Great Depression?

[sr71plt]

War causes many things to happen that might have taken longer in its absence. Sometimes social change is one of them, such as an increased presence of women in the U.S. work force. Some of those accellerated changes may be good things. But as with the townspeople in Bastiat's parable, you ignore the "unseen," those advances that might have occurred but for the war's massive destruction of wealth and lives. Who can say whether the great scientist who might have discovered cold fusion or the cure to cancer was killed at age 18, torpedoed by a U-Boat in the North Atlantic, or blown up by an 88 shell at Stalingrad? What constructive purposes might have been acheived with the billiions of dollars, pounds, yen, marks and rubles that went into 500 lb. bombs and 7.92 mm rifle rounds?

Woulda, shoulda, coulda aside--the war is what did it. I was rebuffing (successfully, I think) the statement that war ever being good for the economy was a fallacy. Obviously, as I demonstrated, that isn't true.

 

[Handprints]

Woulda, shoulda, coulda aside--the war is what did it. I was rebuffing (successfully, I think) the statement that war ever being good for the economy was a fallacy. Obviously, as I demonstrated, that isn't true.

I think the conditions under which it's not a fallacy are perhaps a little more limited than have been noted in this thread. I'd suggest you also need the following to be true in order to improve the odds of measurable economic gain:

Proxy wars and wars fought on someone else's soil are better.
Not having your middle class killed, decimated or on the first plane out after the armistice.
A decade or more of growing local and global trade in the aftermath.
A conquered population willing to throw away past loyalties immediately and JV with the conquerors.
A surviving manufacturing base.
No reparations (generous funding from the conquerors is especially welcome.)
Decent central bank management for at least a decade after the armistice.
Credible post-armistice government.
Extremely tight cohesion between industry and government, supported by a polity which thinks of economic reconstruction as job one.

Those conditions, in my view, are at least a subset of the reasons that most wars are economically bad for everyone involved. Most of the emerging countries I deal with professionally have been involved in at least three wars in the past 100 years; most of them needed at least 20 years plus a once-a-millennium resources boom to get to where they are now.

Hope that's of use,
H

 

[JAMESBJOHNSON]

Jenny has a good point. We're a service economy. When you actually try to do something in this country you deal with the lawsuits and bureaucratic barriers first. But lawyers and clerks dont produce anything. You cannot eat or wear or drive anything a lawyer or accountant or guidance counselor produces. They arent like physicians or optometrists or cosmetologists or cooks who provide material services.

 

[Handprints]

I don't think I'm ever going to be able to understand why people consider services to be somehow less able to create value than primary industry. I can only make sense of it as part of a catastrophist mindset that only assigns "real" value to those things likely to help you survive a winter-long blizzard in an abandoned cabin...

In 1947, the earliest year for which the US Bureau of Economic Analysis provides comparable numbers, private services-producing businesses contributed 47.755% of America's GDP. Private goods-producing businesses contributed 39.770%. I would not be at all surprised to learn that services overtook industry as the major driver of US GDP growth sometime in the 1920s and I'd bet blind that it was well ahead within two years of Smoot-Hawley (1930), which gave US industrial growth a kick in the balls that took 20 years to recover from.

Which is the only goods-producing industry to gain significantly in that period (as a contributor of GDP)? Utilities. Which service providing industries grew the most? Scientific services, healthcare and waste management. Finance types, lawyers and Hollywood - the usual suspects in these discussions - grew slightly slower than the services industry average in that period.

Economies where services are growing faster than industry all share a common set of characteristics: consumers have enough surplus income to start buying more than it takes to stay alive; overall economic stability is sufficient that capital starts chasing higher returns rather than collateral; the population is sufficiently skilled/educated that the majority can now create surplus value by their labour.

Economies where services are a greater contributor to GDP than industry enjoy all of those characteristics plus: consumers who spend the majority of their earnings on post-subsistence purchases; stable democracies; unfettered freedom of movement for people, goods and capital; GDP per capita in the top third of the world rankings.

Economies where services make a contribution to GDP that is a multiple of that of all other private industry enjoy two further characteristics: they're the top decile for (ex-oil) GDP per capita and they're the ones anyone with brain in the world is either emigrating to right now or plans to ASAP.

If you want examples of what life is like in countries where industry was always a top economic and social priority, and where industry contributed the lion's share of GDP, you need look no further than the Warsaw Pact nations from 1945-1990 or any African country where GDP per capita remains below USD800 a year.

The percentage of GDP derived from services is nothing less than the best possible indicator of a country's economic health. Unsurprisingly, services are also the sector where the benefits of democracy, access to capital and education can make the most impact.

Hope that's of interest,
H

 

[JAMESBJOHNSON]

HANDJOB

Ultimately everything rests on material wealth or property.

 

[Le Jacquelope]

I don't think I'm ever going to be able to understand why people consider services to be somehow less able to create value than primary industry. I can only make sense of it as part of a catastrophist mindset that only assigns "real" value to those things likely to help you survive a winter-long blizzard in an abandoned cabin...

