Gindin and Panitch and the "Four Transformations"

Sam Gindin and Leo Panitch try to understand and explain how the world has changed over the last half century or so:

Four specific transformations were especially important in this restructuring of the economy and social relations in the US, each with particular implications for the making of global capitalism. The first of these was the relationship between industry and finance. A much larger share of total corporate profits now went to the financial sector: between 1960 and 1984, the financial sector’s share of domestic corporate profits averaged 17 percent; from then through 2007 it averaged 30 percent, peaking at 44 percent in 2002. ...

The second transformation— the one most associated with the thesis of US decline—occurred in the core industries that had fueled American economic dynamism in the postwar era. The old labor-intensive sectors like shoes, textiles, food, and beverage had seen a sharp contraction well before the 1980s, but it was rising imports and the corresponding loss of jobs in steel, auto, and machinery that occasioned alarm about the state of American manufacturing. …  But more was going on here than the word “decline” could adequately capture. By the end of the century, a major restructuring had occurred within these industries. In the auto industry there were eighteen assembly plant closures between 1988 and 1999, but thirteen new plants also opened, while the sixty-six auto-parts plants that closed over these years were more than offset by 184 new parts plants. Moreover, the number of plant expansions greatly exceeded the number of downsizings. ... 

All this brings us to the third transformation— the shift to high-tech manufacturing production. This new industrial revolution—which soon spread globally and encompassed computer and telecommunications equipment, pharmaceuticals, aerospace, and scientific instruments— was largely American-led in terms of its origins and concentration, and of the mechanisms of its subsequent diffusion abroad. …  By the end of the century, of the top dozen global firms by sector, the US accounted for 77 percent of the world’s aerospace sales, 75 percent of all sales of computers and office equipment, 91 percent of computer software sales, and 62 percent of pharmaceuticals....

The fourth structural transformation in the economy involved the growth of a diverse range of “professional and business services” that ranged across consulting, law, accounting, market research, engineering, computer software, and systems analysis.  Here, the number of jobs increased dramatically. In 1983 employment in this broad sector was less than half that in manufacturing, but by the turn of the century employment— growing even faster than in financial services— had doubled, and matched total manufacturing employment.

Gindin, Sam; Panitch, Leo (2012-10-09). The Making of Global Capitalism: The Political Economy Of American Empire (Kindle Locations 4196-4289). Verso Books. Kindle Edition.   

Recapping, the second is perhaps most understood and most complicated to explain.  What we have here is no just the decline or the rise of something but the decline and rise of the auto industry, as rust-belt "legacy" providers give way to "foreign," particularly Japanese, competitors who shortly Americanize themselves.

And Speaking of Books. (Grunwald on the Stimulus)

I suppose I ought to say a word about The New New Deal, Michael Grunwald's chronicle of the notorious Obama stimulus.  It's a worthwhile and important (if imperfect--see infra) book which to my eyes doesn't seem to be getting the buzz it perhaps deserves.

The book falls analytically into two sections, maybe two and a half.  The first is the chronicle of the assembly of the stimulus bill.  It's another account of the inner workings of the sadly dysfunctional White House economic team, providing further evidence of what you knew from elsewhere--that Larry Summers, while not entirely a Wall Street tool, was just not at all effective at his assigned task: i,.e.,  organizing, focusing and clarifying the Obama economic message.  Important for the record, but not exactly stop-the-presses news. Also further evidence, if we needed any, of how completely in the tank for the big banks was Tim Geithner.

The more important part of the book is the long, detailed and sometimes wearying catalog of all the stuff we did with the stimulus money.  I don't know of any other easily accessible source that comes close to detailing this record so completely.  So far so good, but this is where the trouble starts, because it quickly becomes clear that Grunwald's dominant purpose is to persude us that the stimulus program was just dandy and that the critics are all knaves and scoundrels.

Now, it so happens I am generally hospitable to that view.  I've never pretended to be strong macro, which may distinguish me from all the other know-nothings who do claim to be strong at macro.  But I'm generally sold on the idea that  this crunch may indeed be a problem that you can solve by throwing dollars at it.  Still--really, a little critical detachment wouldn't have hurt.  Note in particular: reading Grunwald it becomes clear that "the stimulus" was partly about revving the engines (but please don't say "shovel ready"again).  Yet it is equally clear that a good many of the projects were not short-stem stimulus at all--rather, just substantive innovations that Obama thought were A Good Thing that he might as well ram through while he had the chance.

