Saturday, August 13, 2011

Thomas Friedman: A Theory of Everything

"Globalization and the information technology revolution have gone to a whole new level. Thanks to cloud computing, robotics, 3G wireless connectivity, Skype, Facebook, Google, LinkedIn, Twitter, the iPad, and cheap Internet-enabled smartphones, the world has gone from connected to hyper-connected.

This is the single most important trend in the world today. And it is a critical reason why, to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before. All this technology and globalization are eliminating more and more “routine” work — the sort of work that once sustained a lot of middle-class lifestyles.

The merger of globalization and I.T. is driving huge productivity gains, especially in recessionary times, where employers are finding it easier, cheaper and more necessary than ever to replace labor with machines, computers, robots and talented foreign workers. It used to be that only cheap foreign manual labor was easily available; now cheap foreign genius is easily available. This explains why corporations are getting richer and middle-skilled workers poorer. Good jobs do exist, but they require more education or technical skills. 

Unemployment today still remains relatively low for people with college degrees (see chart above). But to get one of those degrees and to leverage it for a good job requires everyone to raise their game. It’s hard.

So let’s review: We are increasingly taking easy credit, routine work and government jobs and entitlements away from the middle class — at a time when it takes more skill to get and hold a decent job, at a time when citizens have more access to media to organize, protest and challenge authority and at a time when this same merger of globalization and I.T. is creating huge wages for people with global skills (or for those who learn to game the system and get access to money, monopolies or government contracts by being close to those in power) — thus widening income gaps and fueling resentments even more.

Put it all together and you have today’s front-page news." 


85 Comments:

At 8/14/2011 1:40 AM, Blogger OBloodyHell said...

>>> All this technology and globalization are eliminating more and more “routine” work — the sort of work that once sustained a lot of middle-class lifestyles.

Really? I think it's eliminating the blue-collar workstyle typified by the auto-worker's union and factory shiftwork.

But... less middle-class clerical jobs?

In what Field of Dreams is TF standing, praytell?

Certainly not one on this planet.

Hey, Thom! Let us know when your Space Shuttle has landed, huh?

 
At 8/14/2011 3:21 AM, OpenID American Delight said...

I call shenanigans on the Friedman piece. The reason behind today's news is an increasingly strident underclass entitlement society in the West where the poorest people live better than the middle class of most of the world. The good jobs were smothered out by the government, not by a demand for highly-educated IT employees.

 
At 8/14/2011 7:03 AM, Blogger gmcrews said...

"...those who learn to game the system and get access to money, monopolies or government contracts by being close to those in power."

This, IMHO, is an underlying issue. And even for situations where the term "game the system" is inappropriate, concentrating the decision making processes (publicly or privately) at the top of a large and complex economy is bound to have very significant unintended consequences. You know, free market theory? So I can believe modern communication technology can magnify these unintended consequences to the public.

 
At 8/14/2011 8:46 AM, Blogger Larry G said...

in terms of education attainment and jobs... need to consider how our kids compare against kids overseas.

NAEP proficiency standards - essentially world standards.

In this country about 1/3 of the kids test out as "proficient" whereas 70% of kids overseas do.

"proficient" is not some murky standard.. it's pretty explicit.

we rank no better than 15th in the world on these - below almost all of our competitors.

and it's not teachers who are at fault.

Our school systems want the lower standards - in part because parents want their kids to get good grades so they can have good-looking college resumes.

Our entitlement society is created when we graduate kids who don't go to college and who lack the education to compete for world-class jobs - which now days are more focused on technical knowledge.

When the average school kid in the US cannot do a Calculus word problem - it's an indication that they lack the ability to read and understand technological concepts much less have the ability to solve real world problems using their education.

And in this country, if you cannot compete successfully for a world class job... then you end up on entitlements - ironically paid for by the kids who got college.....

we're all about blame these days.

but the blame is on us.

we refuse to adopt competitive education standards that other countries have and then we act surprised when our kids grow up and end up on entitlements.

these are not just my views.. the facts themselves are clear and people like Gates, Buffet and a whole panoply of CEOs say this

.. and if that doesn't convince you.. take a look at the names of the people who are getting patents and major players in technology companies.. they're foreign.

they graduate from their home country schools with an excellent education then come to this country to get a hard science degree in our world-class colleges then take one of those world class jobs that our kids can't do.

 
At 8/14/2011 8:49 AM, Blogger Walt G. said...

I don't think it is so much "gaming the system" as learning to rationally adapt to natural, social, political, and economic processes that are mainly inevitable whether they are deemed good or bad at the moment.

Two people had their picnic ruined by the rain. One person went home and bitched about it while the other person invented the umbrella. Which person came out ahead?

 
At 8/14/2011 8:59 AM, Blogger Walt G. said...

Larry G

I am skeptical of worldwide educational data integrity. When the poor in the slums of India who do not go to school are counted just as the poor in the slums of Detroit who do go to school are counted, maybe the data would be usable.

I agree that we need to get much better at educating and training both children and adults in the U.S.

 
At 8/14/2011 9:11 AM, Blogger PeakTrader said...

The U.S. has a flatter bell curve compared to other countries.

U.S. students in the top third, who go to private schools and better public schools, are the best educated in the world.

That's why the U.S. leads not only the world in the Information and Biotech Revolutions, it leads the rest of the world combined.

Europe in its attempts to make almost everyone average, continues to fall further and further behind the U.S..

 
At 8/14/2011 9:14 AM, Blogger Larry G said...

Walt - ENOUGH of the kids in India have access to a high quality education that the ones that do - out-compete our kids for jobs.

but the world standards do included a majority of the populations of the countries that are ranked.

It's an easy out for us to claim that not all their kids get a world class education when in most industrialized countries - they do - and in part because all other industrialized countries have national curriculum standards and national testing standards and all students are tested the same way - including the kids that are on a non-college technical track.

The problem in the US is that we bias our educational resources towards those headed to college and shirk off the education for kids not headed to college ...

those non-college kids USED to be able to get a blue-collar factory job - but no more.

other kids in the world in that circumstance have quality educations that allow them to compete for technical non-college jobs.

our kids in that circumstance now have much fewer options... and many end up on entitlements.

ironically one job that is still available to them is the military but now days even the military tests and well over a 1/3 of our kids cannot pass the military entrance test - one that is increasingly focused on the ability to learn and use technology.

We blame people on entitlements while ignoring the reason why.

we do rank no better than 15th in language and science and math literacy.

Less than 1/3 of our kids can successfully solve a simple Calculus word problem.

You are correct about India but go look at the countries that beat us on literacy, math and science:

http://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment

the other thing to point out here and sure to stir up some is that in all those other countries - kids can focus on what they want to do for employment without having their choices restricted to only companies that offer health care.

In those countries - jobs are wide open because health care is guaranteed separate form the job.

Many folks are then able to take a wide variety of jobs.. learn new jobs... change jobs.. practice entrepreneurship without having to worry about their families health care.

 
At 8/14/2011 9:22 AM, Blogger PeakTrader said...

The U.S. also has a flatter bell curve in income.

In 2007, 20% of U.S. households earned at least $100,000 a year.

I suspect, in Europe, less than 5% of households earned at least that much.

 
At 8/14/2011 9:24 AM, Blogger Larry G said...

" U.S. students in the top third, who go to private schools and better public schools, are the best educated in the world.

