the economists, and the politicians are fooling themselves or trying to fool the rest of us when they continually make the error of equating the stock market with the economy, or the financial system with the economy, and gauge the health of the economy based on whether huge organizations are buying stocks or going into debt to the banks.

#42 ::: Meg Thornton ::: (view all by) ::: June 30, 2010, 05:54 AM:

My suspicion is economics becomes much more understandable when people stop treating it as though it's a mathematical system (and therefore has no conceivable limits at either end of the scale) and start treating it as a biological one (which means it's more of a closed loop, and that growth and decline are part of this closed loop as well). Once the general economic system is seen this way, money stops being the scorecard in the game, and starts being the blood in the circulatory system, and thus instead of needing to be accumulated by the "winners" in the game, the money actually needs to be kept moving around and around in order for things to remain healthy.

Possibly a radioactive currency might help with assisting people to get a handle on the whole notion.

#43 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 06:09 AM:

Constance #31: On humping rifles.

I refer you to the OED, which has this definition for the verb "to hump", followed by a nice long usage history:

2. To hoist or carry (a bundle) upon the back: chiefly to hump one's swag (bluey, drum), to shoulder one's bundle. Also more generally, to carry or shift (a heavy object), not necessarily upon the back, and to hump it. See also BLUEY n. Chiefly Austral. and N.Z. slang.
1853 W. HOWITT Two Years Victoria xiii. (1855) I. 226 He ‘humped his swag’, in diggers' phrase, that is, shouldered his pack. 1863 J. GOLDIE 3rd Diary 19 Feb. in J. H. Beattie Pioneers explore Otago (1947) 147 Digger custom, we humped our swag containing our house, our bed, our grub. 1863 J. G. WALKER Jrnl. Mar. (MS.) 4 Humping it over from the Tiviot on our backs would not do as it was too hard work. 1864 J. C. RICHMOND Let. 12 May in Richmond-Atkinson Pap. II. 111 It is very hard work humping your blankets and tucker. 1865 E. R. CHUDLEIGH Diary 16 July (1950) 193 Humping all their belonging with them. 1866 B. L. FARJEON Shadows on Snow 66 [Diggers]. The best thing we can do..is to try and hump it back again tomorrow. 1888 BOLDREWOOD Robbery under Arms I. xi. 142 We put it up roughly..with pine saplings. The drawing in was the worst, for we had to ‘hump’ the most of them ourselves. 1897 Westm. Gaz. 7 Aug. 1/3 He humped his load up country a bit. 1916 ‘TAFFRAIL’ Pincher Martin xii. 218 We'll have to hump the whole bloomin' lot out again, damn an' blast him! 1922 T. E. LAWRENCE Let. 7 Sept. (1938) 365, I went off to hump their swill to the camp pigs. 1924 {emem} Let. 20 Jan. (1938) 456 If it is the best I can do with a pen, then it's better for me to hump a rifle or spade about. 1925 FRASER & GIBBONS Soldier & Sailor Words 122 To hump, to lift, to carry. Ibid., To hump it, to march with full kit, to tramp on foot. 1955 M. GILBERT Sky High viii. 112 Couldn't you hump around the heavy lectern vases. 1960 Sunday Express 6 Mar. 8/4 He..tugged out a suitcase containing his full-dress uniform, humped it across the pavement. 1971 B. W. ALDISS Soldier Erect 78, I followed behind him, humping the wireless set. 1971 N.Z. Listener 22 Mar. 13/1 He's humpin' a haversack. 1973 C. BONINGTON Next Horizon xii. 171 John and Dougal took the lead, while Layton and I followed, humping loads... I humped my big rucksack, taking the occasional photograph.

#44 ::: Michael Roberts ::: (view all by) ::: June 30, 2010, 06:11 AM:

Fragano, I, um, I took the wrong sense, too. Not that I didn't agree, especially given his actual name, but ...

#45 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 06:40 AM:

Michael Roberts #44: And there's a sfnal connection too, you should note.

#46 ::: Serge ::: (view all by) ::: June 30, 2010, 06:47 AM:

Fragano @ 43...

There's a speed bump on the street nearby, and drivers are warned about it by a sign that says "Speed Hump".
Wham bam thank you van?

#47 ::: Gray Woodland ::: (view all by) ::: June 30, 2010, 06:49 AM:

Suppose for argument's sake you're right about the manifest need for a stimulus. I don't see where it follows that a government only just functional enough to accept that, is thereby competent to carry through the presumptively harder project of 'stimulating' with enough skill and honesty to do more good than harm.

Surely it's precisely the marginal polity, which might grudgingly be convinced by arguments like yours rather than making and following them through spontaneously, which is likely to blow the whole wad on dodgy transfers to its favourites and 'job-creating' monuments to its leaders' irrepressible vanity.

So the failure of the Irish government to stimulate, might itself be evidence that any stimulus it could have actually enacted would have been worse than none at all. Of course, if deficit hawks are right, then it would have been worse anyway.

On either hypothesis it sucks to live under the Irish government's aegis right now, and I don't hold out huge hope for the UK either.

There’s money enough to bail out horrendously mismanaged banks — in effect paying a huge retroactive subsidy to the cynical and in some cases criminally negligent housing and mortgage industries that were the beneficiaries of the banks’ loans — but there’s not enough money to get your business’s customers working and earning again?

At the very least, there wasn't the former. Nor have we yet seen all the wealth-destruction and reverse Robin Hoodery that will come of this scammage.

#48 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 07:26 AM:

Serge #43: I'll have no truck with that sort of thing.

#49 ::: Ginger ::: (view all by) ::: June 30, 2010, 07:42 AM:

Fragano, Serge: Wait -- now I see that auto-punning is something of a reflex for you, but in a roundabout way.

#50 ::: Serge ::: (view all by) ::: June 30, 2010, 08:29 AM:

Ginger @ 49... Some probably think this injection of pnus is tiring, and wish we'd spare them.

#51 ::: ajay ::: (view all by) ::: June 30, 2010, 08:37 AM:

Surely it's precisely the marginal polity, which might grudgingly be convinced by arguments like yours rather than making and following them through spontaneously, which is likely to blow the whole wad on dodgy transfers to its favourites and 'job-creating' monuments to its leaders' irrepressible vanity.

It's pretty well impossible to have a misguided stimulus that would be worse than no stimulus at all. Even if the whole lot went on constructing giant statues of George Bernard Shaw, or buying huge gold-encrusted hats for friendly TDs, or (equally foolish) building aircraft carriers for the Irish Navy, it would still have a stimulative effect. Just as long as the money's spent somewhere in Ireland, it'll do good. (See Keynes on paying men to dig holes and fill them up again.)
You're right in that it probably wouldn't be the optimum - here we get into things like multiplier effects - but it would certainly be better than nothing.

#52 ::: ajay ::: (view all by) ::: June 30, 2010, 08:38 AM:

Some probably think this injection of pnus is tiring, and wish we'd spare them.

Wouldn't you find that rather a wrench?

#53 ::: Janet Brennan Croft ::: (view all by) ::: June 30, 2010, 08:42 AM:

Meg Thornton @42, I like that analogy. But when you bring in biology the next thing you know you have to start talking about evolution...

It's starting to hit home even for me, someone with a nicely secure job with tenure and a daughter with a good scholarship package. Yes, that's all fine and good, but what about when her friends and especially roommates get "downsized"? Neither of us is secure enough to carry one more person for more than a month or two. I haven't had a raise in years, and won't be getting one this year either. I find myself keeping my eyes open for jobs for all of her friends now, and it's not pretty out there, even when you do have the dubious luxury of being able to take a minimum-wage job. The rich may exist in nice safe bubbles, but the rest of us are never far from the edge.

#54 ::: Terry Karney ::: (view all by) ::: June 30, 2010, 08:42 AM:

re hump: The meaning, "to carry" is clear to me (I've humped many a ruck, and the army jargon for some things, like hard marching is to say, "that was a really touch hump, etc.) but I read it both ways.

I think it's because I can see him with a certain fetishistic reaction to firearms/violence.

#55 ::: Dragoness Eclectic ::: (view all by) ::: June 30, 2010, 09:03 AM:

I find it curious that, IIRC, Forbes magazine has been slamming the IMF for decades for advising exactly such austerity programs to troubled 3rd World economies, because they cripple the subject's economy and lead to popular backlash which gets the "austerity program" government thrown out and replaced with one that will spend more on social services and drive the economy even further into debt, leading to defaults on foreign debt, nationalizing foreign assets, and other fun features of "banana republics".

It appears the IMF's bad advice is just as bad for European economies as it is for Latin American ones. That, and the libertarians over at Forbes have long been preaching that raising taxes does not lead to prosperity, ever. (They also had rude and prophetic things to say about how the finance industry was managing things back in the late 1990s.)

#56 ::: Ginger ::: (view all by) ::: June 30, 2010, 09:24 AM:

Serge, ajay: Be careful, or we'll drive others away. Part of being a good punner is knowing when to yield.

#57 ::: Ingvar M ::: (view all by) ::: June 30, 2010, 09:29 AM:

Serge @ #46:

Not too far from where I am sitting (I'd estimate it to about 600 metres), there is a sign that says "Humped Zebra Crossing". I have never seen a zebra nearby and even less one that has just mated.

#58 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 09:39 AM:

Y'know, just when you think that there must be a limit to the absurdity of the right, somebody crosses it: http://mediamatters.org/blog/201006260007

#59 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 09:40 AM:

Ingvar M: #57: Much less the fabled zebra-camel mix.

#60 ::: John Mark Ockerbloom ::: (view all by) ::: June 30, 2010, 09:54 AM:

Fragano @ 58: I found it odd that even the critiquing article, in disputing the "poor pay no taxes" canard, made no mention of the social security taxes that all working people pay. You know, the taxes that Boehner wants to keep using to pay for wars and stuff. (Some folks in the comments did point this out.)

#61 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 10:21 AM:

Ginger #56: Are you sure you want to put everything into reverse gear?

#62 ::: Barry ::: (view all by) ::: June 30, 2010, 10:44 AM:

From the original article: '.., the type of austerity measures that financial markets are now pressing on most advanced industrial nations'.

Note that (a) she doesn't give an iota of proof, (b) the article mentions that Ireland did what it was supposed to have done, and the markets punished it quite severely, and (c) Paul Krugman, on her own newspaper's website, has repeatedly debunked this idea.

Either she's stunningly ignorant and can't think her way out of a paper bag, or she knows which side her bread is buttered on.

There was a line from the book 'Late Victorian Holocausts: El Niño Famines and the Making of the Third World' by Mike Davis (I'm paraphrasing from memory), that providing relief during famine would weaken the people's moral fibre, so that they'd expect hand-outs during good times.
(a commenter on Amazon put it: 'Davis starts off with a fascinating and horrific description of the famines, filled with damning facts. For example Lord Lytton and his bureaucrats in 1876 India were obssessed with the idea that relief would just encourage Indian shirking. Readers will not soon forget that the calorie/work regimen that Lytton did impose was worse than that of Buchenwald. Nor will they forget the judgment of the Famine inquiries in the 1880s whom, Davis notes, concluded that with millions of famine dead the main flaw was that too much money was spent on relief').


I've felt that the policies of the economic elites was that once *they* had been bailed out, the #1 priority was to make sure that the rest of us didn't ask about where our bail outs were, or what we'd get for bailing them out. That's why we see the resurgence of Hooverism.

#63 ::: Terry Karney ::: (view all by) ::: June 30, 2010, 10:59 AM:

The NYT this morning is saying the austerity measures are an example of repeating the past and hoping this time things are different. They make, front page; above the fold, a direct comparison to the contraction/redepression when FDR tried to reduce spending too soon in the late thirties.

You know, the second decline, the one people use to say it was WW2 which ended The Depression.

#64 ::: Barry ::: (view all by) ::: June 30, 2010, 11:03 AM:

Fragano Ledgister @10:

"Why is it that I'm getting an wish to see John Boehner humping a rifle in the Hindu Kush?"

Because you're not mean enough - I'd have him driving an old-fashioned, unarmored jeep up and down the roads, looking for IED's, snipers and ambushes. Along with all of the other neoconmen and -women. Until such time as we get a strong and not-too-nasty central government in Afghanistan.

#65 ::: Ginger ::: (view all by) ::: June 30, 2010, 11:52 AM:

Fragano @ 61: Not if you're going to blow a gasket. I just don't want people to think we're a bunch of air-bags on this topic.

#66 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 02:12 PM:

Barry #62: In the Victorian era there was also a rather interesting idea that dietary needs in hot climates were lower than in cold climates. This led to a prison riot in St Lucia in 1889 because the prisoners were being fed what was in effect a starvation diet in accordance with prevailing, ahem, scientific theory.

#67 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 02:16 PM:

Barry #64: You don't think my vision of Congressman Phaique Tan trudging up and down the Afghan slopes with a heavy rifle on his back is mean enough?

#68 ::: heresiarch ::: (view all by) ::: June 30, 2010, 02:39 PM:

I have to brake in here and urge five-point restraint to all the folks currently racing down the Autopuhn. Please, think of the Humped Zebras!

#69 ::: Lori Coulson ::: (view all by) ::: June 30, 2010, 02:41 PM:

John Mark Ockerbloom @24:

If the Federal Government defaults on the bonds held by the Social Security Trust Fund, what is to stop it from defaulting on the rest of the Treasury bonds?

Do you really think the rest of the world's financiers are going to believe that the US won't default on the bonds they're holding if they do stiff SSTF?

BTW -- every Federal entity that has borrowed funds from SSTF over the history of the same HAS paid those funds back. The loans are not open-ended. And FICA a/k/a OASDI taxes do not go straight into the general fund, so this is, in intent at least, a separate income stream.

