Centerfield

Sorry, but there are too many errors in what you have selectively chosen to portray your view and in drawing your conclusion for me to comment on at this moment.

Janus

Ha! "Strip out immigrants."

Well, there's always a way to get the statistics you want. There were immigrants in the 50's and 60's, too. And many immigrants of the 80's and 90's were educated and earn a good salary.

Actually, one of the biggest contibutors to the expanding middle class after WW II was the GI Bill.

Janus,

If all you "have time to do" is insult Heather by claiming the stuff she cites is selective and biased, Please spare us.

If you want to back up what you say, then by all means, have a field day. But if all you have to say is "you're gonna get it," you're just name-calling.

The main point I was trying to make is that the "doom and gloomers" are trying to make too much of an issue of the economy in general. I suppose anyone can "tweak" numbers to make them say what they want.

The bottom line is that the economy is improving and it's not as bad out there as some democrats would have us believe.

What bk said.

And yes, I went and actually read the article, and some of the supporting research.

The article doesn't say that everything is rosy and peachy-keen. It says that the popular perceptions of impending catastrophe are extremely simplistic and overstated, and that the underlying structural facts are often mis-represented by doomsayers in the media, producing a false popular perception.

Which is pretty much true on any given day, under any given administration. The general understanding of real economics among the populace is vague, at best, and selective citation is stock in trade with politicians, especially in election season.

Not only is the economy doing pretty well, but also its strength is generally independent of political influence. Partisans argue whether it's Bush's or Clinton's fault that the economy tanked. Truth is, neither of them deserves blame or credit.

The president can have some influence on the economy through policy decisions and legislation. But the economic cycle will prevail regardless of what politicians in Washington do.

Instead of parroting partisan accusations, the news media should be explaining to the public that the president's influence on the economy is limited. That way we'll be able to focus on real issues.

Janus,

I find your comments to be very Kerry-like, which is one reason I can't vote for the man.

Kerry: The sky is falling, Bush has failed.

Bush: The numbers show improvement, economic indications are that jobs will return.

Kerry: Liar, your administration is full of lies, I have nothing to back up my point and you have Greenspan, the Congressional Budget Office, and most economists on your side, but it is a conspiracy I tell you, you are all liars!!!

Bush: The economy was on a down turn before my presidency, and September 11th made things much worse, but my tax package produced instant stimulus and once revenues rise the deficit will be reduced. If Congress enacts my dudget plan the deficit will be cut in half by 2005.

Kerry: You are out outsourcing all of our jobs. We are doomed, doomed I tell you. You have destroyed our nation. You are the worst President ever.

Bush: What are you planning to do differently?

Kerry: (crickets)

Although this is of course a bit of an overstatement, you get my point: Centrists should vote to re-elect the President because out of the two options we have, he is the only option.

Good points Heather, really good points Tully.

Janus, what exactly is your purpose?

I think the Economist is trying to engage in a bit of misdirection here. Don't look at the jobs! Look how rich we all are!

The data chosen is exremely selective and extremely suspicious. The elimination of immigrants from the count, as Erasmus points out, is just one of these.

Another is their skewed characterization of the "average" American. Is the $25 billion/year Americans spend on boats and jet skis really indicative of the majority of the population? And the article fails to note that the record $44 billion in household wealth is due primarily to the increased value of homes, which is paralleled by the record debt created when those Americans borrow against those homes. Creation of "wealth" is not the same as increase in income. And perhaps the author missed reading this article from the pages of their own magazine, just two weeks ago, which describes how all this "wealth" creation is largely without substance, as it is based on policies of the Fed that are not sustainable.

But, of course, this is immaterial since all the article set out to do was to pretend the lack of job creation does not matter, and that the Democrats are crying that the "sky is falling." Well, the Bush administration certainly thought job creation was important when they used it as justification for huge tax cuts for the wealthy, and they certainly thought it was important enough to focus on huge projections for job creation to pull us out of the recession. So you'll have to forgive me when an article tells me not to pay attention to the massive shortfall in the number of new jobs, suggests that Lou Dobbs is the looney for questioning Mankiw's assertion that exporting jobs is a good thing, and pretends that immigration and decreased family size are to blame for skewing the median income low.

It was Bush, not the Democrats, who pretended that the jobs created by his tax cuts were what was needed to save the economy, and I think we should hold him accountable when those promised jobs fail to materialize.

Oops. Forgot the link. Here's the Economist articls:

http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=2461875

Jeremy,

You think wealth is based on substance?

Nice try, bk.

