THE VIEW FROM CHAOS MANOR
View 546 November 24 - 30, 2008
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November 24, 2008
There is a new Mailbag over in Chaos Manor Reviews
Public works will fun afoul of environmental, disabilities, affirmative action, and work safety regulations and restrictions: imagine trying to get permission to build TVA, Hoover Dam, Grand Coulee Dam, hundreds of court houses, and the other projects that were a major benefit of the WPA. WPA and CCC were desperate measures but there were great long term benefits despite the jokes about people leaning on shovels. There was a work ethic in those times that may or may not exist now, but there was certainly a lot less complication involved in getting a project started and getting people to work. Again I recommend Amity Shlaes, The Forgotten Man as a good history; I presume many of you are familiar with Frederick Lewis Allen's ONLY YESTERDAY, which is the standard history of those times most of my generation grew up on. It's a bit overly friendly to Roosevelt (many of his projects weren't well planned) and I recommend Shlaes as a companion; but it conveys the excitement of the time even as the economy tanked to 25% unemployment (at a time when far fewer women were ever employed outside the home).
Citibank is now bailed out and partly bought out.
The auto companies are being told they have to submit to government management if they are to stay open.
Of course the simple solution to the economic problem is what General Lucius Clay and Konrad Adenaur brought off in the occupation (of a country devastated by war). They announced a suspension of all regulations and restrictions. If you wanted to hire someone and that someone wanted to work, go for it. (I oversimplify, of course.) The result was the German Economic Miracle. Of course that won't be tried. If you give people freedom, some will offer pitifully small wages and some will accept them, the media will find them (some of those cases may well be set up by both parties just so the media can find them) and the sob stories will flow.
Meanwhile no one seems to understand that you cannot have Free Trade coupled with onerous work regulations. This is not to say one should not have work regulations; it does mean that if the cost of those regulations exceeds the transportation costs of the overseas competing goods, the overseas goods will have a competitive advantage. Perhaps that can be overcome by efficiency. Efficiency, of course, is pretty well defined as producing more goods with fewer workers. Fewer workers means fewer jobs. This has an impact on the economy.
The US thrived for well over a hundred years with protective tariffs designed to allow US industries to develop. They were often applied quite unfairly -- the tariff on textile processing machinery was one of the causes of the Civil War -- but the US thrived even so. It's certainly true that tariff walls restrict trade, and one must be intelligent about how tariffs are calculated and applied. US industries and technologies don't need protection in order to develop; but if we burden our industries with regulations that their offshore (or nearshore) competitors don't face, we have to expect that they'll have an effect on the economy.
A trivial example: if we set minimum wages at, say, $100 an hour, then we'll have to be a lot more efficient than an offshore or nearshore competitor who only pays $1 an hour. Depending on transportation and capital investment costs, there is a large incentive for an investor to build overseas, and for a domestic wholesaler to buy there, because a domestic manufacturer would have to be tens of times more efficient than his foreign competitors. Note that this happened at first with NAFTA: many jobs moved south. Then China took the jobs away from the Mexican border towns (much of the pressure to deal with China came from Wall-Mart).
Since that time a good part of the US economy in the past few years consisted of opening shipping crates filled with Chinese goods, and borrowing money from China to let us pay for those goods. This doesn't seem to be an entirely stable situation.
Of course US industries will ask for the largest tariff they can get, and use tariff for profit protection. Tuning the tariff so that it compensates for Federal labor laws is politically difficult, but likely a necessity. The alternative would be to repeal all Federal labor laws -- all of them -- and leave that to the states, who will compete with each other in lowering regulatory costs. Even then we might need a small tariff, but it need not be very high -- and would be a valuable source of revenue. I've said this before: when I was young, the Republican Party was the party of protective tariff, the Democrat platform was "tariff for revenue only." But in those days we weren't worried about exporting jobs to Sinkiang Province of China, or to Uzbekistan.
But do go read Amity Shlaes to see what measures Roosevelt tried for staving off the Great Depression.
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November 25, 2008
I have increasing evidence that people don't understand my position -- and the basic facts -- of free trade and economics. I received this yesterday:
Note that what I said was the exact truth: Lucius Clay and Konrad Adenaur suspended just about all economic regulations during the occupation of a nation devastated by war and bombing, and the result was what was known as the German Economic Miracle. From this Mr. Grenadier infers, apparently, that I hope that Obama will fail so that I can have whatever satisfaction their might be in saying 'I told you so.' How he infers my motives from citing a well known fact is beyond my ken.
