Those Nattering Nabobs of Negativism

I am an optimist. 

My secretary once nicknamed me "Pollyanna," and not entirely as a compliment. It's a personality disorder I share with people like Matt Ridley.

My optimism was dented a few years back when my career took a tumble. Then I fell in with the ZeroHedge (ZH) crowd and folks like Marc Faber. In response I bought a few hundred shares of GLD, managing to time the very top of the market. That's what pessimism will get you. I've since recovered and am back to my old self--see here, for example.

It is possible to be pessimistic in the short term while being a long-term optimist. Trotskyists are like that, though for them the short term extends indefinitely into the future. They believe that capitalism will eventually self-destruct, and until then will be a time of wars, crises, and poverty. But long term (assuming there is a revolutionary Party with the precisely correct political perspective) future generations will live happily ever after. Idealistic young people (i.e., 18-year-olds who think they will live forever) became Trotskyists precisely because of this naive optimism. 

For true pessimism you need to turn to Mark Steyn. He forecasts the demographic and intellectual decline of civilization as we know it, assuming a) that civilized people will never have enough babies, and b) that people who have lots of babies will never be civilized. I think he's probably wrong on both counts, but there is no denying that demographic decline will have a major effect on the economy. That, along with persistent deflation, are probably the signal trends of our age.

A more insidious pessimism--because it is more reasonable--is propounded by Tyler Cowen in his books The Great Stagnation and Average is Over. I've commented extensively on his opinions here and here.

So that brings us to a recent paper by Brink Lindsey entitled Why Growth Is Getting Harder (pdf). He is almost apologetic about his pessimism, practically inviting readers to respond tell me it ain't so. I'll oblige: Mr. Lindsey is too pessimistic by half (but only by half).

His argument is that the four major drivers of GDP growth are all showing signs of long-term, secular decline. Each of them has declined in the past, but this is the first time in the last century that all four have gone down simultaneously. The four components are labor force participation, labor force skill level, capital appreciation, and "total factor productivity," otherwise sort of known as innovation.

The first item largely echoes Mr. Steyn's arguments--we baby boomers didn't have enough babies, and as we retire the labor force is going to shrink. This is happening full force in places like Japan and Italy, and is gathering pace in the US as well. Put more colloquially, the Millennial generation is getting screwed. Unfortunately, I can't argue with this prognosis.

His second point is that we've extended education to point of diminishing returns. In the 20th Century there were huge productivity gains achieved by dramatically increasing the number of people who went to college. There will be no similar gains in the future. Beyond that, I argue that we've passed the point of diminishing returns, and instead today's marginal investment in education is a dead weight loss.

So there is hope on the horizon. Our current college system is hopelessly inefficient and ripe for change. It will become much cheaper in the future--indeed, even trending toward free. One of the ways it gets cheaper is by becoming shorter--there is now a growing trend toward three-year bachelors degrees. Many students can productively use the senior year of high school taking on-line college classes, possibly shortening the time to degree even more. Yes, kids will still want to live on campus in dorms, but for a shorter time than they do today. Beyond this, graduate programs are a complete and total waste of time & money for almost everybody. In particular, the PhD is a recipe for a lifetime of underemployment.

Mr. Lindsey's third point is that less capital is being accumulated and invested. His modest claim is that at very least it does not auger for strong economic growth. And true enough, but I will argue that the point is largely irrelevant. Stuff is just cheaper these days. It requires little up-front investment to launch an international ad campaign on Google. A desktop, 3D printer can be had for a few thousand dollars. Arts & crafts people can set up shop on eBay in a jiffy. Frankly, it just doesn't take a lot of capital to start a business. The days of huge automobile factories is coming to a close. Therefore I suggest there isn't a strong correlation between capital investment and economic growth.

The last factor on Mr. Lindsey's list is innovation. There are reasons to think that the rate of innovation is increasing. Not only are capital and labor both cheaper than they ever have been, less labor and capital are needed to bring an idea to market. More people can start more companies with less money--the cost of innovation has declined dramatically. Individuals can start colleges. People can publish their own books on Kindle for free. 3D printing will allow all sorts of small time entrepreneurs to get into business making stuff. And so on. Of course most of these efforts will fail, but throw the dice enough and you'll get lucky. Resources are so cheap that we'll be throwing the dice a lot more often than we used to.

