Friday, July 30, 2010

What is to be done?

With even my limited, amateur understanding of economics, it's fairly straightforward to understand what we as a society should do economically to respond effectively to the present economic crisis. These measures are not only a required response to the crisis, but the specific nature of the crisis makes these measures especially effective.

Because of lowered inflation and the threat of actual deflation, the government can borrow at long-term interest rates about as low as physically possible. The government should thus borrow boatloads of money and invest in those endeavors that make life better for everyone, but do not provide one private company or another with enough individual advantage for the private sector to pursue. We can:
  • Improve our primary and secondary educational system
  • Send more people to college
  • Research and develop alternative energy systems
  • Build some nuclear power plants (and research long-term nuclear waste disposal)
  • Improve our transportation infrastructure:
    • Improve automobile technology
    • Improve the roads
    • Improve mass transit
  • Research and develop ways of slowing and reversing anthropogenic global warming
And these are just ideas off the top of my head. It's the purpose of government in a liberal capitalist republic to invest in things that will improve the economy as a whole. Just a cursory examination of history shows the overall economic benefits will pay the costs ten times over, even accounting for the inherent inefficiencies of government. Given that inflation will (if our economy does not spiral into depression) rise to nearly the present interest rate on long-term treasuries, borrowing this money now is almost free and serves only to allocate resources presently wasted to socially useful activities.

The above measures will, however, relieve only a portion of the present structural unemployment, and it will directly and immediately relieve structural employment of only those workers and managers with immediately relevant skills in the middle of the lifetime employment cycle. There are three additional components of structural unemployment that we must look at:
  1. Early-career people (teens and 20s) without skills
  2. Middle-career (30s-40s) people with absent or obsolete skills
  3. Late-career (50s-60s) with absent or obsolete skills
We can improve the first two components of structural unemployment with training/retraining and education. Furthermore, most of the direct deficit-based stimulus measures above will directly relieve some of the market saturation for certain skills, especially managerial and executive skills. It's important to note that without creating a demand for skill, it is a waste of resource to create those skills: if there's no demand for computer programmers, it's just as much a waste of time and effort to teach people how to program computers as it is to teach them postmodernist literary criticism.

But stimulus and education will only do so much. Our pace of technological and productivity improvement is so great that entropic externalities — especially pollution and global warming — are starting to become serious problems that threaten the survival of billions. Even with the best controls, the production of commodities always entails some entropy, and we cannot continue to increase production exponentially (even with a small exponent) without eventually drowning in our own shit.

We must remove some people from the productive labor force. We have to do so carefully, of course: we need to still produce food and shelter, televisions and computers, cars and buses, and provide medical care, all of which requires productive labor. The trick is to remove some people from the labor force without creating an incentive for everyone to leave the labor force.

The simplest way is to ship a fraction of the people to the gas chambers or Soylent Green factories. We might use some objective criteria (if you've been unemployed for six months or more, you're on the cart), but we could use arbitrary criteria (left-handed, redheads, etc.) to similar effect. Another slightly more complicated way is to substantially expand the prison population: we currently incarcerate only about 1% of the population, a shamefully small proportion. Imagine the benefits if five or six per cent were incarcerated! Not only do we pull unproductive members out of the labor force, but the construction of prisons, the provision of guards and administrators and other activities would themselves provide considerable economic benefits.

There are of course considerations of sentimentality and morality. If you advocate or tolerate letting people starve and die unnecessarily, your moral position is indistinguishable from sending them to gas chambers. If you advocate or tolerate allowing people to suffer unnecessarily, your moral position is indistinguishable from incarcerating them. Not only can I myself most definitely not live with such positions, I have as much contempt and disgust for those who can as I do for anyone who advocates explicit extermination, genocide and oppression.

(I say "unnecessarily" because there are certain elements of the human condition we are at least presently powerless to ameliorate: despite the most advanced medical technology, for example, everyone must eventually die. If there is not enough actual food to feed everyone, some will starve despite our most elevated and sincere intentions. But beyond our innate mortality and frailty, physical reality no longer wields much of an economic stick. We have plenty of food, plenty of shelter, and plenty of labor to produce what we need and want; our problems today are not of scarcity but abundance.

There are as well those who consciously choose to suffer in certain ways, either as a means to some more compelling happiness or because they actually enjoy experiences most consider to constitute suffering. Such people are sometimes highly weird, but we don't need to construct a political or moral philosophy more complicated than "whatever floats your boat" to deal with them.)

Even though we must as moral beings avoid the stick, we can still make the carrot work.