It's hard top get too worked up about this: I can't imagine any president who wouldn't have yielded to the same temptation.  But I would have loved a more candid and critical account of whether the zeal for particular projects may have hurt the overriding goal of getting the economy going again.

The "half" story is the account of the policing of the stimulus, so as to prevent fraud.  Here Grunwald gives a shout-out to Joe Biden.  And once again, I am disposed to think Grunwald must be on the right track.  But the way he tells the story, the bells are ringing, the whistles blowing, and we're on the first train out of happy town.  All I'd say is that Grunwald has a lot of guts as a journalist to stick his neck out quite as far as he does on this one.  I suspect there's bound to be some contrary evidence as time rolls on, but Grunwald has staked out his position as the original yea-sayer, and I hope he can live with it if as and when the picture out to be not quite so sunny as he paints them.

Skeel on "Corporatism"

I'm embroiled in other stuff today but I'm also just finishing up  The New Financial Deal, David Skeel's impressive exposition/critique of Dodd-Frank.    It's the handiest overall summary of Dodd-Frank I've seen and although Skeel makes it clear he is no fan of this particular financial revolution, he's fair-minded and candid in sketching the basic landscape.  His fundamental complaint is that the Act mandates "corporatism"--giving the government broad powers to channel rewards and punishments into selected financial institutions, so as to accomplish a political agenda.  In Steel's words:

The Dodd-Frank Act invites the government to channel political policy through the big financial institutions by giving regulators sweeping discretion in enforcing nearly every aspect of the legislation.

The general point is clear enough.  Skeel makes it clear that he is no fan of the auto bailouts and resoundingly no fan of Fannie/Freddie, but beyond that, he doesn't attempt to explore the notion of "corporatism" in great detail.  But given the current political climate, I'm pretty sure I know how the average reader will understand it: he'll see the threat of "corporatism" as the risk that government bullyboys put their jackboots on the faces of private citizens who are just trying to go about their business.

I'm actually sympathetic to Skeel's concern about "corporatism" and I am no fan of bullyboys or jackboots but I'd conceptualize "corporatism" a bit differently.   Grant that there is a threat governments will (do) push private parties around.  Seems to me there is just as much of a threat that private parties push the government around, and use the intimate but open-ended structure to work their own will on a malleable government: regulator and regulated get in bed and make whoopee together.

The catchphrase name for this sort of thing is "regulatory capture," but that is insufficiently nuanced.   Recall what we're doing here: we're going to take ring-fence one segment of the economy and mandate a special relationship with special obligations and plenty of special protections.  Recall also the free flow back and forth between regulator and regulated: recall that they mostly went to school together; that they congregate at the same watering holes, that they intermarry and inbreed.   It begins to sound like the definition of an entrenched caste, governing of, by, and for the entrenched caste.

I suppose that every government can be seen through some lens as  a business (and vice versa).  Maybe the instructive example is Venice--in a way, the most distinctive society/economy on the planet, and so not a precedent for anything.  Still, Venice was once one of the most energetic, dynamic, and, yes, innovative economies on the planet, until one day the elite decided too many upstarts were getting into the club; they slammed down the shutters and closed the shop.

I'll try not to get carried away here.  I'm not talking about the illuminati, or even the Council on Foreign Relations (though if you really want to go down that road,. here is a transcript of a discussion of Dodd Frank from the World Economic Forum at Davos).  But you don't need to be a tin hat to worry about the threat of a society in which either governments or private persons have too much power.  Or worse, both together.   

Optional extra-credit reading: Andrew Redleaf, Panic.

Remember the 90s?

Remember the 90s?  Harvard Business Review (via The Economist) thinks that well you might:

America is losing out in the race to attract good jobs. Matthew Slaughter of Dartmouth’s Tuck School of Business and Laura Tyson of Berkeley’s Haas School of Business point out that multinational firms (which pay higher wages than non-multinationals) increased employment in America by 24% in the 1990s. But since then they have been cutting back on jobs in America. They have moved dull repetitive tasks abroad, and even some sophisticated ones, too. The proportion of the employees of American multinationals who work for subsidiaries abroad rose from 21.4% in 1989 to 32.3% in 2009. The share of research-and-development spending going to foreign subsidiaries rose from 9% in 1989 to 15.6% in 2009; that of capital investment rose from 21.8% in 1999 to 29.6% in 2009. In HBS’s survey, alumni reported that when their firms had to decide whether to do something in America or elsewhere, America lost two times out of three.

