Marginal Devolution

The recession got personal for me today, when I learned the reason a man I’ve been gaming with at my regular Friday night group hasn’t been showing up lately is because he’s broke and in a homeless shelter. I’m going to ask the Friday night gang for help for the guy — not money, but the job lead he needs much more. And it got me to thinking, about the two people I know who’ve actually been dragged under by the crappy economy.

You might wonder what took me so long. I knew it was getting bad out there, with the nominal unemployment rate at 10% and the actual hitting 17% and 6 applicants for every job. But my friends are mostly university-educated professionals in high-skilled tech jobs — last fired, first hired, and bright enough that if they had to change careers or found their own business they could probably hack it. Except…except for these two, who I’ll call A and B. What’s happening to them is bad. Very bad. And it illustrates a problem that’s going to get worse barring some drastic changes in the system.

A is the less screwed, so far. He’s in his mid-50s, white, college-educated, a tall Irish Catholic guy who looks right in a tweed cap. He’s a good bit brighter than average, probably in the 125-130 IQ range, but he’s bipolar (manic depressive) and has sleep-disorder issues. And he’s, hm, I think the best way to put it is rigid. Very capable at well-defined tasks and strategy games, but tends to get flustered and inarticulate when off his script. (No, it’s probably not mild autism, I know what that looks like; he’s actually more like OCD.) Socially awkward; few girlfriends, has never married, and tends to come off as an odd duck. He’s been underemployed all his life — clerking at a government agency, selling tract real estate, selling cars. Recently he’s working at a state-run liquor store, but that’s after two years of unemployment and an eviction fight. He’s got no cushion, nowhere to land if he loses this job.

B is in worse shape. About the same age. Average or a hair below-average intelligence — which, given the people he and I tend to hang with, has the consequence of almost always making him the slow guy in the room (I have to remind myself that this is a context effect when I deal with him). What I know of his job history is low-paid clerical work, the kind that requires a lot of specialized procedural knowledge that isn’t portable. A nice guy, very earnest, probably quite a hard worker. I believe he has a two-year degree from a local community college, but he shows no discernible high-value skills. Also unmarried, possibly asexual, slightly effeminate presentation. He’s black, which makes him a EEOC lawsuit risk — and if you don’t know how much that hurts his chances, you haven’t been anywhere near a small or medium-sized business in the last 30 years. Now he’s the guy in the homeless shelter.

What these guys have in common is that they’re only marginally employable. What borderline mental illness has done to one, mediocre skills and the unintended consequences of anti-discrimination laws have done to the other. As long as I’ve known both (and that would actually be most of my years, for both of them), they’ve worked dead-end jobs and put their passion into science fiction and wargaming. They’re decent, honest, unambitious men who have never wanted anything but steady work, a normal life, and a hobby or two. They’re not stupid and they have respectable work habits; in fact they’re probably more conscientious and safe than average. Now they don’t quite fit; too old, too geeky, too male, too quiet. The job market has discarded one and the other is hanging by a thread.

When I look at these guys, though, I can’t buy the explanation most people would jump for, which is that they simply fell behind in an increasingly skill-intensive job market. Thing is, they’re not uneducated; they’re not the stranded fruit-picker or construction worker that narrative would fit. Nor does offshoring explain what’s happened to these guys, because their jobs were the relatively hard-to-export kind.

No. What I think is: These are the people who go to the wall when the cost of employing someone gets too high. We’ve spent the last seventy years increasing the hidden overhead and downside risks associated with hiring a worker — which meant the minimum revenue-per-employee threshold below which hiring doesn’t make sense has crept up and up and up, gradually. This effect was partly masked by credit and asset bubbles, but those have now popped. Increasingly it’s not just the classic hard-core unemployables (alcoholics, criminal deviants, crazies) that can’t pull enough weight to justify a paycheck; it’s the marginal ones, the mediocre, and the mildly dysfunctional.

If that doesn’t scare the crap out of you, you’re not paying attention. It’s a recipe for long-term structural unemployment at European levels of 10%, 15%, and up. What’s even crazier is that the Obama administration wants to respond to this problem by…raising taxes and piling more regulatory burden on employers.

Yeah. That’ll work, sure. It is, in fact, the diametrical opposite of what A and B need if they’re not going to rot in homeless shelters. They need the overhead of employment to fall, not rise. Otherwise their future looks pretty damn grim. They’ve got about a decade each before they can collect Social Security, and even on the optimistic assumption that Federal entitlements won’t crash or be eaten up by a hyperinflationary episode I wouldn’t bet a lot on either one living that long.

I now think the increasingly jobless recoveries from the last couple of downturns were leading indicators. The end of the post-New-Deal fantasy that we could increase the friction costs of capitalism without limit, regulating and redistributing our way to prosperity, is hurtling towards us like a dark sun. A and B are two of the luckless bastards who are spiraling down its gravity well. Multiply them by ten million to see what it’s like when the contradictions of socialism on the installment plan come home to roost.

182 thoughts on “Marginal Devolution

  1. A comment I saw on another blog the other day seems to make a lot of sense here – “Regulation is a luxury good”. It’s something a society provides when you’ve got enough wealth to mess around with it, but most of it is not fundamentally necessary, and in fact it gets in the way of the fundamental economy. We live in a society that can afford a lot of luxury goods, but that’s not an unlimited amount, and one of these days we really ought to decide what we want to spend our wealth on, instead of just grabbing one of everything.

  2. I think there is a little more nuance here.

    Sure, cutting red tape can reduce business overheads and pointless regulation is a brake on innovation and investment.

    But I think it’s a bit of a stretch to say that the solution to our economic woes is just “less regulation”.

    For example, a well regulated corporations code is not only useful but necessary to generate confidence in the marketplace.

  3. You have it exactly right. The cost of hiring (and firing) someone has increasingly crept upward in most Europan countries for the last decades. In the Netherlands you need a court’s permission to fire someone…
    High structural uneployment, especially amongst ethnic minorities and migrants and the 50+ is the consequence. You find it everywhere in Europe. With one notable exception: Switzerland.
    Switzerland has very little labor legislation, and what exists mostly regulates things like workplace health and safety. Switzerland doesn’t even have a minimum wage. In Switzerland hiring is easy, and an employer can at any time fire someone without having to give cause. He only has to to adhere to whatever notice period is in the contract he has with the employee.
    Even in these troubled times unemployment in Switzerland is only about 4%, and Switzerland scores best in Europe when it comes to integrating migrants in to the labor market.

  4. It’s a recipe for long-term structural unemployment at European levels of 10%, 15%, and up.

    Exactly. And the way Europe had to deal with it was to allow people to be unemployed. (money for 2 years of unemployment, money for mothers, money for poorests, etc)

  5. Let us go to the root of the matter.

    You apparently wish to still stay loyal to the free market capitalist system, even to the extent of acknowledging the issue of employees being “too expensive to hire,” as though we can really put a price on these things.

    However, who decides all of this?

    Is it the 20 percent of the population who have 80 percent of the money?

    I do not know, I am no economist, so I am asking.

    Also, I am a little confused on something else.

    Your black friend, you state that he is an EEOC lawsuit risk.

    Equal Employment Opportunity Commision…are you saying that he would be less likely to be hired because of the risk that they may be sued by an organization that ostensibly exists to ensure that blacks have an equal chance at being hired?

    How in the world do they explain their way out of that one? We may be dealing with the world’s greatest sophists here.

  6. There are major issues both with regulation and taxes when it comes to the decision to hire – individuals are often ‘too expensive to hire’ and not because of their demands, from a European perspective:

    In the UK we’re about to have the cost of employing people go up another .5%, (National Insurance our national ponzi scheme contributions are increasing both the take from the Employees and the employer – as well as the normal taxes I have to pay 13% of their wages to NI from now on) that’s a direct tax. Already the total costs of employment per person are approximately 40% of their gross salary.

    In terms of regulation the EU are trying to pass a law that will mean that I have to pay women on Maternity leave full pay for 20 weeks of their year off. My favourite thing about maternity leave is that because they are officially employed they accrue holiday, which means at the end of the years maternity they have two weeks paid leave. This is how a lobby aiming for protection (in this case of women in the work place) undermines their chances of employment.

    Average age in my company is 28, this makes every female employee a high risk for me – as I will have to pay them while they are away (admittedly at a limited rate) hire someone else to do the work they do and have to make it possible for them to return to their role. Meaning their replacement either has to be temporary, or I have to grow the company sufficiently within the year to make sense of retaining them. In my company I have no one whose skills are readily replaceable, some familiarisation and training in the way we operate is required – temps are therefore a direct waste of money.

    Add to which litigation on exit seems to be the norm, firing people almost always ends in tribunal a cost of both time and as inevtiably they find for the ex-emplotee money. As a small business this means big concerns for me. Add that to the fact that the tax bill we pay in relation to salaries is already sufficiently high that if we didn’t pay it I could afford another 3 people on £30,000 a year, bBear in mind that there are only 14 of us at the moment.

  7. And the way Europe had to deal with it was to allow people to be unemployed. (money for 2 years of unemployment, money for mothers, money for poorests, etc)

    Germany: Money not only for two years, but unlimited. Social welfare benefit for a 2-kids family around 1.750 EUR, a family with a low skilled main earner on a regular job may get around 1.800 EUR wages + social benefits. So there isn’t any bigger motivation for the low skilled to work besides the black economy. Longtime unemployment has been increasing for years now. Meanwhile 50% tax payers finance the benefits of the other 50% non tax payers: the European deal is a fuckin’ pricy deal for working people, folks… national deficit explodes, and the first states of the European Union (Greece) are approaching bankruptcy.
    Great paradigm for the US, isn’t it?

  8. @Jack

    “However, who decides all of this?”

    Why, each person contemplating employing someone else. “The market.”

    Re the EEOC threat, I believe the concern of potential employers might be that if they interview the guy and they don’t hire him, they could be sued by him or EEOC activist types.

  9. > You apparently wish to still stay loyal to the free market capitalist system, even to the extent of acknowledging the issue of employees being “too expensive to hire,” as though we can really put a price on these things.

    Huh? Of course you can put a price on it. “The process of hiring and training this employee will require H hours of overhead for employees earning $X/hr. We’d be paying him $Y/hr, and we estimate he can generate $Z/hr in revenue”. If the difference between Y and Z takes too long to amortize to HX, he’s a no-hire.

    > However, who decides all of this? Is it the 20 percent of the population who have 80 percent of the money?

    Hiring managers make the final decisions, of course. I’ll take a wild-ass guess that these make up about 15% of the workforce. But their behavior is going to be largely determined by the much smaller number who have political influence.

  10. Tom,

    > For example, a well regulated corporations code is not only useful but necessary to generate confidence in the marketplace.

    Was this true during the greatest period of growth in America? (Lincoln -> Wilson, I think.) It’s not true in China, where widespread corruption means that regulation is effectively non existent. I know a man who visitied China and talked to an American professor there who said he liked China because he could do anything he wanted. I’ll note in passing that it was a missionary trip, and in fact missionaries are not allowed to do anything they want.

    Jack,

    This is all an application of standard economic / political / crime control theory. If you increase the cost associated with a behavior you get less of it and vice versa. EEOC regulations really increase the risks of firing minorities by increasing risk of lawsuits. This means that companies put a premiem on safe minority hires – people you are sure you won’t want to fire. That makes marginal hires less likely. Marginal hires in general benefit from lower hiring and firing costs.

    This is not an agrument from sophistry. It’s an argument about unitended side effects.

    Yours,
    Tom

  11. >Huh? Of course you can put a price on it.

    Not only can you put a price on it, if you don’t do so your business will go under and you won’t be employing anyone at all.

  12. However, who decides all of this?

    Don’t be silly. The marketplace decides. The marketplace, in this case, is considerably more complicated than just hiring managers: for higher-level positions, you’ve got head hunters. You’ve got those who are responsible for influencing hiring managers. This is not just those who have political influence, either. For example, at larger companies for certain types of positions, hiring decisions may be made by a committee, members of which may include the candidates’ peers.

  13. Not only can you put a price on it, if you don’t do so your business will go under and you won’t be employing anyone at all.

    Agreed. Nobody has a right to be employed. You get to be employed if you have marketable skills and someone decides to hire you. That whole “how can you put a price on it” mentality comes straight out of Marxism.
    Businesses must necessarily — and all successful ones do — put a price tag on their workforce assets. Just as they must put a price tag on their real estate, equipment, supplies, and other direct and indirect costs.

  14. You don’t make much of a case for why one should reject the standard argument, as clerking is getting automated or outsourced and I’m not sure what skills A has to offer given his checkered employment history. Such people on the lower rungs have always been more susceptible to the vagaries of economic cycles; you don’t make much of a case for why high employment costs hurt the two of them specifically. Rather, you detail their cases and then attribute the cause to a general trend of rising employment costs, but any particular person’s situation is almost always determined much more by his personal choices. I think you’re right to bemoan that trend, but it is very difficult to tie such broad trends to specific cases and you seem to be reaching to do so.

  15. A little less than 30 years ago, I went to work for Oasis Systems, owned and operated by my high school friend, Wayne Holder. (It was there that we started up the FTL Games division, and Wayne and I created “SunDog: Frozen Legacy”). Wayne often spoke about how he had been (in his own words) a “flaming liberal” while in college. However, he explained, once he started his own business and started hiring people, he shifted hard to the ‘right’. He complained about how he would like to hire more people than he had, but there were lots of financial and regulatory disincentives to do so, particularly as the number of employees approached certain key levels.

    And this was in the early 1980s.

    And to echo Eric and Daniel, damn straight that you can and must put a price on it. I was part of a software startup (Pages Software) that lasted from 1990 to 1995. Once we secured venture funding and were on our way, the CFO we hired brought an updated spreadsheet to every weekly senior staff meeting. It showed our current burn rate, current cash in the bank, projected income (if any), projected staffing levels, and projected expenses. It would show the exact date when we would run out of money unless we (a) cut staffing, (b) cut other expenses, or (c) brought in more money. The equations are pretty cold, but nonetheless real. Government, by and large, makes things worse, not better. ..bruce..

  16. @bfwebster:

    Wayne often spoke about how he had been (in his own words) a “flaming liberal” while in college. However, he explained, once he started his own business and started hiring people, he shifted hard to the ‘right’.