Now if you'd said that the government is using the Social Security surplus to mask how much debt it is in, I'd have to agree with you.

When I started working for the goverment my first job was with Social Security. I've heard most of the FAQs and set some people straight about how it works.

#70 ::: albatross ::: (view all by) ::: June 30, 2010, 03:06 PM:

heresiarch #34:

The US government isn't at all likely to default, in the current setup where our debt is denominated in dollars whose value we can ultimately define. The far more likely decision on our part would be to inflate the dollar relative to other currencies. (But that has all kinds of problems, since lots of our spending is inflation indexed.)

But imagine we did default, perhaps as a result of some kind of inter-party squabble or power-grab. I believe Gingrich made some reference to doing this as a strategy for gaining power and limiting future government spending[1]. It would *not* only affect the rich.

We're financing something like 12% of our federal spending. If it became impossible to borrow that money (it wouldn't--we'd just pay more), we'd have to cut something like 12% of our budget one way or another. This sort of thing has happened to a lot of countries, and it does *not* leave the average person untouched. Instead, you get a government with an urgent need to cut spending and raise taxes, get hold of money any way it can, etc. The IMF imposes austerity plans on other countries, not by threatening them with nukes or invasions, but by offering them a way to borrow money again.

[1] This idea is on a par with the proposal to fix the Gulf oil leak by nuking it, IMO.

#71 ::: Fragano Ledgister ::: (view all by) ::: June 30, 2010, 03:08 PM:

Heresiarch #68: That would be a zebra crossing on the autopuhn, of course.

#72 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: June 30, 2010, 04:56 PM:

Meg Thornton @ 42:

As an engineer who's spent a lot of time in biological labs I've tried to convince some economists of the utility of applying control systems theory, both linear and nonlinear, to the behavior of economies. Currency flow should be easily modeled with control theory, and I would expect that with nonlinear models you could model crashes and bubbles and such too. Unfortunately, I haven't been able to convince anyone, mostly I think because they're not familiar with the tools and techniques involved, and don't see how the models would work.

It's a shame; the biologists (mostly physiology and metabolism types) I've worked with were quite happy using those tools to describe circulatory systems and hormone feedback loops.

I just looked at the chart of the stock price of Apple over the last week, and it looks an awful lot like the response curve of a slightly underdamped system to an impulse input. Hmmm...

#73 ::: Janet Brennan Croft ::: (view all by) ::: June 30, 2010, 07:27 PM:

Bruce Cohen @72, that just explained what Meg Thornton's comment reminded me of -- the Glooper in Terry Pratchett's Making Money. I have no idea if his economic theory in this book is sound but it sounded pretty good to me.

#74 ::: Edmund Schweppe ::: (view all by) ::: June 30, 2010, 08:29 PM:

Fragano Ledgister @ 71: I thought that there would be no zebra crossings on the autopuhn. However, that presumes the autopuhn to be a lemmated access highway, for which there is no proof.

#75 ::: Bill Stewart ::: (view all by) ::: June 30, 2010, 08:48 PM:

Edmund, you say there are lemmings crossing the highway near the zebra?

#76 ::: P J Evans ::: (view all by) ::: June 30, 2010, 10:16 PM:

Fragano, I think the zebras are following the lemmings.

(Isn't that what 'lemmated access' means?
Oh.
Never mind.)

#77 ::: Ginger ::: (view all by) ::: June 30, 2010, 11:01 PM:

That's not a zebra..that's a tiger crossing.

#78 ::: Serge ::: (view all by) ::: July 01, 2010, 01:14 AM:

Why did the tiger cross the road?
Because that's where the chicken had gone?

#79 ::: ajay ::: (view all by) ::: July 01, 2010, 05:22 AM:

73: as you know, Bob (or indeed Janet) the Glooper is based on the real-world Philips Economic Computer, which is sitting in a glass case a couple of miles from me right now, plotting.

Pratchett's economics are more or less sound. Deciding to use the ******* as ******* would cause massive unemployment and deflation. Even if the ****** produced lots of goods, few people would have the money to buy them, and those who did would hold off on purchases in the hope of prices falling further in the future.
Ankh-Morpork would basically end up looking like 1990s Japan.

#80 ::: Fragano Ledgister ::: (view all by) ::: July 01, 2010, 06:42 AM:

That's no tiger crossing, that's a royale with cheese.

#81 ::: Ingvar M ::: (view all by) ::: July 01, 2010, 09:17 AM:

Fragano Ledgister @ #66:

Well... I can't for a moment believe there's a difference in a "minimum amount" of vitamins, minerals, protein and essential fatty acids. I also suspect this is the part you so correctly ridiculed.

But, there's quite a difference in required caloric intake between (say) the Equator and (say) the North Pole (magnetic or geographic, your choice).

The former probably has a daily requirement of somewhere in the 1500-3000 kcal range, the latter somewhere in the range of 6000-12000 kcal, for an "at rest"-calibrated Standard Human.

(standard humans sold by Hexapodia Mail, send a courier ship for retrieval using non-Blight intelligent programs as payment).

#82 ::: Ingvar M ::: (view all by) ::: July 01, 2010, 09:19 AM:

Myself @ #81:

Note, this is for humans in something approaching "long periods of time outdoors". In a nicely climate-controlled building, where you can stay 24/7, there's not much difference at all.

#83 ::: Adrian Smith ::: (view all by) ::: July 01, 2010, 11:17 AM:

Stefan Jones@27: World War II getting us out of the Depression, translated:

"High taxes and the government going into massive debt to fund stimulus spending are OK as long as it involves blowing things up."

The thing about blowing things up is that it gets rid of an excess of productive capacity which might otherwise prevent capital from earning sufficient return on investment and force it to go and involve itself in questionable derivatives and CDOs, whatever they are.

#84 ::: albatross ::: (view all by) ::: July 01, 2010, 12:44 PM:

Adrian Smith:

Too much capital in your society is the problem you want to have. Go ask a random inhabitant of Haiti, Bangladesh, or Congo if you want further clarification. Hell, go ask the folks we've fought recent wars with, who keep having the joy of using explosive belts and RPGs against folks with flying killer robots and armored vehicles.

A massive wartime economy is a kind of economic bubble, albeit one with a relatively clear endpoint that can be expected. I mean, in 1943, there is a great need to manufacture tanks, fighter planes, missiles, and warships, and by 1946, there will be almost no such need.

One of the worst consequences of it, IMO, is the rise of whole industries whose lifeblood is continued manufacture of those things. It's no accident that the current war on terror has so many odd parallels to the cold war. One reason it's so hard to end the war on terror (which makes very little sense in anything like its current form) is that there's a huge constituency to continue it forever.

#85 ::: Tom Whitmore ::: (view all by) ::: July 01, 2010, 01:28 PM:

I'm waiting for Serge to discourse on using D&D or other RPGs against killer flying robots -- sounds unlikely to work.

#86 ::: Chris Quinones ::: (view all by) ::: July 01, 2010, 01:36 PM:

Bruce Cohen, 72: I'd once devised an epidemiological model of the flow of money years ago, but damned if I can reproduce it now. Maybe as my mind gets back to full function, I'll remember what it entailed.

#87 ::: Mark ::: (view all by) ::: July 01, 2010, 01:48 PM:

Tom Whitmore @ 85, you're better off using Shadowrun against flying killer robots. You'd want to be able to combine magic and tech against that kind of threat.

#88 ::: albatross ::: (view all by) ::: July 01, 2010, 02:04 PM:

Are the flying killer robots operated by NPCs, or NCOs?

#89 ::: abi ::: (view all by) ::: July 01, 2010, 02:17 PM:

Thing is, the US is simply starved of public-sector capital investment. The roads, the schools, the public transport network (or lack thereof), etc.

If there's an area of the society that's starved of capital investment, and there is, as Adrian points out, so much capital floating around that people are inventing new bags of holding for it, one of four things seems likely:

1. The underfunded areas will turn out not to be of any use to anyone and will wither and die. Does anyone seriously expect this of the transport infrastructure, or the educational system that prepares the next generation of citizens and workers?

2. The failure of the underfunded areas will make it impossible to keep the capital in the country. How can there be anything to invest in if you can't move goods or hire people who can read and count? The US certainly does seem to be headed this way.

3. Some way will be made for those underfunded things to turn a profit so that the holders of the capital are willing to put it into them. The most straightforward way is privatization. I disagree strongly with that approach; turnpikes and fee-charging schools are not signs of a modern, egalitarian society, in my book.

4. The government will use its powers to get the capital into the underfunded areas. The commonest way of doing this is via taxation, either for direct investment in said areas or to fund bonds which create situation 3 above.

I tend to prefer option 4, as you can probably tell. But that's because I'm not particularly enamored of the market as a guiding abstraction for the organization of society. I think there are things that cannot be accurately valued by supply and demand (or, indeed, any form of accountancy I've ever seen).

Unfortunately, we do tend to have to use money to keep track of the flows of resources and attention; nothing else seems to match its utility as an abstraction. I don't quite know how to reconcile the good and bad aspects of money as a tool for dealing with the world, but I think Teresa's got a good handle on one way that it can lead us astray.

(This amateurish stab at a comprehensive theory of economics is brought to you by the letter $ and the number O.)

#90 ::: P J Evans ::: (view all by) ::: July 01, 2010, 02:26 PM:

89
The tollroads that were built in southern California aren't making as much money as the builders expected. They also don't have as much traffic as the freeways. (These are not at all unconnected.)

#91 ::: albatross ::: (view all by) ::: July 01, 2010, 03:06 PM:

abi #89:

None of those involve making the country better off by building lots of bombs and blowing people up with them. I think there are cases where that can work (though it may just be an easy-to-construct story--did the Civil War make us rich, too?), but in general, this is pouring wealth and lives down the drain.

I'm curious how to even know whether we're starved for investment in those areas you mentioned. I mean, the people running the schools, highway department, AMTRAK, etc., all tell us every year that they're desperate for funding. And clearly there are times and places where they really are. But it's not obvious to me that this is generally true.

I've lived in places with well-funded, successful schools where there were urgently-worded campaigns to approve more funding for them. That funding may have been a reasonable idea, or may not, but they certainly weren't unable to hire teachers or maintain school buildings. I've watched those campaigns come up with cherry-picked statistics to justify why the schools were underfunded[1].

The hard problem here involves tradeoffs. Running bigger deficits isn't free. Neither is raising taxes[2]. Neither is taking money from one program to put it into another. I think it's more-or-less impossible to meaningfully weigh the costs and benefits of many government programs in any objective way, and that impossibility leads to a lot of yelling and screaming and accusations of heartlessness or evil intentions. How much should we cut from medical research to add to the highway fund? And how can you tell?

[1] This was an obviously cooked-up measure, something on the order of "teachers with 5 years of experience and Masters' degrees at schools in towns of less than 10,000 people," though I'm sure that's not it. It's obviously always possible to cook up some such index that puts you just ahead of Mississippi when you are demanding more money, just as you can always cook up some other index to put you just below Massachusetts when you want to show how amazing your state is.

[2] But running deficits costs politicians up for re-election much less than raising taxes does, which is why we have an ongoing large deficit even in most good years, and why we have a very large debt that costs us a bunch of interest payments every year.

#92 ::: Terry Karney ::: (view all by) ::: July 01, 2010, 03:23 PM:

re too much capital: There is such a thing as too much. The Tulip Mania was part of that. The Housing Bubble was too. All that money floats around and people decide they need to put it to work, but they want to make a lot of money fast; because they have a lot.

Re toll-roads: There is a plan to increase the speed on the freeways in the Bay. Graduated-toll access to the carpool lane. I suspect it to fail. Here's the plan; for a fee, one may ride solo in the carpool lane. One uses a fast-trak to pay. As the carpool lane slows down the fee increases.

What isn't clear is how the fee (as much as .45 per mile proposed; in the discourage use category) will be apparent to the driver. Fast-Trak is linked to checking accounts. The money just goes out. The cops, however, will apparently have Fast-Track detectors to help catch scofflaws. Shades of "Little Brother" (which I am now reading. I understand the various complaints, and I think them pretty much invalid. I like it, and the "as you know Bob's" are fairly deft; perfectly useful for teens, and [while this crowd is probably aware of them] not unuseful for lots of adults. The polemic/manifesto aspect is nicely dressed with a story that paces well).

#93 ::: abi ::: (view all by) ::: July 01, 2010, 03:34 PM:

albatross @91:

It is always possible to question the bases on which we make decisions, apportion needs, etc. I certainly question whether the market prices of things like natural resources reflect a fair valuation, for instance.

It's even easier to question them because the people who generally assess needs and request budgets are not unbiased: their interests are generally served by getting more money rather than less.

Given the choice between blowing stuff up (and people, too), giving all our money to bankers to pay for financial instruments created specifically to direct capital away from regulation or control, or paying people to build infrastructure that will pay off in the quality and productiveness of life for future generations, guess what I pick?

Of course, we never are given that choice, because every time there's a good use to put money to, some politician or businessman has already done some dumbshit thing that's going to cost us everything we could otherwise use for the common good. We'd have had more money for health care reform if we hadn't started two stupid wars. We'd have more money for dealing with the human cost this recession if we weren't bailing out bankers. Who knows how many people will sleep on the streets and eat from garbage cans because no one of either party would ensure that offshore drilling was done to the best of our technical ability?

Given that we're always already committed to the stupid expenditures, what's my motivation for financial prudence on roads and schools? Can't we present that as the next fait accomplis that makes it too expensive to invade Iran or keep sending money to Israel?

(I am tired, and weary, and frustrated. I know we have to be the grownups in the situation. I know that the fault for overspending is not solely the doing of one political party. But I also note that the people who get rich from the cleanup/war/bank bailout do seem to be overwhelmingly from one party. Smells of rat.)

