Sheep from Goats: the rise in long-term unemployment

The graph in this article is most interesting. The feature that fascinates me is not the huge crossover from short-term (0-14 week) to long-term (27 weeks or more) of employment, it’s the purple time series describing 15-26-week employment. It has spiked but is now dropping again.

I think I know what this means. It’s the statistical face of the phenomenon I described in Marginal Devolution.

You may recall that in that essay I described two friends of mine, one who’s been squeezed out of the labor market by the rising cost of employment and another who’s hanging on by his fingernails. I said “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.” And I pointed at a cause: “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.”

I think this graph shows on the macro-level what happened to employment after the bubble popped.

The size of the cohort experiencing a near-median out-of-work period between jobs peaked in mid-2009 and has now returned to historically normal levels. I have a strong hunch that this cohort is demographically stable as well – that is, it’s mostly the same people in 2010 that it was in 2000.

The dramatic crossover from short to long-term unemployment in the rest of the working population is, I suspect, the result of my two friends multiplied by umpty-bump million. This is the job market exiling people who can’t generate enough value at work enough to cover the tax, regulatory, and deadweight costs of their employment. And I mean that “deadweight” as a very broad category including the effects of minimum-wage laws, the Davis-Bacon act, union work rules, diversity mandates, and all of the other ways we pile social costs onto employers. Obamacare, of course, will be yet another and can be expected to depress employment still further.

Of course, this can’t go on. It’s of a piece with the skyrocketing deficits even in G8 countries. Latest word is that Great Britain is facing a Greek-style bond downgrade and a debt crisis in the near future; Spain is already there. The state of California, which would be the sixth largest economy in the world if it were a nation, has done nothing to climb out of its budgetary hole because, really, what can it do? Within the political assumptions and alignments we have now, no solution is possible. A minimum of thirty-seven other states and the U.S. Federal Government are staring near-term bankruptcy down the muzzle for the exact same reasons.

The unemployment numbers and the deficit numbers aren’t simultaneously going crazy by accident. They’re two facets of the same systemic illness, two major symptoms of what I have previously dubbed an Olsonian collapse. It took us twenty years longer, but we’re now reaching the same crisis point the planned economies of the Communist Bloc hit around 1990. The regulatory megastate is in the process of being destroyed by its own contradictions.

UPDATE: Those of you who think the last paragraph extreme should note that no less eminent an economist than Robert Samuelson is now writing on The Welfare State’s Death Spiral. But I was there first… :-)

155 thoughts on “Sheep from Goats: the rise in long-term unemployment

  1. I think you’re mostly right – certainly regulation and other non-wage burdens have reduced the incentive for people to take the risk of hiring – there’s an editorial in the Wapping Liar today about that very topic in the UK – http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article7109831.ece
    And the politicians have indeed been borrowing and spending in a way that would embarrass drunken sailors for the last 10-20 years. And yes at some point the bill for this binge has to be paid and we seem to be pretty much at that point.

    However I think you are missing a root cause or two. The cost of computers and robots and household appliances and so on means that a lot of basic jobs from metal-bashing to cleaning to information processing are no longer required. The internet has only helped fuel this process. We don’t (for example) need secretaries or reference librarians because word-processors do the job of the former and google the latter. The cost of clothes is sufficiently low that it doesn’t make sense to darn or repair worn clothes and so on. A CNC machine shop needs one supervisor and a couple of porters not 20 machinists.

    It seems to me that the world – and particularly the developed/top of developing countries – are facing the problem of moving from scarcity driven economics to surplus driven ones. The fact is that these days food, clothing and even basic luxuries (luxuries being defined as things not required for survival) are pretty cheap. Especially compared to how much they have cost historically.

    I don’t know where this will end up but I think that in part we are going to have to expect that people will be less employed in the future and that there will be less and less demand for the simpler sorts of job. High performers will still be needed because they will still add significant value but the bar will continue to rise and those who can’t perform at the top levels will form a large semi unemployed underclass.

  2. >The cost of computers and robots and household appliances and so on means that a lot of basic jobs from metal-bashing to cleaning to information processing are no longer required.

    But historically, healthy economies that shed huge numbers of jobs in one sector have always generated jobs doing something else. Lots of people used to be employed farming and running livery stables; when the farm jobs went away due to productivity increases and the livery-stable ones due to technological change, we didn’t see a collapse in employment.

    And it’s not like we’re not still generating new job categories. “Web designer” is a classic example of one that didn’t exist before 1996, but there are lots of others as well. So I think it’s a mistake to finger productivity or technological change – a serious one, because it diverts attention from the actual problem of Olsonian collapse.

  3. But historically, healthy economies that shed huge numbers of jobs in one sector have always generated jobs doing something else. ….

    And it’s not like we’re not still generating new job categories. “Web designer” is a classic example of one that didn’t exist before 1996, but there are lots of others as well

    I think more jobs are being lost in old sectors than are being created in new ones. I’m really not seeing a need for a lot of relatively lowly educated people. Which is a bit of a problem given that our schools seem to be doing worse and worse at producing educated people.

    Take Walmart or Tesco or any other successful superstore and compare it to what it has replaced. When I go shopping in a superstore I can buy all my food etc. for a week or so in 45 minutes and I encounter a couple of stackers and a checkout girl. And I can even skip the latter if I scan the stuff myself. The ratio of employees to revenue and to number of shoppers is small and getting smaller. Compare this to a village with a butcher, baker, grocery and so on and its obvious why superstores put the rest out of business. Ditto amazon and the bookstore and so on. But the old way employed a lot more shop assistants than the new way does and I’m simply not seeing any requirement for relatively lowly skilled/educated people in the newer sorts of jobs that are coming up.

    I hope we, as society as a whole, find a way to employ these people but I simply don’t see where the new jobs will be found.

  4. @FrancisT: You’re missing the point – even those superstores would hire more assistants if the cost of the employee made it worthwhile.

    You only have to travel to poorer countries (like mine – South Africa) to notice that where the cost of labour is lower, it makes sense for stores to hire more assistants.

  5. >@FrancisT: You’re missing the point – even those superstores would hire more assistants if the cost of the employee made it worthwhile

    And yes, that’s exactly my point. FrancisT, when you wonder about where the jobs for low-skill/uneducated workers are going to come from, you’re asking where the jobs for people who can’t generate a lot of productive result per hour have gone. And the answer seems to be, tax/political/regulatory overhead ate them.

  6. >Of course this can’t go on. It’s of a piece with skyrocketing deficits in other countries

    I agree with you otherwise, but I think we’ll come out of thiis slump as a stable 2nd world country around 2012. Of course the slump will last longer if Obamacare’s tax/regulatory burdens are carried out, and if he brings off an amnesty unemployment will surge like gangbusters, but I think it’s reasonably possible to run a stable, corrupt, inept social democracy in a deindustrialized US.

    >where the jobs for low-skill/uneducated workers are going to come from

    We’d have to rebuild our industrial base to get high employment levels back. You can be pretty dumb and still be useful helping a contractor who’s semi-attached to a busy factory, but if the Democrats were going to let us rebuild, they wouldn’t have ‘financialized’ the old one.

    It is orders of magnitude easier to sue, tax, and break an industry than to build one. The Democrats have won.

  7. excuse me, but just how expensive is it to hire someone in the USA? And what kind of drop in that price could make a significant difference in unemployment? Last time I checked, hiring in the USA was way cheaper than in Europe, so why is the unemployment rate at 10% now?

    besides, wasn’t the current economic downturn created by people in the USA giving credit away like flyers for a rock concert? and banks selling financial products which included that crazy debt?

  8. FrancisT: I think more jobs are being lost in old sectors than are being created in new ones. I’m really not seeing a need for a lot of relatively lowly educated people.

    This sounds about right to me. But whether or not you think it’s like this now, ponder the trend (decades rather than years):

    Historically, new jobs have largely been created at *higher levels of sophistication* (web-design requires more sophistication than most car-assembly tasks). How long can that continue? It seems to me that two factors will interfere: cost of more education and the competition from automation (for example computers/robots with cheap and easy to use computer vision). esr, do you think that the demand for human employees will be able to withstand those? What kind of jobs *available in large number* will people continue to be willing to pay for at rates that society will accept as technology enables fewer and fewer to do more and more?

    Isn’t regulation only adding additional padding to the cost of employment so that we start getting large-scale unemployment earlier than we otherwise would?

  9. # bruce Says:
    > We’d have to rebuild our industrial base to
    > get high employment levels back.

    In broadest terms this is exactly the wrong thing to do. As Fredrico points out, technology has taken over the production of many goods, and what is left of manufacturing is moving to places where labor is cheaper. Again this is basic economics. What does the USA have to offer that other countries don’t? China has low labor costs and low regulatory compliance, and so they make things that need those things, or things where these are a significant part of the cost. What does the USA have to offer? First we have a large market place. Consequently we can compete well with goods where transportation costs are a significant cost. Second, we have a well educated workforce. This means we compete well where there is a significant knowledge input to the good or service. Third we have excellent infrastructure. This means we compete well where there is a need for a stable, high quality workforce. And so forth.

    The desire to get back to the happy days when the US was a major manufacturer is a mistake. The world has moved on. Those sorts of industries are commoditized anyway. American companies need to compete where they have advantage, which is to say, broadly speaking, high value goods and services. The US is still the innovation center of the world. Just as a example: consider farming. The USA is a massive producer of farm goods, but, despite the imagined images of the family farm, and Joe and Fred working the fields, the truth is farming is a massive industrial complex controlled by complex technology. American farms are productive because American farmers and smart, have great infrastructure and use vast amounts of technology.

    Eric is absolutely right, there is a bifurcation. Between those who have the heft to operate in that “smarts” market and those who do not. There is a need in the US for people at lower level jobs, primarily to supply non transportable goods and services (hair salons for example, cannot be offshored.) But the regulatory burden and dead weight costs of employment hit these sorts of business the most. Which is ironic really. They are theoretically design to help the poor and the low paid, but the truth is that they have the most negative impact there.

    In addition to the employment costs, just as bad, perhaps worse, is the dumbing down of American schools. Our primary and secondary schools are horrible, and our colleges which used to be the best in the world, are getting worse by the year. The fact that the Federal government has just nationalized the payment system for our colleges is the beginning of the end for American educational superiority. Those chickens will take a while to come home to roost, but it is the beginning of a very bad direction in tertiary education.

    The fact is that America, and the world, can recover. However, the political systems make it almost impossible for the political class to do the things necessary to make a recovery happen, which is to say, take the shackles off. If you want to see this writ large, look at the health care bill or the stimulus package. It seems to me ironic also, that those who complain that “Wall St. only focuses on short term profilts” should advocate a policy that spends money in the sort term to the great detriment of the long term. Remember, American’s debt service is now $12,000 per family per year. That is for debt service only, not even principal.

  10. So… that’s it? Game over, well played, shame you guys screwed yourselves over in the fifth quarter? The obvious outcomes that I see here are 1) centralized federal employment for everybody! 2) Balkanization as the talented, rich, educated uberclass flees outcome (1) to trade with each other, 3) southern North America turns into an economic wasteland riven by ugly resource competitions and races to the bottom.

    Maybe I’m being overly pessimistic here, but I don’t think it’s by much.

  11. @Frederico,

    I have no idea what it costs in Europe to hire, but I do have an idea why companies are not hiring in the U.S. My family’s company is agriculture based and, until recently, had a lucrative side-business of leasing drivers and large (5 axles and up) trucks to construction companies that needed extra trucks. Tax burdens and obvious costs have been fairly steady over the past ten years; however, other regulatory burdens have greatly increased costs in non-obvious ways. For example, a change in regulations on required protective equipment on the back of semi-trailers resulted in two cost increases. The first was an increase in the raw cost of trailers by about 5%. The second cost was an entirely hidden result. Poorly trained Department of Transportation (DOT) officers started issuing tickets to trucks with the new trailers for failing to meet the now outdated standards. For each ticket, we had a choice of paying the $1000 per occurrence fine plus $200 for a mechanic to certify that the trailer met standards or we had to pay a lawyer $1500 per occurrence plus a mechanic $500 per occurrence as a professional witness to fight the ticket in court. The first choice had the additional problem of directly funding a bureaucracy that created the problem to begin with. Even then, we could live with the costs and keep our trucks rolling.

    The rest of the reason we quit leasing trucks and drivers was an indirect result of regulation changes in banking. Many banks did make bad loans that helped bring about the lending bubble and subsequent burst; however, ALL of the local banks in my part of the country that funded over 80% of the local construction were very conservative on their lending practices. We were also very careful to work only for companies that obtained local funding for their construction. When the lending bubble burst, regulations in the way that banks evaluate real estate changed. Because of this change, local banks stopped lending money for construction and improvement projects almost overnight. The regulatory changes were draconian enough that even the most carefully run banks had to reduce the amount of outstanding debt held by customers. With no more funding, the number of construction projects abruptly changed. Construction contractors at all levels began laying off workers and selling equipment. This caused further devaluation in an already glutted used equipment market. Suddenly, a fairly new semi-trailer that cost $47,000 new and had only gone through an IRS allowable depreciation of $7,000 was now worth only $20,000 on the open market. Semi-tractors that had paid for themselves already but still had over a half-million miles of use left were worth less than $10,000 on the market (all of the value were in the engines and transmissions that were worth more out of the truck than in it). The few construction projects left were “stimulus” projects that were often won by firms that went out of business before the funds were available to start the project.

    Anyway, this is just an example of what happened and why it happened in just one industry. Repeat this scenario, only changing the industry and the regulations, and you can exemplify this scenario thousands of times over. (A quick example to research would be what FTC, FDA, EPA, and the USDA have done to vitamin and health-food industries or you could research what government regulations on medical experts and insurance companies have done to hospitals, doctors, and nurses.) The problem is not the obvious burdens of taxes, its the non-obvious burdens of regulations and requirements that create insurmountable costs to businesses. The interesting thing is that it is also creating a huge political backlash (i.e. the 10th amendment movement and the “Tea Parties”). It is also creating an emerging barter economy.

  12. Jessica Boxer:

    I agree with you on all but your farming topic. The reason that large corporations run most of America’s farm industry isn’t that they are necessarily more efficient, it’s because farm regulation is predisposed to the Con Agras of the world.

