87 replies to this topic

[John_Ventureville]

Orville Schell, an Asian studies scholar and prominent journalist, spoke last night at the Scottsdale Performing Arts Center. This frail (the epitome of a very aged Ivy Leaguer) but charmingly earnest man shared his troubling insights with us. He is extremely impressed both with China's rapid growth over the last two decades, and the ability of the Communist regime to maintain power. But he admitted deep reservations about China's human rights record and the nature of their global influence as they grow in power.


Schell said he had no crystal ball to give a certain prediction of the future, and he felt things could easily go either way, in terms of the Communists keeping a tight hold on power with very limited civil liberties allowed, or the other scenario being where a societal blow-up causes radical political change in ways the U.S. would like to see. He felt the regime and society is tightly wound and the leadership, despite their tyrannical power, tread carefully to avoid another Tiananmen Square (Chinese leaders feel they might have narrowly avoided a toppling & it could happen again). The Chinese govt. over the years liked to blame foreigners for China's problems, but that incident in particular shook the Chinese psyche deeply because they could only blame themselves for what happened.


China he stated, does not have a firm foundation and sense of itself, as compared to the United States with it's Constitution, Bill of Rights, and moral compass (that we often fail to live up to, as he admitted). The Chinese have Confucianism, Buddhism, Communism, Christianity, etc., but nothing as defining as what our relatively new nation has to guide it. And so they are in some ways feeling their way toward the future and trying as a people to define themselves. But he did say that the Chinese people (top to bottom) have a very strong sense of cultural destiny/nationalism that drives them forward, while on the other hand, Americans have largely lost this burning passion.


He spoke in detail about his recent trips to China and how he finds the gigantic airports, road systems, stores, bridges and general infrastructure there to be stunning. At one time China was known for shoddy construction, but he said those days are largely past, and a visit to a gorgeous and utterly massive performing arts center there made his jaw drop in wonder. During his regular visits there (about every three months or so), Schell notices the many changes due to the explosive growth. He stated that they are overtaking the U.S. at a dizzying rate that is not fully grasped in the nation, despite all the talk over here about China.


Schell was very impressed at how the Chinese Communist regime has made a "Leninist market economy" work so well. In the U.S. we mock the idea of the classic Soviet style "five year plans," but he said the Chinese are master long-term planners, and they allocate vast resources toward scientific research centers, public infrastructure, green-tech, or whatever else they see as vital that needs financial nurturing. The government guides and nourishes their free market economy in ways that have so far reaped great rewards. And the Chinese have the *deep pockets* to grow their nation.


But on the other hand, Schell said the United States govt. is a basketcase of rival political factions who have a hard time getting anything done, due to all the infighting! And due to our inability to control our debt, we have much less money than the Chinese to spend on vital things such as science research or infrastructure. He spent many years in Washington and what he saw there utterly disappointed him.


Regarding technology and business, he stated that Americans are gifted innovators, and the Chinese have a long way to go to fully develop this trait. But he thought it was crazy that we allow foreign students to come here and get advanced science degrees, but then we order them home, rather than letting them get citizenship and settle here! And now many Chinese students don't even want to live here, because they feel there is greater opportunity in their homeland!


I found it very painful when Schell admitted his doubts about whether the American/Western model of government is really the best in the world, and what may just triumph in the end. He confessed that he had a sinking feeling the Chinese "Leninist Market" system may prove superior to our own beloved democratic system, because they can save and spend wisely, and plan & act in long-term ways, without our crippling bickering, deadlock and short-sighted self-interest.


But he admitted that China does have its challenges. Pollution is a major problem, but the Chinese are trying to deal with it by investing vastly more money than we are to develop green-tech. Another huge fear of the regime is that the 170 million rural people who moved to the cities to find factory and construction jobs, might rebel if the economy slows down and many of them become unemployed. The govt does not ever want to deploy large numbers of military forces to put down their own people, but facing such monstrous numbers would be nightmarish for conventional law enforcement. Also, China needs to become much more of a consumer economy, as compared to being an exporting economy. And so they must maintain economic growth to expand their middle class.


Schell touched on Taiwan, saying the new generation of leaders there are much more sensitive to the wishes of the mainland, and so he sees hope in things being resolved non-violently. As for Tibet, the Chinese feel it was once part of their ancient empire, and so they have the right to it. And they view the Tibetans as ingrates for not appreciating the billions poured into the nation, along with Chinese settlers!


I enjoyed his candor and was taken aback by his painful honesty about America's self-destructiveness as compared to Chinese ascension. I had expected to hear how China was not really a true challenger and that things were being overstated in the media, but this was not to be.


As I looked over the audience I notice very few people in their twenties or even thirties. I found this both sad and astonishing, since young people are the ones who will have to deal with this coming of age rival superpower that within 15 years will outstrip us economically. I could have been visiting a retirement home...


There was a Q & A session, but some of the subjects I wanted to see addressed, were not. I desired his opinion about the growth of the Chinese military, the space program, and also their very successful espionage machine that steals a great deal from us (so much for innovation...). And I would have enjoyed his insights about the lack of young people in the audience.
　

I learned that there is an annual conference in Scottsdale, Arizona about the U.S./China relationship, but that this year it was cancelled. And yet fortunately, Orville Schell still came to speak.


http://orvilleschell.com/index.htm


John Grigg

[Rational Madman]

Orville Schell, an Asian studies scholar and prominent journalist, spoke last night at the Scottsdale Performing Arts Center. This frail (the epitome of a very aged Ivy Leaguer) but charmingly earnest man shared his troubling insights with us. He is extremely impressed both with China's rapid growth over the last two decades, and the ability of the Communist regime to maintain power. But he admitted deep reservations about China's human rights record and the nature of their global influence as they grow in power.


Schell said he had no crystal ball to give a certain prediction of the future, and he felt things could easily go either way, in terms of the Communists keeping a tight hold on power with very limited civil liberties allowed, or the other scenario being where a societal blow-up causes radical political change in ways the U.S. would like to see. He felt the regime and society is tightly wound and the leadership, despite their tyrannical power, tread carefully to avoid another Tiananmen Square (Chinese leaders feel they might have narrowly avoided a toppling & it could happen again). The Chinese govt. over the years liked to blame foreigners for China's problems, but that incident in particular shook the Chinese psyche deeply because they could only blame themselves for what happened.


