Bad news for China?
Harold Meyerson in today's Washington Post writes about China's bad economic news and what it may mean for us and Europe. In brief, the answer isn't simple. Worth reading.
Wednesday, May 11, 2011
Economists
"An economist's guess is liable to be as good as anybody else's. "
Will Rogers
I think Will was too kind to the economists of his day. As of his death in 1936, none of the neoclassical economists had figured out how it came about that the economy had stabilized at a low utilization of economic resources. It took John Maynard Keynes to figure that out, and his General Theory wasn't published until after Rogers' fatal airplane crash at Point Barrow.
Here is what Keynes had to say about economists:
"But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
I'm not convinced that even Keynes got this right. The power of vested interests, when coupled with the writings of defunct economists, amplified by "voices in the air" heard only by madmen in authority, can be very powerful, indeed. Present concerns about the nonexistent "debt crisis" and the imagined specter of "inflation" and "bond ratings" are examples. It's like relying on Elwood P. Dowd's conversations with Harvey for economic advice.
Even in Keynes' day, the intellectual influence of defunct neoclassical economists on policy led the Roosevelt administration to prematurely attempt to balance the budget in 1937, setting off a second dip of the Great Depression.
I was there.
It took five more years and immense war spending to dig out of that hole. Let's not go there again.
Will Rogers
I think Will was too kind to the economists of his day. As of his death in 1936, none of the neoclassical economists had figured out how it came about that the economy had stabilized at a low utilization of economic resources. It took John Maynard Keynes to figure that out, and his General Theory wasn't published until after Rogers' fatal airplane crash at Point Barrow.
Here is what Keynes had to say about economists:
"But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
I'm not convinced that even Keynes got this right. The power of vested interests, when coupled with the writings of defunct economists, amplified by "voices in the air" heard only by madmen in authority, can be very powerful, indeed. Present concerns about the nonexistent "debt crisis" and the imagined specter of "inflation" and "bond ratings" are examples. It's like relying on Elwood P. Dowd's conversations with Harvey for economic advice.
Even in Keynes' day, the intellectual influence of defunct neoclassical economists on policy led the Roosevelt administration to prematurely attempt to balance the budget in 1937, setting off a second dip of the Great Depression.
I was there.
It took five more years and immense war spending to dig out of that hole. Let's not go there again.
On Cooperation
"Competition leads to loss. People pulling in opposite directions on a rope only exhaust themselves: they go nowhere. What we need is cooperation. Every example of cooperation is one of benefit and gains to them that cooperate. Cooperation is especially productive in a system well managed. It is easy to make a list of examples of cooperation, some of which are so natural that we may not have recognized them as cooperation. Everybody wins."
W. Edwards Deming
W. Edwards Deming
Tuesday, May 10, 2011
Don't Eat Our Seed Corn
Folks who didn't grow up on a farm may not get the allusion to seed corn. Let me explain.
Back in the olden days (before hybrid seeds and genetic engineering), farmers harvested their crops and set aside some of the harvest to use as seeds for the following year's planting. Even in hard times, they would never eat the grain set aside as seed. If they ate the seed corn, it would extend and intensify the famine into the next year.
Something like that is going on in Raleigh this year as the state legislature is pushing drastic cuts in education programs, layoffs of teachers and diversion of public school resources to charter schools and even private schools. That may even be worse than eating seed corn, because the effects may last for a lifetime of the students affected.
"Why should I care?" you may ask, "I have no children in school."
Such an attitude would be foolish in the extreme. All children in school are our children. They are the ones whose contributions to Social Security taxes and Medicare funds will be used to support us in our old age. Even for those who don't need Social Security to survive, retirement plans depend on future productivity increasing the value of factories and enterprises and expanding our national wealth and the value of our stocks and bonds. Who will labor to cause that increase?
These very schoolchildren.
One of the most pernicious ideas abroad in the land is that children and their parents are "customers" of our schools and that the school systems must compete for their favor. The truth is that we are all recipients of the value provided by effective school systems.
Good schools attract intelligent and capable parents to come here. They attract businesses to our state. Schools are a valuable economic multiplier. We let them languish at our collective peril.
Let's make our schools even better, instead of starving them for resources.
Back in the olden days (before hybrid seeds and genetic engineering), farmers harvested their crops and set aside some of the harvest to use as seeds for the following year's planting. Even in hard times, they would never eat the grain set aside as seed. If they ate the seed corn, it would extend and intensify the famine into the next year.
