Posts Tagged ‘industry’

A lot of what perplexes us about conditions of inequality and economic failures can be better understood if we recognized how much of our hunting/gathering life we bring to contemporary society.

For the first 140,000 years that modern humans have existed, we all lived as hunter gatherers. We shared everything we produced with each other, reinforced egalitarian principles, lived in relative harmony, and no authority figure could tell us what to do. We also lived in small groups of about 100-150 people. Our society was small enough then that lazy or selfish people were quickly identified and shamed into behaving or expelled from the group.

Today, about 20,000 or so years removed from hunter/gathering days, almost all of us live in enormous societies with millions of other, mostly unknown, people. This makes it impossible to live in the primitive socialism of hunter and gatherers. The state, as in Cuba, may try to force a “plan” on everyone and to check non-social behavior. But all it does is to suffocate freedom, produce inefficiently, and generally fail to check anti-social behavior. The solution, as most Northern European countries have discovered, is a judicious combination of capitalist markets and state regulation.

Click on this to see video: Cuban economy

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There is a lot of misinformation out there. I actually teach this stuff and know what the facts are. You can google my points below:
1. The flow of undocumented workers has been from and not to the U.S. since 2005. Thus, building or making the border more ‘secure,’ something that is impossible anyway, would actually keep the undocumented from leaving the U.S.
2. Obama has deported more undocumented than any other president. That is why Latinos call him the “Deporter in Chief”
3. Yes undocumented get some health benefits. But this happens because of actions at the local level rather than by federal policy. See the article below.
4. Why do cities and counties provide such services? First, because it is cheaper to do preventive care than pay for undocumented using hospital emergency rooms. Second, because the undocumented provide essential cheap labor for many local industries, from restaurants to crop harvesting to house cleaning to construction. Local economies need their labor. Trump has used undocumented Polish labor at some of his construction projects. And documented labor will not do those jobs at those wages. Third, undocumented labor contribute enormous amounts of tax revenue, often using other people’s Social Security numbers, but do not collect any unemployment, housing, disability, public housing, or retirement benefits. In fact, the revenue they contribute to social security has kept that program afloat financially and makes possible the retirement of documented Americans. This is a fact. Finally, the U.S. Offers very few immigration opportunities to Latin American countries as opposed to European countries. Thus, the economic demand for cheap labor, the destruction of economies in Latin America by American companies investing there, produce pressures which result in people having to come here without papers. It is a complex process where the U.S. is just as responsible for what is happening as the people sneaking in. http://www.msn.com/en-us/money/personalfinance/illegal-immigrants-get-public-health-care-despite-federal-policy/ar-BBqT8Xo?ocid=fbmsnmoney

A few graphs came to my attention recently which confirm arguments I made in recent posts.  One is on consumer borrowing.  The chart below shows  that U.S. consumers are spending a lot less than they were a few years ago.  This is one reason why the economy is not recovering as fast as it could.

Consumer Borrowing as of 9/10/10

The other data is on the steep industrial decline that began in the 1950s.  It supports the argument I made about how much of the Tea Party anger and desire to “restore” America is a plea for a time period that has largely disappeared and not likely to return any time soon, at least not in the form that existed before.

The current recession is the beginning of a deep structural change in the economy, a shift as radical as the one that led to the period of industrial growth in the early decades of the 20th century.  As Matt Bai has argued, it looks like we are on the verge of entering “into a digitized and globally competitive world, and that transformation was threatening to displace the middle class and erode the country’s economic dominance in the decades ahead.”

Manufacturing Decline in the U.S.

The Tea Party and Republican opposition to Obama’s policies will hamper and stall a process that requires government intervention to lead and subsidize the transition to this new economy.  We have more than a burgeoning government debt to worry about if the opposition has their way.  Clearly, the infrastructure of this emerging economy requires a tremendous expansion of broadband internet, alternative energy, fast inter-city train service, an upgrading of the electrical grid, and more.  Without those, there is little likelihood that the private market, by itself, can do enough to keep the U.S. competitive and in the forefront of this permanent economic transformation.

Impact of Govt Taxes and Spending on the Economy

Moreover, as the side chart makes clear, tax cuts do have a stimulus effect on the economy but it is relatively small compared to other government actions.  In particular, middle class tax cuts, economic transfers through food stamps and unemployment, as well as government spending on infrastructure are much more likely to have a positive effect on the economy.  That so many Americans and policiticans are so wrong about taxes and spending makes you terribly sad or as Professor Edward D. Kleinbard, former chief of staff of the bipartisan Joint Committee on Taxation, now a law professor at the University of Southern California stated, “The debate has become so unrealistic it makes you want to scream.