I am somewhat familiar with the GM Massena operation. The state of NY gave them abatements and grants. The plant was highly automated with the latest robotics and was held up as a productivity public private model of success. By most accounts the plant was productive and profitable.
But even with abatements, automation and productivity improvements it still apears that it has succumbed to the lure of cheap third world labor and lax regulation.
This plant made the cast iron 4 and 6 cylinder engines, popular in GMs smaller cars and light trucks
The 4 cylinder appears to be similar to the one that will be produced in India
I don't see how the one who had to declare bankruptcy due to puts on oil futures could have affected a downward price, but it would be very interesting to quantify the calls on oil, the volume and price.
We never did really answer the original spike as being simply a matter of hidden inventories Supply/Demand as that debate raged or artificially created by oil commodities futures speculators.
Hey, you have been proved right when almost everyone else was claiming it would hit $150/$200/barrel. Way to go in being the dig deep/analysis voice!
And there is no reason to imagine that this drop in the cost of a barrel of oil, will translate to sub-$3/gallon prices at the pump.
The best we can hope for is that the local owner will regain control over prices at the pump- but he knows that his local neighborhood will now pay $3/gallon gratefully, and so he's got no reason to go below that price point.
John McCain Will Move The United States Toward Electricity Grid And Metering Improvements To Save Energy. John McCain will work to reduce red tape to allow a serious investment to upgrade our national grid to meet the demands of the 21st century
I just noticed this and thought...hmmm, what, you are going to sell off our United States power grid to foreign companies, nations and investors like our toll roads and that's the red tape?
That's been going on where even states sell off public assets to foreign private entities.
I have not seen any policy from Obama or Democratic National Committee that does anything to guarantee jobs will go to US workers. Considering how they too are trying to get more guest worker Visas, I doubt it. So will Republicans.
I've written more than few on this and the absurdity that green jobs in new technologies will 1. be created here and 2. stay here considering what has been going on is a huge gaping hole in their green economy plan.
Then, on Energy, to me, if the US is going to use oil and it will use oil then we might as well use oil from the United States. The US isn't going to tolerate the rape of the land like they can and do hide it in places like Ecuador and it would assuredly help in the trade deficit to produce domestically.
Some jobs are truly local and as long as corporations cannot get unlimited migration (another agenda they want) to displace US workers, repress wages, many of these jobs will be created.
I want alt. energies immediately. I want battery technologies to be mass produced and they reduce the costs of manufacture (in the US) immediately and I could go on and on about oil being the fuel of last resort...but we will use it. I want wave energy to be developed, which no one talks about and there are a host of other areas which show promise.
I do not want US tax dollars going to more hype and corporate pockets on some nebulous promise of developing alt. energy. I want a energy DARPA or NASA. Not an energy GM. (which rhymes with hydrogen).
On trade, again from the Dems we have tax cuts in essence there as well, but they are calling it restructuring.
(I'm going to go through the tax code "outsourcing incentives" soon).
On health care, social security and so on we're in huge trouble from the GOP, no doubt. But we don't have HR 676, universal single payer or anything close from Democrats either.
But, I don't want to give the impression that Dems have real policies that are going to really put the middle class first and guarantee that jobs in America will go to Americans for they sure don't.
Is anyone noticing the in masse, bipartisan ads on TV demanding answers immediately on these issues. I mean it's pretty damn bad when even Paris Hilton can propose a bi-partisan compromise that makes a little sense. Even T. Boone Pickens, the ultimate GOP swift boat oil guy on FAUX said he wouldn't endorse either party.
Why is it we have all of these groups, all of these people, even people who are notorious corporate agenda people or super rich like Warren Buffet literally running their own lobbying agenda, bringing it to the public and damn it if it doesn't make a lot of sense.
To me that says both parties are really not presenting overall policy positions to turn the US around.
Sounds interesting. Anything that comparison/contrasts other nations and what they are doing in their own economic interests is good too. Since you've studied it...hopefully you can tell us about it?
Right now in the United States ....if one can get any tidbit on economy policy, getting some innovative policy suggestions and any analysis on it's effects is the dead zone.
writes on this in After Capitalism in which he makes the case for "market socialism."