I think, if wealth is being used in the quoted Economist article as a mark of how well Americans are doing despite the lack of job recovery, then it should be based on something a little more substantive than an artificially inflated home market. You can't use asset appreciation as an excuse to ignore lack of job creation in pretending the economy is hunky dory.

Jeremy,

I fully agree that we should hold Bush accountable if jobs do not come around, but the economic reality is that job growth is always the last thing to rise. And although you are correct that wealth does not translate into income that does not mean that the rise of wealth is not a positive indicator.

Just because job growth hasn't happened yet, doesn't mean that it will not, and if you can give me one policy proposal that John Kerry or the Democrats are offering to fix the problem than I will shut up. But all I see is a lot of complaining with no substance (from Kerry and the D's, not you).

Simply saying that job growth is absent, and Bush is to blame is simplistic and destructive. The reason job growth fluctuates dramatically in the first place is there are too many people in this country who just have a job, but not neccesarily a good job. What kind of jobs are we producing? Are they sustainable? Will they be in danger of being outsourced because somebody else can provide them cheaper? Is the problem the economy or is it that we don't have the right number of people trained to do the right kind of jobs? Is it the decline of the manufacturing sector that is the problem or is it simply the truth that the United States is no longer going to produce these kind of jobs, in which case we would need to focus on the modernization of our education system, in my opinion?

I know that job levels are down, I know that it is a problem, I know that the President is to blame if jobs don't return, I know that the Administration made a prediction about job growth that didn't come true... I want someone to talk about what I don't know. Why does this problem exist and what can be done about it?

To say that it was not the Democrats who did not focus the economic debate on job growth is simply wrong. First it was economic growth, but then the economy started to grow, so now it is job growth, and once jobs start returning they will move on to complaining about something else, while at the same time offering the solutions they have been offering since Truman. Bush made the statement that you said he made, but it was in response to the debate that the Democrats started.

I just don't get it, they could have elected Lieberman or at least Edwards. We could have actually had a debate in this country that would be worth while, but they didn't. They produced the same boring crap and the same message that they articulated over and over again: everything is the Republicans fault because they are evil and favor business over people. Give me a break. There is plenty wrong with Bush, but again, between him and Kerry, I just don't see that there is a choice.

Not only is the economy doing pretty well, but also its strength is generally independent of political influence. Partisans argue whether it's Bush's or Clinton's fault that the economy tanked. Truth is, neither of them deserves blame or credit.

The president can have some influence on the economy through policy decisions and legislation. But the economic cycle will prevail regardless of what politicians in Washington do.

One additional factor which I suspect seems to simple for most folks to mention. I'm not sure it's an accident that our last two periods of extended expansion ocurred during the Clinton and Reagan presidencies -- two guys with a sunny disposition and who projected both optimism and comfort in their role as president.

The president is a constant topic in the news -- we see him all the time -- so he does end up having an influence on the mood of the country.

I was reminded of this while reading John Avalon's new book Independent Nation -- the chapter on Eisenhower.

The 1950's were almost a mirror image of today, in partisan terms. It was the Republicans who had been out of power for a long period of time, and Republican leaders spent most of their time complaining about the various ways in which the Democrats were ruining the nation. In other words, they had a sour, negative vision of politics and public policy. They offered few solutions and focused almost exclusively on the "gloom and doom" stuff.

In comes Eisenhower -- an independent at heart -- and not particularly interested in the way the leading conservative Republicans wanted to do things. He had picked up a simple little lesson in the army -- namely, that it was part of his job as commanding officer to project optimism and a sense of confidence to his troops. He wrote in his diary that he had resolved to smile and act with control and confidence whenever in the presence of the troops.

He realized pretty quickly that this applied to politics too. That's why you see him smiling in every photograph. Convince the people that things are going well ... and it helps make things go well.

Unlike Reagan and Clinton, this didn't exactly come naturally to Ike. If you listen to his speeches, you get that stilted, formal, somewhat nervous style -- a guy who didn't really feel at home in front of a camera. He was no JFK, but he made himself do it anyway.

Now compare these stretches of history -- the 50's, 80's, and 90's -- three decades of economic expansion ... three two-term presidents with similar styles -- compare that to what's happening now.

I can recall one fairly limited period of time -- a while back -- when the Bush folks expressed an overt desire to help create a new sense of optimism. This was maybe a year after 9/11, when the country was still kind of uncertain and the economy wobbly.

I also note in the new ads Bush is running a strong theme of returning optimism and hope to the country.

Other than that, I see mostly a whiff from the Bush team. Bush is choosing to communicate less than other presidents -- fewer press conferences, interviews, speeches. It's pretty clear, when watching him, that he's out of his comfort zone in front of the camera. He chooses to do it less often, and he doesn't usually manage to project confidence or a sense of being "at ease" when he does.

