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Published on: March 7, 2011
Paul Krugman Gets It Half Right

Even a stopped clock is right twice a day; Paul Krugman was almost this lucky in his recent New York Times column: Degrees and Dollars.  It’s an important column and should be required reading even for people who stopped reading him a long time ago.  Krugman’s take on what’s wrong with the American economy and […]

Even a stopped clock is right twice a day; Paul Krugman was almost this lucky in his recent New York Times column: Degrees and Dollars.  It’s an important column and should be required reading even for people who stopped reading him a long time ago.  Krugman’s take on what’s wrong with the American economy and what to do about it shows a powerful intellect grappling honestly with some of the biggest problems we face.

And Krugman’s column also illustrates the point I made in The Crisis of the American Intellectual: that many of the smartest and best educated people in this country are so blinkered and blinded by the assumptions and values of the blue social model that they simply cannot think outside the box.

Paul Krugman, professor of Economics and International Affairs at Princeton (Wikimedia)

First, here’s what Krugman gets right: the hopes of our intellectuals that shoveling ever more money into our faltering higher educational system will raise American living standards are delusional.  Citing the recent New York Times article on the devastating consequences of automation for the future employment of American lawyers, Krugman points out that many high-pay white collar occupations are vulnerable to automation.

He also gets something else: that many professional jobs are vulnerable to outsourcing.  Citing research from fellow Princeton profs, Krugman tells us (again, correctly in my view) that in the next stage globalization is going to be slicing into job opportunities and wages at the high end of the labor market.

Krugman’s column is part of a much broader trend: the intellectual and economic underpinnings of the blue social model are in a process of accelerating and serial collapse.  I posted last week that the truly deadly threats to the public sector unions, the threats that doom them to long term decline, aren’t coming from people like Wisconsin governor Scott Walker; they are coming from blue state governors in places like New York and Vermont who recognize that their states simply cannot afford to give public unions anything like what they want.  The New York Times editorial board, one of the bluest groups in the United States, published an editorial the day before Krugman’s piece appeared that argued for deep changes in the way state workers are rewarded and managed.  Sez the Times:

At a time when public school students are being forced into ever more crowded classrooms, and poor families will lose state medical benefits, New York State is paying 10 times more for state employees’ pensions than it did just a decade ago.

And why is this?  Well, continues the Gray Lady, there are several reasons, including this:

[M]ost state employees pay only 3 percent of their salaries to their pensions, half the level of most state employees elsewhere. Their health insurance payments are about half those in the private sector.

And where does this leave us?

In all, the salaries and benefits of state employees add up to $18.5 billion, or a fifth of New York’s operating budget. Unless those costs are reined in, New York will find itself unable to provide even essential services.

The problem goes beyond wages and pensions.  It also involves work rules — like seniority and tenure.  An editorial that appeared on the same day as the Krugman piece argued for revising New York state law to make it easier to fire bad teachers — and to make layoffs performance-based rather than firing young teachers while protecting time-serving hacks through the seniority system.

The Times, it hastens to assure us, is not (God forbid) anti-union.  It merely believes that the state must set wages, pensions and work rules based on the financial facts of life rather than on union wish lists.  And the state must elect politicians who will stand up to union demands and, presumably, crush union strikes aimed at resisting the wage and pension cuts, layoffs and work rule changes that the Times believes are a matter of life and death for New York State.  If workers want to go on paying dues to organizations that cannot bargain effectively over anything important, the Times is fine with that.  (If that is what the most reliably liberal major news source in the country thinks, it isn’t hard to see where the debate on public unions is heading.)

Krugman and the Times editorial board are both examples of something important in American life today: left-liberal intellectuals are increasingly able to understand that individual supports of the blue social model are crumbling.  But they are still so captivated by the blue model, so profoundly convinced that the Progressive movement’s solutions to America’s social ills in 1910 are still valid today, that they cannot yet look beyond the blue model to imagine a different and brighter future for the United States.

Here, for example, is the solution Krugman proposes to the problems that automation and outsourcing have caused for both blue and white collar workers in the US:

So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.

This is blindness so brilliant it would dazzle a bat.  If, as Krugman posits, demand for US workers will be falling in both manufacturing and the professions, how exactly will labor unions get higher wages for their members?  Factories will be closing in Krugman’s world and law firms will be turning more and more work over to computers or shipping it overseas.  Perhaps stronger unions could make it harder for companies to do this for a while, but ultimately facts speak.  Stronger unions making tougher wage demands will not exactly persuade American (and foreign) investors to create new jobs in this country — or to slow down their efforts to reduce their US workforce by outsourcing and automation.  When human workers receive rising wages, become harder to fire, and are governed by ever more convoluted and expensive work rules, replacing them with computers becomes more attractive, not less.

Unions tend to flourish when demand for workers is rising (as in China today); they do not and cannot protect the situation of workers as a whole against a background of falling long-term demand for their work.

The problem isn’t that this or that piece of the blue social model is breaking down and needs to be fixed so that the rest of the model can go on working well.  It’s not that the university system is broken and that if we fix that the model still works.  Ditto the public sector unions or the situation of the labor movement as a whole. Mandating an expensive new set of health care entitlements at a time of looming insolvency won’t help either.

The problem with the blue social model today is systemic.  It’s not a problem with one piece or another.  The pieces are all falling down and breaking apart at once.  It is what happened to the “One Hoss Shay” in Oliver Wendell Holmes’ poem about, they used to teach us back in Pundit High, the breakdown of Calvinist religion in New England.

Old One Horse Shay (Wikimedia)

The shay in Holmes’ poem had been built in 1755 by a clever parson determined to make sure that every part was equally well-made and that the whole system worked harmoniously.  For 100 years the wonderful shay rolled on smoothly, with none of its parts ever needing repair or replacement.  But nothing lasts forever and 100 years to the day after it was assembled, there was a sudden jerk and the driver fell ingloriously to the ground.

What do you think the parson found,
When he got up and stared around?
The poor old chaise in a heap or mound,
As if it had been to the mill and ground!
You see, of course, if you ‘re not a dunce,
How it went to pieces all at once,
All at once, and nothing first,
Just as bubbles do when they burst.
Logic is logic. That’s all I say.
“End of the wonderful one-hoss-shay.”

Faced with this catastrophe, the Progressive mind can only echo Samuel Gompers’ cry for “More!”  But the cry is doomed to be fruitless.  The only thing that will help is more subsidies: aid to universities and to students to allow the unsustainable education bubbles to continue to rise; aid to states and local governments to pay spiraling wage and pension bills; aid to home buyers to stave off price collapses; and most crucially, massive aid to both health care providers and consumers.

Wrong.  We need to reduce the ‘friction’ in American society: the costs of our legal, health, educational and other government services.  Some of this will come through the use of exactly those abilities of the computer that Paul Krugman dreads: their ability to replace human beings for much routine office work.  Making government (and private sector) bureaucratic payrolls massively smaller is what the general interest requires.

In the medium term this process, aided by ever-improving software and the continuing rapid increase in computing power, can go much, much farther than many people imagine.  Robot judges assessing claims filed by robot plaintiff and defense attorneys?  It may be coming into view.  This post (thanks, Instapundit, for the link, and for much, much else besides!) explores some of the possibilities.

In other cases, the changes have to do with smarter practices rather than automation.  And this is not about a knee-jerk preference for right wing solutions over left wing ones: finding cheaper (and more humane, less destructive) ways than prison to deal with non-violent criminal offenders is one example.

Or look at education.  Moving from “time-served” processes of certification (four year BA degrees, three years in law or divinity school) to certification based on achievement can make education dramatically cheaper.  It is sheer madness that most students spend 12 years in school, and another four in college.  Why exactly should all kids the same age be in the same grade? One size does not fit all; why shouldn’t high school kids go free when they can pass the equivalent of a GED? And for that matter, shouldn’t school districts encourage and reward teachers and schools that are able to graduate students faster?  Among other things, this would allow some of the resources not spent on babysitting high-achieving kids to go to kids who really need the help. How “right wing” is that?

The same goes for college.  Oxford and Cambridge graduate their students in three years — yet few people think British college grads are less accomplished than their American peers.  What is sacred about the four year BA?  Wouldn’t a shift to an exam based system (students who make qualifying scores on the appropriate exams would be certified as graduates) allow more people to advance farther at less cost?  And there’s an element of social justice here: the kid from a no-name school who scores high on the exam will have an edge on the Ivy League kid who partied through college and just scraped by.

I don’t claim to have all the answers to how America’s professions should be restructured.  Those answers will be discovered bit by bit as millions of people work to do things faster, cheaper, smarter.  But the aggressive use of computers and innovation to increase the productivity and reduce the costs of “frictional” activities like government, the legal system, the financial system, health care and education will allow Americans to pay less in taxes and fees for services that they truly need even as the quality of government services improves.  That is what productivity is all about.

For many people this sounds like a systemic assault on the few good jobs left in the United States.  But this process of creative destruction is not a Scrooge-like endeavor to squeeze the honest workers for the benefit of fat cats.  It is clearing the field for new enterprises and new professions.  If education, government and other important services become cheaper and better in quality, and as inflation in other sectors like health care is better controlled, it will be easier and cheaper than ever to start new businesses.

What will the brave new American economy look like?  Nobody knows.  But maybe you will have (or be) a kind of geek-on-call who, for a fixed rate, handles anything that goes wrong with all your electronic and media equipment, who handles those three hour tech support calls for you, and who also figures out what cable, direct TV, online or other service providers work best for you.  Maybe you will use or run services that shuttle kids around the suburbs to their various classes and sport events.  Maybe all of us, instead of a handful of upper middle class and upper class people, will have access to serious personalized guidance and educational counseling for our kids.  Maybe you will have a personal nutritionist who is also your shopper. Health care will be more individually tailored, and instead of seeing a doctor every time you are sick, you may spend time with a person who helps you navigate the health system and who makes house calls (with a “smart box” that give better diagnoses with more up to date knowledge than 90% of human doctors) and sets up a treatment carefully calibrated to work best for you.

You will be able to pay for these services because computers make them cheap to deliver, and also because many of the bills you dread now will go down.  As higher education becomes more skill-based (and the liberal arts portion is increasingly delivered in smarter ways), it is likely to become much, much cheaper — the modern college lecture is using a teaching technique invented in Greco-Roman times when students listened as teachers read scrolls, and not much has changed since. So you won’t have to save up for a generation to send your kids to college — and they won’t have to spend a generation paying off the loans to cover the rest.  Your taxes will be lower in proportion to your income — both because as governments become more efficiently managed they can balance their budgets and because with balanced budgets they will retire the old debt. Should you need legal assistance, in most routine cases it will become much easier and cheaper to get — just as tax software programs now give many consumers the kind of help it once took trained accountants to deliver.

This is the essence of progress: as we move forward less of our society’s time and energy goes into just staying alive; more of it goes into living better.  The key to that now is to move as quickly as possible to reshape these critical professions with the full power of information technology.

Nobody has a blueprint for the post-industrial world, and the pessimists and doomsayers will always be with us.  The porters’ union probably once fought the wheel and predicted mass unemployment and falling living standards if those crazy things ever caught on. How would honest porters earn a living if everybody used those new-fangled wheelbarrows?  And if the porters are out of work, what about all the shopkeepers and tavern owners who depend on the porters as customers?  Alas, oh woe and alackaday!

Ban the wheel!

We have our naysayers and prophets of doom in the US, and many of our intellectuals are so caught up in and so well paid by the blue social model that they literally cannot conceive that the radical changes shaking their world should be embraced rather than resisted.  But one of the great secrets of America’s historical success is that the voices of nostalgia are weaker here than in other places.