That's why the U.S. leads not only the world in the Information and Biotech Revolutions, it leads the rest of the world combined.

but not in jobs... other countries take those jobs more and more

"Europe in its attempts to make almost everyone average, continues to fall further and further behind the U.S."

nope. 70% of European kids pass the proficiency standards and only 30% of ours and don't forget Asia.... do you think Asia is "average"?

education assessments are done only for public schools in the US and 1/3 of the kids in public schools attain proficiency standards.

but the point is missed.

it's not about "average".

it's about the kids who do not get a sufficient education to compete successfully for jobs that require more education than they received - and what happens to those kids ...

those kids end up on entitlements - paid for by the kids who did get a good education.

If NCLB didn't do anything else - it simply documented what kids were not attaining the standards.

By and large - it is two groups - blacks and the economically disadvantaged - in school after school..

Some schools in the US - do a good job with these sub-groups.. but many others do not.

so it's not like we can't do it.

we do do it but not at enough schools.

Here's the irony.

This country was among the first in the world to create public schools.

Now, every industrialized country has public schools - AND - they are using their schools as strategic imperatives for job creation...

many technology companies now days demand a well educated workforce.

Even running robotics and automation requires the operators to be able to read and understand the technology they are operating.

 
At 8/14/2011 9:27 AM, Blogger Jon said...

The rate at which Americans graduate from college is ever rising. The rate at which Americans graduate from high school is ever rising. Despite that wage increases for the middle income groups have stagnated ever since 1980. Prior to that they were rising rapidly. In the last several years wages for the bottom 90% of the population are actually down, an astonishing failure.

I note that all this is in the wake of the neoliberal era, which implemented policies backed by the corporate financed AEI and Heritage Foundation, among others. Friedman and the rest of the neoliberal apologists will grasp at any straw possible to shift the blame and ignore the obvious. First illegal aliens, then swine flu, then 9-11. What next? The entitlements program, which has run surpluses for most of the time (Medicare was a surplus until Bush wrecked it, SS was a surplus until this amazing economic downturn)?

 
At 8/14/2011 9:29 AM, Blogger VangelV said...

So let’s review: We are increasingly taking easy credit, routine work and government jobs and entitlements away from the middle class — at a time when it takes more skill to get and hold a decent job, at a time when citizens have more access to media to organize, protest and challenge authority and at a time when this same merger of globalization and I.T. is creating huge wages for people with global skills (or for those who learn to game the system and get access to money, monopolies or government contracts by being close to those in power) — thus widening income gaps and fueling resentments even more.

This shows why Friedman is an absolute idiot. All he has is a theory that relies on resentment and envy.

 
At 8/14/2011 9:29 AM, Blogger PeakTrader said...

Larry, the data don't support your statements.

Europe has had a historically higher unemployment rate than the U.S., along with lower average income.

 
At 8/14/2011 9:30 AM, Blogger Jon said...

A flatter Bell Curve in wages is usually regarded as a bad thing. That means the society is more unequal, with all the associated problems. See this discussion of those problems.

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/11/income_inequality

 
At 8/14/2011 9:31 AM, Blogger Larry G said...

the premise is pretty simple.

If a kid graduates from high school and has insufficient education to compete for the available jobs then he/she likely will go on entitlements... or worse.. into prison.

Other countries use education of ALL of their kids to produce a well-educated workforce that can and does take jobs away from us.

 
At 8/14/2011 9:32 AM, Blogger VangelV said...

those non-college kids USED to be able to get a blue-collar factory job - but no more.

Blue-collar factory jobs require skills that non-college kids, and many college kids, do not have. This is why there are still many job openings at a time of high unemployment and why companies resort to importing workers from abroad.

 
At 8/14/2011 9:34 AM, Blogger PeakTrader said...

Jon, would your rather have a society where everyone is making $20,000 a year, or half earning $50,000 and half earning $25,000?

 
At 8/14/2011 10:09 AM, Blogger bix1951 said...

how to understand unemployment:
find people who are statistically identical except one is employed and the other is unemployed, then find out what really is different about those people.
My hypothesis is that character, health and mental health are the decisive factors, not education, not race,not age, not sex, etc.
For me the real mystery is how many are employed, not how many are unemployed

 
At 8/14/2011 10:17 AM, Blogger Walt G. said...

Larry G

Those of us in the technical education field separate education from training. You are correct. Our high schools are mainly geared toward going to college and receiving a college degree.

This college-degree only focus has two major problems: 1) for whatever reason, not every student is college material, and 2) students who could excel in the well-paying and available trades or licensed occupations get discouraged and drop out of high school screwing up their future.

We need to make sure every person, adults included, has the skills necessary to be financially productive. Sure we will have up-and-down employment cycles; however, you are either a marketable employee who keeps current with his or her skill-set to add value on the upswing or you are not.

I am a believer that if you do the right things, the right things will happen in the long run. Even if you are wrong and everything does go to hell, you will be much happier in the meantime. That happiness will shine through to potential employers.

 
At 8/14/2011 10:29 AM, Blogger Larry G said...

" find people who are statistically identical except one is employed and the other is unemployed, then find out what really is different about those people."

but the charts show otherwise.

they show, on balance, those who have basic high school educations do much, much worse than those with higher/better educations.

we can blame the people and their character but it won't change the situation with entitlements and prison.

we have more people in prison as a percent of our population than any other country in the world - even the despotic regimes that imprison folks over political issues.

I'm not sure what other choices we actually have.

people without jobs who also get cut off from entitlements will fundamentally change this country to the kind where people live behind walls and metal fences and fear to walk the streets without body-guards...

look at the stats for international comparisons of prisoners per capita:

http://www.nationmaster.com/graph/cri_pri_per_cap-crime-prisoners-per-capita

we already rank tops in the world.

you and I pay for them.

we pay as much or more than we'd pay them in entitlements if they were not imprisoned.

so ..what's the answer?

there are tons of jobs available but the people who are unemployed don't qualify for them - to the point where we are hiring immigrants from other countries to fill them.

Countries Amount
United States:715 per 100,000
Russia: 584 per 100,000 people
Belarus: 554 per 100,000
Palau: 523 per 100,000 people
Belize: 459 per 100,000 people
Suriname: 437 per 100,000
Dominica: 420 per 100,000

..." Housing one prisoner costs a state between $18000 and $31000 annually, ..."

that's more than most might receive in entitlements.....

Many people could actually live on 18K a year - so even a job that pays low wages is better than entitlements and prison.

Walt and I pretty much agree....
by the way...

 
At 8/14/2011 10:33 AM, Blogger PeakTrader said...

When we say people should pay their "fair share" what does that really mean?

Redistributing paper from one person who has "too much" to another who has "too little"?

Or people putting in hours of work?

 
At 8/14/2011 10:57 AM, Blogger PeakTrader said...

Larry, the U.S. is much better at catching criminals:

Four times more crime in Oslo than New York
March 9, 2008

Oslo had the highest rate per person in Scandinavia in terms of reported crimes, with 90 reported crimes per 1,000.

Copenhagen had 50 crimes reported per 1,000 and Stockholm had 79.

In New York, there were 22 reported crimes per 1,000 inhabitants.

 
At 8/14/2011 11:09 AM, Blogger PeakTrader said...

Europe has much more crime than America.

Top ten countries with highest reported crime rates (2010):

U.S. 11.9 million
U.K 6.5 million
Germany 6.5 million
France 3.8 million
Russia 3.0 million

 
At 8/14/2011 11:23 AM, Blogger gmcrews said...

VangelV said: "This shows why Friedman is an absolute idiot. All he has is a theory that relies on resentment and envy."