I think the theme of the Bush commercials is important -- a return of optimism and confidence in America, rather than the sour, hyper-critical politics practiced currently by many leading Democrats. I just don't think the Bush team ever really understood it's importance. For most of his 3+ years, they've failed to do it.

William,

I absolutely 100% agree... Many of Bush's problems are self made. Although I still am voting for the man I contend that his administration has played political games when it should have simply come out and told the cold, hard truth. Whether it be the WMDs or the economy, they have too often decided what is and is not appropriate for the American people to know. My heart tells me that this comes from the Rumsfeld, Cheney, Ashcroft wing of the Administration, and not from Powell, Whitman, and Card.

What is most perplexing to me about this whole issue, is I really feel that when Bush has been the most honest, like for instance after 9/11, and really told us what was in his heart, he has been at his best. It is also noteworthy, as a friend keeps pointing out to me: the day Karen Hughes left the White House, things got noticeably more secretive and negative. I think this argument even has more merit since she has returned because, as you mention, communication has been more positive and uplifting.

Matthew,

I suppose I could turn the tables and ask you what proposals Bush has for job creation, since the only one I've seen has been tax cuts, and they haven't produced the expected result. But I think instead I'll take your question as an honest one and tell you Kerry's proposals for job creation. As a general disclaimer, I am not a fan of Kerry's and I too would have preferred to see someone else a the helm, and I certainly don't agree with all of his policies, but his proposals for job creation are better than what I've seen out of the Bush camp.

First, he proposes reversing the tax incentives that make it more profitable to outsource jobs to other countries and end government contracts for companies that move jobs offshore.

To spur manufacturing, he is proposing a 2-year payroll tax refund for new manufacturing hires, tie tax breaks to companies who hire American workers and provide high quality health care and pension programs, and increase investment into R&D.

And toward the long term, he is proposing tax credits for college and worker education.

Personally, I don't think his ideas do enough, but it's more than I've seen from Bush. All I've seen from the administration is an attempt to obfuscate the issues: pretending "hamburger assembly" counts as manufacturing, suggesting US companies hiring foreign workers is a good thing, and continuing the same policies which have continually failed to live up to the standards that they themselves set.

Bush justified the tax cuts by offering a projection of ways it would benefit the economy, a projection that was at odds with what independent economists expected. Reality has consistently fallen very very short of projections, and I have to question why we should simply accept his estimates without questioning this time around. Jobs are the last part of the economy to come around? Then why did Bush project such huge job growth? And why should we believe him when he does it again?

None of you guys has convinced me that presidents create jobs. Presidents are like quarterbacks, they get too much credit when the team wins and too much blame when it loses. This something I'm willing to point out regardless of which party is holding the presidency.

Jeremy, surely one has to look at a whole host of indicators in order to get even a passing notion of "how the economy is" or "how Americans are doing." Perhaps the economist is focusing on some positives and dismissing some negatives. But according to democrats, the sky is somehow always falling if there's a GOP prez.

It sure seems to me that given the massive economic party of the 90's, the inevitable hangover really hasn't been very bad. Unemployment is pretty moderate compared to historical figures, and very good compared to the figures of European counterparts. Everyone complaining about the current state of the economy needs to ask themselves how shrill these complaints would be if Al Gore was President right now. And everyone minimizing our lingering economic concerns needs to ask themselves if this patience would be so great if Bush had lost in 2000. I have ZERO doubt that if the roles were reversed and the GOP had presided from 1992-2000 and a democrat since then, partisans would be maintaining the exact opposite positions in the blame game.

Mathew, I am totally with you in wishing that our presidents would give us the cold hard truth on economic issues, and tell everyone we might have to suffer a bit in some instances, but I'm not holding my breath. We have to face that we're in the minority, and realize that in bad times honesty is usually a recipe for electoral defeat.

bk, I agree completely that you have to measure "economic well-being" in well-rounded terms for it to have any meaning. In fact, that is exactly why I object to the tendency to look to the stock market as such an important indicator.

I am also inclined to agree that the role of the president in shaping the economy is exaggerated. Nevertheless, when there are such obvious factors we can point to, such as the insistence on more tax cuts despite changing economic conditions, the firing of Paul O'Neill, the acceptance of massive deficits, and the placing of political concerns ahead of sound economic policy, then you have to question whether Bush is doing enough to address the problem.