    Next time you hear some politician bragging about us still being the “bread basket” of the world, remember that with all the subsidies figured in, every ton of grain we sell over seas costs the buyer about 75% of cost, and you and I pick up the rest of the bill in our taxes (or rather, our children will be picking up the tab).

    I know many farmers who make more money NOT planting anything than they possibly could by growing something because of production controls and subsidies. When you rant about hidden costs of regulation, remember that farming was one of the first and is now the most heavily regulated industries in the country. It’s right up there with pharmaceuticals and petroleum, only those industries still have to right to pass on the cost to the consumer, where farmers pass the cost onto the government as subsidies hiding the actual cost of that regulation.

  13. Don Says:
    > I agree with you on all but your farming topic.

    Don you are correct that farming is a pigs’ trough of subsidies and buy offs. However, our government is so big these days it is hard to find examples where government isn’t interfering significantly. However, my point was more that technology and smarts are the reason why American farms are more efficient than, for example, Vietnamese farms. But I agree, paying people not to grow food, and subsidizing food production are just horrible ideas, so stupid and bizaro-world that only a politician could think of them.

  14. I’m not sure if the advantage of US farms is so much technology-technology as financial technology. The style of agriculture we practice on an industrial is very capital-intensive; Vietnam has plenty of access to farm machinery and crops and consultants, but without the political/financial/economic/legal infrastructure to make those investments viable they’re stuck doing everything the low-investment low-return way.

  15. Alan Greenspan, in his book _The Age of Turbulence_ a couple of years ago blamed the US educational system for increasing income disparity in the US. Because the educational system produces fewer and fewer really well educated folks, he argues, the demand for them is higher. Since they’re in higher demand, they attract disproportionately higher wages and income disparity increases. Here’s a quote from page 399:
    —-
    What do we do to their learning process that requires business recruiters to dismiss vast numbers of “educated” applicants for modestly skilled jobs because they cannot write a coherent sentences or add a column of numbers accurately?

    It is not surprising that, as a consequence, too many of our students languish at a too low level of skill upon graduation, adding to the supply of lesser-skilled labor in the fact of apparently declining demand.
    —-

    Add this into ESR’s equation of higher costs to hire and you have a disaster for the weakly educated. Not only do they not provide enough added value to be worth hiring, but there are more and more of them around, driving demand down further.

  16. ESR (and Everyone): Since we have a fairly large concentration of well educated and intelligent folks here, what would be the solution to the education problem? I think we can all agree that throwing money at schools isn’t helping (and I would argue that it’s actually harming education by making it more “gadget focused” than is really helpful).

    Anybody got a real suggestion on how to fix this?

    My gut tells me that we should probably go back to basics at the primary level (at least through 3rd grade) to set a solid foundation and stop performing instruction with a herd mentality. I think we should also teach people HOW to learn – how to pick a topic, narrow/focus it, perform research, think critically about the evidence, form hypotheses, and test/evaluate those hypotheses. They should also be taught critical thinking and basic philosophical ideas such as the the Socratic Method that will assist them with their learning throughout their lives. With these basic tools, they would be prepared for a significantly more advanced and faster paced learning environment in secondary school and advanced education, as well as the ability perform independent research of significantly higher quality that the most people could do today.

    It seems to me that, as we have abandoned the basics of the liberal education over the last 100+ years, the quality of the product produced (a thinking person) has degraded accordingly.

  17. # Brice Says:
    > The problem is not the obvious burdens of taxes, its the
    > non-obvious burdens of regulations and requirements that
    > create insurmountable costs to businesses.

    Thanks for your interesting input and story Brice, I am sorry to hear of your woes. However, I wanted to point out one thing that you didn’t highlight, though I am sure you are well aware of it. The problem is not just the regulations themselves, but also the uncertainty as to what the regulations mean, and how the regulations are going to change in the future. This was very evident in the banking market most of last year. There was huge uncertainty in that market as to what the government was going to do. There was so much hot talk, and threats, and political posturing that the banks, even the very well run banks, did not really know what the regulatory situation would be in the near future.

    What happens when this occurs is organizations go hyper conservative. If you don’t know what the rules are on lending for example, you only make loans to gold plated clients. For sure, you don’t take the risk of hiring people, or building new factories, or investing in new infrastructure. If the government could pass a law that doubled your employment costs, why would you hire? Hiring is always a long term investment.

    So again, it is not just the regulations themselves, but the massive uncertainty of the regulations. The economy can handle fairly onerous regulations, because it is such a powerful wealth generating machine. However, unstable law, unpredictable law, uncertain enforcement, unreliability of contracts, and money that doesn’t fulfill its basic purpose — holding its value — makes business extremely difficult to conduct. Hyper conservatism is the order of the day. High unemployment, low lending rates, low investment, poor stock market returns, and so on are the result.

    > The interesting thing is that it is also creating a huge political backlash
    > (i.e. the 10th amendment movement and the “Tea Parties”). It is also
    > creating an emerging barter economy.

    I have to say, although I like a lot about the tea parties, I am worried by them. What we need is cuts in spending and major reform of the entitlement system. Yet which of these is the tea party proposing? If you look at their “Contract from America” what I see is that they are going to save money by eliminating “waste and fraud.” We have heard that before. They oppose earmarks, which is good, but not significant, earmarks are only a tiny fraction of the problem.The tea party is more for maintaining the status quo of the Bush years than making the radical cuts necessary. So I don’t see them as the salvation. More the kid with his finger in the dike.

    Barter economies will be squashed mercilessly by the IRS if they become significant.

    Here is my plan to fix the economy, which of course will never actually happen:
    1. Monetize all federal obligations, Medicare, Social Security and so forth — convert them from empty promises into tradable debt instruments.

    2. Sell off every government asset we can find (land, buildings, equipment, the radio spectrum, mineral rights, the post office etc.) in a sale. This can be done in a variety of ways so that the market doesn’t glut and run out of capital. Define some very strict criteria for the ones we keep, and demand that at least half of what we have is sold off.

    3. Pass a constitutional amendment that eliminates the income tax, and authorizes the federal government to impose a universal sales tax on all goods and services in the USA at point of delivery. Fix the rate at 10%.

    4. In the amendment allow an extra 5% sales tax which can be imposed only when the Federal reserve has outstanding debt, and have that 5% paid exclusively to pay down the debt principal.

    5. In the amendment insist that the Federal government cannot spend any more money on or off budget than they collected in revenues the previous year.

    6. Give the president a line item veto. Give every congressman a right to vote for a bill but against any individual provision in the bill. The bits of the bill without sufficient votes are cut out of the bill.

    Do that, the economy will bloom like a flower, we will all be richer, and we will have a sustainable future. Of course, things will be particularly good for me, since the only way this will pass is if I become the tyrannical dictator of the USA. But please consider that I will be a beneficial dictator, kind to everyone, especially my friends here in this blog. (Except Jeff Read of course, who I will make work in a communist coal mine. But don’t worry Jeff, I will give you a really nicely designed shovel. You will appreciate the smooth handle, and the easy of use shoveling as you choke on the toxic coal dust. :-)

  18. Don:

    I’m sorry, but you’re making the same mistake too many other do. Not everyone can learn to educate themselves.

    There are three components to mastery: 1) Talent or basic capability; 2) Understanding, which is limited by both the quality of instruction and the student’s receptivity as well as by #1; and 3) Practice.

    A certain subset of students is limited in what they can learn. Many will never get beyond basic reading, writing, and arithmetic. These people are not worthless by any measure, but they require different instruction. They will need to learn skills.

    Another subset of student is limited by their instruction. Some teachers are incompetent. Some are actively malignant. We can’t cull them. It’s really difficult to fire a teacher.

    Another subset of students isn’t very receptive. I live in an upper middle class suburb of Dallas. One of my daughter’s friends loudly proclaimed that she didn’t like school because “they make you learn”. I told my daughter later that I didn’t like her friend’s attitude. Knowlege is power. Ignorance is helplessness.

    There are many places in this country where that attitude is widespread, and worse yet accepted by parents.

    For the basics nothing will ever replace repetition. “How do you get to Carnegie Hall?” “Practice, practice, practice!” Teachers call that “drill and kill”. They don’t like it because it’s boring for the teacher.

    We have our daughter take extra arithmetic at aftercare. She complains, but if her arithmetic isn’t solid Algebra won’t be any fun.

    I personally don’t think we can fix education at the national level. It may not be practical at the state level. The local level has too little control to fix it. It will be extremely hard to give control back to the local level. If the local level gets control back some districts will still not fix the problem. Some will.

    You’re right, it’s not a funding issue. Given a teacher who knows the subject, and a receptive student with the background, you can teach Quantum Mechanics with a blackboard and chalk. We did for decades.

  19. Don Says:
    > Anybody got a real suggestion on how to fix this?

    Yes of course. The solution is not complicated at all. Simply privatize the public school system. How? Sell them all to private industry, and perhaps split the money up amongst all parents. Have parents pay for their children’s education, and demand a quality return on their investment. If necessary fiddle with the tax system to help pay for it.

    The government controls schools in a brutal way. Consequently there is virtually no innovation in the system at all. Don, you and I could think of a few ideas, but frankly neither of us knows squat about educating kids. What we need is the innovative discovery mechanism of the market, with goals set by parents, the consumers of the service. What does it matter what you or I want from the schools, surely it is what parents want that matters.

    Of course there are hundreds of questions about this, but think about the vision: every few blocks would have small innovative schools trying hard to fend off the competitive school down the block from stealing their students. Fighting hard to make sure the parents are satisfied with what the students were learning.

    How much would it cost? Consider this simple calculation: Ms. Ramesey, a teacher with five years experience strikes out on her own. She makes about $50,000 a year in the school system. She rents a room next door to a nice park, and near the YMCA. She recruits 30 students for her class. Ms. Ramesey’s costs are about $50,000 for her salary, plus $10,000 for benefits and taxes, $10,000 for the room and furnishings (bought on lease, second hand), $3,000 for materials, $2,000 to sign the kids up for a few off peak hours classes at the Y, $3,000 per year to hire an outside agency to manage her school, and $2,000 for advertising. Her total cost is about $80,000 per year. Split between her 30 kids that is about $2,500 per year.

    Ms. Ramesey is an elementary school teacher, and consequently realizes that most of her time is spent baby sitting rather than actual teaching, which is her core skill. So she rents a couple more rooms, and hires two trainees to help out. She brings in another class of 30, and she teaches one in the morning, and a different class in the afternoon, One trainee works with the other class alternately with various education games and fun pursuits. There is also a 30 person pre-K class run by another trainee. Ms. Ramesey’s Academy also adds on extended hour facilities to baby sit other kids before and after school to accommodate working parents. She provides a bus service to transport the kids to other local schools,

    By this point Ms. Ramesey’s expenses have gone up to about $180,000 per year. She has reduced her costs to capture more kids. $2,000 for elementary, $1,500 for pre-K, $1000 per year for before and after school, of which she has 30. So she is making $195,000, so she makes a nice profit too.

    Now consider this: Ms. Ramesey is charging $2,000 for a primary education that would almost certainly be better than MANY kids get in public schools today, and parents control it entirely. She charges $2,000 per kid, which is less than one fifth of what it costs to educate this same kid in public school. So what we are talking about here is a minimal level of education for a minimal cost. So questions like “where would poor people get $2,000 per kid” are not really relevant: five times that money is already being spent.

    Mr. Kelso runs the “Academy For Excellence”, which costs $5,000 per kid, but his teacher class ratio is more like 8:1.

    Of course all this assumes a replication of the public school system in private education. With a true innovative market the nature of education would undoubtedly change quite considerably, along with the parents’ relationship with whatever organization provided the school. For example, as you know many large companies provide day care for their employee’s kids. Why not school too? That would be a great benefit to attract and keep employees, especially guilt ridden mothers.

    OK, I think I have said enough already.

  20. > besides, wasn’t the current economic downturn created by people in the USA giving credit away like flyers for a rock concert? and banks selling financial products which included that crazy debt?

    Umm, no.

    You’re ignoring the role that regulation played in the credit bubble. You’re also ignoring the fraud that Fannie and Freddie did on the market. You’re also ignoring the fact that ratings basically had the force of law and were generated by regulated companies. (Banks have to maintain a certain level of assets of specific types. Regulation defines those types, and pushed crap onto bank balance sheets. When the crap went down, it took the banks with it.)

    At best, regulation is systemic risk. It’s typically corruption with a side of “monopoly of force”.

    Regulation that promotes “social justice” can not be economically sound.

  21. esr is pointing out that more and more people are getting priced out of the labor market.

    I think we can judge the size of the market for low and semi skilled workers in the USA. It’s roughly equal to the number of illegal aliens. Our payroll taxes and employment related regulations make citizen workers more expensive than the value of their labor. This gives undocumented workers in the cash economy an unfair price advantage over citizens.

    I’ve said this before. Am I beating a dead horse, or merely pointing out the blindingly obvious?

  22. > The tea party is more for maintaining the status quo of the Bush years than making the radical cuts necessary. So I don’t see them as the salvation. More the kid with his finger in the dike.

    You say that like it’s a bad thing. Perfection is rarely an option. The real question is what’s both plausible and good enough.

    We can probably handle $100B/year deficits, the last deficit under a Repub congress. (The deficit then was decreasing by $50-100B/year.) Even if we can’t, it’s not an imminent threat.

    We’re currently running >$100B/month deficit, or over 10x as much. We can’t handle that very long.

    Yes, I know that the $100B/year didn’t include everything that it should. However, at that level, it’s much easier to get things into the books because the books aren’t scary. $1.5T/year is so scary that cooking the books even more is the most likely result.

  23. Andy Freeman Says:
    > Perfection is rarely an option.

    Indeed, but they are far from perfection. They are not advocating any serious cuts, and generally, one of the tenets of the Tea Party is “protect social security and medicare.” Your $100bn does not factor in the fact that these entitlements are coming due right now and will destroy the economy. The Tea Party is on the wrong side of this one entirely.

    You say we can handle $100bn, but for how long? Can we keep borrowing money forever? Don’t you have to pay a loan back eventually? You are caught between a rock and a hard place. Either you let your principal grow up and up, and eventually your debt service becomes more than your income, or you devalue you debt by printing more money, which increases inflation killing your money source to pay the debt and increases your bond interest rate, increasing your debt service even faster.