China he stated, does not have a firm foundation and sense of itself, as compared to the United States with it's Constitution, Bill of Rights, and moral compass (that we often fail to live up to, as he admitted). The Chinese have Confucianism, Buddhism, Communism, Christianity, etc., but nothing as defining as what our relatively new nation has to guide it. And so they are in some ways feeling their way toward the future and trying as a people to define themselves. But he did say that the Chinese people (top to bottom) have a very strong sense of cultural destiny/nationalism that drives them forward, while on the other hand, Americans have largely lost this burning passion.


He spoke in detail about his recent trips to China and how he finds the gigantic airports, road systems, stores, bridges and general infrastructure there to be stunning. At one time China was known for shoddy construction, but he said those days are largely past, and a visit to a gorgeous and utterly massive performing arts center there made his jaw drop in wonder. During his regular visits there (about every three months or so), Schell notices the many changes due to the explosive growth. He stated that they are overtaking the U.S. at a dizzying rate that is not fully grasped in the nation, despite all the talk over here about China.


Schell was very impressed at how the Chinese Communist regime has made a "Leninist market economy" work so well. In the U.S. we mock the idea of the classic Soviet style "five year plans," but he said the Chinese are master long-term planners, and they allocate vast resources toward scientific research centers, public infrastructure, green-tech, or whatever else they see as vital that needs financial nurturing. The government guides and nourishes their free market economy in ways that have so far reaped great rewards. And the Chinese have the *deep pockets* to grow their nation.


But on the other hand, Schell said the United States govt. is a basketcase of rival political factions who have a hard time getting anything done, due to all the infighting! And due to our inability to control our debt, we have much less money than the Chinese to spend on vital things such as science research or infrastructure. He spent many years in Washington and what he saw there utterly disappointed him.


Regarding technology and business, he stated that Americans are gifted innovators, and the Chinese have a long way to go to fully develop this trait. But he thought it was crazy that we allow foreign students to come here and get advanced science degrees, but then we order them home, rather than letting them get citizenship and settle here! And now many Chinese students don't even want to live here, because they feel there is greater opportunity in their homeland!


I found it very painful when Schell admitted his doubts about whether the American/Western model of government is really the best in the world, and what may just triumph in the end. He confessed that he had a sinking feeling the Chinese "Leninist Market" system may prove superior to our own beloved democratic system, because they can save and spend wisely, and plan & act in long-term ways, without our crippling bickering, deadlock and short-sighted self-interest.


But he admitted that China does have its challenges. Pollution is a major problem, but the Chinese are trying to deal with it by investing vastly more money than we are to develop green-tech. Another huge fear of the regime is that the 170 million rural people who moved to the cities to find factory and construction jobs, might rebel if the economy slows down and many of them become unemployed. The govt does not ever want to deploy large numbers of military forces to put down their own people, but facing such monstrous numbers would be nightmarish for conventional law enforcement. Also, China needs to become much more of a consumer economy, as compared to being an exporting economy. And so they must maintain economic growth to expand their middle class.


Schell touched on Taiwan, saying the new generation of leaders there are much more sensitive to the wishes of the mainland, and so he sees hope in things being resolved non-violently. As for Tibet, the Chinese feel it was once part of their ancient empire, and so they have the right to it. And they view the Tibetans as ingrates for not appreciating the billions poured into the nation, along with Chinese settlers!


I enjoyed his candor and was taken aback by his painful honesty about America's self-destructiveness as compared to Chinese ascension. I had expected to hear how China was not really a true challenger and that things were being overstated in the media, but this was not to be.


As I looked over the audience I notice very few people in their twenties or even thirties. I found this both sad and astonishing, since young people are the ones who will have to deal with this coming of age rival superpower that within 15 years will outstrip us economically. I could have been visiting a retirement home...


There was a Q & A session, but some of the subjects I wanted to see addressed, were not. I desired his opinion about the growth of the Chinese military, the space program, and also their very successful espionage machine that steals a great deal from us (so much for innovation...). And I would have enjoyed his insights about the lack of young people in the audience.
　

I learned that there is an annual conference in Scottsdale, Arizona about the U.S./China relationship, but that this year it was cancelled. And yet fortunately, Orville Schell still came to speak.


http://orvilleschell.com/index.htm


John Grigg

Fear of China's rise is understandable (and Asia by extension), and the rate of it's growth is quite impressive by any standard, but the following caveats should be considered:

--The Asian share of global output was approximately three-fifths at the beginning of the 19th Century, and shrunk to approximately one fifth by 1950. So what we're witnessing in the case of China et. al. is simply a return to the norm of the historical distribution of power.
--Although tremendous strides have been made against poverty, the rural population, which constitutes about 2/3 of the total subsists on less than $3/day. And the number living in conditions of extreme poverty, or under 1.25/day, could be anywhere between 50-100 million. The gross per capita income is equally sobering, and roughly equal to that of Tunisia.
--Although China is endeavoring to reduce its carbon footprint in some ways, there is a parallel effort to satisfy energy needs at any cost: shady deals with questionable states like Angola and Iran, the construction of hundreds of coal fired power plants, and resource materialism in areas where its sovereignty is dubious.
--To elaborate on the previous point, the macro costs of environmental damage are quite serious, leading to at least 400,000 cases of attributable respiratory deaths annually, and creating aggregate costs that reduce its actual rate of growth by 2-4%.
--Popular unrest is growing alarmingly, and since 2005, the state has stopped tabulating the number of cases of major civil unrest, which grew in excess of 120,000 annually, and is likely much higher at present.
--For China to absorb the growth of its labor market---which is estimated to be at least 12 million new entrants annually---it must consistently grow at a rate of 8%, with anything less resembling the effects of a recession.
--Although the growth of its human capital is impressive, there are serious methodological problems with reporting---electricians and plumbers are classified as engineers for instance---and because of differing institutional standards, the majority would not prove to be attractive or deemed employable in overseas labor markets.
--Due to the residual effects that the rule of Mao has had on bureaucratic behavior, there is an alarming tendency to distort data, deliver overly optimistic forecasts, and deliberately deceive, so information emanating from state organs must be treated with a skeptical eye.
--Chinese Nationalism may indeed be a powerful force of progress, or as much of the Chinese experience in 19th Century epitomized, lead to fragmentation, upheaval, and deaths in the tens of millions. Troublingly, nationalism is being carelessly used as a means of mollifying the restless masses, but sooner or later, its dynamics may escape the control of policymakers, and force the adoption of foreign policies tantamount to national suicide.
--The government nurtures important economic actors, and enables them to participate in the global economy, but the distribution of economic output is creating burgeoning societal tensions, and should be judged as unsustainable.
--The dogmatic export oriented model is also unsustainable, because it reduces the purchasing power of the average household, contributes to inflationary pressures, is supported by a program that inefficiently invests in unneeded productive capacity (read stories about the hundreds of thousands of business failures during and after the recession; likely much more, because the number is too embarrassingly staggering), and is likely to yield diminishing returns as inevitable structural changes occur in consumption driven economies (e.g. The United States).
--The Chinese government certainly has made extensive investments into production, but frequently, they are wrong and costly investments (look at the rate of commercial and residential vacancy in sponsored or incentivized developments, for instance).
--The rate of corruption is becoming overwhelming and difficult to quantify, but likely equal to that of Russia, which loses hundreds of billions annually to corruption.
--In the coming years, Tibet and the Xinjiang region may become increasingly restless and difficult to manage.
--The Chinese military is slowly becoming a state within a state, being sustained by a budget that has grown by 120% since 2000, state sanctioned ownership of an absurd number of private companies to supplement state financing, and has been given greater autonomy on foreign and defense matters---which has led to a consequentially greater bellicosity on territorial disputes and bilateral relations.
--There is a very high rate of marginal employment. But then there's also the potentially lethal element of millions of underemployed and still laid off migrant workers that have been displaced by tumult, privatization, deprivation, and the effects of the global downturn.
--For being an ostensibly Leninist inspired government, there is a stunningly inadequate safety net in terms of the quanitity (measured as a percentage of GDP) and the quality of services of government agencies ranging from health care to welfare services.
--And the list goes on and on.
--To be sure, I'm accentuating the negative, and I don't want to diminish the incredible gains that have been made in the last 30 years, but I've grown inpatient with unnuanced portrayal of China. And before we herald it as our successor as a hegemon, we must consider the multitude of endemic problems that complicate this ascension, and may lead to a rapid reversal of tentative gains.

Edited by Rol82, 06 November 2010 - 07:09 AM.

[niner]

Thanks for a great post, John. I think Schell is very much on the money. Rol82's list of China's problems seems to be quite right as well. To it, I'll add that China is facing a demographic time bomb; it is poised to go the way of Japan in that regard, though it will probably not compound the problem with Japan's economic bungling. I have only to look at the recent election to conclude that America is in deep trouble, and that is not a simple partisan statement. I am deeply concerned that we have a politics grounded in ignorance and extremism. Our national distaste for facts, for science, for expertise is a huge problem.

I wasn't going to vote in the poll because I think it's a tossup as to where the singularity will arise. I will go ahead and vote America for that, but consider the chances that it could be China to be approximately equal.

[firespin]

I wasn't going to vote in the poll because I think it's a tossup as to where the singularity will arise. I will go ahead and vote America for that, but consider the chances that it could be China to be approximately equal.

Well considering how the china government have a lot of control over their citizens, even if singularity arises at china first, if the china government is still as it is now, I would not want it. I would wait for a separate one. A singularity with china's government present mentality would become like the Borg, or the government personal robots to control or shut down at will. What is the point of singularity if you have no freedom, and you are merely a ant/slave controlled by a queen(government)?

I want my immortality and my freedom.

[chris w]

I wasn't going to vote in the poll because I think it's a tossup as to where the singularity will arise. I will go ahead and vote America for that, but consider the chances that it could be China to be approximately equal.

Well considering how the china government have a lot of control over their citizens, even if singularity arises at china first, if the china government is still as it is now, I would not want it. I would wait for a separate one. A singularity with china's government present mentality would become like the Borg, or the government personal robots to control or shut down at will. What is the point of singularity if you have no freedom, and you are merely a ant/slave controlled by a queen(government)?

I want my immortality and my freedom.

Their rulers are largely past the days when they wanted to control people's lifes to such extent, it's not like a Chinese Singularity would team up with a Mao Ze Dong mindset anymore. The government has become pretty pragmatic about things that it doesn't deem directly deleterious to its power. It is said that a silent sexual revolution has been taking place among the Chinese urban class, for example. Probably most of the guys at the top are rather into cold and practical technocracy than sadistic enslavement projects. But true, better if Singularity happened in a freer country, the autocratic capitalism model isn't necesesarily something to cherish, and an achievement like this would only make it look even better in the eyes of those disenchanted with the whole idea of liberal democracy.

[niner]

I wasn't going to vote in the poll because I think it's a tossup as to where the singularity will arise. I will go ahead and vote America for that, but consider the chances that it could be China to be approximately equal.

Well considering how the china government have a lot of control over their citizens, even if singularity arises at china first, if the china government is still as it is now, I would not want it. I would wait for a separate one. A singularity with china's government present mentality would become like the Borg, or the government personal robots to control or shut down at will. What is the point of singularity if you have no freedom, and you are merely a ant/slave controlled by a queen(government)?

I want my immortality and my freedom.

I never considered that a Chinese Singularity would be any different than an American or Japanese or Swedish one. I expect a singularity to be "on it's own", and not really under anyone's control, although I suppose if we are to seed it with friendliness, then we could equally seed it with Chinese socioeconomic concepts, or trickle down economics, for that matter. If the Singularity is worth its salt, it will calmly inform us that such ideas are bullshit, assuming that's the case, and then proceed to show us a better path. I suppose that means that any attempts to instill friendliness as a bedrock concept will only be successful if it has intrinsic value. If the Master AI decides that meatware humans are standing in the way of evolution, then maybe we are toast.

Disclaimer: I'm not an authority on AI...

[rwac]

I have only to look at the recent election to conclude that America is in deep trouble, and that is not a simple partisan statement. I am deeply concerned that we have a politics grounded in ignorance and extremism. Our national distaste for facts, for science, for expertise is a huge problem.

What about the recent election do you find troubling ?

Well, you have to admit that the experts have been wrong, in at least a couple of fields. Perhaps there are problems with following expert advice unquestioningly ?

[niner]

I have only to look at the recent election to conclude that America is in deep trouble, and that is not a simple partisan statement. I am deeply concerned that we have a politics grounded in ignorance and extremism. Our national distaste for facts, for science, for expertise is a huge problem.

What about the recent election do you find troubling ?