Yes, if the roles were reversed and Al Gore were presding over this economy, partisans would doubtless be on opposite ends of the debate. In fact, Republicans would have ample reason to complain since the policies being enacted are contrary to their claim that fiscal responsibility is impossible for Democrats and the sole domain of Republicans. But the real question is not what would happen if this were Al Gore's economy, but would we have a different economy if Gore were president.

While I don't know what an Al Gore economy would look like, I have to ask if we wouldn't be in a better position if the surplus had been invested in the country rather than turned into a deficit. Sometimes the president can make a difference.

While I don't know what an Al Gore economy would look like, I have to ask if we wouldn't be in a better position if the surplus had been invested in the country rather than turned into a deficit. Sometimes the president can make a difference.

Well, of course we'll never know, but I'm not really sure what "if the surplus had been invested in the country rather than turned into a deficit" means.

My sense is that the surplus mostly disappeared as tax revenues plummetted when the economy came down (which I think we were justIN FOR, regardless of who took over the reins in 2001). But there's no doubt that Bush contributed to the deficit at least in the short term by cutting taxes.

So I don't think there really was a surplus to be spent, either on tax cuts OR on "investing in the country" (again, whatever that means.) Perhaps under a Gore Presidency it might have come to pass that Gore would have chosen to run a deficit in order to spur the economy, but by spending the dough on things like worker re-training, etc.

I'm not especially sanguine on the long-term feasibility of ideas like tax incentives to businesses that don't outsource. One way or the other this comes down to subsidizing jobs that can't sustain themselves in whatever currently passes for the free market. The fact that the current trend of outsourcing is impacting white-collar high education jobs instead of just blue-collar manufacturing is indeed disturbing, but it seems that based on current numbers this trend is being oversold as widespread tragedy.

Now by saying this, I don't dismiss it, but there is surely an issue of the long-term sustainability of protectionist policies such as this. Particularly paradoxical for democrats is that the flow of jobs to lower wage countries is part of a dynamic of market forces raising the standard of living in nations less wealthy than the US. Charges that the US government is practicing policies that hurt underprivileged and poor nations usually flow from the left. But if the US adopts left-suggested policies of subsidizing American jobs, then the left is advocating policies that hurt underprivileged and poor nations overseas.

I don't have an answer in such a sticky issue. But I do know that it's WAY too sticky an issue to let anyone have it both ways.

Fact: Business cycles are real, and largely uncontrollable by government. Government only has two real methods of affecting the economy, and both are imprecise in effect, and lag so far that "steering" the economy with them on a short-term basis is like trying to steer your car blind-folded in rush hour traffic with instructions that are 30 seconds out of date. That's fiscal policy (tax and spend) and monetary policy (maintaining the monetary base). The White House has only peripheral influence on either. Congress has much more, having the legal control of fiscal policy. Monetary policy is best used simply to keep currencies stable--any other approach leads to a more variable boom/bust cycle. We've had pretty good monetary policy since the Carter years. Our fiscal policy has consistently sucked, regardless of the White House's occupant.

Fact: Cutting taxes is a positive stimulus on the national economy. Raising taxes is a negative stimulus. As far as the economy is concerned, rescinding previous tax cuts is a de facto tax increase. Had taxes not been cut in proximity to the "bubble burst" and 9/11, we'd be in much worse economic shape now. It's quite possible to make the argument that Clinton didn't raise taxes enough to properly restrain the economy, or that Bush hasn't cut them enough to properly stimulate it, or even both. Surpluses and deficits are not good or bad in and of themselves unless they're consistent, what is more important is the overall proportion of GNP controlled by the government. (The astute reader can figure out the permutations for themselves.)

Fact: The major part of the budget surplus we enjoyed in the late '90's was a side effect of the market bubble and vanished along with it. This would have occured regardless of who won the White House. And a major part of the current deficit is the result of the lethargic economy from the ensuing recession, and the sharp external shock of 9/11. Not all, by any means--both parties are all too happy to indulge in trough feeding--but in large part it was both unpredictable and/or unavoidable. But we do love to scapegoat in election season, and the same incumbent that is happy to take credit for the up side will get blamed for the down side, even though he had not all that much to do with either.

Yeah, we have economic problems, both temporary and fundamental, both external and structural. We also have tremendous strengths. And very few problems are devoid of accompanying benefits. We're actually in pretty good shape. Our major problem is government spending expanding faster than the economy, and I have yet to hear either candidate tell me how they're going to stop that.