In 1947, the earliest year for which the US Bureau of Economic Analysis provides comparable numbers, private services-producing businesses contributed 47.755% of America's GDP. Private goods-producing businesses contributed 39.770%. I would not be at all surprised to learn that services overtook industry as the major driver of US GDP growth sometime in the 1920s and I'd bet blind that it was well ahead within two years of Smoot-Hawley (1930), which gave US industrial growth a kick in the balls that took 20 years to recover from.

Which is the only goods-producing industry to gain significantly in that period (as a contributor of GDP)? Utilities. Which service providing industries grew the most? Scientific services, healthcare and waste management. Finance types, lawyers and Hollywood - the usual suspects in these discussions - grew slightly slower than the services industry average in that period.

Economies where services are growing faster than industry all share a common set of characteristics: consumers have enough surplus income to start buying more than it takes to stay alive; overall economic stability is sufficient that capital starts chasing higher returns rather than collateral; the population is sufficiently skilled/educated that the majority can now create surplus value by their labour.

Economies where services are a greater contributor to GDP than industry enjoy all of those characteristics plus: consumers who spend the majority of their earnings on post-subsistence purchases; stable democracies; unfettered freedom of movement for people, goods and capital; GDP per capita in the top third of the world rankings.

Economies where services make a contribution to GDP that is a multiple of that of all other private industry enjoy two further characteristics: they're the top decile for (ex-oil) GDP per capita and they're the ones anyone with brain in the world is either emigrating to right now or plans to ASAP.

If you want examples of what life is like in countries where industry was always a top economic and social priority, and where industry contributed the lion's share of GDP, you need look no further than the Warsaw Pact nations from 1945-1990 or any African country where GDP per capita remains below USD800 a year.

The percentage of GDP derived from services is nothing less than the best possible indicator of a country's economic health. Unsurprisingly, services are also the sector where the benefits of democracy, access to capital and education can make the most impact.

Hope that's of interest,
H

You forget that at one of the heights of America's industrial years - the post WWII years - a single worker could support an entire family.

That has not and will not ever happen in the service economy.

 

[Handprints]

You forget that at one of the heights of America's industrial years - the post WWII years - a single worker could support an entire family.

That has not and will not ever happen in the service economy.

As far as I'm aware, a single industrial worker in the US can still afford to rent a post-war tilt-up, drive a five-year-old used car requiring an hour of tuning up every month, feed four mouths and still have enough left over for bowling night. Of course, it would only clutter up the argument to suggest that anyone living in typical 1955 blue-collar style would be considered abjectly poor today. Or, conversely, that earnings from today's McJobs provide their recipients with possessions and services that the 1950's factory worker would have considered the exclusive right of princes?

EDIT: Worth noting, in the 1950's - which I assume is the "heights" period in question - the percentage contribution of private goods-producing industry to GDP only grew in two years: 1951 and 1955. But, hey, maybe a worker's pay shouldn't in any way reflect the relative economic health of his industry...

If a single worker in the service economy has never and will never earn enough to support a family, how exactly are we to explain my income, derived entirely from the sweat of my brow while toiling in the emerging market hedge fund industry?

H

 

[Roxanne Appleby]

To a signifigant extent the libertarian critique of big government and statism really comes down to a call for good accounting - properly calculating all the costs of any particular government action when assessing its benefit. The virtue of this approach is apparent to any fair-minded individual and is really not controversial.

The seen vs. the unseen problem is one of the contributions of this critique and viewpoint. It describes a real phenomenon. Wilfully ignoring its existance is not really defensible.

That said, the challenges of properly measuring all those costs both seen and unseen are vast, and are the source of endless disagreement between fair-minded people. In many cases the measurements come down to subjective valuations that are not amenable to precise quantification, but that still doesn't mean these should be left out of the equation. The seen/unseen phenomenon interjects similar problems - how does one measure the unseen? - but likewise this reality should not be ignored. Good accounting does not mean the end of politics because in this realm arithmetically precise answers (like "42") aren't possible, but that doesn't mean that good accounting shouldn't be used anyway - it's still the best tool we have.

In this thread I have applied this methodology and critique to war, and suggested that the costs of war - and of any indirect values that arise from it -greatly exceed those attributed to it in the standard forms of analysis.

It's revealing that some people's hostility to the libertarian critique is so intense that their response to it here leads them to defend war.

 

[sr71plt]

You forget that at one of the heights of America's industrial years - the post WWII years - a single worker could support an entire family.

That has not and will not ever happen in the service economy.

Or ever again in any economy, apparently--which says a great deal about the comparative strengths of economies and, again, belies the notion that no war can be good for any economy. (Again, WWII did wonders for the U.S., Japanese, and German economies. There were no set conditions that had to be met--it just was what actually happened.)

We (the United States) just happen to be in a "useless toy accumulation feeding some other country's economy" economy at the moment on top of pouring nonreturnable effort/funds down an Iraq rat hole. No way that can be "good" for the economy, I think.

 

[sr71plt]

It's revealing that some people's hostility to the libertarian critique is so intense that their response to it here leads them to defend war.

Or perhaps that your self-limitation of perspective to serve a narrowly focused, highly doctrinated philiosophy in all matters leads to myopia of convenience?