Something like that is going on in Raleigh this year as the state legislature is pushing drastic cuts in education programs, layoffs of teachers and diversion of public school resources to charter schools and even private schools. That may even be worse than eating seed corn, because the effects may last for a lifetime of the students affected.
"Why should I care?" you may ask, "I have no children in school."
Such an attitude would be foolish in the extreme. All children in school are our children. They are the ones whose contributions to Social Security taxes and Medicare funds will be used to support us in our old age. Even for those who don't need Social Security to survive, retirement plans depend on future productivity increasing the value of factories and enterprises and expanding our national wealth and the value of our stocks and bonds. Who will labor to cause that increase?
These very schoolchildren.
One of the most pernicious ideas abroad in the land is that children and their parents are "customers" of our schools and that the school systems must compete for their favor. The truth is that we are all recipients of the value provided by effective school systems.
Good schools attract intelligent and capable parents to come here. They attract businesses to our state. Schools are a valuable economic multiplier. We let them languish at our collective peril.
Let's make our schools even better, instead of starving them for resources.
Candidate Filing
Overheard during and after last Tuesday's meeting of Oriental's Town Board of Commissioners were a number of negative comments about the board.
For those who were surprised, dismayed or annoyed, you should know that Tuesday, November 8, 2011 is the date of municipal elections. Oriental also has absentee voting (including one-stop) starting in October.
But to run, you need to file. Candidate filing begins at twelve noon July 25, 2011 and ends at twelve noon August 12. It is also possible to run as a write-in candidate.
For details, call the Pamlico County Director of Elections, Lisa Bennett, at 745-4821.
For those who were surprised, dismayed or annoyed, you should know that Tuesday, November 8, 2011 is the date of municipal elections. Oriental also has absentee voting (including one-stop) starting in October.
But to run, you need to file. Candidate filing begins at twelve noon July 25, 2011 and ends at twelve noon August 12. It is also possible to run as a write-in candidate.
For details, call the Pamlico County Director of Elections, Lisa Bennett, at 745-4821.
Power to the Powerful! Wealth to the Wealthy! Blame to the Blameless!
Writing for Slate magazine yesterday, Eliot Spitzer described what he calls the "Republican war against the weak."
It is a multi front war, led by many generals. Republican governors against unions. Legislators against consumers. Judges against individuals and for corporations.
The truth is that the struggle of the wealthy and powerful against what used to be called the common man has been a feature of American politics from the beginning. In the aftermath of the Great Depression, though, it looked for a long time like the New Deal and its subsequent enhancements had permanently evened the tables. Well into the 1970's, Republican efforts to undo the New Deal and its regulatory and safety net features failed.
In the past thirty years, however, as memories of the depression faded and claims were made that we are now so smart we no longer need regulation, Republicans began to make serious inroads into the protections that had worked so well for so long.
"The unifying theme," Spitzer says, "is an assault on the weak. The power of individuals, each of us feeble in isolation, to act collectively and hence stand up to the powerful is being eviscerated. Those who already begin behind are finding the few legal protections afforded them under attack. A critical element of the Republican agenda has become increasing the legal power of those who already have power, and diminishing the power of the weak."
But Spitzer misses the boat on at least one matter. When he tries to explain why these efforts are wrong, he says: "if we are upset at the outcome of an election, we don't take away the right to vote of those who defeated us..." Yet all across the country Republican legislatures and governors are doing just that. They are introducing changes to election law clearly intended to discourage poor, elderly, handicapped, African American, Hispanic and first time voters from voting.
There are currently 41 bills in the North Carolina legislature that will, if adopted, modify election law and practice. The majority of the proposals would impede both voters and candidates. The bills appear to be part of an attempt to rig elections in favor of Republican candidates.
There are at least a half dozen proposed amendments to the North Carolina Constitution with the same apparent aim.
And we don't yet know what will be attempted with legislative redistricting.
It should be an interesting legislative session.
It is a multi front war, led by many generals. Republican governors against unions. Legislators against consumers. Judges against individuals and for corporations.
The truth is that the struggle of the wealthy and powerful against what used to be called the common man has been a feature of American politics from the beginning. In the aftermath of the Great Depression, though, it looked for a long time like the New Deal and its subsequent enhancements had permanently evened the tables. Well into the 1970's, Republican efforts to undo the New Deal and its regulatory and safety net features failed.