    Wayne’s story is not at all uncommon, either. Many people who have successfully started and operated small-to-medium businesses quickly change their politics and tend towards libertarianism, or at least laissez-faire capitalism. Once you truly understand how the free market works (and, if you don’t, your business will surely fail hard and fast), you realize that the liberal’s tendency to want to monkey around with it is incompatible with the realities of the free market.

  17. Eric –

    The best piece of advice I could give you is for your friends to get together and get A and B in to some kind of vocational training. Things that require reasonable skill and cannot be outsourced. There is tremendous demand for HVAC servicemen and installers, for instance.

    It’s a major step up from retail clerk jobs that come and go with the wind.

    This is actually my advice to any young people who aren’t interested in hard sciences (engineering, etc). Just about any clerical or IT work can be outsourced overseas, so go for something that can’t be.

    This is precisely the opposite of the advice we were given in our youth (get a job that uses your brains, not your hands).

  18. Personally, I think there is a deeper issue here which is the whole concept of employment itself. Employment as we understand it is a relatively recent phenomenon in the history of the world. In its present form it was mainly introduced during the industrial revolution to staff factories. Our systems are set up today at their core for a nation of factory workers. Employment has a lot of advantages for governments. It allows a level of central control and a level of hidden taxation that is very beneficial to them. It allows them to co-opt these employers to enforce their policies also. Further, it allows them to pass the blame of their failures onto big bad rich fat cats.

    It also has a very destructive effect on employees. When there is a strong separation between value produced and money received, everything goes badly wrong. People think of their job as an entitlement rather than a free exchange of labor for money, people get sucked into complacency and the easy life. They see their only means of advancement as moving up the corporation. This leads to a lack of drive to self improve, and paycheck to paycheck living. It is all bad for everyone, except, in the short term, political power mongers. (In the long term it is bad for them too because it deeply stymies economic growth too.)

    I suggest we get back to a very simple employment formula. You work, you get paid for the value you bring. Get rid of all the employment laws entirely, let people work a fair exchange of labor for money (whether time or produced goods), and have people see the connection very directly.

    Such a system would require radical changes in the way our companies are structured, in fact, the very concept of company would be changed. IT would require a radical change in the attitude of everyone, so I understand that it is unlikely to happen. However, it is at the root of your friends’ problems. They have lived their lives under the false protective umbrella of pretending that their labor for value exchange didn’t matter, and that they had some sort of entitlement to a job. It is like a mommy who keeps her baby locked up in the house to protect him, never letting him out, doing everything for him. Then when mommy dies, and baby is 35 years old and thrown out into the real world, everything goes to hell.

    For your friends, now reality bites, and they haven’t spent any time making themselves more valuable, and they have to pay the consequences of these years of abuse by a system designed to suck all the low grade value out of them for someone else’s benefit, without allowing them the space and incentive to better themselves.

    If they were my friends my advice would be to find where you can add value to other peoples’ lives or to companies. Focus on that, then find a way to monetize that into dollars. Can your homeless friend shovel snow? Can he cut grass? Can he clean out gutters? Can he change the oil in my car? Whatever value he can offer in a low risk way, that others will appreciate will allow him to begin to move up the ladder and get his life together again. Don’t ask for a hand out, look for a way to add mutual value to you and the others around you, and then you will have a “job” for life.

  19. You know just to illustrate how screwed up this is, I have a friend who is real smart. He has been unemployed for several months. A customer of mine offered him $1000 to do a particular job (a few days work) which he is very skilled in. However, he declined because he claimed it would negatively affect his unemployment benefits.

    Personally, I doubt his analysis of his unemployment benefits is correct, however, it is part of an attitude fostered by the very employment/entitlement mentality mentioned in my previous comment.

  20. I think that payroll taxes and compliance costs are also responsible for the growth of the market for undocumented workers. It’s just so much cheaper to hire out the back door for cash than to formally hire a dishwasher. It’s cheaper to cut a check to a couple of guys as a subcontractor, who then cash it at a check cashing store.

    Texas has almost as many undocumented workers as California, but since we don’t have state payroll taxes they aren’t the burden. They can’t get out of paying sales taxes.

    I bet an econ grad student could get a dissertation out of correlating the spread of check cashing stores with the illegal immigrant population. It’ wouldn’t be PC, though.

    I have no quarrel with people who come here to work. It’s just that taxes and regulations price citizens out of the market.

  21. >They have lived their lives under the false protective umbrella of pretending that their labor for value exchange didn’t matter, and that they had some sort of entitlement to a job. [...] they haven’t spent any time making themselves more valuable,

    Wrong diagnosis, Jessica. These guys went to college. They may not be ambitious, but they’re not slackers either. They did the things you’re supposed to do; get an education, develop good work habits and decent communications skills, look presentable, be honest and seem honest. They both know damn well a job isn’t an entitlement; that delusion only starts to become common a bit further up the SES scale. They’re willing to work; heck, either of them has more tolerance for boring-but-necessary than I’ve ever had to develop.

  22. > I think that payroll taxes and compliance costs are also responsible for the growth of the market for undocumented workers. It’s just so much cheaper to hire out the back door for cash than to formally hire a dishwasher. It’s cheaper to cut a check to a couple of guys as a subcontractor, who then cash it at a check cashing store.

    Maybe I should learn a Mexican dialect of Spanish….

    Expect the black employment market to grow …. it’s a form of civil disobedience!

    Yours,
    Tom

  23. brian, while I agree that vocational training is great advice, I wouldn’t go so far as to say “hands over brains.” Instead, the focus should be on marketable skills, regardless of whether the skill is manual or intellectual. I think there is an overemphasis on “hard sciences” too, as there will only ever be so many mechanical engineers or C++ programmers. Correspondingly, such vocational training has been under-emphasized as people have been sold a fantasy that everyone must try to attend college. However, most work in an advanced economy is brain work or services now and it’s only going to get much larger. The problem is that the broken education system has been the traditional route into those information or professional jobs, though thankfully that’s been changing a bit and is about to get washed out. We’re about to see an explosion of information work on the internet, so while emphasizing the specific routes of hard sciences or attending college is ill-advised, generally focusing on using your brains to make a living isn’t.

  24. >It’s just that taxes and regulations price citizens out of the market.

    Yes. One of the places we’re probably headed is a massive expansion of the shadow economy as employers and employees try to make a market out from under the government-imposed overhead.

    I think this will be a relatively short-run phenomenon, though, because the regulatory state is running out of other peoples’ money and headed for systemic collapse. See for example the news from Illinois, which is running a $13bn deficit against a $26bn budget and has long since passed the point at which it can raise taxes without driving revenues further down and mobile capital out of the state. California isn’t recoverable either, and it is beginning to dawn on people that the Feds ain’t in any better shape.

  25. Ajay –

    Well, there’s s difference between being a dishwasher and being an HVAC technician. It’s still skilled labor (and with some of these systems VERY skilled) but it doesn’t require an overpriced university education and four years of fluff courses.

    A year or two of vocational school, and you hit the ground running. In trades like plumbing and electrical, this is often a path to self-employment too. It takes time to get to Master Plumber, and once you’re there, you really have no incentive to work for someone else.

  26. >See for example the news from Illinois, which is running a $13bn deficit against a $26bn budget.

    Illinois has jacked around with its budget for *decades*. The constitution requires the legislature to pass a budget by a certain date, so they stop the clock in the chamber 1 minute before midnight when they run out of time. It has become almost *traditional.*

  27. brian:

    In a no-right-to-work state you can’t work in the skilled trades without being in the union. It can be positively unhealthy to try work in the skilled trades without being in the union.

    You can’t get into the union unless you know somebody.

  28. Each recovery would probably be increasingly “jobless” even without the increased taxes and regulation since technology is accelerating and employers always reconsider what technologies are available to get the job done before hiring. Taxes and regulation only add further impediments.

    The other thing left that’s possibly more important is that the great uncertainty about future taxes has stymied investment and expansion and therefore hiring.

    Also, there’s the “going Galt” issue. For example, I’m looking at my business now and it doesn’t look like there’s much in it for me going forward. So I’m looking to shut it down and get a nice cushy government job. In other words, I’ll go from being a job creating employer to being a job consuming employee. That also makes it tougher for those at the margin.

  29. @Bob –

    That’s certainly true. My advice would be to vote with your feet in that case. That was the case in CT for the longest time (which is what stopped my uncle from becoming an electrician – he went to school, but since he didn’t have the right connections, couldn’t get an apprenticeship). CT is now a right-to-work state. It’s also a (mostly) at-will state.

  30. @Bret –

    That “government job” thing might not be around much longer. With many states’ pension funds facing insolvency, and there not being enough OPM to confiscate to make good on the payments, there will probably be layoffs, hiring freezes, and massive contractions to benefits packages.

    Which, while bad for government employees, is good for taxpayers.

  31. >Each recovery would probably be increasingly “jobless” even without the increased taxes and regulation since technology is accelerating and employers always reconsider what technologies are available to get the job done before hiring

    But technological change creates lots of new jobs – ask any web designer. At higher income levels, too, because tech is a productivity multiplier that increases revenue per employee. This is why technological change has, historically, been strongly associated with decreases in structural unemployment. This is the opposite of what’s true of taxes and regulation.

  32. esr wrote: “But technological change creates lots of new jobs…

    Oh absolutely!

    But it takes longer for those new jobs to be created than to just rehire those you laid off. Rehiring was more typical in the past when manufacturers would reduce their workforces until inventories dropped and then simply rehire them. That’s going to happen less and less over time.

  33. brian wrote: “That “government job” thing might not be around much longer.

    Yeah, maybe, but it’ll be nice for a few years.

    If healthcare “reform” passes with subsidies for low-income people, I’m thinking I’ll just become permanently unemployed. Returns from savings will put me roughly at the poverty level for life, but if healthcare is paid for, that’ll work for me. I’m perfectly happy hanging out at the beach flying kites if society is willing to pay for my healthcare.

  34. >I’m perfectly happy hanging out at the beach flying kites if society is willing to pay for my healthcare.

    And this is why redistributionism is self-destroying; it turns productive people into parasites. Revenues go down, costs go up. Lather, rinse, repeat.

    This used to be a long-term, theoretical problem. It’s not any longer; collapse is at most a decade out. Three to five years would be a better guess, I think. California, Illinois, and the country of Greece are leading the way.

  35. Periodically, I’ve thought of starting my own business. Given the cost of hiring and firing, and the legal implications of doing so, I’ve never considered a business where I’d have to have employees. I say this knowing I live in an at will state. It’s also a state where there is at least one lawyer who makes his living sending out letters to people who fired his clients, it costs an average of X dollars to defend a wrongful termination suit, whether you win or lose, wouldn’t you rather settle out of court?

    Last year I had the perfect opportunity to start my own business fall into my lap, and I rejected it for the following reasons:

    1. I’d probably have to hire at least one other person.
    2. I’m not willing to risk the modest assets I have.
    3. There would be too many rules I’d have to follow.
    4. The trend in the economy was all wrong.
    5. Given President Obama’s policies, I think 3 and 4 will get worse before they get better.

    Every good action has bad consequences, and a lot of bad actions have good consequences.

    Every new employment related regulation is a disincentive to hire someone.
    Every new tax is a disincentive to work harder

    That doesn’t mean that we should have no taxes and no employment regulations.
    It means we have to consider the consequences of our policies before we enact them.

  36. The Rich Wasp Says:
    > Every new employment related regulation is a disincentive to hire someone.
    > Every new tax is a disincentive to work harder

    It also greatly increases the incentives to off shore work (India is much more accommodating), and to automate (machines don’t qualify under the health and safety laws, or pay social security contributions.) It is a shame Obama can’t repeal the law of supply and demand.

    I propose Boxer’s law of economics: “The economy interprets taxation and regulation as damage and routes around it.”
    (Hat tip, Gilmore.)

  37. Jessica Boxer,

    > Personally, I think there is a deeper issue here which is the whole concept of employment itself.

    This is precisely correct. And the wage economy was only possible because they had been forcibly denied all other alternatives for self-employment and subsistence, to (borrowing a phrase from Sean Gabb) “[rob] them of the dignity that comes of being respectably poor”, by the state on behalf of their industrialist allies — those despicable, thieving shits that Randroids worship as laissez-faire superheroes,

    > Can your homeless friend shovel snow? Can he cut grass? Can he clean out gutters? Can he change the oil in my car?

    Can he do this without falling afoul of some law? I doubt it very much, what when you figure in occupational licensing, zoning, health & safety regulations, etc etc. And that’s not accidental. State capitalism is designed to fuck people like him. Make them poor and desperate and hungry enough and you’ll get ‘em saying “do you want fries with that?” in no time.

  38. >I propose Boxer’s law of economics: “The economy interprets taxation and regulation as damage and routes around it.”

    Damn. That’s good!

  39. # esr says:

    This used to be a long-term, theoretical problem. It’s not any longer; collapse is at most a decade out. Three to five years would be a better guess, I think. California, Illinois, and the country of Greece are leading the way.

    You keep hinting about this, and you’ve made at least one blog post about a forthcoming economic and political collapse, but unless I’ve missed it, you haven’t said how bad you think things will get.

    I’ve been saying the same thing for several years now. I don’t think that our system, in it’s current state, will survive.

    I’m just wondering what preparations you’ve taken or at least what preparations you think others ought to take. That’s the next logical leap from what you’ve presented so far, anyway.

  40. Good, but unfortunately only sometimes true. Just as often, economic actors are to regulation as bacteria are to an open wound.

  41. I propose Boxer’s law of economics: “The economy interprets taxation and regulation as damage and routes around it.”

    That’s not bad, actually. The economy is basically a kind of network.

  42. >You keep hinting about this, and you’ve made at least one blog post about a forthcoming economic and political collapse, but unless I’ve missed it, you haven’t said how bad you think things will get.

    That’s because I don’t really have any idea how bad it will get. We’re about to reach the end of the historical era that began when Bismarck first implemented state socialism in the 1880s. The changes will be huge and wrenching; I wouldn’t even put the dissolution of the USA outside the realm of possibility.

    >I’m just wondering what preparations you’ve taken or at least what preparations you think others ought to take.

    I’ve been trying to think of a way to get my assets out of anything dollar-denominated while staying in the U.S.

  43. > I’ve been trying to think of a way to get my assets out of anything dollar-denominated…

    I’ve been working on putting a portfolio together along the same lines. Basically, I’m going for sectors with lots of non-cash capital assets, real estate being the biggest one.

