Monday, August 5, 2013

Grand plans from the Far North and Far East

For several years I was an occasional visitor to the Twin Cities as my younger brothers and sisters grew up there. I loved the visits and the people. If they received 3 feet of snow with 20 foot drifts they grabbed shovels, snow blowers, tractors, and whatever else was of use, and made the roads passable in a remarkably short period of time. School closings rarely lasted more than a couple of days, grocery stores weren't pillaged as long-time residents knew that events like this, while not uncommon, were ones for which one planned in advance. No one bothered to call FEMA, nor the president, nor the National Guard. 

Minnesota's citizens stand in sharp contrast to the New York's insular broadcast bobble-heads and their daily auditors who seem to view every dusting as a major event. A three-inch snowfall borders on an Oedipal tragedy and merits a query to the mayor's office about possible school closings. Simultaneously, a network lesser-light appeals to the National Weather Service for confirmation that the inconvenient inclemency is a product of global warming. (Apparently there's nothing "natural" about East Coast natural disasters - somebody or something is always at fault and "somebody" - meaning "somebody else" -  must always pay.)

Politically, Minnesota has far more in common with her liberal East Coast brethren. The state's Farm Labor Party has given the nation presidential hopefuls McGovern, McCarthy ("Clean Gene"), Humphrey, Mondale, and (maybe) Jessie Ventura; nor can we forget erstwhile comedian Al ("the 60th vote") Franken, Keith Ellison (the House's first Muslim member), and the state's home grown Charlie Weaver, Garrison Keillor. Little wonder then that Michelle Bachmann is viewed as some sort of alien creature (an experience common to many women of the right) - fresh perspectives, unlike fresh air, aren't always welcome.

(Several years back I read an article which noted that cabbies at the Twin Cities' airport were refusing to provide rides to passengers toting duty-free liquor, or accompanied by a dog - apparently the drivers' Muslim faith [approximately 70% of the drivers are Somali immigrants] these as terrible breaches. As a result [and because so many of the cabbies are followers of Islam], quite a few potential riders waited for inordinate periods of time before latching on to a non-Muslim hack [others, fortunate to get a ride, were dumped off well before their destination when their indignant driver learned of the "contraband."] I wrote one of my brothers concerning this and he responded that it was no big deal and that "there are more important things to worry about.")

Apparently not. The city council attempted to pass an ordinance that cabbies unwilling to carry alcohol-bearing or canine accompanied passengers would "top" their cabs with a specially colored light. However, even the good people of MSP, realizing that whether its tail is braided or not, a horse's ass is still a horse's ass, refused to accept these accommodations and now violators can be suspended. 

Nevertheless, this new social program will be instituted, funded, and put into motion. Its "successes" will be well publicized but difficult to quantify, and its shortcomings well disguised and difficult to identify. Some countries are famous for their multi-year plans - which, by the way, are rarely successful. For comparison's sake I chose to look at the most recent Chinese 5-year plan (initiated in 2011).

The Minnesota 30-year plan (as currently laid out) is broad in scope, short on detail, and leaves expectations unaddressed. The Chinese plan is far broader, significantly more detailed on many more socially important topics, and clearly stipulates goals.

Comparative Goals
Minnesota - in Black
Chinese - in Red

1. Preservation protects natural areas and resources for use and enjoyment today and into the future.
Chapter 49: Deepen the reform of price of resource products and fees for environmental protection

2. A vibrant and globally competitive economy creates opportunities for residents and employers.
Chapter 53: Actively participate in global economic governance and regional cooperation

3. Land use, development patterns and infrastructure align to make the best use of public and private investment.
Simultaneously promote industrialization, urbanization and agricultural modernization. Industry should support agriculture, city should support countryside,

4. Housing options give people in all life stages and of all economic means viable choices for safe, stable and affordable homes.
Chapter 35: Improve construction of affordable houses

5. A multi-modal transportation system safely and reliably connects people and freight with destinations in the region and beyond. 
Chapter 12: Construct comprehensive transportation system

6. A resilient region minimizes its contributions to climate change and is prepared for the challenges and opportunities of a changing climate.
Chapter 21: Actively cope with global climate change

While we in the states typically remain uninformed of any program's goals (even if they are enumerated and published - in comprehensible English), their authors and supporters thrive on them for years. 

China, by contrast, takes a very dim view of failure - especially expensive failure (are there any other kind when bureaucrats run a program?). Lengthy jail sentences and death are not uncommon. No one especially cares if the culprits are swell fellows and members of elite country clubs, or graduates of elite schools, or products of elite couplings. And they definitely don't care if the condemned are lawyers - China prefers engineers to lawyers in that the former rarely find multiple correct answers to straight-forward questions.

Friday, August 2, 2013

The economic future: 6 headwinds, 4 incorrect forecasts, and 2 options

Every once in a while I find among my readings something that brings joy to my heart: an opinion piece (by someone much brighter than myself) which supports a contention I recently advocated. Several weeks back I put forward the idea that we live in a "hockey stick" period of human economic history - that the progress that this country has become accustomed to, and that many believe will continue, is in fact a great anomaly...a one-off event that will never again be repeated and is already fading. 

John Mauldin has written a free weekly market letter for well over 10 years and one which I have followed faithfully. What I enjoy about Mauldin is not that he is always correct (although his record is better than most), but that he is always ready to concede that he has made mistakes and will recount them and search for elements he may have overlooked. 

In his most recent column he recounted the results of a paper published by Dr. Robert Gordon of Northwestern University. I could recount the highlights as I see them but you'll find an excellent synopsis here, or the original paper, which is actually a very good read, can be found here

So, just a few high points for those who dislike reading lengthy papers but which won't be found in the synopsis: on page six (6) of his paper he has shown two graphs, both of which demonstrate a "hockey stick" formation similar to those I used previously - unlike mine, though, Gordon continues his into the future and is bleak.

Gordon also supplies (pages 16-18) "six headwinds" that future generations must deal with if we are to avoid a diminishing standard of living. However, on page 15, Gordon provides some hope by giving four examples of recent "innovation pessimism" that have provenly woefully incorrect (including one from IBM's Watson and another from Microsoft's Gates).

And, finally, to demonstrate the relative importance of recent innovations with those of the past, the good doctor asks us to choose from two options:

With option A you are allowed to keep 2002 electronic technology, including your Windows 98 laptop accessing Amazon, and you can keep running water and indoor toilets; but you can’t use anything invented since 2002.

Option B is that you get everything invented in the past decade right up to Facebook, Twitter, and the iPad, but you have to give up running water and indoor toilets. You have to haul the water into your dwelling and carry out the waste. Even at 3 a.m. on a rainy night, your only toilet option is a wet and perhaps muddy walk to the outhouse. 

Which option do you choose? 

Afterthought: In his analysis, Dr. Gordon does credit World War II production as a factor in America's economic growth. However, I adhere to my contention that much of the sustained growth that followed the conflagration is attributable to the fact that every other major industrial power was crippled and required many years to rebuild the competitive industries we deal with today.