In the past thirty years, however, as memories of the depression faded and claims were made that we are now so smart we no longer need regulation, Republicans began to make serious inroads into the protections that had worked so well for so long.
"The unifying theme," Spitzer says, "is an assault on the weak. The power of individuals, each of us feeble in isolation, to act collectively and hence stand up to the powerful is being eviscerated. Those who already begin behind are finding the few legal protections afforded them under attack. A critical element of the Republican agenda has become increasing the legal power of those who already have power, and diminishing the power of the weak."
But Spitzer misses the boat on at least one matter. When he tries to explain why these efforts are wrong, he says: "if we are upset at the outcome of an election, we don't take away the right to vote of those who defeated us..." Yet all across the country Republican legislatures and governors are doing just that. They are introducing changes to election law clearly intended to discourage poor, elderly, handicapped, African American, Hispanic and first time voters from voting.
There are currently 41 bills in the North Carolina legislature that will, if adopted, modify election law and practice. The majority of the proposals would impede both voters and candidates. The bills appear to be part of an attempt to rig elections in favor of Republican candidates.
There are at least a half dozen proposed amendments to the North Carolina Constitution with the same apparent aim.
And we don't yet know what will be attempted with legislative redistricting.
It should be an interesting legislative session.
Sunday, May 8, 2011
Amending Oriental's Zoning Law
Of all of Oriental's ordinances, the most consequential by far is the Growth Management Ordinance (GMO). The GMO has the greatest effect on the look and feel of the town, the value of real estate, the possibilities of real estate development, and the opportunities for the town's growth.
North Carolina General Statutes rightly provide explicit rules for initial adoption of a zoning ordinance and its subsequent amendment. The goal of these rules is to foster an open process and provide members of the public meaningful opportunities to make their views and wishes known.
In discussions about zoning, we hear frequent admonitions that we must be friendly to business - after all, businessmen and real estate developers invest a lot of money in their projects.
It is worth remembering that, for most of our residents, their home represents the largest investment they will ever make. Maintaining the value of that investment as well as the look and feel of their neighborhoods is often of supreme importance to them.
The town's planning board, made up of volunteers, has significant responsibilities to advise the town's board of commissioners on zoning matters. They are, in effect, the substitute for what, in a larger municipality would be the town's planning department. But they are an advisory board. Both NCGS and our GMO make it clear that the board of commissioners is not bound by the planning board's recommendations.
The Town Board is, after all, the governing body.
Last Tuesday night's kerfuffle between the planning board and the town board shouldn't have happened. In one case, the town board rejected the request for a public hearing on a proposed new section 88. In another case, the town board tabled a motion to schedule a public hearing for a seven-page (single-spaced) complete rewrite of Article XV of the GMO, so that board members would have time to compare the proposed draft with what exists now.
There is a widespread misconception that "tabling" a motion is a back door means of killing it. Not so. Properly used, tabling a motion is appropriate whenever the proposal is seen as not quite ready for a vote (as in not being understood by the board members) or it may even provide an opportunity to build stronger support for the measure. In any event, I believe it is inappropriate (except in case of a quasi-judicial proceeding) to schedule a public hearing on a draft ordinance unless a majority of the board has reviewed the draft and is comfortable putting it before the public. Those conditions did not exist last Tuesday.
I have a number of problems with the draft amendments, including the form of the amendments as put before the town board. I will have more to say about that later.
In the meantime, anyone with an interest in Oriental's GMO, including anyone for whom an amendment might at some time in the future jeopardize any provision of the GMO of personal importance should read the proposed amendments here.
All interested citizens should be sure to attend the public hearing now scheduled June 7.
It isn't clear to me why the planning board is in such an all-fired hurry, or what the actual problems are to which these five drafts are the purported solution.
North Carolina General Statutes rightly provide explicit rules for initial adoption of a zoning ordinance and its subsequent amendment. The goal of these rules is to foster an open process and provide members of the public meaningful opportunities to make their views and wishes known.
In discussions about zoning, we hear frequent admonitions that we must be friendly to business - after all, businessmen and real estate developers invest a lot of money in their projects.
It is worth remembering that, for most of our residents, their home represents the largest investment they will ever make. Maintaining the value of that investment as well as the look and feel of their neighborhoods is often of supreme importance to them.
The town's planning board, made up of volunteers, has significant responsibilities to advise the town's board of commissioners on zoning matters. They are, in effect, the substitute for what, in a larger municipality would be the town's planning department. But they are an advisory board. Both NCGS and our GMO make it clear that the board of commissioners is not bound by the planning board's recommendations.