We can, for example, make it optional to retire at 55. If you can keep working until you're 65, you'll be better off in the short and medium term, but if you can't, well, you won't starve, you won't go homeless, you won't lack reasonable medical care. And you won't have to eat cat food in a roach-infested firetrap either.

If you're early- or mid-career, and you lack the talent or inclination for directly productive activity, we could send you to art school or let you study philosophy. You'll have to put in as much or more effort in these activities as you would if you actually worked for a living, and success even by the internal criteria would not be guaranteed. Some people would find such a life appealing, and if we have to pull some people out of the productive labor pool, it's better to have a bunch of artists, craftspeople, philosophers, or even those as socially useless as theologians and postmodernist literary critics than a bunch of vegetables zonked out on drugs, masturbating to internet pornography and watching vacuous sitcoms. (And what the heck, it's better to have a few zonked-out vegetables than suffering wretches or pissed-off, violent teenagers.)

And, failing "useless" education, there are a lot of low-intensity, low-status, low-skill jobs that need doing. Even if you're a zonked out vegetable, you can pick up a broom and at least pretend to sweep the streets for a few hours a week. (As anyone who has spent any time working at a large corporation knows, we can accomplish quite a lot just by collecting a lot of people and making them pretend to work.)

But here's the crux of the biscuit.

None of these measures require any profound or deep knowledge of economics. I'm not that smart: if I can figure it out, anybody can. They do not require deep changes to human nature: we need not transform ourselves on the instant to become angels and saints.

More importantly, these measures do not require — or they do not seem to require — any fundamental changes to our economic or political systems. We could implement all of these measures and still have a wealthy and privileged capitalist class, an educated and competent professional-managerial middle class, all enjoying more or less of the surplus labor of the working class. We'd still have buyers and sellers in a free market pursuing their individual advantage; we'd still have profit, rent, interest, insurance, and taxation. We'd still have political parties and a professional governing class maneuvering for advantage, campaigns, biannual elections; city councils, corrupt state legislatures, pompous, posturing senators, and a beleaguered president. We could even keep a couple good wars going, if that sort of thing is to your taste.

We must then ask ourselves: why we are not doing what we know we can do and how to do? Why are our governing institutions — I'm not talking about a few isolated, marginalized fanatics but the actual government, the press, academia, and advertising and public relations — not only not doing what manifestly must be done but doing everything in their power short of open violence (and sometimes even that) including outright bald-faced lying about matters of fact trivial to verify to prevent it?

Open your eyes, open your mind, stop complaining, and ask not what we ought to do about the present crisis but why we are not doing what we know we ought to do. When I opened my eyes, stopped complaining about religion and looked for God, I became an atheist. When I opened my eyes, stopped complaining and looked for answers to our economic and political problems — when I stopped whining, "Why can't we have a better press corps?" and started looking for an answer to the question — I became a communist.

Your mileage may vary.


  1. Remember in Soylent Green the people were corpses between they were transformed into artificial foodstuffs.

    And you remind me of that bloke from 'What's the worst that could happen' with the message that we should stop bureaucratic discussion and debate and instead act upon what could genuinely help improve people's lives and the economy.

    To paraphrase a prominent quote from Dragon Age: Origins.

    "The economy exists to serve mankind, not to rule over him."

  2. Dude, your line about the philosophers is fucken hilarious! (And BTW, Soylent Green is a great fucken movie: Heston's best.)


Please pick a handle or moniker for your comment. It's much easier to address someone by a name or pseudonym than simply "hey you". I have the option of requiring a "hard" identity, but I don't want to turn that on... yet.

With few exceptions, I will not respond or reply to anonymous comments, and I may delete them. I keep a copy of all comments; if you want the text of your comment to repost with something vaguely resembling an identity, email me.

No spam, pr0n, commercial advertising, insanity, lies, repetition or off-topic comments. Creationists, Global Warming deniers, anti-vaxers, Randians, and Libertarians are automatically presumed to be idiots; Christians and Muslims might get the benefit of the doubt, if I'm in a good mood.

See the Debate Flowchart for some basic rules.

Sourced factual corrections are always published and acknowledged.

I will respond or not respond to comments as the mood takes me. See my latest comment policy for details. I am not a pseudonomous-American: my real name is Larry.

Comments may be moderated from time to time. When I do moderate comments, anonymous comments are far more likely to be rejected.

I've already answered some typical comments.

I have jqMath enabled for the blog. If you have a dollar sign (\$) in your comment, put a \\ in front of it: \\\$, unless you want to include a formula in your comment.

Note: Only a member of this blog may post a comment.