I think this is a case of being right for the wrong reasons. Let's assume for discussion that income gaps are widening in the US. If I think this is a bad thing, can it only be because of my resentment and envy? Specifically, if I believe the gap is being widened by those sucessfully 'gaming the system', can't I think this is a bad thing because of a sense of fairness and sustainability?

Walt G said: "I don't think it is so much 'gaming the system' as learning to rationally adapt to natural, social, political, and economic processes that are mainly inevitable whether they are deemed good or bad at the moment."

I question your assertion that the system is not being gamed in the bad sense of the word. That it is still likely for the hard-working/talented/creative to have every rational expection and reasonable opportunity for ecomonic success. How do you explain the widening income gaps in the US? I suggest considering two explanations: a financial separation of those that bear the risk/cost from an economic activity from those who reap the rewards (i.e., 'gaming the system'), and a concentration in the number of economic decision makers causing an increase in negative unintended consequences.

 
At 8/14/2011 11:27 AM, Blogger Larry G said...

crimes per capita:

http://www.nationmaster.com/red/graph/cri_tot_cri_percap-crime-total-crimes-per-capita&int=-1

but you're sort of evading the real point here which is what is the cost to those who DO have jobs from those who do not?

the more folks you put in prison, the higher your costs to those who have jobs, right?

 
At 8/14/2011 11:55 AM, Blogger PeakTrader said...

Larry, I think, the point is the U.S. has a higher skilled workforce than some believe, including catching criminals.

The population of U.K, Germany, France, and Russia is 345 million compared to 310 million in the U.S..

Yet, the U.S. has much fewer reported crimes, i.e. 12 million compared to 20 million in those four European countries.

 
At 8/14/2011 12:08 PM, Blogger Larry G said...

@peak - the crime statistics approach is one that you can roll the statistics in a wide variety of ways in terms of what kind of crime and reported crimes.

but you can't really do much about the stats that show the number of people in prison - and how much it costs to keep them in prison - and most important, where the money comes from to keep them in prison.

are you making the case that the US has less people in prison and lower per capita costs for prison?

I know in Virginia - the largest agency is the bureau of prisons - 10,000 workers - and whether you pay them as state employees or contract it out... it's still a costly proposition.

and in this country, the majority of people in prison get turned lose but between not having a decent education and the stigma as a convict - they often end up on taxpayer-provided entitlements... including health care....

if you do not graduate with a decent education... these days... getting a job is much more difficult (born out by the graph) and those folks often end up on entitlements .. and that's better than prison which usually costs more than paying them entitlements.

the point is - do you want these folks to have jobs and pay taxes instead?

the stats I provided you show that, as a country, we have far more people imprisoned ... and totally unproductive ...requiring a de-facto transfer of wealth to incarcerate them - as opposed to other countries with far less prisoners - and no worse unemployment but yes.. a lower average income.

but still - a person with a lower than average income that is not on entitlements and not in prison is more productive and still pays taxes..... even if not income taxes.

Isn't this a better situation than our current entitlement and prison costs?

what would you do instead just keep the status quo?

 
At 8/14/2011 12:20 PM, Blogger Ron H. said...

"Two people had their picnic ruined by the rain. One person went home and bitched about it while the other person invented the umbrella. Which person came out ahead?"

They both did. The invention of the umbrella made everyone's life better.

 
At 8/14/2011 12:23 PM, Blogger VangelV said...

I think this is a case of being right for the wrong reasons. Let's assume for discussion that income gaps are widening in the US. If I think this is a bad thing, can it only be because of my resentment and envy? Specifically, if I believe the gap is being widened by those sucessfully 'gaming the system', can't I think this is a bad thing because of a sense of fairness and sustainability?

If people are getting rich by robbing others thanks to their ability to 'game the system' than your objection would be valid. But not if people earn their money and get their wealth by giving consumers what they want. Walton, Gates, and Jobs got rich by selling products that people wanted to buy. If they get richer it does not mean that others were worse off. In fact, it means the opposite.

 
At 8/14/2011 12:29 PM, Blogger PeakTrader said...

Larry, I'd find what works well and what doesn't to improve the system.

 
At 8/14/2011 1:30 PM, Blogger gmcrews said...

VangelV said: "If people are getting rich by robbing others thanks to their ability to 'game the system' than your objection would be valid. But not if people earn their money and get their wealth by giving consumers what they want."

Robbing? Let's not oversimplify. Here is a example of just a tiny part of the overall "theory of everything" Friedman was talking about. (And even it is a complex issue.)

The folks at the Fukushima nuclear power plants were giving their consumers what they wanted. Electrical power. A critical commodity in our modern society. However, it turns out that those exposed to the most risk were not the same ones getting the most profits from the plants. Lack of proper risk management oversight has allowed the plants' owners to 'game the system' at the expense of the plants' nearby residents. Luckily nobody may actually die from radiation, but the clean up costs will be enormous. And these power plant owners will not go broke because of it.

There is more to managing a global free market economy than just preventing price-fixing and monopolies. Regulation is critical. Otherwise we risk creating an economic system where a few have almost no chance to fail and a large fraction of the rest have little chance to really succeed -- on top of bearing the risks imposed by the elite.

 
At 8/14/2011 2:05 PM, Blogger Walt G. said...

gmcrews,

I think it depends on what level you are talking about. Sure, at the upper level we have the heavy thinkers who want to change the world for the better. I wish them well.

I deal more at the individual level where I teach students to take a simple battery and a piece of wire to make a welder instead of complaining they don't have a way to weld two pieces of metal together. People need useful skills to deal with the world as it is now while hoping for a better future.

Your remark about regulation being critical is why I support labor unions even though I don't always agree with some of their self-defeating tactics. When the balance of power tips too far in one direction, the other side has little hope for success. Countervailing power forces keep things somewhat more balanced. The challenge is to recognize common goals and work toward them as hard as you do toward your differences.

Ron H.,

Yes, but who made more money and changed the world: the bitcher or the person who figured out how to solve the problem?

 
At 8/14/2011 2:10 PM, Blogger VangelV said...

The folks at the Fukushima nuclear power plants were giving their consumers what they wanted. Electrical power. A critical commodity in our modern society. However, it turns out that those exposed to the most risk were not the same ones getting the most profits from the plants. Lack of proper risk management oversight has allowed the plants' owners to 'game the system' at the expense of the plants' nearby residents. Luckily nobody may actually die from radiation, but the clean up costs will be enormous. And these power plant owners will not go broke because of it.

The Fukashima plant was a failure of government. End of story. Everyone knew the issues but the people who regulated the plants did not seem to think that storing the fuel in a vulnerable location was a problem. And nobody got rich off the nuclear program because it was a regulated industry with very limited profit.

You have to do a lot better than this if you want your argument to be credible.

There is more to managing a global free market economy than just preventing price-fixing and monopolies.

Here is your problem. You believe that the global economy can be 'managed.' Theory and history show otherwise. And there is no need to 'prevent' monopolies in a free market. Monopolies are only a problem when they are granted by governments.

Regulation is critical. Otherwise we risk creating an economic system where a few have almost no chance to fail and a large fraction of the rest have little chance to really succeed -- on top of bearing the risks imposed by the elite.

Look how well the 114 or so regulators who were looking after the financial sector worked out. No thanks, I prefer the free market. It punishes bad decisions and does not bail out millionaires who take risks and lose.

 
At 8/14/2011 2:46 PM, Blogger Ron H. said...

Walt,

"Yes, but who made more money and changed the world: the bitcher or the person who figured out how to solve the problem?"