He also has the notion that deregulation was the only (exactly) cause of the economic problems, and that I am somehow opposed to all regulation, which would astonish the egregious Frum and other neocons. Now in fact Lawrence Summers, former (briefly) President of Harvard and one time Secretary of the Treasury, Obama's new economic advisor, warned long ago that Fannie Mae and Freddie Mac were leading us to a disaster, and proposed regulations -- today's Wall Street Journal has an editorial about Summers' new appointment and it's hardly disapproving. I have explained here more than once that the real estate bubble was created by government's desire to do good by increasing the number of people who own their homes -- and thus become part of the middle class -- by setting up institutions to allow higher-risk loans. The result was predictable: there was a race to the bottom. Banks that made the riskiest loans got the largest fees, and there was terrible pressure on conservative banks to get in on the action. The result was a bubble. Once again I do not see how that conveys the information that I don't wish the nation well, and that I will rejoice if Obama's policies fail.
It is certainly the case that unregulated, unrestricted capitalism is the best system for producing goods at the lowest prices. It is also the case that unregulated unrestricted capitalism always generates a race to the bottom, and the end result will be human flesh for sale in the market place, and other horrors. (See Lawrence Durrel's Alexandria Quartet novels and think about what is going on there.) Think on it: what we used to call the underworld is a world in which regulations and laws generally do not apply; and while novelists can romanticize it -- see The Syndic as an amusing example
For the record: I'd love it if everything works as well as Obama hopes it will. I'd love it if the US went over to Scandinavian style socialism and it all worked as its advocates hope it will. For the record I don't think it will work, but that's a conclusion I draw from my observations about human nature. Some people work regardless of incentives, but most people need strong incentives to get them to work day after day, year after year: if there is an alternative such as easy to get welfare, many will prefer to play World of Warcraft or go surfing or hang out at coffee houses or just hang out all day. That costs, taxes rise, and the productive workers begin to wonder why they are working so hard when they can join the gravy train. Scandinavian socialism worked pretty well in Sweden for a long time because they started with a people heavily imbued with the Protestant work ethic, and it took generations before economic incentives prevailed. But that's my view. Moreover, it may be that Obama doesn't have Scandinavian socialism in mind: it's hard to tell just what he plans for America, and we can only make inferences through examining his appointments and his few statements. But only a monster would wish the nation ill just so that he could crow about it later.
Niven just called and is on his way here for us to go to lunch. I'll finish this and do free trade and mail when we get back.
I withhold the name for obvious reasons. I saw the article in today's paper. Beware indeed. Have our masters gone mad? Will Obama reverse this madness?
According to GalleyCat, Houghton Mifflin has "temporarily stopped
Francis Hamit confirms
This mail is reasonably typical:
Of course I did not say Free Trade was a bad idea since we were sending our money overseas. I do wonder if people read what I say. And of course I am pretty well aware of the facts cited in the rest of the letter.
What I did say was that I doubt the stability of an economy based on opening containers of goods from China, and borrowing the money to pay for those goods. I know that it is popular with some schools of economists to say that foreign debt doesn't matter, there is no such thing as hostile trade, and after all we can instantly go back to manufacturing the stuff we now borrow money to buy. I don't find those assertions compelling, and I suspect I am not alone in my suspicions.
Like unrestricted laissez faire capitalism, Free Trade is the most efficient way to acquire stuff, and if acquiring stuff at the lowest prices is the goal -- possibly the only goal -- of your nation then unregulated Free Trade is the way to go. It will get you lots of stuff, and as long as you have some way to generate the money to pay for the stuff, you'll get it at the cheapest prices possible. The question is, how long can you go on paying for it? What happens if your trade partners return the money by buying your country's capital assets, and eventually own a good part of the country in fee simple, and take the yields of their investments overseas? Then use those to buy even more of your assets? Does this matter? Does there come a time when you run out of assets? Is making a living by selling capital assets a way to wealth? Is this what is being taught in the schools? If you inherit property, is it wise to sell it off to pay your current bills, then borrow more against what's left? We used to call people who did that spendthrifts, and say that a fool and his money were soon parted, but perhaps now that is no longer true?