  44. >I’ve been trying to think of a way to get my assets out of anything dollar-denominated while staying in the U.S.

    If you’re in the USA you are subject to tax on all your income wherever it is generated. You have to report your foreign holdings every year. If you leave the USA you still have to pay US taxes for some time to come.

    Real estate is an inflation hedge, but it doesn’t generate much income.

    I think we’re pretty much screwed.

  45. esr Says:
    > I’ve been trying to think of a way to get my assets out of anything dollar-denominated while staying in the U.S.

    Perhaps you should put them in British Pounds, Icelandic Krona, or Greek Euros. Oh, hold on, that won’t work will it?

  46. >Good, but unfortunately only sometimes true. Just as often, economic actors are to regulation as bacteria are to an open wound.

    Correction: “The *productive* economy interprets taxation and regulation as damage and routes around it.”

  47. > Real estate is an inflation hedge, but it doesn’t generate much income.

    It does if you leverage it and pay back your creditors in cheaper dollars than you borrowed.

  48. Re. Bret’s and esr’s comments on past recoveries:

    I don’t think it’s any great mystery why the recoveries were jobless. A lot of the recovery happened on paper, i.e. the growth was in the financial industry rather than the real economy. At the same time, vast numbers manufacturing jobs were exported overseas (blame regulations if you like), while the corporations that exported them remained US corporations and their bottom lines probably looked good.

  49. > Perhaps you should put them in British Pounds, Icelandic Krona, or Greek Euros. Oh, hold on, that won’t work will it?

    I’ve heard some very rich people say Swiss francs, Japanese yen, silver and gold.

  50. Related to the above discussion about imminent collapse, check this out. Money quotes:

    The founding document of the United States, the Declaration of Independence, states that governments derive “their just powers from the consent of the governed.” Today, however, just 21% of voters nationwide believe that the federal government enjoys the consent of the governed.

    63% of the Political Class think the government has the consent of the governed, but only six percent (6%) of those with Mainstream views agree.

    It’s not just a financial crisis, but one of popular legitimacy, too.

    > Basically, I’m going for sectors with lots of non-cash capital assets, real estate being the biggest one.

    If you’re that sure it’s going to happen (I am), invest in general purpose machinery; stuff like CNCs, lathes, welders, etc. You won’t make money on it, but you’re guaranteed a job when the state collapses and corporate capitalism dies with it.

  51. Don’t forget that another member of our gaming group is currently unemployed (one of the computer guys, I won’t give his name here, but if I say he’s our biggest Asperger’s case, you’ll know who I mean) and another is grossly underemployed and supporting a teenage daughter of nearly college age (that should also tell you exactly what I mean).

  52. >wouldn’t you rather settle out of court?

    “Why sure. Me and my crowbar will settle with you in a dark alley some night.”

    >I’m just wondering what preparations you’ve taken or at least what preparations you think others ought to take. That’s the next logical leap from what you’ve presented so far, anyway.

    For ANY possible problem, the basics are to have your own home (paid off) and at least a week’s water and three months food on hand. This is a good idea in ANY event, even just getting a broken leg by slipping on the ice. Any more than this depends too much on specifics of your situation – I strongly recommend Bruce Clayton’s “Life After Doomsday” (if you were prepared for a nuclear war, a blizzard or temporary unemployment would hardly be noticed).

  53. You might also check out John Pugsley’s “The Alpha Strategy”, written at the end of the 1970s when inflation was fairly high. There is a lot of nonsense in it, but the core idea is when prices are going up, buy consumables that you KNOW you are going to need eventually and that have long shelf lives, as you can afford them, rather than as you need them, that guarantees you a non-taxable return of exactly the rate of inflation.

    On a larger scale, I have no idea where the US is going to end up, but surviving, preferably in comfort, to see it is better than not.

  54. Actually, this is the one economy in which you don’t want to have your home paid off. Far better to have a fixed-rate mortgage, and durable assets elsewhere that you can sell off if necessary in order to make the payments.

  55. As the anonymous commenter above me said, machinery, actually any kind of tools is a good investment, if you can afford it. Then take the time to learn to use it well. Also, learn anything practical that you can – for example, take the time to do your own plumbing repairs, if the economy collapses (or even nearly) you may be able to swap minor repairs to a neighbor for help you need. Bruce Clayton, later in the 1980s, also wrote a little book called “Thinking About Survival”. It’s a collection of short articles, in one of them he lists dozens of neat things you can learn, like scuba and shortwave radio, and excuse as learning just in case.

  56. Having your home paid off isn’t a financial calculation, it’s a survival measure. Even selling assets requires a reasonably functioning cash economy.

  57. Bill, the ability of your bank to obtain and execute on a foreclosure judgment will collapse long before your ability to sell your shares in your capital holding companies will.

  58. What they could try to do is to move to somewhere like Thailand or India.

    It won’t solve the original problem of course, and it sucks if they happen to love their country, their familiar surroundings, their relatives and friends who live around them, the climate and the food they are used to etc. (I know from experience it can really suck), but it is still perhaps a better option than the homeless shelter. Fact is, the colonial reflexes are still well and alive and any guy with a white skin and native English skills will be treated there like a semi-superhuman being, which is not particularly hard to turn into getting a good job. Especially at the big corporations where the Western managers would trust a low-qualified Westerner over a high-qualified Asian any day, it’s not really prejudice but the “we expats should stick together” mentality.

    It’s an option at least for A, for B maybe not because Asians (at least Indians, the Japs for example, interestingly, not) can be extremely racist towards anyone with a darker skin than themselves.

    As for the original problem: I’ve seen 1000 debates on Reddit of Libertarians and Liberals throwing very general words like “regulation” or “intervention” or “markets” against each other and I’m dead tired of it because they got exactly nowhere – they COULD NOT GET ANYWHERE because these are too general terms lacking specifics. This debate is like a Windows fanboy and a Mac fanboy debatig, both ignoring that some things one does better, some things the other.

    So I’d like to kindly ask both sides to forget these general terms like the market or government or intervention or regulation. Get to the specifics. Libertarians should list the 10 most harmful intervention with an explanation why are they the most harmful. Liberals should list the 10 most important regulation from their point of view and an explanation why are they the most important. It should be possible to agree in a state of things that would satisfy both sides 70-80%. Or at least see why not.

  59. >What they could try to do is to move to somewhere like Thailand or India.

    That might work for me; I’m extroverted, lived overseas a lot as child, pick up languages relatively quickly, am never fazed by odd surroundings, and have an iron stomach (I liked Thailand the one time I visited there on a speaking gig). Subject A has shown some evidence of an iron stomach but otherwise he and B score a flat zero on all the rest of these. Either of them trying to cope with India or Thailand would be the stuff of low comedy.

    They’re just not psychologically equipped. At all. Nor, I relevantly add, are 90% of Americans, and that figure goes to 99% when you look at the low- and middle-SES types that the recession is hitting hardest.

  60. “I’ve been trying to think of a way to get my assets out of anything dollar-denominated while staying in the U.S.”

    EUR or GBP aren’t going to do any better – maybe Swiss Francs. Gold is probably in a bubble, because of too many emotions attached to it.

  61. W.B. Swift: “For ANY possible problem, the basics are to have your own home (paid off) and at least a week’s water and three months food on hand.”

    And a large magazine 12 ga pump, 2 handguns of .38 Special or larger caliber, 1 .223 or 7.62X39 rifle with at least 10 magazines, 1 scoped deer-hunting caliber rifle, a .22LR pistol and rifle, plenty of ammo for all, and practice, practice, practice. That way you get to KEEP your home, water and food.

  62. @Bob:

    If you’re in the USA you are subject to tax on all your income wherever it is generated. You have to report your foreign holdings every year. If you leave the USA you still have to pay US taxes for some time to come.

    Not entirely true. Even as a U.S. citizen, if you take residence in a foreign country, the money you make is not subject to income tax.

  63. Shenpen,

    I don’t know whether it is top ten, but the Sarbanes-Oxley regulations seem to have both zero utility and onerous costs. There may be a reason for this. In America we have an Evil Party and a Stupid Party. I’m a Republican, and I think the Republicans are the Stupid Party, but my Mom the Democrat says it’s the Democrats. Sometimes the parties get together in Congress to do something both Evil and Stupid, like Sarbanes-Oxley. This is called bipartisanship, and John McCain is usually leading the charge.

    Eric,

    > They’re just not psychologically equipped. At all. Nor, I relevantly add, are 90% of Americans, and that figure goes to 99% when you look at the low- and middle-SES types that the recession is hitting hardest.

    People have to better at this, otherwise refugees would be more rare.

    Yours,
    Tom

  64. Tom:

    >People have to better at this, otherwise refugees would be more rare.

    Refugees are actually relatively rare. Most people won’t leave home, even in the USA. The people who will are exceptional.

    Historically, whole families would move, and settle near other people from the old country. Tenement blocks in NYC were occupied by people from one Sicillian village.

  65. Not entirely true. Even as a U.S. citizen, if you take residence in a foreign country, the money you make is not subject to income tax.

    Citation, please.

    The Infernal Revenue Code provides for two broad classes of income: “Income within the United States” and “Income without the United States“. Both are taxable, but under different rules.

  66. My information comes from one of the IRS Q&A sheets. I used to live in Detroit and briefly considered a job in Windsor. I needed to know whether it would be tax advantageous for me to simply relocate to Canada.

  67. >I suggest we get back to a very simple employment formula. You work, you get paid for the value you bring. Get rid of all the employment laws entirely, let people work a fair exchange of labor for money (whether time or produced goods), and have people see the connection very directly.

    If you think low-skilled wage earners are going to receive fair treatment if employers are given a free run, it simply demonstrates how much of a sheltered life you have lived. In any case. it should be a surprise to nobody that regulations can do a great deal of harm, and if employers are forced to employ workers who are not pulling their weight then we clearly have a problem with the regulatory framework. Selectively picking examples as part of an anti-regulation argument is nothing more than rank dishonesty. One can point out numerous examples of regulations that have immensely improved the state of society. E.g. you don’t hear people lauding the idea of an unregulated market in medicine talking about the fact that heroine was marketed as a cure-all for years until the government intervened. This is back in the ‘golden days’ of the US that people are so fond of looking back on with rose-tinted glasses.

  68. I was just over at Megan McArdle’s blog in The Atlantic and the comments on a post on the LaHood’s idiotic testimony wandered a good bit. In response to a thread on how people now seem to think actually building or working on things for yourself (both cars and guns were discussed) I wrote:

    Unfortunately, “just avoiding making things worse” seems to be more than most people can do any more.

    You can see the same kinds of problems with people being unable to do basic home repair, like fixing a faucet or a porch railing. I remember in the late 1970s there were a lot of people doing their own remodeling and stuff, partially because of the sucky economy at the time.

    If the economy doesn’t really start to improve, we could be looking at a situation worse than the Great Depression, even if none of the financial indicators get as bad, simply because people are much more dependent on buying services through the economy and less able to do for themselves than any previous “hard times”.

  69. I’ve heard some very rich people say Swiss francs, Japanese yen, silver and gold.

    Don’t recommend yen, the government debt over here is something astonishing, and though it’s almost all locally held they’re not going to be able to sell that much more locally as the pension funds are going to have to start cashing out soon.

    I’m fairly into gold, but as Shenpen says it’s not a basket you really want to put *all* your eggs into.

  70. Even as a U.S. citizen, if you take residence in a foreign country, the money you make is not subject to income tax.

    I know a guy here in Japan who’s paying income tax in the States, but he has a business, for most it might be more easily avoided. Amazing idea, taxing non-residents.

  71. >long-term structural unemployment at european levels of 10%, 15%, and up.

    Yes. This isn’t a slump. It’s normal for a country with no industrial base.

    What we should do:
    1) Rebuild our industrial base. Build lots of power plants. Nukes are best.
    2) Abolish all economic regulations, like Germany after WWII. Then figure out what to bring back.
    3) Stop all immigration. Legal or illegal, until we have an industrial base again. Yes, this goes against the old 1st-world America’s principles. We aren’t a 1st world country any more. We are 2nd world like France. Might as well get good at it.

    What we will do:
    Run in circles, scream and shout.

  72. foreign earned income is absolutely taxable for citizens (and green-card holders!). having just returned from a year and a half in singapore, i know all about it. what you do get is a nice big deduction off the top that makes a medium-high-paying job (e.g. finance IT in the very low six figures) essentially tax free.

  73. As an unemployed, 55 year old, white male software engineer, I have to point out the rampant age discrimination in our industry. The perception (possibly correct) is that older workers are less mentally agile, and less likely to put in long hours of overtime (due to family), and less flexible.

    I am competing against immigrants, nimrods just out of school, and most importantly, women, who 30 years ago were not in the same market.

    Given a decaying skill set, I fear that I may be looking at finishing my career in fast food or retail sales. I started with FORTRAN, switched to C, then C++, now even JAVA is not a hot ticket.

  74. In the discussion of regulation, people rarely ask about how comprehensible the regulation is. By this, I mean is a regulation:
    1) Easy to find applicability (do I care?)
    2) Easy to implement (how much does it cost?)
    3) Easy to comply with (am I certain I’ve done what I’m supposed to?)
    4) How connected to the goal is the regulation.

    Consider question 1 above. Now, please answer me this: Why does H&R block exist at all? If tax law was simple, people would do their own taxes. After all, to have an accountant do it for you, you still need to assemble all of your documents together. If tax law was to be substantially simplified (think flat tax), the only thing an accountant would do for you is add up the totals for the amount of money you made and multiply it by the correct, applicable tax rate. Instead, we have a huge collection of tax law which is nearly incomprehensible to the people who actually need to follow it.

    Consider the following (not very realistic) scenario: How much paperwork, which forms, and how long does it take to hire one person, start a bakery, buy equipment and take out a commercial store front least, bake 1 cupcake, sell that to a person on the street, close up shop, terminate employment and resell and capital equipment. If you want to cheat, use an EasyBake oven and store-bought cake mix, if you can.

    Question 1 is doable, but I’m pretty certain that no one here can name off the top of their head all of the relevant regulations, let along cite all of the requirements. It is knowable, however, if you’re willing to do about week’s worth of research. Question 2 is really interesting (and the focus here). Question 3 gets to be interesting when it comes to health inspections.