Krugman and many of his colleagues at the Times are, I think, blinded by how good things once were.  This is understandable; I felt that way for many years myself and it was only slowly and painfully that I gave up on the blue social model that once looked so good.  But the country and the times we live in demand more than angry and ultimately despairing nostalgia from our thinkers and opinion leaders.  Let us hope that it comes.


show comments
  • http://www.frumforum.com/author/JebG Jeb Golinkin

    Walter Mead is living proof of a species that I long ago thought died off: a useful academic. I wish I had something critical or thoughtful to add, but the primary purpose of this post is simply to fawn over WRM’s consistent excellence. Even when I disagree (or simply don’t understand), I always learn.

  • Douglas Cohen

    There’s a lot of truth in what you say — but I don’t think the death of the professions is going to occur in quite as sweeping a way as you suggest.

    All those computer programs that can now perform professionals’ routine mental tasks need the right inputs to give the right answers, and as a general rule a professional is needed to make sure that horrendous but plausible errors are not made in setting up program inputs.

    An example: I don’t trust Turbo Tax or any other program for my tax returns, because, even if your income looks basically the same as last year’s, the tax laws are always changing in weird and wonderful ways. People who really need a tax professional and instead try to use something like Turbo Tax end up having to guess at the answers to questions the program starts asking you — questions like “Is your overseas income in country X truly allowable under regulation ZJp12.45? Answer Yes or No”. This is an example of a professional program demanding more inputs of a specialized nature, inputs that the average businessman cannot be expected to provide. Another good example, this time from the field of aerospace engineering, is the way a Mars probe a while back crashed into Mars instead of going into orbit around it because some NASA genius had entered a physical quantity using the wrong units (I believe it was entering a velocity in miles per hour instead of meters per second — but I could be wrong). In this case NASA badly needed a professional to look at the number and say “There’s something wrong here” instead of just having someone blindly entering numbers.

    Even in education I think you need a human in the loop to give computer taught-and-tested students long — and I mean many hours long — one-on-one interviews to check that the student has a true understanding of the material and not just some sort of half-baked understanding good enough for the computerized tests (or maybe has just corruptly purchased the answers to the computerized tests) The irony here is that what alpha teachers and professors have traditionally done — stand up and lecture — can be replaced (possibly by recording the output of the field’s few very best lecturers and distributing it to every classroom) — but what the lab and research assistants have traditionally done — namely interact one on one with students and make sure they understand what is going on — cannot be replaced. By the way, what cannot be replaced can be unionized to upgrade salary and status, so maybe in this sense Krugman has a fraction of a point. The problem, from Krugman’s point of view, is that we do not really know yet what cannot be replaced because the new work patterns have not yet revealed themselves.

    The problem of choosing the right inputs — and recognizing the wrong inputs — to the computer programs designed to handle routine professional chores will not go away. In a sense, every professional is always in the business of translating what one or more members of those uneducated-in-that-profession want into the correct professional categories to interact with some corpus of professional knowledge. It’s very difficult to computerize that translation process, and probably always will be.

  • Neville

    The progressives’ problem, the precise point at which their brains freeze, is that we can talk about improving productivity in all sorts of areas, but we will never get there as long as the services are run by government.

    Obamacare is thus, of course, a huge step backwards in this respect, a desperate attempt to pretend that it isn’t all happening.

  • ed

    ” Wouldn’t a shift to an exam based system (students who make qualifying scores on the appropriate exams would be certified as graduates) allow more people to advance farther at less cost? And there’s an element of social justice here: the kid from a no-name school who scores high on the exam will have an edge on the Ivy League kid who partied through college and just scraped by.”

    OK, that is nice in theory. But here is what will happen in practice. Whites, Jews and East Asians will do well on these exams. Blacks and Hispanics will not. This will be held to be racially discriminatory, and thrown out in court.

    It isn’t pretty, but it is historically accurate. I see no indications it won’t be accurate now or in the immediate and medium term future.

  • Xavi
  • Dracovert

    There are some ideas so wrong that only a very intelligent person could believe in them.

    — Eric Blair

    Dr. Mead, you have advised us to read what Krugman has to say and as always, Krugman comes across as dumb as a turnip, the first prominent affirmative action Nobel Laureate, if you will. Shame you had to invoke this fellow to make your excellent points.

    But I really think the social model is in for a big change beyond your increased efficiency and lower costs. We are in serious danger of satisfying all material needs with relatively low effort and must now address quality of life, education, and leisure issues on a global scale on one hand and the distribution of work and rewards on the other hand. The Charlie Sheen model will not work, for him or for us.

    So, where to now, Kemo Sabe?

  • Turtle Noneck

    The world you describe sounds a lot like Kurt Vonnegut’s “Player Piano”.

  • az

    Obviously Mr. Krugman doesn’t believe in supply and demand, which has been the underpinnings of our successful American economy for centuries.

    The supply and demand model suggests that each worker would get paid a reasonable amount given the demand for their skills. If workers were underpaid, they would find new skills and new employers. If workers were overpaid, other workers would learn those skills to share in the bounty. Generally and over time the whole system would smooth out so that wages would remain high but not unfair.

    Instead, Mr. Krugman suggests that the solution to our problems is for workers to band together and coerce more than their fair share from employers. As wages rise, more workers would obtain skills to get those higher paying jobs, but unions would block these new workers from working for the employer at slightly lower pay.

    Therefore, the job of unions is to subvert the supply and demand model, so that the unions can limit supply to the employers while coerce higher wages than demand would imply.

    If the supply and demand model is subverted for something as elementary as skilled work in this economy, we’re really in trouble. If we were to accept Mr. Krugman’s plan, a large majority of our skilled work force would not longer be subject to supply and demand, but simply subjected to the coercion of unions.

    As the laws of economics suggest, there is no such thing as a “free lunch”. The cost of labour would rise. We’d be paying too much for skills (like the GM worker who gets paid $83 per hour in labor and benefits). Eventually companies (and governments) would falter, as GM has, taking large bailouts from Federal Government (our tax money) to keep afloat.

    Mr. Krugman is arguing for a system for unfair wages. He does not want supply and demand to work on it’s own to ensure the right supply of skills at the right price to employers. He does not want people to be paid fairly, but instead to be paid based on the coercive power of the unions representing them.

    Young people would be kept out of jobs. Older workers and un-needed skills would be protected. Mr. Krugman should think through his recommendations beyond the immediate, and imagine a world where belonging to a union is more important than young workers learning new skills that are in demand, easily getting a job and being paid fairly for their skills.

  • FrancisChalk

    Krugman isn’t concerned about the “blue social model” you speak of. He is only interested in the Stalinist model and absolutely nothing else. Understand this and you understand everything Krugman has ever written or said.

  • PB

    This is right on. The solutions to our problems will not be progressive or conservative they will be something else, something that doesn’t yet have a name and doesn’t have a place on the political spectrum as we currently imagine it. The institutions and ideas that were developed as we adapted to an industrial society are not necessarily appropriate to the type of society we are evolving into now. This applies not only to the champions of the blue social model on the left but to its opponents on the right as well. The conservative movement was invented following WW2 to “stand athwart history shouting stop” as the blue social model rolled on. While conservatives have offered many valid criticisms of the blue social model, they themselves are as much a product of that model as the liberals who built it.

    “But one of the great secrets of America’s historical success is that the voices of nostalgia are weaker here than in other places.”

    Yes and that is exactly why the US never had a conservative movement before the 1950s. “Standing athwart history shouting stop” is the opposite of what we need going forward, whether from the right or the left. We need creative, entrepreneurial thinking to invent the next social model.

  • BCanuck

    Businesses innovate and cut costs to increase profits or to insure survivial. Doing business better, smarter, faster is a built-in attitude in all successful organizations. Big and small companies innovate constantly – they have to or they’ll cease to exist.

    The public sector, including education doesn’t face the same competitive pressures. Govt doesn’t have sales revenue, it has taxes. The govt never has to worry about running out of ‘customers’. The law ensures the ‘customers’ will always pay. What’s the ROI on the war in Afghanistan? Gov’t is a very strange ‘business’.

    Change in government (revenue and expenses) comes from from politicians. The federal government and the New Jersey government both face pressure to innovate yet ‘CEOs’ Chris Christie and President Obama take very different approaches. They take different approaches because they were elected to manage in a certain style.

    The blue social model can survive if taxes are raised high enough to pay for it. Europe has much higher taxes. If the porters are gov’t porters and they lobby the politicians to ban the wheel, their jobs will be safe. In politics just about anything is possible. If 51% of voters demand more money be taken from everyone (or the other 49%), why can’t the blue social model go on?

    • Walter Russell Mead

      Ask the Greeks!

  • http://www.virtualdba.com Jude Reichenthal

    I agree with most of the points Mr. Mead makes.
    I take issue with one point: the 3 year university degree in Europe.

    The 3 year degree exists because European universities do not have a”Liberal Arts” approach (or requirement). This produces graduates who are more specialized have less
    general understanding of the world, the humanities, civics, history etc.

    In an age of rapidly changing technologies,
    politics, communications capabilities we need more generalists to fully realize their potential to contribute to society.

    I remember an essay that was given to freshman at Yeshiva University.

    “Needed: Whole Men not Fractions”.

    The more specialized and defined a job (or piece of work) the more it lends itself to automation. The more generalized and sweeping human view will not be produced by robots.

    Jude Reichenthal

  • Chris

    Brilliant column, which the always-haughty Krugman is aware of but probably won’t read. His world is running around with fingers stuck in ears, singing “La-la-la…I’m not listening…La-la-la.” Krugman is so utterly captivated (and invested) in Keynesian Thought that reality doesn’t even register with him; only ‘theory’ does. And having a Nobel shoved into his hands by other back-slapping Libs won’t cause this perpetual Academic elite to listen to reason.

  • David

    If only Mead had Krugman’s writing skills. I expected a debate and I got a rambling wreck of a discussion.

  • rginnh

    Krugman never gets anything right,

  • paul glavey

    Great insight and writing, as usual. I only wish Mr. Mead would abandon that silly “blue social model” terminology. It was an attempt at creating a phrase of common currency, but it didn’t take. And now it is only an unfortunate distraction.

  • JohnR22

    Well, it’s nice to hear Krugman gets it half right. I always read his columns, but not because I agree with him; no, I read him so that I know what the Hard Left’s arguments are, and so I know what NOT to do. Taking a position exactly opposite what Krugman proposes is always safe ground.

    That said, I think the biggest threat to the US today is the fact that the Boomers are in charge and they’re the most ideologically extreme (Left and Right) generation we’ve ever had. They literally hate each other and are just as concerned about destroying the other side as they are about seeing the nation suceed. I’ve been putting my hope in the Millenial generation, but the more I read about them the more it appears they’re a spoiled group with a sense of entitlement.

  • Frankls3

    This made me think about the hundreds of millions of dollars the unions spend on electing sympathetic politicians(democrats).
    Might not that money be better spent helping some of their members train and transition to jobs of the future?

  • Winston

    I fear Mr. Mead only gets it half right himself. The limitations of the blue social model are indeed as he describes them. But if he thinks abandoning it and allowing the forces of pure supply and demand and technology will lead to some kind of capitalist utopia, he is sadly delusional. We will end up with a sharply stratified Ayn-Randist survival-of-the-fittest society, with capital flowing even more exclusively to those at the very top while the rest struggle on a global scale for the remaining crumbs. Krugman’s solutions are indeed delusional; so is Mead’s assumption that eliminating the blue social model with obviate the need for solutions to the problems we face. In fact his society, unencumbered by what remains of the blue model, will actually cause an acceleration of the inequality we are already witnessing, and which threatens America’s social contract in a fundamental way.