 

[Roxanne Appleby]

Or perhaps that your self-limitation of perspective to serve a narrowly focused, highly doctrinated philiosophy in all matters leads to myopia of convenience?

That's always a risk. It's why I added, "That said, the challenges of properly measuring all those costs are vast, and are the source of endless disagreement between fair-minded people. Good accounting does not mean the end of politics . . ."

IOW, ambiguity remains even when good accounting is exercised; different people will arrive at different conclusions based on their subjective valutions of particular costs or benefits. But that fact does not diminish the value of good accounting, that is, of recognizing the existance of all the costs and benefits, even if there is disagreement on the value of particular ones.

I described how good accounting should be applied to this particular issue and the response was not, "I disagree with your conclusion because in my view you undervalue X." It was to deny or ignore that the additional costs I cited are even real.

 

[Pure]

good accounting? or visceral hatred.?

rox, It's revealing that some people's hostility to the libertarian critique is so intense that their response to it here leads them to defend war

nice spin, rox. positively rovean.

To a signifigant extent the libertarian critique of big government and statism really comes down to a call for good accounting - properly calculating all the costs of any particular government action when assessing its benefit. The virtue of this approach is apparent to any fair-minded individual and is really not controversial.

these fellows, however, are not especially interested in problems of accounting for private firms, with their common ways of fudging the books. nor in problems like the true cost the US pays for the services of Blackwater and its mercenaries. ($1000/wk?) "true cost" is a sword wielded only against government, never against waste such as that of Boeing and the flop of its spy satellite program

no, i think the American's right's visceral hatred of 'governement', except when it's subsidizing a shipyard in their immediate area, is a religious view, not one based in reality. it's very strong in the "fundies" of Montana and Idaho. entities like TVA and programs like Social Security are viewed as irretrievably evil. hence the years of litigation of the TVA's right to exist.

people support the TVA, despite your appeal to mysterious evils. i guess if the bank had not bought a TVA bond, it would have loaned the money, to someone making a new factory, and thousands would be employed. airy speculations.

most countries HAVE done the math. joint government and private efforts do work, as do what Canada calls, 'crown corporations' which is how the Canada post office works.

the Norwegians have government control of their oilfields and a social democratic set up with lots of private enterprise also.

right wing skepticism about 'evil government' and its actions reminds me of the joke about the Irishman who look at some manufacturing process, and says, "Aye, it works in practice, but does it work in theory?"

RA the response was not, "I disagree with your conclusion because in my view you undervalue X." It was to deny or ignore that the additional costs I cited are even real.

this is a gross misrepresentation. such things as the future earnings of the poor kids killed in Iraq are indeed real. it's that they are not real for Bush and his cabinet, most of the Congress, and the honchos at Halliburton. that means such data do not figure in decisions as to what to do. Halliburton's earnings DO figure in the decisions of all three.

as to your concern for the potential of poor people, the ones who might discover a cure for cancer; i find libertarians, including you, in practice believe in 'benevolent neglect'-- they oppose tutoring and "free lunches,"
early pre schools programs, etc. as set up by cities, states, and the federal government--because, of course, government is evil.

you hate the government, yet the "free market" can never, unsubsidized, help these kids get into a position to have good life and liberty as adults. so libertarians general say 'do nothing,' or like you rhapsodize about private charities, and church run tutoring programs, and soup kitchens for the hungry, which do such a wonderful job w/o taxpayers having to front a nickel.

as you mentioned in another thread, your heroines indicate your politics.

RAmy ideals are reflected in my protagonists.



I just read the story about the one who inherited a 150 million and turned it into 250 million. to take a hypothetical example, her liberty to buy and sell (w/o income taxes), and build a beach property in the Bahamas (w/o significant property tax) is what you fight for.

An only child, Susan inherited a fortune when her parents were killed in a car wreck when she was just 12. [....]

When Susan graduated from college she moved into her own home, and concentrated on managing and increasing the fortune she had inherited, some $150 million. She was proud of the fact that by the time she was 28 years old she had increased that amount to more than $250 million through careful investment in select business start-ups and real estate development projects.

http://www.literotica.com/stories/showstory.php?id=215013

 

[Roxanne Appleby]

rox, It's revealing that some people's hostility to the libertarian critique is so intense that their response to it here leads them to defend war

nice spin, rox. positively rovean.

To a signifigant extent the libertarian critique of big government and statism really comes down to a call for good accounting - properly calculating all the costs of any particular government action when assessing its benefit. The virtue of this approach is apparent to any fair-minded individual and is really not controversial.

these fellows, however, are not especially interested in problems of accounting for private firms, with their common ways of fudging the books. nor in problems like the true cost the US pays for the services of Blackwater and its mercenaries. ($1000/wk?) "true cost" is a sword wielded only against government, never against waste such as that of Boeing and the flop of its spy satellite program

no, i think the American's right's visceral hatred of 'governement', except when it's subsidizing a shipyard in their immediate area, is a religious view, not one based in reality. it's very strong in the "fundies" of Montana and Idaho. entities like TVA and programs like Social Security are viewed as irretrievably evil. hence the years of litigation of the TVA's right to exist.

people support the TVA, despite your appeal to mysterious evils. i guess if the bank had not bought a TVA bond, it would have loaned the money, to someone making a new factory, and thousands would be employed. airy speculations.

most countries HAVE done the math. joint government and private efforts do work, as do what Canada calls, 'crown corporations' which is how the Canada post office works.

the Norwegians have government control of their oilfields and a social democratic set up with lots of private enterprise also.

right wing skepticism about 'evil government' and its actions reminds me of the joke about the Irishman who look at some manufacturing process, and says, "Aye, it works in practice, but does it work in theory?"