Well, I don't know about money, but this is an excellent example of self interest serving a higher good. Adam Smith would be pleased.

The umbrella maker may have ultimately become well off, as his invention became much in demand, but his initial, and intended reward was that he no longer heard incessant bitching about the rain.

The bitcher, on the other hand, likely got his first umbrella free.

 
At 8/14/2011 4:03 PM, Blogger Ron H. said...

"I question your assertion that the system is not being gamed in the bad sense of the word. That it is still likely for the hard-working/talented/creative to have every rational expection and reasonable opportunity for ecomonic success. How do you explain the widening income gaps in the US? I suggest considering two explanations: a financial separation of those that bear the risk/cost from an economic activity from those who reap the rewards (i.e., 'gaming the system'), and a concentration in the number of economic decision makers causing an increase in negative unintended consequences."

Do you not see both of these explanations as government failures?

First of all, there must be a system in place that can be 'gamed'. This is only possible if government force can be used.

Examples of private gain & public loss are all around us in the form of taxpayer bailouts of firms that are 'too big to fail, and GSEs Fannie May & Freddie Mac.

I'm not sure exactly what you mean by a concentration of economic decisions, but I see businesses of all sizes protecting themselves from competition by using government force in the form of licence and fee requirements as barriers to entry.

There are countless examples, but one of my favorites is the requirement in Louisiana that a florist have a license in flower arranging.

 
At 8/14/2011 6:22 PM, OpenID Sprewell said...

I was going to say that this article is such a typical NYT editorial, a mind-numbing mixture of the obvious and the dumb, but apparently the obvious still has to be said, as some seem to be questioning him even on those parts. I'll stick to critiquing the dumb. If "cheap foreign genius" is so easily available, where is the Chinese Google, the Taiwanese Microsoft, or the European Apple? Still waiting. Good jobs don't require "more education," education is just used as a dumb filtering mechanism because most employers are too stupid to actually evaluate talent. Unemployment may be lowest for college graduates but they've been relatively hardest hit, as the other categories had their unemployment double from their lows, whereas college graduate unemployment went up 2.5 times. "We" aren't taking away easy credit from the middle class, they haven't been able to convince lenders that they can pay it back.

Those with huge wages aren't getting most of those gains because of "global skills," it's because they were already doing well before and they temporarily gain more from a bigger audience online. However, that's only a brief spike before others really learn to take advantage of the new tech: one Katie Couric making $15 million/year for one of three broadcast networks will be replaced by hundreds of middle-class news gatherers online. Widening income gaps and "resentment" are part of the market process: they spur those left behind to up their game, which we all benefit from. Dimwits like Tom Friedman will have no audience online, when he can't "game the system and get access to" a column that's included in a well-known newspaper. We already know this because nobody wanted to pay for it, hence they had to end the TimesSelect program where they tried to charge for their dumb editorials.

 
At 8/14/2011 7:22 PM, Blogger gmcrews said...

VangelV said: "Monopolies are only a problem when they are granted by governments."

To a big Teddy Roosevelt 'trust buster' fan, pretty much a conversation stopper. :-)

Ron H. said: "Do you not see both of these explanations as government failures?"

Yes, I do. But I don't think the best approach to avoiding government failure is by simply avoiding government involvement. I would have thought that the recent arrant disasters like the US big-banking bailout and Japan's nuclear power plant meltdowns would be clarion calls for better government involvement -- rather than less.

It would be very stupid of me, in the name of free markets, to allow a nuclear power company to build a plant next to my property without being adequately compensated for the risk I will be exposed to. Or banks to almost bring down my country's entire financial system. Surely I have other choices than being stupid about the nature of risk.

My reference to the concentration of economic decisions was to the emergence of the truly global international companies in concert with rapid growth of our government. IMHO, far bigger economic decisions, both private and public, are being made by far fewer people. I think this inevitably means more unintended economic consequences for the rest of us.

We need a metric with which to come toward agreement. Something measurable, verifiable, and objective. I think the underlying statistic in Friedman's rant is the wealth gap. The wider the gap continues to grow -- the more weight it gives his rant. I think any solution to his 'theory of everything' must narrow the wealth gap.

BTW, I would prefer the poor becoming rich rather than the rich becoming poor. :-)

 
At 8/14/2011 7:36 PM, Blogger Benjamin said...

This is tyoiucal Friedman talk.

But let's say it is true.

Read this:

"This is the single most important trend in the world today. And it is a critical reason why, to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before. All this technology and globalization are eliminating more and more “routine” work — the sort of work that once sustained a lot of middle-class lifestyles."

If this is true, why in the hell engage in free trade?

I keep hearing that thanks to globalization we have to cut wages and benefits and work harder and smarter, until hubbie and wife are doing 60 hours a week each.

Or maybe this is just a smokescreen by plutocrats, who are really saying, "you guys take wage and benefit cuts so we can be richer."

Income distribution patterns suggest the latter.

 
At 8/14/2011 8:02 PM, Blogger VangelV said...

If "cheap foreign genius" is so easily available, where is the Chinese Google, the Taiwanese Microsoft, or the European Apple?

China did not have the capital markets to develop a Google or Microsoft. But to claim that the Chinese are not capable of designing good products or innovating is not paying attention. BYD, Haier, China Mobile, and Lenovo have all done quite well in the past few years and there are a number of small companies following them.

Taiwan has companies like Taiwan Semiconductor, Cathay Financial, HTC, Acer, etc., that do quite well and are very competitive.

Europe has some of the best luxury goods brands around and is dominant in private banking

Still waiting. Good jobs don't require "more education," education is just used as a dumb filtering mechanism because most employers are too stupid to actually evaluate talent.

That is not entirely true. Many good jobs require technical skills that require specialized courses.

Unemployment may be lowest for college graduates but they've been relatively hardest hit, as the other categories had their unemployment double from their lows, whereas college graduate unemployment went up 2.5 times. "We" aren't taking away easy credit from the middle class, they haven't been able to convince lenders that they can pay it back.

If you want to argue that some of the 'education' that students pay for is useless and that marketable skills are not taught I agree.

 
At 8/14/2011 9:12 PM, Blogger VangelV said...

To a big Teddy Roosevelt 'trust buster' fan, pretty much a conversation stopper. :-)

TR was a narcissistic war lover who was as ignorant of economics as he was with his foreign policy.

Jim Powell covers his economic ignorance in his great book, Bully Boy.

And Evan Thomas does the same for TR's love of war.

Yes, I do. But I don't think the best approach to avoiding government failure is by simply avoiding government involvement. I would have thought that the recent arrant disasters like the US big-banking bailout and Japan's nuclear power plant meltdowns would be clarion calls for better government involvement -- rather than less.

You are not very logical. The problems that you describe occurred under a government regulatory regime. They were perfect examples of government failure yet you call for a solution that includes more government involvement.

 
At 8/14/2011 9:14 PM, Blogger VangelV said...

It would be very stupid of me, in the name of free markets, to allow a nuclear power company to build a plant next to my property without being adequately compensated for the risk I will be exposed to. Or banks to almost bring down my country's entire financial system. Surely I have other choices than being stupid about the nature of risk.

Under common law a nuclear plant would never be allowed to be built next to your property without compensation. Only government can allow that. And you are not compensated for risk but for damages done to you or your property.

And isn't this a diversion from the discussion? You and others claim that the rich are somehow taking something away from you but you present no evidence to support that claim. All you can do is divert attention from the issue.

 
At 8/14/2011 9:19 PM, Blogger VangelV said...