#94 ::: Mary Aileen ::: (view all by) ::: July 01, 2010, 04:08 PM:

albatross (91): I'm curious how to even know whether we're starved for investment in those areas you mentioned.

Highway bridges collapsing (e.g., Minneapolis) and levees crumbling (New Orleans) spring immediately to mind.

#95 ::: Fragano Ledgister ::: (view all by) ::: July 01, 2010, 04:31 PM:

Ingvar M #81/82: If you're working prisoners at hard labour, and underfeeding them, what do you think happens?

#96 ::: P J Evans ::: (view all by) ::: July 01, 2010, 04:47 PM:

Underfunding is the sort of thing that leads politicians to sell the operating side of the USPS and Amtrak to 'semi-private' corporations, who are expected to lower costs and make a profit, preferably without cutting services to the contituents of said politician (read: their big donors).

I hear that Amtrak's profitable routes are the Northeast Corridor and the Surfliner in California. Part of the problem may be that management (and Congress) think they're competing with airlines. They're really competing with highways.

#97 ::: ddb ::: (view all by) ::: July 01, 2010, 04:55 PM:

P J Evans@96: I dunno, the areas they're making a profit in are the areas where I think they're competing with highways. For travel from Minneapolis to California, they're competing with airlines, at least for my travel dollars. And they're losing. For me a one-week trip is a long trip, and going here to California by train or car uses up most of the trip time.

#98 ::: Terry Karney ::: (view all by) ::: July 01, 2010, 05:50 PM:

re infrastructure: I'm riding on it now. The places it's being worked on.... Stimulus money. Arizona... all rest stops closed... no money to maintain them against wear and tear.

As to Amtrak; if the freight haulers didn't have the right to tell them how fast they can move, and to hold them up so they can add a car to send someone they want to someplace else (honest, we had a four hour delay in Oakland, so UP could have a car added to send an executive to Portland), and passenger rail wasn't at the very bottom of the priority, and we didn't have single track along most of the routes (and mechanical switches, Amtrak conductors have to get off the train, throw the switch, and then the train is moved to the siding), then the time from here to Seattle wouldn't be 36 hours, plus delays. It would be closer to 28 (because, as I was told, the speed limit through the mountains between Calif. and Oregon were made with cheaper steel, that can't take the speed the Coast Starlight could do that chunk of track. UP runs slow freight, so they put in track with a limit of 30 mph on that stretch; which Amtrak therefore travels at 25. Since the train can do 60, and that's a hundred miles... it adds to the time).

There are any number of ways the train, even with the slower speeds, can compete with the airlines... mostly what they need is some infrastructure. It won't be a head to head, but for pleasure... the train is already useful; it's an end in itself, part of the vacation. It can compete, if it's not artificially kept out of competition for the niche it can fill.

#99 ::: P J Evans ::: (view all by) ::: July 01, 2010, 08:51 PM:

Amtrak ought to be able to do 75, if the tracks are up to it (welded rail, no joints except at switches). Local commuter rail here can move that fast, and the track's limit is 79 (less in extremely hot weather).

#100 ::: Terry Karney ::: (view all by) ::: July 01, 2010, 09:39 PM:

P.J.: The limit there is the grade/curve.

They can do 75, they do 75, just not there.

#101 ::: heresiarch ::: (view all by) ::: July 01, 2010, 11:54 PM:

albatross @ 70: "If it became impossible to borrow that money (it wouldn't--we'd just pay more), we'd have to cut something like 12% of our budget one way or another. This sort of thing has happened to a lot of countries, and it does *not* leave the average person untouched. Instead, you get a government with an urgent need to cut spending and raise taxes, get hold of money any way it can, etc. The IMF imposes austerity plans on other countries, not by threatening them with nukes or invasions, but by offering them a way to borrow money again."

On the other hand, we spend 9.6% of our budget just servicing our debt. If we declared our debt void and no one would lend to us (unlikely), we'd still only have to cut 2.4% of our current spending to balance the books.

As for other countries' debt you are, I think, confusing cause and effect. The devastating aftermath we've seen debt crises leave in other countries aren't primarily the effect of the defaults themselves--they're the effect of the globally-imposed austerity measures those countries were forced to adopt. There are a number of reasons why a default would play out very differently for the US than it would for, say, Greece. The United States and its position in the global financial scheme is fundamentally unlike other countries. There are a lot of key variables with values not seen in the rest of the world. We are large, we are rich, we are central. Quite literally, investors have nowhere else to go. Not to mention, a US government that had just defaulted on its debts would be in an objectively better position to pay any future debts incurred than the current US government.

@ 84: "Too much capital in your society is the problem you want to have."

That's like saying that inflation is the problem that you want to have. No, having too much capital is actually enormously destabilizing and destructive. Capital is desperate for a return on its investment, and if it can't find the returns it likes then it will invent them. That's what bubbles are, and the value destruction that bubbles lead to is crucial to correcting the over-abundance of capital and allowing the surviving capital to attain an acceptable rate of profit.

#102 ::: C. Wingate ::: (view all by) ::: July 02, 2010, 01:03 AM:

re 101: Reducing the deficit, however, is not the only effect of reneging on the debt, and I do not think it is so true that investors have nowhere else to go. The mere threat of doing so devalues T-bills and other federal debt instruments, and simply destroying some of the assets of virtually every person in the country who isn't in abject poverty is not the way to retain elective office.

#103 ::: Dave Bell ::: (view all by) ::: July 02, 2010, 04:56 AM:

The rest of the world knows how fast rail can be.

You can get high speed, sharing the lines with freight traffic. It's what most of the UK does. But the whole infrastructure was built to a different style.

Build new lines, such as the French TGV system, and total journey time becomes a challenge to air travel. The USA does have some high-speed rail in the NE.

Getting the main lines between London and Scotland up to suit speeds of over 100mph did take a lot of work. Not much realignment of the route, it was built for higher speeds than US railways, but reworking of switch alignment. Signalling systems were a big change. There have been special double-block procedures for express trains since the 1930s, because of the distances needed to stop. Modern high-speed lines are controlled on different principles, which involve detailed tracking of train position and fine control of speed.

Companies such as Westinghouse did a huge amount of business in the UK when the old purely-mechanical signalling systems started to be replaced. And the investment paid off in extra traffic capacity.

150 years ago, people were starting to take seriously the idea of a transcontinental railroad. It's about time to start thinking of upgrading a line to match ordinary European speeds, passenger trains cruising at maybe 140mph, using something other than fossil fuels. (Is the French TGV nuclear powered? A lot of French electricity generation is nuclear.)

Build a new line, and maybe the USA can beat the French. The speed record is only 357mph, after all. Most of the current US rail network would struggle to match the speed record set for steam traction by Mallard on 3rd July 1938.

(I think I'll have a nice, hot, cup of tea tomorrow.)

#104 ::: Alex ::: (view all by) ::: July 02, 2010, 06:10 AM:

mechanical switches, Amtrak conductors have to get off the train, throw the switch, and then the train is moved to the siding

! I don't think we've done that in the UK in the last fifty years.

#105 ::: Ingvar M ::: (view all by) ::: July 02, 2010, 06:16 AM:

Fragano Ledgister @ #95:

If you underfeed a prisoner set to hard labour, bad things happen. There will be more accidents (underfed people performing hard physical labour will have more accidents, less cognitive ability and a slew of other things). There will be more, earlier deaths from ailments, as the immune system breaks down.

All very, very bad things and definitely something I wish had never happened (and wish isn't happening and wish it never to happen in the future, but I fear my wishes are all in vain).

#106 ::: Nancy Lebovitz ::: (view all by) ::: July 02, 2010, 08:03 AM:

I assume both that people living in hot climates need fewer calories and that the Victorians exaggerated the difference.

#107 ::: albatross ::: (view all by) ::: July 02, 2010, 08:26 AM:

heresiarch:

I think that calculation about current interest payments vs default costs is a big part of what investors think about, when they worry about default. (Though I'm not sure either of our figures were adjusted to account for the part of the debt held by other government agencies--defaulting on that is just another way of forcing spending cuts.) The other big cost of a default is that it makes it harder for your country to borrow money in the future--everyone assumes default is more likely because you've done it before.

The unique position of the US is not something handed down by God and inviolate--if it starts looking like we're going to default or massively inflate our currency, US treasuries will no longer be considered a safe haven. Part of that is ultimately a prediction about US politics--what is the probability that we will decide to default rather than make really unpopular spending cuts or tax increases? What if the choice is to let the Goldman-Sachses of the world go belly up, to much pain and suffering in the financial markets and among the most powerful and well-connected, or to take on obligations that may force us into default later? (See Iceland for details.)

#108 ::: albatross ::: (view all by) ::: July 02, 2010, 08:49 AM:

heresiarch:

I think you (and others) are mixing up capital[1] being put to unproductive uses with having too much capital. My very imperfect understanding of the last decade is *not* that there were no worthwhile, productive places to invest spare capital. Rather, the housing bubble and related financial bubble (which I think were largely fueled by monetary policy) made a bunch of ultimately unproductive investments look better, in various ways, than productive investments. All the while that people were investing in mortgage securities, there were hundreds of high tech companies with brilliant ideas going begging, factories that could have been built, valuable buildings that could have been put up instead of more McMansions to be sold at bubble prices. If we'd had 10% less capital in our society, I don't think we'd have invested 10% less in bubble-fueled investments, I think we'd have invested a lot less (maybe not the whole 10%) in productive investments.

I think the other big driver for this bubble leading to a disaster was the overlap of regulation of where some entities could invest their money (requiring AAA rated securities, say) with the use of inaccurate models for estimating risk, and rating agencies that had a huge financial incentive to be generous with those AAA ratings.

[1] Capital is ultimately the wealth your society starts with. It's hard for me to see how it can be too large, though it can surely be badly misallocated, and when you stop thinking of it as one big interchangable number, you can see ways that you can have capital in counterproductive things. The funny thing about misallocated investments is, so long as the bubble continues, it's not visibly painful--your society just stays poorer than it should. Thus, the decades of the US and USSR spending godawful amounts of money financing the possible destruction of industrial civilization and building massive armies to fight over the steaming radioactive craters left behind was a horrible waste of wealth and human ingenuity[2], but it only caused a lot of visible pain when the cold war ended and lots of defense contractors got laid off[3]. Go ask someone who used to have a nice job in the finance or real estate industry what this feels like, as they've just experienced it directly.

[2] Imagine how much deep cleverness and hard work went into developing the H-bomb. What would have happened if that same amount of cleverness had been expended toward something useful--better power sources, whatever. There were a lot of spillover benefits from those investments, but it's hard to imagine that there wouldn't have been just as many spending that wealth to do something just as hard but directly useful.

[3] Fortunately, we've now got an endless war with an opponent who has no Berlin Wall to fall, and thus, one that can be used to justify flushing vast wealth down a toilet forever.

#109 ::: Terry Karney ::: (view all by) ::: July 02, 2010, 09:12 AM:

albatross: There are difficulties with "capital" in the abstract. I suspect the three of us are using the term "too much" in slightly different ways (with heresiarch and I in much accord).

If capital is the money available for doing, "things", then yes, having "too much ability to to things" is probably not possible.

If, however (as heresiarch and I seem to be doing) one means "money which isn't being put to any purpose... then too much is both possible and (from the historic record) all too likely to lead to trouble. When there is a lot of money, "looking" for something to do, and that money has enough "power" to move markets, it is likely to get used to do just that.

Because why would the person in control of it wait twenty years, at a rate of 4 percent, when a bit of playing in the markets can get 30 percent in a year, or a week?

Which causes other players to jump in, and then there's a bubble. The refrains in the '30, apart from some of the style, are of the same problems we're having now. And the pattern of the South Seas Bubble, the DotCom bubble, etc. are all very similar.

As to the ability to borrow.... Mexico seems to be doing all right. I suspect much of the resistance to it has to do with the same parallel of thinking behind equating personal debt with gov't deficits. The rules aren't the same.

#110 ::: ajay ::: (view all by) ::: July 02, 2010, 09:28 AM:

mechanical switches, Amtrak conductors have to get off the train, throw the switch, and then the train is moved to the siding)

Steampunk: fun in books, not so much fun in real life.

#111 ::: Steve C. ::: (view all by) ::: July 02, 2010, 09:41 AM:

The way that you tell if US treasuries are getting riskier is that their interest rates would go up. That's not happening at all.

#112 ::: P J Evans ::: (view all by) ::: July 02, 2010, 10:33 AM:

If the crossing gate is broken or not working, the conductor (or the brakeman) has to get down and stand in the appropriate part of the road holding a red flag, while the train slowly (about 5mph) rolls through. 19th century technology. And rules.

#113 ::: C. Wingate ::: (view all by) ::: July 02, 2010, 11:21 AM:

re 104: Actually, in that sense, it really never happened in the UK. British interlockings in the manual age were operated by an on-duty switchman, a system that didn't work well when the points in question were located in the middle of nowhere in the Mojave. And fifty years ago, large parts of the UK were still in the manual age; I think there were fully mechanical interlockings in use as late as the 1980s.

When looking at the French TGV system it should be kept in mind that France is not as large as Texas. If one could talk the Texans into it a pilot program involving the major east Texas cities might make sense; I think at some point I suggested here a Chicago-St.Louis pilot line. But when you look at the plains states it's hard to imagine them getting too much enthusiasm up for a project which cannot ever benefit them.