RA the response was not, "I disagree with your conclusion because in my view you undervalue X." It was to deny or ignore that the additional costs I cited are even real.

this is a gross misrepresentation. such things as the future earnings of the poor kids killed in Iraq are indeed real. it's that they are not real for Bush and his cabinet, most of the Congress, and the honchos at Halliburton. that means such data do not figure in decisions as to what to do. Halliburton's earnings DO figure in the decisions of all three.

as to your concern for the potential of poor people, the ones who might discover a cure for cancer; i find libertarians, including you, in practice believe in 'benevolent neglect'-- they oppose tutoring and "free lunches,"
early pre schools programs, etc. as set up by cities, states, and the federal government--because, of course, government is evil.

you hate the government, yet the "free market" can never, unsubsidized, help these kids get into a position to have good life and liberty as adults. so libertarians general say 'do nothing,' or like you rhapsodize about private charities, and church run tutoring programs, and soup kitchens for the hungry, which do such a wonderful job w/o taxpayers having to front a nickel.

as you mentioned in another thread, your heroines indicate your politics.

RAmy ideals are reflected in my protagonists.



I just read the story about the one who inherited a 150 million and turned it into 250 million. to take a hypothetical example, her liberty to buy and sell (w/o income taxes), and build a beach property in the Bahamas (w/o significant property tax) is what you fight for.

An only child, Susan inherited a fortune when her parents were killed in a car wreck when she was just 12. [....]

When Susan graduated from college she moved into her own home, and concentrated on managing and increasing the fortune she had inherited, some $150 million. She was proud of the fact that by the time she was 28 years old she had increased that amount to more than $250 million through careful investment in select business start-ups and real estate development projects.

http://www.literotica.com/stories/showstory.php?id=215013

Jesus, you accuse me of spinning? This entire post is nothing but that, straw men, obfuscation and trying to change the subject.

And now you're mining my strories for material to use in your bottomless vendetta against me? I must really get under your skin to generate this level of stalker-like behavior. Give it rest, why don't you.

 

[Pure]

hi rox,

the story is just a fortuitous example. the degree of your "libertarian" care* for the poor is pretty evident to anyone.

here's a little libertarian puzzle for you: suppose the poor unemployed don't WANT to go to church soup kitchens?

suppose people in the US agree with them that government run insurance is the way to go!

(this is a bit like asking the pope about a happily fornicating couple on the pill.)

---

oh, i get it: sometime the best 'care' is to let someone be a bit hungry; does wonders for his motivation. indeed, "doing nothing" is the kindest thing one can do. i get it.

 

[trysail]

Sect Waiting Out Doomsday in Penza Cave

By Kevin O'Flynn
Staff Writer
Twenty-nine members of a religious doomsday sect, including a 16-month-old baby, are hiding in a snow-covered cave in the Penza region, refusing to come out as they wait for the end of the world next May, prosecutors said Wednesday.

The sect members, who liken tax identification numbers to the apocalyptic sign of the beast, are threatening to blow themselves up if authorities storm the cave, located near the village of Nikolskoye, 100 kilometers southeast of Penza, regional prosecutor's office spokeswoman Tatyana Ostrovskaya said by telephone.

The leader of the sect was not in the cave, national media reported.

Steam could be seen rising from a hole in thick snow in footage shown Wednesday on NTV television. Police are guarding the cave to prevent anyone else from joining them, Ostrovskaya said.

Authorities estimate that the zealots have been in the cave for two weeks, prompting concerns for the health of the four children hiding out. Attempts to coax them out of the cave or at least to release the children have been unsuccessful as the sect members have taken a vow of silence, Ostrovskaya said.

"They are ordinary Christians," Father Georgy, a local priest, told NTV while standing near the cave. "They just don't accept [tax identification numbers] and passports. They say the church did this and that wrong and that the end of the world is near."

Gunshots were fired into the air from the cave when Father Georgy and police tried to approach, NTV reported.

The government and the Russian Orthodox Church have complained repeatedly about the rise of sects since the fall of the Soviet Union. The opening of the Iron Curtain provided a hospitable climate for religious movements such as the Moonies and the Scientologists.

The messianic Japanese cult Aum Shinrikyo, which released anthrax in Tokyo in 1993 and Sarin gas on the Tokyo subway in 1995, recruited hundreds of people across Russia and sought to acquire various weapons in Russia. The cult actively recruited top Russian scientists and technical experts in order to develop weapons of mass destruction, according to a 1995 U.S. Senate report.

A former traffic cop who claims he is Jesus is the spiritual leader of some 5,000 disciples in Siberia.