Economists use models to study events. Let's make a very simple one. Two countries, A and B. Country A has, we will say, excellent schools that produce workers who, on average, can produce 5 times as many widgets per hour as the workers of country B. The two have a common border, so there are no transportation costs. They have a Free Trade agreement. Both countries are pretty well self sufficient in food and necessities, but there is a nearly infinite demand for widgets in each country.
The Country A widget corporations make money like mad. Everyone is happy, but of course there are "excess profits" in the widget business. Now Country A decides that its well educated workers are exploited by their corporate employers who are making excess profits, and enacts some regulations to make things more fair. They enact compulsory health care, pensions, work safety, and minimum wages. This is known as the fairness package. County B does not do this.
At this point we have to examine the costs of our fairness package. If it turns out that Country A workers can still produce widgets cheaper than Country B can produce them, A sells widgets both domestically and in the export market. Country B thinks about this for a while and starts an education program to make its workers more productive. As productivity rises, there comes a point at which the real cost of making a widget in Country B is lower than it is in Country A, because although B's workers are less productive than A's, A's fairness regulations impose costs that B doesn't have. The traffic in widgets reverses. They now flow from B to A, and A's widget factories can't make widgets for less money than the current widget price, and are about to go out of business.
A now has some choices. One is to try to increase productivity, but they already started at high productivity, and the fairness package has lowered the incentive for workers to learn more about being productive.
Country A can invest in better widget machinery, but the excess profits that might have gone into that investment were spent on the fairness package.
Country A can nationalize the widget factories (bail them out by taking equity positions in them) and hope that a government bureaucracy will do a better job and raise productivity. Good Luck with that.
Or A can borrow money from B to buy widgets from B, and watch B buy up the productive food lands in A. With luck those who started this process will be dead before there are serious consequences.
Another alternative is to cut the fairness package benefits until the higher productivity of Country A's workers overcomes the disadvantages of the fairness package. This turns out to be politically impossible.
Perhaps they can impose a tariff on imported widgets that exactly equals the cost per widget of the fairness package. Of course this ends Free Trade.
Now of course this is greatly simplified, but surely you get the idea. In essence, if you impose costs on production, you lower your capability to compete with those who don't have those costs. I would not have thought that controversial.
If your goal is economic growth without regard to social disruption and displacement and you don't mind forcing people to change jobs and restructure their lives in response to market place demands, then Free Trade and laissez faire capitalism work very well together. If your goal is full employment at "fair wages" then Free Trade may not be the way to go.
I would not have thought that difficult to understand.
Incidentally, the practice of living by selling one's capital assets is not very stable. At some point you may need the revenue from those assets. Or you run out of assets to sell. Then what?
IN the real world, the remedy would be to make the US education system more responsive to requirements of a modern world. That means educate the holy heck out of the bright and bright normal kids, and make sure that your average kids learn a lot even if that means separating them from the not so bright, and especially separating them from the disruptive and destructive. It means teaching the average kids things that are practical and suited to their capabilities so they can go out and do something useful. Make goods. Do services. Service robots. Repair things. Recycle stuff. Do things useful. Of course that's not possible in today's political climate either.
Now Free Trade has the useful property of requiring domestic producers to be more efficient, as US auto companies were changed; perhaps Free Trade will do the same for our education system. But don't hold your breath. The auto companies weren't able to change enough, even though there was some real competition -- and the auto companies can't compel you to buy their cars. The school system is harder to change, they can compel you to pay for their services no matter how bad these services are, and they don't permit any real competition. (Ask anyone in DC if they'd rather their kids went to DC public schools or Sidwell. We know what the Obamas think about that, and who can argue with them? No one wants the Presidential and Congressional Children to have to go through what the average citizen of DC's kids must endure.)
I'm not against Free Trade; but I'm not for it in all circumstances either. There are good reasons (including revenue) for tariffs. And that's enough for today.
follow up on bad flash memory
A follow-up on the bad flash memory, and a reminder why to buy from good retailers… Newegg.com will be shipping me another flash memory card and they don’t even want the bad one back because it’s not worth the shipping. Dealing with newegg is almost as good as going to a friendly electronics store down the street, and I’ve had pretty good results with their customer service.