Basically, the idea is to create the capital needed to run the economy through taxation on existing capital. I was directed towards Schweikart by one of my favorite profs from my master's school.
The thing that amazes me about this book is that it presents a viable alternative to the current system. And I think that even more surprising is that what Schweickart describes is similar to the system of economic development that was in place in Spain during the period in which that country developed.
Schweickart is a big fan of Mondragon, the large cooperative in the Basque country. Mondragon is Spain's 7th largest corporation, and it's entirely owned by it's members.
I think that there there is something to this, but only if you have socialized capital. The interesting question here is whether there is a possibility to implement a real alternative to neo-liberal capitalism using something like local credit unions to fund the development of industry.
Locally owned capital that is held by the local credit union on behalf of members is not going to have the same incentive to bug out that footloose finance capital has.
Further, I can see a role for politics here. A type of sewer socialism here creating a role for local governments using taxation to create local investment funds are arguably more socially efficient than the public cost of property tax abatements and investment incentives in the form of public money for private gain.
Lest we not forgot the "use/create a crisis to enact bad economic policy" doctrine came form the University of Chicago.
That's pure psychology, mass psychology, sociology.
Campaigns are riddled with symbolism, timing, media control, sound bytes.
Casinos are the ultimate psychological manipulation and they also tap into that addictive buzz, so do video games.
But all of this is in the realm of psychology, crowd control, manipulation, marketing, advertising, propaganda (oops, public relations) and so on.
Whereas economics to me at least is much more of a hard science which often is presented as soft.
I mean when Krugman whips out the real economics so everyone says "oh that must be right", well the basics of what he presents is correct but he may for example, be missing something in his assumptions, let's say hidden oil inventory or maybe there is something with oil trading futures where oil inventory in the real world doesn't need to exist.....
matter of tweaking the model conditions. or people assume one thing from his model that actually isn't implied because the interpreter suffers from bad math.
That's why I put the behavioral focus in this piece. The bottom line is they have the data, they have the statistics, they have the theory and they have some very good policy recommendations to reform trade so it actually can be a win-win or more importantly the United States (on all levels not just workers) wins.
So, we're getting this defocusing in on what should be heavily mathematical, statistical and data focused policy adjustments as a result.
In trade, I've read opinion piece after opinion piece but my overall impression on the gang of bad math is they often are not economists or they have some philosophical agenda.
For example, think tanks. Sometimes they write studies that actually have merit but so often one can read the assumption flaws....but one has to read the paper on a case by case. I think at best most read the abstract or executive summary only.
What I find most frustrating is when economists explain a totally unexpected, contrary result, by the "revealed preferences" dodge. As in, aha, the consumer revealed their strange preferences (so of course our model which until now we thought predicted exactly the opposite, is still correct).
go to a high-end casino. Everything, including of course the payouts, is designed to draw in players, create a social atmosphere, stimulate the senses, and cause people to bet over and over again.
I happen to think that "Pavlov's dogs" as in receiving a painful negative reinforcement, explains a lot about the views of the economy by those who have firsthand experience of downsizing -- and nowadays that is damn near everybody.
Article says nothing about any US GM facilities being closed.
It seems the press reports domestic closures and foreign openings totally seperate - intentional to make it less easy to link it to the offshoring of jobs?
I am woefully unimpressed by Obama’s $120 billion economic stimulus plan. It’s primarily tax cuts, the Republican way.I would note that his policy is not surprising given that Obama's economic advisers are all wingers.
Over on the Economist's View is a great post overviewing some recent studies and results that employee owned businesses actually works quite well. There are a few new reports referenced.
I noticed you pointed to those neoclassical economists who claim raising the minimum wage has a negative effect on jobs.
Here is George Borjas talking about this as well as immigration models on wage and employment effects.
He is pointing again to some "bad math" because it leads to results inconsistencies. (He's considered "on the right" but I find his math to be pretty solid generally)
Via a WSJ op-ed, we have McCain's plan to incrase jobs (uh huh, see the corporate lobbyist wish list on both on how they plan to increase jobs for US citizens).
He's got a butt load of tax cuts and R&D investments tax credits.