(warning--favorite hobbyhorse) The 800 lb gorilla in the room is health care. Not military spending, not taxes, not whose beach house is bigger, but that 15+% and rising of our GDP that is out of control and required to keep breathing, especially in a population with an aging demographic composition. Health care is a major part of every domestic policy issue, from outsourcing to gay marriage. As long as we insist on having the world's most expensive and discriminatory health care system and running it on an oligopoly/monopoly for-profit basis with both parties kow-towing to the health-care lobby, government spending can go nowhere but up. We can diddle with the little monkeys of political favoritism and good ol' boy tax breaks, but sooner or later we're gonna have to notice and deal with the gorilla.

Jeremy,

You gave a better pitch for Kerry's ideas than he has ever given himself. He should talk more about what he is going to do rather than what the President has done. Although, I see his ideas mostly as token proposals, and not a plan for economic recovery.

I don't agree that you can easily turn the tables on Bush, because he isn't the one bitching, Kerry is, with not much to offer as an alternative besides rhetoric. The President is stating this is where we have been, this is what I have done, the last part which is this is what will happen has been off, but to say the economy is not improving is a dramatic creation from people whose actions are 100% politically motivated.

I think all that can be done to encourage economic growth is to make it easier for businesses to do business and produce an economic stimulus, which is what the President has done. I also think that extreme budget deficits do not help the situation, and I think this is the biggest failure of the Bush Administration, the problem is that John Kerry would spend more, not less as his voting record indicates.

I also agree with those who have argued that Presidents don't have much of a roll in actually creating economic growth. Which is why Kerry's whining about jobs is even more irritating to me. He is complaining about an issue that he himself will have little control over, and he knows it. He is simply making an issue for political purposes and scaring the hell out of people for his own personal gain. But I will give him credit for the higher education tax cut... why this is not already being done is confusing to me. We should be providing parents with an economic incentive to sent their kids to school... period.

BK,

I think you are right, but I am sick of people accepting that politicians lie, and that is just the way it is. I think they fact that they lie is very telling... Americans really in the end mostly don't want the truth. I think as long as politicians provide fluff responses on the war and the economy, centrists are dead in the water and the extremes will always win out. Which is what is the most frustrating about this general election, we really are arguing about who is the better of two people that in the end none of us truly prefer.

Matthew: ...which is exactly the reason to vote for Kerry -- to achieve divided government again.

Economics is certainly an arcane science/art! The complexity of almost any issue is overwhelming for my tiny mind. I've made it a point to read Brad DeLong daily -- that helps at least get a general idea of what some of the issues are.

One thing I believe is clear with this administration: they did not pursue policies that would result in in faster job growth in the SHORT TERM. That could have been accomplished by targeting tax breaks to those who SPEND rather than those who INVEST. It's DEMAND that has been lacking. I really can't remember seeing anything that clearly contrdicts that impression. Let me know if you have a source.

Tully, there are actually TWO gorillas out there. The other one is called Entitlements and it's going to have tobe dealt with probably sooner than health care.

But Heather, I said it was my favorite hobbyhorse! [g] I do note that health care is part of entitlements too, and it's the part growing the fastest and going broke the quickest. Social Security grows by demographic and inflation. Medicare and Medicaid grow by demographic and medical cost inflation.

Erasmus, the problem with pursuing short-term fixes is that the long-term fallout from the fix is often much worse than the original problem. Not that I give Bush credit for much other than cutting taxes and getting the hell out of the way, which credit he used up and then some with the special-interest highway robbery called the Medicare Prescription Drug Program.

The issue of how the tax cuts were stacked and who got the most benefit out of 'em is another debate entirely. I don't think a President Gore would have done any better, just pandered to different constituents. Same pie, different slices. But hey, I'm a certified heretical cynic. Being a reality-based cynic, I won't speculate on how Gore's actions would have differed, as it would only be a guess. There is little justice or knowledge to be gained from savaging someone for something he never got the chance to do.

Once again, I think this fall we will be choosing which of the two weevils is the lesser, with the choice varying by individual perceptions. I don't think anything I say here will change anyone's mind, and if I have any purpose in saying anything at all it's simply the hope that it may inspire a few folks to quit parroting the opposing propagandas, short-circuit their patellar-reflexive memes, and think for themselves.

At the risk of incurring more scorn, I would like to suggest that curbing outsourcing will only postpone the inevitable. Economic globalization is inevitable. Instead of trying to save jobs that can be done more economically elsewhere, we should be spending more time, money and effort finding and creating new goods and services that we can provide better than anyone else. Then we need to educate and/or re-educate our workers and students to fill those new positions.

I believe that the primary reason for slow job growth right now is a major economic shift such as we have seen in the past as when we shifted into an industrial based society from a primarily agricultural society. Change is inevitable and often painful, but to try and stop it is like burying your head in the sand.

No scorn from me. I think you're pretty much on the mark there!

Janus: you have two misunderstandings in your economic model.

