Saturday, April 13, 2013

Some Additional Notes

I thought I'd include some snippets that I had bookmarked but didn't make it into the final cut. I think it might add to the discussion based on some of the comments.

Here's the always-excellent and peceptive Thomas Edsall in the New York Times. It defies easy summation, but here is the conclusion:
Elite anxiety over entitlement-driven budget deficits and accumulating national debt has created a powerful class in the nation’s capital. The agenda of this class is in many respects on a collision course with mounting demands for action by those lower down the ladder to address the threat to government social insurance programs. Intransigent opposition by the better off and their representatives to raising the necessary revenue means that not only Social Security and Medicare face a budgetary ax.

Among the additional likely casualties: WIC, which provides free nutrition for women, infants and children; long-term and emergency unemployment compensation benefits; low-income housing vouchers; vaccines for poor children; schooling for children with disabilities; special education; preschool programs; child care for disadvantaged and vulnerable children; after-school programs; treatment of the mentally ill; and meals for sick and homebound seniors.

This conflict could not have come at a more difficult time: the United States is in the midst of a zero sum struggle requiring politicians to pick losers, not winners. The population of those over 65 is set to multiply, with longevity steadily increasing even as median annual household income for the population at large has shrunk to $51,584 in January 2013 from $54,000 in 2008.

In this kind of conflict over limited goods, one of the most valuable resources that can get lost in the fray is the wisdom of the electorate at large. In this case, the electorate is pointing toward progressive tax increases for those closer to the top far more readily than members of the political class, for whom high-earners are a crucial source of campaign contributions.

The very nature of the basic security Americans are entitled to is at stake.

This one is important - it reviews the context of history. As industrialism expanded, soo too did the welfare state out of necessity. We don't live on the farm anymore. To the extent that people are trying to move back to that way of life, I fully endorse. But it is not practical at this time for everyone to do so (don't forget the reversalist fallacy).
As the U.S. entered the 20th century, important social changes arising from industrialization were becoming increasingly evident, and these changes exposed the high degree of economic risk under a capitalist system. Migration to cities and the resulting breakup of the extended family, reliance on wage income as a primary means of support, and increasing life expectancy resulted in increased economic risk for the typical worker relative to the more agrarian economy that existed prior to industrialization.

In an agrarian economy, economic security is provided by extended family relationships coupled with the largely self-sufficient nature of farms. On a farm, a recession is a bad harvest, but it generally does not mean a total lack of income. Times can be tough, food can be very scarce and there can be hunger, but generating a subsistence level of income from the farm is usually possible even in the worst of years. For a worker dependent solely upon wage income, the consequences of a recession are much more severe. A recession means a total lack of income, not just hard times. Without the help of others or the existence of some type of social insurance program, abject poverty is a real possibility (see Life After the Great Depression for descriptions of the misery that followed the Great Depression).

Retirement also takes on a different character. On the farm, retirement meant gradually, if often reluctantly, letting the children take over responsibility for the farm, but it did not mean a total loss of income. Children provided for parents. But an aging worker in a city, perhaps disconnected geographically from their children, faces a different circumstance upon retirement. Such a worker may face a complete loss of income, and disability from age is not always an event that occurs according to plan. Even a worker who has diligently saved for retirement can suddenly become impoverished due to events such unexpected health costs, or even a much longer life than expected.

As industrialization progressed, 1920 marks a benchmark year where, for the first time, more than half of the population lived in cities. When the Great Depression hit around a decade later, the social changes the U.S. was experiencing and the need for new ideas regarding the government’s responsibility for the economic security of its citizens became clear. The Great Depression made it evident that in a capitalist system, where the whimsies of the marketplace can wreak havoc on people’s lives, the government has an obligation to provide economic security. It was also evident that the private sector did not provide the needed level of insurance and that government intervention was required to overcome this problem (due to both moral hazard and asymmetric information problems in the private insurance market).

It is important that the economy be allowed to change with new technology and changing preferences, but the consequences for innocent workers affected by such changes is a social responsibility that needs to be addressed. In addition, as extended family relationships are hindered by geography and the social contract between parents and children breaks down, the elderly need a way to avoid poverty. Programs such as Unemployment Compensation, Medicare, and Social Security arose as a means to mitigate these economic risks under capitalism using the least amount of society’s valuable resources.

Drawing a rough analogy, socialism is like investing in T-Bills. Low risk, but low return. Capitalism is like the stock market. There is a higher average return accompanied by higher risk. Financial theory tells how to insure against such risks and there is no reason why this cannot be applied in the social insurance arena to smooth variations in income.

There is a need for social insurance under capitalism.
It is more than 30 years since I first attended a conference on the global welfare crisis. Rarely have a few months passed without an invitation to another. Last week, Tom Palmer, the American libertarian, came to London to denounce the “world-straddling engine of theft, degradation, manipulation and social control we call the welfare state”.