But wait, folks, it ain't all bad:

This relative deterioration in America’s business climate has coincided with a spectacular rise in the incomes of the sort of people who read the Review.

    

Nannyhood and the Ascending Bar

Following up on my snark about high-achiever nannies, it occurred to me: isn't this one more item of evidence for the proposition that the bar to entry into the elite is getting ever higher?  I wonder if the career services office at major grad schools now offers tips on nannyhood.  Or, now that I think of it, at our law school.?


This insight came to me this morning while doing class prep at a student coffee shop. The next table was engaged in sober inquiry as to whether it made sense to do a second PhD.

Bleakest, Most Chilly Phrase of the Morning

"the flexibility, diligence and industrial skills of foreign workers..." 

Apple executives, on why those jobs are never coming back.

Dead Letter Office?

I came biking up to my front door a while ago, just as the postman was turning away from the mailbox, having dropped off the daily ration of catalogues and third-class envelopes.  "How're you doin', m'friend?"  I asked.  "Just fine," he replied, with a cheerful smile as he resumed his rounds.

It was ever thus.  I don't know about the rest of the world, but here in Palookaville, mail service is pure Sesame Street.  Mailpersons are unfailingly friendly, easygoing, cooperative.  For a while we had one who hummed hymns.  Which is not to say they're lazy.  Granted they don't sprint along at a trot, like UPS men do (or used to--they've slowed down, haven't they)?  But I never see one who isn't busy, taking stuff out of his truck, putting stuff into his truck, walking his beat, whatever.

And why not be happy?   He's out in the open air. He gets plenty of exercise.  For all our fussing, the weather is actually pretty good here.  And the customers are always glad to see him.

A good, steady job with benefits.  Just like his mother told him.  "Go to work for the Post Office," she said, "and you'll be set for life."

Wonder what she is saying now.

Anyone You Know?

Andrew Redleaf explains the difference between socialism and crony capitalism:

The socialists are an intellectual party comfortable with abstraction and with theory. Moreover, precisely because they have visionary and ambitious goals, at least since Lenin and his New Economic Policy the socialists have recognized they can get where they want to go only by riding on the back of capitalism.  

Crony capitalists have neither the inclination for theory nor the interest in general economic success that attaches to the socialists. ...

No one is more sophisticated than the crony capitalist, to whom everything is gray and no man is a greater fool than the man of principle. The crony capitalists pride themselves on their grim realism, on being unburdened by ideas, on their infinite flexibility and pragmatism. All of which comes down to you can't trust them as far as you can throw them.

Unlike the socialists, the crony capitalists do not depend upon the general success of the economy to achieve their larger goals. For one thing, they can hardly be said to have larger goals. The crony capitalist is instinctively satisfied with the notion of a zero-sum game, which, for his purposes, is better than a rising tide that lifts all boats. What good is it to the crony capitalist to see all boats lifted? Will all boats remember the favor?

Crony capitalism is widely identified with the personal corruption that everywhere ultimately attends it. This is a mistake. The crony-capitalist politician is often not corrupt in the ordinary sense. What did Hank Paulson gain personally from bullying financial markets to the brink of a general economic collapse?

At its heart crony capitalism consists in a deep skepticism about the efficacy of ideas, the practicality of principle. Or at least it is a deep skepticism in the breast of the rare crony capitalist contemplative enough to achieve such a highly intellectual state. For most of them, it is not so much that they are skeptical of the power of ideas but that the notion of such power has never occurred to them. . ...

Crony capitalists are always statists, not in theory, like the socialists, but in practice, because they cannot let go of the impulse to control events. Controlling events means staying within the narrow boundaries of their experience and imagination, not to mention their Rolodexes. Iraq needs to be rebuilt? Call in the certified, pedigreed, well-connected, quasi-official rebuilders. The Democrats would do the same thing in their place (with bigger minority set-asides) and tell themselves they were doing it for the people.   

--Andrew Redleaf (2010). Panic (Kindle Locations 2840-2884).  

Stanley Greenberg Tries to Explain What it Is with the Democrats

[Oops: yesterday I called him "Goldstein."  Brain f*rt. sorry.]  There's probably nobody better equipped to know what center-left Democrats are thinking than Stanley Greenberg.  He's been making his living by listening to them since 1992.   Here's what he is hearing:

Government operates by the wrong values and rules, for the wrong people and purposes, the Americans I’ve surveyed believe. Government rushes to help the irresponsible and does little for the responsible. Wall Street lobbyists govern, not Main Street voters. Vexingly, this promotes both national and middle-class decline yet cannot be moved by conventional democratic politics. Lost jobs, soaring spending and crippling debt make America ever weaker, unable to meet its basic obligations to educate and protect its citizens. Yet politicians take care of themselves and party interests, while government grows remote and unresponsive, leaving people feeling powerless. ...