Well, you have to admit that the experts have been wrong, in at least a couple of fields. Perhaps there are problems with following expert advice unquestioningly ?

What I find troubling is the extent to which it was driven by the "I don't want the government trying to get involved in my Medicare" kind of people. The vast majority of people don't know that we almost destroyed the economy of the developed world, and worse, they don't know how that almost happened. They think that TARP was Obama's doing, and that our present debt situation is largely his fault. They continue to believe that trickle-down, supply-side economics works, despite all evidence to the contrary, including recent statements by such luminaries as Alan Greenspan*. You pretty much can't be a Republican and also listen to scientists where climate is concerned. Of course there are problem with following expert advice unquestioningly. That's not what I want to see. The thing I worry about is that having actual qualifications, like education and training, like actually freaking knowing what you're talking about seems to disqualify you from speaking in the eyes of far too many. They will, however, listen slavishly to every word from Limbaugh, Hannity, and Beck. Honestly, I think we have a serious problem.

* Meet The Press transcript, Aug 1:
MR. GREGORY: You don't agree with Republican leaders who say tax cuts pay for themselves?
MR. GREENSPAN: They do not.

[Rational Madman]

I have only to look at the recent election to conclude that America is in deep trouble, and that is not a simple partisan statement. I am deeply concerned that we have a politics grounded in ignorance and extremism. Our national distaste for facts, for science, for expertise is a huge problem.

What about the recent election do you find troubling ?

Well, you have to admit that the experts have been wrong, in at least a couple of fields. Perhaps there are problems with following expert advice unquestioningly ?

What I find troubling is the extent to which it was driven by the "I don't want the government trying to get involved in my Medicare" kind of people. The vast majority of people don't know that we almost destroyed the economy of the developed world, and worse, they don't know how that almost happened. They think that TARP was Obama's doing, and that our present debt situation is largely his fault. They continue to believe that trickle-down, supply-side economics works, despite all evidence to the contrary, including recent statements by such luminaries as Alan Greenspan*. You pretty much can't be a Republican and also listen to scientists where climate is concerned. Of course there are problem with following expert advice unquestioningly. That's not what I want to see. The thing I worry about is that having actual qualifications, like education and training, like actually freaking knowing what you're talking about seems to disqualify you from speaking in the eyes of far too many. They will, however, listen slavishly to every word from Limbaugh, Hannity, and Beck. Honestly, I think we have a serious problem.

* Meet The Press transcript, Aug 1:
MR. GREGORY: You don't agree with Republican leaders who say tax cuts pay for themselves?
MR. GREENSPAN: They do not.

Sure, the results are somewhat depressing in some cases, but can you think of a period in American political history that was free of demagoguery? The intensity of such just seems to be a function of the business cycle, so this nonsense probably won't last at the same volume forever.

[niner]

Sure, the results are somewhat depressing in some cases, but can you think of a period in American political history that was free of demagoguery? The intensity of such just seems to be a function of the business cycle, so this nonsense probably won't last at the same volume forever.

I don't think it has been this bad in the past half century. I've been seeing this distaste for knowledge and expertise through ups and downs in the business cycle; it's been building for over thirty years, I'd venture. Note that our current economic situation is no ordinary cyclical recession. We've laid an unprecedented economic crisis on top of a long term structural change in the world and in our domestic economy.

[rwac]

The thing I worry about is that having actual qualifications, like education and training, like actually freaking knowing what you're talking about seems to disqualify you from speaking in the eyes of far too many. They will, however, listen slavishly to every word from Limbaugh, Hannity, and Beck.

Except that the people who "know what they're talking about" also tend to have some kind of agenda of their own, possibly a stake in the current system.

The question is how far do we trust these people. This is not a partisan question. Bush was sucked into defending the Status Quo just as Obama is doing.

I don't know if you've been following the foreclosure mess, but it's the latest indicator of the current system being broken.

Edited by rwac, 05 November 2010 - 06:50 AM.

[niner]

The thing I worry about is that having actual qualifications, like education and training, like actually freaking knowing what you're talking about seems to disqualify you from speaking in the eyes of far too many. They will, however, listen slavishly to every word from Limbaugh, Hannity, and Beck.

Except that the people who "know what they're talking about" also tend to have some kind of agenda of their own, possibly a stake in the current system.

The question is how far do we trust these people. This is not a partisan question. Bush was sucked into defending the Status Quo just as Obama is doing.

You're right, this really isn't a partisan question. It's an epistemological question. However, like politics, it bears on the future of our nation. When you hear that someone has an agenda, you need to be on guard for propaganda. Some "experts" really do have an agenda that isn't the best thing for us or our country, but the claim that someone has "an agenda" is a potent and popular propaganda meme. People who want to do what's best for themselves, rather than best for their country, might tell us that the scientist or policy expert who's exposing their scheme "has an agenda". They're correct in a way; I have an agenda, which is to uncover what is actually true, and to prevent people or corporations from doing things that harm others more than they add value to society. We all have agendas; Rush has an agenda, but I don't think it's good for America.

Regarding the status quo; some parts of the status quo need to be defended. Other parts need to go. Both Bush and Obama changed the status quo pretty substantially, which is what got so many people angry at them. Other parts of the status quo that needed changing didn't change or have not yet changed under their watch. I can't entirely blame either of them for that, as they just don't have the power to change everything that needs changing. (e.g. we should put an end to gerrymandering, nationwide. We should change the way we elect our leaders; the way we do it today is beyond idiotic.)

[rwac]

They're correct in a way; I have an agenda, which is to uncover what is actually true, and to prevent people or corporations from doing things that harm others more than they add value to society. We all have agendas; Rush has an agenda, but I don't think it's good for America.

My agenda is also to protect people, but I believe that government is a greater threat, especially the collusion of government and business. Note that there's a difference between pro-market and pro-business, being pro-market means that sometimes you have to let businesses die. (Note: Not kill them with regulation)

If I disagree with your (and the experts') agenda, it would make sense that I would actually not listen to your advice.

[Rational Madman]

Sure, the results are somewhat depressing in some cases, but can you think of a period in American political history that was free of demagoguery? The intensity of such just seems to be a function of the business cycle, so this nonsense probably won't last at the same volume forever.

I don't think it has been this bad in the past half century. I've been seeing this distaste for knowledge and expertise through ups and downs in the business cycle; it's been building for over thirty years, I'd venture. Note that our current economic situation is no ordinary cyclical recession. We've laid an unprecedented economic crisis on top of a long term structural change in the world and in our domestic economy.