The sect members in the Penza cave are followers of 43-year-old Pyotr Kuznetsov, who moved to Nikolskoye last year claiming to head up the true Russian Orthodox Church, said Alevtina Volchkova, chief prosecutor of the region's Bekovsky district, where the village is located, the Regnum news agency reported.

"They say the current Russian Orthodox Church is commercialized," Volchkova was quoted as saying. "The church has its own tax code and carries out commercial activities, so [the sect claims to] represent the real Russian Orthodox Church."

Dozens of people from across the nation and from former Soviet republics came to the village to join the group, Ostrovskaya said.

"They came, they came, they came," elderly Nikolskoye resident Galina Chepurnova told Rossia television Wednesday. "They sang, they sang, they sang."

Last year the group built a prayer house in Nikolskoye, and several months ago members began preparing the cave 500 meters outside the village, national media reported. Members began storing enough petrol, kerosene and food to last until May, and before moving in, they expanded the cave and reinforced the roof, she said.

"Their leader -- or Father Pyotr, as they call him -- says their supplies include a half a ton of honey and a lot of jam," Volchkova told Regnum.

Followers did not work, children in the sect were not allowed to go to school, and members were banned from speaking to their relatives, NTV reported.

When the group disappeared from the area, "we thought they had gone away. But it seems they didn't," Volchkova said in televised comments.

Prosecutors have opened a criminal investigation in connection with the formation of an illegal sect, a crime punishable by up to three years in prison.

The hideaway was only discovered when the daughter of one of the sect members turned up in Nikolskoye, and Kuznetsov -- who did not go into the cave himself -- squealed under pressure from investigators, Izvestia reported Wednesday.

"He said they should not be disturbed, that they are chosen ones and nobody else is allowed to get in the cave," a law enforcement source told Izvestia.

Kuznetsov's whereabouts were unknown as of Wednesday, NTV reported.

Archbishop Filaret of the Penza and Kuznetsk dioceses said in a statement published on the regional government's web site that he was "deeply grieved" to hear that "a group of people who are outside the church of God ... are preparing themselves for the second coming of Christ."

Ostrovskaya refused to say if there was any plan to storm the cave, and the Interior Ministry's Penza region branch referred all questions to prosecutors.

© Copyright 2007 The Moscow Times. All rights reserved.

 

[Le Jacquelope]

As far as I'm aware, a single industrial worker in the US can still afford to rent a post-war tilt-up

Those weren't tilt-ups even back then. And the land that a house is built on, is sometimes more expensive than the house. I've seen termite infested homes in Santa Clara bought up for $500,000 straight cash money, and then torn down the next month. I'm looking at doing it to a lease-to-own property in town (though for only a quarter as much). It was the land that was valuable.

drive a five-year-old used car requiring an hour of tuning up every month, feed four mouths and still have enough left over for bowling night. Of course, it would only clutter up the argument to suggest that anyone living in typical 1955 blue-collar style would be considered abjectly poor today. Or, conversely, that earnings from today's McJobs provide their recipients with possessions and services that the 1950's factory worker would have considered the exclusive right of princes?

Today's McJobs don't even pay rent. You have a point about the car.

My point is, incomes have plummetted relative to inflation.

EDIT: Worth noting, in the 1950's - which I assume is the "heights" period in question - the percentage contribution of private goods-producing industry to GDP only grew in two years: 1951 and 1955. But, hey, maybe a worker's pay shouldn't in any way reflect the relative economic health of his industry...

So you are arguing that GDP and workers' income are essentially tied together? I'm not even a degreed economist (a degreed comp sci dude, but not an economist) and I can drop a comet on that one. But then again I know if I did, I would have to be attacking a straw man.

Case in point: Machines can (and sometimes do) work for free and produce a huge GDP. Infinite productivity, zero labor cost. We're pushing towards that right now.

If a single worker in the service economy has never and will never earn enough to support a family, how exactly are we to explain my income, derived entirely from the sweat of my brow while toiling in the emerging market hedge fund industry?

H

You got me on that one. I meant to say, an average worker in the service industry. But that should be taken as implied - the service industry includes everything from hedge funds to customer service call center work. When you look at the distribution of people who get these jobs in America, the curve is very heavily weighted to the left, with a tiny handful in our position (mine as well as yours) on the high paying right, and the vast majority near the bottom.

 

[Le Jacquelope]

Or ever again in any economy, apparently--

Oh, I believe those factory workers abroad - the ones working in jobs that we used to have, producing things for America - are pretty close to, or are at the point of, feeding whole families and paying for roofs over their heads - with that one worker's income. (At least until their factory or mine collapses and kills them all, at which time we all say 'God bless lassiez-faire Capitalism'.)

That is the benefits of raising their standard of living by lowering our own. Of course, the fact that it is impossible for America's workers to ever see much of any (if any) benefits from this, is a fact that laissez-faire globalists are better off ignoring.

which says a great deal about the comparative strengths of economies and, again, belies the notion that no war can be good for any economy. (Again, WWII did wonders for the U.S., Japanese, and German economies. There were no set conditions that had to be met--it just was what actually happened.)