In our recent Web survey of 2,000 respondents, voters respond strongly to Democratic messages on the economy only when a party leader declares, “We have to start by changing Washington. ... The middle class won’t catch a break until we confront the power of money and the lobbyists.”

Why is that?

You do not have to look very far. If there is an article of faith among contemporary center-left leaders, it is that investment in education will pay dividends with increased productivity and increased income. And yet the evidence is piling up that the economy is not working for the middle class. Productivity and education increase but wages do not follow.

When presented with vivid descriptions of income inequality in America, people are deflated, rather than empowered to bring change. In surveys, they tell me that they think the politicians and the chief executives are “piggybacking off each other.” They think that the game is rigged and that the wealthy and big industries get policies that reinforce their advantage. And they do not think their voices matter.

That government and the elite appear blithely to promote globalization and economic integration, while the working population loses income, makes the frustration more intense.

Our research shows that the growth of self-identified conservatives began in the fall of 2008 with the Wall Street bailout, well before Mr. Obama embarked on his recovery and spending program. The public watched the elite and leaders of both parties rush to the rescue. The government saved irresponsible executives who bankrupted their own companies, hurt many people and threatened the welfare of the country. When Mr. Obama championed the bailout of the auto companies and allowed senior executives at bailed-out companies to take bonuses, voters concluded that he was part of the operating elite consensus. If you owned a small business that was in trouble or a home or pension that lost much of its value, you were on your own. As people across the country told me, the average citizen doesn’t “get money for free.” Their conclusion: Government works for the irresponsible, not the responsible.

Everything they witness affirms the public’s developing view of how government really works. They see a nexus of money and power, greased by special interest lobbyists and large campaign donations, that makes these outcomes irresistible. They do not believe the fundamentals have really changed in Mr. Obama’s Washington.

All this is powerful, if not entirely novel, stuff, but I'd give it a slightly different spin.  In a word, ring-fencing: we seem to have created a system that protects entrenched insiders and let everybody else fend for themselves.  That would include Wall Street bankers and their "elected" minions,, but it would also include disparate other constituencies as well: public employees who have been around since the first big hiring freezes; pensioners old enough that they will be lucky enough to die before the money runs out (that would be me, your honor); hell, throw in Californians foresighted enough to have bought their homes before 1978, and even a range of private-sector workers who bought their homes early, stayed on the job for a while, and kept their nose clean.    These are the constituencies not specifically rich enough but better described as connected enough so it looks like their particular bowls of gruel will stay full.  Everyone else can go hang.

More: I may not be well-informed enough to judge, but my guess is that this is one factor that pervades the current malaise across a bunch of countries.  The specifically financial crisis takes different forms in, say, Greece, Ireland, Italy.  Problems like youth un (or under) employment, like the off-the-books shadow economy--these seem to prevail more generally.   I suppose there are differences of degree.  In Spain, with perhaps a longer history of systemic unemployment, one hears reports of what amounts to a fully-developed two-tier economy, one of which is doing quite well, thank you, and one, scratching for bits.  I wouldn't say we've got quite to that point at home yet, but one might argue that we seem to be on our way.

Greenberg follows up with a set of positive recommendations which you can find here.  Some of them  may sound like same-old same-old; some (immigration) perhaps more appealing, albeit probably utopian.  But none of them seem very ambitious --none betray an understanding that we seem to face a widening gap here, not so much between rich and poor as between already-got-mine and still-trying to get on board.  It's one of those instabilities which, like the San Andreas fault, will only get more dangerous until it cracks.

Write Your Own Headline

From CNN, April 2, 2009

Some economists say the U.S. economy won't recover until 2010 or beyond.

An Invitation to DeLong

Neil Barofsky made a noisy exit from his role as inspector general of TARP, excoriating the Treasury for (my words, his sentiment) breaching its covenant with the American people:

Though there is no question that the country benefited by avoiding a meltdown of the financial system, this cannot be the only yardstick by which TARP’s legacy is measured. The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership.

These Main Street-oriented goals were not, as the Treasury Department is now suggesting, mere window dressing that needed only to be taken “into account.” Rather, they were a central part of the compromise with reluctant members of Congress to cast a vote that in many cases proved to be political suicide....