Do we have an equivalent to Father Couglhin, Huey Long, William Jennings Bryan, Joseph McCarthy, or perhaps Pat Buchanan when he was at his pinnacle---the 1992 Republican Convention? Since the founding of our state, demagoguery has been immutable, but we mistakenly romanticize the past, and forget the political influence of each generation's demagogue. And to be clear, I'm not dismissing the recent recession as an ordinary cyclical recession, but the drop in output is still a part of an inevitable cycle of peaks and troughs. What has made this recession exceptional is not its effects on aggregate output and the labor market, but its global reach, and its destruction of the global aggregate value of assets---at its climactic point, 55 trillion in wealth was destroyed. But the price levels of assets have recovered in several categories, so I'm not overly concerned, but I sympathize with those debilitated by the torrent. Prior to World War II for instance, the United States had experienced 20 recessions marked by at least a 15% drop in aggregate output, which is a decline unheard of in modern political economies. Indeed, the closest analogy that we have is the latest recession, which resulted in a 4.1% decline, and followed by the 3.2% decline in the 73-75 recession.

Edited by Rol82, 06 November 2010 - 12:18 AM.

[niner]

They're correct in a way; I have an agenda, which is to uncover what is actually true, and to prevent people or corporations from doing things that harm others more than they add value to society. We all have agendas; Rush has an agenda, but I don't think it's good for America.

My agenda is also to protect people, but I believe that government is a greater threat, especially the collusion of government and business. Note that there's a difference between pro-market and pro-business, being pro-market means that sometimes you have to let businesses die. (Note: Not kill them with regulation)

If I disagree with your (and the experts') agenda, it would make sense that I would actually not listen to your advice.

I don't think that we really disagree all that much; you care about truth, right? We're both pro-market; (yeah, I really am- I like competition in the market. I like markets that are transparent, free, and fair, which among other things means corporations don't get to dump externalities on others, a form of theft.) Neither of us likes collusion between government and business.

No one has to listen to anyone else's advice, but facts are facts. That's what really worries me. Too many people believe stuff that's demonstrably wrong. While we can have a variety of philosophies and viewpoints, I think that most of us would come to reasonable, though not identical conclusions if we start with correct premises. It's just that these days, too many of us aren't starting from correct information.

[Rational Madman]

They're correct in a way; I have an agenda, which is to uncover what is actually true, and to prevent people or corporations from doing things that harm others more than they add value to society. We all have agendas; Rush has an agenda, but I don't think it's good for America.

My agenda is also to protect people, but I believe that government is a greater threat, especially the collusion of government and business. Note that there's a difference between pro-market and pro-business, being pro-market means that sometimes you have to let businesses die. (Note: Not kill them with regulation)

If I disagree with your (and the experts') agenda, it would make sense that I would actually not listen to your advice.

I don't think that we really disagree all that much; you care about truth, right? We're both pro-market; (yeah, I really am- I like competition in the market. I like markets that are transparent, free, and fair, which among other things means corporations don't get to dump externalities on others, a form of theft.) Neither of us likes collusion between government and business.

No one has to listen to anyone else's advice, but facts are facts. That's what really worries me. Too many people believe stuff that's demonstrably wrong. While we can have a variety of philosophies and viewpoints, I think that most of us would come to reasonable, though not identical conclusions if we start with correct premises. It's just that these days, too many of us aren't starting from correct information.

But what is the quantified strength of this amorphous movement that both you and I loath. Looking at the polling data, it's striking how lacking in cohesiveness they are, and their relative weakness to other blocs of voters. Just because they are the loudest, it doesn't mean that they'll dominate public policy. For now, they have the power of obstruction, but like I said, I have doubts about the durability of these types of movements. Like all populist movements, they eventually run out of fuel, and we return to the norm of a bipolar (meaning Democrats and Republicans) political system. What happened for instance, to Perot, LaFollete, Henry Wallace, William Jennings Bryan, Teddy Roosevelt, Eugene Debs, Pat Buchanan, George Wallace, John Anderson, or Ralph Nader? What about the Know-Nothings of the 19th Century? Perceptions of economic stress gave rise to these candidates, but as conditions changed, their movements ceased to be important. Wouldn't you consider the religious right of your generation---Falwell, Swaggert, Baker, and Graham---to be analogous when they reached their peak during the Reagan administration and the Gingrich Congress?

[Rational Madman]

The thing I worry about is that having actual qualifications, like education and training, like actually freaking knowing what you're talking about seems to disqualify you from speaking in the eyes of far too many. They will, however, listen slavishly to every word from Limbaugh, Hannity, and Beck.

Except that the people who "know what they're talking about" also tend to have some kind of agenda of their own, possibly a stake in the current system.

The question is how far do we trust these people. This is not a partisan question. Bush was sucked into defending the Status Quo just as Obama is doing.

I don't know if you've been following the foreclosure mess, but it's the latest indicator of the current system being broken.

Just because the herculian task of reforming government sponsored enterprises like Fannie Mae and Freddie Mac was given to the next Congress, it doesn't that there is an absence of a desire to begin a reform of their activities. In their absence, I suspect house price indices would be far worse. And remember, an intervention in the market was necessary for preventing a further drop in prices, since foreclosures have a contagious effect on neighborhood prices.

[niner]

Sure, the results are somewhat depressing in some cases, but can you think of a period in American political history that was free of demagoguery? The intensity of such just seems to be a function of the business cycle, so this nonsense probably won't last at the same volume forever.

I don't think it has been this bad in the past half century. I've been seeing this distaste for knowledge and expertise through ups and downs in the business cycle; it's been building for over thirty years, I'd venture. Note that our current economic situation is no ordinary cyclical recession. We've laid an unprecedented economic crisis on top of a long term structural change in the world and in our domestic economy.

Do we have an equivalent to Father Couglhin, Huey Long, William Jennings Bryan, Joseph McCarthy, or perhaps Pat Buchanan when he was at his pinnacle---the 1992 Republican Convention? Since the founding of our state, demagoguery has been immutable, but we mistakenly romanticize the past, and forget the political influence of each generation's demagogue.