So, by going down this road of all things lead to the tax code by basically both parties (have you noticed this, now economic policy being reduced to the tax code?)....seemingly all of this is to change behavior of corporations with the idea they would maximize profits and so on so ya know does it add up by the math? Can any tax cut come close to capital arbitrage, manipulating exchange rates and labor cost ratios of 100:1?
Taken to the extreme it's called crazy making treatment, psychological warfare.
Keyword here is control.
So, let's say you have a human from an abused background and you try "vary the reward"....well, it's possible one would instead trigger PTSD and they just walk away from the entire event.
Even in behavioral there are not absolute outcomes and especially over time. There are some general rules sure but people are not Pavlov's dog.
Back to the math, sure you can put some probabilities into behavior but here is my point. Instead on focusing in on the fact that free trade theory says we're in trouble or how it is in the national interest, especially on security to ensure certain sectors remain in the United States...
and that's by neoclassical math in part...
we're focusing in on default paths on 401ks. Well, that's just behavior. It's well known the path of least resistance in most things is the action taken. In computer science graphical user interface and UI design it's known as the 3 button rule or the 1-click action.
So, ok, hey great, let's analyze behavioral paths and try to quantify the human condition...I believe Citibank, Visa, MC are already doing this btw!
So, to me economics has to focus in on the big picture, which is the raw data, the absolutes of the economy.
So, one can focus in on the default state of beginning employee in 401k participation but here's the real damn question...what the hell happened to traditional pensions and how is that affecting retirees and the middle class. What kind of effect did the move from traditional pensions to 401ks (even with the correct most maximizing state now as the default selected) do?
I also note a subtle thing....oh, the reason their poor policy won't work...well, people just are not rationale, they just make the wrong choices...that's a real condescending blame the victim belittlement buried within.
Traditional neoclassical economics assumes people make "rational" choices. Confronted by experimental results that it just isn't so, you can either stick your hands in your ears and pretend its not so (what the authors of "In Defense of Mindless Economics") do, or else you can try to take into account how people actually behave.
So, for example, we know that due to inertia a plurality if not most employees will take the "default" 401k selection offered them. Why not then make the "default" selection one that maximizes the employer match? Note the difference between traditional neoclassical economics and behavioral economics: traditional economics assumes people will make the most rational choice, behavioral economics assumes the tendency of people to accept the choice offered them which may or may not be the best choice, and so tries to maximize the number of people making the best choice (maximizing the employer match).
Behavioral econ isn't a question of "liking" or "not liking" the math; it's a question of trying to integrate actual reality, something traditional economics patently does not do. Does it make the math far more complicated? Absolutely. Is it messier because people's behavior is messier? Sure. Is it better than assuming "homo economicus"? You betcha.
For example, one place where experimental psychology has literally thousands of studies in support (all vetted mathematically), that completely contradicts traditional economic theory is, what is the best reward system to use to maximize a behavior? Econ says, simply increase the reward. Experimental psychology says, vary the reward -- sometimes give more, sometimes less, sometimes nothing at all. It's called "variable reinforcement" and it leads to lots more of the desired behavior than simply increasing the reward. Experimental psychology has also demonstrated, again by means of thousands of studies, properly mathematically vetted, that once a behavior is established, it can be continued by ever less reward. Traditional economics has no such concept.
This is not debatable, the studies have been done, with actual human subjects: experimental psychology is right, the traditional economic equations are wrong.
If you want to use those traditional economic equations because you feel that's all you can do mathematically, you will get a nice mathematical result. Unfortunately it will have only a random relationship with reality.
I do not see anywhere that behavioral economics mandates one particular trade policy over another. Goolsbee may believe there is a set of policies that can best mold behavior to a particular policy, but if he does, I didn't read it in the MIT article. I saw two unconnected parts, the first describing his relationship to behavioral econ, the second his support for free trade. I saw no attempt to say that the first automatically leads to the second. In fact there is plenty of evidence that without compensation, a majority of people in a polity may be made worse off by "free trade" and that majority may therefore "rationally" vote to restrict such trade. There is nothing in behavioral econ that contradicts such a "rational" choice by the majority.
I am somewhat familiar with the GM Massena operation. The state of NY gave them abatements and grants. The plant was highly automated with the latest robotics and was held up as a productivity public private model of success. By most accounts the plant was productive and profitable.