First: an economy is not primarily about goods. It's primarily about providing value to its participants.

Example: is a carton of milk more valuable to you at a convenience store in walking distance, at a big grocery a mile away, or orderable on the Internet? You can get to the convenience store much faster, it may be available 24/7, and probably even pick up milk when pumping gas. At the grocery store, it's only really handy when you're grocery shopping anyway. The Internet is simply annoying for buying milk just now - you'd only buy there if you got a pretty amazing deal. And yet, we're talking about the same physical goods here.

The "paper professionals" that you keep talking about (presumably including consultants like me) add value by producing goods and especially services that people find to be of value. Like, for example, managing the supply chain of some convenience stores.

Second: balance-of-trade is not a necessity. It's more like a good thing to have. This follows directly from the primacy of value. If you produce enough of value, then you can use that created value to buy stuff. Because the value is created, ab nuovo, all the time, there's no limit on how far this process can go. Are there bad effects? Yes - our currency goes down (in turn improving the balance of payments and pushing the cycle back). But it's not a lurking crisis kind of thing.

Yeah, thanks for pointing this out, John. It's a tempting common-sense based notion that our wealth must come from concrete goods such as via manufacturing, as opposed to "imaginary" value goods such as legal advice or service or whatever.

But economists by and large reject this notion as inaccurate, unsophisticated, wrong.

I'm pleasantly surprised that this thread has remained fairly civil and not degenerated into a flame war, because I suspected that the discussion would rely on rhetoric and generate more heat than light.

I think it's probably worthwhile for somone to work on a "basic economics for dummies" post or series that explores some basic notions. I may spend some time looking into this to see what resources I can find. Non-economists tend not to spend much time thinking about money. But when you do, and it hits you in the face the extent to which money and value are essentially imaginary, or at least mentally malleable, it's pretty mind blowing.

Here's the one that sort of blows my mind. Two men enter an auditorium, one with $50 in his pocket, and the other with a 99 cent notepad, for a total value of $50.99. The first man gives the second man his $50. This second man writes his name on a piece of the notepaper and gives it to the first man. Now the 2nd man has $50, and the first man has a piece of paper that, even though it's not a check or a promise or anything, is worth $50, and may even be worth more to others. That first man created $50+ dollars of value out of thin air. Because he was, say, Michael Jordan. He's magic.

Value can be largely imaginary, but as long as everyone, or enough people, agree upon it, it's real enough.

More truth-telling from Heather on job sourcing, which is exactly what Bush should be arguing to the American people, but he is taking the easy path that Will was talking about.

But again, to make an issue out of job sourcing like Kerry is, when he knows that there is nothing that he can or should do about it, is disgusting.

[i]At the risk of incurring more scorn, I would like to suggest that curbing outsourcing will only postpone the inevitable. Economic globalization is inevitable. Instead of trying to save jobs that can be done more economically elsewhere, we should be spending more time, money and effort finding and creating new goods and services that we can provide better than anyone else. Then we need to educate and/or re-educate our workers and students to fill those new positions. [/i]

No scorn from me, Heather, but I have to address the opinion that enacting policies which help curb outsourcing will cost us time, money, and effort that we should be spending elsewhere. Right now we are actually spending money to export jobs, in the form of tax incentives. Even if we don't give tax breaks to companies which "hire American," I don't see any possible justification for underwriting the opposite practice. It is like a parody of itself, the reducto ad absurdum of policy which favors the corporation over the good of the nation.

And I agree wholeheartedly with your assessment of the need to improve education because, as we are finding out, if you don't fund education then there won't be any "new goods and services that we can provide better than anyone else."

Added value? Is nice for a while as some added value. But, unless exporting, just pushing textbook term of value around in this country.

Really think we are going to be coming up with so many new ideas? Our shuttle is even a mess.
That the rest of the world isn't smart? Really think because people went to the univs that you are to be considered so smart? It was a cushy life for them, while 90% of the programs and those whose tuition money they took don't belong there. The univ types even let in those from around the world to go against you.

Really think $130B+ trade deficit and growing means so little? It's really basic math. Produce and export or down a country goes. It's only a matter of how long. I think that clock started ticking fifteen years ago.

I previously explained several factors to explain why this country is in trouble. It needs to undergo major econ changes for the better, quit living like wannabe out of touch princes and princesses, and quit playing John Wayne for the rest of the world. Producing products and exporting is key.

Am an Independent /Non-Partisan and have paid dearly for it, including not being able to be in office as family members and friends or being around them. And, have actually been ahead in my thinking for a long time.