  • Dracovert

    Chalk –

    Ref “blue social model.”

    I think Dr. Mead is trying to observe social conventions without becoming totally politically correct, that dreaded blue blot on society.

    Everyone knows that some Marxist professors inspire, if that is the correct word, their students in journalism, law, and politics, but the students never identify themselves as Marxists, preferring the more genteel “progressive” or “liberal” labels even if the students are hard-core. The students certainly don’t want to blow their covers prematurely.

  • Scott Walker

    I have but one question. Once we have made the vast majority of human beings economically superfluous, what are we going to do with the vast majority of human beings? It is becoming apparent that machines can do productive tasks far more efficiently than flesh and blood, and machines are, so far, much easier to push around than flesh and blood, making them superior to pesky human employees.
    If we aren’t going to be working for a living, being superfluous, what are we going to be doing instead?

  • No One Important

    Excellent piece.

    What I believe you see happening, is the crumbling of the self anointed elites realizing that their “reign” is over. No more do the unwashed masses believe the elites have the answers. We are suffering because of the “elites” and their ideas right now. An education system that is a complete failure, no matter how much money is poured into it. American union workers demanding more and more, driving the costs of goods up, even though they contribute no increased value to a product or service. Meanwhile, regular working Americans, trying to make the dollars they earn go farther, aren’t inclined to support those higher costs of those same goods.

    We see the meddling of the government with over taxing, over regulating, damaging the economy, and pushing our “trade” jobs overseas.

    For intellectuals like Krugman, you see a reality dawning.

    They’re being left behind by America. Their policies are a failure. Krugman’s economic arguments about big government spending have become a laughing stock. He has spent this last year defending the failure of his Keynesian economics by shouting “it just wasn’t big enough!” No matter the size of the spending, he would have always said it just wasn’t big enough.

    It’s as specious as the “saved or created” jobs claim that Obama uses. There is no metric Obama can use to claim it worked, but no one can say he is wrong, either.

    Krugman is now struggling with the collapse of the “elitist” system in America. For a self anointed elitist, someone who always thinks they are smarter than everyone else, there is no fate worse than having the nation look at you, and the only person that thinks you’re smart is you. Just you, alone, in your own echo chamber.

    Americans have had it with the great social experiment that is the concoction of people like Krugman, EJ Dionne, and others. Krugman just seems to be the first to realize this. The rise of the TEA party, the wholesale repudiation of the democrats, the fact that Obama’s healthcare is still as unpopular today as the day they passed it, the nation has hit a point where, we’re just not interested in what the blue blood elitists have to say anymore.

    People like Krugman and Obama are effete intellectualists, who don’t understand regular Americans. Regular Americans are tired of those who have self aggrandizing opinions of themselves shoving their ideas upon them, regardless of reality, regardless of history, and the lessons history teaches us.

    I think what you see is Krugman is one of the first to realize the nation no longer needs to listen to self anointed narcissists because we have 50 years of their policies, and we’re much worse off now. We have the benefit of history to show us, their ideas are failures. The federal government is crushing us, and all people Krugman want to do is continue to expand this leviathan.

    Americans no longer swallow the “conventional” wisdom that used to be shoveled to them by people like Krugman. The regular news media has become a buggy whip, as noted by the dying newspapers and abysmal viewership of the regular 5 o’clock news. And as they lose their power, they scream and demand legislation, bail outs, fairness doctrines, etc. The people that once held power are loathe to lose that power.

    America is telling the blue blood intellectuals “we’re just not that into you anymore.”

    You have Washington who passes legislation on top of legislation believing they’re “helping” the nation as more and more jobs leave overseas. Krugman and Obama believe taxing such entities is the answer, as opposed to cutting failed federal programs and regulations. The GAO just gave a report on billions upon billions of waste/repetition. And yet, the republicans can only come up with 61 billion to cut.

    The congress just passed out 537K in bonuses to their staff. For what? What have they done that deserves bonuses? Did you get a raise or a bonus this year? Of course not. Washington and the elites are out of touch with Americans when they engage in this type of grotesque behavior.

    Americans have reached a point where they now understand, the federal government is an abysmal failure at everything they do. There is no accountability, and no one in Washington ever tells themselves no, they deny themselves nothing because they spend other peoples’ money. Faceless/nameless tax payers, who are hurting in the nation, because of government policies. People like Krugman, who advocate more of this type of grotesque behavior are becoming pariahs in our nation.

    Unions who demand the taxpayers support them, despite the fact that the taxpayers are hurting beyond belief. There is a disconnect between the government and those that pay taxes.

    The more they talk, the angrier Americans are getting. We are living in history. You are witnessing the nation turning away from self anointed elitists like Krugman and Obama, and the unions who support them. You are seeing the rise of everything that made this nation great. Individualism taking control again. Americans aren’t like Europeans. When things are bad, we don’t demand more government like Europeans, we demand less government. We demand government get out of our lives and out of the way.

    People like Krugman have never understood this about Americans. We’re not Europeans. We’re uniquely American. People like Krugman have spent too much time in “blue blood” circles insulating themselves from real Americans.

    Welcome to the new future of America. . . . .and it doesn’t include Krugman-like intellectuals who refuse to face their failures.

  • http://rifuture.org Frymaster

    Oh, what the heck. I’ll take a swing at it. I’m sure your commenters will be good enough to point out my faults.

    Despite what the knee-jerkers on either side of your comment stream say, I rate this as a decent read with some provocative ideas. Not that I agree a whole lot, but food for thought.

    My main issue is what seems to be an uncritical desire for efficiency. I’m not against efficiency, but I’m not sure that you’ve worked through the downsides. Of course, I take it that when you speak of ‘minimizing the friction’, that drives towards greater efficiencies.

    Efficiency’s great downside is its vulnerability, its brittleness. Highly efficient, single point systems lack resiliency and are prone to catastrophic breakdown. I’m old enough to remember the effects when a single transfer station in upstate NY got struck by lightning: the famous NYC blackout. (Of, what, ’77?) So I see no utopia in your robot legal system, nor do I see dystopia. Rather, I see a system just begging to be gamed, and, since money will be involved, the motive is built in.

    But such is my thinking. I’m very much a man of the street not the ivory tower.

    From my perspective, I expect the knock-on effects of higher oil prices to drive some trends that will doubtless shock your regular readers. Specifically, I expect our food production apparatus to undergo remarkable changes that will reinforce not degrade your so-called ‘blue social model’.

    Already, food production is dis-aggregating, if that’s a word. The article in Sundays NY Times on the Oregon Grange points out some of the emotional and intellectual drivers behind these leading-edge farmers, but I fully expect the big changes to be driven by economic realities.

    Long story short: the input costs of oil make long-distance food supply a shaky situation. Anecdotally, I heard of a meeting in Amherst, MA in the summer of 2008 in which supermarkets told city leaders they would no longer bring trucks from CA. Just let that roll around in your head a little bit. There’s a rooftop farm in Queens called the Brooklyn Grange that is, in fact, sustainable / profitable.

    The leading indicators are everywhere, if you know what you’re looking at. Expect food production to crop up in long-forgotten metro lands and to be done by people that don’t hate Karl Marx. RI DEM just put out an RFP to farm 100 acres or so near Providence.

    Also, I need to quibble with your interchangeable use of liberal and progressive, neither of which I capitalize. As a progressive, I’ve been tussling more with liberals than conservatives. Not a lot of that latter tribe in these parts. In my man-of-the-street way, I formulated this quip as a way to define each:

    Liberals think they’re right. Conservatives are certain they’re right. Progressive don’t care about being right; we just want to solve the f-ing problems.

    Lastly, please put up some kind of a bio for ignorant slobs like me. You use three names, so you must be important. You talk about academia and one commenter called you “Dr.”, so you must be a college professor. But, honestly, it’s a bit much to expect normal people to know about such things.

    Thanks. Gotta grab a quick smoke before my yoga to come the Teevles. (Okay, Righty, let me have it!)

  • Harry Banks

    Why can’t articles by Mr. Mead be emailed to others?

  • rob

    all true, but the implication is that vast numbers of people are living on borrowed time, including the government. the assumption that this process will occur over time and be absorbable by society is false, Moores law now applies to social systems too.

  • Kill Fedzilla

    Mr. Mead hit the nail squarely on the head: The progressive model, circa Teddy Roosevelt in 1910, and Samuel Gompers, circa 1920, (although absolutely needed, at that time, in the best of humanitarian intentions) simply doesn’t work anynmore, rendering Krugman most foolish in his insistence that it will work, once again. Liberalism and its stupid, ugly cousin, Political Correctness
    and the unintended consequences( Black illegitimacy of 80% as a prime example) are a direct result of liberalism and political correctness run amok. In fact,nearly every single social ill can be traced, on a straight line,to liberalism. Every single liberal policiy has been a complete, utter failure and a train wreck of governmental meddling. Kill Fedzilla, shut it down to shrink it by at least 80%. Nobody would miss one beat as 80% of federal workers do absolutely nothing – NOTHING!

  • michael bender

    I disagree with paul galavey that the “blue social model” terminology is silly. The national news is fully of references to Blue States and Red States and their differences. So why not a “blue social model”?

    I particularly love “blue nose”. I remember my aunt (born 1915) referring dismissively to the blue noses of her day; they were the same then as now: 100%PC, autocratic and believers in the bureaucratic state.

  • mark passey

    The gist of the arguement seems to be that as yet unknown productivity gains will produce continued economic gains if sclerotic minds like Krugman will get out of the way.

    I worry that this formula underestimates the very close correlation of standard of living with energy consumption. Energy availability is a boundary condition for production of consumable goods, since productivity gains cannot be infinite. Economists tend to assume that supply and demand forces will always eventually produce enough energy but there is really no a priori reason to assume that in the actual physical world. We might be entering an era where standard of living is restrained by decreasing ready availability of cheap fossil fuels. Efficiency can only go so far to solving that problem.

  • truthisnotrelative

    I would not normally head in the direction of any piece of writing that suggests Krugman is right about anything but I’m glad I did. Fantastic a$$ handing to Krugman and exciting theories about the future of our country.

  • Dracovert

    PB –

    Mahatma Gandhi was asked what he thought of Western civilization. His reply:

    “I think it would be a good idea.”

    Instead of hiding behind the “industrial society” facade, stand up and say what is obvious: rule-of-law, free-market capitalism is the greatest secret of our success. The problem is that no one seems to understand or believe in capitalism. And capitalism would be a good idea, if we actually tried it, just as Gandhi urged the Brits to try civilization..

    The tremendous success of Reagan’s tax cuts and reduced regulations are abundantly clear and universally denied by Marxists, who think they have a better model. But reduced interference by the state is fundamental to our core values, our Constitution, and to our highly successful capitalist model. For that matter, the middle years of the Bush Administration (2004-2007) showed growth and employment gains of Reaganite proportions (look it up), unfortunately sandwiched between the destructive Dot.com Bubba Bubble/Recession and the even worse Democrats’ Unaffordable Housing Project. But both the Bubba Bubble collapse and the Housing Bubble collapse were cited by Marxist as a “failure of capitalism.” Utter. Nonsense. The Democrats’ serial interferences in the economy are poor copies of the Soviet model, not exactly what the Founding Fathers envisioned.

  • Matthew Sheldon

    In general, automation does not destroy high skill jobs the way it destroys low-skill jobs.

