Against 'the end of prosperity'

The border between Haiti, left, and the Dominican
Republic shows the ravages of unchecked
deforestation on the Haitian landscape.
It wasn't the resources, it was the policy.
(Photo/United Nations Environment Programme)

From 2000 to 2010 – a period that includes the worst economic recession since World War II – the U.S. economy has grown 45 percent in nominal terms, 17.6 percent in real terms, according to the Bureau of Economic Analysis. 

That, in conjunction with this, is why I do not believe that recent American middle-class experience tells us anything about “the end of prosperity”:

"The disposable income of families in the middle of the income distribution shrank by 4 percent between 2000 and 2010, according to data compiled by the O.E.C.D. In Australia, by contrast, it increased 40 percent. Middle-income Germans, Dutch, French, Danes, Norwegians and even Mexicans gained more ground."

There’s much more in the article, a veritable litany of the ways America is turning, or has turned, into a Third World country. But for me, the above comparison with the rest of the world has tremendous clarifying power.

We live in a global economy. If resource constraints, rather than bad policy, are causing the woes of America’s middle class, why are those constraints not affecting the Australians, the Germans or the Mexicans? 

Throw the book at him

After enjoying Alex Rosenberg’s interview in 3 a.m. magazine last week, I thought it might be interesting to read his book, The Atheist’s Guide to Reality. And so it was, but not in a good way.

The first half isn’t bad. Rosenberg gets through physics and biology pretty well, making some nice points about the second law of thermodynamics and the directionality of time. His notion of “nice nihilism,” that human “core” morality plus correct facts about the world give you all the ethics you need … well, I’ve heard worse ideas.

But when Rosenberg gets to consciousness, he tries to explain it away, and steps on a rake instead. Thoughts aren’t about anything, he argues strenuously, and as proof, he adduces what I think may be the dumbest premise in the history of contemporary philosophy: 

“Introspection certainly produces the illusion of aboutness. But it’s got to be an illusion, since nothing physical can be about anything.” (my italics)

Anyone who writes a book – a physical object – should think very hard before penning those last six words.*

*If this seems too glib, see this review. Alternatively, read up on computer science. How anyone, this far into the computer revolution, could think that we haven’t learned quite a lot about how to physically encode information (information = patterns that are about something) is beyond me. Hint: Aboutness does not require consciousness.

There's a Google Street View of Mount Fuji

Apparently, I didn't need to climb Mount Fuji on that cold, rainy night in 1993.* I just needed to wait 20 years until Google climbed it for me.

Truly, we live in remarkable times.

*Climbing Fuji is a bit like going up the world's largest slag pile - it's all this crunchy, crumbly volcanic rock. My friends and I froze our butts off because we couldn't see spending 7,000 yen to get into one of the shelter huts. So we huddled together outside and sang Beatles songs to keep warm. It didn't work! When we reached the top the next morning, it was fogged in; I succumbed to altitude sickness and ended up spending 9,000 yen I couldn't afford on cans of oxygen at 1,500 yen a pop. Despite all that, I remember the climb with great fondness.

Blip or streak?

Lancaster journalist and blogger Gil Smart, via Facebook, points us to “The Blip,” a New York Magazine feature on pessimistic economist Robert Gordon. As the article details at length, Gordon believes the broad-based and sustained economic growth that modern Americans consider normal was actually a one-time piece of good fortune that is basically over. “Fascinating piece,” Smart says, and I agree.

Awhile back, Gil and I traded emails on the topic of American decline and its inevitability or lack thereof. Gil at least provisionally endorses the notion that America has reached “peak prosperity,” and that going forward we’ll have to get used to the idea of constraints on growth, of limits. Given Americans’ sense of what they’re entitled to by virtue of living in “the greatest country on Earth,” he expects the adjustment process to be … well, let’s just say, if you thought the past few years have been ugly, you ain’t seen nothing yet.