Janus

No scorn from me, Heather, I think you're precisely on target. But I also agree with Jeremy about subsidizing outsourcing being asinine, and that's not at all contradictory. "It is like a parody of itself, the reducto ad absurdum of policy which favors the corporation over the good of the nation." Special interests versus public good--the precise intersection of American RealPolitik and the common weal.

Jon Kay's comment on paper professionals is a VERY valid point as well. It may be that many paper professionals are societal deadweight, but many are NOT. Try running any complex organization or process without 'em. Then watch it collapse. I'll leave balance-of-trade alone for now, but I agree with him.

BK, if you want to start a series on basic economics I'd be happy to contribute. (In my copious spare time, of course!) Most people are woefully ignorant of even the basics of supply and demand. And monetary economics, comparative advantage, and value theory can make astrophysics seem simple at times. Economies are organic systems, not static or mechanistic.

Since we're talking about basic economics, a field in which I find myself woefully inadequate to defend myself, and since the discussion has turned occasionally to problems in defining economic well-being, I have to ask what you all think of indicators, such as the "Genuine Progress Indicator," which attempt to incorporate non-monetary transactions which have positive or negative value for the economy as an alternative to the GDP for determining economic health. Admittedly, the criteria you have to use in something like this are subjective and open to criticism, but I wonder what you think in general.

Here's the report:

http://www.redefiningprogress.org/publications/gpi_march2004update.pdf

Tully, I'm going to email you at flyover@cox.net regarding some possible approaches to furthering understanding of econ. I am FAR from an expert, but I'm somewhat practised at making complex ideas understandable. So check your email, I'm going to try and touch on some perspectives that we may find useful here. I'm not aiming for comprehensive coverage, just understanding of some basics, debunking of common misapprehensions, etc.

Jeremy,

If you want to join Tully in our exploration, let me know. I mentioned talking about indicators to him.

Regarding your link, I am, as always, immediately suspicious before I even look at it, just by the way it sounds. I wonder whether it's tacitly trying to redefine progress for some overt political goal instead of a basic goal of taking a realistic look. That's just me though, I see a URL named like that, and my BS detector starts to flash, ya know? I'll try and look into it when I have a minute though.

A couple thoughts on indicators: it always seems much wiser to me to look at as many benchmarks as possible in trying to denote a trend.

And because indicators are almost inevitably constructed based on necessary subjective judgements about valuation, it tends to be the case that any indicator's primary value is in comparision to itself (and related indicators) over time. The point is that any indicator is subjective and not especially reflective of some important reality all by itself. But if it shows a trend, and similar indicators show the same trend, then you're on to something, whatever that is.

The idea of using numbers and models to conceal what are, at their essence, subjective judgements, is certainly an idea worth elaborating on. If you dig into the specifics of a model that generates a single number from several, at some point someone made a subjective judgement about relative values and then pulled some numbers from their rectal cavity based on that judgement. It can be a problem.

Jeremy,

From a quick look at the document, my initial take is that it doesn't hold water in any empirical sense whatsoever. It's scientific pseudo-babble, with an agenda. Using the same process and technique, you can produce "measurements" that say absolutely anything you want them to. (I'd like to note from the start that GDP is an objective measure of objectively defined economic factors, bounded by the usual problems of imprecise measurement and non-omniscient inclusion of data. How it is used as an indicator is entirely up to the interpreter--GDP itself makes no value judgements, just as a temperature chart has no opinions on global warming.)

The authors start with some valid points about the inaccuracy and flaws of GDP as a measure of economic "progress." They then proceed to point out that it doesn't measure their favorite quality-of-life and political justice issues, so they add even more flaws (of their own choosing) and adjust the basic figures by extremely selective and nebulously relative factors (also of their own highly selective choosing) in order to achieve a "measurement" that proves their thesis and produces their desired results. Had I handed this in when I was a grad student, four out of five profs would've bounced it out the door with a failing grade on grounds of pre-determinism, selective citation, irreproducability of results, and non-quantifiable variables. (The fifth would have offered me an invite to a campus meeting of the Marxist internationalists....)

I'm not saying they don't have some VERY valid (if highly selective) points about quality-of-life issues and the shortcomings of GDP formulation and usage. But there's a HUGE difference between noting some selective flaws in an empirical standard measurement process, and producing a new "measurement" process that is entirely dependent on subjective factors defined and measurable only by the biased perceptions and value judgements of the authors.

Science, it ain't. Some good commentary on quality-of-life issues, some of which I agree with. Not a hint on how to translate any of that into a real objective measure. In short, an agenda-driven rhetorical polemic lacking in objective foundation.

I'm gonna stop now before I start lecturing on the theory of relative value....