So I'm not as pessimistic as Mr. Lindsey. I admit his point about the declining labor force, but I don't see any commensurate increase in salaries. So this can't be harming the economy. I acknowledge that our education system is dysfunctional, but that presents an opportunity for growth. Lack of capital investment may be a problem, but with interest rates so low it's hard to see how it makes much difference. And finally, the cost of innovation is dramatically cheaper than it ever has been. We should be getting more of it.

So Mr. Lindsey is wrong. The glass is half full!

Note: The title is borrowed from a speech written by William Safire for Spiro Agnew. Does anybody remember Spiro Agnew?

Further Reading:

• Are Rich People Rich?
• Book Review: Human Capitalism
• Why The Academy Sucks

Food Network & The New Normal

Over the past couple of months I've taken to watching three shows on The Food Network: Diners, Drive-ins, and Dives (3D), Restaurant Impossible, and especially, Chopped.

These are not about food. Television is a poor medium for taste and smell, and in LED facsimile even color doesn't work to well. For me, at least, Pavlov's response is not triggered; the shows don't make me hungry.

Instead the programs are about restaurants: the people who work in them, the people who eat at them, the kinds of destinations they make, and what their business model is. Themes run the gamut, from a reality-show episode exposing a family torn asunder by their restaurant, to a sober account of how the front of the house should be managed. Food and recipes also appear, but are mostly relegated to the webpage.

When I was growing up, my parents had a friend--moneyed beyond his professor's salary--who fancied himself a connoisseur--fine art, classical music, good wine, elegant furniture, and excellent food. As a divorcee he did most of his own cooking, to Mozart accompaniment, but it was not his passionate avocation. His kitchen possessed a repertoire of tasteful, clever, well-engineered gadgets that supposedly made the job easier.

His facility was nothing compared to those I discovered in the pages of Architectural Digest. The kitchens of the 1% (a few of which I've actually seen in person) are vast, barn-like structures with every appliance imaginable, decorated with granite counter tops, built-in freezers, and possessed of mountain/ocean/city vistas. These are kitchens as a competitive sport--read David Brooks' funny account of the phenomenon in Bobos In Paradise.

So you will understand that for most of my life I thought of haute cuisine as the preserve of the well-to-do. My more humble family ate good food, but it was simple fare. In my college town there was exactly one Chinese restaurant, and otherwise one could choose between diners, the occasional steakhouse, or maybe a sandwich shop. McDonalds came of age during my youth. Needless to say, we didn't eat out often.

Imagine my surprise, then, when I saw the chefs on Chopped--tattooed, overweight, scraggly, working-class folks. Far from the kitchens of Architectural Digest, the Chopped contestants are the sons and daughters of truck drivers, plumbers, and maids. They're not listening to Mozart. The runner-up on today's episode was a ghetto kid who spent part of his life homeless, and then got a job as a dishwasher, feeding himself from the leftovers on people's plates. From that he worked his way up to chef--no formal education. The winner had a more stable life growing up in poor, East Los Angeles. Both of them are highly skilled, incredibly practiced cooks.

And likewise with the other programs. The chefs on 3D are one step removed from the short order cook at Dennys. And the owners profiled in Restaurant Impossible are former garbage handlers and postal employees. These are not people my parents' professor friend would associate with, nor did they grow up in an elite kitchen.

So what's changed? How has cooking gone from a hobby of the elite to a skill for the dispossessed?

I'll suggest three things. First on the list is WalMart. While a luxury kitchen is still a luxury, a perfectly functional kitchen can be had at everyday low prices. Even poor kids can obtain a blender, buy some decent knives and teflon pans, and have access to a stove, fridge and freezer. That's different from my youth, where much on that list were middle class appliances.

Second, improvements in transport and agriculture means that quality, fresh food can be had at almost any grocery store. Yes, there's a marginal benefit to Whole Foods or some other elite store, but those are no longer necessary. As Robert Irvine of Restaurant Impossible never tires of pointing out, fresh food is both cheaper and better than the frozen or canned variety. You don't need to be rich to buy it anymore.