But even with abatements, automation and productivity improvements it still apears that it has succumbed to the lure of cheap third world labor and lax regulation.
This plant made the cast iron 4 and 6 cylinder engines, popular in GMs smaller cars and light trucks
The 4 cylinder appears to be similar to the one that will be produced in India
I don't see how the one who had to declare bankruptcy due to puts on oil futures could have affected a downward price, but it would be very interesting to quantify the calls on oil, the volume and price.
We never did really answer the original spike as being simply a matter of hidden inventories Supply/Demand as that debate raged or artificially created by oil commodities futures speculators.
Hey, you have been proved right when almost everyone else was claiming it would hit $150/$200/barrel. Way to go in being the dig deep/analysis voice!
At $115 a barrel, I've seen gas stations in my neck of the woods as low as $3.25/gallon.
At $100 a barrel, that translates into ~$2.78/gallon.
I consider it more likely than not that before election day (not coincidentally) I will fill up at less than $3/gallon.
(although I understand your point about pricing power for local gas stations).
And there is no reason to imagine that this drop in the cost of a barrel of oil, will translate to sub-$3/gallon prices at the pump.
The best we can hope for is that the local owner will regain control over prices at the pump- but he knows that his local neighborhood will now pay $3/gallon gratefully, and so he's got no reason to go below that price point.
I just noticed this and thought...hmmm, what, you are going to sell off our United States power grid to foreign companies, nations and investors like our toll roads and that's the red tape?
That's been going on where even states sell off public assets to foreign private entities.
I have not seen any policy from Obama or Democratic National Committee that does anything to guarantee jobs will go to US workers. Considering how they too are trying to get more guest worker Visas, I doubt it. So will Republicans.
I've written more than few on this and the absurdity that green jobs in new technologies will 1. be created here and 2. stay here considering what has been going on is a huge gaping hole in their green economy plan.
Then, on Energy, to me, if the US is going to use oil and it will use oil then we might as well use oil from the United States. The US isn't going to tolerate the rape of the land like they can and do hide it in places like Ecuador and it would assuredly help in the trade deficit to produce domestically.
Some jobs are truly local and as long as corporations cannot get unlimited migration (another agenda they want) to displace US workers, repress wages, many of these jobs will be created.
I want alt. energies immediately. I want battery technologies to be mass produced and they reduce the costs of manufacture (in the US) immediately and I could go on and on about oil being the fuel of last resort...but we will use it. I want wave energy to be developed, which no one talks about and there are a host of other areas which show promise.
I do not want US tax dollars going to more hype and corporate pockets on some nebulous promise of developing alt. energy. I want a energy DARPA or NASA. Not an energy GM. (which rhymes with hydrogen).
On trade, again from the Dems we have tax cuts in essence there as well, but they are calling it restructuring.
(I'm going to go through the tax code "outsourcing incentives" soon).
On health care, social security and so on we're in huge trouble from the GOP, no doubt. But we don't have HR 676, universal single payer or anything close from Democrats either.
But, I don't want to give the impression that Dems have real policies that are going to really put the middle class first and guarantee that jobs in America will go to Americans for they sure don't.
Sorry!
What do you think of T. Boone Pickens plan?
Is anyone noticing the in masse, bipartisan ads on TV demanding answers immediately on these issues. I mean it's pretty damn bad when even Paris Hilton can propose a bi-partisan compromise that makes a little sense. Even T. Boone Pickens, the ultimate GOP swift boat oil guy on FAUX said he wouldn't endorse either party.
Why is it we have all of these groups, all of these people, even people who are notorious corporate agenda people or super rich like Warren Buffet literally running their own lobbying agenda, bringing it to the public and damn it if it doesn't make a lot of sense.
To me that says both parties are really not presenting overall policy positions to turn the US around.
Sounds interesting. Anything that comparison/contrasts other nations and what they are doing in their own economic interests is good too. Since you've studied it...hopefully you can tell us about it?
Right now in the United States ....if one can get any tidbit on economy policy, getting some innovative policy suggestions and any analysis on it's effects is the dead zone.
writes on this in After Capitalism in which he makes the case for "market socialism."
Basically, the idea is to create the capital needed to run the economy through taxation on existing capital. I was directed towards Schweikart by one of my favorite profs from my master's school.