    Most people (in the US) don’t have a lot of experience interacting with subjective government agents on a day-to-day basis. The closest is probably a driver’s license tester or firearms permits in the event of may-issue licensing. Where things get really messed up is question 3. This is where a lot of corruption comes into play. The people who you talk about being bribed on a regular basis are health inspectors and construction inspectors – areas where “good enough” is a gray line. Gray enough that you can paper over it with green. This ambiguity adds a lot of risk to business. Risk needs to be offset either through comparable risk reduction elsewhere, or through higher return on investment.

    Some regulation is straight-forward. Federal labor law requires that a notice of labor law be posted. It’s so straight-forward that there are companies which make your life easy. The Compliance Poster Company makes posters which allow you to fully comply with the associated regulations. In my state of Pennsylvania, the cost to comply with this regulation is $31.95. Yes, it’s a cost, but a straight-forward one. My office (180 employees) has 2. Hmm. $64. Not a big deal.

    Eric already mentioned EEOC lawsuits. Sarbanes-Oxley is always of interest to me. It is trying to regulate people into being “good”, without holding the actual parties with oversight responsible. This hands individual responsibility to the CEO and CFO (typically) for the financial reports. The problem with this is simple: a large corporation is really, really complicated. There isn’t *anybody* who can personally vouch for every dime spent and received by a large corporation. You delegate areas of responsibility, either by business unit or dollar amount. So what happens is that the senior corporate officers have to take on additional personal risk. That means they want higher offsets. Like higher pay. You know – the higher pay that the current administration keeps complaining about. After all, in a choice between a CFO or a senior VP of finance, one job requires a lot of work, the other requires a lot of work and a lot of personal risk. If you want someone to take the risky job, you’re going to have to pay them more.

    Finally, my favorite. Question 4, listed above. Consider CAFE standards. The goal is to ensure higher fuel-efficiency in vehicles on the market. The easy way to do this is to increase the gas tax. The price goes up and people look to use less of it. Pretty simple. Pretty straight-forward. Easy to understand and implement. The problem is that doing that is an “attack on the poor”. So instead, we penalize companies who produce vehicles that people want to buy instead of the vehicles that the government wants people to want to buy. I’ll be the last person to claim that car manufacturers are nimble or responsive, but when people want fuel-efficient vehicles, the first person to come out with one wins a whole lot of market share. Either the companies adapt, or die. Instead, we have page after page of law and regulation which seek to change human desire, rather than to implement the stated goal.

    In summary, regulation is almost always costly. However, these costs can be minimized by increasing their readability, simplicity, objectivity and association with the desired goal.

  75. ESR Said
    >That’s because I don’t really have any idea how bad it will get. We’re about to reach the end of the historical era that began when Bismarck first implemented state socialism in the 1880s. The changes will be huge and wrenching; I wouldn’t even put the dissolution of the USA outside the realm of possibility.

    An interesting short novel titled “the Day the Dollar Died” has recently been posted at:
    http://johngaltfla.com/blog3/2009/11/18/the-day-the-dollar-died-a-blovel-entire-series-single-thread-not-edited-for-content-yet/

    It is an interesting read and the author has some definite opinions on where things are headed.

  76. # Roger Phillips Says:
    > If you think low-skilled wage earners are going to
    > receive fair treatment if employers are given a free
    > run,

    Please define “fair”.

    > you don’t hear people lauding the idea of an unregulated
    > market in medicine talking about the fact that heroine was
    > marketed as a cure-all for years until the government
    > intervened.

    Whereas today instead of medicines that are damaging to health, over regulation prevents medicines that are healing. For example, in fear of the DEA throwing them in jail for supplying people’s oxycontin habit, Doctors under prescribe pain medicines. Meaning that people suffer terrible pain to satisfy the DEA’s lust to control the uncontrollable. Of the undoubted benefits of marijuana that are denied to the suffering and sick for no good reason that I have ever heard, except the raw exercise of power. Or the hundreds of thousands of people who have died as the result of medicines, legal in other countries, which have been denied Americans because of the FDA’s conservatism. The problem you cite can easily be solved for people willing to treat themselves with respect, that is the power of free choice. The problem of the DEA or FDA cannot, that is the cost of government choosing for you.

    Furthermore, if you really think society today is the same as society in the late Victorian, or that the incentives or pressures are the same, then I think you need to get out more. In London in early 18th century gin was the scourge of the poor. The breaking of a particular monopoly allowed competitive forces to drive down the costs of gin and make it much more widely available. There was an outbreak of drunkeness that reduced the city to a den of drunken depravity. So much so that some of the first liquor control laws in the world were passed as a result.

    Yet today I can buy a bottle of gin at the local 7/11, yet my city is not falling down drunk. Not even the poor parts. Strange how circumstances change things.

  77. > that they simply fell behind in an increasingly skill-intensive job market
    Most jobs aren’t actually intellectually stimulating or challenging. Off the top of my head, the only careers I can think of as intellectually challenging would be research, computer programming, medicine, law, and engineering. Other careers might be this way but I think more often they require IQ to get into but thereafter are more demanding of social skills/conscientiousness.

    Part of the reason that the job market appears to be skill-intensive is (a) that professional cartels limit entry to those with credentials and (b) that government subsidizes a rather expensive signalling mechanism called post-secondary education which is subsequently overconsumed. I think you overrate the economic value of intelligence/education. Just think of the going rate for doctorate-holding sessional lecturers. I think that’s an entirely predictable blind spot, though, because you have chosen a field (computer programming) where intelligence is highly prized.

  78. By “other careers,” I meant “other professional careers.”

  79. As a US citizen living in New Zealand, I can state categorically that I must file my Form 1040 every year and that I am not exempt from income taxation by the feds. This despite my complete lack of physical or economic presence in the USA.

    Most expats earning ‘foreign’ salaries are able to exclude a nontrivial amount of their overseas income from taxation – something over US$90k/year, if they meet certain criteria. People with solo businesses or who are transients (employees of a large corporation residing temporarily on assignment) have different tax avoidance mechanisms from which to choose.

    Renouncing one’s US citizenship is one way out.

  80. >I think you overrate the economic value of intelligence/education. Just think of the going rate for doctorate-holding sessional lecturers. I think that’s an entirely predictable blind spot, though, because you have chosen a field (computer programming) where intelligence is highly prized.

    Hm. On the one hand, I’m rather inclined to think you’re right (about my tendency to overrate the economic value of intelligence because of my job(s), I mean).

    On the other hand, I think the low employment rate of doctorate-holding lecturers is rather a red herring. Murray and Hernstein did a really good job in The Bell Curve of arguing that intelligence is competitively valuable even in jobs very unlike programming — their paradigm example was waiting tables. It could well be that increasing intelligence is valuable everywhere but that the economic value of education has a ceiling usually reached well before graduate school.

  81. >Please define “fair”.

    Toilet breaks: fair. Meal breaks: fair. Conditions that are not overly hazardous to the worker’s health: fair. All three of these things have been violated freely by employers trying to squeeze every last cent out of low-skilled workers. Would you care to hear some more?

    >Whereas today instead of medicines that are damaging to health, over regulation prevents medicines that are healing.

    You don’t know this until the drugs have passed clinical trials. If the system of trials is inefficient, then we have a problem with the regulatory apparatus that needs fixing, not some kind of intractable problem that will magically fix itself if we abolish all regulation. Knowing full well that you believe guessing is the same thing as science, I’m not surprised by the fact that you think you can make claims about the efficacy of medicines without the appropriate application of science.

    >For example, in fear of the DEA throwing them in jail for supplying people’s oxycontin habit, Doctors under prescribe pain medicines. Meaning that people suffer terrible pain to satisfy the DEA’s lust to control the uncontrollable. Of the undoubted benefits of marijuana that are denied to the suffering and sick for no good reason that I have ever heard, except the raw exercise of power.

    In a market without regulation I can sell oxycontin (without labeling) mixed in with other medicines in an effort to get people hooked on it. Your argument that because the FDA is not perfect that we should abolish all regulation just doesn’t wash in the real world. The government also lets people suffer because euthanasia is illegal; I disagree with this, but it does not justify dismantling the only mechanism that ensures I receive quality medicine. As for medical marijuana, that is legal in many countries that have regulatory bodies and even in some cases socialised medicine. The real reason medical marijuana is illegal in the US is ideologically-driven government policy, not the presence of a regulatory body.

    >Or the hundreds of thousands of people who have died as the result of medicines, legal in other countries, which have been denied Americans because of the FDA’s conservatism.

    Let’s put aside the fact that you should provide a citation for your claim that ‘hundreds of thousands of people’ are dying because of the FDA given that it’s not common knowledge. Do the countries you are talking about regulate the sale of medicine? The fact that the FDA has some problems does not mean regulatory bodies cannot be implemented competently.

    >The problem you cite can easily be solved for people willing to treat themselves with respect, that is the power of free choice. The problem of the DEA or FDA cannot, that is the cost of government choosing for you.

    Treating yourself with ‘respect’ does not ensure your medicine is unadulterated, nor that it functions as advertised. I am not an expert in medicine, and in the absence of regulation drug companies can publish false data anyway. The US has had an unregulated system of medicine prior in history and the result was that it was common-place for people to ingest substances that had no medical benefit and in many cases were in fact harmful. Hard problems are hard, and cannot be hand-waved away with free market ideology.

  82. Employment is not a right?

    That reminds me of when I was reading a book by Ray Bradbury, about writing…he also said that one does not automatically deserve their life, they must earn it. I am paraphrasing, mind.

  83. Germany: Money not only for two years, but unlimited. Social welfare benefit for a 2-kids family around 1.750 EUR, a family with a low skilled main earner on a regular job may get around 1.800 EUR wages + social benefits.

    Is that after the Hartz reforms?? What about the new government w. Guido Westerwelle et al.? Are they having some serious plans to restrict this madness?

  84. Oh, don’t be such a wascally wabbit.

    ESR’s 64-bit essay was right on the money regarding ‘trajectory’…and, allowing for the vagaries of the market, was within a respectable window. What he saw happening in 2008 is happening now, barely a year(ish) later.

  85. Sounds like someone pissed in Lapin’s Post Toasties.

    Although Eric couldn’t have seen Windows 7 coming when he worked on that piece. I have to say (at the risk of having my nerd card pulled) that Windows 7 on x64 is as good an operating system as I’ve ever used, and possibly the best.

    Also, as of Windows Server 2008 R2, MS has essentially said “32 bit servers do not exist” as there is no x86 32-bit build available.

    The good thing about that is it allows for better sandboxing of legacy apps and better security going forward. The bad thing about it is that native apps are going to take a while to catch up and leverage everything the platform offers.

  86. J Lapin: I just browsed back over that. You can’t call it “false”, because esr lined up what he thought Linux needed to do to take advantage of the 64-bit transition to become at a minimum the dominant 64-bit server OS. Linux didn’t do it, and lo, it can’t be called the dominant 64-bit server OS, or desktop either.

    Whether he’d have been right if Linux had managed to take those steps we’ll simply never know.

  87. @Jeremy Bowers:

    Not trying to start a Linux vs. Windows pissing war, but actually Linux is definitely becoming quite the dominant player on the server. I’ve worked at several Fortune 500 companies, and all of them are using Windows on the server only in limited roles: ActiveDirectory and Exchange. That’s it. Everything else is either some type of storage appliance (most of them running Linux or FreeBSD) or are commercial Unix or Linux servers. And they’re slowly replacing the commercial Unix servers (mostly Solaris, HP-UX and AIX) with Linux.

    And with the bad economy, many large enterprise customers are looking to replace even ActiveDirectory and Exchange.

    Today is a very good day to be a Unix/Linux expert. I know of dozens of large enterprise customers that are hiring Linux expertise by the boatload.

  88. “Murray and Hernstein did a really good job in The Bell Curve of arguing that intelligence is competitively valuable even in jobs very unlike programming — their paradigm example was waiting tables. It could well be that increasing intelligence is valuable everywhere but that the economic value of education has a ceiling usually reached well before graduate school.”

    AFAIK it was exactly them in exactly that book who did a really good job arguing that intelligence is rather inherited than developed or increased through education. Also, and that’s just my opinion, you can either test IQ the usual ways or you can test one’s ability to memorize a text or apply standard problem solving methodologies, but you cannot test both at the same time. Thus education is at best either learning or IQ increase. How would you, f.e., design a programming test that’s able to tell creative problem solving from applying a design pattern from a textbook AND is completely objective and excludes the personal opinion of the teacher in the same way multiple-choice tests do? IMHO that’s only possible by an expert looking at it and saying “wow, that’s clever” but that’s too subjective to be used in mass education.

  89. “Are they having some serious plans to restrict this madness?”

    The problem is I can’t name one popular German newspaper or magazine that would have a “saner, even somewhat smaller government” ideology. In Austria there is one, the name is Die Presse. That’s OK in print, although, interestingly, the online edition seems to be kinda gutted, the entertaining attacks on PC or unions are always in the printed edition.

  90. Morgan, Linux is ruling the school on the back end. Especially now that Sun is dead and IBM stands alone as the sole remaining non-commodity big iron vendor. Linus will have to content himself with dominating the world the old-fashioned, Illuminati way: in secret, in the back rooms, through controlling the centralized nodes of power. :)

    Eric and Rob were also right when they said Steve Jobs doesn’t want to win this game. Who cares about winning when you reshape the rules and the field? “The 64-bit desktop” is a moot point when most computing usage at the end-user level takes place on iPhones and iPads.

  91. How would you, f.e., design a programming test that’s able to tell creative problem solving from applying a design pattern from a textbook AND is completely objective and excludes the personal opinion of the teacher in the same way multiple-choice tests do? IMHO that’s only possible by an expert looking at it and saying “wow, that’s clever” but that’s too subjective to be used in mass education.

    IMHO, that’s one reason why we have human teachers and have (yet) to supplant them with teaching computer programs. A computer can’t recognize when a student groks a subject and is equally incapable of recognizing qualities like intelligence or aptitude. Computers are, OTOH, very good at recognizing achievement — give a student a multiple-guess test and see how he scores on it. That’s why computers have taken the role they have in mass education.

  92. @Jeff Read: Bingo. It isn’t about the computer anymore, it’s about the network. Although, I will say that the iPad is almost certainly doomed to fail and the iPhone’s history is yet to be written: it’s still very much anybody’s game in cellphones.