No, but that's why I said 'the past half century'. Buchanan, Gingrich... I'm not really sure I could draw a line between them and today's demagogues; it's all of a piece. I'm not limiting my rant to the highly visible demagogues, though; there are a thousand mini-Limbaughs, with smaller megaphones, but they add up to more. It's the mammoth scope of the meme machine that gives it a lot of its power.

And to be clear, I'm not dismissing the recent recession as an ordinary cyclical recession, but the drop in output is still a part of an inevitable cycle of peaks and troughs. What has made this recession exceptional is not its effects on aggregate output and the labor market, but its global reach, and its destruction of the global aggregate value of assets---at its climactic point, 55 trillion in wealth was destroyed. But the price levels of assets have recovered in several categories, so I'm not overly concerned, but I sympathize with those debilitated by the torrent. Prior to World War II for instance, the United States had experienced 20 recessions marked by at least a 15% drop in aggregate output, which is a decline unheard of in modern political economies. Indeed, the closest analogy that we have is the latest recession, which resulted in a 4.1% decline, and followed by the 3.2% decline in the 73-75 recession.

If we go back to the days before fiat currencies and Keynes, then yeah, things got pretty ugly on a regular basis. Anyone who thinks going back on the gold standard will fix us right up should look into this. I don't know if aggregate output paints a full picture of the current situation- The credit freeze-up was unprecedented in modern times; we really were staring into the abyss. The degree to which we had gotten leveraged up was also unprecedented. Adding in the long-term structural changes due to globalization, and we have a perfect storm.

[niner]

They're correct in a way; I have an agenda, which is to uncover what is actually true, and to prevent people or corporations from doing things that harm others more than they add value to society. We all have agendas; Rush has an agenda, but I don't think it's good for America.

My agenda is also to protect people, but I believe that government is a greater threat, especially the collusion of government and business. Note that there's a difference between pro-market and pro-business, being pro-market means that sometimes you have to let businesses die. (Note: Not kill them with regulation)

If I disagree with your (and the experts') agenda, it would make sense that I would actually not listen to your advice.

I don't think that we really disagree all that much; you care about truth, right? We're both pro-market; (yeah, I really am- I like competition in the market. I like markets that are transparent, free, and fair, which among other things means corporations don't get to dump externalities on others, a form of theft.) Neither of us likes collusion between government and business.

No one has to listen to anyone else's advice, but facts are facts. That's what really worries me. Too many people believe stuff that's demonstrably wrong. While we can have a variety of philosophies and viewpoints, I think that most of us would come to reasonable, though not identical conclusions if we start with correct premises. It's just that these days, too many of us aren't starting from correct information.

But what is the quantified strength of this amorphous movement that both you and I loath. Looking at the polling data, it's striking how lacking in cohesiveness they are, and their relative weakness to other blocs of voters. Just because they are the loudest, it doesn't mean that they'll dominate public policy. For now, they have the power of obstruction, but like I said, I have doubts about the durability of these types of movements. Like all populist movements, they eventually run out of fuel, and we return to the norm of a bipolar (meaning Democrats and Republicans) political system. What happened for instance, to Perot, LaFollete, Henry Wallace, William Jennings Bryan, Teddy Roosevelt, Eugene Debs, Pat Buchanan, George Wallace, John Anderson, or Ralph Nader? What about the Know-Nothings of the 19th Century? Perceptions of economic stress gave rise to these candidates, but as conditions changed, their movements ceased to be important. Wouldn't you consider the religious right of your generation---Falwell, Swaggert, Baker, and Graham---to be analogous when they reached their peak during the Reagan administration and the Gingrich Congress?

It sounds like you're talking about the Tea Party. They're mostly an economic phenomenon, I suspect, and they will soon flame out because they aren't sufficiently reality-based. The conservative movement that began in the 70's, picked up steam with Reagan and Gingrich, blossomed with talk radio, Fox News, and ultimately the blogosphere seems to be a lot more durable.

[Rational Madman]

Sure, the results are somewhat depressing in some cases, but can you think of a period in American political history that was free of demagoguery? The intensity of such just seems to be a function of the business cycle, so this nonsense probably won't last at the same volume forever.

I don't think it has been this bad in the past half century. I've been seeing this distaste for knowledge and expertise through ups and downs in the business cycle; it's been building for over thirty years, I'd venture. Note that our current economic situation is no ordinary cyclical recession. We've laid an unprecedented economic crisis on top of a long term structural change in the world and in our domestic economy.

Do we have an equivalent to Father Couglhin, Huey Long, William Jennings Bryan, Joseph McCarthy, or perhaps Pat Buchanan when he was at his pinnacle---the 1992 Republican Convention? Since the founding of our state, demagoguery has been immutable, but we mistakenly romanticize the past, and forget the political influence of each generation's demagogue.

No, but that's why I said 'the past half century'. Buchanan, Gingrich... I'm not really sure I could draw a line between them and today's demagogues; it's all of a piece. I'm not limiting my rant to the highly visible demagogues, though; there are a thousand mini-Limbaughs, with smaller megaphones, but they add up to more. It's the mammoth scope of the meme machine that gives it a lot of its power.

And to be clear, I'm not dismissing the recent recession as an ordinary cyclical recession, but the drop in output is still a part of an inevitable cycle of peaks and troughs. What has made this recession exceptional is not its effects on aggregate output and the labor market, but its global reach, and its destruction of the global aggregate value of assets---at its climactic point, 55 trillion in wealth was destroyed. But the price levels of assets have recovered in several categories, so I'm not overly concerned, but I sympathize with those debilitated by the torrent. Prior to World War II for instance, the United States had experienced 20 recessions marked by at least a 15% drop in aggregate output, which is a decline unheard of in modern political economies. Indeed, the closest analogy that we have is the latest recession, which resulted in a 4.1% decline, and followed by the 3.2% decline in the 73-75 recession.

If we go back to the days before fiat currencies and Keynes, then yeah, things got pretty ugly on a regular basis. Anyone who thinks going back on the gold standard will fix us right up should look into this. I don't know if aggregate output paints a full picture of the current situation- The credit freeze-up was unprecedented in modern times; we really were staring into the abyss. The degree to which we had gotten leveraged up was also unprecedented. Adding in the long-term structural changes due to globalization, and we have a perfect storm.

I would suggest reading Kenneth Rogoff's research on the subject, he looks at data going pretty far back, and helps to shed a great deal of light on our relative situation. Although he's identified with the right, he has the reputation for being exceedingly pragmatic, and is thus, highly respected by economists from both poles. I mean, how many times has the New York Times quoted him? Having a tenured position at Harvard helps too. I actually talked briefly with him when he was speaking at a conference, and although unquestionably brilliant, he strikes me as quite the Asperger's type. But he's not a rock star like Taleb or Roubini.