I am not getting heavily into whether war can be good or not. I know WW-II was good for America and Japan, etc., and that's all; it is no indicator of the overall positive or negative effect of war on a victor's or loser's economic health. I'm tempted to reminisce about "The Mouse That Roared", however. (Peter Sellers starred in that, if I recall?) (I'm too lazy to wiki right now.)

Well, I guess I can cop out with an, "it depends". We shielded two of World War Two's conquered enemies, Japan and (West) Germany, from the total consequences of their actions by their victims who wanted total vengeance (preventing the USSR from gobbling up West Germany; stopping the USSR from attacking Japan, etc.), and we rebuilt them.

If we had followed the Marshall plan, we would have turned Iraq into a gleaming example of democracy even by now.

Since I have some time, I'll go over my post war plan for Iraq and Afghanistan, if I were supreme grand poobah:

* Ignore Iraq. Send 1/4 as many troops sent to Iraq, to Afghanistan instead;
* Send aid to the worst regions in the country.
* Strengthen the Northern Alliance, let them root out the Taleban.
* Troops would train the Northern Alliance and protect people during election season, while rooting out straggling terrorists.
* Enforce RESPECT of Islam and also of religious diversity, in the region. (Arguably, Northern Alliance people tended to kill women FAR less often)
* Help them develop home grown economy to make the poppy crop profits obsolete. (Say, within 15 years, make them the cust service call center capital of the Middle Eastern cust service region? Saudi Arabian banks would outsource to Afg. to service Saudi customers, etc.)
* Force Al Qaeda to fight in Afghanistan, not spread to Iraq.
No tolerance for Abu Ghraib. (And if one happens, no amnesty for any personnel, civilian or otherwise, that are involved; make sure Private English is only one in a long line of people waiting for yellow jump suits)
No bombing weddings.
No foot dragging over Blackwater incidents.

Show Afghanistan the benefits of democracy and "one law for everyone" Constitution-based civil rights first, then America's socia-capitalist economy next.

Similar approaches crushed Communism (a bigger, more well armed enemy than radical Islam).

We (the United States) just happen to be in a "useless toy accumulation feeding some other country's economy" economy at the moment on top of pouring nonreturnable effort/funds down an Iraq rat hole. No way that can be "good" for the economy, I think.

Oh, we're feeding our economy. Ever notice the explosion in demand for minimum wage cashiers and stockers and clerks? Not to mention direct marketing door to door sales people (1099ers as I call 'em)?

This economy is launching a thousand new multi level marketing jobs a day.

 

[sr71plt]

I am not getting heavily into whether war can be good or not. I know WW-II was good for America and Japan, etc., and that's all; it is no indicator of the overall positive or negative effect of war on a victor's or loser's economic health. I'm tempted to reminisce about "The Mouse That Roared", however. (Peter Sellers starred in that, if I recall?) (I'm too lazy to wiki right now.)

Since my single comment on this issue was focused on the claim that war was never good for the economy, and this concedes the very examples I responded with--happy to focus on this and walk away with a smile.

Yes, I'm intimatly aware of "The Mouse That Roared"--played David Benter, leader of Grand Fenwick' Dilutionist Party, in a semiprofessional running of it (got paid, but not much). It's a scream, and so, so true. And, yes, I think Peter Sellers played several of the parts in the movie.

 

[Roxanne Appleby]

If a single worker in the service economy has never and will never earn enough to support a family, how exactly are we to explain my income, derived entirely from the sweat of my brow while toiling in the emerging market hedge fund industry?

H

Would you like fries with that debenture?

 

[Handprints]

Would you like fries with that debenture?

Unless I can read the prospectus, I'll just have the fries, please. With mayo.

If you're willing to chip on the Randland questions I asked in another thread, I'll have someone call you about the debenture...

H

 

[Handprints]

Those weren't tilt-ups even back then. And the land that a house is built on, is sometimes more expensive than the house. I've seen termite infested homes in Santa Clara bought up for $500,000 straight cash money, and then torn down the next month. I'm looking at doing it to a lease-to-own property in town (though for only a quarter as much). It was the land that was valuable.

Note: Long post - I'm in an airport facing a delayed departure with a dead mobile. Apologies if it's excessive.

Fair enough on the tilt-ups - I'm betraying a lack of familiarity with US post-war housing. What I should have said was Veteran's housing and post-war (1946-56) housing developments, which were, respectively, awful and a mixed bag. You're absolutely right about certain area's land/house values and there are identical scenes to be observed in Europe. I can't help noticing, however, that right now the most valuable land is always in either places which also house the most globally-competitive service jobs or the best services for the retired...

My point is, incomes have plummetted relative to inflation.

Have they? The BEA says there were 43.4m Americans employed full-time and part-time by private employers in 1950 and, in total, they were paid (straight salary, nothing about benefits, transfers or unearned income) a total of USD124.6bn. That's USD2868.42 a head. In 2005 (the most recent year for which we have comparable, fully-revised figures), the respective numbers were 117.09m, USD4,686.9bn and USD40,028.18.

That means the average private employee wage grew 4.91% annually in that period. The average increase in CPI inflation in the same period was 3.87%, according to the BLS.

US incomes have grown, relative to inflation - and by an enormous margin - since 1950.