The thing that amazes me about this book is that it presents a viable alternative to the current system. And I think that even more surprising is that what Schweickart describes is similar to the system of economic development that was in place in Spain during the period in which that country developed.
Schweickart is a big fan of Mondragon, the large cooperative in the Basque country. Mondragon is Spain's 7th largest corporation, and it's entirely owned by it's members.
I think that there there is something to this, but only if you have socialized capital. The interesting question here is whether there is a possibility to implement a real alternative to neo-liberal capitalism using something like local credit unions to fund the development of industry.
Locally owned capital that is held by the local credit union on behalf of members is not going to have the same incentive to bug out that footloose finance capital has.
Further, I can see a role for politics here. A type of sewer socialism here creating a role for local governments using taxation to create local investment funds are arguably more socially efficient than the public cost of property tax abatements and investment incentives in the form of public money for private gain.
I think that there's a diary here.
Lest we not forgot the "use/create a crisis to enact bad economic policy" doctrine came form the University of Chicago.
That's pure psychology, mass psychology, sociology.
Campaigns are riddled with symbolism, timing, media control, sound bytes.
Casinos are the ultimate psychological manipulation and they also tap into that addictive buzz, so do video games.
But all of this is in the realm of psychology, crowd control, manipulation, marketing, advertising, propaganda (oops, public relations) and so on.
Whereas economics to me at least is much more of a hard science which often is presented as soft.
I mean when Krugman whips out the real economics so everyone says "oh that must be right", well the basics of what he presents is correct but he may for example, be missing something in his assumptions, let's say hidden oil inventory or maybe there is something with oil trading futures where oil inventory in the real world doesn't need to exist.....
matter of tweaking the model conditions. or people assume one thing from his model that actually isn't implied because the interpreter suffers from bad math.
That's why I put the behavioral focus in this piece. The bottom line is they have the data, they have the statistics, they have the theory and they have some very good policy recommendations to reform trade so it actually can be a win-win or more importantly the United States (on all levels not just workers) wins.
So, we're getting this defocusing in on what should be heavily mathematical, statistical and data focused policy adjustments as a result.
In trade, I've read opinion piece after opinion piece but my overall impression on the gang of bad math is they often are not economists or they have some philosophical agenda.
For example, think tanks. Sometimes they write studies that actually have merit but so often one can read the assumption flaws....but one has to read the paper on a case by case. I think at best most read the abstract or executive summary only.
Economists of all stripes can engage in it.
What I find most frustrating is when economists explain a totally unexpected, contrary result, by the "revealed preferences" dodge. As in, aha, the consumer revealed their strange preferences (so of course our model which until now we thought predicted exactly the opposite, is still correct).
go to a high-end casino. Everything, including of course the payouts, is designed to draw in players, create a social atmosphere, stimulate the senses, and cause people to bet over and over again.
I happen to think that "Pavlov's dogs" as in receiving a painful negative reinforcement, explains a lot about the views of the economy by those who have firsthand experience of downsizing -- and nowadays that is damn near everybody.
www.industryweek.com/ReadArticle.aspx
Notice how it says "for domestic and EXPORT"
Article says nothing about any US GM facilities being closed.
It seems the press reports domestic closures and foreign openings totally seperate - intentional to make it less easy to link it to the offshoring of jobs?
GM closing its engine plant in Massena NY, and opening a new one in Pune India
Coincidence?
I am woefully unimpressed by Obama’s $120 billion economic stimulus plan. It’s primarily tax cuts, the Republican way.I would note that his policy is not surprising given that Obama's economic advisers are all wingers.
Over on the Economist's View is a great post overviewing some recent studies and results that employee owned businesses actually works quite well. There are a few new reports referenced.
I noticed you pointed to those neoclassical economists who claim raising the minimum wage has a negative effect on jobs.
Here is George Borjas talking about this as well as immigration models on wage and employment effects.
He is pointing again to some "bad math" because it leads to results inconsistencies. (He's considered "on the right" but I find his math to be pretty solid generally)
Via a WSJ op-ed, we have McCain's plan to incrase jobs (uh huh, see the corporate lobbyist wish list on both on how they plan to increase jobs for US citizens).
He's got a butt load of tax cuts and R&D investments tax credits.
