January 15, 2009

Obama's stimulus bill

Like I’ve been saying all along, exciting mass transit infrastructure projects have proven to be largely incompatible with the notion of “stimulus.”

Most of the stimulus spending is going toward bailing out state and local governments, spending which I’ve long suggested be renamed “human infrastructure” to make it sound sexier and obscure the fact that Obama’s whole “infrastructure stimulus” idea has turned out to be largely a flop. Liberals have spent the last forty years making it excruciatingly slow to bulldoze anything big in the Blue States. They made their beds and now they are lying in them.

Now that progressives have gotten a bitter taste of the delays inherent in environmental regulation, it's time for the Obama administration to call for a major review of how those regulations can be made less onerous and time-consuming. Don't junk environmentalism, but make it more efficient. Mend it, don't end it!

This review should extend to how can we get the hand of government off the throats of our export industries. We desperately need ways to stimulate our exports to pay for our enormous imports from China and oil producers. We should look at ways to make our exporters more globally competitive by reducing upon them the burdens imposed by environmental, affirmative action, and disability regulations. You can keep forcing domestic industries to subsidize lots of politically favored groups, but let's not indirectly tax exporters to the same degree.

Also, we should probably lift the American ban on American firms bribing overseas customers, that goes back to when the prime minister of Japan shook down Lockheed for a kickback on aircraft purchases, and the U.S. Congress went into a tizzy about how evil Lockheed was. Let the foreigners police themselves. If they want to arrest American salesmen who are paying kickbacks to get contracts, good for them. But why is it our duty?

My published articles are archived at iSteve.com -- Steve Sailer

16 comments:

Anonymous said...

For the most part I agree the FCPA was one of the dumber moves of the Carter years, but there is a good argument to be made that what Lockheed was doing in bribing foreign government officials was also in violation of the Logan Act. Whether that law in turn was one of the dumber moves of the, uh, Adams years, I leave to the reader's judgments.

gene berman said...

As to why we need detect, apprehend, and punish those who bribe foreigners (especially gov't. officials, I'd suppose (without specific knowledhe that such laws are matters of reciprocity according to the terms of treaties between nations. (And it well to remember that treaty obligations are at least on a par with the Constitution as the "supreme law of the land."

Doug_S said...

Export industries are no more important than domestic industries notwithstanding how much we import. Look, if I can escape spending all my time at subsistance farming by going to the local Stop n Shop, it is irrelevant that my ballance of payments vis a vie the Stop n Shop is negative. I can produce more value with the time freed up from growing corn and pigs, and as a lawyer I can produce more value to whomever I trade with. Comparative advantace. Through trade I am allowed to apply my time to the use that adds the most value to the human race. I'm a poor farmer, a good lawyer. you are probably a poor farmer, a good writer. As long as trade allows you to do less farming and less personal home construction and less of anything you are low productivity at, and allows you to sell services anywhere domestically or internationalyy that you are higher productivity at, the mere fact that you can specialize in your area of strength increases the material wealth of mankind in general and you in particular.

You are thinking mercantlist. Why draw the line at countries, why not states? What if California sells more to other states than it buys from them? Or individual businesses, what if I spend half my paycheck at the local tavern and do not sell them one darn thing? Doesn't matter. they are more efficient pulling beers, I'm better at my business we both benefit when we trade.

Glaivester said...

Doug S:

Look, if I can escape spending all my time at subsistance farming by going to the local Stop n Shop, it is irrelevant that my ballance of payments vis a vie the Stop n Shop is negative.

Yes, but that is equivalent to a trade deficit with one country, not with all of them.

I can produce more value with the time freed up from growing corn and pigs, and as a lawyer I can produce more value to whomever I trade with.

Yes, but presumably you have a trade surplus with someone. Somone must be buying your services or else you go into debt.

As long as trade allows you to do less farming and less personal home construction and less of anything you are low productivity at, and allows you to sell services anywhere domestically or internationally that you are higher productivity at, the mere fact that you can specialize in your area of strength increases the material wealth of mankind in general and you in particular.

Well, yes, but there is the assumption that you are getting money from someone. In the U.S.'s current situation, we have negative balances of payments with almost everyone.

Why draw the line at countries, why not states? What if California sells more to other states than it buys from them?

If you take any two groups of people in a closed system, and Group A consistently buys more from Group B than Group B from Group A, eventually Group A will be in debt to Group B. (And ultimately any open system is just part of a larger, closed system, so if you want to argue that the openness of the sytem prevents this, please show me Group C that buys from Group A and sells to Group B).

Or individual businesses, what if I spend half my paycheck at the local tavern and do not sell them one darn thing? Doesn't matter. they are more efficient pulling beers, I'm better at my business we both benefit when we trade.

But presumably you have a trade surplus with someone, in this case, your employer. All of your analogies work only if there is some other party or parties within the system whose relationships balance out the trade balance.

The problem isn't that we have a negative balance of payments with China. It is that we have an overall negative balance of payments. We are going into debt to pay for imports because we are not selling as many of our goods as we are buying of other people's.

This isn't like having a negative balance at Stop 'n' Shop, which is offset by your positive balance at work. This is like having a negative balance everywhere, including at your job.

Doug_S said...

This is fun: What's the trade deficit with Austraila? Surplus. What's the trade deficit with Singapore? Surplus. I guess we are reaming those poor suffering countries.

But if we add up all the countries, if the trade deficit with the whole world is large and China is the biggest fraction of that, we must sell more goods to China.