  93. # morgan greywolf Says:
    > it’s still very much anybody’s game in cellphones.

    I don’t think that is true, it will be Apple or Google. MS don’t have the creative energy to do it, and RIM and Nokia are playing in the wrong ball park.

    However, let me say this: for those of you who hated Microsoft, and thought Bill Gates was a monster, you’d getter get under cover. Steve Jobs is much worse.

    Currently if you want to develop an app for this platform you need to get through a capricious, and appeal free approval process. You piss of Steve Jobs, or try to cut into their business is the wrong way and you are simply out with no means of appeal. Microsoft never exercised anything like that level of power — total control over the platform.

    If, as I suspect, the phone will become the major user platform, then this should deeply trouble everyone who works in commercial software. However, I don’t see Steve Jobs dressed up as a Borg in slashdot. On the contrary, he still seems to be almost a folk hero amongst the geek community. I don’t know if his level of control is sustainable, or if the Feds will eventually clip his wings, but it is a huge hidden problem.

    Frankly I am pulling for Android primarily because Steve Jobs doesn’t control it. He scares the heck out of me.

  94. 1) Male labor force participation has been declining since WWII at a relatively steady rate.
    http://www.amptoons.com/blog/wp-content/uploads/2006/08/male_lfpr.png

    2) Absolute productivity per worker is up on the order of 10 times since then as well – which
    totally swamps the effects of government spending. It’s *tripled* since 1975. This increase isn’t because people put passenger doors on Chevys three times as fast – it’s systemic, Adam Smith pin factory stuff. It rises at what seems to be a modest 3.1% per year (on average ) but over 60 years, that’s 6.75 times as much. This is slowing down from the 19th and 20th centuries – 1900 to 2000, productivity is up about 100 times – 10,000 percent (give or take).

    3) The Singularity *is* coming. Human labor is very very rapidly declining as a factor of production. This will be at least as disruptive as the transition from hunter-gatherers to agriculture.

    4) The amount of money flowing in capital markets is two or three orders of magnitude greater than all flows in government. That this money is not reflected in GDP is simply one of those things. This is the principal reason that government control of the economy is simply infeasible. GDP is just what happens when the music stops.

  95. >Currently if you want to develop an app for this platform you need to get through a capricious, and appeal free approval process. You piss of Steve Jobs, or try to cut into their business is the wrong way and you are simply out with no means of appeal. Microsoft never exercised anything like that level of power — total control over the platform.

    And this is why I think app development for the iPhone will stall out and it will stagnate. Jobs has two problems: one is that he’s steadily reducing the incentives for third-parties to join his gang, and the other is that centralized control is expensive and scales very badly.

  96. Garrett,

    Thank you for this comment. It was great. I’d be interested in what you have to say about my comment below.

    Roger Phillips,

    It’s good to hear from you. Man, I’ve been missing you on this thread. I’ve been trying to bridge the gap between you and Jessica there, but you left. I’m pretty sure she doesn’t think the gap was bridged, but because you left I still haven’t found out. You don’t have to scratch my itch, but since I was defending you my ego pitifully cries out for validation…. Wait, this is getting embarrassing.

    We have a real problem with the rule of law in this country. I agree with you that people in the anarchist -> minarchist -> libertarian spectrum have too little belief in the usefulness of the rule of law. Where I suspect I disagree with you is that I believe you (and most Americans) overestimate it’s utility. The American rule of law is, at it’s root, the attempted rule of experts. Experts encode their expertise in rule form, and other experts enforce those rules. In the old days rule of law was not so much the rule of experts. Laws were short and simple and generally understandable, although you still needed expert judges to handle the hard cases.

    Garrett pointed out some of the problems the American rule of law above. Here are some more:

    1. Can the experts really know the matter they are trying to regulate well enough to write enforceable regulations that will positively result in the improvements we want? The FDA tries to regulate drugs for efficacy. There is no similar bureau for regulation itself. Far too many regulations sound like they will work, just like the ideas behind many drugs sound like they will work, but when tried they don’t. We don’t even have a framework for scientifically judging the efficacy of regulations.

    2. Can the experts really know the matter they are trying to regulate and the other things related to it well enough to avoid crippling side effects which make their regulations more of a problem than what they seek to correct? Again, the FDA will not approve medicines where the side effects are too nasty, but again there is no such agency or scientific framework for regulations.

    3. Are the politicians writing the highest level of law actually experts? My bet is not even close. And where is the accreditation bureau? The FDA has rules on who creates and tests drugs.

    4. Are the staff the politicians hire to write laws actually experts? My bet is not even close, although they are usually really good at constituent services.

    5. Considering 4 and 5, how many laws are actually written by lobbyists who are experts, or who have experts ready at hand?

    6. Now consider the other end of the spectrum. How many of the people who we depend upon to enforce the law really understand it? Are they experts? Lots and lots of cops know lots of things about police work and very little about the law.

    Number one and two are the biggest problems. I maintain that human beings cannot be expert enough to use the rule of law to solve many of the problems we are trying to solve with it. We don’t understand the world well enough, nor do we have time to write rules complex enough to manage it – particularly since people just as smart as we are will immediately attempt to turn the rules to their advantage while trying not to break them. Most will even be operating within their understanding of the spirit of the rules, but since they aren’t experts either they often fail – not just at the spirit of the rule but the letter as well.

    We’ve got to stop trying to pound everything home with the rule of law hammer. Some of these things are screws. Some are eggs. Some are big rubber cubes.

    Yours,
    Tom

  97. “The Singularity *is* coming.”

    Sounds like a secular religion. Isn’t it like the flying cars that year 1930 have promised by the year 2000?

  98. “Sounds like a secular religion.” Really?

    Nope. It’s already happened in agriculture, it is happening in factory-industry contexts and it’ll be here in services before long.

    I’m not using Kurweil’s exact definition. Mine’s more like “the singularity occurs when human productivity exceeds the ability of humanity to absorb all that can be produced.” Watch the U6 (labor force participation) figures for the last 50 years, factoring out the business cycle…

  99. > ESR’s 64-bit essay was right on the money regarding ‘trajectory’

    HE EXTRAPOLATED CURVES!

    > What he saw happening in 2008 is happening now, barely a year(ish) later.

    He used the words, “Hard deadline” over and over.

    The 64-bit transition was a speedbump. Frakin’ Hell, boys, *phones* have 64-bit CPUs now. The real change was to multi-core architectures, and integrated graphics something esr didn’t predict.

    > And this is why I think app development for the iPhone will stall out and it will stagnate.

    If anything slows iPhone app development it will be saturation, not the app approval process.

    Getting an app in the app store isn’t that much different than getting a package into Ubuntu, for similar reasons. In fact, Ubuntu claims about 16,000 packages, and there are what, 10X that number in the app store?

    > Microsoft never exercised anything like that level of power — total control over the platform.

    Perhaps they’re not creative enough. They certainly would have tried if they knew how.

    > Frankly I am pulling for Android primarily because Steve Jobs doesn’t control it

    The technology behind Android is all f***ed-up. Java? Really? And a twisted-up version at that?

    Give me a frakin’ break.

    If Steve Jobs scares you, and Eric Schmidt doesn’t, then you’re just not paying attention.

  100. > Although Eric couldn’t have seen Windows 7 coming when he worked on that piece.

    What, because Vista was going to take the company down, and the army of monkeys at MS would never release another OS variant?

    Wikipedia says:
    “Windows 7 was released to manufacturing on July 22, 2009,[4] and reached general retail availability on October 22, 2009,[5] less than three years after the release of its predecessor, Windows Vista. Windows 7’s server counterpart, Windows Server 2008 R2, was released at the same time.”

    Apparently 2008 was not a “hard deadline”….

  101. >HE EXTRAPOLATED CURVES!

    Actually, that part was mostly Rob Landley. He had collected a lot of data on memory prices and design-ins from the last couple of memory-width transitions, and it indicated a clear pattern. As others have noted, we got the timing on this transition pretty much dead accurate. To within a calendar quarter.

  102. > Eric and Rob were also right when they said Steve Jobs doesn’t want to win this game. Who cares about winning when you reshape the rules and the field? “The 64-bit desktop” is a
    > moot point when most computing usage at the end-user level takes place on iPhones and iPads.

    Is that the voice of sanity I hear in this vast wasteland of squandered opportunity?

    The desktop has been eclipsed, android and the iPhone have blocked the Sun (er Oracle). Yeah baby, there is a linux kernel on android phones, but… good luck replacing it without rooting the phone. Woops, Google went and crapped all over teh linux.

  103. Saying Apple or Google have mobile wrapped up is as if you’d said Sun or IBM have the desktop wrapped up in 1990, :) yet I see that statement made too far commonly. Symbian is still by far the leader in smartphone share and iPhone OS and Android have less than 20% share combined. I think Morgan’s right and anything can still happen, though I’m not so down on the iPad (not that I’d ever buy one ;), I want to pick up one of the Android/Tegra tablets and put BSD on it :D ). Also, I wouldn’t write off Microsoft so soon, their new UI on Windows Phone 7 looks very good and Zune HD is a nice device by all accounts. As always they’re late to the game, but they somehow manage to win out usually. I’d never buy it, or any Apple device again for that matter for the reasons Jess gave, but it looks like MS will be a credible competitor. Also, I think there is far too much emphasis on mobile as the future of computing. While tablets will be big for computing on the go, mobile will always be a lesser experience, more geared around quick grabs of information or watching video. The home desktop or server will always be the center of your computing life, even if it shifts to become a home server that is primarily accessed by a constellation of tablets in the home. Even the cloud will not replace that, only augment it.

  104. # J. Lapin Says:
    > Getting an app in the app store isn’t that much
    > different than getting a package into Ubuntu,

    Completely different! If Ubuntu doesn’t want your package, you can still send it to people direct. Apple controls the ability to install software on the hardware itself. They can brick your phone if they think you are sneaking around their wall.

    > The technology behind Android is all f***ed-up. Java?
    > Really? And a twisted-up version at that?

    Currently apps have to be written in Java, but that could change, and what exactly is wrong with Java? It isn’t my first choice, but people dwell WAY too much of the relative merits of programming languages. There are many far more important things. Eclipse for example, is very powerful.

    > If Steve Jobs scares you, and Eric Schmidt doesn’t,
    > then you’re just not paying attention.

    Android is open source. Android SDKs are open source. Google doesn’t brick your phone. Android phones are multi sourced.

    I’m afraid it is you who is not paying attention.

  105. I agree with you that people in the anarchist -> minarchist -> libertarian spectrum have too little belief in the usefulness of the rule of law.

    By defnintion, an actual anarchist has NO belief in the usefulness of the rule of law.

    On the other hand, minarchists/libertarians find it very useful indeed, when it is applied correctly. Unfortunately, nearly everything governments do now is as far from the minarchist ideal of the rule of law as I am able to imagine. And I have a really good imagination.

    The rule of law provides clear lines of demarcation where one person’s rights end and another’s begin. Like good fences, good laws make good neighbors.

    The leftist agenda being enacted on all levels today is the antithesis of the rule of law. It is simply impossible to know before committing an act whether it will be punished by the government. Businessmen do not know whether they will be bought out by the government or in competition with those who have. Entering into contracts with skilled workers, under which bonuses are paid for performance, is compromised by the risk that those bonuses will be revoked due to political considerations.

    This minarchist would LOVE to see actual rule of law.

  106. >By defnintion, an actual anarchist has NO belief in the usefulness of the rule of law.

    False. Law != government.

  107. > I’m afraid it is you who is not paying attention.

    I’m afraid that Lapin is correct here, Jessica. Have you changed the kernel on your Google phone?
    Its possible if you’ve purchased the ‘dev phone(s)’, or if you’ve rooted your non-dev phone, otherwise, its not.

    Can you create a custom distribution with Google’s apps (such as Maps or the Gmail app) included? No you can not.
    The phone is nowhere near as ‘open source’ as you might like (or claim).

    > If Ubuntu doesn’t want your package, you can still send it to people direct.

    one may send iphone apps to others, without routing through the app store, too.
    I can think of at least four ways of doing this.

    and Lapin said, “Getting an app in the app store isn’t that much different than getting a package into Ubuntu,” you changed the subject.

  108. False. Law != government.

    Moving the goalposts. Let me point out the word you left out there:

    By defnintion, an actual anarchist has NO belief in the usefulness of the rule of law.

    I have known plenty of anarchists who believe that some kind of private legal system can entirely replace government rule over a particular piece of land, and do so for the better. I happen to disagree with them (agreeing that people should be free to take their disputes to non-governmental arbiters, but recognizing that there will always be some who refuse to agree to a particular judge’s authority) but their position is clear that they want law without rule.

    If you have a law that rules in a particular place, even over people who do not consent to its authority over them, then regardless of what you call that arrangement, it is “government”.

  109. Jake Fischer Says:
    > The phone is nowhere near as ‘open source’ as you might like (or claim).

    When do you expect the port of MotoBlur to the iPhone?

  110. > Jack Says: “You apparently wish to still stay loyal to the free market capitalist system, even to the extent of acknowledging the issue of employees being “too expensive to hire,” as though we can really put a price on these things.”

    Wait a second.

    “As though” we can really put a price on these things?!?!?!

    Jack, have you ever owned or run a company?

    I’ve started two companies, and am running them both now (total headcount: around 10).

    I put a price on EVERYTHING. I know how much toner costs. I know how much soda costs. I know how much my customer support people cost. How much credit card processing fees, web hosting, and phone service cost.

    Every dollar that I spend on these things is a dollar that isn’t in my (modest) paycheck.

    How can you conceivably call into question the fact that things have REAL, dollar-denominated costs?!?!

  111. >Multiply them by ten million to see what it’s like when the contradictions of socialism on the installment plan come home to roost.

    Australia, Canada and New Zealand all have employment protection laws and a minimum wage and they have lower unemployment rates than the US. Of course, when you hand-pick your data it’s easy to draw any conclusion that suits your political viewpoint.

  112. TJIC: slavery is an unjust government monopoly; it should be open sourced and brought back to the people. Re-establish the slave-owning franchise! (You think I’m joking, don’t you.)

  113. Businesses can’t plan and don’t want to take risks in the face of huge uncertainty. The employment picture won’t change until businesses can see a guarantee of predictible and limited government borrowing and lower overall taxes. It isn’t going to happen under Obama.