So, by going down this road of all things lead to the tax code by basically both parties (have you noticed this, now economic policy being reduced to the tax code?)....seemingly all of this is to change behavior of corporations with the idea they would maximize profits and so on so ya know does it add up by the math? Can any tax cut come close to capital arbitrage, manipulating exchange rates and labor cost ratios of 100:1?
Next topic for me.
Yes and it's also a torture technique. ;)
Taken to the extreme it's called crazy making treatment, psychological warfare.
Keyword here is control.
So, let's say you have a human from an abused background and you try "vary the reward"....well, it's possible one would instead trigger PTSD and they just walk away from the entire event.
Even in behavioral there are not absolute outcomes and especially over time. There are some general rules sure but people are not Pavlov's dog.
Back to the math, sure you can put some probabilities into behavior but here is my point. Instead on focusing in on the fact that free trade theory says we're in trouble or how it is in the national interest, especially on security to ensure certain sectors remain in the United States...
and that's by neoclassical math in part...
we're focusing in on default paths on 401ks. Well, that's just behavior. It's well known the path of least resistance in most things is the action taken. In computer science graphical user interface and UI design it's known as the 3 button rule or the 1-click action.
So, ok, hey great, let's analyze behavioral paths and try to quantify the human condition...I believe Citibank, Visa, MC are already doing this btw!
So, to me economics has to focus in on the big picture, which is the raw data, the absolutes of the economy.
So, one can focus in on the default state of beginning employee in 401k participation but here's the real damn question...what the hell happened to traditional pensions and how is that affecting retirees and the middle class. What kind of effect did the move from traditional pensions to 401ks (even with the correct most maximizing state now as the default selected) do?
I also note a subtle thing....oh, the reason their poor policy won't work...well, people just are not rationale, they just make the wrong choices...that's a real condescending blame the victim belittlement buried within.
Traditional neoclassical economics assumes people make "rational" choices. Confronted by experimental results that it just isn't so, you can either stick your hands in your ears and pretend its not so (what the authors of "In Defense of Mindless Economics") do, or else you can try to take into account how people actually behave.
So, for example, we know that due to inertia a plurality if not most employees will take the "default" 401k selection offered them. Why not then make the "default" selection one that maximizes the employer match? Note the difference between traditional neoclassical economics and behavioral economics: traditional economics assumes people will make the most rational choice, behavioral economics assumes the tendency of people to accept the choice offered them which may or may not be the best choice, and so tries to maximize the number of people making the best choice (maximizing the employer match).
Behavioral econ isn't a question of "liking" or "not liking" the math; it's a question of trying to integrate actual reality, something traditional economics patently does not do. Does it make the math far more complicated? Absolutely. Is it messier because people's behavior is messier? Sure. Is it better than assuming "homo economicus"? You betcha.
For example, one place where experimental psychology has literally thousands of studies in support (all vetted mathematically), that completely contradicts traditional economic theory is, what is the best reward system to use to maximize a behavior? Econ says, simply increase the reward. Experimental psychology says, vary the reward -- sometimes give more, sometimes less, sometimes nothing at all. It's called "variable reinforcement" and it leads to lots more of the desired behavior than simply increasing the reward. Experimental psychology has also demonstrated, again by means of thousands of studies, properly mathematically vetted, that once a behavior is established, it can be continued by ever less reward. Traditional economics has no such concept.
This is not debatable, the studies have been done, with actual human subjects: experimental psychology is right, the traditional economic equations are wrong.
If you want to use those traditional economic equations because you feel that's all you can do mathematically, you will get a nice mathematical result. Unfortunately it will have only a random relationship with reality.
I do not see anywhere that behavioral economics mandates one particular trade policy over another. Goolsbee may believe there is a set of policies that can best mold behavior to a particular policy, but if he does, I didn't read it in the MIT article. I saw two unconnected parts, the first describing his relationship to behavioral econ, the second his support for free trade. I saw no attempt to say that the first automatically leads to the second. In fact there is plenty of evidence that without compensation, a majority of people in a polity may be made worse off by "free trade" and that majority may therefore "rationally" vote to restrict such trade. There is nothing in behavioral econ that contradicts such a "rational" choice by the majority.
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