    Look at the realm of analytics, for example. It used to take a day for an economist to program and execute a single multivariate regression analysis. Improvements in processing power and software automated most of that process. So now an economist or analyst simply does 10 in an hour, or even 10 in a minute if the task requires.

    It is not the case that we have fewer economists or analysts, we simply analyze much more than we used to. It still takes a skilled hand to contsruct and execute complex analysis, we have only made them more productive.

    Perhaps there will come a day when artificial intelligence truly renders such skill obsolete and redundant, but at that time who will remain employed? We will be like the fat lazy citizens depicted in the movie Wall-E. All of our tasks will be automated so that we can simply become full-time consumers.

    That day is not anytime soon.

  • http://claxtonarchitects.com russell

    As more and more jobs are eliminated, there comes a point when the entire raison d’être of an economy is endangered. As difficult as it may be to accept, the cobbler’s shoes can only be bought by a baker if people are buying bread, and if all the textile mills are automated, the bank tellers become atm’s, and the factory workers are replaced by computer-driven machinery, the baker has no buyers, and the cobbler is out of luck, as well. So, we, what? All go back to subsistence farming?

    * duh

    • Walter Russell Mead

      Don’t worry. As Thomas Carlyle wrote, “Man is such a wanting animal.”

  • Tom Kinney

    Here’s the crux of this: Big corporations spread the campaign wealth around to members of both parties in an attempt to hedge their bets on who will win and to ensure some fealty among D.C. politicians. Call it cynical or call it common sense, same dif. The net result is that Democrats in congress and in the WH are reluctant to go after corporations that could then decide they had nothing to lose by giving all their monies to Republicans. It’s a balancing act.

    Unions, on the other hand, have put all their campaign cash into Democrats, some 95% of it and in Wisconsin, 98%. Republicans, as a result, have nothing to lose and plenty to gain by opposing unions. That also shows a certain hard-headedness and intransigence on the part of the unions that probably dates back to their early years.

    All things, including orgs, tend to carry forth in time the true nature of their origins, and this despite the fact that their realities have changed in the interim. By clinging stubbornly to these original identities they appear to be intransigent and stubborn and nonadaptable because they haven’t changed with the times. This tarnishes their reputation and often then becomes their demise. For unions it was a congenital bellicosity that preempts compromise and that remains their true nature today.

  • john a werneken

    Having just got done calling one of your fellow taveler a Nazi and [reference to banned activity deleted — ed] I don’t think I could possibly be mistaken for a right wing nut. A nut perhaps but not that species.

    You have got it right. “Progress’ – faster better cheaper…always leads to Free-er.

    Taken as a whole, for most of my 62 years, the left/Blue model (let’s hang the Chicken who decided the Republicans could be Red so the D’s would not have to be!) has stood on the side of progress. It’s a toss-up now. And though you guys lose on the ‘big’ ideas-property, climate, sexual morality – you are winning with what matters: how to adapt to and foster the positive aspects of real life change, on the job and in the home.

  • Jim.

    “This is the essence of progress: as we move forward less of our society’s time and energy goes into just staying alive; more of it goes into living better.”

    Yet somehow the rat race hasn’t changed in 50 years at least; except that women are participating in greater numbers, and we’re having less children and our homes are more of an unpleasant mess because of it.

    How did it work out for the French, to try to limit their workweek to 35 hours? Was that a real solution? Assuming we can just tweak how many hours we work and “standard of living” the rest, has never worked before.

    Aside from all that, it’s not like Mead to miss a Great Big Point here, but he does.

    The fact of overwhelming salience in our current global system is that labor is cheaper in other parts of the world, and communications have allowed “outsourcing” to dramatically erode America’s labor market. That is the change.

    What is the trajectory of this change? Well, you’re going to see global labor prices head towards a new equilibrium. American wages will drop, yes, but overseas wages will rise. (That’s only fair — the worker must not be defrauded of his wages, after all.) How far will this change go, and what other implications does it have?

    The clear implication is that overseas laborers (being paid more) will have the increasing ability to economically take control of the resources of this planet. Their share of the wages will equalize, so ultimately, their share of the consumption of Earth’s resources will equalize. Once that balance is achieved, the changes will stop — and probably not before.

    Anyone who’s ever seen the numbers for what percentage of Earth’s resources the American standard of living consumes should be getting very, very nervous right now. The world’s carrying capacity can’t support 7 billion American-type consumers. It can support maybe 1 billion. Maybe.

    The options for our future are some combination of these:
    – Utter collapse of the American standard of living. (Militant Greens love this. The rest of us, not so much.)
    – Massive environmental impact, as we open up more terrestrial resources for human consumption. (Possibly counterproductive, on the scale we’re talking about, as industry and extraction vie with a biosphere devoid of wilderness, entirely dedicated to human consumption.)
    – Malthusian war, to reduce the population.
    – Darwinist war, to limit raw material access to only a few.
    – Massive-scale forced abortion (preferred by Liberals, no doubt, but irrelevant unless globally enforced, which it can’t be.)

    Do you seriously think this is an unlikely parade of horribles? That it somehow isn’t what we’re in for? Think very carefully about what our other options are.

    Unless you want to think seriously about getting our resources off-planet, this is it. This is our future. This current round of cuts is only the beginning.

    So…. do you really think it’s such a good idea to neglect the space program, now? (And defense, if you can’t bring yourself to think outside the box this planet has us in?)

  • Jim.

    mark passey –

    We’re not going to run out of coal any time soon. We’re not going to run out of uranium / plutonium any time soon either.

    As long as we can avoid the sort of fatal strategic blunder normally reserved for regimes that do not allow dissent — specifically, a rigidly-enforced decision to avoid all cheap energy sources — we should be fine, energy-wise.

  • Dan

    Krugman’s column reminded me of this passage from Niven & Pournelle’s The Mote in God’s Eye: “When a city has grown so overlarge and crowded that it is in immediate danger of collapse … when food and clean water flow into the city at a rate just sufficient to feed every mouth, and every hand must work constantly to keep it that way … when all transportation is involved in moving vital supplies, and none is left over to move people out of the city should the need arise … then it is that Crazy Eddie leads the movers of garbage out on strike for better working conditions.”

  • indipete

    Excellent article. It is a source of continuing amazement to me that the left cannot or will understand that prosperity is not achieved by raising the wages of workers, but by increasing the efficiency of production.

  • Tim Huie

    Walter, thank you again for an informative column. I certainly hope that the future envisioned in this column comes to pass, but civilizations can and do decline as well as advance. Better to plan for both eventualities. If we cant haul the country back from the edge of the abyss that adherence to the ‘blue social model’ has brought us to we are in deep doodoo. I’m thinking more of a ‘Mad Max’ future rather than a ‘Star Trek’ one.

  • Doug

    Krugman errs by equating bargaining power with organized labor, an antiquated model dependent on a weak competitive environment with high bariers to entry. The reality of globalization is killing private sector unions.
    The modern model is individual bargaining power based on skills value in a global marketplace.
    Automation of business processes (even for services) increases quality and efficiency but still requires human judgement and decisions to provide excellent products and services to people. Many future careers will be for builders of the automated processes or delivery of services exercising human judgement based on an automated process.

  • Dr.BDH

    “This is blindness so brilliant it would dazzle a bat.”

    There are probably computer software programs with the ability to generate sentences as nonsensical as this, so watch out, Mr. Meade, your job is at stake.

  • patrick

    @ Jude – You’re correct in you analysis, but not your conclusion.

    Computers increase complexity by deceasing labor. you are correct that when you have more choices available, then you need more knowledge to better understand your choices.

    (It is easy for ProDoc users, for example, make selections and print a completed legal document. It is not easy for them to understand the consequences of their selections, because the overall complexity of the general law is increased.)

    This means that specialization reduces automation, not vice-versa.

    Also, I have no idea why you seem to think that liberal arts have any practical application for this specialized and knowledge-dependant future.

  • No One Important

    Russell:

    Excellent point. What others don’t understand is, the US had deliberately put our own resources out of reach making us more dependent on other nations for energy, etc. Something tells me this is going to change dramatically after the 2012 elections.

    Unions have steadily increased their demands while not increasing their value in a product. Americans voted with their wallets. They said “you’re not worth the price that you’re demanding.” Remember, regular Americans work hard for their own paychecks also. Unions made the mistake in thinking that regular Americans would continue to support them no matter what, and they were wrong.

    Our nation has the highest or one of the highest corporate tax rates in the industrialized world. Foreign car manufacturers moved here. But they moved to “right to work” states. “Blue state” elitists with their union supporters are destroying their own industries, while liberals at the federal level are steadfastly destroying our economy with big government policies that are proven failures.

    Who wouldn’t prefer to open manufacturing here? Steady power, private property, you used to be able to deal with the government, versus 3rd world nations with unstable governments, violence, hostile seizures, etc.

    However, we have an over taxing, over regulating Washington now. Obama just whimsically yanked a mining permit in West Virginia. Moratorium on drilling, with no end in sight from Salazar. Abbott Labs just laid off 1,900 as a direct consequence of the federal health care law. (Company outright said that.) EPA who has said they fully intend to “regulate” no matter what.

    Now who in their right mind would invest here? Who would deliberately open/expand a business here?

    The liberals/progressives scream that it’s the “rich” companies causing the harm! They won’t hire!

    That’s like blaming someone for not wanting to stick their hand in a blender while you’re pushing the buttons. That’s insane. Obama and liberals never want to accept the blame for their policies, and the harm they cause. They refuse to see the reality that history has taught us.

    Road to Serfdom, the arrogance of people who never want to admit their policies have failed is how we keep repeating the mistakes of the past. They always think they know better than the historical examples. Witness, Obama pushing us toward government healthcare while other nations are doing everything they can to get away from their national systems that are crushing them.

    The Obama/Economist meetings that were unpublicized, one participant reported that Obama became “very defensive” during one of the meetings. This is an unprecedented level of arrogant, self aggrandizing belief in “all things Obama.” He doesn’t listen to those who know better, because Obama, as one casual acquaintance said has an “unbounded beliefs in his own ideas.”

    Krugman is only now realizing, the blue blood elitists, with their union thugs, have lost the war in America. The people are walking away from them. Big government is not sustainable, and the American taxpayers won’t continue to tolerate them. Americans can get by just fine without the elitists like Krugman, and they’re proving this every day.

    As government programs are slowly being stopped, the world isn’t coming to an end. 600 people are about to be laid off in Wisconsin. Will any of the taxpayers really notice? Seems the taxpayers in the nation are willing to now take that chance.

    Threat of a federal government shut down? It’s not as scary as the democrats demagogued in the 1990s. Now, the taxpayers are saying “do it!” They are perfectly prepared for the federal government to shut down.

    This is a new America rising. And it isn’t centrally focused on government anymore. Taxpayers just aren’t going to tolerate the Krugman blue blood elitist models anymore. And they’re certainly not going to pay for it, either. The longer the Krugmans of the world deny this, the more painful the fall out will be. They’ve been telling these elitists this for years, they just didn’t want to listen.

  • Brendan

    Many interesting ideas about how to make higher education more efficient and fair, but to a large extent they rest ultimately on the ability of someone being able to craft a test that will be a good measure of subject mastery. In many fields, this is simply impossible, and to the degree that it is possible, it is not necessarily a good thing. If higher education becomes (even more) about how to game standardized tests, it will not ultimately be a net benefit.