I rarely find myself taking the less pessimistic side in a debate, but I see enough causes for hope to be at least agnostic on this topic. The world is very big, very messy and very complicated, and there is never a shortage of reasons to think we’re doomed. On the other hand, if you look around, there are always a few reasons to think we might muddle through, too.

I remember the existential threats of yesteryear: the oil shock of the 1970s, the standoff with the Soviet Union, the advent of Japan as a manufacturing titan. Each time, pundits confidently predicted the end of the United States’ status as a world power. In a few years, you were given to understand, the average American would be reduced to biting the heads off rats for basic sustenance. Yet here we are in 2013 – not in great shape, certainly, but most of us are still having sandwiches or salads for lunch, not rat sushi.

There’s no doubt we face immense challenges over the next couple of decades. Nevertheless, here are a few reasons I think we can hold off on the sackcloth and ashes:

• Our economic engine isn’t broken: Growth cooled a bit after the 1950s and 1960s, but it hasn’t stalled – it just feels that way, because the rich have been soaking up most of the income gains. Post-recession, U.S. GDP quickly returned to growing at about the rate it had previously – which is truly remarkable, given our ongoing high unemployment and other headwinds, and quite encouraging.
• New sources of economic growth are coming online: Amazing things are happening in biotech, nanotech, artificial intelligence and robotics … developments straight out of science fiction. And as per Kevin Drum’s illustration of how geometric rates of change work, we can expect much of this stuff to thunder into the mainstream economy over the next couple of decades. If we manage it properly, it will do a world of good.
•  Solar energy could become practical: This is kind of an adjunct to point No. 2, but if trends in solar prices continue, we may be able to wean ourselves off fossil fuels at last and avert the worst consequences of global warming. Affordable clean energy is the holy grail of sustainable 21^st-century growth.
• The rest of the world has problems, too: China’s cheap labor isn’t inexhaustible, its governance isn’t that great, and it faces terrible environmental challenges and resource constraints. Europe’s demographics are far worse than ours. The Middle East is ruled by despots, has radical Islam to contend with and is as dependent on selling oil as we are on buying it. And so on.

To counterbalance those factors, here are a few of those “immense challenges” I mentioned:

• For too many Americans, the link between work and economic security has been broken. College costs, health insurance costs and the erosion of stable employment and pension systems have left vast swaths of the middle class scrambling not to lose ground, let alone to advance.
• We have a predatory financial system that extracts tribute from the real economy with impunity. These folks got away with murder in 2008, and they’re still around.
• We are afflicted with a reactionary political movement hell-bent on making us dumber, sicker and poorer. There is such a thing as reasonable conservatism, but this is not it. In the second decade of the 21st century, a First World country should not be debating whether evolution is true, applauding the premature death of the uninsured, or suppressing the vote. Not that I'd give the Left straight A's either, mind you. We need better governance. 
• Global warming may not be solvable after all. If any of the worst-case scenarios turn out to be true, all the robotics in the world won’t make much difference.

So, it’s going to be tough going these next few decades. Point No. 4, in particular, worries me. Nevertheless, I think it’s at least conceivable that, despite everything, when 2050 rolls around we’ll find ourselves somewhat richer, healthier and saner than we are today. And if we’ve managed to avoid ecological catastrophe, too, we might even make it to 2100.

Guess we’ll see, won’t we?

Consumer surplus in action

Like most people who use the Internet, I’m not an HTML expert. I understand the basic idea, but the last time I was anywhere near the cutting edge, <B>bold</b> and <I>italic</i> tags were new and exciting. So when I was advised to make the links in these posts open in new tabs, it’s not as though I knew how to do that off the top of my head.

Fortunately, I’ve long practiced the principles behind the XKCD Tech Support Cheat Sheet. A quick Google search led me to this page, which told me I needed to insert the code “<base target=’_blank/>” in the header section of my template. I did, saved, and checked the result. Presto! Problem solved.

Until the next day, when I realized every link was opening in a new tab, not just the external ones. Click on “About” – new tab. Click on “Journalism” – new tab. That’s not what I had in mind.