And finally, as the above implies, we're all richer now. In contrast to where I grew up, the college town I live in now has three sushi bars, along with other places serving Thai, Indian, Chinese, Japanese, Italian, and American cuisine. All for a town of about 30,000 people! But food in my town is downright expensive compared to New York City, where you can eat like a king for under $15.

So why is this important? My Trotskyist friends will take these lower class chefs and lump them in with the proletariat--a term they consider complimentary. But it's really deeply insulting because it dismisses the hours and hours and hours of practice and hard work these people invested in their trade. Like the rest of us, the Chopped contestants all aspire to the petty bourgeoisie, i.e., they hope to bring some unique, marketable skill to the table. The proletariat has power and significance only in the abstract mass--the attributes of an individual don't matter much. Thus Trotskyists are championing the fast food strike, trying to extort higher wages for people whose jobs are already at risk of automation.

More serious is the opinion of Tyler Cowen in his book Average Is Over. He argues that while there will be more millionaires and billionaires than ever before, the largest part of the American population--85%--will be left behind. Those that succeed will have the cognitive chops to compete and cooperate with computers. But he's wrong.

The Chopped champs may be smart, but they've got a different kind of chops. Unlike any computer they can chop vegetables, reduce a broth, taste a sauce, and judge the color of meat. Very few of them will be millionaires, but most of them will earn a living. And unlike what Mr. Cowen claims, they'll do better than just feeding the Architectural Digest crowd (though they'll be doing that, too).

Everybody wants good food. All the food in my town is putting the old-fashioned diners out of business. The restaurants that specialize in prepackaged microwave food (e.g., Olive Garden) are probably next in line. Fast food places will be automated and their employees laid off.

People--even poor people--are going to be eating much better food in the future. The former fast food workers will find employment as servers and busboys in gourmet restaurants, run by Chopped champions who really know what they're doing. Their customers will be you and me--we'll get quality, fresh ingredients, combined in complex, tasty recipes, cooked by expert chefs, served by trained staff--and all for under $10.

Mr. Cowen is wrong. Automation will eliminate lots of jobs. But it will make better jobs just as quick, and it will make us all richer in the process. Yeah--McDonald's and (maybe) Starbucks will be automated, but their former employees won't be sitting around collecting welfare. They'll be creating yet more value added that improves the lives of everybody.

Is this a great country, or what?

Further Reading:

• Book Review: Average Is Over
• A Nation Of Shopkeepers
• Book Review: Human Capitalism

Unprecedented Times

There's the old Jewish joke:

We live in unprecedented times! Why, there are people dying today who've never died before.

It is precisely this kind of precedent that The Militant twists into the latest crisis. Not for them is the normal warp and woof of daily life. Instead, every event, however trivially novel, is an argument for the end of life as we know it.

The latest cause for panic--according to Brian Williams in this front page article-- is that Janet Yellen has been appointed Chair of the Federal Reserve. Why the cause for fright?

Here's Mr. Williams' argument:

• The economy is doing poorly.
• As a result, unemployment is high.
• The Fed pretends to be fixing that.
• In reality, the Fed is just trying to maintain profit margins for the fat cats.
• What is really needed is a depression-era public works program that "actually put[s] millions to work building and repairing things workers need — at the expense of capitalists’ profits."

The Militant's case for a poor economy is pretty thin.

Yet all evidence points to the conclusion that the monetary fiddling has no effect on bosses’ hiring. The world crisis of capitalism is rooted in a slowdown of production and trade, which is not affected by government policies. Over the past year through mid-2013, world trade volume “has lost its mojo,” remaining virtually stagnant, reported the Financial Times.

So there are many reasons why world trade could stagnate without necessarily indicating a bad economy. I'll cite two:

1. North America is now a major oil and gas producer, resulting in diminished trade between our continent and the Middle East.
2. Manufacturing is increasingly automated. Therefore there is less reason to move it offshore, and indeed, ever more reason to bring it back home. America's booming textile industry is an example of that. This reduces shipping costs.