#114 ::: Barry ::: (view all by) ::: July 02, 2010, 11:22 AM:

Bruce Cohen:
"As an engineer who's spent a lot of time in biological labs I've tried to convince some economists of the utility of applying control systems theory, both linear and nonlinear, to the behavior of economies. Currency flow should be easily modeled with control theory, and I would expect that with nonlinear models you could model crashes and bubbles and such too. Unfortunately, I haven't been able to convince anyone, mostly I think because they're not familiar with the tools and techniques involved, and don't see how the models would "

Somebody tried this on Mark Thoma (Economists View blog) - turns out that he had been sent over to the engineering school during his grad econ studies to take their controls course.

I also imagine that 'Currency flow should be easily modeled with control theory' is clearly false, since there's got to be a fair number of economists with control theory - if a professor at U Oregon has got that background, it's probably possessed by others in ecoonmics.

#115 ::: Steve C. ::: (view all by) ::: July 02, 2010, 11:28 AM:

C. Wingate @ 113 -

If one could talk the Texans into it a pilot program involving the major east Texas cities might make sense

There has been some talk about this. The Texas T-Bone would a high-speed rail system linking Dallas/Fort Worth-Austin-San Antonio-Houston.

In these uncertain financial times, whether it goes beyond the dream stage is anyone's guess.

#116 ::: C. Wingate ::: (view all by) ::: July 02, 2010, 11:40 AM:

re 111: That how you can tell that people think treasuries are getting risky, which is not a reassuring thought given that the last bubble was heavily powered by concealment of the riskiness of investments.

re 108/109: One of the advantages of keeping upper end tax rates up is that whatever waste may be generated through government mismanagement, pushing the money into the economy that way makes it unavailable for speculation.

#117 ::: fidelio ::: (view all by) ::: July 02, 2010, 12:37 PM:

Local Amtrak service seems to be getting better from the last time I checked; the midwest has several going at this point, at speeds that don't compare too badly to highway travel.

Illinois Service--Chicago to Quincy, St. Louis, or Carbondale--the latter supposedly popular with college students heading to southern Illinois. The Chicago-Carbondale service compares well with highway times, as does Chicago-Quincy and Chicago-St. Louis.

Missouri River Runner--Kansas City to St. Louis--this takes nearly 6 hours, while the interstate is about four--but the train stops a lot.

Hiawatha, Milwaukee/Chicago--which is supposed to take 90 minutes, which compares well with the interstate.

The Michigan Services also look as if they compare fairly well to highway travel, in terms of time.

Of course, whether your're served at all depends in large part on whether the railroads want to play; CSX isn't much interested in being involved with Amtrak, so Nashville-Chattanooga, Nashville-Atlanta, and Nashville-Memphis are not options. Then there's the issue of demand--I notice that there's service from Kansas City to St. Louis, but I don't see anything about Oklahoma City/Tulsa up through Springfield, MO to St. Louis along the old Frisco line that BNSF now operates--I don't know if this reflects lack of expected interest from possible travellers, or lack of interest by BNSF. In browsing through the Amtrak site, I don't notice any of this for Indiana or Ohio, except as part of the much longer routes like the Lakeshore Limited.

The Class II and Class III railroads might benefit from local passenger service and commuter routes, but whether or not they can afford to make the track and rolling stock changes needed to do so is another matter. Nashville has been experimenting with a commuter service on track belonging to the Nashville and Eastern*, but it wouldn't have happened without federal money, and I suspect this is the case with most of the other small lines; a railroad ends up with a great deal of capital tied up in roads and rolling stock**, both of whch require regular maintenance, acquiring the right-of-way to alter routes is an expensive hassle, and unless you're a rail enthusiast, they are not a glamour investment.

*using old Tennessee Central tracks.

**Good (and successful) commuter service depennds on frequency of trains and convenient timing; you need enough cars and locomotives to do this, which can be a stretch for a service that's just starting up.

#118 ::: P J Evans ::: (view all by) ::: July 02, 2010, 12:47 PM:

117
Even longer-established commuter lines sometimes have too few cars for one or another reason. Which is why the one I use has cars borrowed from Utah and New Jersey.
The Utah (aka 'Jesse James') cars aren't too bad, but the NJTA (aka 'Joisey') cars were intended for much higher platforms than we have.

#119 ::: albatross ::: (view all by) ::: July 02, 2010, 02:16 PM:

C Wingate:

Not if the government spends the money inflating a bubble, either directly (unsustainable increases in health care spending, frex) or in terms of tax credits (the mortgage interest tax credit, and the recent new homebuyer tax credit could be examples, though new homebuyer credit started after the bubble burst).

Terry:

I think I see the distinction you're pointing at. My view of this is that capital is ultimately about *wealth*--the work of previous years and generations, frozen into machines and buildings and knowledge and existing social arrangements. That's what you're ultimately investing.

Money, in the sense of little green pieces of paper or bookkeeping entries in ledger books, is a different thing than capital--this is why we don't get richer in general from a few years of 50% inflation.

And somewhere in there is the wealth (measured in dollars, but it's ultimately measured in the ability to use that pile of capital and hire employees) available for investment. I think that's what you're thinking about.

My very rough understanding is that bubbles generally start with a widespread inaccurate belief about the world (lots of people think X is a better investment than it really is), and then accelerate because, due to that starting incorrect belief, the investment does well (because new investors are jumping into the market). It's a kind of self-organizing Ponzi scheme, in which both the winners and losers largely delude themselves. I think this phenomenon is behind that wonderful Keynes quote that "Markets can remain irrational longer than you can remain solvent." The irrational investors who think this is a better investment than it really is have several years of success.

Naturally, there are also people who invest even believing it's a bubble, on the "greater fool" theory[1], people who use the enthusiasm of the bubble to carry out frauds small and large, etc.

I saw all this firsthand during the dot.com bubble. *Lots* of money was poured into some very clever, ultimately quite productive people and companies, the overwhelming majority of which failed. Among those were amazing bits of cleverness, some of which have spilled over to everyday life in all sorts of wonderful ways, others of which have been lost. And also, there was a fair bit of fraud and collateral damage--successful companies that wrecked themselves trying to tap into that endless fount of dot.dom funding, researchers more-or-less conning investors into paying them to do something cool they really wanted to do that would never make any money, con-artists setting up companies that were nothing but inefficient devices to move investor money into their pockets[2]. I saw examples of all those, as well as examples of people doing everything right, as well as possible, and still eventually falling apart. And people doing everything right and making a hell of a lot of money.

The destructive aspect of a bubble is that it draws forth wealth from more sensible/productive investments. In global financial markets, it even draws wealth from across borders, so that the whole world can help inflate your bubble. Go ask the Icelanders how that works out when it fails. But also note that we also have a net inflow of investment capital every year--in some sense, this is required to balance the fact that we are buying more stuff than we're selling overseas. (This gets complicated, involving the effect of trade/investment flows on currency rates, and I don't feel like I understand it fully, so maybe I'm missing something here.) The implication is that we, too, can inflate a huge bubble with Chinese and European investment capital, and I think we did quite a bit of that with the mortgage-based securities markets. (And since a lot of them were effectively guaranteed by the feds, or by too-big-and-well-connected-to-fail financial companies, the taxpayers ended up on the hook for them.)

[1] As I remember seeing someone write about the dot.com bubble, the problem with this strategy involves the "last fool" theory.

[2] Because, as Teresa has pointed out w.r.t. fraud in other contexts, it doesn't matter to the con artist if the business fails, as long as he gets his payoff.

#120 ::: Bruce E. Durocher II ::: (view all by) ::: July 02, 2010, 02:38 PM:

P J Evans:I hear that Amtrak's profitable routes are the Northeast Corridor and the Surfliner in California.

Oh, God, and here I am back in Environmental History at the U.W.

O.K.:short version. Al Runte was teaching the course at the time--he later left the UW over a tenure mess. At the time he was considered one of the top experts in rail travel in the USA. The class was Environmental History, not current events, and it was 25 years ago, but he told us that if you looked at the costs of running a passenger train the fewer stops the less expenses based on wear and tear issues. Therefore, the train between Seattle and Chicago was much cheaper to run than anything on the Northeast Corridor. As he put it, "the majority of members of Congress that vote funding for rail are located on the Northeast Corridor. Mark my words, Chicago-Seattle will be killed because there aren't enough heavyweights in Congress available to prevent it being cut to save money for the Northeast Corridor. It's acting without thinking." And he was right.

#121 ::: albatross ::: (view all by) ::: July 02, 2010, 03:17 PM:

Bruce:

Somewhere in there is a lesson about the right level of the organization to make the decisions. Congress is clearly not the right level. Probably neither is the DOT. A private company trying to make a profit seems more likely to be the right place, but if the rail service has to be subsidized to survive, how do you keep it from having decisions about routes and stops made by people whose interests have little to do with your actual goal of, say, efficient and pleasant rail travel between big cities? (This is the same problem, whether those subsidies come from the federal government, or come from the much more profitable freight operations of the railroad, I think. The thing you care about isn't the thing the decisionmakers care about.)

#122 ::: C. Wingate ::: (view all by) ::: July 02, 2010, 03:22 PM:

re 119: Tax credits are simply tax cuts. And the issue with "unsustainable" is not so much in bubbles per se as in the lack of control.

I think "self-organizing Ponzi scheme" is not a bad description, but I also would note that bubbles of late have specifically relied upon obscuring the information about what was actually going on, making it all that much easier for people to lose track of the actual value of their assets. And not incidentally, that's the avenue for a lot of outright scamming.

#123 ::: OtterB ::: (view all by) ::: July 02, 2010, 03:40 PM:

albatross 121, I agree that decisions need to be made at the right level, but I think I disagree that a private company trying to make a profit is the right place in this area. On the one hand, companies trying to make a profit should be much more sensitive to actual operating costs and customer demand than regulators who can deal by fiat and in general the companies should be more aware of conditions on the ground. On the other hand, companies trying to make a profit are perfectly capable of making short-sighted decisions (e.g. stinting on safety or dropping all but a handful of routes and indulging in cutthroat competition on those). On the gripping hand, railroads are a highly capital-intensive operation with investment that takes time to develop and can't be picked up and moved (well, the rolling stock can, but not the track), and it's not clear to me that it's in the public interest to leave the choices up to the free market. But on the fourth hand, politicians posturing and pontificating are not the right choice either. ("We demand that you operate with low fares, high frequency of service to all possible markets, and the most up-to-date equipment. Make it so.")

I don't really know all that much about the railroad business, aside from a long-ago project that had to do with transportation of coal from mines in Wyoming to power plants in the south. But I wonder if the track should be handled as a public good, the way the interstate highways are, but companies could complete to use them the way there are multiple trucking firms.

#124 ::: Elliott Mason ::: (view all by) ::: July 02, 2010, 03:51 PM:

fidelio @117 said: The Michigan [Amtrak] Services also look as if they compare fairly well to highway travel, in terms of time.

That's because the timetables don't show the routine 2-5 hours of waiting-for-freight layovers that all the evening trains on the schedule are subject to. Every single time I have taken Amtrak Michigan service from Chicago to Ann Arbor on a Wednesday or Thursday evening, (so I can carpool from there to a con with a friend who lives in AA) I get there at least 2 hours later than the schedule claims I will. And from discussing in the waiting room with other passengers who take it regularly (because of work, family, etc -- some of them take four legs a week on it), this is absolutely standard.

I've tried to take trains to cons in preference to planes:

OVFF or MarCon: Trains don't run to Columbus, sorry. Pick Toledo, Cleveland, Sandusky, or Cincinnati, and find some way of getting from the edge of the state to the center on your own. It was actually simpler for a friend of mine who lives in Southern Ontario to take a train TO CHICAGO and carpool from there to Columbus with me than any of the alternatives she could find. When I tried to do the route from Chicago, it looked like the trains went through, but Amtrak was booking me a transfer to a bus in Indianapolis to drive the rest of the way.

New York City: Sorry, you have to get off the train in Albany for a 21-hour layover because the train from Albany to Manhattan (the ONE train per day) leaves just BEFORE the train from Chicago to Albany is scheduled to arrive. Several hours before it actually does arrive, after freight layovers through Michigan.

Atlanta: Your choices for Amtraking from Chicago to Atlanta are to go through DC or to go through New Orleans. Or, rather, they were pre-Katrina; now it doesn't offer the NOLA route at all. I wish I were kidding. Either option is very nearly 24 hours end-to-end, which is far less than it takes to drive it.

Yeah, real attractive.

And I live in arguably the single largest rail hub in the entire United States, with the greatest variety of tracks going out in all directions and the largest assortment of possible destinations -- what chance has anyone else got?!?

#125 ::: heresiarch ::: (view all by) ::: July 02, 2010, 03:55 PM:

albatross:

I think you're looking at capital's function from the point of view of society, and I am looking at capital's function from the point of view of capital. From capital's point of view, its function is to increase itself and nothing else. Whether an investment is "productive" is measured in those terms alone: what is the return on investment? Two things drive down ROI: time and competition. Time, because in any given investment environment, the most profitable opportunities will be seized first, leaving less and less desirable investment opportunities. Competition, because of the usual reasons of supply and demand: one investor with twelve companies eager for her money can negotiate better terms than one of twelve investors trying to invest in a single company. And too much capital also exhausts profitable opportunities more quickly.

So if you are in an investment environment where all the low-hanging fruit has been plucked over time (to great profit and thus to engorged supplies of capital), eventually you reach a stage where there simply aren't enough new investment opportunities to satisfy the available capital. Like say, the late twentieth century US.

(And there weren't scads of dazzling high-tech companies waiting for investors--there were a handful of genuinely profitable companies and a tremendous number of duds [or people with world-shaking, unprofitable ideas]. There weren't any factories waiting to be built--manufacturing was and is fleeing the country as fast as it can. Builders built McMansions because anyone looking for something more reasonable could find one already constructed. At the same time, huge amounts of foreign capital from the developing world was looking for someplace safe to invest, and came to the US.)