So, back to Google. This time my search for “Blogger external links new windows” led me to this page … and a much longer stretch of HTML gobbledygook that apparently implements some JavaScript. Fortunately, this is what cut-and-paste is for. Save again … and now everything seems to work as intended. (Let me know if it doesn’t.)

This strikes me as an example of the “consumer surplus” provided by the Internet. Thanks to the plunging price of storing and distributing information, I get a free fix to the free code that underpins my free blog. I don’t know how much it would cost to have a professional modify my blog code, but presumably it would be more than $0.

Of course, the forces that have caused the Internet to blossom with free blog fixes are the same ones making it harder for many information providers, including journalists, to make a living. One person's consumer surplus is another person's lost revenue. Still, I'm glad my links work - and despite first-hand experience with the Internet's battering of traditional print journalism, I'm continually delighted by the cornucopia of amazing writing that the Web daily places for free before my eyes.

It wasn’t the shale, yinz

Pittsburgh

Paul Krugman muses on why deindustrialization left Detroit a basket case, but not Pittsburgh. Both metros were one-industry towns well into the 1970s (cars in Detroit, steel in Pittsburgh). Both took huge economic hits in the 1980s when the factories closed and the jobs went away. Yet today Detroit is a bankrupt wasteland, while Pittsburgh isn’t doing too badly. What’s the difference?

Krugman tentatively suggests that “Pittsburgh, by taking better care of its core, also improved its ability to adapt to changing circumstances.” By contrast, Detroit, he thinks, may have been so eviscerated by the exodus to the suburbs that it lost “the kind of environment that could incubate new sources of prosperity.”

I come from Pittsburgh, and I think Krugman’s roughly right. Specifically, I think it’s an “eds and meds” story.

Pittsburgh is home to two top-rank educational institutions, the University of Pittsburgh and Carnegie Mellon University; CMU in particular draws the kind of brilliant entrepreneurial students who start viable high-tech companies. It’s also home to the University of Pittsburgh Medical Center, aka UPMC, a behemoth of a health system that owns 20 hospitals and has 54,000 employees. Virtually everything to your right as you drive down Fifth Avenue in Pittsburgh’s Oakland neighborhood is UPMC – it’s like the Borg on the Hill there.

According to this article, post-industrial Pittsburghers "practically saw themselves as defined" by eds and meds. And how's this for data: Among Pittsburgh’s private-sector employees, one in five works in health care.

Yet more than a few of the 200-plus comments on Krugman’s post think it’s all about the Marcellus Shale. I’ll grant that the timing looks right at first glance, given that Detroit’s and Pittsburgh’s employment numbers start diverging around 2007. But the scale and geography are all wrong … and actually, as I’m about to argue, the timing is wrong, too.

Scale first. The fact of the matter is that the Marcellus Shale’s effect on the jobs market has been absurdly overhyped. Gas companies and their political allies continue claim shale development is leading to hundreds of thousands of jobs. In reality, fewer than 25,000 new jobs statewide can be attributed definitively to Marcellus Shale activity.

In the Pittsburgh area, the mining sector added just 3,200jobs between 2007 and 2011, out of a regional payroll of more than 1 million. And that’s in an eight-county area. A job in rural Washington County doesn't count toward reducing unemployment in downtown Pittsburgh.

Which brings up geography and timing. It’s true that a number of gas companies have established regional headquarters in Pittsburgh. But that was a choice, not a necessity. Northcentral Pennsylvania doesn't have any Pittsburgh-sized metropolitan area, yet that hasn't prevented drillers from going gangbusters up there. If their site selectors had scouted Pittsburgh and found a ruined urban wasteland, they could have set up shop just fine in Washington County instead.

Fortunately, by 2007, Pittsburgh had done most of the hard work of reinventing itself – becoming pace Krugman “the kind of environment that could incubate new sources of prosperity.” When the drilling firms turned up, they found a hospitable downtown business district, so they signed office leases and moved in. That’s all to the good – every job is a job, contributing to Pittsburgh’s bottom line. 

