On The Cheap

Well, the latest coffeepot commotion to strike the Puget Sound region is the revelation by The National Labor Committee (an advocacy group with an official-sounding name) that Microsoft uses teenage workers in China to make computer mice. Sort of. The actual story is that a factory that Microsoft, along with a number of other companies, buys from has been alleged to use run-of-the-mill sweatshop practices to keep its prices low. Not to downplay these findings, but it seems a little (or a lot) like a scholarly research paper that tells us that water is, in fact, wet.

The issue with the Chinese-made mice is the confluence of three different aspects of a sort of collective self-image among the stereotypical "average American." Two of them are in direct conflict – self-importance and price sensitivity effectively guarantee that most Americans would balk at paying for a mouse manufactured by someone who was paid as much as they themselves would demand to do the labor. And these two factors are together in conflict with a self-styled compassion that prohibits us from openly acknowledging the fact that so much menial manufacturing labor is done in China for the very reason that wages there are between 5 and 20 percent of what they would be here.

Unable to combat either the self-importance or price sensitivity, activists instead play on the compassion angle. But unable to press people to change their behavior without engaging the two taboo parts of the equation, anti-exploitation campaigners instead look for the powerful to exert a level of noblesse oblige and through their own actions bar the public from access to choices that result in the taking advantage of others’ poverty. In this case, that means trotting out a report full of estimates and anonymous interviews in an attempt to lever Microsoft into leaning on its vendors.

To Tell The Truth

I've really begun to feel sorry for the Roman Catholic Church, even as I look askance at their accusations of persecution. (But then again, Christopher Hitchens and Richard Dawkins are looking to have the Pope arrested, and as they say: You aren't paranoid if they're really out to get you.) But it's not the crime, it's the cover-up, and in this case, the fact that the scandal just never seems to go away is fueling the idea that everything we've seen to date is just the tip of the iceberg.

While I must admit to being somewhat weary of the Church's claims that it's being persecuted, the lengths that people are starting to go to dig up new dirt and the scandal itself, I hope that I'm learning something from all of this. My mother was once very Catholic, and when she told me that she'd left the Church, I was sure that something had gone very, very wrong with the world. And I realized that actions taken and not taken reach very far beyond the actors themselves. Once the scandal had gained legs, and people realized that it was going to be with them for a while, my parents came to me, and wanted to know if I had been molested as a child or teen. I think I managed to allay their concerns, but even the fact that the scandal hadn't touched her family directly wasn't enough to stop the erosion of what I had always considered to be the single most important thing in my mother's life.

I don't ever want to be a party to something that does that to someone. Ever. Now, the only trick is being smart enough to see such a thing coming, and brave enough to stand up to it.

Glass Half Full

Over at Slate, Daniel Gross has penned an article putting forth a positive take on the eventual (progressing?) economic recovery from "the Great Recession."

In the end, Gross' entire point seems more emotional than economic, and it trots out a number of tropes as "evidence" that strike me as suspect. Now - my point isn't that the naysaying "elite—left, right, and center" are correct. It's just that Gross' refutation of them isn't particularly convincing. Gross' argument? In a nutshell: "Some people are pessimists. They're wrong. I'm an optimist. I'm right." The first issue that I have with his argument is that once you arrive at the end, it rests on this: "If the United States continues to adapt as it has, and if it produces a few more game changers like Google and Apple[...]." The problem? Since this is at the very end of the piece, there's no space devoted to examining these rather non-trivial "ifs." And, if you read carefully, they aren't the only ifs.

"If the U.S. economy grows at a 3.6 percent rate this year, as Macroeconomic Advisers projects[...]"

"If these impulses [adaptability, inventiveness and resilience] are embraced more systematically and wholeheartedly[...]"

These ifs are important, and I think that it's a significant omission that they aren't explored more deeply. What does it take for the economy to grow at 3.6 this year? Who's Macroeconomic Advisers, what are they basing that prediction on and why should we believe them? What needs to be in place for a "game changing" company to barge onto the scene, and will those factors produce such a company before, say, the next presidential election? (Sure, there will be other game changers in the future - but if we won't see the next one until 2050, that doesn't really do anything for us now.)