The content of these rants is familiar. Levels of welfare provision are unaffordable; government finance is a huge Ponzi scheme. A common conclusion is to provide an estimate of the discounted value of the cost of some hated item of expenditure if its current provision were continued into the indefinite future. Mr Palmer reported that the present value of unfunded liabilities of US medicine and social security is $137tn.

Social security is a means of inter-generational transfer..., but why ... should we look after old people, who can no longer do anything for us?

The obvious answer invokes Kant’s categorical imperative: it would be good for everyone (including ourselves when we are old) if everyone acted in this way. We feed the generations of our parents and grandparents in the expectation future generations will come along and do the same for us. But the consequences of this arrangement do have the character of a Ponzi scheme. One day, the world will end and the last generation of workers will have been cheated of their expectation of a peaceful retirement. In the meantime it is possible to calculate enormous measures of unfunded obligations, and it doesn’t matter. The value of these obligations is offset by the implied commitments of future generations. ...

Exaggeration can sometimes be forgiven when it is used to draw attention to a problem that has received insufficient attention. It is less easy to excuse when it threatens the fragile social arrangements on which economic security depends.

I included this before, but it's still a good reminder:
This is a powerful conservative argument for national health insurance. There are many other ways, as well, in which what the conservatives call bloated European welfare states are actually very efficient. This fact is disguised in commonly cited data for spending as a share of G.D.P. because so much social spending in the United States takes the form of tax expenditures, which are de facto spending. 
The O.E.C.D. recently calculated net social spending in its member countries, taking account of tax expenditures and outlays that individuals are forced to make to compensate for the lack of commonly available public programs. On a gross basis, the United States ranks 23rd of 27 countries in the study, with social spending at 17.4 percent of G.D.P. versus an average of 22.4 percent. But based on adjusted data that accounts for tax expenditures, United States social spending rises to 27.5 percent of G.D.P., putting us in fifth place, well above the average of 22.2 percent.  
American conservatives routinely assert that the people of Europe live in virtual destitution because of their swollen welfare states. But according to a commonly accepted index of life satisfaction, many heavily taxed European countries rank well above the United States, including the Netherlands (where total taxes were 38.7 percent of G.D.P. in 2010 compared with 24.8 percent in the United States), Norway (42.9 percent), Sweden (45.5 percent) and Denmark (47.6 percent).

And see this article by Stuart Staniford, which describes the inteplay of our major problems (but offers few solutions):
Finally, I note that there are complex interplays between these various threats.

For example, consider the effects of peak oil in the context of increasing automation.  Reversalist thinkers like the Archdruid, or Jim Kunstler, believe that one effect of peak oil will be to cause replacement of machines by human labor again (on the theory that with less energy, we'll need to use more human labor, just like we did back in the day, when we had less energy before).  However, this certainly isn't evident in the data to date, and it's not at all obvious that it follows.  Consider, for example, the decision as to whether to lay off the security guards, and replace them with security robots.  This is a decision that companies will take individually based on the economics and quality of the security robots, but presumably over time, these will improve and there will be more robots and fewer humans doing physical security, and the employment-population ratio will drift a little lower. 

However, consider the implications for oil demand.  An employed security guard will be driving to work in his (or her!) pickup truck, and if you pay him enough, he may even fly off for a yearly vacation, or to his daughter's wedding on the other side of the country.  If he's not employed, he probably will use far less oil like that, and the robot that replaces him will run on a little electricity and no oil. 

So it's not at all clear that less oil implies less automation.  Similarly, addressing climate change by switching to renewable power doesn't prevent continued automation either, because machines can be fundamentally more efficient than humans at converting sunlight to work.

And so I think, in the longer term, the threat to most of the nine or ten billion of us that there will soon be is that the economy simply won't need us to operate.  And if we address the financial crisis, solve peak oil, and fix climate change with ever increasing amounts of cleverness and innovation, we will probably simply hasten that day.
Singularity > Climate Change > Peak Oil > Financial Crisis (Early Warning). Worth reading in full. I agree with this assessment (for singularity, read job displacement)

I'm moving on to some articles about "green" architecure at the moment that hopefully will be of interest to a general audience.


  1. Being the impatient creature that I am, I put the below together and also posted to my personal LJ, the LJ Comm 'The_Recession', my FB Wall and Twitter.

    1. Cool, thanks. Although this means all my typos are now memorialized :)

  2. The whole attack on the "reversalists" is interesting.

    Is human society like a mathematical model which cannot really go "backwards"? Systems go from state to state, but not necessarily backwards. Eco-systems in particular go from low-diversity but very resilient/stable, to highly diverse but fragile. We are in a state in which humans are incredibly overspecialized, as is the machinery which supports the system which supports the current population density.