Production isn't slowing down. It is just becoming cheaper, and therefore more of it is being done locally. This is not an indicator of a weak economy.

So then why is unemployment so high? Actually unemployment really isn't all that high--in August, 2013, it was 7.3%. But Mr. Williams is correct that most of the recent decline is due to shrinking of the labor force rather than a recovery of the economy. In other words, more and more people are dropping out of work.

That is not good news no matter how you spin it. But is it due to economic weakness or to some other factors? That's a matter of much debate, but I side with the folks who suggest other factors, also known as a structural change in the economy. Jobs that used to exist (e.g., lawyers) are being rapidly automated, and the biggest effect of the 2007-08 recession was to speed up that automation. That means that workers' skill sets no longer match what the economy requires. Jobs as a laborer on an assembly line don't exist anymore, and people who used to earn a living doing that are either unemployed, or earning substantially lower wages.

Couple that with excessive government regulations, and low wage work is rapidly becoming uneconomic. Between minimum wage, payroll taxes, new Obamacare regulations, and various licensing requirements, hiring somebody for less than $10/hour doesn't make much sense. Briefly, a large number of people can no longer earn enough to keep them in the labor force.

That means Mr. Williams is right to say that the Fed can't do much about unemployment. Monetary policy is effective for cyclical unemployment--and indeed, the reduction from 10% to the current value may very well be due to Fed actions. But structural unemployment is a different beast, and requires a much larger change in government policy and workers' skills.

So why is the Fed printing money? Gee, there are probably as many answers to that question as there are people. Mr. Williams (along with some at ZH) argue that they're in cahoots with the crony capitalists, such Goldman-Sachs and Chase-Manhattan. Maybe. There are others (e.g., Paul Krugman) who disagree with the structural change hypothesis and simply argue that the stimulus isn't big enough. ("Stimulus" and "Fed easing" are two different things, but Mr. Williams conflates them and I'll go along for the ride.)

Others argue that the Fed action is too small to be consequential--a theory at odds with the popularly used descriptor, mega-printing. My opinion is that production costs are relentlessly going down, and the result is a long-term deflationary trend. The Fed is doing its best to keep nominal prices approximately constant.

Whatever. Outside of the ZH world and Mr. Williams' imagination, none of these models imply that the Fed is building a crisis for the future. We are not in an economic crisis.

So we come to Mr. Williams' proposed solution to the non-crisis--a massive, depression-era public works program. Doing what, exactly? Back in the 1930s men still built roads with picks and shovels. Today one worker can do the job previously done by dozens. We've got two such make-work projects here on my own campus--construction of new academic buildings--both at union scale. The one now under construction probably never has more than 30 guys working on site at any one time.

The problem with these infrastructure, welfare projects is not only do they waste money, but they don't employ very many people. And worse--they are not going to employ the structurally unemployed. The number of unskilled laborers required at today's construction sites is pretty small. And people with skills already have jobs--they don't need the welfare work.

Like most Marxists, Mr. Williams can't resist a slander of the financial markets. He says

But with the slowdown, it’s not profitable for the great majority of bosses to invest in equipment and labor to expand production. Instead, they mostly tend to sit on hoards of cash reserves or seek higher returns through investing it in stocks or other forms of speculative bets, such as on the rise or fall of various kinds of commercial paper.

This plays to the Marxist conceit that Wall Street is just a casino. But it isn't--companies need capital in order to operate. That capital can come in two ways--equity or debt. Equity is sold through the stock market, and debt is acquired through "commercial paper." Investing in stocks or commercial paper is investing in the "equipment and labor to expand production." The rise of the stock market is, in fact, a very good indicator that the economy is doing fine.

I know Brian Williams well from my time in Chicago. We nicknamed him "Brainy" because he was pretty sharp. And his piece is well-written and as cogently argued as is possible for a Marxist. But at the end of the day, it's just wrong.

We live in precedented times.

Further Reading:

• What Are Unions Good For?
• Crony Capitalism
• Getting Richer While Feeling Poorer

Book Review: Average Is Over

Tyler Cowen's recent book, Average Is Over, is a deeply pessimistic and fundamentally mistaken look at America's future. He's got the ingredients right--computerization, globalization, a skills misfit--but he puts them together in a way that doesn't make any sense.