    It is insanity to think that you can borrow your way out of poverty, unless you are investing the capital into something that can produce value, which we are not.

  24. @Brice

    thanks indeed, that was a very informative post! But i understand that the real problem you point at is regulatory (or rather, mis-applied regulation), not taxation per se, right? which is what ESR is claiming, if I understood him correctly

    in europe, the real obstacle to hiring is that it is basically impossible to fire people, but that’s true only for those with a permanent contract. What commentators from the other side of the atlantic miss is that it is true that if you hire someone with that type of contract is very very difficult to find them later on, but 1) that’s true only for the public sector, most private firms would find other legal ways to achieve that (declaring bankruptacy being the most drastic, but effective) 2) nowadays, people with permanent contracts are a protected species in most countries. In italy, it’s been more than 20 years now that a new law was introduced, allowing for extremely flexible contracts, which on top of that were abused massively by employers. For instance, there are several type of contracts in which the employee gets ZERO benefits, and a scheme to help young people just off from university to get american-style ‘interships’ resulted in a couple of generations working free for months at a firm, only to be subsituted by the next wave of new graduates 3) in some countries, such as spain, italy france, but also in the UK, ‘black (i.e illegal) jobs’ are very common. In some parts of europe, or in certain professions, is the norm. My lawyer friends in italy feel it’s only natural that your law firm pays you only when it feels like it, if you are an apprentice. And when you are an apprentice, you work like a slave.

    Just an example, to give everybody here a more realistic idea of state-oppressed europe …

  25. FrancisT,

    Cheap food is not sustainable. The planet can only provide so much petroleum and phosphorus — inputs for intensive agriculture such as what we practice — and its ecosystems can only tolerate so much fertilizer and pesticide runoff. And then there’s the public health issue: pesticides on our veggies and grains, hormones and antibiotics in our meats, HUGE corn subsidies that encourage the use of corn by-products in processed foods that fatten us like cattle for the slaughter. And — gee whiz, it turns out that our heretofore relatively unregulated health insurance industry has a vested financial interest in keeping you sick with cheap garbage food, so it can reap the profits on all those treatments you bill to insurance. This is the price of cheap food. Better for us and the planet that food be local, organic, and whole than cheap.

  26. About the idea that technological breakthroughs increase unemployment.

    Absent a minimum wage law, everybody is employable at some price. To have a 0% unemployment rate, all we have to do is repeal one law, the minimum wage law.

    If I could pay a dollar an hour, or a dollar a day, for low-skill labor, I’d have people cleaning my bathrooms every morning, mowing and weeding my yard for me, babysitting my kids every afternoon, etc. When the economy was down I’d hire skilled labor too: artists could create new art to decorate my home every week, cooks could prepare me three meals a day, down-on-their-luck computer programmers could write software I thought was interesting, and so on. I could have an entourage of attendants to follow me around and dress me for each appointment I have, as if I was royalty. (OK maybe not… I like my personal space.)

    I’m not saying a dollar an hour or a dollar a day is enough to live on. I’m only saying $1 an hour is better than $0 an hour.

    Repealing the minimum wage would have at least that one good effect any time the unemployment rate was greater than zero, and technology has nothing to do with it, because technology doesn’t change the fact that human desire is infinite. In a world of 6 billion people, somebody can always think of something for you to do at some price.

  27. Federico Says:
    > (declaring bankruptacy being the most drastic, but effective)

    Excellent point. The nature of the free market is to try to route around obstacles, including regulations intended to reduce the freeness of the market. If permanent employees are too expensive to allow a company to stay in business, then companies will find a way to “reboot” (go bankrupt and reincorporate, perhaps) before continuing to provide a product that the market desires. And the (presumably lower) cost of rebooting will be passed onto the consumer instead of the cost of retaining unnecessary or undesirable employees permanently.

  28. Federico Says:
    > And when you are an apprentice, you work like a slave.

    Apprentices do not work like slaves. Slaves are the owned property of the slave owner and are compelled to work by violence and the force of the state. Apprentices are free to choose what contracts they enter into. The comparison is vile.

  29. # Jeff Read Says:
    > our heretofore relatively unregulated health insurance industry

    You cannot seriously believe that? The health insurance “unregulated”. I think you have been eating too much pesticide infected corn, it has addled your brain.

    > has a vested financial interest in keeping you sick with cheap garbage
    > food,

    I tried to read your link. It was hard to cut through all the layers of bs to get to his point, but when you arrive there you have to laugh.
    Let me just point out that “sick” customers are a liability on insurance companies, not an asset.

    > This is the price of cheap food. Better for us and the planet that food
    > be local, organic, and whole than cheap.

    Perhaps you should consider a move to a small African village? Food is local, organic (actually covered in cow shit) and whole. Few pesticides no non organic fertilizers. When I was there the delightful villagers gave me some pottery that they had died red with untreated cow blood. Doesn’t that sound appealing? Your paradise awaits you Jeff.

  30. > besides, wasn’t the current economic downturn created by people in the USA giving credit away like flyers for a rock concert? and banks selling financial products which included that crazy debt?

    There were a number of causes, none of which individually was obviously a problem.

    1) Fannie Mae and Freddie Mac (I can never remember the actual acronyms.) established a market for mortgages. The lender doesn’t have to hold the mortgage, collect payments, and risk default. They can sell it to someone else. FNMA and FHLMC were conservative about what loans they would buy.

    2) In the Carter administration Congress passed a law that where prudent, banks must lend where they take deposits.

    3) Securitization of mortgages. During the Clinton administration mortgage backed securities became widespread. A mortgage backed security consists of a part interest in a number of mortgages. It encapsulates the risk spread of a very large lender. You can maximise your revenue if you make a certain number of riskier loans, if you are big enough. A small lender has to be more conservative, because each loan is a larger part of the portfolio. A mortgage backed security lets everyone play with the big boys. It also depends upon everyone upstream being totally honest.

    4) During the Bush II administration there was a push for the “Ownership Society”. The idea was that people who own homes have a bigger stake in the future, and will act more responsibly. There was pressure to relax lending criteria both at the local level and at FNMA and FHLMC.

    5) The maximum size of the riskier mortgages that FNMA and FHLMC would buy was increased, in the name of “fairness”.

    6) The tax law regarding profits on the sale of a primary residence changed. Before, you had to roll them over into the next house within a year to avoid taxes. Now they’re tax free.

    7) Banks became heavily leveraged. The ratio of deposits to loans went down. Various accounting practices made things look better than they were.

    8) Credit Default Swaps allow financial institutions to hedge the riskiness of their portfolio. It makes them more blasé about risk. These became widespread during the Bush administration.

    9) Many of the loan origination companies started fouling the waters downstream of them. They started lying about everything about the loans: the value of the properties, the finances of the borrower, everything. Nobody downstream cared until too late; they thought they were covered.

    10) The trade deficit means plenty of foreigners have dollars. They quite reasonably don’t want to stuff them into a mattress. They invested them the only place you can invest dollars, the USA. This led to a number of bubbles, including commercial real estate in the 1980s, the internet bubble, and the oil bubble, as well as…

    11) The huge amounts of money available caused residential real estate price inflation, yet another bubble.

    12) Everyone started to doubt the value of those mortgage backed securities. Most of them weren’t all that bad, if perhaps not as good as advertised. Most people pay their mortgages. If they can’t, a healthy real estate market lets them get out from under, if they aren’t too leveraged. Still, with no easy way to accurately appraise them, the market for them dried up.

    13) Mark to market accounting forces a bank to value securities at the price at which they can sell them. If the bank can’t sell them that price is $0.00. Suddenly the bank is insolvent.

    14) The easy money for mortgages went away, so more people had to default on their loans. The people most likely to default had jumbo interest-only loans.

    None of these alone was enough. It was all of them together. The political pressures came from both sides of the aisle.

  31. techtech says: I’m not saying a dollar an hour or a dollar a day is enough to live on. I’m only saying $1 an hour is better than $0 an hour.

    What do we do when those jobs are not enough for people to buy food and shelter? Let them starve? Give the difference in benefits? If so, what incentive is there for them to do the work? (Though of course, there’d be lots of jobs for people assessing what that difference is..) I think a just-about liveable citizen salary could be a solution; largely because it’s simple — no minimum wage, no (additional) benefits, no exceptions, no assessments.

    I agree that it will be easy to find things people want done; I don’t think it will be easy to get people to do them. They’ll get the government to tax you before they become your entourage. I guess you could argue that’s what they’re doing…

  32. Carl:

    Nobody in the cash economy gets $1/hour. They do find ways to live on what they get. I suspect more people will ignore ordinances about unrelated people living together.

    All those people hired out the back door or the Home Depot parking lot could also speak English and vote, except that citizens are too tracked, checked, and taxed.

    Some people cannot hold down a job for more than a week or so. Should they be forbidden to work at all? In effect, that’s what our taxes and regulations do.

  33. Federico Says:

    April 29th, 2010 at 11:58 am
    @Brice

    thanks indeed, that was a very informative post! But i understand that the real problem you point at is regulatory (or rather, mis-applied regulation), not taxation per se, right? which is what ESR is claiming, if I understood him correctly

    The banking crisis is the insult added to injury. Now, with the increased employment taxes and regulations, we’re being injured yet again.

  34. Jeff: unregulated health insurance industry has a vested financial interest in keeping you sick with cheap garbage food

    Since the best-case scenario for an insurance company is that you pay your whole life for insurance you never make a claim on, I don’t think this statement passes the smell test.

    Anybody got a real suggestion on how to fix this?

    I think privatizing education would be a big pill to swallow that might very well turn out to be so difficult to do that we wouldn’t do anything. All we really have to do is allow for competition between schools and I think we’ll be most of the way there.

    While we all fool around with health care and other crises de jour, the real crisis is that the level of actual education received by the average high school graduate started dropping in the 1970′s and hasn’t stopped dropping. If the decline doesn’t stop, we eventually (and arguably already have) reached a point where we don’t have enough smart people to maintain our technological culture. That’s a big fat crisis from which there is no recovery that takes less than a generation.

  35. > Carl Says:
    > What do we do when those jobs are not enough for people to buy food and shelter? Let them starve?

    I don’t know, and I’m no agricultural expert, but I can’t help but notice that even in the high-priced U.S.A. you can feed a man plenty of bread and rice for under two dollars a day or $730/year. Given that the average income in the U.S.A. is in the vicinity of $50,000/year, I’d say its going to be a rare person who wouldn’t be able to earn, borrow, or beg the thousand dollars a year he or she needs to barely survive with minimum nutrition.

  36. …The political pressures came from both sides of the aisle….

    Certainly true that both sides dallied with such politically-motivated insanity, but only one side was utterly unmoveable with respect to their sacred cow…to the point of blatantly lying about the stability of such institutions and instruments with a sincerity that would make Baghdad “No tanks around here” Bob blush.

    History should justly damn the Democrats for their especially idiotic economic plank….and damn everyone else for being so spineless that they played along for votes, until it was too late.

  37. To play devil’s advocate to myself, is it truly possible to outlaw a job (and the corresponding product produced by the job) based on a price range? Won’t a business simply pass a higher labor cost onto the customers and/or reduce their profits, but still make some profit? Yes, of course businesses will try to profit, but minimum wage increases will tend to result in higher prices which will tend to cause decreases in demand for products produced by minimum-wage workers, i.e. low-end products, mostly.

    So the minimum wage law has the same effect as if the market lost some interest in products produced by minimum-wage workers. There may be some hypothetical equilibrium point where the market still wants all the low-end products even at the higher prices, but Congress apparently has never hit the correct minimum wage or else there would be zero unemployment among people willing to work for minimum wage, which I’ll guess has never been recorded in history. (Correct me if I’m wrong.)

    If businesses could hire every last unemployed person at minimum wage, and still make a profit, they would, because it’s in their self-interest to do so. Either the unemployed people are too overextended financially to bother taking a minimum wage job (their fault), or the unemployed people are too proud to work for minimum wage (their fault), or the minimum wage law has priced the unemployed people higher than any value they offer to society (the government’s fault and/or God’s fault).

    Therefore, the minimum wage is a failure, or rather, it successfully forces the poorest people to compete for the same pool of wages. Those who win, earn the minimum wage, those who lose, become unemployed. Without a minimum wage, all those people would have been employed, some for more, some for less.

  38. I haven’t rad the whole thread yet, so I hope I’m not repeating anything.

    Here’s an idea. We need more craft employees doing custom, one of a kind work. Things you do with your hands, or relatively unique things that you make in small lots via computerized manufacturing.

    Think Make magazine for money. Lots of people have this kind of talent.

    Yours,
    Tom

  39. Bruce: Will the US still be a “2nd world country” if there aren’t any other countries doing any better? The only country that seems to be remotely floating above it all is China, and I for one don’t buy it for a second; China simply reeks of USSR-style message control sitting atop a rotten core. (The difference is that you can see the rotten core in the democracies.)

    Pretty much every politician in the world bought the whole entitlement tomorrow = votes today line, which remains what is really killing us. The US isn’t unique on that front, if anything, it has resisted better than most, although nowhere near enough. The debt crisis, for all its size, is merely a precipitating event; had our governments been healthy and had reserves, I don’t think we’d still be talking Great Depression 2. (Assuming we even had the crisis in the first place, since a healthy government that didn’t spend spend spend would probably not have created the regulatory incentives that produced this crisis in the first place.)

  40. Here’s an idea. We need more craft employees doing custom, one of a kind work. Things you do with your hands, or relatively unique things that you make in small lots via computerized manufacturing.

    Unfortunately those are all skilled jobs. We’re not training skilled workers. People used to learn the basics in high school.

    Hobbyists don’t count. I can hack something crude together out of plywood. I am not a carpenter, let alone a cabinet maker or machinist.

  41. “But historically, healthy economies that shed huge numbers of jobs in one sector have always generated jobs doing something else. Lots of people used to be employed farming and running livery stables; when the farm jobs went away due to productivity increases and the livery-stable ones due to technological change, we didn’t see a collapse in employment.”

    Yes, but there is a hypothesis to consider. What if the jobs that are being eliminated are the low-IQ ones and the jobs being created are the high-IQ ones? Which sounds very plausible to me as the low-IQ ones correlate with the ones that are easier to automate.