The Town Board is, after all, the governing body.
Last Tuesday night's kerfuffle between the planning board and the town board shouldn't have happened. In one case, the town board rejected the request for a public hearing on a proposed new section 88. In another case, the town board tabled a motion to schedule a public hearing for a seven-page (single-spaced) complete rewrite of Article XV of the GMO, so that board members would have time to compare the proposed draft with what exists now.
There is a widespread misconception that "tabling" a motion is a back door means of killing it. Not so. Properly used, tabling a motion is appropriate whenever the proposal is seen as not quite ready for a vote (as in not being understood by the board members) or it may even provide an opportunity to build stronger support for the measure. In any event, I believe it is inappropriate (except in case of a quasi-judicial proceeding) to schedule a public hearing on a draft ordinance unless a majority of the board has reviewed the draft and is comfortable putting it before the public. Those conditions did not exist last Tuesday.
I have a number of problems with the draft amendments, including the form of the amendments as put before the town board. I will have more to say about that later.
In the meantime, anyone with an interest in Oriental's GMO, including anyone for whom an amendment might at some time in the future jeopardize any provision of the GMO of personal importance should read the proposed amendments here.
All interested citizens should be sure to attend the public hearing now scheduled June 7.
It isn't clear to me why the planning board is in such an all-fired hurry, or what the actual problems are to which these five drafts are the purported solution.
Saturday, May 7, 2011
Redistricting
We attended a meeting last night on redistricting in North Carolina. This is required after every decennial US census, to insure that each legislative district (and some other districts) represent the same number of citizens.
The process is highly political (meaning partisan). It is also subject to complex legal constraints. The Research Division of the N.C. General Assembly has prepared a very helpful pamphlet: "Legislator's Guide to North Carolina Legislative and Congressional Redistricting." The pamphlet makes it very clear how difficult it is just to comply with the legal requirements. Once you overlay the legal requirements with the natural desire of each political party to maximize its vote and minimize that of the other parties, the challenge becomes mind-boggling.
The reasons we have so much difficulty with redistricting are:
1. Representation is by geography rather than by social, cultural or economic affinities;
2. We have single-member districts with representation decided on a winner-take-all vote;
3. By comparison with other countries, we have few legislators;
4. We have only two viable political parties.
The truth is, the reason we have only two parties is because of the first three characteristics of our system.
Is there a better way?
I think there is. For legislative elections, I favor multi-member districts and proportional representation. It is not as complicated as it sounds. Such an approach would almost certainly introduce new political parties into the system and require parties to cooperate. It would be less likely that a single party would control any house of a legislature, thus leading to coalition building. And redistricting would become much less complex.
Based on the past couple of decades of polling by Times Mirror and the Pew Trust, it seems that our population would shake out into perhaps nine or ten opinion groupings and perhaps that many parties.
Would such a change lead to better outcomes? Who knows? But such a system works pretty well elsewhere.
I predict we will adopt such a system as soon as we can persuade pigs to fly.
The process is highly political (meaning partisan). It is also subject to complex legal constraints. The Research Division of the N.C. General Assembly has prepared a very helpful pamphlet: "Legislator's Guide to North Carolina Legislative and Congressional Redistricting." The pamphlet makes it very clear how difficult it is just to comply with the legal requirements. Once you overlay the legal requirements with the natural desire of each political party to maximize its vote and minimize that of the other parties, the challenge becomes mind-boggling.
The reasons we have so much difficulty with redistricting are:
1. Representation is by geography rather than by social, cultural or economic affinities;
2. We have single-member districts with representation decided on a winner-take-all vote;
3. By comparison with other countries, we have few legislators;
4. We have only two viable political parties.
The truth is, the reason we have only two parties is because of the first three characteristics of our system.
Is there a better way?
I think there is. For legislative elections, I favor multi-member districts and proportional representation. It is not as complicated as it sounds. Such an approach would almost certainly introduce new political parties into the system and require parties to cooperate. It would be less likely that a single party would control any house of a legislature, thus leading to coalition building. And redistricting would become much less complex.
Based on the past couple of decades of polling by Times Mirror and the Pew Trust, it seems that our population would shake out into perhaps nine or ten opinion groupings and perhaps that many parties.
Would such a change lead to better outcomes? Who knows? But such a system works pretty well elsewhere.
I predict we will adopt such a system as soon as we can persuade pigs to fly.
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