And, if your comment should be understood to mean that this "plummet" has happened recently, I'd point you to the first half of this post where the absence of more-than-anecdotal evidence for such a trend was noted.

So you are arguing that GDP and workers' income are essentially tied together? I'm not even a degreed economist (a degreed comp sci dude, but not an economist) and I can drop a comet on that one. But then again I know if I did, I would have to be attacking a straw man.

Case in point: Machines can (and sometimes do) work for free and produce a huge GDP. Infinite productivity, zero labor cost. We're pushing towards that right now.

Let's talk about machines and their role in making money, then. Let's say we've got a series of them than can turn raw materials into finished product at absolutely zero marginal cost - a Platonic ideal of a production line. For never-changing products - paper clips, cigarettes - they're unbeatable. What about the other 99% of the manufactured goods in the world - the ones that are attempting not to be commodities?

There will certainly be marginal costs to our machine plant whenever we want to change any aspect of the finished products - at a minimum someone will have to reprogram the machines; frequently, someone's going to have to reorganise the production line and, on the worst occasions, ditch some of the machines to buy replacements which can do the new tasks that manufacturing the changed product requires.

These costs aren't small but, on the bright side, you don't need to have too many people around to make the required changes. Or is that a problem? What if your non-commodity product is sold in a competitive marketplace, where innovation and well-funded efforts to change consumer behaviour are commonplace? What if those consumers have surplus incomes and prefer the newest and most-variably functional goods to the stodgy, old, lowest-priced ones?

You can hire a bunch of guys to do consumer analysis and innovation - coming up with what buyers will want and new ways to give it to them - but you've now got a new bottleneck: the guys who know how to reprogram, rearrange and re-purchase machines are going to have real trouble keeping up with the wants of the new hires, plus their own reprogramming, rearranging and repurchasing efforts going to be racking up marginal costs at speed. Plus, guys who can keep a model of a whole integrated plant in their heads are rare: as your demand on their brains increases, so will their price, especially if you're not the only company with these problems.

How much worse is this situation going to get when your competitors start teaching consumers to want services bundled with their products: 10-year warranties, remotely-upgradable functionality, guaranteed six-monthly cycles of new accessories, interoperability with other machines?

Is it really going to surprise you, at this point, that competitors who prefer human-driven labour (with machines used primarily to increase the range of tasks a human can do and only working autonomously on the lowest-value parts and processes), in the most flexible working conditions possible, with management desperate to reward suggestions from any source, are eating your lunch? Or were paper clips your ideal product to start with?

More broadly - and back to services for a moment - the Henry Ford/AJP Taylor model of industrial command and control was a brilliantly creative innovation. It just didn't work out, for two mostly unforeseeable reasons: it didn't identify how unbelievably sophisticated consumer demand would become (ask old Henry what mass customisation meant to him: "Any color, as long as it's black.") and it destroyed incredible amounts of potential value by limiting so severely the number of people who could add it and the ways in which they could do so. These restrictions are what flexible, services-led manufacturing techniques attempt to overcome and they're also the reasons nobody's been keen on machine-led plants (except for commodity goods) for more than 20 years.

You got me on that one. I meant to say, an average worker in the service industry. But that should be taken as implied - the service industry includes everything from hedge funds to customer service call center work. When you look at the distribution of people who get these jobs in America, the curve is very heavily weighted to the left, with a tiny handful in our position (mine as well as yours) on the high paying right, and the vast majority near the bottom.

There's absolutely no doubt in my mind that your comment about the distribution of incomes in the services is correct: it's much, much wider than it is in manufacturing. There's equally no doubt that the average income for full- and part-time workers in manufacturing is probably a multiple of that in services. In fact, the BEA tells us that the manufacturing average wage number (full- and part-time in 2000) was USD47,887.57 and the services number was USD21,842.49.

No surprises there: it's a lot easier for a 16 year old to pick up ten hours a week at McD's than ten hours a week at an auto plant. The pay gap narrows quite a bit when you consider full-time-equivalents: in 2005, a manufacturing FTE earned about USD52,307 while a services FTE earned about USD44,229. They don't break the FTE numbers out the same way as the all-in figures, so the FTE numbers are probably off by a few hundred dollars up or down.

The change in service sector composition over the past 55 years in the US is also interesting: then, food and accommodation workers were the largest single subset of service workers by a mile, with (non-government) education and health care workers second and professional and business service providers third (this is headcount, not income.) In 2005, prof and bus was the largest sector (number one with a bullet for growth), private teachers and nurses still second, and food and accommodation an ever-more-distant third. I'm not sure those are stats that tally with most Americans' perceptions of changes in the service industry over time...

So here's the bit where we probably part company: the average FTE income in services is definitely lower but I think the range of earnings in that sector isn't the only thing that's higher. I think job mobility, opportunity for advancement and potential for income growth are also higher. I think there's a lot more structural room to reward further education, development and effort in the services sector than in manufacturing, so I'm delighted it offers so very many more jobs.