Part of it is a lack of prediction. Simply saying that someone's a pessimist doesn't tell us what they expect to happen, except that by some standard, it will be lacking in some way. If we flash forward five years, what are the expectations? What do Gross' doomsayers expect to see? And what, for that matter, does Daniel Gross expect to see out of the economy by 2015? Where will the DJIA be? What will the unemployment rate look like? What will be the GDP? Saying that such predictions have little value because they're often wrong is beside the point - it's the difference between the prediction and the actual reality that determines if one was being optimistic or pessimistic in the first place. Right now, no matter what happens, both sides can claim they called it. The doomsayers can say the recovery should have been stronger and Gross can counter that it was stronger than one might expect. Now, before you remind me that Gross doesn't just blow off telling us what the future would be like, I realize that he does throw us a bone in that regard - just not a very meaty one. His "what will our new economy look like once the smoke finally clears?" presents mindless platitudes. "[F]ewer Hummers and more Chevy Volts," huh? My Magic Sacrastic Ball could have told you that, considering that Hummer has been discontinued and the last I knew, efforts to sell the brand to a Chinese firm fell through. I don't know that the Volt will be the hottest car on the block, but one hopes it can outsell a defunct brand.

As for the fact that there has been a doom-and-gloom outlook on the part of some in the United States since before there was a United States, so what? It's a pretty safe bet that predictions of the demise of the nation that didn't pan out are thick on the ground. Considering the fact that here in Seattle, the weatherman can predict rain and you wake up to a sunny day, it's pretty remarkable to expect people to accurately predict the fate of nations. But the more salient issue might be that despite the fact that Gross trots out a number of incorrect predictions, he never explains WHY they were wrong. If "Progressives returned from Mussolini's Italy convinced that Il Duce had a superior economic model," why did they get it wrong? What did they not know, and how does that relate to today's presumably erroneous prognostications? After all, if I declared, simply on the basis of a failure to predict rain in Seattle, that Meteorology was junk science, I'd have to present a little more evidence.

"In the first quarter of 2009, the economy was shrinking at a 6.4 percent annual rate. By the fourth quarter it was growing at a 5.9 percent rate. Consider the scope of that swing: The growth rate of a $14.5 trillion economy shifted by 12.3 percentage points in about nine months."

First off, is that assumption even accurate? The economy didn't shrink 6.4 percent in Q1 or grow 5.9 percent in Q4. (And that second number? Gross also isn't above picking and choosing to back his case. Given that the Bureau of Economic Analysis issued three reports on GDP growth in Q4 of 2009, each with a different percentage, guess which one Gross used. Hint: it wasn't the most recent one.) These numbers are annualized. Now, I could be very wrong here, but - my understanding is that this means: A) you're assuming a linear trend and B) the percentage given is what you would get after an entire year of that trend. So it seems to me that taking the difference between the numbers, and claiming that as the actual annual rate of change isn't correct. And there is an unspoken assumption here, that the shrinking and growth have the same 0 point. But this is never stated. And according to the Bureau of Economic Analysis report... well, I can't make heads or tails of that - in the section 2009 GDP it says: "Real GDP decreased 2.4 percent in 2009 (that is, from the 2008 annual level to the 2009 annual level), in contrast to an increase of 0.4 percent in 2008." But it also says: "During 2009 (that is, from the fourth quarter of 2008 to the fourth quarter 2009), real GDP increased 0.1 percent." So I guess the BEA report has something for everybody. But what it doesn't have is 12.3 percent, anywhere. Something tells me there is important information in the second and third quarters that may have been left out of Gross' analysis.

Anyway, this has gone on long enough... there are other problems I have with the way Gross structures is argument. He points out "In the short term, the ruthless pursuit of efficiency translates into the uncomfortable—and unsustainable—dichotomy of rising profits and falling employment." But then goes on to say that a contract with BigBelly Solar, "has allowed Philadelphia to cut weekly pickups from 17 to five and will save it $13 million over 10 years. BigBelly employs fewer than 50 people, but like many businesses in fast-growing markets it indirectly supports a much larger number of jobs." Okay - but without telling us how many jobs were lost (directly and indirectly) when Philly nixed more than two-thirds of it's weekly pickups (that number is unlikely to be 0), you can't just assume (and Gross is far from the only offender here) that the BigBelly contract represents a net gain in jobs. The list goes on, but now I really will stop picking at it, rather than spinning it out simply for completeness sake.