    I completely support the welfare state, because it prevents the masses of urban poor from rioting, and cutting short my attempts to develop alternatives. I haven't yet decided if the best path is to leave the city. Our city is on a major river, and is therefore destined to be a center of trade, whatever happens with peak oil.

    OK: so the welfare state cushions the blow, and makes things less fragile. That does not mean that humans will not or cannot revert to earlier lifeways and economic scales.

    The anti-reversalists are overly deterministic. What they miss is that people can choose to go "backwards" in economic development, for many reasons:
    Some people find it romantic. Others have no choice, because they can't get a job in this society. Why not just become resilient and self-reliant? In the far north, where I am from, the Mennonites grow grains, make things, and in general, are pretty backwards (in a good way).

    The anti-reversalists miss this fact: people still have the choice to radically simplify and downsize and de-specialize. The main impediments these days seems to be family members, who often refuse to contemplate life without the high-tech gizmos and luxuries they are used to.

    All fragile systems end up breaking. Once that starts happening, the outcome is not known, because it's indeterminate. It will be determined by the actions of the millions of individuals involved, the choices they make individually and collectively, and the ideals they choose to emulate and learn from.

    I would personally stay away from the South and libertarians, and stick with those who have the Hippie mentality. It will be impossible to survive a real crash alone, unless you are very lucky.

    Better to work in community and develop new systems.

    1. I've noted that the Hispanic immigrant community that I live near has behaviors that help it get by - it has large, extended families that help each other out. It has an informal and barter economy. It has local shops that give each other deals. It has multiple generations living under the same roof. People know how to do things for themselves like fix cars and do house repairs (or know people who do). Kids wear hand-me-downs and people shop at second-hand and consignment stores. They take advantages of public services like parks and beaches instead of going on expensive vacations. The ride the bus. But the biggest of all is they lack the white middle class sense of entitlement.

      Well, wouldn't you know it, this is exactly how most immigrant families used to live. My grandparents were the children of dirt poor immigrants, and they lived exactly the same way, except their parents spoke German rather than Spanish. They got caught up in the suburban nuclear family movement of the 1940s-50s, and now my family is extinct.

      So maybe what we're headed for is back to that way of living like the Hispanic immigrants who've never known anything but scrimping for survival, and have learned to realize anything beyond that is gravy and could vanish in an instant. It's a good object lesson. You could call that reversalism of a sort - just back to the pre-war period.

  3. Regarding automation, etc., I can see a whole segment of the population boycotting the products of automation. All you have to do is to stop shopping at Walmart. Of course, most people are now to poor to NOT shop there. A conundrum, unless one makes it a principle. This won't really change the system, unless it becomes a mass movement, but it will teach one to do without, or to repair/re-use. Always a good skill.

    There is so much used crap out there, it's amazing. On the other-hand, it's tempting to backslide and buy that unnecessary widescreen HDTV, or cheap Chinese shovel, etc.

    In a way, the crapitalists have backed themselves into a corner: if they don't provide a welfare state for those they reduce to dependence and poverty, they will have nobody to sell their goods to.

    Whatever happened to being poor, self-reliant, and proud, rather than living a caged but easy existence? I find the choice of so many to be caged by their careers, possessions, and conceits to be puzzling.

    I guess I'm a hypocrite, still planning my escape but not yet executing. I take that back: I do garden, and am always trying to improve my gardening skills. I repair old machines/appliances rather than throw them out. I rescue such things from the curb when I find them. Next, I plan to start offering to repair things for others. Well, I've even done that, mainly old audio equipment. It brought in needed extra money when I did it.

  4. Because we live on a planet in the middle of an astronomic shooting gallery, Reversalism is a prescription for racial extinction.

    Either we become a spacefaring race or one day a 'celestial object' will wipe us off the face of this world.

    It is that simple...and the clock it ticking.

    1. Because we live in a cosmos that will either re-contract to a point of energy, or will continue expanding until everything is 1 degree Kelvin, dispersed, and dead, becoming spacefaring is a prescription for thinking that it's OK to treat the earth like a disposable waste dump, while nurturing childish pseudo-religious fantasies of escape from reality.

      Unfortunately, barring a big die off, there isn't the capital, high-ROEI energy, and political will to become "spacefaring," whatever that means. Even if we devoted all of our energy to this project, we could only get a tiny percentage of the human population to a planet like Mars, with low probability of forming a self-sustaining colony. And we'd deplete our resources and capital in the meantime. Regardless, as energy descent continues, I think it's highly unlikely that earth citizens will allow the necessary resources to flow into interplanetary space programs.

    2. That is a cosmic strawman as said event is, as the Good Doctor Sagan would say, billions of years away. It is the same as saying each of us is going to die so why bother looking before you cross the street.

      The resources are all out there waiting to be harvested. And who says we have to live on planets? There are many designs for space habitats.

      Of course, it IS highly unlikely that Baseline Humans will do any of this. We're not really made for space. But The Cyborgs are coming and I cast my lot with them.


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