No doubt we are beginning an era of rapid technological change, one probably as dramatic as the industrial revolution or electrification. The computer revolution has grown up, is leaving the IT ghetto behind, and now is moving into the world of Real Stuff, radically changing the way we will live. Many, many jobs will be automated out of existence, or at least changed into something unrecognizable today. This will involve a new way of working, putting a premium on different sets of work skills.

Mr. Cowen's book catalogs some of those changes, using, among other items, the interesting example of freestyle chess as a guide. Unlike the traditional mano a mano chess tournaments of yore, freestyle chess lets the players use whatever tools are available, including powerful computers (that Mr. Cowen dubs genius machines). The combination of man and machine is more effective than either alone, and the best freestyle chess teams can beat any human or computer opponent out there. Freestyle teams include computer geeks and chess nerds--but not the best of either. Instead, the teams put a premium on computer/human teamwork, and must decide when to trust the computer, or instead go with human instinct. This is a different skill set than either the traditional grandmaster or computer nerd possesses.

His discussion of chess occupies a goodly portion of the book, but two other examples add to the flavor. He spends most of a chapter on String Theory, an esoteric field of physics primarily of interest to hobbyists. Finally we come (sort of) down to earth with an account of the digestive tract in starfish.

So there you have it. You take these examples, add them together, and you get--I dunno--maybe $5-6 million in global annual revenue if you're lucky. Enough to keep Bill Gates in the pink for a couple of weeks, but this is not the stuff that economies are made of. While he does mention other topics of somewhat more practical importance, the book radiates unreality. There is very little about how people in the future will actually earn a living.

Indeed, in one large part of our economy he argues that the dashing young men and their genius machines will have almost no impact at all. By virtue of demographics, he predicts that health care costs will continue to grow faster than inflation indefinitely. I find this incredible. At most demographics suggests a growing job market for home health care aids (a low wage job), but surely the genius machines are going to displace large numbers of doctors and technicians. Watson (it of Jeopardy fame) was designed to do medical diagnoses--no human doctor will be able to compete with that. Radiologists, pathologists, oncologists, etc., are all looking at the unemployment line.

Indeed, I think Mr. Cowen gets the trend all wrong. He says that middle-wage workers (bookkeepers, travel agents, stock clerks) will suffer most, while the "cognitive elite" will benefit. But he's wrong. Computers are putting lots of lawyers out of work right now. College professors are on the bubble. Doctors are not too far behind. The cost savings is maximized when you eliminate the most expensive people. The home health care aid, nurse practitioner, and physical therapist are more likely to stay employed than most doctors. Those middle-income, skilled trades will survive and thrive--they're the eyes, hands and feet for the computers.

It is surely odd that Mr. Cowen has not addressed topics more central to the way people actually make money. Important topics such as agriculture, oil & gas, and manufacturing are almost unmentioned. And this leads to the fundamental flaw of the book.

He posits that the future will lead to a radically inegalitarian society, with a few very wealthy millionaires and billionaires, and the rest of us left over as shlubs. This seems indisputable, and inequality doesn't bother me particularly. But he further claims that a large fraction of our population will be poorer in an absolute sense, not just relatively. They will live in more isolated areas, have less access to health care, eat lower quality food, and live in smaller and less comfortable houses. I find this unbelievable. As I say, his is a very pessimistic view of the future. I also don't think it's true.

You can see why Mr. Cowen thinks so. Given that his examples are all of the pocket change variety, no wonder he thinks we'll all be poor. But then why are we undergoing this huge technological revolution just to save a few pennies at the margin? Mr. Cowen's (implicit) answer to that is very disturbing.

His view of America's future is similar to Latin America's present--a wealthy elite lording it over the miserable peasants. But America isn't built that way. Unlike Latin America, our economy is not structured around crony capitalism (despite the best efforts of Democrats to move us in that direction). Rich people in the US can't just collect rents in the manner of Carlos Slim, Pemex, the Mexican teachers' unions, or the drug gangsters. Instead, American billionaires become rich only because they provide goods and services to consumers at prices people can afford.