    Right now, we are seeing a recalculation to adapt to a more socialist control of business, more costly regulation, and higher energy costs. The economy will not employ as many people as it did before, if this adaptation to big, intrusive, and costly government continues.

    Waiting for the jobs
    Quip: Obama is building a new society. I’ll wait until he is done.

    Small business owners are standing by the fence and watching, paralyzed by regulatory uncertainty. They aren’t hiring precisely because of government intervention in the economy. So-called stimulus, and temporary or limited tax breaks won’t change that.

  114. “Wait a second.

    “As though” we can really put a price on these things?!?!?!

    Jack, have you ever owned or run a company?

    I’ve started two companies, and am running them both now (total headcount: around 10).

    I put a price on EVERYTHING. I know how much toner costs. I know how much soda costs. I know how much my customer support people cost. How much credit card processing fees, web hosting, and phone service cost.

    Every dollar that I spend on these things is a dollar that isn’t in my (modest) paycheck.

    How can you conceivably call into question the fact that things have REAL, dollar-denominated costs?!?!”

    I’ll think of an answer for that, right after I try to figure out why you are aghast and indignant at my question. Or whatever other answer you will say is the real intent behind your excess punctuation.

    After all, I’m just one man on a blog.

  115. By defnintion, an actual anarchist has NO belief in the usefulness of the rule of law.

    Leaving aside the “true scotsman”fallacy you’re indulging in, the only ‘anarchists’ – that I have ever known of – that think in the manner you describe, are the idiotic adolescents that smash windows and burn stuff whenever some inter-governmental conference is in town.

    They are not ‘anarchists’. They are morons. Sadly, they have poisoned the concept of anarchy so severely that most people think of “anarchy” as “lawless chaos & mayhem”.

    The concepts of ‘law’ and ‘anarchy’ are not mutually exclusive. At its core, anarchy is all about the illegitimacy of the authority hierarchy. Legal concepts defining right & wrong remain intact.

  116. @JessicaBoxer: Yes, Eclipse is very powerful, but the architecture sucks. It’s too big and too slow. That’s why I gave it up and went back to my faithful-old beloved Emacs. Anything Eclipse can do either already is or can easily be implemented in Elisp.

  117. Don’t look at Eclipse: Their architecture doesn’t allow it to do the highest level magic all that well. Instead, look at IntelliJ IDEA: I was an Emacs developer for a decade, but the power of an editor that has such a deep knowledge of the languages you are using as Idea is just extremely expensive to implement using Elisp. The IDE not only understands enough of the code to have both constant syntax checking, code completion and over a thousand code inspections, all running constantly on my code as I edit it, instead of having to be triggered or checked every 10 seconds, but it also understands dozens of infrastructure libraries, build systems and application servers. The level of integration with anything I would ever use is just insane.

    Still, I’m running plugins to make the editor as emacs-like as possible.

  118. The concepts of ‘law’ and ‘anarchy’ are not mutually exclusive. At its core, anarchy is all about the illegitimacy of the authority hierarchy. Legal concepts defining right & wrong remain intact.

    How can there be “rule of law” when the parties to a controversy cannot agree on the legitimacy of any particular authority to arbitrate their disputes?

  119. @hibikir:

    IntelliJ IDEA doesn’t support Python, Perl or C, which makes it an immediate non-starter for me. Emacs is the one IDE that let’s me easily work with Python, Java, C/C++, shell scripts, PHP, HTML/XHTML, CSS, XML, JavaScript, etc., on Linux, Windows or Mac. The other thing that’s nice about Emacs is that it has a lot more options when working from remote. Something like IDEA or Eclipse forces me to use VNC or RDP or similar: with Emacs I can ssh in and work on a terminal if I like. The other thing I like about Emacs is that I can customize it endlessly. I use the CEDET tools, the Speedbar, and I’ve been actively developing my own project system in Elisp.

  120. ESR: it could well be that increasing intelligence is valuable everywhere but that the economic value of education has a ceiling usually reached well before graduate school.

    Actually I’ve been reading “Outliers” which has a chapter on this specific issue. It proposes (and anecdotal evidence seems to agree) that IQ of about 120 is about as much as is “useful” in any competitively meaningful way. They suggest that IQ is to success in professional life as height is to success in basket ball. It’s a threshold, and having an IQ of 150 doesn’t help you be any better than somebody with an IQ of 130, just as being 7′ tall Shaq doesn’t make you better than 6’6″ Jordan. If you have an IQ of 120 (which is a little above the minimum for a realistic chance at grad school), then you’ve got all you need, and it’s more about practice and skill-set than raw brain power.

    This is born out by a survey of Nobel Prize winners and successful business professionals.

  121. The Monster: How can there be “rule of law” when the parties to a controversy cannot agree on the legitimacy of any particular authority to arbitrate their disputes?

    How is arbitration currently handled in the private sector? I choose an arbiter, you choose and arbiter, THEY choose an arbiter and that’s the disinterested third party. There’s your “Judge”. It works pretty well and no governmental interest is required.

    As for enforcement of laws, the agreement of laws can be by basic democracy (everybody in an area votes on a proposed law covering that area) and enforcement is left to the aggrieved party. This is not terribly different from the way laws in England where enforced in the 16-19th centuries. A whole cottage industry grew up for investigators, prosecutors, etc., only the courts were the local feudal lords or town authorities who held court on a regular schedule. Not dissimilar to modern torts.

  122. LOSS OF NATIONALITY AND TAXATION

    P.L. 104-191 contains changes in the taxation of U.S. citizens who renounce or otherwise lose U.S. citizenship. In general, any person who lost U.S. citizenship within 10 years immediately preceding the close of the taxable year, whose principle purpose in losing citizenship was to avoid taxation, will be subject to continued taxation. Source: http://travel.state.gov/law/citizenship/citizenship_778.html

  123. “As recently as mid-2009, Eric did not anticipate Windows 7 being awesome.”

    Can you care to explain why is it awesome? I’m still using Windows XP whenever I’m not using Linux (sadly most of the time), at home and in the office.

    The purpose of the OS is launch my apps and shut the fuck up in the background, and leave as much CPU and RAM and graphics card capacit to the apps as possible while using as little itself as possible.

    XP does launch my apps, does shut the fuck up in the background and demands for that way less CPU and RAM and graphics card capacity than Vista or 7.

    What is the real point in Vista or 7? I may be thick, but I think from a user point of view the OS is a double-click on the desktop and anything will do that will do that reliably and with little overhead. Whether you just run a browser or the most complicated statistical modelling software ever, or an editor to program something absolutely cool and clever like Haskell in it, the OS is just the double-click on the desktop.

    I mean I’m no fool and know perfectly how many jobs an OS must do in order for tha double-click to work but my point is that the OS must do them, silently, well, fast, with little hardware overhead, and then shut up and don’t demand my attention.

    What is the point of the upgrade, really?

  124. >Actually I’ve been reading “Outliers” which has a chapter on this specific issue. It proposes (and anecdotal evidence seems to agree) that IQ of about 120 is about as much as is “useful” in any competitively meaningful way.

    Huh? I have a pretty good idea what my IQ is, and I know a lot of people with IQs around 120, and the difference does actually matter. At tasks that are extremely cognitively demanding (handing long chains of logic, rapid assimilation of large volumes of information, pattern recognition in noisy data), the 120s simply cannot match my normal performance no matter how hard they try. My observations suggest that anyone with an IQ of 140 or up could say the same (for reference, psychometricians generally peg the beginning of “genius” territory at about 145). A standard-deviation gap can be closed with effort, maybe; two standard deviations, not. The difference seems to be particularly important in conditions of dealing with novelty.

    Now, if the argument is that very little human work is actually so cognitively demanding that an IQ above 120 yields significant returns over the long term, I might buy it. But on a one-to-one level, a 120 competing against me is still reliably going to get waxed unless there’s a large difference in the level of our domain-specific knowledge. That is, a 120 chess expert will beat me at chess, but if three 120 chess experts sit down to play me at a 4-hand strategy game none of us has ever seen before, it’s long odds I’m going to learn the rules faster and win (which I know because this sort of situation comes up a not infrequently at my Friday night gaming group). Granted, some of them are likely to overtake me in later plays by accumulating more domain knowledge about that game than I do.

    Now that I think about it, strategy games may be a particularly sharp instrument for such comparisons. The only person I know who can reliably wax my ass across any gameboard is also one of the handful of people in my social network that I suspect of having a higher IQ than me. I say “also” because he has a freaky talent for games that sort of seems to stick out above the rest of his ability profile.

    How does this fit the “Outliers” model?

  125. >Can you care to explain why is it awesome? I’m still using Windows XP …

    That was going to be my question too. My Windows-using friends mostly took a long look at 7 and then barfed all over it.

  126. Windows 7 is the first Windows since 3.1 that I can use for a full day without unhealthy things happening to my blood pressure. It’s decent enough that it’s less painful to run it as the host operating system on my laptop (my secondary computer) than to run VirtualBox or WINE, like I used to do when forced into using Windows for something.

  127. > (for reference, psychometricians generally peg the beginning of “genius” territory at about 145).

    Damn, Eric, *on which test*?

    ESR says: The Stanford-Binet scale is the one to assume if a psychometrician doesn’t name a scale. Most modern tests are calibrated to it.

  128. > > (for reference, psychometricians generally peg the beginning of “genius” territory at about 145).

    > Damn, Eric, *on which test*?

    The way smarter than me test is a good test. When I realized one of my best friends was way smarter than me in my own field which was not his it was a bit of a blow to my ego. He may not be a genius, but it sure helped me put things in perspective.

    Yours,
    Tom

  129. How can there be “rule of law” when the parties to a controversy cannot agree on the legitimacy of any particular authority to arbitrate their disputes?

    How is arbitration currently handled in the private sector? I choose an arbiter, you choose and arbiter, THEY choose an arbiter and that’s the disinterested third party. There’s your “Judge”. It works pretty well and no governmental interest is required.

    That’s all well and good when the parties can agree on that framework. I explicitly insist that they have the right to do so, and that a government that deprives them of that right is violating its very reason to exist.

    But that is not responsive.

    My question is what to do when they don’t agree on that authority? What if, say, you have a dispute between, oh, I don’t know… a Christian and a Wiccan, or a Protestant and a Catholic, or a vi guy and an EMACS user, neither of which will trust a judge that the other trusts, nor will the arbiters each of them trust agree on a third to be the disinterested party? In fact, one of the litigants may reject your neat little formula outright, questioning its legitimacy. Suppose you choose a female arbiter and the other litigant is of a religious sect that cannot allow a woman to have authority over a man. What do you do?

    In the real world, of course, there will be someone who gets to decide the case. He may call himself “Judge”, “Chief”, “Mayor”, “King”, or “Capo”. Whatever his title, he is imposing his judgement upon someone contrary to their choice. He is the one who gets to rule on the controversy. You may call some of these people “government” and others by some other name, but to me, a mechanism by which someone gets to enforce his rule on others, whether they like it or not, is “government”. No matter what anarchists dream, such an entity will exist. The question is whether it is a good government or a bad one.

    When we have the rule of law, this person is bound by his oath of fealty to a codified body of rules that are clear as to the point at which one person’s rights end and the other’s begin, and all the parties have the opportunity to know these rules before they engage in the behavior that brings them before the judge. Furthermore, if they don’t approve of these rules, they are able to “vote with their feet” by moving to a different jurisdiction where they find the rules more tolerable.

    This last point is very important; because governments that are confined to the smallest possible territory provide the best opportunity for people to escape governments that threaten their liberty. One of the surest signs of an oppressive government is that it won’t permit free egress (see: Berlin Wall).

  130. >My question is what to do when they don’t agree on that authority?

    The easy case is when they’re both contracted with the same judicial agency (or, equivalently, their crime-insurance companies are); then this never comes up. If they’re contracted with different ones, their judicial agencies choose an arbiter. It’s no longer up to the parties themselves. If one of them rejects the process, his contract is canceled. In practice, this means he’s an outlaw and doesn’t live long, because the equilibrium state of a system like this is for all of the judicial agencies to have reciprocity with each other (jurisdiction wars are expensive and bad for business).

    Now, if you want to play definitional games, you can say that the one big reciprocity network “rules” and is a “government”, but there’s a key difference: nobody in the system is legally privileged to initiate force or levy taxes. The contract network has resilience, because any individual member can fold and new (startup) judicial agencies can join.

    This is all pretty standard anarchocapitalist theory.

  131. “If you have an IQ of 120 (which is a little above the minimum for a realistic chance at grad school), then you’ve got all you need, and it’s more about practice and skill-set than raw brain power.”

    According to Gottfredson this occurs above IQ 125 WAIS (>95%ile), which is SD 15.

    She labels this as the “yours to lose” range.

    http://www.udel.edu/educ/gottfredson/reprints/2002notamystery.pdf

    The Hi IQ society differentiates the 124 to 140 range as well, noting “this group of people and those above them don’t require assistance to learn. They can find the information and master the methods by themselves.” The 140 to 155 range is distinguished from the lower range by the ability to build theories/intellectual systems from essential features of a situation and a self-chosen morality.

    I agree that in terms of professional/financial success you don’t need a 140 IQ. However, you don’t exactly need an IQ of 120 either (if you’re in professional sports, performing arts, etc.)

  132. “And he’s, hm, I think the best way to put it is rigid. Very capable at well-defined tasks and strategy games, but tends to get flustered and inarticulate when off his script.”

    Sounds like the current resident of the Oval Office.

    “We’ve spent the last seventy years increasing the hidden overhead and downside risks associated with hiring a worker — which meant the minimum revenue-per-employee threshold below which hiring doesn’t make sense has crept up and up and up, gradually.”

    Exactly. I have worked 25 years for a chemical company. In that time our sales per employee has gone from the $100,000 range to $350,000.

  133. Just to add to this a personal observation (take it for what it’s worth): in my experience strenuous physical exercise raises IQ significantly (my guess – as much as half an SD.)
    And knowing what my IQ is, I’d say that it makes all the difference in the world.

  134. >The Hi IQ society differentiates the 124 to 140 range as well, noting “this group of people and those above them don’t require assistance to learn. They can find the information and master the methods by themselves.” The 140 to 155 range is distinguished from the lower range by the ability to build theories/intellectual systems from essential features of a situation and a self-chosen morality.