My reference to the concentration of economic decisions was to the emergence of the truly global international companies in concert with rapid growth of our government. IMHO, far bigger economic decisions, both private and public, are being made by far fewer people. I think this inevitably means more unintended economic consequences for the rest of us.

What a bunch of crap. Microsoft did not start out as a big company. It got that way by selling people what they wanted. End of story. The same is true of Google, Wal-Mart, Apple, etc. Do you really think that we would be better off if we had the government design iPods?

We need a metric with which to come toward agreement.

No we don't. Just mind your own business and let people do what they want to do with their own property.
Something measurable, verifiable, and objective. I think the underlying statistic in Friedman's rant is the wealth gap. The wider the gap continues to grow -- the more weight it gives his rant. I think any solution to his 'theory of everything' must narrow the wealth gap.

As I wrote before, Friedman is an idiot. It seems that he has a lot of company on that front.

BTW, I would prefer the poor becoming rich rather than the rich becoming poor. :-)

Then why do you want to put up barriers in the form of costly regulations that would prevent them from becoming richer?

 
At 8/14/2011 9:42 PM, Blogger VangelV said...

If this is true, why in the hell engage in free trade?

Because free trade increases the standard of living. It makes the things that you buy cheaper and allows you to specialize so that you can do what you do best.

I keep hearing that thanks to globalization we have to cut wages and benefits and work harder and smarter, until hubbie and wife are doing 60 hours a week each.

This is not true. Wages are cut when skills and capital are insufficient to be productive. Remove the cheaper foreign goods and you will still have the same problems except that you will be able to afford less.

Or maybe this is just a smokescreen by plutocrats, who are really saying, "you guys take wage and benefit cuts so we can be richer."

No. It is a smokescreen by the economic illiterates who have no idea how things work in the real world. It is a smoke screen by the statists and inflationists who want someone else to blame for their failure.

Income distribution patterns suggest the latter.

Not at all. Look again.

 
At 8/14/2011 9:45 PM, OpenID Sprewell said...

Vange, it's not that the Chinese are incapable, it's that I don't think they'll innovate cheaply. HTC is richly rewarded by their share price these days. But the fact remains that Chinese tech successes are few, primarily centered in Taiwan and usually not very close to the cutting-edge even in tech. As for European luxury goods, that's actually a sign of decline, as all you're selling is your long-faded glory as a brand. High-paid jobs do require technical skills, the problem is the university teaches almost none of them. The issue is that most of a college education is a waste of time now, at least in terms of making you productive on the job, even in engineering degrees. If you want to learn art history or calculus for your own edification, I have no problem with that, just don't force it on the students by padding out the degrees to four years and certainly don't ask anyone else to pay for or subsidize it.

 
At 8/15/2011 12:56 AM, Blogger PeakTrader said...

The problem with government is it typically spends too much to produce "good" and then has to spend even more to contain the damage producing that good.

 
At 8/15/2011 1:07 AM, Blogger varunvijay said...

Don Peck of "The Atlantic" seems to be saying the same thing; check his latest articles
http://www.theatlantic.com/don-peck/

Can the Middle Class Be Saved?
http://www.theatlantic.com/magazine/archive/2011/09/can-the-middle-class-be-saved/8600/

Is the Middle Class Really Doomed?
http://www.theatlantic.com/business/archive/2011/08/is-the-middle-class-really-doomed/243223/

http://www.theatlantic.com/business/archive/2011/08/the-middle-class-is-mostly-invisible-to-the-elite/243232/
The Middle Class Is Mostly Invisible to the Elite

 
At 8/15/2011 1:24 AM, Blogger Ron H. said...

gmcrews

"Yes, I do. But I don't think the best approach to avoiding government failure is by simply avoiding government involvement. I would have thought that the recent arrant disasters like the US big-banking bailout and Japan's nuclear power plant meltdowns would be clarion calls for better government involvement -- rather than less."

Bank bailouts? If banks were allowed to assume the risk and suffer the consequences of their actions, there would never be any thought of bailouts. Do you really believe that more government regulation would have prevented the recent problems? I believe you are claiming that government regulators, who have little to lose, are better qualified to asses risk than bankers who have everything to lose. You must have a much higher opinion of government bureaucrats than I do.

In your previous comment regarding nuclear power plants: "Luckily nobody may actually die from radiation, but the clean up costs will be enormous. And these power plant owners will not go broke because of it."

If no one has died, what risk are you talking about? It's not just blind luck that safety measures have worked as well as they have. Is it only financial loss you are concerned with? Fear of nuclear power seems to be mostly unjustified. The reason those power plant operators won't go broke, is due to government imposed limitations on liability, and taxpayer support. Just the thing you later decry as the rapid growth of our government.

I think you will find that nuclear has involved fewer deaths and injuries than any other form of power production, and in fact a better record than most industries of any kind.

What exactly would you have done differently to prevent the meltdowns at Fukushima if you could impose any restriction or regulation you thought necessary? Keep in mind, that at some point, operating a nuclear plant wouldn't be economically possible, so there would be no nuclear power generation.

Friedman is an idiot. His rant is intended to sell newspapers, so to speak, by inflaming class envy with this bogus claim of increasing income disparity, that doesn't account for income other than wages, income mobility, and the continuing influx of low income immigrants to the US.

Perhaps you missed this previous post here at Carpe Diem, and here or
here.

 
At 8/15/2011 3:21 AM, Blogger gmcrews said...

Ron H. said: "What exactly would you have done differently to prevent the meltdowns at Fukushima if you could impose any restriction or regulation you thought necessary? Keep in mind, that at some point, operating a nuclear plant wouldn't be economically possible, so there would be no nuclear power generation."

It just so happens I have experience in nuclear facility probabilistic risk assessment, mechanical and piping system design, and safety software development. IMHO, there is no brief or simple answer I can give you. Neither could I be absolutely sure my answer was correct.

But there are a couple of general things that the US nuclear industry has learned over the decades (sometimes the hard way) that could be of interest to this discussion about regulating economic entities.

One, it is very important to have truly independent and periodic verification and validation (IV&V) of all procedures, designs, and their modifications at nuclear facilities. Everybody potentially exposed to risk, especially off-site, needs a significant voice in deciding who the IV&V people will be, their required expertise, and their authority.

Secondly, there needs to be a strong "corrective action program" at nuclear facilities. This includes, constant indoctrination to look for new or changing risks; a mechanism for reporting what may or may not be problems without fear of reprisal; and a formal documented process to review all potential problems and report them to IV&V.

 
At 8/15/2011 5:22 AM, Blogger Larry G said...

re: nuclear risk and govt and private insurance

the private insurance market - the "free market" has rendered an opinion on the risk of nuclear plants.

they have provided a number that they say is needed to cover the risk.

to that point, the govt had nothing to do with the transaction but the power companies did the numbers and decided that the insurance costs made nuclear power uneconomic.

If there was no subsequent govt involvement that would have been the end of the story - no nuclear power unless and until the insurance companies altered their risk analysis.

so the govt did with nuclear plants what it also does with flood insurance - it subsidized them.

the govt - per private entity request passed a law to cap their liability and made the taxpayers responsible for all damages that might exceed the cap.

It's pretty safe to say that nuclear power would not exist in the private sector without that nasty, incompetent, grossly inefficient govt.

 
At 8/15/2011 8:23 AM, Blogger VangelV said...

Vange, it's not that the Chinese are incapable, it's that I don't think they'll innovate cheaply.