So you end up with capital desperately jockeying with capital to find something, anything to invest in. That leads to a bubble which doesn't just destroy excess capital, but also throws the whole economy out of line and wipes out the savings of people who really can't afford it.

So no, there is such a thing as too much capital. Inevitably so.

#126 ::: albatross ::: (view all by) ::: July 02, 2010, 03:55 PM:

OtterB:

Yeah, market failures, regulatory failures, democratic failures, take your pick. We have no always-right, always-fair, always-wise decisionmaking mechanisms to apply to any problem.

I could wish that more libertarians really got market failures and bubbles at an intuitive level, and that more progressives and conservatives really got the similarly destructive failure modes of regulatory agencies and democratic politics and bureaucracies. My suspicion is that one reason more don't is because complex and nuanced arguments are much harder to make and defend than talking points and slogans[1]. Another (very much a problem on the right these days, IMO) is that a nuanced understanding of the world doesn't pass ideological purity tests very well.

[1] This becomes very clear watching the screaming-heads political argument shows. Good luck discussing information asymmetries or perverse incentives to take risk in a three minute slot, where you're faced off against a paid shill for some industry that doesn't want to be regulated, or that wants you regulated to keep you from competing with them.

#127 ::: John Mark Ockerbloom ::: (view all by) ::: July 02, 2010, 04:08 PM:

P J Evans: "I hear that Amtrak's profitable routes are the Northeast Corridor and the Surfliner in California."

Bruce Durocher: "Al Runte was teaching the course at the time--he later left the UW over a tenure mess. At the time he was considered one of the top experts in rail travel in the USA. The class was Environmental History, not current events, and it was 25 years ago, but he told us that if you looked at the costs of running a passenger train the fewer stops the less expenses based on wear and tear issues."

Runte's still around; he's a rail advocate in Seattle, by the looks of things. But it sounds like his numbers are at variance with others'. Does he have anything published to show that the stopping patterns makes so much difference in the depreciation of rolling stock to have that big an effect on overall costs?

(Commuter rail makes lots of stops, but we've still got cars on our system that are over 40 years old, and are only getting replaced now. And in SEPTA's railroad budget, labor appears to be a significantly higher cost than depreciation and maintenance combined.)

For a point of comparison, the Pew Charitable Trusts' SubsidyScope looked at the Amtrak routes last year, and concluded the Chicago-Seattle route (the Empire Builder) lost $0.10 per passenger mile without depreciation and $0.21 per passenger mile with depreciation. The Northeast Regional (the most heavily used Corridor service) earned $0.13 per passenger mile without depreciation and $0.02 per mile with. (If you add the more expensive Acela, things look more profitable still on the Northeast Corridor.)

They seem to be distributing depreciation more or less uniformly per passenger mile; I don't know offhand if that's justified or not, but the Regional carries a lot more passengers than the Empire Builder does.

(Not that I want the Empire Builder to go away-- we're actually riding it next month between St. Paul and Minot. But at least at the moment, it and the other long-distance trains-- which except for the Auto Train all appear to cost more money net per passenger mile than the Empire Builder does-- don't appear to be covering costs as well as the short and medium distance Amtrak routes.)

#128 ::: fidelio ::: (view all by) ::: July 02, 2010, 04:33 PM:

Elliott Mason @124--Of course they don't mention those pesky little delays! People might get discouraged and give up on rail transportation altogether. It does serve to emphasize how much the larger railroads in general hate having to deal with passenger service and how much they wish it would go away and quit bothering them.

#129 ::: Elliott Mason ::: (view all by) ::: July 02, 2010, 05:20 PM:

Fidelio@128: Of course they ignore them -- they're unscheduled! And the unscheduled never happens, because everything always goes according to plan.

Remember: In theory, theory and practice are exactly the same.

However, the extreme repeatability of the experiment suggests that Amtrak could adjust the schedule to better reflect reality ... or at least to build in some slop for time they expect to be sitting on sidings waiting for (also very scheduled and predictable) freights to go by. And that they choose not to.

#130 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: July 02, 2010, 05:28 PM:

Barry @ 114:
I also imagine that 'Currency flow should be easily modeled with control theory' is clearly false

Just because no one is doing it doesn't mean it can't be done. I'll freely admit it may not be possible to create models with control theory easily, but I'd want to see some sort of proof that it can't first.

#131 ::: Debbie ::: (view all by) ::: July 02, 2010, 05:33 PM:

I was interested to read about the Megabus on another forum -- double decker, lots of electrical outlets, free wifi, negligible lateness. No idea if that's just in Illinois (where the poster was from) or if that type of bus service is widespread in the US. Sounds a lot better than the somewhat seedy Greyhounds I was taking 25-30 years ago.

In the meantime, here in Germany, rail company Deutsche Bahn* is in trouble with the EU for blocking competition. Germany doesn't have long-distance inter-city bus service, other than for private bus trips. Even now they'd be restricted with regard to their ticket pricing, so I'm not sure how soon bus services might get started.

*which is some murky combination of nationalized and private. This has not been a good thing for things like infrastructure maintenance.

#132 ::: fidelio ::: (view all by) ::: July 02, 2010, 05:40 PM:

Elliott Mason @129--They choose not to, because, as I noted before, it might discourage some riders.

#133 ::: P J Evans ::: (view all by) ::: July 02, 2010, 05:52 PM:

129
Then there are the delays due to 'mechanical problems' (the catch-all excuse for both local commuter rail and Amtrak). Some of our conductors used to work Amtrak trains and they have stories about the problems.

#134 ::: Marilee ::: (view all by) ::: July 02, 2010, 05:57 PM:

Debbie, #131, the DC area has a lot of that type of bus going several places -- recently to the beaches. Since the buses go to NYC and Boston, buses come from there, too.

#135 ::: Dave Bell ::: (view all by) ::: July 02, 2010, 06:01 PM:

For those interested in British steam railways, I recommend the short movie Night Mail.

It shows the operation of a mail train, the Postal Special, from London to Glasgow in the 1930s, and was shot by the GPO Film Unit.

There's one stop detailed, at Crewe, where the locomotive is changed and mail is transferred between various trains. Trains connect at other stations, and also mail is dropped and collected at various places with the train maintaining full speed.

YouTube Part 1
Part 2

The video quality isn't great, I'm afraid.

#136 ::: Serge ::: (view all by) ::: July 02, 2010, 06:03 PM:

ajay @ 110... I have this theory that the attraction of steampunk is that it reminds us that we live in a world surrounded by wonders. Yes, they laughed me at the University when I proposed the Theory, but I'll SHOW them! Bwahahahah!!!

#137 ::: C. Wingate ::: (view all by) ::: July 02, 2010, 06:26 PM:

The train to which Runte referred was the North Coast Hiawatha, which was the Amtrak successor to the GN North Coast Limited. It only lasted until 1979, when it was killed off as part of a budget cut. By that point Mansfield (D Mont.) had retired and the alternate "let's stop someplace in Montana where someone actually lives" route to the Empire Builder could no longer be defended. There is a study for restoring this route which can be seen here which has a lot of interesting detail about what it takes to support service on a new route, costs and all.

#138 ::: heresiarch ::: (view all by) ::: July 02, 2010, 07:09 PM:

ajay @ 110: "Steampunk: fun in books, not so much fun in real life."

Pish posh--in steampunk, the conductors don't have to get off the train because the mechanical switches are thrown by coal-burning robots. Twenty-foot tall robots! With Gatling guns for eyes!

#139 ::: Fade Manley ::: (view all by) ::: July 02, 2010, 07:28 PM:

Gatling guns for eyes are just silly.

Clearly, they have gatling guns for feet.

#140 ::: Serge ::: (view all by) ::: July 02, 2010, 07:40 PM:

A twenty-foot tall clone of Abe Lincoln with one of his forearms replaced by a Gatlin gun...

#141 ::: TexAnne ::: (view all by) ::: July 02, 2010, 07:49 PM:

Oh, Serge, what's the fun of having a clone that's just like the original?

#142 ::: Serge ::: (view all by) ::: July 02, 2010, 07:54 PM:

TexAnne @ 141... I know that Abe was tall, but not quite that tall. How about a 20-foot clone of Mary Todd?

#143 ::: Bill Stewart ::: (view all by) ::: July 02, 2010, 08:17 PM:

The longest TGV I've taken was from Paris to Bordeaux, about 600km, a bit shorter than Boston-Washington or a bit longer than SF to LA. (If they go from Paris to Marseilles, that's more like 750.) It was certainly more interesting than flying, if a bit slower, but I was on vacation so that was fine. IIRC, it was about 4-5 hours, vs 6-7 for Amtrak Acela or 12 hours for the Coast Starlighter which has to wait for freight.

#144 ::: Bill Stewart ::: (view all by) ::: July 02, 2010, 08:32 PM:

One of the big reasons that money was flying into Silicon Valley like crack during the 90s was that there really was new market experimentation going on as a result of the new technology. What was internet advertising worth, now that the Internet let everybody in the world talk to everybody else? Nobody really knew, and there was a wide range of opinions from stodgy conservatism to wide-eyed naive optimism. Some businesses also had the possibility of actually making money directly (charging for access was popular with investors, less so with actual users, though we've seen it in World of Warcraft this decade. And ordering dogfood online was obviously such a convenience that everybody would go for it!) My wife described her job in those years as "tulip bulb industry".


Some of the reasons that boom ended were market driven (rough consensus on the value of advertising and dogfood-ordering, plus the limits to future growth now that almost everybody was online, and when Y2K was over, that large niche market vanished), but there were two significant reasons driven by the government. The Clinton Administration was threatening to break up Microsoft (since one of the primary ways you made money in Silicon Valley was to sell out to Cisco or Microsoft, that killed off software/services business investment for a couple of years), and Alan Greenspan raised interest rates by 2% in early 2000 (causing real problems for a capital-intensive industry, and IMHO helping George Bush get elected, which was bad for everybody.)


A lot of that boom money fueled the San Francisco Bay Area housing bubble, and when the tech boom ended and there were fewer places to put money, lots of people decided housing was the obvious safe investment because that stuff just kept going up. Sigh.

#145 ::: Chris Quinones ::: (view all by) ::: July 02, 2010, 08:35 PM:

Debbie, 131: Murky combinations of nationalized and private ownership seem to be especially pernicious. A lot of mischief can be hidden in the cracks and seams.

Dave Bell, 135: Re: Night Mail, the script is by W.H. Auden and the music by a very young Benjamin Britten.

#146 ::: heresiarch ::: (view all by) ::: July 02, 2010, 08:38 PM:

David Harvey talks financial crises (with neat cartoons)

#147 ::: Earl Cooley III ::: (view all by) ::: July 02, 2010, 08:49 PM:

Bill Stewart #144: charging for access was popular with investors, less so with actual users, though we've seen it in World of Warcraft this decade

I read recently that WoW is considering switching to a free-to-play model. Plenty of online games thrive with f2p combined with micro-transaction player perks and occasional paid expansions.

#148 ::: P J Evans ::: (view all by) ::: July 02, 2010, 08:56 PM:

143
FWIW the rail distance between SF and LA is closer to 750km. (My commute takes me past milepost 450-something, which is about 25 miles north of Union Station, where they're measuring from the SF end of the line.)

#149 ::: Evan Goer ::: (view all by) ::: July 02, 2010, 09:41 PM:

Bill Steward, 144: In addition to those reasons, I think some of the failures were technology-driven, in that many ideas (both smart and dumb) ended up failing simply because the human race 10-15 years ago didn't have a very good understanding of how to build websites that wouldn't fall over in a strong breeze. Back then, it was much more likely you would make lots of terrible architectural mistakes, and hardware was so weak and expensive, that you couldn't really afford to make many mistakes.

#150 ::: Bruce E. Durocher II ::: (view all by) ::: July 02, 2010, 11:05 PM:

John Mark Ockerbloom: Runte's still around; he's a rail advocate in Seattle, by the looks of things. But it sounds like his numbers are at variance with others'. Does he have anything published to show that the stopping patterns makes so much difference in the depreciation of rolling stock to have that big an effect on overall costs?

He could very well have and I didn't hear about it: remember I was taking Environmental History from him 25 or so years ago, not rail history (although there was some overlap), so I didn't get any info on that outside of hearing when the tenure thing blew up that he would be able to support himself on some sort of consultation arrangement with one or more rail companies. I remember that in the conversation I mentioned he said that when Amtrak started up he went into his collection and had reprints made of some of the classic color ads from rail's heyday showing trains going into the still extant tracks to lodges at the national parks and passing through spectacular ocean and mountain views and sent them in with a suggestion that since the infrastructure was still there it might be worth looking at either using the rail access again or stressing the scenic potential of some of the routes and sent the package in to Amtrak. He got a letter back that said Amtrak did not accept suggestions from outside advertising firms. I think that's when he washed his hands of Amtrak.

C. Wingate : The train to which Runte referred was the North Coast Hiawatha, which was the Amtrak successor to the GN North Coast Limited. It only lasted until 1979, when it was killed off as part of a budget cut.

You could very well be right: that's just about when I took the class.

#151 ::: Evan Goer ::: (view all by) ::: July 03, 2010, 12:39 AM:

Oops, sorry for misspelling your name, Bill. :)

#152 ::: Charlie Stross ::: (view all by) ::: July 03, 2010, 05:13 AM:

Bill @143: what you got from Paris to Bordeaux was not a TGV if it took 4-5 hours.

According to the timetable, the TGV service from Paris to Bordeaux takes 3 hours 15 minutes, non-stop. (Longer if you have to change, of course.)

Sounds like you got a regular train instead.