    I think what is more important is to have good teachers and committed students, and changing broken incentive structures can go a long way to improve both of those things. Also, don’t forget that our “higher education” system is actually two systems joined uncomfortably at the hip: education (which cares about teaching and students) and research (which is what academics care about because it is what they need for career advancement, and is concerned with knowledge advancement). The two things are clearly related, but often in conflict.

    The overemphasis on automation (though important, especially in the other domains discussed like business and government) ignores these structural realities.

    That being said, I agree with the overall diagnosis on unsustainability.

  • Danram

    Prof. Krugman’s worldview is typical of someone who has spent his entire adult life safely ensconced within the hallowed walls of academia. never having had to contend for any great length of time with the real world outside.

    There’s a reason that American college professors are so disproportionately represented on the left of the political spectrum, and that’s because a college environment is the only place where many of them can function. They’d be lost out in the real world.

  • Eli Katz

    Walter, you write, “If, as Krugman posits, demand for US workers will be falling in both manufacturing and the professions, how exactly will labor unions get higher wages for their members?”

    Krugman is not talking about manufacturing jobs. He is talking about the millions of service-sector jobs that pay little and come with no benefits. Think of all those Wall-Mart, McDonald’s, and Starbucks jobs that will never be outsourced. Shouldn’t these workers have the ability to organize and collectively bargain for better working conditions?

    Let me tell you, as a student who has had to do every nasty job available to pay for school, there is nothing more frightening than being at the mercy of, and working for, a nasty store manager.

    • Walter Russell Mead

      My point is that if conditions in the labor market as a whole aren’t improving, then the ability of labor unions to raise wages and improve working conditions in those price-sensitive industries will be poor. I’m not at all opposed to private (as opposed to public sector) unions, but unfortunately can’t see them as offering a lot of hope at the present time for most US workers.

  • No One Important

    BCanuck:

    “The blue social model can survive if taxes are raised high enough to pay for it. Europe has much higher taxes. If the porters are gov’t porters and they lobby the politicians to ban the wheel, their jobs will be safe. In politics just about anything is possible. If 51% of voters demand more money be taken from everyone (or the other 49%), why can’t the blue social model go on?”

    Because, American has, historically speaking, a throwdown level. When you are taking too much from others, as the unsustainable happens, larger and larger groups of takers, the group you take from will just stop contributing (producing.)

    It is unsustainable. You are seeing people in Wisconsin, and across the nation, angry at the unions for demanding so much money, that the services they purport to deliver need to be cut back just to support those who work in the system.

    In other words, the government entities have become parasites, and have ceased to perform what they were originally conceived to do.

    Americans are a smart people. They will let crumbling governments fall. They will allow the structures to decay, as they work around those systems. They will elect people that will start to have 1 mandate and 1 mandate only. . . . .get rid of those government entities. The big progressive/liberals have never understood Americans.

    We are a “can do” nation. We are a nation of people who pull together, and take care of our own. The government increasingly behaves in grotesque and offensive behavior on the backs of those who are devastated by that same governments’ behavior.

    Unions demand more and more, while regular americans are doing with less and less. Now who do you think is really going to win that battle? As more and more Americans don’t believe in the federal government’s competence, as they prove day in and day out that their incapable of fixing themselves?

    Where do you believe this ultimately ends? A citizenry hostile toward their governments and those working for those entities.

    And that is where the elitists like Krugman have gone so far wrong believing the Americans would shoulder and continue to shoulder that burden. We’re not Europeans.

    We’re Americans. We’re used to rebuilding, reshaping, and starting over. And we don’t need them to do it, either.

    Unions need to understand, we don’t need them either. And when Americans eventually throw the unions out on the road, and can’t fund the taxing bodies anymore, the unions will find out how much they’ve overplayed their importance and their hands.

    Once again, like the auto industry, the unions will have overplayed their hands, demanded far too much from those who carry them, and eventually, when you become a parasite of this size, the host will figure out a way to get rid of you.

  • EJM

    Change is never easy.

    But a free market receives signals about what’s working and what isn’t, and can react to those signals, in a myriad of ways.

    Government systems can only adapt by political change, which involves changing the minds of millions, including those most entrenched and beholden to the status quo. This is generally a much more wrenching process, that can even tear a society apart in violence or civil war.

    The central problem with the “blue model” is not higher taxes, or collective bargaining for public service unions, or lack of automation. The central problem of the “progressive” state is that it seeks and has always sought to place more and more decision making power in the hands of the central government, not free individuals in the marketplace. This makes it almost sclerotic in its inability to adapt to broad changes in economic realities.

    This is the lesson being driven home now by the budget impasse in Washington, the brawl in Wisconsin, and the looming catastrophes in more than half of our once great states.

    Progress in the 21st Century will come only when the “progressive” model goes the way of other variants of the statism–socialism, fascism, communism–which were tried and failed in the 20th Century. The 18th Century founders of a limited government which left all but the most essential federal powers in the hands of smaller, more nimble state and local control, or the smallest unit of all, the free citizen, had it right 230 years ago.

    Too bad we have to go through trauma and possible economic collapse only to progress to where we once were.

  • T

    Danram (1:32 above),

    or, as Ray Stantz said when the Ghostbusters were evicted from Columbia’s campus (paraphrased): We’re in trouble. In the real world, they expect results.

  • No One Important

    Danram:

    “There’s a reason that American college professors are so disproportionately represented on the left of the political spectrum, and that’s because a college environment is the only place where many of them can function. They’d be lost out in the real world.”

    There is a reason that we have the phrase: “Those that can, do. Those that can’t, teach.”

    Krugman has spent his entire life, as you said, in the halls of acedemia, never having to have competed for anything other than his nobel. Not for a job, not for advancement, not for anything.

    It is easy for those to pontificate and espouse the “we need to protect the worker” memes, while never having coped with reality.

    The advancement of the worst, just because they managed to show up and no vomit on their shoes for 30 years. This does not mean that their job is now worth 30.00/hour and gold plated bennies.

    A union person, who had the benefit of 100s of thousands spent on their education, who invests nothing in themselves, and shows up at a 9.00/hour job, and expects a “livable wage” when never having sought to improve their skills, is not “entitled” to anything. Especially at the expense of a regular American consumer, who may have worked their way through school, works hard for that check.

    And yet, unions believe they are “entitled” to that other person’s money. Even though the union benefits, public and private, far outstrip anything a regular working American has access to.

    The arrogance and mentality of entitlement is just jaw dropping. And Wisconsin is a perfect example, a crucible of this mentality, heated and raw. Give us what we demand, no matter the cost, no matter how bad the performance.

    The US is getting a stark, unvarnished look at the unions, in all their glory. And Americans are disgusted with what they see. . . . .

  • MadBag

    As the eminent British historian, Paul Johnson, says, “An intellectual is someone who thinks ideas are more important than people.”

  • No One Important

    Eli Katz:

    “Let me tell you, as a student who has had to do every nasty job available to pay for school, there is nothing more frightening than being at the mercy of, and working for, a nasty store manager.”

    Hence the reason these jobs are entry level, and are not meant to be a “livable” wage, or meant to be a career.

    These are simply jump off points for individuals. The person that takes a job at McDonalds, and expects to earn a livable wage, has not paid any attention to the realities of America, nor the ladder of success. Someone who doesn’t bother to get any skills beyond “would you like fries, with that?” has no reason to expect the rest of America to support him or her.

    If this person did not invest in skills, or try to advance themselves beyond this type of job, why is that incumbent on society? Why should those of us who did improve ourselves pay much higher prices for goods because someone else who didn’t, thinks they’re “entitled” to a livable wage at a no skill job?

    It’s a reality check that is coming for an entire segment of our population. It’s not going to be pretty, either. We’ve spent so much time making people “feel good” about themselves, they have an overinflated sense of their own self worth, and what they bring to the table.

    If you are working at the same 9.00/hour job that you started at 10 years ago, it doesn’t make that job any more valuable or worth more just because you never tried to advance.

    It’s still a 9.00/hour job. If someone can be trained in 2 hours to do your job, without a special set of training, you have an entry level job, and shouldn’t expect more than that. If I can walk out on the street and grab any single person standing on a corner, and train that person within 2 hours, it’s an entry level job.

    And it’s time an entire segment of our population was given that type of reality check. Because, we cannot “afford” a segment of our population to have an overinflated sense of their own value and skills, like unions do.

    That’s what got us here in the first place. A sense of entitlement.

  • Jordi Costa

    It doesen’t exist “financial facts” from a static point of view: It is rather a dinamic and a open process where social actors struggling for their rights can change the context and economic balances in the long run

  • No One Important

    Teachers are a perfect example.

    Are they brain surgeons? Are they reconstructing a human hand to function again? Are they curing cancer?

    What are they, that they believe they deserve job security for life, and insurance paid in full all the way until they die no matter the cost to tax payers?

    Are they that indispensible? No. They’re teachers, who only work 9 months a year, but somehow think they’re as valuable as the most rarest of all brain surgeons or doctors curing diseases.

    They’re just teachers. Now, there are those that scream “they are teaching your children!”

    Ok, you put your precious children in your car every day, don’t you? Putting their lives at risk, right? And yet, you’ll shop around for the brake job, right?

    So again, what is it that teachers do that is so important, that they can cause the wide spread damage to our educational system, with job security for life, no matter how bad they are, and have benefits paid by taxpayers until the day they die? At a never ending increasing demand on the taxpayers’ back?

    If they’re so sure they’re so valuable, then why are they so afraid of competition from private schools for tax dollars? Why are they afraid to allow parents to have vouchers to shop around for the best education?

    Why was the teachers’ union in Washington DC so afraid of a proposal of merit pay that they wouldn’t even allow the members of the union to vote on it? (Waiting for Superman)

    Because [persons of whom this commenter disapproves — ed] are in charge of the union there. Because, the only way the unions can survive is by having a hammer lock on taxpayer funded activities, like government workers and teachers’ unions.

    Eventually, the taxpayers will revolt. We’ve hit that point now. The system is overloaded with parasites, and no longer functioning as it was supposed to, because every dollar is being siphoned away to take care of those who work in the system. At the federal level, at the state level, in our education system, etc. The systems are all plagued by parasites.

    As I said, eventually, when the parasite becomes big enough, the host will find a way to get rid of that parasite.

  • Tom Holsinger

    Keep in mind that reducing what Mr. Mead terms “the ‘friction’ in American society: the costs of our legal, health, educational and other government services” will entail a direct attack on the core public employee, non-white and so-called environmental constituencies of the Democratic Party, which depend for most of their income on public funding and public-mandated transaction costs imposed on private employers.

    My day job as a government attorney entails enforcement of those public-mandated transaction costs imposed on private employers. I know very well how those work, and have a fair appreciation for the magnitude of the adverse economic and societal impacts of those costs.

    It simply will not be possible to appreciably reduce those costs without elimination of the diversity and environmental scams in particular. Those really are scams now, and have been for at least the past twenty years.

    This is inherent in government regulation of anything. Unless a private activity directly and immediately threatens public health and safety, government regulation of it will inevitably be turned into a government-mandated scam which creates a new public burden far outweighing any public benefits conceived of, or even possible, at the regulation’s onset. The beneficiaries of the scams will include politically connected private groups as well as the public employees doing the regulating.

    I can’t emphasize this enough – the diversity and environmental rackets have to be broken before it is possible to significantly reduce the “friction” described by Mr. Mead.

    To the extent his post merits criticism, it is due to his failure to recognize the mutually beneficial relationship between the Democratic Party and the groups which derive the bulk of their income from parasitic “friction”.