Perhaps. But they have certainly made great progress in a very short period of time as their economy has become freer.

HTC is richly rewarded by their share price these days. But the fact remains that Chinese tech successes are few, primarily centered in Taiwan and usually not very close to the cutting-edge even in tech.

Taiwan had a major lead on the mainland because in many ways it was much freer. It should not be surprising that China is behind given the fact that its government controlled most of the economy just a few decades ago. Some sectors, like transportation, are still plagued by too much government control but that will fade away over time.

As for European luxury goods, that's actually a sign of decline, as all you're selling is your long-faded glory as a brand.

No. They sell high quality goods at very high margins to people who have the money to buy them. But it would be foolish to think that is all the Europeans do because there are some great European companies that do very well.

High-paid jobs do require technical skills, the problem is the university teaches almost none of them. The issue is that most of a college education is a waste of time now, at least in terms of making you productive on the job, even in engineering degrees.

It is hard to learn engineering elsewhere so it makes sense to take engineering courses at the better universities.

If you want to learn art history or calculus for your own edification, I have no problem with that, just don't force it on the students by padding out the degrees to four years and certainly don't ask anyone else to pay for or subsidize it.

I agree. But it seems to me that the typical American student is choosing to take courses that do not provide very marketable skills. And as long as government is involved in education there will always be subsidies and poor quality.

 
At 8/15/2011 8:51 AM, Blogger VangelV said...

the private insurance market - the "free market" has rendered an opinion on the risk of nuclear plants.

they have provided a number that they say is needed to cover the risk.

to that point, the govt had nothing to do with the transaction but the power companies did the numbers and decided that the insurance costs made nuclear power uneconomic.


This is not entirely true. First, the companies had to incur very high costs due to the massive amounts of regulations in the sector. The bureaucratic hurdles that needed to be cleared before one could start already meant hundreds of millions of dollars in costs. Second, the insurance companies had no say in operational and safety requirements because the government called all the shots. That increased costs further because the insurance companies could not reduce the risks involved but were on the hook if things went wrong.

Your argument fails because you assume that the economic calculations are made in a rational free market system rather than a regulatory cesspool controlled by incompetents.

 
At 8/15/2011 9:13 AM, Blogger juandos said...

"But they have certainly made great progress in a very short period of time as their economy has become freer"...

Hmmm, I wonder how much of this 'progress' can be (if any) attributed to piracy of intellectual property either through reverse engineering or by other means?

 
At 8/15/2011 9:57 AM, Blogger VangelV said...

Hmmm, I wonder how much of this 'progress' can be (if any) attributed to piracy of intellectual property either through reverse engineering or by other means?

I suspect quite a bit. But even though some do not see that as a problem, the environment is changing and the Chinese designers are innovating and competing.

 
At 8/15/2011 11:21 AM, Blogger juandos said...

Yeah vangIV, I suspect your opinion pretty much reflects the realities of the situation...

The Chinese aren't stupid and must know that strictly basing all of their production on other people's work will run up against diminishing returns in a hurry...

 
At 8/15/2011 11:24 AM, OpenID sethstorm said...

For those who want to push education - why not have the company provide the relevant training instead of asking everyone else? Otherwise the business will complain that (educational level x) is simply not enough.


China did not have the capital markets to develop a Google or Microsoft. But to claim that the Chinese are not capable of designing good products or innovating is not paying attention.

The only innovation in China is figuring out how enslave 1bn people or punish them. The rest is simply China copying off of other countries.



BYD, Haier, China Mobile, and Lenovo have all done quite well in the past few years and there are a number of small companies following them.

Lenovo is simply IBM's PC division, acquired by a Chinese clone maker. Same part number scheme, service level, shared parts, and mostly unaltered product line - aside from being too much "third world market machine, US kit" in build quality.

BYD is a parts manufacturer that makes worse car copies than Korea.

Not sure about the other two, but China does not innovate. They just know how to operate a Xerox machine with 1.4bn parts.

 
At 8/15/2011 11:36 AM, Blogger VangelV said...

The only innovation in China is figuring out how enslave 1bn people or punish them. The rest is simply China copying off of other countries.

I would not push the slavery angle. Your government can fine or imprison you because your toilet tank holds too much water or your shower flow rate is too high. The Chinese government does not really care.

 
At 8/15/2011 11:47 AM, Blogger VangelV said...

Lenovo is simply IBM's PC division, acquired by a Chinese clone maker. Same part number scheme, service level, shared parts, and mostly unaltered product line - aside from being too much "third world market machine, US kit" in build quality.

BYD is a parts manufacturer that makes worse car copies than Korea.

Not sure about the other two, but China does not innovate. They just know how to operate a Xerox machine with 1.4bn parts.


You have to love the arrogance. BYD has taken huge steps forward just as the Korean automobile companies did.

But BYD is a lot more than a car company. It does a lot of work in solar, power generation, and distribution, battery technology, etc. If you check your Wiki page on the company you will find that, "BusinessWeek ranked BYD the 8th most innovative company in the world, ahead of Ford; Volkswagen and BMW, and that same year saw Fast Company ranking BYD as the 16th most innovative." I would say that you are wrong to dismiss it. While we are on the innovation lists I note that Huawei is number five, well ahead of Cisco, GE, Intel, and other American companies touted for their innovation.

http://www.businessweek.com/interactive_reports/innovative_companies_2010.html

http://www.fastcompany.com/mic/2010

 
At 8/15/2011 12:42 PM, Blogger Ron H. said...

"It just so happens I have experience in nuclear facility probabilistic risk assessment, mechanical and piping system design, and safety software development. IMHO, there is no brief or simple answer I can give you. Neither could I be absolutely sure my answer was correct."

Your response is impossible to disagree with. :)

"But there are a couple of general things that the US nuclear industry has learned over the decades (sometimes the hard way) that could be of interest to this discussion about regulating economic entities.

One, it is very important to have truly independent and periodic verification and validation (IV&V)...

Secondly, there needs to be a strong "corrective action program" ...
"

It's hard to argue against these points, and I don't believe a reasonable person would.

I don't believe government agencies are capable of filling this role, as it appears most such regulatory agencies eventually become "owned" by those they regulate.

I also believe that those involved in operating a nuclear power plant, would demand strict adherence to safety guidelines and procedures, as they are at risk themselves, and likely live nearby with their families.

What failures do you see at the Fukushima plant? There must be some limit to how much earthquake and/or tsunami protection is reasonable, as all possible risk can't be eliminated .

 
At 8/15/2011 1:12 PM, Blogger Larry G said...

" Your argument fails because you assume that the economic calculations are made in a rational free market system rather than a regulatory cesspool controlled by incompetents"

with respect to nuclear power - I know of no examples in the entire world where the insurance issue does not require govt subsidies.

that's all kinds of countries.. all kinds of regulations ...

are you saying that worldwide - there is no free market when it comes to nuclear energy?

there might be a reason for this, eh?

do you think any population in any country would be "ok" with the private sector designing and operating nuclear plants with no govt involvement?

I think the nuclear industry issue is an excellent example where people do not trust the free market to produce an acceptable risk solution - worldwide.

 
At 8/15/2011 1:48 PM, Blogger VangelV said...

are you saying that worldwide - there is no free market when it comes to nuclear energy?

Yes. It is the most regulated industry in the world. And because governments call the shots operations are not as reliable and as cheap as they should be.

 
At 8/15/2011 1:52 PM, Blogger Larry G said...

and.. we should have unregulated nuclear power.... because it will be safer and cheaper than govt regulated?

and we let private industry decide how much insurance is adequate?

and if a company has a nuclear accident and declares bankruptcy before it compensates those that are damaged... that's just the way the free market works?