#153 ::: C. Wingate ::: (view all by) ::: July 03, 2010, 07:47 AM:

re 135: A couple of comments on the film: US railroads operated a similar mail service, the Railway Post Office. There were minor differences in operating details, and they very rarely ran in dedicated trains, but the principles were exactly the same. US service ended in the 1970s, killed off partly by the withdrawal of mail contracts with the trains in 1967, but also partly by the zip code system, which didn't fit well with the way the RPOs worked. British TPO service only ended in 2004.

The bit at the beginning with the signalling could use a bit of explanation. American mainline signalling by that time might have used CTC, but in its less developed mode there would be a tower operator at each place where there was an interlocking (a set of switches where it was possible for there to be route conflicts). Automatic block signals took care of the rest. In the British system of the time, the operators controlled each block, and they exchanged exactly the sort of messages you heard. In the American TO&TT system a train like this would operate through the system on a time table, backed up by a system of priorities and the ability of a dispatcher to call around and make spot modifications through train orders. Both systems were pretty labor intensive but the British system more so.

At the point where we see the track workers you can see a long trip down the middle of the track. That is a track pan, and properly equipped tenders allow the train to scoop up water on the fly. Presumably they didn't demonstrate that in the interests of keeping everyone dry.

#154 ::: Chris Quinones ::: (view all by) ::: July 03, 2010, 10:28 AM:

Heresiarch, 146: Thank you for that link, very illuminating.

I've been hearing glib pronouncements about "late capitalism" probably since high school, and I've often wondered, what are these people talking about? Capitalism is nowhere near its late stage, it's just getting started! But now I wonder if we're not close to a turning point. If you thought the last decade was interesting times, just wait.

(BTW, I think both Karl Marx and Adam Smith have useful things to say about the times we're in. I can't wholeheartedly endorse Marxism because I went to business school, and I can't wholeheartedly endorse capitalism because I went to business school; but both thinkers are underrated.)

#155 ::: OtterB ::: (view all by) ::: July 03, 2010, 03:08 PM:

albatross @126 I could wish that more libertarians really got market failures and bubbles at an intuitive level, and that more progressives and conservatives really got the similarly destructive failure modes of regulatory agencies and democratic politics and bureaucracies. My suspicion is that one reason more don't is because complex and nuanced arguments are much harder to make and defend than talking points and slogans.

Yes to all that. Unfortunately.

I think I've recommended this book on here before, but I'll mention it again. I greatly enjoyed "Reinventing the Bazaar: A Natural History of Markets" by John McMillan. The Publisher's Weekly review pans it a bit, but I found it very readable, thought-provoking, and even-handed. The review cites his main points as "that good design of a market is crucial to its success, that a market develops over time by trial and error, and that government plays an indispensable role in providing public goods and acting as rule setter and referee in the best of all market-based worlds" which squares with my recollection.

#156 ::: heresiarch ::: (view all by) ::: July 03, 2010, 06:58 PM:

Chris Quinones @ 154: "I've been hearing glib pronouncements about "late capitalism" probably since high school, and I've often wondered, what are these people talking about?"

I think it's hard to identify the overall shape of a movement when the movement is still incomplete. Marx himself famously expected the international communist revolution to come during his own lifetime. Personally, when people say "late capitalism" I usually just substitute in "post-industrial capitalism" and it usually works pretty well.

I do think we're nearing a qualitative change in the development of capitalism. It has to do with what I was talking about earlier, the exhaustion of investment opportunities. We're nearing the point at which the majority of the world will be "developed," and that's never happened before: since its inception capital has existed in, and thrived on, a stark differential in wealth and power. The British Empire was built on wealth extracted from India, North America, and substantial other chunks of the world; the American Empire was built on resources drawn from South America, Asia, and Africa. Where will China and India turn to build their empires? Capital has always been able to find somewhere to go when its local environs were exhausted; soon that may no longer be true.

#157 ::: Linkmeister ::: (view all by) ::: July 04, 2010, 01:28 AM:

heresiarch @ #156, you write: "the American Empire was built on resources drawn from South America, Asia, and Africa"

What makes you say that? I think the American empire was built mostly on its own quantities of resources, unless you mean something other than natural ones. We exploited our own oil reserves, our own forests, our own coal fields, and our own iron mines while building ourselves into what we became. Maybe after we started using those up and we developed an environmental movement we began to look overseas for more resources, particularly oil, but for the most part I think we got there with our own raw materials. I'm sure there were things we didn't have (bauxite, maybe?), but it seems to me that American natural resources were the mainstay of empire for a long long time.

#158 ::: The Raven ::: (view all by) ::: July 04, 2010, 02:45 AM:

Returning to the original subject, I'm starting to wonder if part of the motivation for these austerity budgets isn't quasi-religious: the same kind of thing that leads people to decide they are "sinners" and undertake a course of mortification of the flesh--or even better, the fat and happy priest who advises his parishioner to do so. I don't know...it's not an idea that I've heard before. Yet it seems to make more sense than the stated reasons for austerity which even from the viewpoint of the very wealth do not make much sense.

#159 ::: Linkmeister ::: (view all by) ::: July 04, 2010, 02:55 AM:

Raven @ #158, have you read the latest column from Krugman?

somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.
He doesn't mention moral hazard (as, in, pour encourager les autres) in this particular column, but he has been mentioning it in his blog.
#160 ::: Mark ::: (view all by) ::: July 04, 2010, 09:49 AM:

Linkmeister @ 157: US mercantile interests in South America have looked pretty imperialistic over the years - viz., United Fruit. See also the rampant exploitation of cheap labor by American industry over the last 40 years or so. The US has come rather late to the fair, particularly missing out on the colonial era in Africa, but I wouldn't say our hands are clean.

#161 ::: TexAnne ::: (view all by) ::: July 04, 2010, 10:26 AM:

Mark, 160: The US didn't have any official colonies in Africa, but I wouldn't say we missed out on the colonial era. Nor are our corporate overlords missing out now, unfortunately--I'm thinking in particular of oil companies in Nigeria and elsewhere.

#162 ::: Constance ::: (view all by) ::: July 04, 2010, 02:40 PM:

#157 Linkmeister

That wealth and infrastructure was built BY AFRICANS and their descendants, extracted forcibly from Africa for slave labor, which labor was employed for centuries, both here and other parts of the hemisphere.

Then, when institutional slaveru was abolished, it was re-instituted under other names, but essentially it remained: prison labor, Jim Crowe -- in every way those of African descent were not paid the worth of their labors, ever.

That's one instance.

Love, C.

#163 ::: Constance ::: (view all by) ::: July 04, 2010, 02:44 PM:

What to call this stage of capitalism?

Decadent? Fascist?

The idea that there is no more development opportunities so thus capitalism is facing a fall back? So investment as actual investment rather than extraction and exploitation and slavery isn't investment? We need alternate, clean energy systems. We need to clean the oceans and the lands. Just for starters ....

Love, C.

#164 ::: Charlie Stross ::: (view all by) ::: July 04, 2010, 05:11 PM:

Constance: are you familiar with the concept of disaster capitalism?

(Looks like we're about to get a dose of it here in the UK, with government departments being told to draw up plans for funding cuts of up to 40% ...)

#165 ::: albatross ::: (view all by) ::: July 04, 2010, 05:33 PM:

Constance:

The interesting question is, how fundamental a part of the process of building our capitalist society was that stolen labor and treasure? My very amateur take on it is that it was a big part early on (when sugar and cotton and tobacco were a big deal in the growth of the US and European economies), but far less later on.

Similarly, it's clear we have been pushing folks around to make sure well-connected people/companies here can get richer with a minimum of hassling from the locals for a hell of a long time. But it's not clear how much it matters, in terms of our economy. In general, we do a vast amount more business with the developed world than with the poorest parts of the world.

My suspicion is that most of the strong-arm side of capitalism is good business for the well-connected guys on whose behalf we send gunships and Marines, but probably not such good business for the country as a whole. Anaconda Copper presumably benefited from our help in having Pinochet bumped off, but probably, that's because they didn't have to pay us the full cost of doing it. The full cost includes stuff like a low probability that we end up in an expensive war/occupation, unwillingness of other countries to have US companies invest in them leading to more gunship diplomacy, popular dislike of the US leading to sympathy for whomever is opposing us (Germany in WW2, the Soviets in the cold war), along with the direct costs of keeping CIA guys wandering around South America, passing around bribes to potential allies, etc.

To use a couple obvious examples, postwar Japan and Germany have gone from bombed out poverty to vast wealth and success, without a heck of a lot of opportunity for colonialism. Similarly, most of Europe lost its colonies soon after WW2, and much of Europe got the hell bombed out of it, served as a battlefield for the big powers, and/or ran up godawful debts in the war before that. And yet, we don't sit around feeling bad about the horrid poverty of the Swedes or Finns or Italians. In the 20th century, losing your colonies was probably a win.

#166 ::: albatross ::: (view all by) ::: July 04, 2010, 06:00 PM:

What evidence is there that capitalism lacks further investment opportunities? This doesn't look at all like the world as I can see it--where even in a recession, people are investing money in all sorts of things, from solar cells to natural gas wells.

It can't just be the recent burst bubble, because those have been happening since investment markets arose.

#167 ::: Linkmeister ::: (view all by) ::: July 04, 2010, 06:12 PM:

In my #157 my definition of American Empire begins in the 20th century; up to that point we were a much more insular country than we became in the TR and Wilson eras and forward. That's (mostly) why I didn't include the use of slaves as a source of American power.

#168 ::: Constance ::: (view all by) ::: July 04, 2010, 06:53 PM:

Naomi Klein has done a terrific job of describing the ways and means of disaster capitalism.

If you think that slave labor and the labor of African descendants played a small role in the building of this nation post 1865, well, I can give you bibliographies that show quite otherwise.

What do you think Jim Crow and the southern prison system was and still is about? It's free labor. Without rights. Contemporary scholars from all areas of discipline have been tracing this process of re-imposition of slavery by another name. While the legal system everywhere looked away.

For that matter who is incarcerated in the largest numbers by far in our now privatized fo-profit prison system?

Love, C.

#169 ::: Constance ::: (view all by) ::: July 04, 2010, 06:58 PM:

#167 Linkmeister

How then do you see Manifest Destiny, the Mexican American War, even the War of 1812, called by the Brits "The American War", in which we planned and hoped to take Canada, but had to settle for blowing the Brits out of Louisiana instead, the purchase of the Florida territories, and so much else through the 19th century? The newspapers, etc. of the time did call it Empire Building. New York state named itself the Empire State. Empire was a favorite usage for nomeclature of all kinds in the 19th century here.

Then we tried to pretend otherwise in the 20th century -- which still employed at slave labor, below minimum wage, even forced labor -- read the accounts of the Flood of 1927 for instance, descendants of Africa to build and rebuild.

Love, C.

#170 ::: Constance ::: (view all by) ::: July 04, 2010, 07:06 PM:

In any case -- beyond that -- Linkmeister left out the tremendous fortunes made in the 19th century by U.S. capitalists in South America -- which some of you mentioned, as with United Fruit. The U.S. pretty much controlled much of the new mining that extracted resources from the Andes as well.

Not to mention other ventures, in which even Cornelius Vanderbilt got entangled.

Not to mention the hopes of further expansion, even unto cutting out one's own kingdoms there as the infamous William Walker attempted, and other filibusters did as well in other regions.

Love, C.

#171 ::: fidelio ::: (view all by) ::: July 04, 2010, 08:54 PM:

There's also the extent to which industrial development, especially in the northern states, relied on cheap immigrant labor--labor that didn't speak much English and didn't know enough about the local labor market to be able to ask for competitive wages, and without enough connections that starting the process of collective bargaining (hard enough, given the legal climate WRT unions) was made any easier. Given that troublemakers could be easily replaced with more cheap immigrant labor as needed, it was perfectly set up for exploitation.

#172 ::: heresiarch ::: (view all by) ::: July 04, 2010, 11:21 PM:

Linkmeister @ 167: "In my #157 my definition of American Empire begins in the 20th century;"

That's when I would date the American Empire from as well, though as many people (especially Constance) have noted, that wasn't the beginning of American exploitation.

In the 20th century, however, there are numerous examples of the US knocking over governments explicitly or implicitly in order to forward the new economic order. It wasn't colonialism as it had been previously understood, but a looser arrangement where the colonies were ruled by their own so long as they kept American business interests happy. That was the case in swathes of South America, the Philippines, Indonesia, Korea, Iran, and good number of African countries as well. Generally it was presented in a very Cold War lens: "Oh no, they're threatening to nationalize American companies! They must be turning communist! Domino theory! Red menace! Quick, throw a military coup!" More recently, the War on Drugs and the War on Terror has played the role.

albatross @ 165: "The interesting question is, how fundamental a part of the process of building our capitalist society was that stolen labor and treasure? My very amateur take on it is that it was a big part early on (when sugar and cotton and tobacco were a big deal in the growth of the US and European economies), but far less later on."

Marx's Capital basically consists of two parts: the big long first section where he laboriously details how even when capitalism is working just like the capitalists say it ought to work it produces wealth polarization and exploitation, and then the short chapter at the end where he points out that that this is a ridiculously ideal case and in fact capital has accumulated as often by theft as by production--particularly, as you suggest, at the beginning. (He calls this "primitive accumulation.")

A more recent Marxist--the fellow giving the talk I linked to above, actually--has elaborated on this process under the term "accumulation by dispossession." He observes that accumulation by dispossession is constantly happening, often at the margins but often in a shockingly central way. The Asian Financial Crisis, for example: during that crash a huge amount of capital vanished, and the remaining investors were able to buy stock at a fraction of the cost. In other words, some were dispossessed while others doubled their rate of return (buy twice as much stock for the same cost, get twice the dividends.)

@ 166: "What evidence is there that capitalism lacks further investment opportunities?"