    So what if – and I find that likely – the IQ needed for getting employeed creeps slowly upwards – 80, 85, 90, 95, 100 and on and on – and of course that must result in umployment if the Flynn effect cannot keep the pace with it.

    Of course there are many things speaking against this hypothesis. One of them is that paradox an AI researcher whose name I have forgotten have discovered, that it is somehow much more easier for a computer to be a genius in chess than to walk like any 5 year old kid can walk. Or any cat. However I think this doesn’t really an argument against it. Designing robots who carry sacks like humans may be hard, but instead we have eliminated the whole sack thing and basically load containers on ships by cranes and that is easy.

    Another argument could be that more developed technology is easier to use, like the iPhone. Dead simple. But my argument is not against the IQ barrier in operating technological devices but simply the IQ barrier in outcompeting machines at your job.

    What do those people who all they could do was to load sacks up to a ship or work on an assembly line should do now? Are there enough low-IQ jobs left? If not for all that governmental intervention, would there be enough low-IQ jobs? In what form? Loading sacks up to a ship manually again, or something very new, but something that’s despite its newness can be done by a low-IQ human better than by a machine?

  42. Education: “Anybody got a real suggestion on how to fix this?”

    I don’t but I can at least point to some of causes of it. I know it sounds very logical to the rationalistic mindset of programming- and science-oriented people that every problem must have a systemic, mechanical cause which could be fixed as one fixes a bug or in the worst case as one refactors a whole solution, but the sad fact is that it isn’t so.

    Culture counts much more than anything else, for many reasons, the foremost of them is that it is culture, that, through political preferences, political pressure, creates the actual systemic causes in the workings of politics.

    So if basically I would recommend starting by looking at cultural changes between 1950-2000. Of course it is very hard to analyse them without descending into the realm of vague opinions – one way out of that, one way to analyse cultural changes in predictive and at least somewhat formal ways is to look at changes in time preference.

    Time preference serves as a useful and predictive abstraction of changing cultural values.

    As in: the high time preference way of getting a degree is “I want a paper with degree X printed on it as easily and comfortably as I can get it because people with a paper with degree X printed on it are being paid a good salary as of NOW” vs. the low time preference way of getting a degree is “I want knowledge that gives me enough productive ability to produce lots of value throughout my whole career which if surely will pay well in the long run because employers will be competing for me”.

  43. Shenpen Says:

    April 29th, 2010 at 3:34 pm

    Yes, but there is a hypothesis to consider. What if the jobs that are being eliminated are the low-IQ ones and the jobs being created are the high-IQ ones? Which sounds very plausible to me as the low-IQ ones correlate with the ones that are easier to automate.

    Most of the low skilled and semi skilled jobs have not gone away, at least here in the USA. They’ve moved to the informal economy.

    Similarly, automation replaces labor when it’s cheaper and more reliable. The cost of labor is artificially high.

    People, even with low IQ, are much smarter than policy makers credit. They can easily tell which side of the bread is buttered. People act in response to their incentives. Right now the incentives are more than perverse.

  44. “Similarly, automation replaces labor when it’s cheaper and more reliable. The cost of labor is artificially high.”

    I understand that well enough. But it into a bigger perspective. A 80-IQ guy is replaced by the machine whose yearly cost (depreciation, interest, repair &revision, energy, lubrication – I’m actually working on a machinery costing software module these days) is like $2000/year. And also suppose that there are no low-IQ jobs being created, only mid-to-high IQ ones like web design. Should said guy try to live on $1500 a year?

    Basically I can see only one solution that is both economically and morally sound – that such automation should increase productivity so much that prices should be dropping like a stone, with the answer: yes, $1500 a year but a pair of shoes costs like 50 cents so $1500 a year is actually enough.

    In other words, the economically sound and morally correct effect of automation should be a huge deflation of prices. Now I’m not Keynesian so I don’t have much against deflation, just the opposite, I think the typical way of workmen to reap the benefits of technological progress should not be in higher wages but in MUCH lower prices. This is both economically logical and historically more or less observable in the long run.

    Now. Basically what follows from it is that the real problem is not the cost of labour but the inflation of the money supply.

  45. Shenpen Says:
    > What do those people who all they could do was to load
    > sacks up to a ship or work on an assembly line should do
    > now? Are there enough low-IQ jobs left?

    At some price, yes, there must be, although that price may be below the minimum wage.

  46. > Absent a minimum wage law, everybody is employable at some price.

    The problem with this, when theory meets reality, is that the people who can’t earn $7/hr are actually going to make life harder for you, not easier. Most of them will not be trustworthy and self-managing. And with a whole entourage of them, you’ll have serious problems.

  47. So the minimum wage law has the same effect as if the market lost some interest in products produced by minimum-wage workers. There may be some hypothetical equilibrium point where the market still wants all the low-end products even at the higher prices, but Congress apparently has never hit the correct minimum wage or else there would be zero unemployment among people willing to work for minimum wage, which I’ll guess has never been recorded in history. (Correct me if I’m wrong.)

    You’re wrong. It’s not just a question of low-end products; it’s a question of the productivity of the various segments of the workforce.

    The effect of minimum- and prevailing-wage laws is to prevent lower-skilled workers from competing with higher-skilled workers, which is why labor unions support them.

    The employer will try to pass the higher wages along to its customer but if they’re trying to sell at above the equilibrium price, they’ll have a tough time finding customers willing to pay what they want to charge.

  48. > You say we can handle $100bn, but for how long? Can we keep borrowing money forever?

    In some circumstances, yes. (Those circumstances involve growth that significantly exceeds $100bn/year.)

    Let’s take a smaller number – do you really think that the US govt couldn’t handle $100/year forever?

    I don’t know what the sustainable number is. It may be less than $100B/year. However, it’s almost certainly less than $1.5T and we can sustain $100B much longer than we can 1.5T.

    > Don’t you have to pay a loan back eventually?

    I was going to write that you might have to pay back a given loan, but a requirement to pay off a given loan doesn’t imply that you have to get out of debt. Then I realized that it’s possible to have loans that aren’t ever paid off. Consider preferred stock.

    So, no you don’t necessarily have to pay off a loan, and even if you do have to pay off a given loan, that doesn’t imply that you must get out of debt at any point.

    I’m not comfortable with $100B/year, but it’s absurd to equate it with $1.5T/year.

    More to the point, the tea party folks, however imperfect, are basically our only hope. That’s why dumping on them is dumb. (If you’re going to say “this is the smart way to deal with the problem”, doing dumb things is counterproductive….)

    Disagree? Where’s the 30% of the population who is willing to go further than they are? Seriously – where are the people who you expect to support your plan right now? How many of them are there?

    I say right now because many of the tea party folks have become far more sensitive to govt spending in the last year or so so I think that they’re the folks who can be persuaded to go further.

    If you don’t have the numbers now and don’t think that the tea party folks can be persuaded then I’ll ask who you plan to persuade.

    Perfection is not an option.

  49. The Monster Says:
    > You’re wrong.

    You say I’m wrong but then everything you wrote after that seems to agree with me. Maybe I didn’t understand. Or maybe you replied too fast.

  50. David McCabe Says:
    > > Absent a minimum wage law, everybody is employable at some price.
    > The problem with this, when theory meets reality, is that the people who
    > can’t earn $7/hr are actually going to make life harder for you, not easier.

    Of course, strictly speaking, some people are not employable at any price. Somebody who doesn’t want a job, for example. Somebody in a coma. Somebody you think will kill the golden goose and raid your savings account.

    But for everybody who needs money and is willing to try even a little, there is some low price where an employer will think of a task for them to do. Move all the rocks from point A to point B. Or, I’ll pay you a dollar a day forever until the day I see a weed in my yard. Then you’re fired. Eventually I’d find somebody who would do a good weeding job for that $1/day. Except technically I can’t, because paying somebody $1/day is illegal, or at least has a paperwork overhead with a cost that would totally dwarf the paychecks I’d be writing.

  51. Sorry, was replying to this:

    “At some price, yes, there must be, although that price may be below the minimum wage.

  52. ESR: Have you seen this graph?

    It shows the dip in aggregate employment from preceding peak during each of the post-WW II recessions: 1948, 1953, 1958, 1960, 1974, 1980. 1981. 1990, 2001, 2007. In all the recessions through 1981, the dip was 5% or less, and ended within 24 months (27 in 1981). 1990 bottomed at 1.5% down, and ended in 30 months. 2001 bottomed at 2% down, though it did last 46 months.

    2007 is down 6%, 27 months out. That is, it is much longer and deeper than any of the others, except that 2001 is still longer, and there is a slight uptick in 2007 at 27 months out, whereas 2001 stayed flat till 30 months.

    I think this is a sign of the special-interest/regulatory state going dangerously toxic. The dead-weight impositions may have gotten entirely out of hand. Some of it is looting – e.g. tort law scams, bridges to nowhere, the absurd pensions collected by state employees. Some of it is looting by regulation or mandate: the wealth squandered on “green energy”, farm subsidies. Some of it is just dumb regulation, e.g. the CPSIA’s destruction of small toymakers. But it’s all dead weight, and the economy may yet break under it.

  53. Jeremy> Will the US still be a ’2nd world’ country if there aren’t any countries doing better?

    Yeah, that would make the term obsolete.

    I’d say Singapore and Japan are still 1st world, since I think the reports of Japanese depression are greatly exagerrated. japanese spacecraft landing stuff from the asteroids in australia, smart population, a more intelligently faked financial data set, etc.
    But it’s not like I don’t see what you mean.

    ’2nd world’ used to mean mellow statists who accepted a lower tech level and mediocre military in order to maximize vote-buying and, by extension, a fat welfare state. Obama is 1950s France revenant.

    Jessica> ‘The desire to get back to the happy days when the US was a major manufacturer is a mistake. . . the world has moved on’

    Yeah, we disagree here.
    I can see your point about ‘the world has moved on’ for jobs exactly like the 1950s. Puddling steel by picking up a 200-pound steel jug and pouring it carefully in 140+ f&#* degree heat while the foreman expounds on your parentage? Those jobs are gone for good, and good riddance.

    The world has moved on all right. So has manufacturing. It’s the USA that stopped trying to get civilian nuclear power (the Democrats stopped that for good). We aren’t in the space travel business (the Democrats stopped that for good). We don’t have flying cars because we don’t have the light plane industry they’d evolve out of (the Democrats destroyed our light plane industry for good). The Democrats have won.

    So what is to be done? A regulatory holiday. Like West Germany under Allied occupation; it won’t happen, but it’s the only thing that would work.

  54. You say I’m wrong but then everything you wrote after that seems to agree with me. Maybe I didn’t understand. Or maybe you replied too fast.

    So the minimum wage law has the same effect as if the market lost some interest in products produced by minimum-wage workers.

    The problem is your focus on “products”.

    The market doesn’t care what products are produced by those workers; the same products can be produced by low-wage workers and high-wage workers. In fact, if the minimum wage is high enough, those products won’t be produced by low-wage workers, because they’ll be more expensive than the high-wage workers!

    Imagine a scenario in which a job can be done in one hour by a worker with a particular skillset or in three hours by an unskilled worker. The finished product is the same regardless of who did the job. If the minimum wage is $7/hr, the skilled worker can offer to do the job for $20/hr and still underbid the unskilled workers. Only when the unskilled worker is able to offer to work for less can he gain the experience that turns him into a skilled worker, and thereby command higher wages.

  55. Eric, I have a question in light of this topic. The critics of free markets, and the Way Things Are, can often be heard to say “The Rich get Ritcher and the Poor get Poorer”. In the real world it appears that the rich get richer faster than the poor get richer which makes it appear that the rich get richer and the poor get poorer. My question is: in terms of basic free market economic theory is the growing gap between the rich and the poor a natural consequence of the interplay of supply and demand or is it due to some other cause, eg. successful rent seeking, price fixing etc? I know there is a theorem which states that the global utility of income is maximized if income is equally distributed, so another way to put my question is whether markets devoid of distortions tend toward equal distribution of income or toward radical disparity of income?

  56. “So what is to be done? A regulatory holiday. Like West Germany under Allied occupation; it won’t happen, but it’s the only thing that would work.”

    I’m as cynical as the next poster here, perhaps even a bit above average for a crowd already trending pretty high. But I would point out that every time someone with the capability of making this not true but cynical enough to know the odds says this, it becomes more true. Feeding cynicism with self-fulfilling predictions is no fair.

    A year ago I would never have guessed that the Tea Party phenomenon would be what it is today. Six months ago I would have predicted the entire movement would either have fallen apart by now or made a disastrous play at a third-party run. Something genuinely new is happening; that latter outcome should have occurred, and I can only credit the new media for getting the idea out there that the Tea Party should be essentially a PAC and not a third party. We have seen a large mass of people learn from history! Holy cow! I’m not naive enough to say “This changes everything!”, but it does mean there’s enough novelty in what is going on right now that I’m not comfortable blindly applying the old templates. Which is good, because the old templates do indeed say “decade-scale decline and failure”.

    Perhaps we should express a bit more hope than we actually feel, so that that becomes a self-fulfilling prophecy. Let’s see what happens this November, and even more tellingly, in the year after that. Things are happening faster and bigger than ever, and this need not play only to the advantage of the side telling us to listen to the sirens.

  57. > Eventually I’d find somebody who would do a good weeding job for that $1/day.

    No you wouldn’t.

  58. >whether markets devoid of distortions tend toward equal distribution of income or toward radical disparity of income?

    There are lots of conflicting claims about this out there. My own belief is that political system choice is essentially incapable of changing the “natural” Pareto (power-law) distribution of income. That is, free-market capitalism tends towards strong inequality of income, but so does every other choice; the best they can do is hide that result with various dodges, such having a closed privilege network like the Soviet nomenklatura in which connections substitute for nominal money income.

    The reason many people are confused about this is that there are two other effects of political system choice that look like they’re altering income distribution when they’re actually changing other variables that are more important. One of these variables is average wealth level (that is, what you can buy with constant work-hours). Freer markets raise this; one result, as I’ve previously noted, is to decouple purchasing-power disparities from relative income levels. The U.S. looks like a more egalitarian society than you’d expect a Pareto income distribution to generate because, essentially, everything is inexpensive.

  59. > > Eventually I’d find somebody who would do a good weeding job for that $1/day.

    > No you wouldn’t.

    Your presumption that the only “job” that weeder could have is the one that pays $1/day is the failure in your observation.