 
At 8/15/2011 2:06 PM, Blogger VangelV said...

do you think any population in any country would be "ok" with the private sector designing and operating nuclear plants with no govt involvement?

Why not? Private car companies do much better than government run companies.

 
At 8/15/2011 2:24 PM, Blogger VangelV said...

and.. we should have unregulated nuclear power.... because it will be safer and cheaper than govt regulated?

and we let private industry decide how much insurance is adequate?

and if a company has a nuclear accident and declares bankruptcy before it compensates those that are damaged... that's just the way the free market works?


You don't read well enough. The bottom line is that the market will deliver cheaper and safer nuclear power than government regulated nuclear power.

 
At 8/15/2011 3:17 PM, Blogger Larry G said...

you don' think that Toyota and Kia are not govt run?

how come if private nukes are so safe an economical - there none on ships?

we could have nuke-powered cruise ships... registered in some 3rd world country, right?

I see none.. why?

 
At 8/15/2011 10:23 PM, Blogger gmcrews said...

Ron H. said: "What failures do you see at the Fukushima plant? There must be some limit to how much earthquake and/or tsunami protection is reasonable, as all possible risk can't be eliminated."

That's exactly right. Risk can't be completely eliminated. And, to the heart of the matter, risk is inherently subjective. What may be reasonable to one person may be unreasonable to another.

Risk is the probability of failure multiplied by the cost of the failure's consequences. As I have alluded to before, these costs may be unevenly distributed among the stakeholders. Worse, the failure probability term is intrinsically subjective. That is, the failure term is a "measure of a state of knowledge", and all knowledge (technical, scientific that is) is entirely in the mind of the person calculating the risk. The probability is not a property of the thing that may fail. (Google "Bayesian probabilities" if interested.)

It is my understanding for the Fukushima plants the designers reviewed Japan's historical records for the biggest tsunami ever recorded -- about a thousand years of data -- and used the biggest number found in the design. Reasonable. (But 1000 years of data for a plant with a 50+ year operating life -- that's 5%. Mmmm.)

In the US, we calculate the maximum earthquake energy as a function of distance that could theoretically be released for any known faults around the plants. We calculate the maximum theoretical tsunamis those energies could produce at those distances. We then use the largest of those for the design. Reasonable. (But what if there are unknown faults or our tsunami theory is not settled. Mmmm.)

It is my understanding that if Fukushima had used the US approach, the tsunami walls would have been built high enough to protect the plants. Of course, that would have cost them more money to build.

IMHO, the US Nuclear Regulatory Commission (NRC) deserves some of the credit for what seems to be a better US approach.

 
At 8/16/2011 3:27 AM, Blogger Ron H. said...

gmcrews

"It is my understanding for the Fukushima plants the designers reviewed Japan's historical records for the biggest tsunami ever recorded -- about a thousand years of data -- and used the biggest number found in the design. Reasonable. (But 1000 years of data for a plant with a 50+ year operating life -- that's 5%. Mmmm.)"

I doubt that there's much reliable data available for more than 1000 years. And, you didn't mention it, but when building for the largest number ever, I suspect there was an extra margin of safety built in also.

If the recent earthquake and tsunami were much larger than any ever recorded, I'm not sure how much more precaution could be taken, short of not building the plant at all.

"(But what if there are unknown faults or our tsunami theory is not settled. Mmmm.)"

What if a previously undetected astroid strikes the plant?

As I have said, at some level of concern, you can't build the plant. Some risk must be acceptable.

These same principles apply to any kind of endeavor, not just nuke plants. as you said, "reasonable" is subjective, but I think there is more fear of the "invisible death rays" than is warranted.

Coal mines, oil refineries, and many others cause more death and injury than nuclear power plants, but we don't fear them nearly as much.

We often speak of the Three Mile Island "disaster", but there were no deaths, no injuries, and to my knowledge, no verifiable cases of cancer or other effects from the miniscule amount of radioactive material that escaped into the air. Although several separate safety failures occurred, the system ultimately worked as designed to contain the problem. What could be better than that?

 
At 8/16/2011 3:51 AM, Blogger Ron H. said...

"how come if private nukes are so safe an economical - there none on ships?

we could have nuke-powered cruise ships... registered in some 3rd world country, right?

I see none.. why?
"

If you thought about it a little longer before letting your fingers get loose on the keyboard, It might become apparent to you, just as it already is to everyone else.

You do see nuclear reactors on ships. The US Navy has only nuclear powered submarines and only nuclear powered aircraft carriers, because they are safe, efficient, and allow extremely long trips between refuelings.

That would also be true for commercial ships and cruise ships, except that those, unlike warships, are vulnerable to pirates and hijackers who would love to make big bucks selling nuclear fuel and technology. It's a security thing, not a safety thing.

 
At 8/16/2011 8:10 AM, Blogger Larry G said...

so....you trust the govt to do it right and don't trust the private sector to be able to ?

I thought the govt was corrupt, incompetent and grossly inefficient?

are you saying the govt can deal with pirates better than the free market?

do you think it has anything to do with risk and unacceptable economics?

A non-got entity can have security - better, more effective, cheaper.... etc... and besides how far is a pirate going to get with a cruise liner or other large ship?

Oh my LORD - look at this:

" Insurance of nuclear vessels is not like the insurance of conventional ships. The consequences of an accident could span national boundaries, and the magnitude of possible damage is beyond the capacity of private insurers.[5] A special international agreement, the Brussels Convention on the Liability of Operators of Nuclear Ships, developed in 1962, would have made signatory national governments liable for accidents caused by nuclear vessels under their flag [6] but was never ratified owing to disagreement on the inclusion of warships under the convention.[7] Nuclear reactors under United States jurisdiction are insured by the provisions of the Price Anderson Act."

so geeze... that sounds like there would be no nukes with govt .....

that would be the big, bad, nasty, incompetent govt...right?

so the govt is willing to take on risks that the private sector will not.

I guess that really does prove your argument about govt, eh?

 
At 8/16/2011 8:26 AM, Blogger Larry G said...

" IMHO, the US Nuclear Regulatory Commission (NRC).."

incompetent govt bureaucrats in charge of nukes instead of the private sector?

the heck you say.....

so... are not Nukes an example of where the private sector determined a level of risk considered too risky and uneconomic for the private sector to do - but it was decided that it was not too risky and uneconomic for the govt to do?

is that a mistake and essentially proves the point that govt engages in more risky and more uneconomic propositions than the private sector?

what justification can there be for the govt to do something the private sector believes is too risky and not profitable enough?

 
At 8/16/2011 12:08 PM, Blogger VangelV said...

how come if private nukes are so safe an economical - there none on ships?

we could have nuke-powered cruise ships... registered in some 3rd world country, right?

I see none.. why?


One word: regulations.

 
At 8/17/2011 3:49 AM, Blogger Ron H. said...

"are you saying the govt can deal with pirates better than the free market?"

This seems to be another subject you don't know much about.

It must be obvious even to an idiot like you, that a heavily armed naval vessel is capable of thwarting pirates with small arms, traveling in a skiff.

As I'm sure you also know, commercial vessels are restricted by various nations laws from being armed, so they are vulnerable.


"A non-got entity can have security - better, more effective, cheaper.... etc..."

That would be true, if they were allowed to arm themselves properly, but sadly, they're not. Government interference, you know. Always a problem.