I think you're confusing fewer investment opportunities for no investment opportunities. It's not that there aren't any investment opportunities, it's that there are less than there were in the 1950s, or the 1850s. There aren't any railways to be built, there aren't any new consumer items people have never heard of and need desperately. Sure, there's the internet, but no one really knows how to make money off of that. Twitter, anyone? Sure, there's alternative energy, but again, how do you make money?

When you look at the places in the world experiencing explosive growth, what you find is someplace that was way behind the curve: a place where any two-bit suit with a duffel full of cash could see what needed to be done to improve productivity: build a road there. Build a factory here. Toss up an electrical grid. And so forth. In someplace like the US, if there was money to be made by doing something, odds are someone already did it. It's a pretty well saturated market.

#174 ::: Tom Womack ::: (view all by) ::: July 05, 2010, 10:34 AM:

albatross @ 84: yes, the single thing that has struck me when traveling around admittedly fairly rich corners of the third world - the sort of corners to which Western trip-organising companies are happy to organise trips: I am no Jon Evans - is that this is a place which lacks capital.

I give (not enough) money to Practical Action, a charity that, amongst other things, builds irrigation systems in the godsforesaken depths of rural Nepal, ten hours on foot from the nearest road. An irrigation system consists of two concrete tanks and a quantity of plastic pipe, costs about $2500 to install, and increases the income of the village by about that amount in the first six months; but nobody in the village has anything like the money to build the irrigation system themselves.

#175 ::: Tom Womack ::: (view all by) ::: July 05, 2010, 10:55 AM:

ddb@97 et seq: The thing that looks like high-speed rail across Europe is a set of inter-city links each of which makes sense and is a reasonable length: it's obviously daft to go from Seville to Berlin or Naples by train, it would take days, but Seville-Madrid, Madrid-Barcelona, Barcelona-Paris, Paris-Cologne, Cologne-Berlin, Paris-Lyon, Lyon-Turin, Turin-Rome, Rome-Naples are all perfectly reasonable train journeys that a businessman at end A might want to do to attend a meeting at end B and be able to have late dinner with his wife back at A.

TGV Minneapolis-Chicago would be entirely reasonable (I've taken the Amtrak, on the one day in the last decade when it was three days faster than flying, and indeed ddb met me at the station; the terrain doesn't look that lumpy, though there are some pretty bluffs around the Mississippi) and ought to be a two-hour trip each way. Not sure if you'd stop in Madison.

But I can't think of any city the size of Minneapolis and on the sane (ie not Colorado) route to California which would be the next natural step on the cross-country route. Maybe in a couple of centuries if America gets to more Chinese population densities.

#176 ::: Mark ::: (view all by) ::: July 05, 2010, 12:08 PM:

Tom Womack @175: You could almost argue for Sioux Falls as the next stop after Minneapolis, given how much of the consumer finance industry calls it home. But then you'd have a problem linking from there to Spokane - I can't see much interest in building a line through Billings, MT.

#177 ::: Tom Womack ::: (view all by) ::: July 05, 2010, 12:37 PM:

Sioux Falls is 200k for the metropolitan area (a bit smaller than Madison), whilst the Twin Cities area has nearly three million people; Spokane metro is half a million.

I don't have any feel at all for the Indiana/Ohio/Pennsylvania region; the map makes me think of Germany somehow, with lots of cities but nothing really vast. Chicago-Cleveland-Pittsburgh-Philadelphia doesn't seem _that_ daft a route, Cleveland metro is nearly two million and Pittsburgh metro 2.5 million, but I suspect the east end of Cleveland metro and the west end of Pittsburgh metro are closer than either would be to the city-centre TGV stations.

#178 ::: Terry Karney ::: (view all by) ::: July 05, 2010, 12:45 PM:

albatross: What you are calling capital, I'd think of as infrastructure. It's not profit (which is what "capital" seeks. It may make it easier to make profit, but no one, who isn't making money on it, will make roads, buildings, machinees, etc., unless there is profit in it).

These days, we've decided we aren't interested in the profits which come of making things, because there is so much to be made making money. I really wish I could recall the work which analyzed that paradigm. It pointed to two things... means of driving the systems, and what was done with the profits.

The Dutch had wind, and they were tops for a while. Then they stopped making things, and decreased trade. They had so much money in the system it was easier to lend/speculate. They got tulips as a result.

Then the British got steam. It beat wind, and put them on top. They finally started to play around with being bankers as much (and then more) than they did at making things. Further, they had sunk costs in steam architecture, easier to let the new kids make stuff; while they financed it.

Then we got oil (which starteed a lot longer ago than we tend to think), and pushed steam out. We've come, it seems, to the place where we play with money (instead of making things) and where the means of powering stuff is going to change again. Which means (if the model is true) we shall shortly lose economic primacy. It's happened before: the British Empire was "Unassailable", who didn't want pounds sterling? It was one of the benchmark currencies, in some ways it was the benchmark currency.

re Amtrak: One of the things the previous administration tried to do was give money to the railroads, and steal it from Amtrak. So they said they were going to pay for the "infrastructure" (rails and switches, etc.) but the trains themselves would only run if they could show a profit. Who owns the trains? The people. Who owns the rails and switches? The rail companies. Two-faced kleptocratic bastards.

#179 ::: Chris Quinones ::: (view all by) ::: July 05, 2010, 01:08 PM:

Terry, if you do find out what work had that analysis, I'd love to know.

#180 ::: Steve C. ::: (view all by) ::: July 05, 2010, 01:19 PM:

The notion that the US doesn't make anything anymore isn't true. Manufacturing doesn't supply the same level of employment or even percentage of GDP it once did, but we still made $1.7 trillion worth of goods in 2007.

#181 ::: Charlie Stross ::: (view all by) ::: July 05, 2010, 02:10 PM:

#180: It's the same in the UK. We've got a pretty damn strong manufacturing sector ... but it employs a dwindling proportion of the population. (And a lot of it is owned by foreigners. Automobiles? The British marques are all but extinct, but if you buy a Ford or a Toyota in Europe, there's a good chance it was built in the UK -- or contains lots of UK-manufactured parts.)

#182 ::: C. Wingate ::: (view all by) ::: July 05, 2010, 02:22 PM:

Well, if we're throwing stories at this, then let me try a different one: the tendency of all systems if to escape from control, because you can't make nearly as much if you aren't cheating.

#183 ::: Evil ::: (view all by) ::: July 05, 2010, 03:39 PM:

Earl @147 - WoW as free-to-play only came up in discussions as a possibility for when the game is past any active development (at this rate many years down the road) when their attention is on another MMO - or the WoW share of the MMO market has declined significantly.

From Tom Chilton (lead designer) "If another game comes along and blows us away it may not make sense for us to have a subscription fee. Or even further down the line, when we have another MMO out. . . Its not something thats a reality for us in the near future."

#184 ::: Barry ::: (view all by) ::: July 05, 2010, 04:02 PM:

The Raven:
"Returning to the original subject, I'm starting to wonder if part of the motivation for these austerity budgets isn't quasi-religious: the same kind of thing that leads people to decide they are "sinners" and undertake a course of mortification of the flesh--or even better, the fat and happy priest who advises his parishioner to do so. I don't know...it's not an idea that I've heard before. Yet it seems to make more sense than the stated reasons for austerity which even from the viewpoint of the very wealth do not make much sense."

Yes, mortification of the (other guy's, smaller guy's) flesh.

#185 ::: Craig R. ::: (view all by) ::: July 05, 2010, 04:52 PM:

And, to my view, the biggest snare and delusion foisted upon the American workers is the elimination of the pension system in American workforce and swapped it for the 401K system, which feeds the bankers' and financiers' coffers and leaves the workers with zip.

#186 ::: Terry Karney ::: (view all by) ::: July 05, 2010, 04:59 PM:

Steve C: I know we still make things (I was a machinist, after all), but the portion of our GDP which is manufacturing based.... 12 percent. It makes up 10 percent of the workforce, and it's declining. It won't ever go away, just as it didn't in Britain, but the prognosis is for it to "
recover" to the 2008 levels... but with a decline of almost 1/3rd in jobs. The machines will have to work better, and the people running them do more.

That's not great for the economy.

In 1987 the financial sector was 16 percent of the GDP, in 2007 it was 30 percent. That's a lot of money which was made by moving money around. It's not the same sort of market. If one makes stuff, the stuff is good, or it isn't.

When one is making fees from moving money around... it's about trust. Right now, I don't trust the financial markets, they have perverse incentives, inadequate regulation, lax enforcement of the regulations which do exist, and no desire on the part of the gov't to use what other leverage there is (e.g. Arnie deciding to settle in the case of Enron, and the other energy traders who robbed Calif. blind).

It's also a game in which those what have, get, and those what don't, lose.

As Jesus said in Matthew, For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath.

This does not strike me as a good way to run a country.

#187 ::: The Raven ::: (view all by) ::: July 05, 2010, 06:50 PM:

Linkmeister, #159: my remarks are in large part intended as an explanation of Krugman's observations. Enforced privation simply does not make economic sense. Yet that is what the political consensus is converging on.

#189 ::: Constance ::: (view all by) ::: July 05, 2010, 10:58 PM:

That's when I would date the American Empire from as well, though as many people (especially Constance) have noted, that wasn't the beginning of American exploitation.

The Great American Century was also the century of modernism = i.e. recognition of American Popular Culture and, additionally, the African experience, i.e. the African = music, art, history, etc.

When the Matter of Africa that built so much of this nation from clearing the land to exploiting the land to culture was recognized = Harlem Renaissance, Picasso, Jazz, Civil Rights, Voting Rights -- that was this nation's time of greatness.

NOTICE THAT CURRENTLY rolling all that back is in effect. Notice how well the economy is doing.

Love, C .

#190 ::: Elliott Mason ::: (view all by) ::: July 06, 2010, 01:01 AM:

Craig R. @185 said: And, to my view, the biggest snare and delusion foisted upon the American workers is the elimination of the pension system in American workforce and swapped it for the 401K system, which feeds the bankers' and financiers' coffers and leaves the workers with zip.

Minor point of order: it doesn't NECESSARILY leave the workers with zip. It merely (a) gives the company a set, paid-for-now contribution that they can file and forget, and (b) transfers all long-term risks to the worker.

No wonder companies prefer it to defined-benefits pensions, which (b) stick the company with the risk while simultaneously (a) hooking 20-years-from-now's management for unknown costs in an unknown financial reality, in return for medium-to-long-term worker productivity and happiness.

What I don't get is why workers go for it (other than "it's the only game in town kind offered"). Well, why they go for it NOW. They went for it BEFORE because everyone knew the stock market could only go up ...

I was working tech support for a company that wrote daytrading software, during much of the upside of the recent set of bubbles. The only kind of investing I have any confidence in is DRiPs. Especially long-term. My grandparents bought $75-worth of General Mills stock the week I was born, and set it up DRiPwise. It's now worth over $20K. The magical property of DRiPping is that, as long as the company is healthy and still paying dividends, low stock prices are a FEATURE, because they mean you compound faster.

#191 ::: Doug Burbidge ::: (view all by) ::: July 06, 2010, 02:19 AM:

C. Wingate @ 182:
Well, if we're throwing stories at this,

People in flat houses shouldn't throw stories?

#192 ::: Craig R. ::: (view all by) ::: July 06, 2010, 04:05 AM:

Elliot Mason (#190)

"..Why workers go for it" -- because it *is* the "only game in town" in most factories, and also see "snare and delusion" above.The whole point of defined benefit plans was that the relatively unsophisticated "ordinary worker" would have the prospect of being able to know that, after a certain amount of time, there would be some cash available to live on after some length of continued employment.

With the change in attitude, fostered by what I call the "MBA culture," where workers, formerly viewed as assets, are now viewed as interchangeable units to be expensed out when terminated, the concept of line workers having real long-term value to a business is now absent.

With the last two "jobloss recoveries," businesses discovered that they could hold the stick of "there are ten people out there willing to take your place in the job" as a means to force more "work" out of people, with no increase in pay. Note that the increased "work" often doesn't result in increased *productivity,* but for many managers that distinction is lost -- even when those same managers should know what the difference between "work" and "productivity" is.

(as an example, I once had a manager who called me on the carpet because I spent more time on pre-coding analysis and incremental testing to get a module up and running than on keying in lines of code. he insisted on using one metric available (the system's capture of lines of code generated) rather than viewing the quality off the code, as evidenced by the reduced problems with the code after installation because of the more extensive analysis and testing. Another manager recently complained I was giving too much detail anaysis in the technical specification for a project. She accepted my thesis that I *had* to do the analysis to do the tech spec, in order to identify the places in the system that would be affected by the changes. She "accepted" the thesis, but is still unconvinced of the need.)

#193 ::: Craig R. ::: (view all by) ::: July 06, 2010, 04:15 AM:

On the subject of railroads and the USPS (The United States Postal Service, for those who are non-USAin), and the demand that they "show a profit:" I remain soundly *un*-convinced that services such as passenger rail, the postal service, public libraries and the public education system need to have their funding so severely rationed -- these are *public services that benefit the community as a whole,* and should not be treated on the same basis of whether an "investor" of some sort gets a return on investment (ROI).

The "investor" in question is the community, and the ROI is there, in a non-directly-monetized fashion, in the increased quality of life in the community enjoyed by it's citizens, and the long-term maintenance of the community infrastructure that comes with those quality-of-life improvements.

#194 ::: Phil Armstrong ::: (view all by) ::: July 06, 2010, 08:24 AM:

Bruce@130: You might find the publications of Steve Keen (University of Western Sydney) to be of interest. Effectively he argues that the biggest mistake of modern (neo-classical) economics is that it operates from an underlying assumption that the economy is always (or nearly always) in a state of near-equilibrium. Standard economic models are simply unable to cope with a system that has been pushed to a state which is far from equilibrium & fall apart completely.