    Depending on the prevalence of weeds (how often do I have to visit and weed), the proximity of neighbors also willing to pay $1/day, the size of the area to be weeded (time commitment), and the availability of nearby “non-traditional” “jobs” – there is the potential for $1/day weeding to be “profitable” in the larger picture.

    If weeding that $1/day yard only takes 5 minutes per day on average, the actual rate of compensation is $12/hour, which is not insignificant; at least until you factor in Social Security tax, Self Employment tax, and the lovely, about to debut, Health Care tax…

  60. JT,

    There is another factor, which is deliberate regulatory policies that funnel the most profitable investments to the already wealthy. Google “accredited investor,” unless you have blood pressure problems.

    The worst thing is that the Democratic financial “reform” bill being considered would raise the lower bound to $25 million in assets, which will devastate whole swaths of the economy that are dependent on angel investors. Bastards. Other policies I can excuse as the product of a different view of how the world works, but this is malignant.

    I speak as one who holds licenses for stock brokering and money management, though I’m presently in grad school.

  61. ESR says:

    >>> The U.S. looks like a more egalitarian society than you’d expect a Pareto income distribution to generate because, essentially, everything is inexpensive.

    We are truly blessed to live here in America, at this time. Look, I’m poor. I work at UPS throwing boxes, I make jack squat. My apartment is small but is in good repair. I have a car, refrigerator, air conditioning, and two computers with high speed internet. I am going to school to hopefully get a better job in IT. I have health insurance, so I have access to the best of modern medicine if I should become ill. The Sun King of France, who would no doubt be a billionaire by today’s standard, did not have so much as penicillin to cure his ills. Or air conditioning.

    This society offers great opportunity to all. I’m poor, but I feel blessed.

  62. Jeremy > more hope than we actually feel

    Okay. A regulatory holiday COULD happen. After all, sensible reasonably honest citizens have as much influence on US politics as the Germans had on German politics under Allied occupation. They managed it.

  63. # Andy Freeman Says:
    > More to the point, the tea party folks, however
    > imperfect, are basically our only hope. That’s
    > why dumping on them is dumb.

    Are you claiming that they should be immune from criticism? Why is pointing out a major flaw in their position worthy of the description “dumping on them”?

    The fact is that despite their claims of fiscal conservatism, they are barely advocating any actual cuts in spending, aside from the medical care mess, in fact they are advocating protecting that which is at the heart of the problem, entitlements. $100bn perhaps in the Bush years, but that is not sustainable because the chickens are coming home to roost.

    If they are our only hope, what do we do if it is a false hope? Perhaps rather than pretending the Tea Party is the savior, we need to recognize the truth about what it is, and continue to advocate in parallel with them for the changes that need to be made. Perhaps even working within a still pliable Tea Party to point out the profound contradiction in their position.

    A terminally ill patient says to the doctor: “Doctor, please cure me of my sickness, but don’t hurt my tumor, I have grown quite attached to it.” It would be criminal were that doctor not to try to convince the woman of the error of her ways.

  64. @ David McCabe (Apr. 29 @ 10:58 PM)

    Not “goalpost-moving”. A real-world example – whenever it snows more than about 3 cm. here in NW Ohio, there are quite a number of persons (from barely teen-aged to late middle-aged) who grab a shovel and go door-to-door offering to dig you out. You negotiate some price, based upon how much work there is, and what you judge their level of `skill´ is. (I agree, snow-shoveling is completely unskilled labor, but some people do a more complete or a neater job than others.) They do it, you hand them the $$$, and they move on to the next opportunity.

    If you compute their marginal hourly wage rate, including time trudging between jobs, it’s pretty low. But people are willing to offer their work at these low wages, absent any “minimum-wage” or other regulatory nonsense. The aggregate quantity of work available to them, and the low overhead to participate, makes it viable for these casual laborers.

  65. I have read the preceding posts. They are all intelligent and make excellent points, but they miss, or tapdance around the main one:

    As the machines get more and more intelligent, the human intelligence level required to make oneself actually useful to modern society rises as well. A large, and *ever growing* segment of the population will be “left behind” by this. We will have to redefine our notion of what work is, and while I personally like the free market system for the very near future, it will probably have to go later on….

    Short of a ‘Butlerian Jihad’, what can we do?

  66. “The fact is that despite their claims of fiscal conservatism, they are barely advocating any actual cuts in spending, aside from the medical care mess, in fact they are advocating protecting that which is at the heart of the problem, entitlements.”

    It’s hardly fair to blame the Tea Party for not having a detailed platform of how the US will achieve fiscal solvency at this point. From a political standpoint, because Obama’s politics are so intensely zero-sum (you over there get healthcare coverage, yours over there gets cut) people have a natural defensive reaction to reverse the changes.

    Once his agenda is repealed (and unlike many here I am optimistic that in fact, the Democrats have “won” a pyrrhic victory) it will be much much easier to ask EVERYONE to share in the pain, in a fair, honest and rational manner.

    For this reason the Tea Party should be supported. There is no other choice.

  67. JB Says:
    > It’s hardly fair to blame the Tea Party for not having a detailed platform

    I’m not asking for a “detailed platform”, I like the angry mob. But along with “Obama lied, Grandma died”, and “Taxed enough already”, can we also have a few signs saying “Entitlements Strangle our Kids”, “Reform Social Security Now!”, or “Social Security: Give us back our damned money you thieves.”

    I hope they never have a “platform”.

  68. > And what if the price is below the survival costs?

    They’re still better off, as is society.

    There are two cases.

    In one, society makes up the difference. In that case, the “not enough to live on” price/salary reduces the amount that society needs to provide.

    In the other, society does not make up the difference. Since that society also wasn’t going to help the person survive if they didn’t have the inadequate job, they’re still better off with the inadequate job because it buys them some time.

    Since you disagree, please provide details.

  69. > The worst thing is that the Democratic financial “reform” bill being considered would raise the lower bound to $25 million in assets

    While the Dem proposal is a disaster, the new lower bound is not $25M, it’s $2.4M, up from $1M. And the new lower bound is going to be inflation-adjusted.

    Note that not all assets count for satisfying this rule. In particular, residence equity doesn’t.

  70. > Are you claiming that they should be immune from criticism? Why is pointing out a major flaw in their position worthy of the description “dumping on them”?

    I’m not saying that they’re immune from criticism.

    You’re not just pointing out a major flaw. You’re claiming that they’re part of the problem, that they can’t be part of the solution.

    Remember “The tea party is more for maintaining the status quo of the Bush years than making the radical cuts necessary. So I don’t see them as the salvation.”

    I’m not trying to tell you who your allies should be. I’m asking who they are. You need to get to at least 30% to be successful.

    You’re not obligated to go after any specific group, so it’s okay to reject the tea party folks. However, you need large numbers from somewhere.

    I’ll ask again – where are your allies?

    > can we also have a few signs saying “Entitlements Strangle our Kids”, “Reform Social Security Now!”, or “Social Security: Give us back our damned money you thieves.”

    What’s stopping you from carrying such signs? I suspect that they would be warmly received and the message would spread.

    The Teddy Roosevelt quote about the man in the arena actually understates things. If you’re not in the arena, you can’t influence the outcome. I’d argue that that’s a good thing.

  71. I’m beginning to love this site and the intelligent discussion that it stimulates.

    As to the topic at hand, the federal government is overspending and over-promising at an unsustainable rate and this, in turn, has damaged the economy and is creating social stress and hardship. This growth of stress and hardship is a necessary feedback mechanism for inducing political change. The key question for many of us who frequent this blog is, “Are we headed toward greater collectivism and government control over our lives or will we be able to reverse course toward greater individual liberty?”

    If we buckle down, work harder, and in essence act to mitigate the harmfulness of recent governmental actions, then we are simultaneously undermining the feedback mechanism for political change. Sometimes things have to get worse before they can get better. At some point, the productive members of society may have to step aside for a while and let Rome burn itself down.

  72. LS Says:

    April 30th, 2010 at 9:43 am
    I have read the preceding posts. They are all intelligent and make excellent points, but they miss, or tapdance around the main one:

    As the machines get more and more intelligent, the human intelligence level required to make oneself actually useful to modern society rises as well. A large, and *ever growing* segment of the population will be “left behind” by this. We will have to redefine our notion of what work is, and while I personally like the free market system for the very near future, it will probably have to go later on….

    Short of a ‘Butlerian Jihad’, what can we do?

    I don’t think we’ve danced around it at all. I disagree that machines are replacing workers. In some cases they might be displacing workers, but the size of the underground labor economy indicates there is plenty of demand for low and semi skilled labor.

    Something else causes the high levels of formal unemployment of unskilled and semi skilled workers. That something is that increased employment costs added by workplace regulation, payroll taxes, and associated compliance costs price these workers out of the market.

    Some regulation is obviously necessary, whatever the mechanism. “If men were angels, government would not be necessary.” We have, however overdone it.

    Human beings are the most versatile, easily reprogrammable robot around. We’re cheap to fuel, self maintaining, and assemble our own replacements. You have no idea just how smart a moron is until you try to program a robot to replace him.

  73. # Andy Freeman Says:
    > You’re not just pointing out a major flaw. You’re claiming
    > that they’re part of the problem, that they can’t be part of the solution.

    That is not an accurate representation of what I have said here. On the contrary, I have indicated that I like the Tea Party.

    > I’ll ask again – where are your allies?

    The proposal I made was to point out that RADICAL action is necessary to change the downward spiral. However, as I indicated in the very comment I made, I don’t think there is enough people in the ballpark to make it happen. However, when we hit rock bottom perhaps it would be nice to have some ideas out in the public space to actually solve the problem rather than more “Wall Street Fat Cats” and “Racism”, and “Greedy Bankers” which seems to be the only reason that anyone is considering right now.

    > What’s stopping you from carrying such signs? I suspect that
    > they would be warmly received and the message would spread.

    You have no idea what sort of political action I take outside of this cozy little world. So before you go throwing accusations of armchair quarterbacking, I suggest you get your facts right. And, to the contrary, these ideas are NOT well received at the Tea Party rallies I have been involved with. The fact is that older Americans, who form a disproportionate share of the membership, are petrified into dependency on the government. Most want their entitlements protected, even at the cost of the economy. Stockholm syndrome indeed.

  74. The thought that always crosses my mind, and it seems to be more frequent as time passes – is what would guys like Thomas Jefferson, Ben Franklin, John Adams and the rest of that crew make of what has happened to their vision of the future and what would they do if alive today?

  75. Another point to be considered.

    Much of the deadweight isn’t regular burden imposed by misguided statists, it’s regulatory capture imposed by predatory interest groups, mostly capitalists (but also unions and guilds). When a city seizes property on the dubious excuse of “blight”, then hands it over to a politically favored private developer for a song, then provides subsidies to said developer for construction and operation, including guaranteed purchases of whatever the project provides – is this a failure of the regulatory state as such, or is it just another form of theft by state power?

  76. # pinzero Says:
    > would guys like Thomas Jefferson, Ben Franklin, John Adams
    > and the rest of that crew make of what has happened to their
    > vision

    “Come back King George, all is forgiven”

  77. Rich Rostrom Says:
    > imposed by predatory interest groups, mostly capitalists

    You know FWIW, I object to the word “capitalist” being used to mean “person who runs a big company”. I am a capitalist, and I don’t run a big company. Capitalist means a person that believes in the free market system, and many large companies’ boards do not, as is evident by their constant looking to government for favors. If you live on the government dole, whether you do it is an Armani or a set of overalls, you are not a capitalist.

    (FWIW, I don’t actually much like the term capitalism anyway. It is about the freedom to make whatever mutually beneficial transactions both parties agree to, whether that involves capital or not. “Free market” is a beautiful thing.)

  78. bob > As machines get more and more intelligent, the human intelligence level required to make oneself actually useful to modern society rises as well.

    Well, partly. It’s not that I disagree entirely, but there are a few other aspects of machines getting more intelligent.

    1) As machines get more intelligent, they get better at amplifying our intelligence. See Ross Ashby, ‘Design for a Brain’. One thing I like about the GURPS Transhumanists is the way the horizon of their Singularity keeps withdrawing as smart humans, with meat brains amplified by silicon, keep seeing furthur.

    2) If I close your factory so I can get your 15$/hour job done for a dollar a day in China, have I displayed a) bad character ; disloyalty to American society, b) good character: sensible capital maximization, or c) both?
    If a), b), or c), am I actually more useful to society than you? And since when do libertarians think being useful to society is all that and a bag of chips?

    3) You are right. But 1) and 2) aren’t wrong.

  79. I agree that machines can amplify our brain power, but unfortunately “working synergistically with a machine to amplify your brain power” will itself be a skill that not everyone is going to be able to acquire.

    Arguably, Eric’s point can be broken into two classes, with both growing over time: First, the one he identifies where the difference between “cost of employee without regulation” and “cost of employee with regulation” takes someone from employable to unemployable, and then there’s a class below that where the benefit an employee can bring simply doesn’t make it worthwhile due to reasons beyond regulation. Techtech suggests (s)he’d hire someone for $1 to do menial tasks. I say, actually, no you wouldn’t. I would be worried about someone being paid $1/hour that they’d decide to “help themselves” to a raise, with enough rational concern over that outcome that it’s not worth $1/hour. Not to mention transaction costs, mental transaction costs, and the other low-order terms that we usually ignore in economic modeling, but can’t when we’re talking $1/hour.

    This second class is much smaller than the first, but technology is going to increase it, too. When you can get a housecleaning robot for even $2,000, a human simply will not be able to compete at any price, for these reasons. The housecleaning robot won’t steal from you. (Or won’t last long on the market if it does.)

  80. Jessica Boxer, your personal definition of “capitalist” is not supported by history; as early as 1633 it was used to refer to owners of capital.

    Capitalism, the name of the system, was popularized by Marx drawing from work by Blanc and Proudhon.

    Anyway, a “capitalist”, in common and historical usage, has meant nearly all the time an owner of wealth or assets with which to do business.

    I don’t exactly like the term myself as it is very ill-defined. What the Rand crowd, the Lew Rockwell crowd, and so forth envision for our economy is vastly different from what is currently extant, and both are yet different from other systems called “capitalist” (e.g., Japan’s state capitalism).

  81. About that term capitalism:

    It is an unfortunate term really. As Jeff Read points out, capitalism was name by it’s enemies: it is a marxist term.