    Interesting; their distinction matches my experience of these groups quite well. Can you point me at documentary resources about their classification system?

  135. Eric,

    The source for this is their “test results” page which pops up after you take the test (highiqsociety.org).

    Let me find my printout and I’ll email it to you.

  136. That’s because I don’t really have any idea how bad it will get. We’re about to reach the end of the historical era that began when Bismarck first implemented state socialism in the 1880s. The changes will be huge and wrenching; I wouldn’t even put the dissolution of the USA outside the realm of possibility.

    I am not that worried about dissolution. From glancing through history that has usually happened as a result of a conflict between political parties (Republicans & Dixiecrats, PAP v UMNO, etc.) With an approaching “era of non-alignment” the ingredients do not seem right. When I was looking for historical parallels, I concluded that the current US’s predicament is most similar to that of France in the 1780s, and we all know what that led to.

  137. > Murray and Hernstein did a really good job in The Bell Curve of arguing that intelligence is competitively valuable even in jobs very unlike programming — their paradigm example was waiting tables.
    You could be right – I was surprised to learn that players in the NFL are required to take the Wonderlic IQ test.

  138. Jeff Read Says:
    Morgan, Linux is ruling the school on the back end. Especially now that Sun is dead and IBM stands alone as the sole remaining non-commodity big iron vendor. Linus will have to content himself with dominating the world the old-fashioned, Illuminati way: in secret, in the back rooms, through controlling the centralized nodes of power. :)

    The problem is that position can easily be disrupted. This is how mainframes, minis and Unix boxes went the way of the dodo. Last I heard Microsoft was doing a good job of that. I remember seeing data a few years back that Windows was the fastest growing server operating system, and Linux had mostly remained stagnant. Furthermore, didn’t a Windows cluster recently break into the top ten?

  139. > One of the surest signs of an oppressive government is that it won’t permit free egress (see: Berlin Wall).

    I was looking at the U.S. tax code. If you are slightly upper middle class or upper class, you don’t have free egress.

    Yours,
    Tom

  140. Answering a question asked way upthread:

    # Jack Says:
    >Your black friend, you state that he is an EEOC lawsuit risk.

    >Equal Employment Opportunity Commission… are you saying
    >that he would be less likely to be hired because of the risk that
    >they may be sued by an organization that ostensibly exists to
    >ensure that blacks have an equal chance at being hired?

    Approximately true. The EEOC’s mission is to enforce non-discrimination in employment; it pursues this by punishing alleged incidents of discrimination. Cases are normally brought to the EEOC by aggrieved parties.

    A non-hire has a relatively weak case – the non-hired party did not expect to be hired in the first place, as a rule. Most job applications are rejected, and most rejected applicants don’t feel aggrieved.

    However, a terminated employee has a potentially strong case: a current employee does expect not to be fired, and a fired employee almost always feels aggrieved. With a black employee, there is the risk that if fired, the person will file a grievance with the EEOC. This means a very expensive legal case with a high probability of a costly adverse judgment.

    This added cost applies to every similar hire: hispanic, female, homosexual, handicapped. There is no comparable risk for hiring a straight white male: such a person can be fired at will. So many employers avoid hiring black employees for whom there is any of needing to fire them later – the marginal cases whom ESR identified as being especially burdened.

  141. >So many employers avoid hiring black employees for whom there is any of needing to fire them later – the marginal cases whom ESR identified as being especially burdened.

    Exactly correct. A wrongful-termination lawsuit can easily destroy a small business even if the defendant technically wins. Small businessmen know this and avoid the risk, creating a barrier against black employment that is as insidious and persistent as racism ever was. Actually, it’s a worse problem for its black victims because it’s rationally justified; in a perfect example of unintended consequences, the antidiscrimination laws reproduce the effects of racism without the intent.

  142. In a way, I may be more screwed than these guys. I’ll be 60 in a year or so, and I havn’t had a job with a W-2 form since some time in the 1980s. I spent the time from 1994 till 2005 taking care of my aged parents in exchange for room, board, and expenses. Mom died in 2001, Dad in late 2005. I should have been Ok, as my half of the estate was a good bit over a half million, after selling the aged parents’ house. I did not count on the animosity of the person I now call my ex-brother, and the avarice of the lawyer I hired to protect me from him. I am now living from hand to mouth at the sufferance of a landlord who feels sorry for me, having to move from place to place as _he_ gets foreclosed upon.

    Maybe there just are more people now than there are useful things for them to do.

    Maybe we should pay more attention to Jerry Pournelle and look out for our own folks before looking out for foreigners.

    BTW, I’m pretty sure I actually _do_ have a touch of the “A”, which doesn’t help in job interviews.

  143. @Jessica Boxer: I think I recall reading that as late as the 1890s, something like 90% of Americans were still self-employed. These days, the IRS (among others) kinda looks at you funny if you are self-employed.

    @Brian: Yup, HVAC is good, but here in South FL, there are lots of well-qualified HVAC guys with no work. People are putting off maintenance and repair. Hell, I grew up in southern Florida with no AC. It may be starting to dawn on some of these recently cash-strapped transplanted yankees here that air conditioning is not necessary to sustain human life.

  144. Oh, on being smart as a qualification for employment: If I were hiring people, I would insist that they be minimally smart enough to do the job. After that, I would winnow the pool of potential empkoyees by selecting for doggedness, diligence, and honesty. (All three of them autistic traits! Heh.)

  145. Hi there your recipe I disagree with.

    Long term structural is not going to change in this country with market share concentration in every sector like it is today.

    And campaign finance and other legal system shit which protects large corporates from open markets, particularly the marketplace for ideas and public tastes which they totally control with propaganda rights here that are not allowed in Europe.

    Tax rules here favored real estate speculation which was the biggest source of “wealth creation” over last 30 yrs. But, it wasn’t real wealth, cause it was on paper and is gone now. The tax code doesn’t encourage real investment and risk taking for technologies. Also, look who’s running Washington this week. “clean coal” lobbyists. There are not lobbyists for wind, solar, hydro, nano like those clowns, so structural unemployment is here to stay.

    Your ideas too clouded by neo-liberal libertarian propaganda. There’s 500 yrs of history of capitalism, the collapses and failures of unmitigated markets, and also the violent fascism that emerges after. Why don’t you read some history about France under Louis XIV, or Germany under Bismarck? That was the stuff that informed Marx, and that eventually those Europeans lived through at continental industrial strength against which they’ve written their current Constitutions for social democracy. You don’t seem to cite any of this history which is pretty typical for Americans?

    In any case, the conditions for Fascism are here. You cover the human interest very nicely. The same thing has been happening in MI, OH, IN, IL for the last 2 year. The propaganda rights of the big deniers are also perfectly in place. Good luck with those old Chicago school ideas of yours.

    Best regards PB

  146. their judicial agencies choose an arbiter.

    So your entire judicial theory is based on the idea that people who are unable to agree on the legitimacy of each others’ agencies will have chosen agencies that can agree on some third agency?

    In practice, this means he’s an outlaw and doesn’t live long, because the equilibrium state of a system like this is for all of the judicial agencies to have reciprocity with each other (jurisdiction wars are expensive and bad for business).

    Jurisdiction wars are expensive for nation-states, too. But they still happen. The most recent one I can call to memory is South Ossetia. Last century there were quite a few jurisdiction wars.

    This is all pretty standard anarchocapitalist theory.

    When/where have the experiments been done to validate this theory? Or is it more accurate to say it’s standard anarchocapitalist hypothesis that competing judicial agencies could coexist in a single geographical area and not assert exclusive jurisdiction, and the power to compel those in that area to pay them for their services? (“You got a nice business here… It would be a shame if anything happened to it, capice? How would you like to buy ${Familia} Brand Judicial Insurance?”

    And yes, I’m equating an organized crime syndicate to a government. They provide similar services to their customers, and the latter is increasingly indistinguishable from the former.

  147. >So your entire judicial theory is based on the idea that people who are unable to agree on the legitimacy of each others’ agencies will have chosen agencies that can agree on some third agency?

    I left out the incentive. Each judicial agencies wants to be contracted with every other so its jurisdiction will be extended.

    >Jurisdiction wars are expensive for nation-states, too. But they still happen.

    But they don’t happen among democracies with functioning civil societies. You sgould think about why that is.

    >And yes, I’m equating an organized crime syndicate to a government. They provide similar services to their customers, and the latter is increasingly indistinguishable from the former.

    Quite rightly. In a libertarian system, the attempt to assert exclusive jurisdiction would itself be recognized as a crime signifying that a judicial agency has gone irrecoverably bad, much as political censorship is in civil democracies.

  148. “…Thing is, they’re not uneducated; they’re not the stranded fruit-picker or construction worker that narrative would fit. “

    That is me. My solution? Under the table. Cash. No file. Now I work bartending, pizza making, interior trim. I’m doing fine now that I’ve kicked off taxes. And, in my state now we have Obama Care Lite, so I’ll just sponge, take, game the system. All my life the system has been gaming me, now I game it back. I couldn’t care less if the whole thing collapses.

    Further, I’m proud to be a criminal.

  149. “This added cost applies to every similar hire: hispanic, female, homosexual, handicapped. There is no comparable risk for hiring a straight white male: such a person can be fired at will. So many employers avoid hiring black employees for whom there is any of needing to fire them later – the marginal cases whom ESR identified as being especially burdened.”

    Wow.

    Talk about making an end run around the system.

  150. “Australia, Canada and New Zealand all have employment protection laws and a minimum wage and they have lower unemployment rates than the US.”

    How to put it… as a non-American I’ve found the following interesting – or sad – thing.

    On the average, the US was historically less statist/interventionist/screwing-things-up-ist/”fiscally conservative” than most other countries, with the possible exception of Switzerland, Singapore and Hong Kong.

    OTOH in the recent decade there is some sort of a turning around at an astonishing speed. Bush and Obama and the FED under them seemed more fiscally irresponsible than the average European country. At the moment – however astonishing it seems – the ECB does a distinctly better job of refraining from debasing the currency too much as the FED. At the moment it pretty much seems an average Libertarian or Fiscal Conservative in California had pretty much nothing left to be proud about against, say, The Netherlands.

    If it won’t be turned around, it is a change – for the worse – of enormous historical proportions. A change happened so fast – on a historical timescale – that most folks haven’t really recognized it’s depth or extent. The way things look like now I have to give a better grade in fiscal conservatism to Angie Merkel than to Bush or Obama. And frankly I never expected that anything like that can ever happen.

    One telltale sign of the change is that now the primary immigration target for unhappy Europeans seems to be no longer the US but Australia or NZ. (There is some phenomenon of “Melbourne gold rush” rising in Hungarian blogs in the last 5 years – and nothing comparable with regard to the US.) I suppose, despite the labour protection laws, on the average there are still less governmental attempt to strangle those who are willing and able to produce.

    I’m kinda feeling dizzy about it all, I think I’ll soon have to reinterpret the world in wholly different ways…

  151. “You could be right – I was surprised to learn that players in the NFL are required to take the Wonderlic IQ test.”

    There appears to be a threshold IQ for every occupation beyond menial labor.

  152. Well, Heritage downgraded the US from “free” to “mostly free” in its Economic Freedom World Rankings this year — a disgrace to be sure.

    Free:
    —-
    1. Hong Kong
    2. Singapore
    3. Australia
    4. New Zealand
    5. Ireland
    6. Switzerland
    7. Canada

    Mostly Free:
    —-
    8. USA
    9. Denmark
    etc.

    http://www.heritage.org/index/ranking.aspx

  153. >Jurisdiction wars are expensive for nation-states, too. But they still happen.

    But they don’t happen among democracies with functioning civil societies. You sgould think about why that is.

    Oh, but I do think about it. And while they are rare, they do happen. Take for instance the American Revolution and War Between the States (which was not truly a “Civil War” at all; the South did not want to rule the North). In each case, there was a disagreement about which government would have jurisdiction over people/places. The wars each ended when one side decided it wasn’t worth fighting any more; when that side was willing to withdraw its competing claim to jurisdiction, leaving a sole entity exercising the power to rule its own territory.

    I’m still waiting for the experimental evidence that justifies the use of the term “theory” in describing anarchocapitalism. We have, however, done some interesting experiments with governments attempting to assert authority to prohibit consensual activities, and a peculiar, counter-intuitive result…

    Precisely because the parties to a transaction such as illegal drug trade or prostitution (or the purchase of ethanol during Prohibition) cannot rely upon the rule of law (the judicial system that would otherwise stand ready to arbitrate disputes between them considers these activities outside the law), there are “competing judicial systems” in the form of gangs, who fight out their jurisdictional wars in the streets. The soi-disant advocates of “law and order” have actually withdrawn the rule of law and thereby fostered disorder.

  154. There appears to be a threshold IQ for every occupation beyond menial labor.

    “From the neck down, a man’s only worth a dollar an hour.”

  155. >I’m still waiting for the experimental evidence that justifies the use of the term “theory” in describing anarchocapitalism.

    You’ll have to wait until I post on the topic. A tendentious quibble about “theory” vs. “hypothesis” is way beyond the threshold for threadjacking.

  156. A tendentious quibble about “theory” vs. “hypothesis” is way beyond the threshold for threadjacking.

    The difference between “theory” and “hypothesis” is that a “theory” is well-supported by evidence, while a “hypothesis” only has to be consistent with casual observation. You began this thread by describing certain economic policies as “fantasy”, which is substantially lower on the Science Scale than “hypothesis”: it contradicts common sense (which is sadly quite uncommon).

    We’ve done experiments that justify your denotation. Perhaps the best occurred after World War II: we divided Germany into socialist and (mostly) capitalist parts, and despite the Soviets subsidizing the “Democratic Republic”, it failed miserably in comparison to the side with a freer economy. We also had a nice long-running experiment in Hong Kong, where arguably the closest thing to a libertarian economic policy was in place for decades, and even the nominally Communist Chinese government has seen the wisdom of doing little to change it once they gained legal control over it, and in fact have expanded the geographical extent of the policy.

    The intellectual bankruptcy of leftism is such that these repeated experimental failures of their theoriesfantasies never are acknowledged as falsifying the claims they make. They are convinced that this time things will be different.

    And they have the temerity to call themselves “The Reality-Based Community”.