From where I sit, the issue is that Mr. Gross wrote a single long piece, rather than a number of shorter ones, where he could take each point in turn, and really lay out what he thinks is going to happen, and predicate those predictions on solid evidence. Ambitious ends require ambitious means, and that seems to be lacking here.

Recovery

Jobs are really two things - they're how businesses get things done that require actual people to do them; and they're how people support themselves. One of the enduring issues that we have with jobs is that we're long past the point where we can produce all of the goods and services that we need, and likely all of the ones that we want, without actually requiring all of our available workforce to produce them. (We're also long past the point where one can go back to the farm to create a living.) This produces a surplus labor force. Now, that labor force can be deployed to create new technologies or otherwise aid in production of valuable goods and services, or it can be abandoned in the name of efficiency and cost savings.

Right now, a larger percentage of the population that many are comfortable with has been relegated to their surplus labor force, and as a result, they lack the ability to support themselves. Politicians, sensitive to popular discontent, are readying the battle lines over how to deal with the problem. Democrats are looking to make it less painful by allowing the government to step in and make payments to those who are unemployed. They are, in effect, seeking to buy votes with public money. On the side of the ideological no-man's-land, the Republicans are looking to spur employment by removing the risk to employers through tax benefits to businesses and other drivers of industry. They too, are seeking to buy votes with public money.

Neither approach, it seems to me, gets at the heart of the problem - there are fewer things to be done than there are people who need to do things. Both sides seem to be avoiding dealing with this issue. You could make the point that the Democrats are working an indirect Keynesian angle, seeking to boost aggregate demand by funneling money to people who have little choice but to spend it, but most of the recipients are likely to use the money for things like keeping a roof over their heads, thus their spending will largely end up in the hands of landlords, investors and banks, rather than going towards new goods and services that would spur more hiring. While the Republicans will always loudly proclaim that is you make enterprises more profitable, they'll hire more people, businesses rarely approach jobs as if they were charity. A business owner who lacks demand for products is unlikely to use a tax break to hire someone to make them anyway - they'll simply bank the money, or dole it out to shareholders.

I don't know a sure-fire way to push things along - otherwise I'd be rich enough that I wouldn't need to type my own blog posts. >Smirk.< But I suspect that what the government could to that might help is to start releasing new technologies into the public sector. I have no idea what the government has in it's research and development labs, but I'd guess that some of it could spark a resurgence in investment, leading to new companies, and therefore more people needed to do work. But as long as both parties see the function of government mostly as a financial instrument, it's a hypothesis that will go untested.

Scrubbing Bubbles

I was reading an article online, in which the author, a black conservative, was remarking that the rhetoric of the Tea Party movement, vis-a-vis African-Americans was turning them off, rather than attracting them. The specific example he cited was a black Tea Party member denouncing those African-Americans that wouldn't join as being "'hypnotized' by President Barack Obama." (I wasn't aware of this at first, but the idea that President Obama is capable of literally hypnotizing people with his words has been around for some time. Well, for those of us that wear tinfoil hats, anyway.) Race aside, flat-out telling people: "The fact that you aren't one of us proves that you can't think for yourself," has NEVER been a winning recruitment strategy for any organization that I can think of. (Neither, for that matter, is "The fact that we're right is more important than the fact that we're always calling you stupid.")

It seems to be a common tactic, on all sides of the political spectrum, to write off people that it takes some real work to reach, and then blame them for their unwillingness to see things in the way that they're "supposed to." It's time to put this moronic idea to rest, if for no other reason than it makes your and your ideas seem weak. Convincing people that your point of view is correct isn't, and shouldn't be, trivial. It takes work, and sometimes quite a lot of it. And sometimes, you put a lot of work into it, and it doesn't pay off. Adopting a position that other people have some sort of obligation to understand the correctness of your position, or that a person's stance on any given issue can be taken to be evidence (or counter-evidence) of their intellect or thoughtfulness, is a cop-out. And a blatantly obvious cop-out at that. So why do we still see it?