Yes, we have a few, rent-collecting scoundrels--maybe Goldman Sachs falls into that category. But folks like Malcom McLean, Sam Walton, Steve Jobs, and George Mitchell all did something that made everybody richer. Mr. Cowen describes a scene--two billionaires having lunch--that shows he fails to appreciate this fact. Those two billionaires earned their billions by improving the lives of us shlubs--not by diminishing them.

There is no good way to interpret the message of Average is Over. Perhaps Mr. Cowen thinks we're going to evolve into a crony economy such as they have in Mexico, Brazil and Argentina? That is surely a very depressing thought, and one the Tea Party is actively resisting. If that's true then we really will become poorer, but it won't be because of technological change or the computer revolution.

Or perhaps Mr. Cowen thinks that billionaires can become rich without selling anything to anybody? In Average is Over, apparently the only things the peasants can buy is cheap entertainment. That's it--an economy based on Grand Theft Auto and internet porn. No wonder Mr. Cowen picks examples of no financial significance.

In reality, billionaires become rich because they sell things to people at a price we can afford. Us shlubs buy the stuff because it makes our lives better. Of course there will be winners and losers in any technological revolution--just ask lawyers, college professors and doctors about that. But Mr. Cowen's dire prediction of mass impoverishment will not come to pass.

My post entitled Getting Richer While Feeling Poorer is a much clearer vision of the future than Average is Over. Mr. Cowen exaggerates the problem of inequality, which I address in a post entitled Are Rich People Rich? Finally, some thoughts on the future of the labor market in STEM fields are here.

I've read a lot of books by Tyler Cowen and Alex Tabarrok. I have enjoyed them all, including this one. But within that set, the current tome is well below average.

Further Reading:

• Book Review: Human Capitalism
• Joel Kotkin Hates The Tech Business
• Free Trade or Foul

College & Wishful Thinking

Here's a prediction for you:

In the future, higher education will be very different from what it is today.

This seems almost trivially true, if only because the words future and different are left undefined. Certainly, by the year 2100, changes in technology, the economy, finances, and demographics will render higher education unrecognizable by today's academics.

Of course, by then we'll all be dead, so who cares.

For me, I'm 62, and I am emotionally invested in disrupting higher ed. It's got to happen quick--I certainly won't be around much more than 20 years and I want to see how it's all going to turn out. So in my heart I make the following prediction:

Over the next ten years, existing colleges and universities will lose their ability to control the curriculum. Instead, students will choose what they study and how they do it. Faculty will more and more be in competition with each other for students' patronage and attention. The very best faculty will earn an excellent living, but median salaries will decline and job security will disappear. By and large, faculty will be reduced to adjunct status.

That's much more specific, and so hardly a slam-dunk prediction. There are two parts: the outcome itself, and the time frame in which it is supposed to happen. I'm pretty confident about the outcome, and much less certain on the ten years. I favor the outcome because it has much greater social utility than what we have now--students will get a better education at a significantly cheaper price. Of course, I'll be retired before it really hits the fan--it will have little or no impact on my career.

Not so for my colleague, Joe. He, about 40 years old, just got tenure, and accordingly is promised a 25 year future on our campus. My prediction renders that promise empty--it says he will rarely if ever get a raise, and tenured job security won't be what it's cracked up to be. Still, Joe might agree with my prediction. He'd just argue about the time frame--such dramatic change simply won't happen over a mere decade.

I want to out-live higher ed. Joe wants to live out his career in higher ed. What you think depends on where you sit.

There are people who share my judgement about the lack of social utility, but not my optimism. I'm thinking of Bryan Caplan, who like me, advocates taking tax dollars out of higher education. His view is that college is disproportionately a signaling phenomena. Students go to college to demonstrate to future employers that they are diligent, can follow directions, and have invested more in their careers than other people. There is relatively little human capital appreciation through college--it is mostly a zero-sum signaling game. Students pay a very high cost, investing years and tens of thousands of dollars just to show that their signal is better than some other students. Students and society are losers, while colleges and employers reap the benefits. (I think Tyler Cowan effectively rebuts the argument here.)