  • Luke Lea

    Quoting Mead: My point is that if conditions in the labor market as a whole aren’t improving, then the ability of labor unions to raise wages and improve working conditions in those price-sensitive industries will be poor. I’m not at all opposed to private (as opposed to public sector) unions, but unfortunately can’t see them as offering a lot of hope at the present time for most US workers.”

    The only conclusion is that labor must organize on a national basis, politically. Public policies — trade, immigration, wages and hours — are where the American people must concentrate. We are a nation and our government must be made to serve the nation. A government for the people — is that asking too much?

  • http://capitalismdemocracypeace.blogspot.com/ Galen

    WRM–

    Please stick with “Blue Model,” but don’t see why “social” is needed. The Blue Model is about society, but also politics, economics, religion, psychology, the humanities (history for sure, philosophy). “Blue Model” does nicely. “Blue” as in elite, blue blood.

  • JLK

    What a satisfying 10 mins; reading and rereading Prof Mead’s eviscerating of that bonehead Krugman. Talk about your Narcissistic Libtards!

    The guy is so convinced of his own genius and, more importantly moral righteousness, he becomes incoherent as he attempts, time and again, to fit a square conceptual peg in a round logical hole.

    One thing I am not so sure of….history never speaks of a bureaucracy that is actually efficient except maybe the pre-war Germans. High productivity is just not attainable when you work for the govt.

    I don’t know if it is the type of people attracted to those careers or if it is the type of work and lack of incentives/job loss fears, but something keeps the mindset almost the same wherever you go.

    There are some differences like the level of corruption but when you adjust for culture they are generally the same.

    There are 3 basic types some with 2 or more characteristics:

    1) they hate their job and can hardly wait to retire (hence hanging onto their bennies for dear life)

    2) either lazy or have no sense of urgency

    3) Not the sharpest knives in the drawer (hence fear of job loss and hanging onto seniority guarantees for dear life.)
    JLK

  • Anthony

    WRM says “this is the essence of progress: as we move forward less of our society’s time and energy goes into just staying alive….” Yet, our society is complex and contains many conflicting interests hampering many from “just staying alive” let alone moving forward. So, as we compellingly move to 5.0 a recasting of public conversation undergirds WRM’s societal insights. “Without knowledge of wind and current, without some sense of purpose, men and societies do not keep afloat for long, morally or economically, by bailing out the water.”

    Mr. Krugman is grappling with a recasting of public arrangements in a post blue era. Yet as WRM implies,if Americans do not think differently we will not meet quickly the social challenges battering our political/social arrangements.

  • http://bit-dribble.blogspot.com andrei rădulescu-banu

    Paul Krugman wants to build a more equitable society, but for him education is not the answer. Can his Nobel Prize be taken back just for that thought? Both you, Mr. Mead, and Mr. Krugman make a mistake to drive the economic productivity argument to an extreme. You write:

    “Moving from “time-served” processes of certification (four year BA degrees, three years in law or divinity school) to certification based on achievement can make education dramatically cheaper. It is sheer madness that most students spend 12 years in school, and another four in college. Why exactly should all kids the same age be in the same grade?”

    Think about it for a moment. Schools already are hit day in and day out with standardized, multiple-choice tests. The No Child Left behind legislation demands it. Too much of the classroom time is spend in mindless training for answering bubble questions that may come on the test.

    I’m not saying that it would not be possible to design exams worth ‘teaching to’, but alas, such exams would not be as objective as these exams we have now. This is a sort of a Heisenberg principle at work: the more the exams are worth ‘teaching to’, the less objective the exam results are. Right now we are erring on the side of the objective exams. And we are trying to save on cost by using multiple choice questions graded by computers. Computers can’t check whether a mathematical proof is correct or complete. And schools suffer because mathematical proofs are not taught anymore, as they will not appear too often on the exam. Children are robbed of an education. Despite what Mr Krugman thinks, this is a problem. And in the middle of this mess, you, dear Mr. Mead, would like to make this achievement system even more ruthlessly efficient.

    “… As higher education becomes more skill-based (and the liberal arts portion is increasingly delivered in smarter ways), it is likely to become much, much cheaper — the modern college lecture is using a teaching technique invented in Greco-Roman times when students listened as teachers read scrolls, and not much has changed since. So you won’t have to save up for a generation to send your kids to college — and they won’t have to spend a generation paying off the loans to cover the rest. ”

    But you are missing a fundamental point, dear Sir, taken as you are with your argument for efficiency. College tuition is high not on account of the expense of undergraduate classes!… Thomas Sowell explains this very well in his book “Inside American Education”: college tuition has gotten ridiculous because it is used to cover research that has nothing to do with undergraduate studies.

    If undergraduate teaching is made cheaper, by some artifice, tuition will not go down – the saved balance will go to research that professors and graduate students do in that college. And that’s the way it should be – because the quality of undergrad education will go up when reserch is of high quality in that college. But notice that colleges have the perfect mouse trap here: parents need to send the kids to college, and the colleges have in effect formed a cartel to charge them as much as they can possibly get away with. If the parents are rich, the colleges will bill for full tuition. If the parents are poor, they will be billed for as much as they can pay, and a little more. All while students max up their loans. It is a racket that has been refined over time to perfection and that has nothing in common with the laws of supply and demand.

    To drive down college costs for the students, I am afraid you’d need to ‘go about building that directly’, as Krugman says. Specifically, state governments should sponsor local state colleges, to waive tuition for the best students that choose to go there, on one hand, and to sponsor more of the research done in the state colleges, on another. This will make state colleges competitive, and when we’ll have 50 state colleges of the level of Berkeley or Ann Arbor then private colleges will feel the squeeze and will have to bring down their tuition costs.

  • http://facingzionwards.blogspot.com/ Luke Lea

    Quoting Mead: “they cannot yet look beyond the blue model to imagine a different and brighter future for the United States.”

    Can you? I’ve tried to. Here is the cover of my little book on the subject:

    http://facingzionwards.blogspot.com/

    Can you do better?

  • Luke Lea

    “Wrong. We need to reduce the ‘friction’ in American society: the costs of our legal, health, educational and other government services.”

    Seriously, do you think reducing “friction” is going to restore the American dream for two-earner families with children to raise?

    At the very least you could wring your hands.

  • Luke Lea

    “Unions tend to flourish when demand for workers is rising (as in China today); they do not and cannot protect the situation of workers as a whole against a background of falling long-term demand for their work.”

    Which is why that Jewish cigar roller you referred to above also asked for less: fewer hours in the working day, less immigration. And by Golly he was right, on both counts. The first true and only American dream was built on immigration reform and the eight-hour-day. And it was strong enough to win the Cold War, because America furnished an example the whole world wanted to follow.

    Well, they ain’t California dreamin’ nowadays, are they?

  • Jim.

    WRM —

    As long as globalization continues to “level the playing field” between workers in the 1st world and workers in the 3rd, there is no way that any unions, public or private, will be able to do anything but watch helplessly as American wages drop by 70% or more.

    Without serious thought to how to grow the pie, this round of cuts is just the beginning.

    The pie is being shared more and more equitably. We need to develop a conscious strategy of finding ways to grow that pie — introducing ever-increasing novel sources of raw materials (not deliberately cutting them off!), maintaining our supplies of cheap energy (not deliberately cutting them off!), and convincing more people around the world to increase the amount of minimally-resource-consuming human productivity of which they are consumers.

    THIS is what is going to determine America’s standard of living in the 21st century. Ultimately, Krugman’s arguments over unionism (far more helpful if vigorously pursued in countries other than the US) — and even Mead’s arguments of productivity gains (relevant, but will be ultimately swamped by globalization factors) — are rearranging deckchairs on the Titanic.

  • Professor

    It is Federal Aid that is killing our colleges. Until we find a method of rewarding academic achievement and NOT ATTENDANCE, the quality of our “graduates” will decline and the cost of a college education will increase. It is true that the system lets poorer students attend college but it also encourages waste since individuals who are not as academically inclined attend as well. This forces up tuition (When Federal Aid is increased–tuition soon follows) and makes it even harder for the “middle class” student to attend. The cycle continues–and higher education continues its downward spiral.

  • FBanta

    Krugman concludes: “So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.
    What we can’t do is get where we need to go just by giving workers college degrees, which may be no more than tickets to jobs that don’t exist or don’t pay middle-class wages.”
    (A version of this op-ed appeared in print on March 7, 2011, on page A21 of the New York edition.)

    Krugman’s concluding paragraph is the most absurd conclusion from an alleged economist that I’ve ever encountered! Krugman spends much of his article explaining why and how off-shoring is happening: that jobs that traditionally provided a path to the middle class are being replaced by computers; and that college is no longer the key to securing jobs that lead to a middle class lifestyle.

    Why is that Krugman? Why did people invest the time, talent, and money to develop computerized tools that can replace engineers? Because computers do it cheaper (and possibly better).

    Now, magically, collective bargaining is somehow capable of reversing these realities. Arbitrary wage and benefit demands are somehow able to eliminate competition and restore the glorious days of yesteryear when America enjoyed a monopoly on manufacturing capacity.

    Krugman ignores 40 years of history that demonstrates that US wages are continually dropping because other markets can provide suitable products and services at lower cost; yet somehow ordinary workers can, in Krugman’s brain, bargain for good wages for jobs that have gone to China, India and beyond.

    How does the government “guarantee the essentials” when those essentials cost more than the people can afford? Would someone wake up Krugman? He’s dreaming again.

  • Frumious

    Another well presented article. I particularly prize the two thrashing put-downs: “Even a broken clock is right twice a day.” and “This is blindness so brilliant it would dazzle a bat.” I will save those for future use – giving proper credit where it is due of course.

    The major premise of this essay is correct: The whole “blue social model” is crumbling. I say this as a former bluey. Yet, a major impediment to dismantling the model remains in place: The system in enshrined in law. ANd not just law but millions of regulations, certification requirements and other legal code that give preferential treatment for those part of the existing system and make any other system or lack thereof, illegal.

    An example to make the point: Many nurses are qualified to do 100% of what a general practice Medical Doctor does. But in most states, they are not allowed to – even where there is a shortage of such MDs. Why? Because existing law protects the doctors and protects those education institutions that get paid to train them and protects hospitals that take advantage of med student’s cheap service during their internship years. Laws, regulations and other certification requirements expressly prohibit otherwise fully qualified nurses from providing services without an MD – no matter how much those services are needed and no matter (of perhaps because of) how affordably they could be offered.

    The challenge ahead will be to chop away the legal bramble that protects over costly professions and businesses and chokes out a generation of new growth and innovation.

  • http://none Herb J.

    There are jobs that can’t be outsourced: Auto mechanic, plumber, carpenter, butcher, baker, and probably Indian Chief. The problem is that these are blue collar jobs and have been looked down on and denigrated for the last 40 or so decades. They lack snob appeal, unless they are done by someone who is credentialed such Robert M. Pirsig (Zen and the Art of Motorcycle Maintenance) and it’s OK for him to do it without losing any Ivory Tower Cred because he is using it as a metaphor rather then as a real job to earn a living. A good auto mechanic is not held in as high regard as someone who has a B.A. in Art Appreciation. But I suspect the former could find a job easier then the latter.

    It is somewhat ironic that the Blue staters have spent the last half century denigrating the jobs their supporters are doing and saying that everyone should go to college. Red staters have just been trying to woo them and ignore them at the same time.

    There are lots of jobs that cannot be outsourced. They just don’t have the fancy title or cool office. And of course that’s what counts.

  • Ross

    As one of those “blue socialists” you describe, I have to say that I love your ideas.