If you really want to get into the nitty gritty, you can get the code to his economic models from his site, although ISTR that you need some commercial software (Matlab or something like it?) to run them.

#195 ::: Chris Quinones ::: (view all by) ::: July 06, 2010, 09:12 AM:

Craig R. 193: these are *public services that benefit the community as a whole,*

Exactly. A lot of the elite think fewer public services means more for them! We don't deserve their generosity, you see. Noblesse oblige is an obsolete concept.

#196 ::: Glenn Hauman ::: (view all by) ::: July 06, 2010, 10:04 AM:

#172: When you look at the places in the world experiencing explosive growth, what you find is someplace that was way behind the curve: a place where any two-bit suit with a duffel full of cash could see what needed to be done to improve productivity: build a road there. Build a factory here. Toss up an electrical grid. And so forth. In someplace like the US, if there was money to be made by doing something, odds are someone already did it.

In fact, many of the worst examples of suburban sprawl came from somebody doing exactly that in the US-- looking at a piece of empty* land and saying, "What this place needs is a pizza place, a deli, a video store, and an unidentifiable little store started by a bored wife." And they did so to the point of collapse, up to and including the bank that loaned the money to build it.

#197 ::: ddb ::: (view all by) ::: July 06, 2010, 10:45 AM:

Maybe people need to be reminded of the scale of this country. Minneapolis to the Bay Area is vaguely 1500 miles (which is a bit less than half the distance all the way across the USA). If a train could average 200 MPH, which I doubt (remember how much time the Japanese spend doing track maintenance on the bullet train routes; at their density it works out, but this isn't at their density), it'd still take a while to get there.

Another way to put it would be to point out that Los Angeles and San Francisco are about as far apart as any two points in France -- and the Bay Area is only half-way up the state of California; to get to the next big cities up it's that far again.

#198 ::: Jacque ::: (view all by) ::: July 06, 2010, 02:18 PM:

C. Wingate @122: bubbles of late have specifically relied upon obscuring the information about what was actually going on, making it all that much easier for people to lose track of the actual value of their assets. And not incidentally, that's the avenue for a lot of outright scamming.

Seems to me the obvious take-home for the investor is: "If you don't understand it, and your broker can't explain it to you so you can, you probably shouldn't invest in it." Too obvious?

#199 ::: C. Wingate ::: (view all by) ::: July 06, 2010, 02:45 PM:

I just had a brainstorm: since the cost of the Iraqi/Afghan occupations accounts for so much of the deficits, why not issue war bonds to pay for them? That way the neocon patriots will have to face up to the reality of the cost, and can hardly object to ponying up some cash to pay for it.

#200 ::: Earl Cooley III ::: (view all by) ::: July 06, 2010, 03:24 PM:

C. Wingate #198: since the cost of the Iraqi/Afghan occupations accounts for so much of the deficits, why not issue war bonds to pay for them?

Great idea! To put things into modern perspective, war bonds promotional posters could feature Rosie the Riveter recast as a patriotic investment banker.

#201 ::: Jacque ::: (view all by) ::: July 06, 2010, 04:00 PM:

Debbie @131: Megabus -- double decker

I picture one of those noodling down I-25, and I have visions of Megabus + chinook. <shudder>

heresiarch @146: neat cartoons Who the heck is that artist? I've poked around a little bit, but it's not obvious to me. Is it David Harvey?

heresiarch @156: I do think we're nearing a qualitative change in the development of capitalism.

2012!!! THE END OF THE WORLD AS WE KNOW IT!!!

What? Not what you were referring to?

heresiarch @172: Linkmeister @ 167: "In my #157 my definition of American Empire begins in the 20th century." That's when I would date the American Empire from as well

Well, I wonder about the 18th&19thC, wherein the US set about gobbling up as much of North America as it could. Seems pretty imperical to me.

#202 ::: ddb ::: (view all by) ::: July 06, 2010, 04:17 PM:

Jacque@200 (imperialism): Maybe. I'm not sure it's morally different, but lots of the details were different. Including that we moved territories up to statehood at the request of the people (by then) living there, rather than incorporating them by conquest as has been more traditional for empires.

#203 ::: Earl Cooley III ::: (view all by) ::: July 06, 2010, 05:02 PM:

ddb @201, the annihilation, forced transportation and concentration of the indigenous populations in the territories are some of the details that makes it imperialism.

#204 ::: Constance ::: (view all by) ::: July 06, 2010, 05:49 PM:

ddb -- You might read some American history -- your vision of what happened, how and why it happened, is quite at odds with what did happen, how and why it happened.

For starters just pick the history of any of the original 13 colonies, the first states. Start reading that state's history from the beginning in the 16th century through to the present, or at least through the Civil Rights era.

Maryland is a good example.

Begin reading with questions like these: Why do you think these were called Indian "Wars?" Why would there be a war with "Indians?"

Love, C.

#205 ::: ddb ::: (view all by) ::: July 06, 2010, 06:00 PM:

Earl Coolie III@202: Those are precisely the details that make it rather different from the other empires being discussed. We were NOT taking over territory for the purpose of using the indigenous population as cheap labor. Doesn't necessarily make it a different thing, and is if anything ethically MORE wrong. Still, viewing it as just another example of the same thing seems likely to lead to mistaken conclusions in many areas.

Constance@203: Jacque@200 specifically asked about the 18/19thC, and I was responding specifically to that.

#206 ::: C. Wingate ::: (view all by) ::: July 06, 2010, 06:32 PM:

re 204: I have to agree: without comment as to the displacement of the Indians, the western expansion of the USA does not fit within the Marxist search for cheaper labor to exploit. OTOH perhaps American immigration does sort of fit, except for the detail that in general people did feel they were moving from a worse to a better life. (And certainly their descendants largely did move up conspicuously.)

The thing that makes me uncomfortable about the Marxist analysis is how it tends to make politics subservient to economics. Classical economics tends to ignore political power (and therefore power in the large) altogether, in particular tending to ignore that wealth not only gives access to power but is itself a means of wielding power directly. It tends to deny sin by sweeping it under the rug of rational expectations, as though people didn't deliberately do foolish things. It's obvious that stupid human behavior in the market isn't just the result of political intervention, but is the natural result of human behavior regardless of social structure.

The problem is, how to do better. A mainstream (meaning, "how capitalist democracies actually work") approach is to try to put politics at enough distance from the economy so that the government can turn around and "tamper" with the economy in order to keep it within reasonable bounds. Right now this is failing in the USA mostly, it seems to me, due to pressure from Republicans and the Right (and note they aren't synonymous here). The Republicans are compromised by subservience to the wealthy who want to be undertaxed and do not want any limits placed on them gaming the system; the Right is compromised by its adherence to libertarian dogma. What the Democrats need at the moment is another FDR: someone patrician, wealthy, and unafraid to betray his own social class.

But the problem for anyone who wants to be a capitalist critic is to do better. And what seems to me to happen is that (a) in practice central planning is beyond human competence, and (b) get wealth out of the way, and politics takes over as the reservoir of human sin, which is much, much worse-- and the powerful often enough become wealthy anyway.

#207 ::: Bill Stewart ::: (view all by) ::: July 06, 2010, 06:51 PM:

Charlie@152, thanks - it's fuzzy memory on my part, since we did TGV from (some town I've forgotten in Burgundy) to Paris, taxi across Paris, TGV to Bordeaux, local train to Dax, and it was 10 years ago, but I'm more sure about the TGV part than the exact time....

#208 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: July 06, 2010, 06:56 PM:

In terms of natural resources the US acquired from third-world countries in a pseudo-colonial manner during the 20th century, consider bauxite ore from Haiti, uranium from Congo, and tungsten from Bolivia.

#209 ::: Chris Quinones ::: (view all by) ::: July 06, 2010, 07:20 PM:

I have a severe dislike of David Brooks. Since he began bootlicking the Obama administration, I've taken to calling him "The Vicar of Brooks." (Pass it on. It's free!)

His column in today's paper is especially replete with stupid about the economy. Happily, our pal Paul Krugman dispenses with Brooks handily.

So what's the problem? Brooks is the one with the administration's ear. Dammit!

#210 ::: Terry Karney ::: (view all by) ::: July 06, 2010, 09:04 PM:

David Brooks lost me when he said US soldiers had to become terrorists, and torturers; so that (in six months, or so) we could reinvent a better Iraq.

That was, of course, almost seven years (and going on 14 Friedman Units ago).

#211 ::: C. Wingate ::: (view all by) ::: July 06, 2010, 09:12 PM:

Not that I have that much use for Brooks, but for an authority like Krugman to say, authoritatively, "question authority", it does not strike me as, well, a particularly felicitous response.

#212 ::: heresiarch ::: (view all by) ::: July 06, 2010, 09:23 PM:

Jacque @ 200: No, David Harvey is one talking.

When I say that the 19th century is the century of American Imperialism I mean that is when the US became a global power rather than a regional power. You could call the earlier westward expansion* imperialist as well; it just depends what you're trying to highlight. I was talking global hegemony.

* And the initial settlement was obviously imperialist, though it wasn't the US's empire.

C. Wingate @ 205: "the western expansion of the USA does not fit within the Marxist search for cheaper labor to exploit."

The westward expansion of the US fits quite well with Marxist economic theory, actually; I'm not sure where you got the idea that "search for cheaper labor to exploit" was the be-all end-all of Marxism. There are many contradictory forces at play in Marxist economics. Among these is the desire of workers not to be exploited, and the difficulty of exploiting workers when alternatives present themselves--like, say, being able to flee a sharecrop tenancy to start one's own farm on the frontier. This led on the one hand to the rise of slave labor, and to the late development of manufacturing on the other. Only when population density had risen enough, and untenanted land was difficult enough to come by, could factories find a sufficiently desperate labor force.

"The thing that makes me uncomfortable about the Marxist analysis is how it tends to make politics subservient to economics."

That's a position more characteristic of thumbnail descriptions of Marxism than of arguments put forth by real-life Marxist scholars. It's true that Marxist thought places a great deal of importance on economic factors, but no one thinks it's a relationship that flows only one way. As I like to put it: everything is interdeterminant, but some objects are more interdeterminant than others.

Indeed, the entire political project of Marxism is dependent on the potential for politics to influence economics--that seems to me to be a powerful argument that Marxism admits the possibility.

#213 ::: Constance ::: (view all by) ::: July 06, 2010, 09:54 PM:

ddb

Nevertheless you are wrong when you say there was nothing imperialist / empire building going on in the 18th and 19th centuries -- the zenith of colonial imperialism.

But first you said that the U.S. empire only happened in the 20th century, and that territory gained by the U.S. was at the request of those already living there, and that we only created fortunes out of 'our' own materials -- which, of course, we wrested from those who were already here before we came.

So, I'm confused by what you mean.

Love, C.

#214 ::: ddb ::: (view all by) ::: July 07, 2010, 09:40 AM:

Constance@212: Several of the things you attribute to me are things I did not say; this may be part of the confusion.

I was making one minor point, only: That the 19th century westward expansion of the US looked in many ways different from other things that people now consider "imperialistic".

(Not that it couldn't be considered imperialistic, not that it was morally better than the other things!)

#215 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: July 07, 2010, 06:26 PM:

C. WIngate @ 210:

I don't understand why you object to Krugman saying that. Does his being an authority mean he can only sincerely say, "Kneel before Krugman"?

#216 ::: P J Evans ::: (view all by) ::: July 07, 2010, 06:40 PM:

213
Try 'Manifest Destiny' as another way of describing imperialism.

#218 ::: C. Wingate ::: (view all by) ::: July 08, 2010, 12:46 AM:

re 215: In a dispute between authorities it seems to me that the only telling arguments are those which establish whose authority is superior. Krugman's statement is a little too close to saying "Question other authorities-- just not me." Mind you, I'm largely in agreement with Krugman; it's his rhetoric that is unfortunate.

#219 ::: ddb ::: (view all by) ::: July 09, 2010, 01:02 PM:

Seems to me the smart authorities, which may include Krugman, would WANT people to question authorities in general, including them. (Which means I'm agreeing with Bruce Cohen@215, too).

#220 ::: Earl Cooley III ::: (view all by) ::: July 09, 2010, 01:27 PM:

I'd like to think that Krugman was aware of the irony of his statement.

#221 ::: Jacque ::: (view all by) ::: August 10, 2010, 04:37 PM:

heresiarch @212: Then who the hell is that artist!? I want to know!!! And I haven't been able to find a credit.

#222 ::: Mary Aileen sees probable spam ::: (view all by) ::: February 20, 2011, 04:49 PM:

I don't recognize the language in #222. Turkish, maybe?

#223 ::: Niall McAuley sees a spam probe @ #223 ::: (view all by) ::: July 13, 2012, 03:52 AM:

For some reason, I hear this one in Yoda's voice.

#224 ::: Cally Soukup has been gnomed ::: (view all by) ::: July 16, 2012, 10:13 PM:

Another spam report gnomed. Do the gnomes perhaps have a craving for chocolate peanut butter ice cream?

#225 ::: Tom Whitmore ::: (view all by) ::: July 16, 2012, 10:45 PM:

Jacque @221 -- I actually just tried to find out who the artist was, and failed. So I've taken the step of writing to RSAnimate and asking them why their artists aren't credited. We'll see if they answer.

#226 ::: Tom Whitmore ::: (view all by) ::: July 20, 2012, 01:16 PM:

Ha! Even got a response from them. The folks who do the animations for RSA are a group called Cognitive Media, who seem not to want to identify their individual artists either. They're hidden three levels down, in the "About Us/People" lvel. But at least it's possible to find them there.

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