Closer to my view is Glenn Reynolds, of Instapundit. He keeps talking about the higher education bubble, though it's not immediately clear what that means. It sounds like college is a house of cards, ready to fall apart. But the revolutionary zeal is largely absent from his book, which mostly suggests some rather modest changes around the edges--certainly nothing as dramatic or on as short a time frame as I have proposed.

Mr. Caplan's pessimistic conclusion is that higher ed, however dysfunctional, is nevertheless stable and will not change quickly. We're stuck with the girl that brung us. Thus he disagrees with all the bubble/crisis talk, and won't find my ten-year deadline credible. He'd say I live in the land of wishful thinking.

Other futurologists suffer from wishful thinking. Famously, the climate science crowd fell for a typographical error. A prediction had it that the Himalayan glaciers would melt by 2350--well beyond my lifespan--but this was copied into an IPCC report as 2035. The new catastrophe was eagerly accepted by climatologists around the world--it took the Indian government to point out the obvious mistake.

Back when I was an 18-year-old Trotskyist, in response to questions about the timing of the world revolution, we answered "maybe twenty years from now." For me that was more than a lifetime--a very long time away. Our thesis was that, because of new technology, history was speeding up--we could expect change faster than before. Today it seems hopelessly unrealistic--if anything, now forty years later, the revolution is even further away than it ever was.

So I could be a wishful thinker, but I'll stick to my ten-year prediction for these reasons. First, colleges are already under significant stress, with increasing pressure to lower prices and costs. Second, however relevant the curriculum may have been in the 1990s and before, it is much less useful today. I'm thinking of the general chemistry class I teach--it made students employable back then, but much less so today. And third, there simply is more competition than before. Students just have more choices.

When do these incremental changes reach a tipping point and disrupt the whole system? Will MOOCs be the straw that breaks the camel's back? Will it result from the unbundling implicit in the accreditation of individual courses? I don't know. Tipping points are notoriously hard to predict.

But here I stand: college will tip over sometime within the next nine years, eleven months, and 29 days. And good riddance!

Further Reading:

• What's Wrong With College?
• Thomas Jefferson & Political Correctness
• Why The Academy Sucks

Take A Trotskyist To Tea

The opening sentence of Jeff Mackler's article in Socialist Action displays all the faults of Leftist thinking.

In the old days—very old days like the last Great Depression of 1929—most people understood the term “economic stimulus” to mean some form of government investment in the economy aimed at directly producing jobs for working people through various kinds of public works programs.

He actually believes that government make-work programs create jobs. They do nothing of the sort--all they do is redistribute the jobs from one place to another. Robbing Peter to pay Paul does make Paul richer, but it makes Peter poorer. Taxing money away from thriving businesses to pay for corrupt, politically-inspired, welfare projects makes society poorer.

The Tea Party understands this. We believe that government is an expense, not a benefit. Prisons, police departments, firemen, welfare social workers, tax collectors, soldiers and spies all cost money. They may be a necessary expense--I wouldn't want to live in a world without policemen, public streets, or parks--but they create no wealth.

Workers create wealth when they produce quality products at affordable prices that consumers want to buy. I can buy a car from honorable people like Gregg Shotwell or Diane Feeley but I can't buy a public street, a welfare case load, or the 5th Armored Division. Accordingly, we Tea Party types are pretty sanguine about the government shutdown. In particular, if non-essential government employees are laid off, so much the better. Why are we hiring non-essential employees in the first place?

Mr. Mackler cites an example of economic progress as if it were a great evil. About the newly booming American textile industry he writes

“This wasn’t some patriotic quest,” [textile CEO] Winthrop insisted. And indeed it wasn’t. Like all capitalists his loyalty was to the dollar, not to the working class. In addition to the savings in transportation costs, the turnaround time, and other technical matters, what interested this capitalist the most was the fact that, according to the The Times, “wages aren’t that much more overseas.” 

Mr. Mackler doesn't understand that the savings are sought to compete with rivals, and therefore to lower prices for consumers. The extra money will not be pocketed as additional profit for Mr. Winthrop. Instead it makes us all richer.