    Adam Smith called it the system of natural liberty. The term capitalism did not exist in his time.

  82. Perhaps I should illustrate my points with examples. I spent my career as an electronic engineer in the broadcasting field. I had two permanent jobs in that time, held for five years and thirty years.

    The first was for a radio station. I was eventually “automated out of a job” there. (It wasn’t really automation. Management finally installed remote controls for the AM transmitter, and about five jobs disappeared.) The same thing was happening all over the metropolitan area at most of the other stations as well. All of these people were technologically knowledgeable men (we were all male) with few places to go to. (I was lucky; I moved on to job number two, below.) The companies that created and sold the remote control equipment did not employ nearly as many people as the number that were displaced by their products. This was a net loss of jobs.

    The economy, if not meddled with too much, creates jobs as well, but in other industries, in other places, that are not of much help to the displaced workers. It’s not easy, in fact well-nigh impossible, to switch careers for many middle-aged or older people. (I’m talking about real careers here – not greeter at Walmart.) There’s a slogan about working smarter, but those men I knew were plenty smart already, but not smart enough to have kept up with advances in electronics. The IQ and mental flexibility requirements for the new jobs had *increased*.

    The second job was for a major TV network. My job was to troubleshoot problems, many of which were in the brains of the people running the automated switching systems. (This was genuine automation, with humans monitoring the system, and handling problem cases.) These were NOT stupid people. They had college degrees. They owned homes and took care of families. They could converse intelligently on a wide variety of topics. They wrote literate emails with perfect spelling. They often still did not understand how the system worked after many explanations from more than one of us in my department.

    Please do not suggest that better user interfaces would have led them to better performance in emergencies. If the computer could make it clear what action is needed, then the computer could just do it, and there would be no need for a human.

    Things are getting tougher and tougher in technical fields. You simply need to know more and more. Having computer tools to amplify your brainpower is not going to work if you don’t have enough brainpower to amplify, and what is ‘enough’ is a rising number. More and more of us simply won’t be able to hack it.

  83. Jesicca Boxer> “Come back King George, all is forgiven”

    I’m not sure that’s even a good joke. That’s like saying the Chinese are wanting Mao back. Or Russians are longing for Stalin and Lenin.

    As bad as it is now, it’s still nowhere near where things were under the Redcoats.

    To answer the original question, I think many of them would be appalled at some of it (particularly the entitlements… Franklin would call it a new form of slavery, and he’d be right), but all in all, I think they’d still be satisfied because we are having these discussions, we CAN have these discussions.

    As far as I know, nobody on this list has been dragged from their home at night, tried by a magistrate without benefit of counsel or jury for treason, and hanged the next morning. Such was not unheard of during Colonial times (and was VERY common on the Continent for those who spoke out against the Crown).

    We’re still a ways from that thank goodness, and what I see here gives me encouragement that it may not come to pass in my lifetime. I can’t say the same for my kid’s lifetime, but I promise you all to teach them what freedom actually means, and how to shoot a gun in case it needs defending. Please do the same for me. That’s what Jefferson, et al. would have recommended I think.

  84. LS: While your storie is a bit sad, I don’t get why you can’t expand yourself to include other fields of study. For instance, I’m have a Computer Science degree and my major career field has been systems and network administration. However, I’m constantly on the prowl to learn more, and my interests in mechanics and my aptitude for electrical systems (grew up with a lineman so learning about wiring, etc. was as natural as learn to walk) have lead me to my current position as a Data Center manager.

    I’ve heard many people, including very close friends, give stories similar to yours and tell me that they are “trapped” by their situation, their knowledge, whatever. I’ve never felt that way, and can’t really imagine how I would get in that position. Perhaps thats because no matter where I am, or what I’m doing I’m always looking for something new and learning something I didn’t know yesterday.

    Of course, you gotta be willing to do lots of work for no money, because you don’t get the education without doing the work. I know lots of folks (including my wife) who think if they are going to “work” they should be “paid”, not considering education a payment. But that seams like a really good way to get painted into the corner. And I think this works no matter your age or experience.

    Would any of this have helped in the situations you described? If not, why not? I’m curious because if there’s a blind spot to my plan, I’d like to find it before it bites me :^).

  85. LS Says:
    > Perhaps I should illustrate my points with examples.

    Thanks for sharing your experiences. You know there is a mechanism in the free market to deal with the issue you are discussing, it is called specialization, and it is the foundation for all our wealth.

    Consider this: doctors used to treat the whole of a person, then over time doctors began specializing is particular areas and conditions. We got family doctors, and surgeons, and gynecologists and so forth. Consider this: today we have pediatric periodontists. You would think that the teeth would be enough of a specialization, but no, we have people who specialize in the spaces between your teeth. In fact, we go further, we have people who specialize in the spaces between the teeth of children only.

    I have a friend who works for an endodontist. This man, who makes a lot of money, performs basically two operations on your teeth, conventionally called root canals. That is all he does, every day. He is presumably pretty good at it. He can presumably keep up with all the latest research on it. Now is he up to speed on the latest crown technologies? Probably not. Does he know much about fitting braces? Doubt it. But in his narrow field of specialty he knows everything.

    In the knowledge economy it is the same. It isn’t good enough to be an electrical engineer. You have to be a specialist in radio transmitters and receivers, or perhaps digital radio only. It isn’t good enough to be a specialist in computer design. You have to be an expert in designing the north bridge, or, a specialist in making adjustments to pass FCC EMI tests.

    And when you specialize, you have to stay 100% expert on your specialty. That is how you overcome this problem.

    It is also worth point out that the purpose of the economy is not to provide jobs, but to provide affordable goods and services. That, however, is a whole other discussion.

  86. I am troubled by an aspect of this discussion as it relates to evolving employment attributes and expectations. In the real world, there is no entitlement to a particular type of job or a guarantee that an equivalent or better job will be available if you should find yourself out of work. Some amount of employee displacement may be due to macro structural changes brought on by government over-regulation and market intervention, but I would argue that the only effective remedy is self reliance. It seems to me that the core of all this employment-related philosophical angst is a perverted self image in which the individual sees him/herself primarily as a cog in an occupational machine. Oh well, the employment paradigm has changed and I’m out of work, so I guess I’ll just drop dead.

  87. BobW, the mortgage situation was worse than you say. Once it became possible to resell mortgages and lie about how good they were, the incentive was in place for banks to talk people into mortgages that couldn’t be repaid. People who were qualified reasonable mortgages were talked into unrepayable morgages– I suspect because the higher debt looked like a better deal if the unsustainibility was concealed.

    The idea that most people pay their mortgages only applies if the mortgage is negotiated in good faith on both sides.

    ****

    There’s a nasty background factor in the education mess. If a very high proportion of people don’t have basic arithmetic and literacy, where do you find enough teachers? Who evaluates them?

    I think excellent teaching videos are a start, for people who are online.

    ****

    I haven’t heard of *any* work being done on figuring out how to raise the intelligence of people who are average or a little below average, except for background factors like nutrition and safety from lead. I suspect the problem simply isn’t dramatic enough.

  88. jb> You know there is a mechanism in the free market to deal with the issue you are discussing, it is called specialization, and it is the foundation for all our wealth.

    Well, that works well for some…but not others. In my case I had to be a generalist. (“Specialization is for insects.”) There were just two of us to take care of some 400 racks full of equipment of all sorts. Once you found the bad module, you could send it out to the specialists.

    TomA>In the real world, there is no entitlement to a particular type of job or a guarantee that an equivalent or better job will be available if you should find yourself out of work.

    Right. What happens when there are no jobs available for a large percentage of the population? Don’t you think that some sort of employment right will have to appear, or maybe most of us won’t have to work? ESR’s original posting is about how we’re heading that way. I think he’s right.

  89. Nancy Lebovitz Says:
    > I think excellent teaching videos are a start, for people who are online.

    Here is the problem with this Nancy: school is a lot more than learning, though we are all loathe to admit it. Truth is that a large part of what school is is a place to park the kids while the parents work. A public babysitting service is not an insignificant part of the value the public sees in schools. The fact that it is “educational” goes a long way to salving he guilt of the parents who park their kids out of the way for six hours a day.

    Clearly there are vastly more efficient ways to help people acquire basic literacy skills than we are doing in school. However, until we get real about what school is we can’t truly solve the problem. And the only way to do that is to get the schooling system out of the control of bureaucrats who have to look good rather than do good. Your proposal might “do good” but it wouldn’t “look good”.

    After all, babysitters are much cheaper than teachers.

  90. Don Says:
    > I’m not sure that’s even a good joke. That’s
    > like saying the Chinese are wanting Mao back.

    You can’t be serious. George III was nothing like Mao or Stalin. I suggest you read the Declaration of Independence where Jefferson and others set out in plain sight their complaints against the King. You will find no complaints about capricious capital offenses, you will find nothing about secret prisons, you will find nothing about cultural revolutions, gulags or summary executions.

    On the contrary, Jefferson’s complain was firstly neglect. The King neglected the colonies by not providing the laws and legal systems needed. Secondly, bureaucratic overwhelm, including my favorite complaint: “He hath sent hither swarms of Officers to harass our people and eat out their substance.” Third paternalism: he did not give the colonists enough control over their laws and legal systems.

    There are a few others such as impressment and so forth, however these were the three key complains. They bear no resemblance to the tyrannies that you offer by comparison.

    “String em up” was not uncommon in colonial America, nor in the early United States (or for that matter England or any other civilized nation at the time.) Of course, the blight of slavery was in full swing both here and abroad. But there is little doubt that Jefferson would be horrified what he would see today in the government he created, heck he was horrified by the plans of Alexander Hamilton never mind Barak Obama.

  91. bruce Says:

    April 30th, 2010 at 6:03 pm

    I’m sorry, but I messed up the blockquote so that what I was quoting ran into my counter argument.

    I really think that low and semiskilled labor will prove the most difficult to automate. An automobile assembly line required the same motions over and over, so it was easy to automate. Cutting grass, mopping floors, and the like are actually much more complex. The Roomba is a neat toy, but it can’t replace a human being with a vacuum cleaner.

  92. Nancy Lebovitz Says:

    May 1st, 2010 at 7:15 am
    BobW, the mortgage situation was worse than you say. Once it became possible to resell mortgages and lie about how good they were, the incentive was in place for banks to talk people into mortgages that couldn’t be repaid. People who were qualified reasonable mortgages were talked into unrepayable morgages– I suspect because the higher debt looked like a better deal if the unsustainibility was concealed.

    The idea that most people pay their mortgages only applies if the mortgage is negotiated in good faith on both sides.

    I think my point #9 mentioned the toxic loan originators. It didn’t take very many of those slimeballs to wreck investor confidence. That closed off the money for new mortgages and popped the real estate bubble. This meant that people with toxic mortgages couldn’t get out of them, and had to default.

    Falling real estate prices also left quite a few people underwater who could still afford the actual payments. Most of those people still make those payments.

  93. Jessica, you’re right about the baby-sitting function of school. I don’t know what the way out is on that one, though it’s probable that a lot of young people could be trusted to manage their own time younger than they’re permitted to.

    Still, if more people were literate and numerate, it would mean more minds available to work on solving that problem, too.

    BobW, you’re right about your point 9. I’m not sure what proportion of the mortgages were fraudulent. I get the impression that it was a high proportion of the mortgages written during the boom, but I don’t really know.

  94. Jessica said:
    >1. Monetize all federal obligations, Medicare, Social Security and so forth — convert them from empty promises into tradable debt instruments.
    >2. Sell off every government asset we can find (land, buildings, equipment, the radio spectrum, mineral rights, the post office etc.) in a sale. This can be done in a variety of ways so that the market doesn’t glut and run out of capital. Define some very strict criteria for the ones we keep, and demand that at least half of what we have is sold off.

    Jessica are you, by chance, a reader of the blog of the Internet’s favorite Jacobite: Mencius Moldbug? I find some interesting similarities with your plans and his:
    http://unqualified-reservations.blogspot.com/2008/01/how-to-actually-restore-gold-standard.html

  95. Jessica Boxer Says:
    >Rich Rostrom Says:
    >> imposed by predatory interest groups, mostly capitalists

    >You know FWIW, I object to the word “capitalist” being used to mean “person who runs a big company”.

    “The trouble with socialism is socialism; the trouble with capitalism is capitalists.” – Willi Schlamm

    But I suppose I should have written “businessmen”. (And small businessmen do it too.)

  96. John Dougan Says:
    > Jessica are you, by chance, a reader of the blog
    > of the Internet’s favorite Jacobite: Mencius Moldbug?

    No, but thanks for the tip, I’ll check it out. If he agrees with me he must be a very smart and wise person :-)

  97. Nancy Lebovitz Says:
    > Jessica, you’re right about the baby-sitting function
    > of school. I don’t know what the way out is on that one,

    I don’t think there is anything wrong with an organization providing baby sitting services for parents at work. If they can offer educational value during that baby sitting, all the better. What I was a teenager I used to baby sit for families in the neighborhood. I always tried to encourage my charges to do something useful with their time: books, board games, homework and soccer in the backyard. There were no video games when Jessica was in charge. However, I wasn’t unionized, I didn’t demand the state paid for my services, and I didn’t demand $80,000 a year nor a pension.

    If parents actually paid for this function directly, rather than through the diffuse mechanisms of the state, then we could all find the right balance between these things. Perhaps a lot of teenagers could find useful employment in this capacity, rather than cooling their heels in the intellectual vacuum of public schools.

    FWIW, I am convinced that most of the problems that parents have with teenagers is far more to do with the fact we emasculate them, rob them of all responsibility, and treat them like babies than any raging hormones. These problems were far less prevalent in the past when the term teenager didn’t exist because kids were too busy learning an apprenticeship, or taking on some other valuable task and contribution to society.

  98. jb>It is also worth point[ing] out that the purpose of the economy is not to provide jobs, but to provide affordable goods and services. That, however, is a whole other discussion.

    Yes, but if nobody has jobs, nobody can buy goods and services, and then the providers of goods and services don’t have jobs and….we get recessions, or worse.

    Democracy doesn’t work very well in this sort of situation. The people simply vote themselves the treasury and we have Argentina under Peron.