  • SamAdams25

    Please tell me that you were just kidding. Paul Krugman, like Barrack Obama, is a Nobel Prize winner, and therefore infallible.

    Next you will be telling me that Santa Claus, the Easter Bunny, and the Tooth Fairy aren’t real. I need a nice big pitcher of Kool-Aid right now. Go away, you’re mean-spirited.

  • http://www.strategicinvestor.blogspot.com Doug

    Great article. You can almost hear Paul Krugman’s desperate cry – “what happens when Indian economists start publishing major papers on developed economies? On market movements? Where do all of my research grants and leagues of grad student minions go?”

    It is definately true that defenders of the blue social model are immune to the fact that Americans have never been better off.

    People live longer and healthier and have a host of life improving technologies that they didn’t have in the nostaglic golden age.

    The fact is that when they were in the midst of that “golden age” the same left-leaning intellectuals were disheartened that Americans weren’t sufficiently collectivist in their thinking – they thought they were entitled to consume, to own homes, to have private property. They lamented the fact that unionized employees could not be persuaded to be part of a bigger collective.

    In short, they lamented that cartels and unionization were but pale shadows of their favored model of human “progress” – socialist totalitarianism.

    Finally, I think it is interesting that most of these people – from Krugman, to Chris Matthews, Ed Schultz, Howard Fineman, the protesters in Wisconsin and the like, are aging Baby Boomers, whose nostalgia for the past – and whose sense of decline – may have more do to with the withering of their own physical and mental condition than with a decline of society.

  • Luke Lea

    Quoting Jim: “Without serious thought to how to grow the pie, this round of cuts is just the beginning.”

    The irony is that the pie is growing, and has been all along. Yet workers’ wages are falling. Logically, that can only be true if the workers’ piece of the pie is shrinking not relatively but absolutely. In other words, not only is all the extra pie going to the guys who already had the most, they’re cutting into the little guys’ pieces as well.

    Free-trade, mass immigration, and labor-saving technology all have this perverse effect. It can only be counteracted by well-crafted public policies designed to promote the greatest happiness of the greatest number — aka, the general welfare. Right now we are governed by callous corporate elites whose cosmoplitan vision of the world essentially says, “f**k you” to the American people.

    Obama, too, it turns out, is one of them also, not one of us. I guess we shouldn’t be surprised. The bankers vetted him. All that noble oratory about the Kansas side of his inheritance was just so much rhetoric. He is totally out of touch with white working people. He is totally out of touch with black working people. He is totally out of touch with brown working people. He is totally out of touch with people who don’t go to college. He is totally out of touch with people who didn’t graduate from high school. He is totally out of touch with people who make their livings with their hands and their feet.

    P.S. And so is Walter Russel Mead by all the evidence.

    We are victims of the most cynical manipulation of public discourse in the history of the English language. The cynical knaves behind the scenes have totally taken of the brains of the naive fools like Krugman and Mead — yes, bamboozled twins under the skin in the same basket with all the rest of the punditocratic-puppetry — leading to the death of our republic.

    When the man on a white horse finally comes on the scene (I can hear his hoof beats now) you better pray he is not the devil incarnate. But if he is, then you have only yourselves to blame — all you who have deserted and betrayed the American people. May their wrath be upon you.

  • Luke Lea

    The American people must rise up in anger. Let them shake the foundations of our republic! May the Tea Party movement and the demonstrations in Wisconsin will be seen as only the faintest precursors of the earthquake to come.

    Make the Tories run. Expose the Benedict Arnolds of our time, the donor class who control both political parties. Storm the Ivy League, those schools of treason, breeding grounds of callous cosmopolitanism, the shame of our democracy.

  • Luke Lea

    I found this nice description of what we have lost:

    “It was a magnificent run. From the end of the Second World War to the mid-1960s, California consolidated its position as an economic and technological colossus and emerged as the country’s dominant political, social, and cultural trendsetter. … In 1959, wages paid in Los Angeles’s working-class and solidly middle-class San Fernando Valley alone were higher than the total wages of 18 states.

    It was a sweet, vivacious time: California’s children, swarming on all those new playgrounds, seemed healthier, happier, taller, and — thanks to that brilliantly clean sunshine — were blonder and more tan than kids in the rest of the country. For better and mostly for worse, it’s a time irretrievably lost. …

    Starr consistently returns to his leitmotif: the California dream. By this he means something quite specific — and prosaic. California, as he’s argued in earlier volumes, promised “the highest possible life for the middle classes.” It wasn’t a paradise for world-beaters; rather, it offered “a better place for ordinary people.” That place always meant “an improved and more affordable domestic life”: a small but stylish and airy house marked by a fluidity of indoor and outdoor space … and a lush backyard — the stage, that is, for “family life in a sunny climate.” It also meant some public goods: decent roads, plentiful facilities for outdoor recreation, and the libraries and schools that helped produce the Los Angeles “common man” who, as that jaundiced easterner James M. Cain described him in 1933,” addresses you in easy grammar, completes his sentences, shows familiarity with good manners, and in addition gives you a pleasant smile.”

    Real per capita GDP is significantly higher today than it was back then. So tell me, Mead, why have we lost it?

  • Jim.

    Luke Lea-

    Getting angry isn’t going to help. Targeting “the corporations” may feel good, but that’s not going to help either. (In fact, they’re more part of the solution than part of the problem.)

    The fact is that we’re running up against the carrying capacity of planet Earth. Formerly 3rd world populations are getting something that’s more like their share of the pie. Have-nots are becoming Haves.

    We’re not under attack by some shadowy malignant force of “the rich”; we’re facing the implications of forces that are, for everyone but us, overwhelmingly positive.

    We need to find a way to ride this wave. Now that trade barriers have fallen, peace reigns, communication / transportation costs have dropped dramatically, and most of the world is now a good place to invest, classical economics are reasserting themselves. Americans are going to end up with the same standard of living as a people in Beijing or Mumbai; it’s only a matter of time, and maybe not much time, at that.

    Unless we (short-term) stop denying ourselves cheap sources of fuel and raw materials, and (long-term) can find a way to expand our resource base beyond what this planet alone has to offer, the American Dream is going to die within a generation — possibly even within a decade.

    And that’s the best-case scenario, with worst-case scenarios involving wars that make the 20th century conflicts seem like amateur hour.

  • steve smith

    “This is the essence of progress: as we move forward less of our society’s time and energy goes into just staying alive; more of it goes into living better.”

    Nope.

    “Staying alive,” otherwise known as “living,” is best valued by the liv-er. Any collective sense of what “living better” means seems to me to be a little too 1980’s. I don’t want public policy to focus on someone else’s idea of how my life could be better.

    It seems that to economists, every problem can be fixed with a resort to the right economic tweak. I don’t see it that way. The market exists to serve the users of it. The government exists, inter alia, to protect that market and (overly simplified) to insure its weights and measures. Its not the government’s job to foster “greater productivity.” Its to protect the participants of the market.

    Greater productivity for the sake of greater productivity doesn’t seem to answer anything. When or how will that ever end? Is there a logical conclusion to the rat-race theory of economics? Our problem is one of consumption, not production. Consumers have decided to ignore their communities. Today these folks are called globalists. They used to be called traitors. Borders matter. Loyalty matters.

    Both the Nobel winner and Prof. Mead believe this force called globalism is unstoppable. Its not. Until it is stopped, the fruits of any greater productivity will inure to multinational citizens, not us un-enlightened, un-intellectual locals. In effect, we don’t have a market. A market is where locals go to trade things. We have a store where we are all buyers and multi-national corporations are sellers. Who does this system favor?

    The theory of a global free market is a nice one. But it is only a pipe dream. In fact, what we have is a market free for globalists who write trade policy, and a highly regulated one for locals. The Davists, as Prof. Mead called them a couple of articles ago, are functionally free to control local markets despite heavy regulation of the system because they are the only ones who are responsible for the specifics of the regulations and are large enough to spread the costs of the regulations to consumers. It is how they control competition. If you don’t believe it, study the ratio of corporate employees plus government employees versus small entrepreneurs today versus any time in the past.

    So instead of freeing “friction” in the local markets by outsourcing everyone to India, society might decide to outsource the globalists. Oh, what a happy day. Then there might be fewer analogies between doctors, lawyers and buggy makers.

    Conversely, if gas prices don’t stop vaulting, buggy makers might make a comeback. Under Prof. Mead’s rubric, it might be more rewarding to make buggies than put thieves in the prisons that are so pre, post-modern.

    Maybe I could live better as Prof. Mead’s defines it as a buggy maker than an outsourced lawyer. I’ll have to put a little more thought into that. God knows its impossible to start a car company. You’d have to compete against the full weight of the United States government. Ask Toyota.

    If not buggies, maybe bikes. They are sufficiently progressive these days. I think our systems of transportation may have progressed all the way back to the 1910s. China is building high speed trains and multi-national auto assembly plants and Americans are building bike friendly lanes. Somehow this whole experiment seems to be de-railing.

    Maybe the fix isn’t a new economic tweek. Maybe its in regulating and tweeking economists. How about a few decades without changing economic rules every election cycle. We can start with Krugman. Whose next?

  • Tom Holsinger

    Luke,

    I can’t tell you quickly why things went wrong in California, but I can tell you when it started, having lived in California all my life, with intensely political parents and what not. My life has epitomized the Golden Dream.

    My parents met at my maternal grandmother’s house in Carmel on VE Day in 1945, just before my father shipped out to the Pacific as a replacement rifle platoon lieutenant. I was born in San Francisco and have lived all my life within about 100-150 miles of it. I grew up on the central California coast, and lived more than half my life prior to law school in the equivalent of national parks.

    In addition to political parents, my for-real godfather was Philip Burton of San Francisco (THAT Phil Burton). I managed my first campaign – a county campaign in a Presidential primary – at the age of 18. The only reason I made a career in law rather than politics was the discovery, when later managing a Congressional campaign, that I didn’t have the belly for politics because I wouldn’t destroy a friend’s marriage so he could win.

    My father, as President of Orange County’s Pacific Lighting in 1972-73 while I was in law school in San Francisco, had taken Jerry around introducing him as “your next Governor” to a large number of owners/CEO’s of truly enormous Southern California businesses.

    California’s Golden Dream starting dying when Jerry Brown was first elected Governor in 1974. I watched it happen, and understood very well what was going on at the time.

    Exactly how it happened is better said by others, such as Joel Kotkin of Chapman University (see his _City Journal_ article at http://www.city-journal.org/2010/20_3_california-economy.html ), Victor Davis Hanson, etc.

  • WhiskeyJim

    A challenge to Mr. Mead: There is a healthy chunk of professional services that is bloating our cost of living. And part of it is in the private sector.

    First, the over-build concept:
    The tendency in any bureaucracy is to over build. That is why most innovation is at the low end, which threatens the industry leaders’ viability. This is a driving force in freer markets.

    An example is hard drives, where previous market leaders are now bankrupt several times over. The successful upstarts were not faster, they were cheaper and smaller.

    Other examples are mpeg, jpeg, Wal-Mart clothing, etc., where in every case consumers are ready to give up quality for ease of use and less cost.

    Public services by their nature avoid this creative destruction, as does any industry that is highly protected by regulation.

    In fact, those instances are the only ‘industries’ that are increasing in price. Even commodity prices have remained flat or declined while demand skyrockets except when governments manufacture Malthusian circumstances.

    Now take your article’s argument one step further:

    Government cost of services is toppling the economy. But it is not just government services; it is industries that are heavily regulated (e.g., safer, less expensive cars are available except for government mandate).