Since I mentioned that I got the bad card from newegg, I wanted the record set straight about what they did when it was brought to their attention.
Uh -- if you haven't subscribed and can, this would be a great time. It need not be platinum....
November 26, 2008
I seem to be a bit under the weather today.
For those who want to know something about the writing racket, there's an interview with Francis Hamit at http://travisheermann.com/blog/?p=163 that has some good information.
I'll get mail up later. I hope. Have a good holiday.
I have a note from a former military administrator on the practice of 20 year veterans arranging some kind of disability as part of a retirement package, and attempts to prevent this; the new procedures weren't designed for short time truly injured retirees. Perhaps so, but I'd think an augmentation to retirement was part of what clever soldiers have been doing for two thousand years; Sergeant Bilko has existed since Rameses. A martinet approach to the cause of genuine injuries can't save us much money compared to the harm done.
November 27, 2008
A day to count blessings. I have many. So do all of you: you're here, which means you have Internet access, which means you have access to the accumulated knowledge of Western Civilization and much of the accumulated knowledge of other civilizations. Most of you are free to come and go as you please, and all of you have enough leisure to read this: you're not herding goats or hoeing potatoes.
November 28, 2008
Black Ink Friday
Roberta had a great time in Las Vegas with three of the boys and the latest Grandchild at Frank's new place. Back when I had to decide whether or not to go, I thought I would not be up to the trip by airplane and Roberta didn't want to drive (nor really did I) so I opted to stay home. Enjoyed the party by telephone. Made myself ham and yam and cornbread. A good day.
Today I have to pay the bills and catch up on trying to get my desk a little bit cleared off. I'll also try to put in a bit of Mamelukes time. There's mail on many subjects.
It's not going to be a great shopping day and many retailers will not get out of the red this Black Friday, I think. I have been bombarded with fairly attractive offers but mostly for stuff I don't need and some I'd be better off without. Of course I am tempted by some of the great Cannon and Nikon offers: the latest SLR devices are astonishingly cool. On the other hand, I don't really have any need for a camera better than the Panasonic Lumix, and most of the pictures I take are with the Sony DSC T100 pocket camera -- the camera you have with you is the one you'll get pictures with -- and except for the coolness factor I have no real need for anything else photographic. Same more or less with computers. I'll be setting up the new MacBook Pro shortly and revamping my network, none of which requires anything new.
I have toyed with the idea of setting up a hydroponics greenhouse -- plastic over aluminum frame, exhaust fan at the peak, waist high tables -- but in fact it wouldn't be a worthwhile investment of my time. When I was an editor of Survive Magazine back in the days when survival skills were worth acquiring I had the boys at home to help with the gardening chores (and I was a bit younger). It is astonishing how much food a 10 x 6 foot hydroponics greenhouse can produce at reasonable financial and labor costs. Mine more than paid for itself in a year -- and that's independent of the income that I made by writing about it. Some of you should seriously consider this if you have youngsters available to do some of the chores. The adult work isn't onerous and in my case I could do a fair amount of my plotting while mixing the plant food and lifting the buckets of water.
Of course the publishing industry is collapsing, but it's not gone. On that score I got a big box of the reissue of INFERNO by Niven and Pournelle. If you haven't read that in years, now would be a good time.
You can get it at Amazon http://www.amazon.com/Inferno-Larry-Niven/dp/0765316765/jerrypournellcha but even better would be at your local book store and if they don't have it tell them they ought to get it...
I'm still watching events in the office of the president-designate (on December 15 the Electors will send their votes to the Vice President (Acting as President of the Senate) in Washington, and on January 6 they will be opened and counted in a joint session of Congress; at which point we will have a President Elect, but not before). The appointments are interesting and bode better than I thought; but we have not yet heard from the Ravenous Wolves that so harried Jimmy Carter. Perhaps Obama will be better equipped to deal with them. According to Carter he can hardly be more motivated to do good for the nation, but Jimmy Carter's notion of what it would have meant to do good could he have acted without the interference of the Democratic Party Congressional and Senatorial Chairmen is not entirely clear. Of course it's not clear what Obama thinks will be good for the nation. The nation is in real trouble, and we can wish Obama well.