  99. LS Says:
    > Yes, but if nobody has jobs, nobody can buy goods and services,

    Need I point out that there are many people who don’t have a job and who buy many goods and services. May I also point out that there are lots of people who add value to the economy without having jobs in the conventional sense. However, my point was more that if you focus your economy on providing jobs you are focusing on the wrong side. We see this all the time when governments talk as if the purpose of the economy is to provide jobs for people. Wouldn’t the world be a better place if we could generate the same goods and services with half the effort, assuming there was no more uneven distribution.

  100. Jessica Boxer, what I meant was that I can’t see the culture making the jump to acknowledging that most of what they want from school is baby-sitting.

    “Emasculate” doesn’t seem like a good metaphor. What word would you use for denying responsibility and freedom to teen-aged girls?

    BobW, this is a bit of a stored rant, but mastery involves directed practice– aiming at sub-goals and having a way of knowing whether you’re getting better at them. “Drill” has the risk that you’re also teaching how to endure boredom.

  101. > Some amount of employee displacement may be due to macro structural changes brought on by government over-regulation and market intervention, but I would argue that the only effective remedy is self reliance.

    Losing your job because advancing technology made it unnecessary is no different in priciple from some other guy not getting a job because your employer hired you, instead, as being better suited. In both cases the appropriate response to the lack-of-job is to pull up ones socks and try something else.

    Losing your job because government over-regulation squeezed it out is no different in principle from some other guy not getting a job because he’s one of “them” and the local bigot goon-squad will burn out any employer who hires one of “them.” Here, pulling up ones socks and trying something else is not the only appropriate response, and likely not even the best response.

  102. LS> Don’t you think that some sort of employment right will have to appear, or maybe most of us won’t have to work? ESR’s original posting is about how we’re heading that way. I think he’s right.

    Please explain how a right appears. Is this a natural phenomenon or is it man-made? If it can appear, can it also disappear? Will we receive some kind of formal notification or demonstration of validity? Can we choose to opt out of this right if we don’t want to play along? The mind boggles.

  103. Jessica:
    >No, but thanks for the tip, I’ll check it out. If he agrees with me he must be a very smart and wise person :-)

    I wouldn’t so much call him wise as I’d call him a brilliant maniac. He has interesting ideas, many of which he admits he has nicked from various Victorian era sources (often Carlyle). Usually there is little to disagree with in their initial presentations. He then takes them to their logical conclusions.

    One of Moldbug’s fans(?) has put together a pretty good thematic index at http://moldbuggery.blogspot.com/ . It makes it much easier to get the sweep of the ideas in question.

  104. Slightly tangential, but the only solution is a separation of state and economics. We already separated state an philosophy/religion which is what allowed the enlightenment and then the industrial revolution. I think we should push for the separation of state an economics as the next step.

  105. # Doc Merlin Says:
    > I think we should push for the separation of state an economics as the next step.

    And what form should that push take? Remember the government is deeply entwined in the economy at almost every level. One might try to unpick the Gordian knot, but it seems to me that Alexander the Great’s solution is the only one that will work. Yet the nature of politics and our culture demands incremental change not a swift sharp sword.

    One of the things that got me interested in politics was Harry Browne’s presidential campaign for the Libertarian party. He slogan was “would you give up your favorite government program if you never had to pay taxes again?” This is Alexander’s solution. It is such a concise summary of the libertarian bargain. Yet Harry Browne got half a million votes. So, I guess there isn’t much popular support for this, or wasn’t.

    Although I have been accused of dumping on the Tea Party, the simple fact is that they want to pick at the knot, not cut it, so they don’t have the solution either.

  106. In the amendment allow an extra 5% sales tax which can be imposed only when the Federal reserve has outstanding debt, and have that 5% paid exclusively to pay down the debt principal.

    Terrible idea. It guarantees the Fed will never pay down its debt. What will happen is the Fed will borrow on behalf of the government, and lend the borrowed funds to them. Interest costs will be about the revenue the tax brings in, so the debt won’t be paid down. Voila, the government will get to tax us that extra 5% in perpetuity.

    This is similar to what happened to the tolls on the Golden Gate Bridge. The Bridge was given toll authority only so long as the bonds were outstanding. The plan was that the bridge would become toll-free. Since the tolls are a significant profit center for San Francisco, they just rolled over the bonds for another 20-30 years (even though they had the money to pay them off) and said “we have to keep charging tolls because our bonds require it”. It was a perversion of the original intent of the bridge’s financing.

  107. Bob Smith Says:
    > Terrible idea. It guarantees the Fed will never pay down its debt.

    Thanks for the feedback, however, this putative amendment demands that the government can only spend in any year what they collected in revenue in the previous year (and I should have been clearer that this excludes the 5% surcharge.) So, what that means is that the government basically can’t borrow any money in the long term. It is meant as essentially a balanced budget demand, with bright lines to eliminate the usual political shenanigans as to what is and is not on the budget. They did a similar thing for some of the toll roads in my area; it is for that reason bright lines are necessary.

  108. “And what form should that push take? Remember the government is deeply entwined in the economy at almost every level.”

    Defund, Privatize, Decentralize, Cut, Deregulate.

    In political terms, a President that will use the power accumulated by the WH (in conjunction with a sympathetic congress) to return power to states and individuals, then close the door on the way out. The AntiObama.

    If the dilemma described in the Federalist papers is that of a too weak a federal government, deliberately devolving it at this point would not only be wise but politically popular as well. A return to something which in practice more closely resembles an Articles of Confederation arrangement. A cultural, if not political affinity should persist and suffice for a long time.

  109. While the Dem proposal is a disaster, the new lower bound is not $25M, it’s $2.4M, up from $1M. And the new lower bound is going to be inflation-adjusted.

    That only eliminates ~75% of angels. Which is the point. How else can the Dems divert billions of investment dollars from private equity into the public markets where their Wall Street pals can profit? Most of the rest will be eliminated by taking away Reg D 506′s preemption of state securities law.

  110. Nancy Lebovitz Says:

    May 1st, 2010 at 9:10 pm
    BobW, this is a bit of a stored rant, but mastery involves directed practice– aiming at sub-goals and having a way of knowing whether you’re getting better at them. “Drill” has the risk that you’re also teaching how to endure boredom.

    You’re right. I usually say skill not practice. You have to practice in order to become skilled. I’m not enough of an education theorist to distinguish between deliberate and directed practice. Is the former more self-directed?

    You can’t have mastery without all three.

  111. > That is not an accurate representation of what I have said here. On the contrary, I have indicated that I like the Tea Party.

    That may be, but you wrote “The tea party is more for maintaining the status quo of the Bush years than making the radical cuts necessary. So I don’t see them as the salvation.”

    > The proposal I made was to point out that RADICAL action is necessary to change the downward spiral. However, as I indicated in the very comment I made, I don’t think there is enough people in the ballpark to make it happen.

    In other words, you’re hoping for some form of Cloward-Piven. Fair enough.

    >> What’s stopping you from carrying such signs? I suspect that
    >> they would be warmly received and the message would spread.

    > You have no idea what sort of political action I take outside of this cozy little world. So before you go throwing accusations of armchair quarterbacking, I suggest you get your facts right.

    The only “fact” here is that you haven’t seen signs that you like at Tea Parties. That means that no one, including you, weren’t carrying such signs.

    I’m not saying that it’s wrong for you to not carry such signs. I’m just pointing out the consequences.

    > And, to the contrary, these ideas are NOT well received at the Tea Party rallies I have been involved with. The fact is that older Americans, who form a disproportionate share of the membership, are petrified into dependency on the government. Most want their entitlements protected, even at the cost of the economy. Stockholm syndrome indeed.

    My experience has been different. They know that SS is going away, the only question being when. They know that their children will never see a dime of SS. They’re very interested in how the transition will happen.

    FWIW, I found that SS was a great way to deal with the Obamacare debate. When a youngster expressed support, I thanked him/her for offering to pay for my healthcare. Said youngster then retreated to “but it will be there for me when I’m old too”. I then asked if they believed that SS would be there too. Some went with “healthcare will be different”….

    My point is that everyone knows that SS is a dead man walking and folks outside of govt are willing to say so. There’s some argument about how much longer it can stagger before it falls.

  112. Andy Freeman Says:
    > My point is that everyone knows that SS is a dead man walking

    And medicare?

  113. > In other words, you’re hoping for some form of Cloward-Piven. Fair enough.

    That’s unfair. (Yes, I’m quoting and criticizing myself.) Cloward-Piven are intentionally trying to crash the system and seek to take control during the crash. Boxer is merely hoping that people will do the wrong thing when the inevitable crash occurs. That’s a pretty significant difference.

  114. > > My point is that everyone knows that SS is a dead man walking

    > And medicare?

    They don’t see that yet. (It’s not necessarily true that Medicare will crash first, it’s just going to work out that way. They don’t know the numbers, which is why medicare will go down first, but they’re starting to understand the principles.)

    However, they do see the analogy between Obamacare and SS so it won’t take much for them to see that medicare has the same problems.

  115. Andy Freeman Says:
    > Boxer is merely hoping that people will do
    > the wrong thing when the inevitable crash occurs.

    Wow! How did you conclude that?

  116. BobW, I don’t know if there’s a difference between directed and deliberate practice– the former is merely what I’ve seen it called.

    Check out Talent Is Overrated– it’s the only book I’ve seen about the details of what people need to do during that 10K hours of practice.

  117. # Nancy Lebovitz Says:
    > what people need to do during that 10K hours of practice.

    I find this whole subject of 10k hours to become an expert very curious. I first read the contention in Malcolm Gladwell’s book, though I am sure he did not originate it. However, how is it possible that all talents and skills, regardless of their nature take the same amount of time to master? I understand that it is an approximate rule of thumb, but, certainly in his book, he proposes that things as diverse as playing music at a concert to hacking, take the same amount of time to master.

    I wonder if we are confusing the cause for the effect. Is it really that it takes 10k hours to master a talent, or rather do we define mastery as the level of achievement the top few percent reach in 10k hours?

  118. Jessica Boxer– a reasonable point. We aren’t going to see what could be accomplished with 10K of deliberate practice.

    On the other hand, there are going to be a lot of people who put in 1K hours of less intense effort +10K of moderate attention, and whose skill level is good but not really striking.

  119. Jessica Boxer:

    It’s not the 10k hours, it’s what you do during that time.

    As I understand it, it’s the difference between twiddling your fingers on the piano keyboard until practice time is over, and comparing the sounds you make to the tune in your head/on the page, and trying to make the first more like the second, measure by measure. Most musicians come from musician families because the children see relatives practice. They think it’s normal, and they learn how to practice by that example.

    It’s quality management applied to practice. If you don’t measure your results, you have no idea what you’re doing; you won’t get good results except by accident.

    My daughter sees me reading all the time. She reads a great deal, too. She doesn’t see me practice the piano. I’d like to know how to motivate her to work hard on things she doesn’t see me do.

  120. Actually I did something like this in my mid-20s. Wanted to see if I could learn how to shoot a basketball really well from long range. Virtually from scratch. Hand-eye coordination nothing to write home about, average or below (although foot-eye good from soccer.)

    Learned the technique, started practicing, correcting myself, etc. Incredibly hard at first as technique feels “unnatural” (first instinct is to fling a line drive, the right technique is high arching spin shot.) Comic results for quite a few months until some progress. It took maybe 2 or 3 years for major progress and a few more to polish it up a bit. Probably less than 10k hrs, maybe 5k or so to get to a point where future progress is insignificant. At what point is it mastery? I’ll never have an NBA shot no matter how much I practice. They are genetic freaks with superquick releases, so even in an empty gym they’re much better. I suppose statistically it’s “mastery” compared to Joe Average.

  121. > > Boxer is merely hoping that people will do
    > > the wrong thing when the inevitable crash occurs.

    > Wow! How did you conclude that?

    “wrong thing” was an artifact from a previous version of the sentence – it should have been “correct thing”.

    I got that Boxer is hoping that people will do the right thing when the crash happens and that she doesn’t think that they will before from

    > However, as I indicated in the very comment I made, I don’t think there is enough people in the ballpark to make it happen. However, when we hit rock bottom perhaps it would be nice to have some ideas out in the public space to actually solve the problem

  122. BobW Says:
    > It’s not the 10k hours, it’s what you do during that time.

    I completely understand the concept, however, my point still stands. I have only read Gladwell on this, so I am sure my view is distorted by the specific examples he gave. (I should say that I read Gladwell about a year ago on a long plane trip, so if I hash up the details, please forgive.) However, what strikes me on this is that the rhetoric doesn’t necessarily match the reality.

    For example, Gladwell points out that the Beatles got so good not because of some intrinsic talent, but rather, because when they were in Germany, they had to play an immense amount, and consequently developed huge skill. He also gives as an example Bill Joy who spent huge amounts of time at the computer lab. However, this is rather contrary to his contention. The Beatles did not sit in the studio, play something, listen and assess, then play it again, wash, rinse repeat. No, they because great (according to Gladwell) by simply playing a lot. Similarly Joy did not become great by directed practice (based on what Gladwell says) he simply hacked a lot of code.

    (I should add that I don’t think the Beatles were actually awesomely great. Mega success is more about luck and marketing than talent. Though to be clear, the Beatles did make some nice, and occasionally innovative music. I can’t comment on Bill Joy, I am sure many people know a lot more about him than I do.)

    Now, perhaps the Beatles did do a lot of directed practice (but I would have thought it difficult since they were apparently playing so much), and perhaps Joy did do directed practice. But the examples he gave are not of directed practice, but of people doing their thing a great deal, which isn’t the same.

    I know for sure that directed practice is a force multiplier in learning skills, that is why I hate all those handwavy books teaching “programming”. The best programming books by far are the ones that actually step you through writing code for the particular skill you want to learn. (BTW, I also dislike the fact that many of these books put up the code on a web site to download. There is nothing quite like typing the code in from the book to help you really get what is going on.)

    So, I guess what I am saying is that I don’t think Gladwell makes a real strong case. It strikes me as one of those things we think should be true, rather than something that actually is true. It seems to me that you need intrinsic talent and a lot of practice to get great at stuff. It also seems to me that you can “practice” an art or skill for a long time and studiously refuse to learn from your experience. It also seems to me that you can learn just by doing, and that directed practice is more an accelerating process than a requirement. I also think there is a very significant step between mastery and genius, and that that step can never be overcome by sweat equity.