  157. The Monster, doesn’t the Hong Kong government own all the land? Yes, I believe it does. Pardon my french but how in the fuck can anyone call such a place an example of libertarianism? This is also probably the reason for their low level of taxes. If Uncle Sam nationalized all the land and required you to buy a lease for your former property, I bet taxes could be pretty low too.

  158. Phil, the entire colony was leased by the UK from China, for a 99-year period that ended barely a dozen years ago. Under those terms, it was natural for all land to be subleased, as the government could not honestly recognize ownership of the land beyond the end of its own lease.

    But the government interference with economic activity in HK is almost nonexistent. John Stossel did a great ,a hreef=”http://freedomchannel.blogspot.com/2007/07/abc-2020-is-america-1-with-john-stossel.html”>special in which he showed how little paperwork is required to open a business there. He filled out a simple DBA form to register his trade name, paid a nominal filing fee, and was able to conduct business immediately. Their tax rate is a flat 15%, in stark contrast to the crushing burden from the combined load of US, state, and local taxes in, say, New York City.

    As a result of the freedom enjoyed by Hong Kong residents, they lifted themselves from abject poverty to one of the richest standards of living in the world in about a generation.

  159. John Stossel did a great ,a hreef=”http://freedomchannel.blogspot.com/2007/07/abc-2020-is-america-1-with-john-stossel.html”>special in which he showed how little paperwork is required to open a business there. He filled out a simple DBA form to register his trade name, paid a nominal filing fee, and was able to conduct business immediately.

    Well, the Freedom Index says that the average time to start a business in Hong Kong is six days versus five in the US.

    I find section C.12 of the Anarchist FAQ does a good job of debunking the idea of Hong Kong being a shining example of free-market capitalism.

  160. You sure you want to link to a FAQ that has “Kill Capitalism Before it Kills You!” in its page titles and has a whole section on how anarcho-capitalism is supposedly a contradiction in terms?

    That is an ad hominem attack; I was linking to an argument, and I was not 100% endorsing the viewpoints of the people who made that argument. Should we flat out reject all Objectivist arguments because Ayn Rand was a serial-killer groupie?

    Regarding the supposed oxymoron of “anarcho-capitalism”, they point out that anarchism often evolved as a counterpoint to capitalism, and anarcho-capitalism does not have many roots in the traditional anarchist movement.

  161. >Regarding the supposed oxymoron of “anarcho-capitalism”, they point out that anarchism often evolved as a counterpoint to capitalism, and anarcho-capitalism does not have many roots in the traditional anarchist movement.

    I used to believe this (“no roots in the traditional anarchist movement”) but it turns out not to be true. Look back through Benjamin Tucker and the mutualist tradition to Proudhon. Having done this, I now understand the historical roots of modern anarcho-capitalism in a very different way than I used to. Turns out the “capitalism” is the recent part, and developed when Tucker and other Proudhonian/mutualist anarchists figured out that the labor theory of value doesn’t work.

  162. Phil, it is not “ad hominem” to point out that the source of your information has specific irrational biases that are likely to render them not very capable of providing cogent arguments. For example, they spend an entire two paragraphs in your Hong Kong link decrying the distribution of income in Hong Kong, displaying a redistributionary mindset that no free market capitalist would argue for. So Hong Kong is not a freer market because it doesn’t have perfect equality of income? Nonsense. As I noted before, nobody asserted Hong Kong as some free market utopia, only that it’s better in many regards than say Sweden. You or that FAQ pointing out that Hong Kong is still a mixed economy like every other state comes as no surprise to us.

  163. “No. What I think is: These are the people who go to the wall when the cost of employing someone gets too high. We’ve spent the last seventy years increasing the hidden overhead and downside risks associated with hiring a worker — which meant the minimum revenue-per-employee threshold below which hiring doesn’t make sense has crept up and up and up, gradually.”

    Partly true, but what you are ignoring here is that democratic processes will result in these social programs. They are popular. My relatives in Canada all enjoy their free healthcare and that’s why no major political party can advocate changing that system. So, Eric please have the intellectual honesty to admit that reality, and go to step 2, which is how can these social programs be made efficient and workable? Failure here is not an option.

  164. >So, Eric please have the intellectual honesty to admit that reality, and go to step 2, which is how can these social programs be made efficient and workable? Failure here is not an option.

    Wrong. Not only is failure an option, it’s inevitable. The redistributive state is fundamentally unsustainable, for reasons I’ve discussed in Some Iron Laws of Political Economics. Note in particular laws 2 and 5. As I’ve written elsewhere, we are seeing the end phase of Olsonian collapse now in Greece and California.

    The people can like the idea of generous social programs indefinitely continued all they want. They can like unicorns and the tooth fairy, too. Neither preference changes reality, which is that (as Margaret Thatcher put it) eventually you run out of other peoples’ money.

  165. eric:
    >I’ve been trying to think of a way to get my assets out of anything dollar-denominated while staying in the U.S.

    eh? pretty trivial, surely? 20 years ago, sure, fiddly and expensive for retail investors. but now?

    convert to cash and buy another currency (hint: china — artificially depressed fx rate: but nontrivial sovereign risk).
    alternatively, as an income-generating asset with the same core exposure (relative GDP), buy debt (bonds) in another currency in a noncrippled economy with good legal-environment aka repayment likelihood. ie: 1st world. in particular, look at those economies with good legal/corruption regimes, paying away some potential income upside for certainty of principal repayment (by far the larger risk: eg, the credit crunch).

    so for minimum risk with maximum upside about now, looking at not just near-guaranteed repayment of principal but serious risk of exposure to relative GDP growth upside, i’d be recommending aussie bonds.

    in today’s financial environment: trivial to execute.

  166. better (on further thought): invest in MSCI (World) Energy index. has had top-quartile-hedge-fund performance, year-in year-out ,for about 50 years. we’re talking an average performance nearly 4 times higher than the industry benchmark for Equities, with a fraction of the volatility and almost none of the downside risk.

    as a technologist, consider it a bet on/an investment in, humanity’s appetite globally for energy.

  167. oops. “artificially depressed fx rate” –> to be clear, sooner or later the chinese govt will run out of reserves/capacity/politicalwill to manipulate the renminbi:$ rate and there will be a major correction upwards. incidentally: to the enormous benefit to the US economy (and the EU’s: the EU economy is now much crippled by the china:USA position — the resulting pressure blows-back through the next-largest bloc). much of the last 5+ years’ underlying doldrums in the US are attributable to this single fx-rate number given the weight of trade and the endemic tendency to move production offshore to china (china’s GDP now mostly serves as a proxy for the 1st-world economies’ demand).

  168. It is very sad to hear about your two friends. I hope they will land a job soon and the global economy will recover as soon as possible.

  169. I agree with you on the New Deal fantasy. It’s impossible to redistribute our way to prosperity, and it’s also impossible to print our way to prosperity. It’s tragic.

    Jim

  170. The job market has discarded one and the other is hanging by a thread. Otherwise their future looks pretty damn grim. A and B are two of the luckless bastards who are spiraling down its gravity well. You find it everywhere in Europe. He only has to to adhere to whatever notice period is in the contract he has with the employee. And the way Europe had to deal with it was to allow people to be unemployed. As a small business this means big concerns for me. Longtime unemployment has been increasing for years now. But their behavior is going to be largely determined by the much smaller number who have political influence. I know a man who visitied China and talked to an American professor there who said he liked China because he could do anything he wanted. If you increase the cost associated with a behavior you get less of it and vice versa. EEOC regulations really increase the risks of firing minorities by increasing risk of lawsuits. That makes marginal hires less likely. Nobody has a right to be employed. You get to be employed if you have marketable skills and someone decides to hire you. Things that require reasonable skill and cannot be outsourced. Employment as we understand it is a relatively recent phenomenon in the history of the world. In its present form it was mainly introduced during the industrial revolution to staff factories. Our systems are set up today at their core for a nation of factory workers. It allows a level of central control and a level of hidden taxation that is very beneficial to them. They see their only means of advancement as moving up the corporation. He has been unemployed for several months. It can be positively unhealthy to try work in the skilled trades without being in the union. Taxes and regulation only add further impediments. That also makes it tougher for those at the margin. My advice would be to vote with your feet in that case. Rehiring was more typical in the past when manufacturers would reduce their workforces until inventories dropped and then simply rehire them. I say this knowing I live in an at will state. The trend in the economy was all wrong. State capitalism is designed to fuck people like him. The economy is basically a kind of network. You have to report your foreign holdings every year. If you leave the USA you still have to pay US taxes for some time to come. the growth was in the financial industry rather than the real economy. Me and my crowbar will settle with you in a dark alley some night. Then take the time to learn to use it well. Even selling assets requires a reasonably functioning cash economy. Subject A has shown some evidence of an iron stomach but otherwise he and B score a flat zero on all the rest of these. Either of them trying to cope with India or Thailand would be the stuff of low comedy. Perhaps a remote location may also be suggested. There may be a reason for this. In America we have an Evil Party and a Stupid Party. The people who will are exceptional. Tenement blocks in NYC were occupied by people from one Sicillian village. I used to live in Detroit and briefly considered a job in Windsor. I needed to know whether it would be tax advantageous for me to simply relocate to Canada. One can point out numerous examples of regulations that have immensely improved the state of society. Then figure out what to bring back. This is where a lot of corruption comes into play. Gray enough that you can paper over it with green. This ambiguity adds a lot of risk to business. Federal labor law requires that a notice of labor law be posted. The Compliance Poster Company makes posters which allow you to fully comply with the associated regulations. So what happens is that the senior corporate officers have to take on additional personal risk. That means they want higher offsets. The easy way to do this is to increase the gas tax. The price goes up and people look to use less of it. Easy to understand and implement. The breaking of a particular monopoly allowed competitive forces to drive down the costs of gin and make it much more widely available. There was an outbreak of drunkeness that reduced the city to a den of drunken depravity. So much so that some of the first liquor control laws in the world were passed as a result. Strange how circumstances change things. This despite my complete lack of physical or economic presence in the USA. It could well be that increasing intelligence is valuable everywhere but that the economic value of education has a ceiling usually reached well before graduate school. The bad thing about it is that native apps are going to take a while to catch up and leverage everything the platform offers. I know of dozens of large enterprise customers that are hiring Linux expertise by the boatload. Human labor is very very rapidly declining as a factor of production. That this money is not reflected in GDP is simply one of those things. This is the principal reason that government control of the economy is simply infeasible. GDP is just what happens when the music stops. In the old days rule of law was not so much the rule of experts. There is no similar bureau for regulation itself. Now consider the other end of the spectrum. I maintain that human beings cannot be expert enough to use the rule of law to solve many of the problems we are trying to solve with it. Some of these things are screws. They certainly would have tried if they knew how. Apple controls the ability to install software on the hardware itself. They can brick your phone if they think you are sneaking around their wall. There are many far more important things. Android phones are multi sourced. And I have a really good imagination. Businessmen do not know whether they will be bought out by the government or in competition with those who have. I know how much my customer support people cost. Or whatever other answer you will say is the real intent behind your excess punctuation. Anything Eclipse can do either already is or can easily be implemented in Elisp. The level of integration with anything I would ever use is just insane. The other thing I like about Emacs is that I can customize it endlessly. They suggest that IQ is to success in professional life as height is to success in basket ball. It works pretty well and no governmental interest is required. Not dissimilar to modern torts. citizens who renounce or otherwise lose U. The difference seems to be particularly important in conditions of dealing with novelty. The only person I know who can reliably wax my ass across any gameboard is also one of the handful of people in my social network that I suspect of having a higher IQ than me. Most modern tests are calibrated to it. When I realized one of my best friends was way smarter than me in my own field which was not his it was a bit of a blow to my ego. Suppose you choose a female arbiter and the other litigant is of a religious sect that cannot allow a woman to have authority over a man. He is the one who gets to rule on the controversy. The question is whether it is a good government or a bad one. They can find the information and master the methods by themselves. Last I heard Microsoft was doing a good job of that. Cases are normally brought to the EEOC by aggrieved parties. This means a very expensive legal case with a high probability of a costly adverse judgment. People are putting off maintenance and repair. You cover the human interest very nicely. The propaganda rights of the big deniers are also perfectly in place. Good luck with those old Chicago school ideas of yours. The most recent one I can call to memory is South Ossetia. Last century there were quite a few jurisdiction wars. Each judicial agencies wants to be contracted with every other so its jurisdiction will be extended. You sgould think about why that is. Bush and Obama and the FED under them seemed more fiscally irresponsible than the average European country. The way things look like now I have to give a better grade in fiscal conservatism to Angie Merkel than to Bush or Obama. And frankly I never expected that anything like that can ever happen. They are convinced that this time things will be different. Look back through Benjamin Tucker and the mutualist tradition to Proudhon. You or that FAQ pointing out that Hong Kong is still a mixed economy like every other state comes as no surprise to us. I hope they will land a job soon and the global economy will recover as soon as possible.This is my google

  171. Interesting and provocative piece but where is the evidence for the increasing cost of hiring, increasing regulatory burdens on business? What happened to defined benefit pension plans, what share of American workers now have employer-paid health cover? Have these costs on business fallen or risen over the last decades?

    At the very top of this thread, somebody cites the Netherlands as an example of the European disease of over-regulation. The current unemployment rate in Netherlands is 4.2% and did not rise above 5% even during the peak quarters of the great recession (google: netherlands unemployment rate). Which prompts a general observation about the unemployment rates of individual European countries – the ‘more regulated’ countries suffered much less unemployment-wise during the recession. Germany 7% unemployment, Austria 4%, the Netherlands, Sweden 6%.

    It’s becoming a more difficult and polarised labour market in US and Europe but the reason isn’t labour regulation.

  172. Interesting and provocative piece but where is the evidence for the increasing cost of hiring, increasing regulatory burdens on business? What happened to defined benefit pension plans, what share of American workers now have employer-paid health cover? Have these costs on business fallen or risen over the last decades?Just to add to this a personal observation (take it for what it’s worth): in my experience strenuous physical exercise raises IQ significantly (my guess – as much as half an SD.)And knowing what my IQ is, I’d say that it makes all the difference in the world.I agree with you on the New Deal fantasy. It’s impossible to redistribute our way to prosperity, and it’s also impossible to print our way to prosperity. It’s tragic.as a technologist, consider it a bet on/an investment in, humanity’s appetite globally for energy.so go on………

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