I spent the day with Phil Tharp disassembling my Active Director server and domain. It wasn't easy, and I am not at all convinced that the simplicity of the workgroup is worth the effort: among other things, all my jerryp accounts were cancelled and had to be set up again, one each machine. It all goes in the column. But it does make it simpler for the Macs and the Windows systems to talk to each other. We still have a bit of a kludge because Roberta's system has to be set up properly with her personal account set up properly. I did the first steps of that.
But it was a full day, and I did nothing else.
It has been a long day. The situation is pretty horrible. My Vista machines can see only other Vista machines. My XP machines can't connect or network at all. At least we can connect to the Internet. This is no fun. Oddly enough, the network was working fine earlier this afternoon. Now it's pretty well useless.
I guess I will go to bed. The Vista systems see each other. The Mac machines can -- perhaps -- see some of the Vista machines but can't connect to them. Or, I think to each other although that may not be the case. I'm too tired to keep it up, but I sure wish I was back to where I was this morning before I began all this. It's pretty grim here.
November 30, 2008
Things look better by day, but the network is weird, and I don't quite know what to do about it. The Vista machines, three of them, see and talk to each other. They are in a workgroup. Satine, an XP machine, is in the same workgroup. Satine sees all three Vista machines, and can talk to them. They Vista machines refuse to admit that Satine exists. I have of course reset all four machines.
What we were trying to do was disable the old Windows 2000 Domain and put all the machines -- about half a dozen -- into a single Workgroup. That is supposed to make it easier for Vista, XP, and Mac systems to talk to each other. If so I have no evidence of it: at the moment things are pretty awful here.
Vista machines see each other fine, but no XP machines or Macs. The XP system sees the Vista machines and can connect to them. The XP machine sees the Macs, but it can't connect to them. The iMac 20 sees or thinks it sees the Vista machines, but can no longer connect to them, nor does it ask me for a user name and password to connect as; it once did. I am not sure what was done in an attempt to make that work properly, but apparently it killed the ability of the Vista machines to see XP systems. I am sure it will be fixed eventually, but it's going to be a while...
I have also killed Lisabetta the HP TabletPC tc1100. I no longer have a user name and password that will work to access her. The old domain user o normally logged in with vanished the instant I changed from Domain to workgroup; I foolishly reset the system, and of course couldn't log in again. Apparently I have forgotten the Administrator login password. I guess I will have to reinstall XP and set the system up again. It will be onerous, but I don't know anything else to do. If anyone knows a way to fool an HP tc1100 into letting me into the system under XP I'd be happy to hear it, but please, unless you know, don't send speculations. I've tried most of the speculations.
I have tried user name Administrator and all the passwords I use for that, but this machine is some years old -- I don't even remember what year I set it up -- and thus I can't find the logbook that might or might not be relevant. Lisabetta is old enough that I wasn't as meticulous in logging things in those days -- my memory wasn't as rotten as it is now. (Hard X-rays tend to do that to you, I think.) In any event, poor Lisabetta is unusable and will be until I can reinstall XP. I have copies and as I said, it's onerous but not all that difficult. I presume I will also need to install all the applications again. Some of the Tablet specific ones came with the system, and I suspect I have long ago mislaid the support disks. I don't use the Tablet a lot, but of course now that she's dead I miss her a lot. If anyone KNOWS what I ought to do at this point, please send me mail; but please speak from some experience, not speculation. If I need speculation I'll ask again, but for now, I'm looking for someone who has some knowledge of the situation.
[THANKS TO ALL THOSE who TOLD ME ABOUT LINUX BOOT PROGRAMS that will let me change the Administrator password. I'll be doing that shortly. THANKS TO ALL and I need no more mail on this.]
For today I have a lot to do. About 4PM yesterday the net was working properly. I am not sure what changed after that; it had to do with getting the Macs talking to the system, and if I can get back to where I used to be that will be a start. The moral of this story is LOG EVERYTHING. The other moral of the story is DON'T FOOL with user names, computer names, domains, and workgroups until you are absolutely certain you know the Administrator account name and password so that you can get back in control of the system if your user name vanishes.
This will be in the column in considerable detail, but I hope to have a happy ending before that happens.
Monday I'll work on restoring the network but one moral of the story is, if you have a domain network that works -- even if it is fussy -- think really hard before you make drastic changes.
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