    But that is just my opinion.

  123. Andy Freeman Says:
    > I got that Boxer is hoping that people will
    > do the right thing when the crash happens
    > and that she doesn’t think that they will before

    Yes, that is a fair summary of my thoughts on the matter. I hope I am wrong, but I doubt it. And FWIW, I think the TP will slow the speed of the inevitable crash. Is that a good thing? Not sure. Sometimes it is better to just rip of the Band Aid in one swift movement.

  124. JB Says:
    > Wanted to see if I could learn how to shoot a basketball really well from long range.

    JB makes an interesting point here. Are we to imagine that all mastery takes approximately 10k hours? So 3 pointers takes 10k hours, and becoming Mozart takes 10k hours, and hacking the Kernel takes 10k hours. Why 10k hours for all of them? It seems insane that that is the effort required from such fundamentally diverse skills. Why is why I say it is more likely that mastery is defined by 10k hours rather than 10k hours defining mastery.

  125. I hear you about typing in the code. I spent two weeks typing in the examples from Charles Petzold’s Programming Windows, and debugging my typos and changes. It warped my life.

    I’ve read comments by professional musicans to the effect that Paul McCartney at the height of his powers was an excellent bass player.

    The Lennon & McCartney songwriting team was much better than either alone, especially with George Martin to arrange and produce.

    Perhaps areas with a physical component require some of that time to build up strength, endurance, and muscle memory. That would mean that my daughter’s practice time isn’t totally wasted, it’s just not as usefull as it could be.

    I’m sorry, but despite all his accomplishments Bill Joy doesn’t impress me. He wants to prevent bad possiblities he foresees by banning them. That didn’t work for me in Jr. High. I don’t think it works in the real world either.

  126. I’ve played piano since I was a pre-teen – lessons for 6 years or so from a very good teacher (though I was a less than attentive student) – and I’m 39 now. I play several times a week for anywhere from 1 to 3 hours for my own enjoyment. It is primarily me leafing through various pieces I have collected and playing what I feel like hearing. So, I estimate that I have approximately 6500 hrs of practice (there was a period where I did not have a piano). I am nowhere near mastery (although my sight-reading is very good on moderate to slightly difficult pieces). In fact, I feel like I have reached a plateau in my skill level. I am happy with my current abilities and, although I play, I do not practice.

    Based on my own personal experiences, I would be more inclined to believe that directed, attentive practice has more impact on developing mastery of a skill (at least a musical skill) than hours spent. However, I also think that talent and enjoying practice are a close second and third with desire to improve an important factor too (although, I suppose that desire to improve would be a key factor in how attentive one would be during practice).

    Kelly

  127. BobW Says:
    > Bill Joy doesn’t … wants to prevent bad possiblities he foresees by banning them.

    Joy’s political views need to be considered independently of his skills as a hacker and businessman. It is common for people who are geniuses in one area to be dunces in others. Not that I am saying Joy is a genius or a dunce, I really don’t know much about the guy. I am just saying that it is important to separate the two. I am a pretty good computer programmer, but I really suck as a musician.

  128. Jessica Boxer> Why is why I say it is more likely that mastery is defined by 10k hours rather than 10k hours defining mastery.

    Just a guess, but it might have something to do with laying down the pathways within the brain. Think of everyone you’ve ever know who was a “master” at some skill. The most common description you hear from lay people is that, “they make it look easy.” If you can examine a complex problem (be it designing a software system or composing an opera) and see all the pieces, that would account for that “ease,” and it’s been my experience that when I do something I’ve truly mastered that’s exactly what happens. The WAY to do it is simply THERE, when I call it.

    As for the 10K hours, yes I think that’s a rule of thumb for any non-trivial activity. Tic-tac-toe takes way less, and chess way more. I think the number comes from the fact that any “mere mortal” is unlikely to be able to dedicate more than that amount of time before they give up, and so anything that is more complex than requiring 10K hours is likely broken up into sub-specialties (e.g. medicine, engineering, etc.).

    Again, just a guess, but I think it fits with everything I know about the brain and learning (which is admittedly not much … haven’t put in 10K hours on that one yet ;^).

  129. Don > Just a guess, but it might have something to do with laying down the pathways within the brain

    Another reason why directed attentive practice is especially important (as opposed to just time spent). Bad habits and incorrect patterns become stronger with repetition just the same as good patterns. Once an incorrect pattern is internalized (i.e. moved from the learning phase where you consciously have to think about what your doing to the phase where it becomes “second nature”) it is harder to relearn the proper pattern.

  130. Andy Freeman Says:
    > I got that Boxer is hoping that people will do the
    > right thing when the crash happens and that she
    > doesn’t think that they will before from

    Andy, since you and I have been discussing the Tea Party, I wanted to point out that there is a looming problem for that organization going right now. Specifically, the disaster in the Gulf of Mexico due the the explosion of the drilling platform.

    All that oil leaking out, covering cute fuzzy animals makes for great political images, and you can be sure that you will soon see a Sarah Palin voice over of “Drill Baby, Drill”, as we see sad and depressing pictures of dead dolphins, and ducks trying desperately to shake the heavy oil off their feathers.

    This is more than a photo op. It is a fundamental thing: “The Tea Party wants to put power in the hands of big business, yet we democrats believe that regulation is necessary to keep the greedy speculators in line.” We see pictures of the sea afire with burning oil, turtles covered in oil, Gordon Gecko at the stock exchange.

    The demonstrations in Arizona do offset it a little, but I am sure a compliant press will emphasize the right story. This is a big stick for November, that is for sure. This oil spill is a gift for the democrats, and could very well rescue them from electoral disaster in November. I sure hope the Tea Party are preparing a good response.

  131. > The demonstrations in Arizona do offset it a little, but I am sure a compliant press will emphasize the right story. This is a big stick for November, that is for sure. This oil spill is a gift for the democrats, and could very well rescue them from electoral disaster in November. I sure hope the Tea Party are preparing a good response.

    It’s not a complete gift. The Dems’ problem is that they’re in charge now. Bad happenings suggest that Dems can’t regulate and problems getting out of hand suggest that they can’t respond.

    There’s already a hint of “Obama’s Katrina”, especially as it gets out that there has been a plan for exactly this sort of thing since 94, a plan that is supposed to be put into action within hours, a plan that they started following after 10 days.

    If there’s a dramatic improvement, the obvious question is why it didn’t happen sooner. We’re already hearing that the relevant federal agency didn’t know that the Navy had significant resources, resources that made a big difference once deployed, resources that could have been deployed much earlier.

    There’s also likely to be “truthers” pointing out that we didn’t have such a disaster until Obama started going after the oil industry. (It doesn’t much matter that the timeline doesn’t make a lot of sense.) That’s amplified by the “boot on the neck” talk. (Yes, that’s red meat for folks who would support Obama regardless, but it doesn’t necessarily play with swing voters.)

    Obama has an overpromise problem. We’re supposed to be riding unicorns and yet we keep having bad things happen.

    I think that terror incidents are going to be a bigger problem for him. He promised that his “reset” would help but we’re seeing more domestic stuff. It didn’t help that Bloomberg tried to blame the NYC car bomb on the tea party and managed to hit the same news cycle as the first arrest.

    I think that the violence argument is going to seriously hurt him. He keeps ranting about violent tea party folk, but the left’s violence is getting more play. If the tea party pushes that angle, he’s got problems.

  132. Note that Obam’s public position is more offshore drilling but no drilling on-shore in ANWAR.

    We can argue about how serious he actually was about offshore drilling, but he said that he was. If he now goes with “it’s too dangerous”, he’s gets to explain why he didn’t know that before.

  133. Jessica,

    It’s sort of a wash I think. Oil exploration is a tertiary issue for the Tea Party; reminding the voters about Obama’s incompetence in this episode may backfire on the Democrats. And if gas prices are high enough, the sea otters will take a hike.

    But primarily I think it won’t make anyone forget about Obama’s first twenty months: the nationalizations, the insane spending, the unread crammed-down bills and the VAT threats (assuming it doesn’t pass) among other things.

    Too much bad juju to be neutralized by one attack ad.

  134. Andy, since you and I have been discussing the Tea Party, I wanted to point out that there is a looming problem for that organization going right now. Specifically, the disaster in the Gulf of Mexico due the the explosion of the drilling platform.

    Your paradise awaits you, Jessica.

  135. Too much bad juju to be neutralized by one attack ad.

    One attack ad? No. But hopefully the news reports of the disaster should drive home the idea that the era of oil dependency, of putting the Earth’s ecosystems and living creatures at risk so we can have cheap processed food, cheap goods from China, and a car in every garage, of literally mucking up the planet for our own convenience, needs to come to a close.

    In the meantime, those bright sparks at BP have a way of cleaning up this mess, right? …Right?

    Engineers plan to deploy a specially constructed iron dome over the site on Thursday.

    D’OOOOOOOOOOOOOHHHHHHHHHHHHHHHHME!!!

  136. @Jessica Boxer and Andy Freeman:

    The oil drilling and exploration is such a big fat red herring it’s not even funny. There is little or no evidence to suggest that drilling in the Gulf of Mexico will result in a big enough payoff to even make it worth anyone’s time. Sure, a couple of oil companies might make a few dollars here and there, but the amount of oil in the Gulf is likely not even enough to make a dent in the price people are paying at the pump. And that’s what the people who say they are for drilling care about.

  137. Jeff Read Says:
    > But hopefully the news reports of the disaster
    > should drive home the idea that the era of oil
    > dependency, [is]… literally mucking up the planet

    Would the world be a better place if we had no more oil? Of course not. What would be mucking up the planet them would be all the rotting corpses of the billions of people who died without this wonderful substance, responsible for so much of today’s wealth. I am saddened that the coast down there will be hurt, that the wildlife will die or be injured, that tourism and fishing will be badly impacted for a few years. But how ironic. The tourism industry would complain, even though without oil there would be no tourism, or that the fishing industry would complain, even though their industry would be tiny without oil.

    How sickening to hear your mock the efforts of great minds doing everything they can to help stop this horrible disaster in the best way they can. I respect and admire all the efforts of everyone from BP, the contract companies and the US Coast Guard who are doing their best in a difficult situation.

    You need to break a few eggs to make an omelet, and, although I regret them, I will take a few Exxon Valdez’s and a few gulf oil spills rather than the alternative of no oil exploration. Because oil exploration leads to wealth for everyone, not just fat cat “capitalists”.

    I’d simply ask you this: if a broken window creates work for glaziers, and clean up specialists, and glass makers, why is it not economically beneficial for me to come smash all your windows?

  138. Jeff Read,

    Petroleum and it’s products are bigger miracles than aspirin. I love oil companies. They do a wonderful job for me – and they keep reducing pollution all the while. The automobile created a massive reduction in pollution from horse manure, and it pollutes less and less all the time.

    Morgan Greywolf,

    > There is little or no evidence to suggest that drilling in the Gulf of Mexico will result in a big enough payoff to even make it worth anyone’s time.

    If people are willing to spend their own money doing it, then that’s pretty good evidence.

    Yours,
    Tom

  139. > But hopefully the news reports of the disaster should drive home the idea that the era of oil dependency, of putting the Earth’s ecosystems and living creatures at risk so we can have cheap processed food, cheap goods from China, and a car in every garage, of literally mucking up the planet for our own convenience, needs to come to a close.

    Perhaps Read can tell us about how he avoids such activities. Surely he has no cars, buys nothing from China, and so on.

    No – asking for a law doesn’t count.

    BTW – Processed food isn’t cheap. Rice and beans are cheap. However, it is cheaper to produce them in some places and transport them than it is to produce them everywhere. Since Read thinks that food transportation is bad, surely he’s moved to where his food comes from.

    Right?

    Which reminds me. If transporting food is bad, what does Read want to do with folks who don’t live near food sources? No, they can’t start growing food.

  140. @Tom DeGisi:

    If people are willing to spend their own money doing it, then that’s pretty good evidence.

    People were also willing to spend their own money investing in dot-com businesses with no business plan and no viable business model. By your logic, the dot-com bust should never have happened.

  141. > People were also willing to spend their own money investing in dot-com businesses with no business plan and no viable business model. By your logic, the dot-com bust should never have happened.

    I’m not seeing similar irrational exuberance about drilling in the gulf, are you? I think you are comparing apples and quasars.

    Yours,
    Tom

  142. I’m not seeing similar irrational exuberance about drilling in the gulf, are you? I think you are comparing apples and quasars.

    Peak oil means any large-scale drilling project constitutes irrational exuberance…

  143. > Peak oil means any large-scale drilling project constitutes irrational exuberance…

    Actually it doesn’t.

    If “peak oil” is true, a large scale drilling success will be incredibly profitable.

    Yes, there’s a difference between a “project” and a “success” but the success rate has been going up and “peak oil” doesn’t change that. (Peak oil says that there aren’t any successes to find, not that we can’t identify them if they exist.)

  144. > People were also willing to spend their own money investing in dot-com businesses with no business plan and no viable business model. By your logic, the dot-com bust should never have happened.

    One huge difference – we didn’t know what on-line biz models looked like. There’s no such uncertainty wrt oil.

  145. > Sure, a couple of oil companies might make a few dollars here and there, but the amount of oil in the Gulf is likely not even enough to make a dent in the price people are paying at the pump. And that’s what the people who say they are for drilling care about.

    Umm, the Gulf by itself doesn’t have to be significant for drilling to make sense because there are lots of other places to drill.

    1% here, 2% there, and so on adds up.

    Note that the gulf is considerably larger than 1% – It’s a significant fraction of US production, http://uk.reuters.com/article/idUKN2642239720080826 which itself is a significant player http://www.nationmaster.com/graph/ene_oil_pro-energy-oil-production .

  146. > Sure, a couple of oil companies might make a few dollars here and there, but the amount of oil in the Gulf is likely not even enough to make a dent in the price people are paying at the pump. And that’s what the people who say they are for drilling care about.

    Umm, the Gulf by itself doesn’t have to be significant for drilling to make sense because there are lots of other places to drill.

    1% here, 2% there, and so on adds up.

    Note that the gulf is considerably larger than 1% – It’s a significant fraction of US production, http://uk.reuters.com/article/idUKN2642239720080826 which itself is a significant player http://www.nationmaster.com/graph/ene_oil_pro-energy-oil-production .

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