[Rational Madman]

They're correct in a way; I have an agenda, which is to uncover what is actually true, and to prevent people or corporations from doing things that harm others more than they add value to society. We all have agendas; Rush has an agenda, but I don't think it's good for America.

My agenda is also to protect people, but I believe that government is a greater threat, especially the collusion of government and business. Note that there's a difference between pro-market and pro-business, being pro-market means that sometimes you have to let businesses die. (Note: Not kill them with regulation)

If I disagree with your (and the experts') agenda, it would make sense that I would actually not listen to your advice.

I don't think that we really disagree all that much; you care about truth, right? We're both pro-market; (yeah, I really am- I like competition in the market. I like markets that are transparent, free, and fair, which among other things means corporations don't get to dump externalities on others, a form of theft.) Neither of us likes collusion between government and business.

No one has to listen to anyone else's advice, but facts are facts. That's what really worries me. Too many people believe stuff that's demonstrably wrong. While we can have a variety of philosophies and viewpoints, I think that most of us would come to reasonable, though not identical conclusions if we start with correct premises. It's just that these days, too many of us aren't starting from correct information.

But what is the quantified strength of this amorphous movement that both you and I loath. Looking at the polling data, it's striking how lacking in cohesiveness they are, and their relative weakness to other blocs of voters. Just because they are the loudest, it doesn't mean that they'll dominate public policy. For now, they have the power of obstruction, but like I said, I have doubts about the durability of these types of movements. Like all populist movements, they eventually run out of fuel, and we return to the norm of a bipolar (meaning Democrats and Republicans) political system. What happened for instance, to Perot, LaFollete, Henry Wallace, William Jennings Bryan, Teddy Roosevelt, Eugene Debs, Pat Buchanan, George Wallace, John Anderson, or Ralph Nader? What about the Know-Nothings of the 19th Century? Perceptions of economic stress gave rise to these candidates, but as conditions changed, their movements ceased to be important. Wouldn't you consider the religious right of your generation---Falwell, Swaggert, Baker, and Graham---to be analogous when they reached their peak during the Reagan administration and the Gingrich Congress?

It sounds like you're talking about the Tea Party. They're mostly an economic phenomenon, I suspect, and they will soon flame out because they aren't sufficiently reality-based. The conservative movement that began in the 70's, picked up steam with Reagan and Gingrich, blossomed with talk radio, Fox News, and ultimately the blogosphere seems to be a lot more durable.

Yes, but at the end of the day, they have to govern and deliver results. Gingrich realized this during the latter half of his tenure, and as a consequence, he lightened up, and turned out to be okay as a Speaker. After 2008, when I expect the Democrats will regain some lost ground, Boehner et.al. will probably undergo a similar metamorphosis.

[rwac]

Just because the herculian task of reforming government sponsored enterprises like Fannie Mae and Freddie Mac was given to the next Congress, it doesn't that there is an absence of a desire to begin a reform of their activities. In their absence, I suspect house price indices would be far worse. And remember, an intervention in the market was necessary for preventing a further drop in prices, since foreclosures have a contagious effect on neighborhood prices.

Ah, so you don't know the details. Nothing to do with Fannie and Freddie this time.

The latest mess is that the lenders may have lost the note showing that they own your mortgage, in as much as 50% of all mortgages. So now it's possible that lenders have been foreclosing without having the legal authority to do so. The Attorneys General of several states have filed suit.

And we just bailed these guys out too (BoA, Chase, GMAC), what a waste.

http://www.zerohedge...res-note-update

[Rational Madman]

Just because the herculian task of reforming government sponsored enterprises like Fannie Mae and Freddie Mac was given to the next Congress, it doesn't that there is an absence of a desire to begin a reform of their activities. In their absence, I suspect house price indices would be far worse. And remember, an intervention in the market was necessary for preventing a further drop in prices, since foreclosures have a contagious effect on neighborhood prices.

Ah, so you don't know the details. Nothing to do with Fannie and Freddie this time.

The latest mess is that the lenders may have lost the note showing that they own your mortgage, in as much as 50% of all mortgages. So now it's possible that lenders have been foreclosing without having the legal authority to do so. The Attorneys General of several states have filed suit.

And we just bailed these guys out too (BoA, Chase, GMAC), what a waste.

http://www.zerohedge...res-note-update

Well, I heard of that, but that's a private sector, and regulatory error. I thought you were referring to something along the lines of how federal intervention has worsened the crisis.

[rwac]

Well, I heard of that, but that's a private sector, and regulatory error. I thought you were referring to something along the lines of how federal intervention has worsened the crisis.

Actually it's more along the lines of "The Feds can't save everything, and trying to do so will leave us bankrupt."

This whole mess started because the feds tried to distort the market and increase home ownership. And now, the housing market seems to be overvalued and shows no sign of coming down, because homeowners are sitting tight. You can expect more bailouts to be necessary as the market reasserts itself.

[niner]

Well, I heard of that, but that's a private sector, and regulatory error. I thought you were referring to something along the lines of how federal intervention has worsened the crisis.

Actually it's more along the lines of "The Feds can't save everything, and trying to do so will leave us bankrupt."

This whole mess started because the feds tried to distort the market and increase home ownership. And now, the housing market seems to be overvalued and shows no sign of coming down, because homeowners are sitting tight. You can expect more bailouts to be necessary as the market reasserts itself.

You are being entirely logical, but your premises are incorrect. Federal policies that encourage home ownership, which have been in effect for decades had almost no part in the cause of the implosion. This is precisely the kind of widespread disinformation that I've been talking about in this thread. There are thousands of people with megaphones of various sizes, and they are all repeating this story. It's not correct.

Edited by niner, 06 November 2010 - 01:31 PM.

[rwac]

You are being entirely logical, but your premises are incorrect. Federal policies that encourage home ownership, which have been in effect for decades had almost no part in the cause of the implosion. This is precisely the kind of widespread disinformation that I've been talking about in this thread. There are thousands of people with megaphones of various sizes, and they are all repeating this story. It's not correct.

The problems started with those policies. Those very policies inflated the bubble and ran up the housing market, making housing less affordable. However, opinions vary on whether the CRA somehow catalyzed the subprime crisis, and the popping of the bubble.