Hope that's of interest,
H

 

[xssve]

Most of your wage growth relative to infaltion occured between the mid Sixties and the late Seventies, during the inflationary spiral, and have declined relative to inflation ever since - very difficult to draw any conclusions from averages, a two tiered economy has emerged in the last twenty years, partially due to the erosion of jobs you could make a decent living at with only a high school education.

My biggest concern about the growth in the business and professional service sector is about resiliancy: let's say we do suffer a depression on a 1929 scale - you seem to disparage the notion that intrinsic value is the only meausre of real value, but when less than a third of the vast sums of value traded everyday in global markets represents actual goods and services, it makes me wonder about resiliancy, i.e., the ability to work ourselves out a major depression - caused, I might add, largey by financial service sector ledgerdemain, and you're fooling yourself if you don't think there will be a backlash should things go South.

Now most of this has been good for global economies, but from an American perspective, it been a bit like putting all out eggs in one basket, not your problem, I'm aware, you can take the next flight out, I'm stuck here.

The point I guess, in all of this, is that the concept of balanced local economies, i.e., sustainability, seems to have been largely ignored in the shift to globalizaion, it all sounds very dynamic and interesting to investors I'm sure, Indonesia makes textiles China makes everything else, etc., i.e., the way entire regions, even hemispheres specialize in a certain thing, creating continental sized economies of scale, but this interdependency is also a weakness to local economies - Argentina would be the example of the failure of neo-liberal managed capitalism, which doesn't seem very far removed from neo-con military colonialism, every bit as devastating, it just didn't cost us as much in lives and taxes.

Europeans seem to me to have achieved this balance to a large extent, but then you have more history, so maybe it makes more immediate sense - I'm curious if Europe has policies to this effect, or is it a function of general consensus?

 

[Roxanne Appleby]

Let's talk about machines and their role in making money, then. Let's say we've got a series of them than can turn raw materials into finished product at absolutely zero marginal cost - a Platonic ideal of a production line. For never-changing products - paper clips, cigarettes - they're unbeatable. What about the other 99% of the manufactured goods in the world - the ones that are attempting not to be commodities?

Damn, HP, where have you been all my life?

Thought experiment:

What if every human had a zero-marginal cost production machine that was infinitely versatile and brilliant - you just think what you want and out pops the item - fried rice, a ferrari, a frying pan, a new Mac, or a heart bypass operation. IOW, nobody had to lift a finger to have all the stuff they want or need.

What would people do? Stay home, watch Oprah and eat bonbons? Some would - but not Oprah. She's having fun and gaining satisfaction providing a service.

Man is a social animal, so people would want to gather in places to eat and drink. Someone who thinks he's really good at thinking up new recipes for the machine to make and is proud of that will provide such a place - a "restaurant." Probably there's more than one such person - now we have competition. (BTW, the only worker in these places is the guy thinking up the recipes - the machines do all the physical work.)

There are bicyclists out there who want to compete - Some get together and organize a race, a league, a world cup, a yellow jersey, etc. Probably more than one group does, and again there's competition. Some of the races are on TV right after Oprah.

There are smut writers who produce mass quantities and post it on the internet without monetary payment, sometimes engaging in competition that gets pretty heated. Oh wait a minute - we already have that.

The thought experiment demonstrates that producing material stuff is not the sine qua non of value.

My last example is fortuitious: We produce smut or erotica and give it away in exchange for nothing material. Readers value our written words, and we value the fact that others value our work. That sentence describes the essence and reality of a non-material based, 100 percent service economy. Humans still strive, create, compete, and value. There is still conflict too.

 

[xssve]

Absolutely true, Even the soviets pitted design bureaus against each other to develop their weapons systems and platforms - and yet the bottom line is there is no such machine, and after all is said and done, as Woody Allen said, "man does not live by bread alone, frequently, there must be beverage".

In short, intrinsic value represents those things people need to survive; the Easter Islanders are the classic example of misplaced priorites, what happens when a little success goes to your head. They too were modern human beings in every respect, anatomically and phychologically.

Modern finance is synergystic insofar as it facilitates the production and distribution of goods and services of intrinsic value, it's essentially a by product of the market process, which gave rise to it - if it doesn't, there is no justification for it's existance.

To some extent, it's an amusing game, the persuit of abstract wealth for it's own merit, but realistically, wealth itself is merely an abstract symbol of fertility/fecundity.

The Jag, the Swiss account, the Villa on Amalfi - their intrinsic value is to impress chicks.

If that isn't what you're doing, you're doing it wrong.

 

[elsol]

Some people have been predicting a great depression in about six months for the past 60 years. It's a cottage industry. There's an entire library of books on it. New ones come out every year explaining why this time it's all but a done deal. They are always filled with facts and figures, trend-lines and projections, and many are quite convincing. Some of them do fairly well in sales, too.

Is there one that takes the hollywood writers' strike into account?

Seriously, all those people at home with nothing to watch but news programs predicting the doom of all...

Bush better step in and resolve this strike for the good of the status quo... white, rich men aren't going to like what my plans are if I can't get new episodes of House, Heroes, or Moonlight... I'm talking a whirlwind tour around the nation to organize La Raca into a single political block and affect REAL change for mi gente.

Or I guess I could always write more porn... which would be just as offensive to the Moral Right (maybe more so).