But these jobs are an effect, not a cause. They’re a modest added bonus, not the reason Pittsburgh isn’t Detroit.

                                                                                                            

Phrase of the day

Thanks to “3 a.m. Magazine” and its interview with philosopher Alex Rosenberg (HT The Browser), I recently discovered Rosenberg’s characterization of most economics as “mathematical politics” – a delightful turn of phrase.

“Mathematical politics” neatly encapsulates a reservation many people have about economics. More precisely than words like “religion” or “ideology,” Rosenberg's term highlights the crucial bait-and-switch: the notion that economic theories are exempted from having to accord with everyday notions of fairness or justice, or the facts on the ground, because they use really hard math. That makes it OK if they completely fail to predict major economic events or if policies based on them do not produce the promised outcomes. Being hard grants a discipline epistemic status … never mind that to the rest of us this often looks more like a form of bullying (the "politics" part).   

(Note that in saying the above I am playing right into NoahSmith’s stereotype of how laymen view economics. So be it.)

For what it's worth, the whole interview with Rosenberg is fascinating. His attitude toward science seems to be: “You can’t beat it, so join it (but keep your eyes open),” which seems about right to me. The humanities embarrass themselves almost as much as religions do when they go mano-a-mano with the most successful intellectual enterprise of the past four centuries. Here’s one good quote from the interview: 

Science is much more reliable than common sense since it is common sense recursively reconstructing itself on firmer foundations, and by now it has shown us that conscious introspection is a wholly unreliable guide to almost anything, including the nature of cognition, emotion and sensation.

 Well, quite so, and no well-informed person should disagree. Yet, so many do … 

Economics, inside and out

Noah Smith is a terrific economics blogger, and Thursday’s post, “How normal people see economics” is a fine example of his work. As the title implies, it’s about the contrast between how economists view their profession, versus how the rest of us view it. (Cue the appropriate meme.)

According to Smith, outsiders see economics, particularly macroeconomics, as “inherently political” and as “being mostly about redistribution.” Economists, on the other hand, are far more aware of the vast body of settled science in their field (or dogma, if you prefer), and see themselves as students, not of distributional fairness (whatever that is) but of efficiency.

I think Smith is right, and I hope most people will agree: It’s utterly unsurprising that economics is viewed this way. Noneconomists mostly encounter economics in policy debates – as the source of rationales for tax policies, fiscal stimulus, regulation schemes, and so on. And, as the past few years have shown, though economists may hold hands and sing "Kumbaya" around the normal science that constitutes the majority of their field, when it comes to policy they disagree as profoundly as the rest of us do. Tellingly, even highly respected names in the field seem to let their politics determine their economics rather than the other way around, even to the point of making what other economics consider to be intro-level mistakes. So there are good reasons for the perception that economics is a form of ideology, a field that attempts to make prejudices look objective by dressing them up with numbers and equations.

As for Smith’s second observation, it’s simply much easier for the average person to notice social fairness than social efficiency. For most of us, the modern world’s historically unprecedented prosperity is background noise. It takes an economist to marvel appropriately at the wonder that is a $1 bag of Lay’s potato chips at the mini-mart; the average person sees it and is bummed because he can’t afford the $3 gourmet chips with the artisanal sea salt.

One might expect Smith to close ranks with his fellow economists and chide us laymen for our naïveté about his profession. Instead, he suggests we have a point:

In a certain sense, the normal people's approach makes more sense than that of the economists. We are an incredibly rich economy - the world's richest large economy by far. This means there are relatively few efficiency gains to be had, but the impact of any redistribution of our titanic wealth will be enormous. Economists usually try to be impartial, shrugging and saying "Rent is rent!" when confronted with questions of distribution, or pooh-poohing welfare analysis as the province of philosophers and dorm-room discussions. They focus on efficiency because a Pareto improvement is something that everyone can get behind (in fact, that's how it's defined). In the process, they ignore the main issue that is usually on the mind of someone thinking about the economy: "What's in it for me?"