When American capitalism fails to make us all richer, Mr. Mackler calls that a crisis, and perhaps rightly so. But his solution is odd--he proposes instead that we go the full North Korea. Now it is true--North Korea has no economic crises, mostly because it has no economy. Their goal, far from making everybody richer, is to maximize poverty. That's a completely different goal from that most Americans share.

David Finkel, over at Solidarity, publishes an article with an extended update entitled Is the Ship of State Headed for a Shutdown? This gets into the weeds about the shenanigans in Congress in a way that smacks of reformism. Instead of demanding the full North Korea, Mr. Finkel is simply asking that the government stay open so that people can continue to receive benefits. In other words, he's sane.

The downside of sanity is that the article no longer reads like a Trotskyist wrote it. Instead it comes across as just another Progressive point of view, very similar to what you'd read in The Nation or In These Times. It's boring. And like those journals, he takes swipes at the Tea Party.

Here are some examples:

Defunding “Obamacare” or delaying it a year (a delay which could obviously be repeated over and over) would cripple the Obama presidency beyond hope of repair. That’s precisely why the racist-fuelled Tea Party is forcing the issue, and why the Democrats cannot give in even if they’re ready to viciously slash Social Security and Medicare for decades to come.

And,

The Tea Party was largely created by a section of the ruling elite--the billionaire Koch brothers and the like--for this purpose, exploiting the paranoia and racism among white Americans as leverage against the Obama presidency.

A commenter with the handle Redchuck4 (yes, unlike other Trotskyists, Solidarity allows comments) takes issue with Mr. Finkel, remarking that

The Tea Party, while supported by political outliers in the capitalist class like the Koch brothers, is a political phenomena that is INDEPENDENT of capital. It reflects the growing racist/nativist, anti-working class hysteria of sections of the white middle class-- both professionals and managers and small business people. Again, while capital may find these yahoos useful in their battle against working people at home and abroad, the Tea Party has and is often on capital's "wrong-side."

Now I consider the accusation racist to be a slander--it's just an epithet. But lets take it seriously for a minute and see where it gets us.

All political movements are tribal to some degree. Sharing the same political platform implies speaking the same language and sharing the same culture. American whites and Blacks are different tribes and therefore belong to separate political parties. This is similar to English and French Canadians or Muslim and Hindu Indians, etc. So I can agree with Redchuck4 about the ethnic and "class" characterization of the Tea Party, though I'd probably phrase it a bit differently. But that doesn't mean that we're racist any more than the fact that 90% of Blacks vote Democratic means that they're racist.

The Tea Party is not about racial purity. Instead it is a radical Libertarian group. In the cause of Liberty, we believe in limited government and Constitutional order. Congress (and hence the federal government) deserves no more power than that delimited by the Constitution. The extension of the federal government into things like health care is very much against the spirit of the Constitution, John Roberts' messy compromise notwithstanding. In our federal system the states are sovereign, and if government has a role in health care (a separate debate), then it has to come from the states.

Though few Blacks are members of the Tea Party, those that are have played a very important role. Two of our leading theoreticians, Thomas Sowell and Walter Williams, are African-American. Tea Partiers have adopted Martin Luther King as one of their own (see here). And all of us thrilled to the message of Herman Cain, who used the beautiful, eloquent and musical language of his culture in the cause of Liberty. I actually contributed money to his campaign, and was sorely disappointed when he turned out to be a deeply flawed candidate. There is the more recent example of Paul McKinley.

Indeed, cultural barriers notwithstanding, African-Americans should be the strongest supporters of the Tea Party. Who has suffered more from government tyranny than they? Who benefits more from strict equality under the law? Who suffers most from absurd nanny-state regulations that make many Black occupations illegal? (E.g., it's illegal to operate a Jitney cab without a city license, or braid hair without a beautician's diploma.)

So if you believe in Liberty, join us. And then, please invite a Trotskyist out for a cup of tea.

Further Reading:

• Book Review: Filthy Rich in Rising Asia
• Why Trotskyists Don't Like Las Vegas
• Liberals!