Indeed, Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals — whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in — may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy. 

 In short, Barofsky allies himself with a growing chorus of voices who are coming to perceive the American economic model as an examplar of crony capitalism, if not a banana republic ("kleptocracy" is perhaps too strong)--in any event, a small network of interconnected elites who ringfence themselves in warm nimbus of a beneficent government letting everyone else go hang.  See also link, link.   What's remarkable is how far this complaint has metastasized beyond the hysterical left--no more just Naomi Klein and Michael Moore, but seasoned conservativs like Michael Barone and Richard Vigilante, and market liberals like Simon Johnson or Raghuram Rajan.  These new critics are of a tendency too sophisticated to see President Obama as a vulgar socialist.  They see him as something worse: as an elitist/statist who believes that government is the privilege and responsibility of the good and great.

Brad DeLong showcases Barofsky.  DeLong demurs: "A considerably harsher verdict on the Obama Treasury than I would have handed down," DeLong declares.  The temperate nature of the demurral is itself worthy of remark: when DeLong encounters something he doesn't like, he customarily shampoos it with peanut butter and sand.

Which makes it all the more urgent to suggest: take it seriously, Brad.  Clearly you understand that "the Barofsky tendency" (for lack of a better name) cannot be dismissed out of hand.  But can it be dismissed at all?  If the critics are wrong--if the Obama economy has not become an elitist/statist ring-fence, rewarding its enemies and dismissing everyone else--then where do the critics go wrong?  I don't think that you can dismiss them as motivated by mere venality.  For the most part I don't see these critics as anything other than honest seekers after the truth (some have carped that Barofsky wants to run for office; I can only say I hope so).  They may make errors of analysis but these people are sophisticated and well-schooled and their errors, if any, are likely to be subtle and difficult to avoid.  You might be the academic best equipped to identify and defuse them.

Or to acknowledge that they are, in part or entirely, correct.  So, how about it?  

Manufacturing: Mark Perry Imposes A Reality Check

I'm one who has whined about the decline of manufacturing, so it is bracing to read the great contrarian Mark J Perry collecting the data to suggest that these "decline" stories are much overblown.  But Perry's data do show that we retain manufacturing power while shedding manufacturing jobs.  I have also been enjoying the great curmudgeon, Charlie Munger, saying he just isn't seeing any place where job growth will come from (Munger's advice: suck it up).

Funny thing about Perry: from all I read, I'd infer that he regards President Obama with contempt and loathing.  But virtually everything he showcases--say, 90 percent--is designed to show that things are really much better than you expected.

What Martin Wolf Thinks

If you want to know what Martin Wolf thinks (and well you might), DeLong has graciously liberated him from the paywall.  Link.  But skip the last paragraph, it's depressing (hah, made you look!).

Picking Winners Again: What Works

I posted about this before but I shouldn't let pass this cool summary from The Economist on the question of when government industrial policy--aka "picking winners"--actually works:

First, the more it is in step with a national or local economy’s comparative advantage, the more likely industrial policy is to succeed. Drives to spur high-tech entrepreneurship in areas of heavy manufacturing, for instance, face a struggle. According to Mr Lin of the World Bank, following comparative advantage has produced clear successes for some developing countries. Chile, for instance, moved from basic industries such as mining, forestry, fishing and agriculture to aluminium smelting, salmon farming and winemaking thanks to a number of government initiatives.

Second, policy is least prone to failure when it follows rather than tries to lead the market. Curiously, Sheffield Forgemasters might have been an example of the former: Westinghouse, an American company, had suggested to the Yorkshire firm that it should try to break Japan’s monopoly on ultra-large nuclear steel forgings.

Third, industrial policy works best when a government is dealing with areas where it has natural interest and competence, such as military technology or energy supply. The worst problems unfold when politicians intervene in purely private domains with short-term goals, bailing out old firms to save jobs or spending lavishly on white elephants. The present round of industrial policy will no doubt produce some modest successes—and a crop of whopping failures.

Link.

There, That About Gets It

October 15: 1973: the End of Western Civilization as we Knew it.  That was the day before OPEC jacked up the price of oil by 70 percent (to $5.10 a barrel).  So it was also the last day when a guy as dumb unskilled as Homer Simpson could count on holding a job where he would earn enough to support a wife and three children in a house in the suburbs with a two-car garage.