For the average American, that last question is of more than theoretical interest.

Voter ID - the 100:1 solution

Can a voter ID law depress turnout even if it isn't being enforced? The chairman of Pennsylvania’s Republican party thinks so – and he seems fine with that.

Rob Gleason

ThinkProgress posted a snippet today of an interview with GOP Chairman Rob Gleason’s interview earlier this week on Pennsylvania Cable Network. In it, Gleason agrees that the furor over Pennsylvania’s voter ID law probably affected the 2012 election:

Gleason: “Think about it. We cut Obama by 5 percent, which was big. … He beat McCain by 10 percent. He only beat Romney by 5 percent, and I think probably voter ID helped a bit in that.”

As you may recall, voter ID was not enforced in the 2012 election, thanks to a court injunction. So what Gleason is describing so complacently is voters who stayed home based on a mistake. (A number of observers, by the way, thought the state’s publicity about the law in the runup to the election was deliberately confusing.)

I have no idea whether Gleason’s conjecture is correct, but let’s look at some numbers. Here are Pennsylvania’s official vote counts for the 2012 and 2008 presidential elections:

           2012

      Obama-Biden                         2,990,274

      Romney-Ryan                         2,680,434

      Total major-party votes:            5,670,708

      Margin of victory:                    309,840

      2008

      Obama-Biden                         3,276,363

      McCain-Palin                        2,665,885

      Total major-party votes:            5,932,248

      Margin of victory:                    620,478

In 2012, the two major parties’ nominees secured a total of 5,670,708 votes, and the Obama-Biden margin of victory was 309,840, or 5.4 percentage points. In 2008, the nominees secured 5,932,248 votes, and the Obama-Biden margin was 620,478, or 10.35 percentage points. So Gleason’s right on the facts.  

                                                                                                 

Now, I don’t know what Gleason means by “a bit,” but let’s suppose it’s around 5 percent – that is, that he thinks 5 percent of the difference between the two elections was due to voter ID. Obama’s margin of victory was wider by 310,638 votes in 2008 than in 2012 – 5 percent of 310,638 is 15,532.

In addition, total turnout for the two major parties was 261,540 votes lower in 2012. If 5 percent of that difference was due to voter ID, that’s 13,077 votes.

But here’s the thing: all of those people who (putatively) didn’t vote were entitled to. The voter ID law wasn't operative. So that's upward of 10,000 people (based on my 5-percent conjecture) erroneously foregoing their voting rights.

Of course, if any of them had planned to commit voter fraud, then they were rightly kept from the polls. But reliable estimates of the amount of in-person voter fraud – the only kind voter ID laws address – range from “nonexistent” to 0.0002 percent –  the number ThinkProgress cites. If 0.0002 of the voters in 2008 committed voter fraud, that works out to about – 118 voters.

Besides, if you're going to commit voter fraud, you're probably more likely than average to try to find out what the rules are, and not let a mistaken belief about ID requirements keep you at home. So the effect of an unenforced voter ID law would almost certainly be limited to depressing turnout among legitimate but confused voters.

Gleason’s tone of voice gives me no reason to think he’s disturbed by the 2012 outcome – quite the contrary. If so, and if my definition of "a bit" is anywhere near Gleason's, that means the head of the Pennsylvania GOP has no problem with discouraging well over 10,000 voters from voting in order to prevent, at most, a little more than 100 fraudulent votes. In other words, he’s fine with an overkill ratio of at least 100 to 1, caused (hypothetically, I want to stress) by a law that wasn’t even being enforced.

What will the ratio be if the law is enforced? Perhaps 1,000:1, if the plaintiffs challenging voter ID  in Commonwealth Court this week are correct. They estimate it will effectively disenfranchise “hundreds of thousands” of otherwise legal voters if it is fully enforced.