    It is not just the legal profession that will ultimately be at risk. Auditing, consulting, and banking have all grown incredibly top heavy thanks to regulation that absolves them from the brunt of free markets. For example, my plumber’s house is always at risk, even when the book keeper absconds with the money to feed her coke habit.

    The recession taught us that much of our ‘private’ white collar regulation is [unpleasant and unnecessary] as well. What is the cost to society of economists that can not manage the economy, auditors that give Lehman a clean bill of health, and bankers that over-leverage, all protected by regulation?

    To use the popular example, we do not need to figure out how to ‘fix’ education, much less the auditing profession. All we need to do is subject them to free markets and watch quality rise as prices decline, or in fact prices rise to the level of quality that the market demands (e.g., I’ll audit Lehman with my profession on the line, but the audit will look much different, and probably cost more).

    The cost of living would decline for Americans by as much as 40% within 10 years. And that is better than a 3% annual raise.

    And before anyone says that such deflation would cause hardship, ask yourself whether you are now squirming just because you are living in a white collar profession. Because that is the turmoil that the majority of Americans live in all their lives.

    I’ll compress my whole dialog: Give labor the same mobility as capital. Watch what happens in the next 20 years, especially to government overhead.

  • http://facingzionwards.blogspot.com/ Luke Lea

    Thanks, Tom Holsinger. I read, like Joel Kotkin and have written for him. What pains me at the moment is the defeatism in the faxe of tractable problems, and a loss of love of country of those naively idealistic cynical folks who blithely look forward to drastic reductions in the average American working family’s standard of living, as though it were no big deal, as though abandoning a 2000 year old tradition of progress is nothing.

    I agree rqdical readjestments must be made to the changing economic realities of the 21st century, but I disagree that they are a step down, or that they will be decided for us by our political elites, or at least the ones that are in charge now.

    I’ve outlined what that adjustment might look like in an introductory chapter/essay:

    http://sites.google.com/site/lukelea2/introduction

  • EKurtz

    Krugman writes: “… jobs that can’t be carried out by following explicit rules — a category that includes many kinds of manual labor, from truck drivers to janitors — will tend to grow even in the face of technological progress.”

    Krugman writes without doing any research or consulting experts.

    The “rules” of driving are vastly more complex than those of chess, but they exist nevertheless. Driving is not a free-form activity. Or rather, it shouldn’t be. Driverless vehicles that can function successfully in an urban environment have been created and are being tested, see http://www.nytimes.com/2010/10/10/science/10google.html (yes, the NYT, Krugman’s paper).
    To the extent that it is a janitor’s job to maintain security, he has already been replaced, Google security robots. The tasks associated with cleaning have already been mostly transferred to human-operated machines. Floor-cleaning robots can be bought from Wal-Mart for a few hundred dollars.

  • Anon

    “Unions tend to flourish when demand for workers is rising (as in China today); they do not and cannot protect the situation of workers as a whole against a background of falling long-term demand for their work.”

    You’re obviously wrong. Demand for their work can always increase – The government can just create demand through stimulus! It’s all about aggregate demand – Haven’t you read Krugman?!?

  • Willy H

    “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”
    – Winston Churchill

    Nothing has changed as evidenced by this article!!!

    “We need to reduce the ‘friction’ in American society: the costs of our legal, health, educational and other government services. … through the use … of the computer …: their ability to replace human beings for much routine office work. Making government (and private sector) bureaucratic payrolls massively smaller is what the general interest requires.”*

    * We are facing down an unprecedented energy crisis – peak oil – peak natural gas – heck, pretty much peak everything over the next decade! – largely due to rampant unsustainable consumption. The transition to the post-industrial age will require the full mobilization of central governments and individuals that will dwarf our WWII efforts! Blue-collar jobs will return soon enough when the costs to transport textiles and steel across the Pacific become cost-prohibitive!

    “Or look at education. Moving from “time-served” processes of certification (four year BA degrees, … ) to certification based on achievement can make education dramatically cheaper.”**

    ** Reducing the length of education is the answer? We already have that flexibility. Gifted students skip levels and attend university years earlier or take more advanced courses within existing institutions. We have 25% youth unemployment in the Middle East and it is a growing problem in North America and Europe. Shortening the period of education required for individuals will only have them lining-up for unemployment sooner! Perhaps we could start by tackling the antiquated agrarian-based 8-9 weeks of summer holidays when most pupils lose 1/2 of what they learned the prior year. That would be a much more sensible start with immediate pay-back!

    “Your taxes will be lower in proportion to your income — both because as governments become more efficiently managed they can balance their budgets and because with balanced budgets they will retire the old debt.”***

    ***LOL – If we ever get out from under the mountain of debt we currently have! We have shown absolutely “0” (“zero”) interest in sacrificing to get our country back into fiscal shape. We go to war and we lower taxes! Currently we appear to favour balancing the books Clinton style – on the backs of the our weakened middle class! And besides, I haven’t seen a single military procurement that the federal government hasn’t been willing to fork out billions upon billions for! Why have our military expenditures not shrunk due to technological advancement you trumpet?

    Most of us are not Luddites and we welcome the computer in our lives but I am tired of all the techno-optimists spin on how technology will solve all of our problems. America’s “brave new economy” may very well end up looking much more like the early pre-oil industrial age (1890’s-1930’s) than a tax-saving 2021 version of HAL!

    PS. Interesting how this article makes no mention of our Wall Street financiers (who recently “shorted” the American people using highly efficient computerized hedging models and a double dose of good ole fashion fraud!) or the corporate elites who pay lip-service to American exceptionalism and American workers at election time while off-shoring their operations at supers-sonic speed!

  • Willy H

    steve smith says:
    ….
    Both the Nobel winner and Prof. Mead believe this force called globalism is unstoppable. Its not. Until it is stopped, the fruits of any greater productivity will inure to multinational citizens, not us un-enlightened, un-intellectual locals. In effect, we don’t have a market. A market is where locals go to trade things. We have a store where we are all buyers and multi-national corporations are sellers. Who does this system favor?
    __ __ __ __ __ __

    Well said!

    Globalization is currently at it’s high-water mark in my opinion. I believe it is stoppable, not by government policy, but by economic scarcity! The decline of globalization will be correlated directly with oil prices. It began in 2007 and it will continue unabated.

    “When oil prices got to be over $100 barrel, all of the sudden, Chinese steel exports to the US fell at double-digit rates. And all of the sudden, US steel production was up. And all of the sudden, US Steel Corp., which was one of the biggest dogs in the market, all of the sudden its share price doubled.”

    http://www.energybulletin.net/stories/2010-11-08/jeff-rubin-oil-and-end-globalization-aspo-usa

    Both Mead and Krugman to some extent, peddle the same old partisan left and right views cloaked in distorted economic visions that suit their purpose. Our solutions are likely to be found somewhere in the middle, the center, a position we Americans appear least comfortable in!

  • Willy H

    indipete says:

    … It is a source of continuing amazement to me that the left cannot or will understand that prosperity is not achieved by raising the wages of workers, but by increasing the efficiency of production.
    __ __ __ __ __ __ __

    You right, taking your logic to the extreme, America’s early economic growth was built largely on this premise – unfortunately it’s referred to commonly as “slavery”.

    America’s productivity stats have become little more than political spin, worthless, much like the posted inflation rates. These economic indicators serve only to sustain consumer confidence so bankers and corporations can continue harvest wealth from artificially created economic bubbles and unsustainable consumption. Despite “supposed” productivity gains over the past 30 years, & 5 Presidents the middle class has watched their incomes and purchasing power decline. You argument is as tired and worn as the “trickle-down” mantra peddled by the right for 3 decades.

  • Robert W. Gill

    Could anyone please tell me when Krugman does get it right?

    Although there certainly is a connection between Politics and Economics is it simply Paul have conclusions in search of
    justifications?

    I think so

  • RPU,PhD

    It’s all about pride. Krugman has previously staked out a position which he will defend forever. After all he is defending HIS entire persona – HIS PhD, HIS Nobel Prize.

  • Graham

    Much food for thought.

    But I wonder about how far automation can go at the more intellectual ends of the white collar spectrum. Processing and filing is one thing, and lawyers do a lot at the bottom end. But representing cases in court? Sitting on the bench and adjudicating them?

    What computer is nearly that advanced now? This is not mere quantitative work.

    And who will trust their fate to the computers as advocates, let alone judges?

    Would it be constitutional in any rule of law society to require a citizen to accept judgment from a computer? And would that not, at last, be sufficient cause to take up arms against any government prepared to institute such a policy?

  • Luke Lea

    “Unions tend to flourish when demand for workers is rising (as in China today); they do not and cannot protect the situation of workers as a whole against a background of falling long-term demand for their work.”

    Interesting thought. OTH, organized labor (and unorganized labor too for that matter) can work for legislaion to restrict the supply of labor to offset the fall in demand. That was the effect of the eight-hour day three generations ago. The same goes for protective tariffs — protecting labor in this case, not particular industries — which are certainly within the purview of national legislation. Or amending the 1965 immigration act to remove the so-called “family reunification” provision which completely destroyed the stated intention of that act.

    It’s all about legislation, policy, politics, votes, working people, getting organized on a national level, if we want to end the trashing of America.

  • Middle Class Worker

    No One Important – Who taught the brain surgeons?

  • Luke Lea

    As the blue model crumbles, behold, the trashing of America! And was we mindlessly tread towards a racially-stratified class society, behold, the subversion of democracy.

    I’m sorry, but almost the entire American pundit class is complicit in the process: that includes Mead as well as Krugman, David Brooks as well as . . . just about anyone else you care to name who gets published in the mainstream media.

    Unconsciously our pundits serve the interests of the new cosmopolitan plutocracy that now rules the Western world. But just wait until China, the 800 lbs Gorilla, comes out of its cage. Even the plutocrats themselves will come rushing home to Mommy I predict. But it will be too late. Their place in the world will be forfeit. And even their reception at home may not be so sweet.

    The trashing of America. How sad, how sad, how sad it will be. It’s not too late to turn back — but only barely.

  • Luke Lea

    They grind the faces of the poor. Where there is no vision the people will perish.

  • Jim.

    Luke Lea —

    Arguably, the old Communist bloc’s refusal to participate freely in international trade was one of the most serious impediments to their economic advancement. Certainly, their new participation in globalization — especially on the part of China and India — is what is driving their current prosperity.

    With that in mind, how do you propose that America’s turning away from that sort of free trade — the “maritime model” that Mead proposes (particularly in “God and Gold”) — is going to put us into a better position, economically?

    I’m not saying that China is devoid of predatory trading practices, or that America should absolutely continue its strategy of unilateral disarmament in the trade wars that really are going on these days. I would, however, like to hear how simply mucking about with laws is going to fundamentally change the fact that classical economics is reasserting itself and inexorably favoring regions with cheap labor resources.

    Behold, you’re barking up the wrong tree, LL. Forsooth, what we need is to expand humanity’s resource and cheap energy base. From there, the workers around the world (whose playing field is inevitably leveling) can enjoy the sort of standard of living that the US has enjoyed up to now.

    THAT is the solution. Anything else is, shall we say, less than constructive.

  • John L

    Mead’s proposal reminds me of the best and worst aspects of the late imperial Chinese examination system. A completely exam-based certification structure allows the government to farm out the costs of education to the people. However, in late imperial China, those who could actually afford to rapidly accelerate their children’s educations essentially monopolized the process. Would such socio-educational polarization be all the more intensified in capitalist America? Or would the US’s wider availability of prestigious outlets for “successful exam graduates” lead us on a more positive route?

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