[Rational Madman]

Well, I heard of that, but that's a private sector, and regulatory error. I thought you were referring to something along the lines of how federal intervention has worsened the crisis.

Actually it's more along the lines of "The Feds can't save everything, and trying to do so will leave us bankrupt."

This whole mess started because the feds tried to distort the market and increase home ownership. And now, the housing market seems to be overvalued and shows no sign of coming down, because homeowners are sitting tight. You can expect more bailouts to be necessary as the market reasserts itself.

Going bankrupt? How much money have we lost on the TARP scheme, does the CBO estimate of a projected $30 billion loss sound right? In the fiscal year of 2009, relief rendered to the private sector only accounted for $245 billion of a $1.4 trillion shortfall. Much of the shortfall, or at least $500 billion, it should be noted, is attributable to the residual effects of the recession of 2001-2002, and the most recent torrent of a recession---because a loss of income means a smaller tax base, and thus, greater deficits. And is a three year stimulus plan of $787 billion placing a $14.5 trillion economy, with a $3.8 trillion budget, and approximately $2.5 trillion in annual revenue in a position of legitimate bankruptcy? What happens to aggregate savings when national governments pay no heed to a precipitous cyclical decline in aggregate demand, or perhaps the strength of credit markets? I can assure you, it's a very painful outcome. In rankings of public debt holdings as a percentage of GDP, we're only ranked 47, with Canada, the United Kingdom, Norway, Japan, France, Germany, Singapore, Italy, Belgium, and the Netherlands ahead of us---and with this in mind, how strong is the causal relationship with high debt holdings and a poor economic performance? Very imperfect to say the least. Even with our projected level of public debt in 10 years, is such a level historically unprecedented? Is the annual servicing cost of $189 billion worrisome? Even assuming that there is a projected increase to approximately 100% of GDP by 2020, is there evidence that investors will capriciously lose confidence in the United States' economy, abandon a large percentage of their holdings, and risk a spike in interest rates? What sort of losses would they incur with their portfolio, and how would their national economies fare if the export destination of choice suddenly faced a financing problem? And even if such happened, is there evidence that nation-states can self-finance? Modern Japan, World War II United States for example? Assuming that you're also concerned by the state of Federal Reserve policy, would you really counsel a course of ending, or seriously reducing the rate of quantitative easing in spite of price instability, deflationary conditions, and sub-optimal economic growth? I don't think that even the Dallas or Kansas City Federal Reserve would take such a position. As should be abundantly clear, I like to shower those that disagree with me with a storm of questions before I proceed with further discourse.

Now I can agree with your criticism of a system that incentivizes home ownership at the expense of other options, and without regard to commercial and residential asset prices, the level of household debt, and future macroeconomic conditions would be highly ill-advised. But I would hardly go as far as saying that in conditions of a 30% drop in residential prices, that residential assets are overvalued. What we're seeing is a panicked market, that's made worse by the rate of foreclosure, the number of underwater mortgages, the rate of delinquency, low private sector confidence, the level of household debt, unfavorable macroeconomic conditions, and an unnaturally low level of demand. With these conditions, the behavior of households is being driven by the rational belief that market conditions are unnatural, and that to prematurely foreclose would risk the incurring of a greater economic cost. A federal intervention in markets is requisite for incentivizing a renegotiation of the terms of outstanding and delinquent mortgages, so innocents that happen to be in the same municipality or neighborhood are spared, and to facilitate a market stabilization. The alternative of self-correction would risk a great societal cost, see the economic history of Japan for instance, and the 80% decline in Tokyo real estate prices. Public resistance to these requisite measures, and the consequentially weak fiscal response, are some of the leading explanations of why the market has yet to recover. And like it or not, in the absence of private sector equivalents (where's Mozilo when you need him?), government sponsored enterprises have prevented a drop in asset prices that might have been similar to what was experienced in Japan during the late 80s, and much of the 90s. So the picture is much more complicated than being driven by a basis of an ostensible federal creation of market distortions.

Edited by Rol82, 07 November 2010 - 06:43 AM.

[Rational Madman]

You are being entirely logical, but your premises are incorrect. Federal policies that encourage home ownership, which have been in effect for decades had almost no part in the cause of the implosion. This is precisely the kind of widespread disinformation that I've been talking about in this thread. There are thousands of people with megaphones of various sizes, and they are all repeating this story. It's not correct.

The problems started with those policies. Those very policies inflated the bubble and ran up the housing market, making housing less affordable. However, opinions vary on whether the CRA somehow catalyzed the subprime crisis, and the popping of the bubble.

Is any market phenomenon monocausal? It seems like you're spewing tired pamphlet dogma here.

[niner]

You are being entirely logical, but your premises are incorrect. Federal policies that encourage home ownership, which have been in effect for decades had almost no part in the cause of the implosion. This is precisely the kind of widespread disinformation that I've been talking about in this thread. There are thousands of people with megaphones of various sizes, and they are all repeating this story. It's not correct.

The problems started with those policies. Those very policies inflated the bubble and ran up the housing market, making housing less affordable. However, opinions vary on whether the CRA somehow catalyzed the subprime crisis, and the popping of the bubble.

I had the same discussion with RighteousReason a while back, this post encapsulates it. If anyone really wants to know the source of the credit crisis, this report is the best I have ever encountered. It deals with the real issues, which includes some arcane finance, but it's done in a way that is interesting and understandable to the layman. A transcript is available, but the audio is a lot better. I have been reading Barry Ritholtz for years. He is a Wall Street guy who does financial research and manages money. He lives and dies on the basis of actual reality. Not only that, he called the disaster before it happened. He was a few years early, but he was right. Barry has a standing offer of $100,000.00 to anyone who can demonstrate that the CRA was a major cause of the crisis. Barry is a good example of a guy with expertise. He knows what he's talking about. Guys like Limbaugh and Beck and a hundred others are demagogues who are more than happy to repeat a nice neat (but incorrect) little narrative that resonates with the wildly popular "government is not the solution, government is the problem" belief. The vast majority of them no doubt believe it themselves. They aren't lying; they are mistaken. That's why they are so persuasive.

I think it is incredibly important that we understand the real causes of the crisis, so we can make sure it doesn't happen again. That's why it's important that we don't blame it on the wrong reasons.

[cathological]

Speaking of people that predicted the collapse.