Homer had had a pretty good run up to that time, from the end of World War II, during which American well-being was pretty well insulated from anything else in the world.  It wasn't tariff barriers per se: it was just that every other important economy came out of the war in such a mess that we could pretty much do what we wanted.   So unskilled "industrial union" worker could enjoy something like the same good fortune that historically shined on their better-protected brothers in the trades ((the AFL and the CIO had merged in the Eisenhower years).    So Charles Wilson and Walter Reuther could make a nudge/wink deal on how much to charge and how to divvy up the swag and we all drove crap cars.

Homer's long, slow decline was masked by three factors:

• His wife went to work; family income stayed up,but on two incomes rather than one.
• He suffered "stealth losses" through the corruption of the benefits package, specifically the starvation or looting of his defined-benefit pension plan.
• He learned--or was taught--how to use his house as a piggy bank.

Homer believes he was impoverished by foreign competition.  There is some truth in that, but he also gained from bigger markets and cheaper goods.

Three factors.  And the fourth factor is--?

Ed Luce Reminds us of What We Suspect is Probably True

I'll bet one of the tops of everybody's forwarding list this morning is Ed Luce's brisk and forceful reminder of what we already more or less knew about the American economy: it's got problems.

Those looking for consolation might want to flip into the Sunday NYT magazine and take at the full page ad on Page 7 for a new education offering: a semester-long course in "filmmaking or photography."  \The venue is the Queen Mary 2: "Visit 34 Cities, 18 Countries in 103 days."    No price in the ad, but a flip to the website discloses that the tuition is $17,000.  Room and board varies from 17k up to 51k, not including, I assume, booze and tschatschkes.

A Second Thought on the Supply of Doctors

I posted last night on the supply of doctors. A couple of comments on that post provoke a second thought. That is--a while back I met a retired doc, fellow my age (maybe Eydie Gorme's age) who offered this comparison: when he went to med school half a century ago, something like 95 percent of classmates were headed for direct patient care. These days the number is--what? 75 percent? Lower?--anyway, a lot fewer than 95 percent are headed for patient care. The rest are headed to Law School, B School, or direct to investment banks and such.

That, at any rate was the story back at the end of '06. I wonder what all those guys are planning now?

Afterthought: My interlocutor had specialized in post-surgery care of heart patients. He displayed, not incidentally, about the best bedside manner of any person I ever met. Just to meet him as you came from under anesthetic would be enough to put you on the road to recovery.

Optional outside reading: Might be a good time to take a look at Simon Johnson's account of how we are becoming a banana republic. And Phil Greenspun cfs. the current Harper's on the same line.

I Cried Because I Had No Shoes ...

...until I met a Wall Street Journal reporter, trying to fight the loonies in the airline business in the company of a three-year-old and an infant:

I'm betting those speculators at the Chicago Mercantile Exchange were behind the retention of that counter agent who recently placed me, my 3-year-old and my infant in completely different rows for a cross-country flight, instructing me to "sort it out at the gate." The CME undoubtedly also hired the gate agent who told me to "fix it on the plane." Ditto the stewardess who yelled at me for not dealing with this problem before I boarded and then ordered a dozen people to shift seats, delaying our departure. Not that it mattered, since we sat on the runway for two hours.

HT Carpe Diem.

Here's Dancin' Sam Again

Sam Zell sings us and dances us through the current economic uproar (together with a catalog of great Sam oldies) (link).

Who're You Callin' Insolvent?

Dani Rodrik didn’t write this about the United States, and he didn’t write it last week, but read this catalog of how an economy might go bollywackers:

When the economy is on an unsustainable path—for example, when the country as a whole or the government is accumulating obligations at a rate that will compromise its ability to abide by them—participants in the economy know that the current rules of the game will need to be abandoned and act to protect themselves from the expected changes rather than engage in productive investments. Problems of macro stability can be generated by imbalances arising from different areas. The fiscal accounts may be in deficit, and public debt may be increasing faster than the capacity to service it. Longer-term fiscal commitments, in particular the actuarial liabilities of the government vis-à-vis the pension system, may bankrupt an otherwise solvent government. A monetary policy may be too looses, causing a loss of international reserves and an eventual large depreciation. Banks may be taking excessive risk, which can result in a disruptive crisis that often weakens both fiscal and monetary stability. The country may be running large external imbalances that translate into reserve loss or a rapidly rising external debt and signal the need for eventual currency depreciation. The real exchange rate may be misaligned, limiting the profitability and growth of export- and import-competing sectors.

—Dani Rodrik, One Economics, Many Recipes 74 (2007)

Remind you of anyone you know?