I'm looking forward to what Brian and Tully come up with. It's been way too long since my college economics courses!

I think you may have misunderstood my reasons for bringing up the GPI. I certainly have no illusions that it, by itself, represents reality in any meaningful way, or that it should be used in place of the GDP. In fact, I'd say its primary usefulness is the exact opposite: in showing that the GDP itself should not used as a "value neutral" indicator.

The GDP may be, as you say, an objective measure, but it is widely misused to represent factors that are anything but objective, and the GPI's usefulness lies in pointing that out. No one can accurately measure the relative "economic value" of childcare by a homemaker vs. childcare by a paid professional vs. childcare by a volunteer worker vs. manufacturing a sprocket while one's child is being taken care of by someone else. However, the GDP only ever takes into account two of those activities. It may be objective, but it is also selective. It may measure all that is measurable by its criteria, but it necessarily ignores the existence of anything that is not measurable in the same way.

There is an agenda involved in any measurement, as soon as you decide what it is that you want to measure, what units you want to measure it in, and where you are going to draw the boundaries of that measurement. Since we have many people in positions of power who do, in fact, use the GDP as a benchmark of economic progress, and by extension of their own success in guiding it, we need to be made aware of the underlying assumptions which shape their agenda. Using an indicator with a competing agenda is a way of doing that.

I guess I'm trying to relate this to the original post, in which wealth was chosen over jobs as an indicator of economic well-being. That's a valid decision, but when you use it to ignore the lack of jobs, draw the conclusion that the economy is just fine and dandy, and the media shouldn't complain about it so much, that's when you run into problems.

Sigh.

An objective measure is just that, Jeremy. You don't need to invent a new (and biased, and subjective) measure to compete with it in the world of ideas if you don't like its interpretation. Your problem is not with the measure, but with the interpretation thereof. The GPI approach is no more and no less than an attempt to appropriate the objectivity of the original measure for purely subjective and political purposes. The only usefullness it has in a factual sense is to point out that some people would like to give their own set of subjective "facts" an objective veneer by adjusting the measure to suit themselves.

This is clearly illustrated by the fact that the GPI people take what they claim is an invalid tool, then use it as the very basis for their own propagandic approach. If it's so flawed, why is their own measure based on it? GPI is not a competing measure. It's not even a measure at all, it's just political rhetoric swathed in psuedo-economic terms. It's based on premises several orders of magnitude more systemically and fundamentally flawed than the measure it purports to adjust. It has no reason to exist except to pretend to be what it is not--objective.

The argument you're using against GDP (or that of the GPI authors anyway) seems to be that people misuse it, so therefore it must be either de-legitimized or appropriated--standard Marxist dialectic doctrine. And the problem is that GDP doesn't give a damn, it's just a measure. The sticking point that seems to be so annoying is that people misuse it. Hey, there's nothing to stop the GPI people from misusing GDP even worse (and they do). But that doesn't give GPI any relevance whatsoever. And it doesn't invalidate GDP in the least. Want a better measure? Start with reality and find a way to incorporate those things you think should be included in order to produce a more accurate result. But start with objective data, or you'll never get there.

"There is an agenda involved in any measurement, as soon as you decide what it is that you want to measure, what units you want to measure it in, and where you are going to draw the boundaries of that measurement. Since we have many people in positions of power who do, in fact, use the GDP as a benchmark of economic progress, and by extension of their own success in guiding it, we need to be made aware of the underlying assumptions which shape their agenda. Using an indicator with a competing agenda is a way of doing that."

That's a neat example of post-modern relativistic rhetoric, and has absolutely zero validity in any area where the data is objective. GDP is objectively measured, with the value of GDP determined by verifiable and replicable data. The results are reproducible, consistent, and standardized, and the determination of those individual data likewise. It has no "agenda," it's just a composite measure. GPI, by comparison, is an agenda-driven "measure" that uses non-measurable non-objective non-replicable non-verifiable "data" to adjust known data to suit the agenda of the designer--Lysenkoism in action. It is, hence, utterly invalid as a measuring tool by any rational standard.

You want to expose the assumptions of those in power? Have at! Always like to know what the top dogs are thinking, and their working assumptions. You want to compare those assumptions to those of their opposition? Great! Quite helpful to the voter in election season. Always nice to have better info on which is the lesser of two evils, or (fat chance) even a possible good. But understand that it's political debate, and not anything resembling applied economics. If you don't like the results of an objective measure because they don't support your position, don't squawk that the measure's imperfect and that therefore simply inventing "data" to make the results fit the agenda is somehow illuminating. It's not. It's simply diddling the data.