What about creation of wealth? Americans are richer today then they were in 1900. Mainland Chinese are richer today then they were in 1950. Indians are richer today then they were in 1970.

If all this trade is the static moving of chips from one person's territory to another person's territory, I guess the increase in wealth experienced by the USA, India and China was squeezed out of Zimbabwie and other third world countries. Lets look at who had trade deficits to see who was getting poorer. There is no such thing as creation of wealth, and anyway, when it occurs it does not happen in any place; it happens nowhere.

Doug_S said...

Glivester:

I'm impressed with your logical, well reasoned response to my arguments. I am sure that you don't need my approval, but I appreciate your direct on point response. I do think, however, that iSteve seems to fall short in International Economics and general economic knowledge as befits all journalists. Of course large imballances in trade lead to currency readjustments. China resists that because they do not understand Capitalism. We benefit from China's misunderstanding, every consumer in the US lives a little better because every worker in China saves a little more, for various reasons such as currency controls. Think of it, fat American SUV drivers going to the country club being subsidized by poor Chinese factory workers because the Chinese elite believe they know best. Their elite see only one way to make things work and that involves massive transfers of saved wealth from the Chinese populace to American SUV drivers.

Anonymous said...

"Why draw the line at countries? Why not states?"

If you can't answer that question for yourself, you are not nearly as smart as you think you are.

Two hints: Blood and Soil.

Anonymous said...

No, Doug.
Actually the 'poor chinese factory workers' who are supposedly subsidizing 'rich, fat, Americans' have seen their incomes rise by spectacular and unprecedented levels by the policies of the 'Chinese elites'.
- 'Rising incomes' -Isn't that the whole name of the game of economics?

Anonymous said...

Glaivester's argument is wrong because it neglects the fact that all voluntary exchanges increase *wealth*, which is not the same as *money* per se.

If person A on a desert island trades bananas to person B for lumber, both feel like they are better off. Now they both have food *and* shelter -- their individual wealth has increased. Global wealth (that of A + B) has also increased.

Money enters the equation because you don't want to subdivide bananas or lumber indefinitely, and/or because you don't want to cart around stuff to barter with. Money is universal barter.

Ultimately what the paleos are reacting to is that America is getting much worse at *creating wealth* in both relative and absolute terms. This has the obvious implications for national security and prosperity respectively.

The paleos are correct that a big part of this is due to immigration policy, diversity, and the like.

However, another big part was inevitable as the world recovered from WW2, the Asian nations expanded, and the Eastern Euros entered the world economy. The high IQ in countries such as Russia and China shot themselves in the foot for much of the last century, which is not something that can be relied upon forever.

As the mean IQ drops, it is now our turn to spend a century or more in remission as China leaps ahead.

Svigor said...

And it well to remember that treaty obligations are at least on a par with the Constitution as the "supreme law of the land."

Explain the "at least" part for me? Because at face value this statement smells like horse manure.

Jun said...

Obama's bridge to nowhere ;-)

Glaivester said...

Anonymous,

i guess the point is that if we're not as good at creating wealth, we need to be more cautious about consuming wealth.

The trade deficit is not really a problem per se as much as it is a symptom of a problem - that we are not living within our means.

Tom Piatak said...

Another way to reduce the trade deficit: have Obama convince every SWPL type liberal that he should sell his Japanese or German car and replace it with a new American car.

Anonymous said...

Think of it, fat American SUV drivers going to the country club being subsidized by poor Chinese factory workers because the Chinese elite believe they know best. Their elite see only one way to make things work and that involves massive transfers of saved wealth from the Chinese populace to American SUV drivers.

And so America continues to build an infrastructure that assumes we'll be able to afford to drive our SUV's 40 miles to work each way, leading to permanent higher fixed costs, putting us at a long-term competitive disadvantage with those countries which don't assume that. Such subsidies, like China and Eastern Europe's bad economic policies, can't be assumed to continue on forever.

Anonymous said...

As long as trade allows you to do less farming and less personal home construction and less of anything you are low productivity at...

Steve may be a poor farmer, you may be a poor farmer, and I may be a poor farmer. But that doesn't mean that we couldn't be good farmers. Go to Africa and who are the most productive farmers? The Europeans, still. The real point is that our net trade imbalance is less than zero (nearly a trillion, in fact). For how long can you continue on driving an economy by spending more than you earn?

gene berman said...

Svigor:

I cannot account for some residual smell in your nostrils but what I wrote is essentially the precise wording of the opening lines of the U.S. Constitution:

"This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the authority of the United States, shall be the supreme Law of the land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding."

Like I said, just telling it as it is.

But, that being said, I'd be in complete agrement with someone who pointed out the relatively (as compared to domestic policy stuff) low level of public attention focused on international agreements; the combination is one that delivers outsized importance to the executive/diplomatic function, especially during administations where Congress is essentially a rubber stamp.

It's often remarked (when considering the particular history) that Jefferson's acquisition, the Louisiana Purchase, was clearly unconstitutional; even were that true (of which I'm uncertain--not that I have any specific doubt), my guess is that Jefferson found it at least justifiable "after the fact" on the basis of those words.

The more important intent of those words is to establish that (especially) ordinary laws of either the federal government or any of the states cannot countermand international agreements.

In the main, it makes perfect sense: when you "shake" on a deal with a guy and he later renegs on the deal, you don't want to hear some crap about his bookkeeper using a different system, his wife not liking the color, or it being in violation of his town's zoning laws. Each expects the other to have his own "ducks in a row" before getting together to seal the deal.