"...and besides how far is a pirate going to get with a cruise liner or other large ship?"

Are you really unaware of what's going on around you?

 
At 8/17/2011 6:29 AM, Blogger Larry G said...

" a heavily armed naval vessel is capable of thwarting pirates with small arms, traveling in a skiff."

that would be the big, bad, nasty, incompetent, grossly inefficient govt Navy?

" "A non-got entity can have security - better, more effective, cheaper.... etc..."

That would be true, if they were allowed to arm themselves properly"

Blackwater? A "for-profit" Soldier of Fortune company?

come on Ron.. you can do better than that....

Why I bet, we could cut our military costs in half if we turned it over to contractors, eh?

and pirates? taking over nuke-powered Exxon Tanker ?

Wouldn't that be Exxon's responsibility?

are you saying that Exxon is incapable of stopping Pirates and have to rely on the incompetent govt to protect them?

geeze Ron...

are you saying that the the govt is better than private industry?

 
At 8/17/2011 1:00 PM, Blogger Ron H. said...

"that would be the big, bad, nasty, incompetent, grossly inefficient govt Navy?"

It wouldn't have to be, but I've already explained this to you.

"Blackwater? A "for-profit" Soldier of Fortune company?"

What's your point? Blackwater isn't in the Gulf protecting shipping, as they haven't been hired to do so. Are you merely pointing out that there are alternative private solutions to security problems? If not, read the link I gave you and stay on track.

"Why I bet, we could cut our military costs in half if we turned it over to contractors, eh?"

Your buddy Obama must think so, In July he awarded them a $250mn contract for security services in Afghanistan.

"and pirates? taking over nuke-powered Exxon Tanker ?"

Are you questioning whether it could be done?

"Wouldn't that be Exxon's responsibility?"

Yes it would.

"are you saying that Exxon is incapable of stopping Pirates and have to rely on the incompetent govt to protect them?"

They are currently required by law to do just that, and it's not working. You can see that for yourself if you follow the previous link I gave you.

"are you saying that the the govt is better than private industry?"

Of course not. That's a ridiculous notion. Only a statist like you, who can't manage their lives without guidance from wise, benevolent government employees would imagine such a possibility.

 
At 8/17/2011 1:16 PM, Blogger Larry G said...

Lord Ron... who would stop Exxon with a Liberian registration from doing what they must?

how can govt stop these companies if it has no authority over them?

who would stop Exxon from having a nuke ship if it was registered in a country that did not agree to international treaties?

you keep saying that the free market will do better than govt but even when I ask you how a non-govt international free market can be prevented from doing their own thing.. you keep insisting that govt is holding them back?

what govt?

If Exxon registers their craft in Liberia to avoid regulations.. what is the problem?

 
At 8/17/2011 1:25 PM, Blogger VangelV said...

Lord Ron... who would stop Exxon with a Liberian registration from doing what they must?

The regulations that they have to work under. Once again your ignorance and inability to do basic research is showing. Exxon is not permitted to have heavily armed ships deliver oil to the US. Since that is what their tankers do, they are not permitted to defend those tankers from pirates by the use of arms.

 
At 8/17/2011 1:43 PM, Blogger Larry G said...

" Exxon is not permitted to have heavily armed ships deliver oil to the US"

huh?

if EXXON is operating a Liberian-registered ship what does the US have to do with that?

are you saying that there is really not a free-market in the entire world?

Exxon cannot hire an escort vessel that is heavily armed and then lose it when it enters US waters?

why do shipping companies register in Liberia is the regs are the same worldwide?

Ron - I think you are grasping at straws here...

If the US can hire Blackwater and other soldiers of fortune that operate outside the US why can't Exxon?

 
At 8/17/2011 1:46 PM, Blogger VangelV said...

if EXXON is operating a Liberian-registered ship what does the US have to do with that?

Exxon delivers oil to American ports dumdum. It has to work to American regulations. And when it sails thorough foreign controlled waters, its ships have to meet the regulations of those foreign countries.

Surely you can't be as stupid or incapable of doing basic research as you appear? What do you do again?

 
At 8/17/2011 1:51 PM, Blogger Larry G said...

Exxon can't use armed escorts that don't come into US Ports - dum dum?

I think you are evading here...

I don't think it's the armed escort that is keeping Exxon from using Nuke ships.. guy...

I think it is profits...

:-)

 
At 8/17/2011 2:21 PM, Blogger VangelV said...

Exxon can't use armed escorts that don't come into US Ports - dum dum?

No, they can't. The ships often travel in areas that are not international waters, which is where the danger really is. In those areas Exxon is not permitted to have weapons on board.

 
At 8/17/2011 2:27 PM, Blogger Larry G said...

they're not permitted to have armed escorts?

come on Ron........

you're getting desperate here...

are you saying that if a Country like Somalia tells EXXON they can't protect their ship that Exxon will just let themselves be victimized?

I doubt it.

methinks the reason that Exxon does not use Nuke ships has nothing what-so-ever to do with pirates...nor incompetent govt... and everything to do with costs.

 
At 8/18/2011 4:11 AM, Blogger Ron H. said...

"how can govt stop these companies if it has no authority over them?

who would stop Exxon from having a nuke ship if it was registered in a country that did not agree to international treaties?
"

You are off course here. Before wondering who would stop them, you might ask where they could build it? I don't think Liberia has ship building capability, and I know they don't build nuke reactors for ships.

Most countries with the necessary technology and capability are members of international agreements that don't allow private nuke ships, because they are very concerned about nuclear fuel and technology falling into the "wrong hands", whoever that might be. Essentially, all nuke power is government controlled and regulated. You probably should study a little bit before you before you burst out with stupid questions.

If they somehow got it build somewhere and registered in Liberia, where do you suppose Exxon would want to sail that tanker? Perhaps to the US, Japan? Venezuela? Iran? Canada? Mexico? It's just possible they would want to carry oil around the world like they do with their other tankers, rather than just keeping it docked in Monrovia..

How many of those countries would allow them to travel inside territorial waters? Would they use the Suez canal to travel from the mideast to the Indian ocean through the Somali pirate business zone?

Pull your head out of your ass for a moment and think about some of these things?

 
At 8/18/2011 6:21 AM, Blogger Larry G said...

so essentially there is no free market - worldwide - because govt controls the world?

 
At 8/18/2011 12:07 PM, Blogger Ron H. said...

"so essentially there is no free market - worldwide - because govt controls the world?"

There is no free market in nuclear power, Larry, unless you count N. Korea and Iran as free markets.

 
At 8/18/2011 12:32 PM, Blogger Larry G said...

seems like for those countries and possibly others.. there is "opportunity"... eh?

 
At 8/18/2011 10:21 PM, Blogger Ron H. said...

"seems like for those countries and possibly others.. there is "opportunity"... eh?"

My answer was meant as a joke. There is no free market in nuclear power, period.

Everyone knows neither of the countries I mentioned has anything at all resembling a free market.

North Korea, in fact, is the very poster child for what the central planning you admire results in when carried to it's logical conclusion.

The image I linked to shows Korea and parts of northern China from space, at night. Notice the huge area of light around Seoul S. Korea, and the many lights elsewhere in the South, compared to the North. The single dim light in N. Korea is Pyongyang. the rest of the country is dark at night. This should tell you everything you need to know about the benefits of the dictatorial, collective rule you advocate.

Culturally and ethnically these are all the same people, although the average S. Korean man is now 7 cm taller than his Northern counterpart due to better nutrition. This, in less than 60 years.

 

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