"One of the speculations I have made from time to time is that the very assumptions underlying neoclassical economic theory are so flawed in comparison with reality ...."
Truer words were never spoken! I'd like to serve up another example. In 1815, Ricardo introduced his "principle of oomparative advantage" in which he hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. He offered up hypothetical examples to support this theory, but no empirical evidence.
But no matter. Although the United States had built itself into the wealthiest nation on earth - its preeminent industrial power - our leaders believed that Ricardo's theory was a path to even greater riches. So in 1947 we signed the Global Agreement on Tariffs and Trade and "bet the ranch" on Ricardo's unproven theory. Six decades later, the U.S. has been transformed into a skid row bum, literally begging the rest of the world for cash to keep us afloat. While this free trade policy has certainly benefitted global corporations, it has been an unmitigated disaster for the common good of the American people. Median income and net worth have fallen. Debt has soared out of control. The life blood has been drained from our economy.
Why? We were already the most productive nation on earth and we continue to improve. While our quality may not have measured up at one time, we are now on a par with the best in the world. Our workers have taken cuts in pay and benefits and have worked tirelessly to improve their competitiveness, but still our trade deficit grows and manufacturing jobs flee the country.
Clearly, something is amiss with free trade and Ricardo's theory. Is it possible that he missed something?
At this point, I should introduce myself. I am a self-published author of a book titled "Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America." To make a long story short, my theory is that, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (which always rises), inevitably yields rising unemployment and poverty.
This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It's because these effects of an excessive population density - rising unemployment and poverty - are actually imported when a nation attempts to engage in free trade in manufactured goods with a nation that is much more densely populated. Their economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.
One need look no further than the U.S.'s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!
Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. In fact, our largest per capita trade deficit in manufactured goods is with Ireland, a nation twice as densely populated as the U.S. Our per capita deficit with Ireland is twenty-five times worse than China's. My point is not that our deficit with China isn't a problem, but rather that it's exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one sixth of the world's population.
Ricardo's principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it is a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.
If you're willing to consider a new economic theory that has originated beyond the hallowed halls of academia, one that sheds new light on how trade actually functions in the real world, then I invite you to visit my web site at OpenWindowPublishingCo.com where you can read the preface for free, join in the blog discussion and, of course, buy the book if you like. (It's also available at Amazon.com where you'll be able to have it shipped outside the U.S.) However, because your site obviously has a large following, I'd be very happy to send you a free copy. Just E-mail me your shipping address.
Please forgive me for the somewhat "spammish" nature of the previous paragraph, but I don't know how else to inject this new theory into the debate about trade without drawing attention to the book that explains the theory.
....non-linear, discontinuous functions means in real life. Actually, it's vice-versa as homo economicus does NOT function in a linear, continuous fashion. He/She just doesn't and the results of that range from being unable to consistently pick winners in the market to the apparent fact that every economic entity, corporation etc., has a finite life span.
The similarity of what happens here in this example to the Heisenberg principle arises from a different causation than in quantum physics. Or maybe not....
We really don't know enough about the brain's functioning to say.
But we do know a lot more than Smith and Pareto did and that knowledge is being applied more and more every day.
The day is not too far distant when Greenspan, Friedman and their ilk will be regarded as painted and befeathered witch doctors by modern economists working in the field.
Paulson proposals are not "Regulation" in a reform sense, as in reform to improve, but dismissal and consolidation of statutory agencies to render them superfluous and ineffective in regulation. Combining the OCC, SEC and trade/commodity future market regulators and meshing commercial banks, brokerages, hedge funds and private banking, and others sounds like a good deal because of streamlining and efficiency, but it jumbles together well regulated and transparent organizations and processes with those those that are now "old boy's club" and completely unreported and untraceable for all intents and purposes. That is an untenable combination.
The 3 commissars(his proposals) that have the Uber powers and rule by decree for the most part is not a good tradeoff when the source of the problems is allowed to fester and boil and gets dealt with after the fact of the disaster, not in its roots and development. This is an issue that requires a far more detailed response and exposure than a 4 paragraph post but will get dealt with in the coming weeks and months.
Remember H Paulson is defending the practices and grasp and future reach of predatory finance capitalism. It includes his own financial "tribe" and holdings, since he is not an guru that happens to be a benign neutral balanced player who wears the title of Treasury Secretary at the moment. He is one of sources of the economic problems we have at present
Paulson proposals are not "Regulation" in a reform sense, as in reform to improve, but dismissal and consolidation of statutory agencies to render them superfluous and ineffective in regulation. Combining the OCC, SEC and trade/commodity future market regulators and meshing commercial banks, brokerages, hedge funds and private banking, and others sounds like a good deal because of streamlining and efficiency, but it jumbles together well regulated and transparent organizations and processes with those those that are now "old boy's club" and completely unreported and untraceable for all intents and purposes. That is an untenable combination.
The 3 commissars(his proposals) that have the Uber powers and rule by decree for the most part is not a good tradeoff when the source of the problems is allowed to fester and boil and gets dealt with after the fact of the disaster, not in its roots and development. This is an issue that requires a far more detailed response and exposure than a 4 paragraph post but will get dealt with in the coming weeks and months.
Remember H Paulson is defending the practices and grasp and future reach of predatory finance capitalism. It includes his own financial "tribe" and holdings, since he is not an guru that happens to be a benign neutral balanced player who wears the title of Treasury Secretary at the moment. He is one of sources of the economic problems we have at present
Here is a paper I found that discusses applications of the Heisenberg uncertainty principle in economics.
If equilibrium is merely a set of probabilities, and the act of any person's observing that equilibrium changes it, that inherently introduces instability into the system.
Re herding. If every market participant uses the same program that monitors herding behavior, then they will still behave like a herd. With the same results.
In high-tech, employers are afraid of highly-skilled people. Basically, our wages were becoming commensurate with the let's-do-lunch class, corporate lawyers, managers etc.
Instead of simply raising retails costs, they've chosen to pound wages down on the supply-side, without lowering retail costs.
My estimate is that over 50% of computer-related occupations are now held by temporary residents. As the USD continues to decline, what will stop the temporary residents from simply abandoning our economy?
Where will industry come up with 1.5 million highly-skilled workers who are up to speed with the latest technologies?
OPIC is a net US Treasury contributor -- even though it has funds appropriated to it, it is a profitable organization which gives back to the Treasury more than it takes out. It really is financially "self-sustained."
And I haven't seen any evidence of military support for projects in your quotes above...
And why doesn't OPIC support projects in the U.S.? Because it is not mandated to do so. There are other agencies which have this jurisdiction -- SBA rings a bell... heard of it?
There may be ethically dodgy issues at hand, but you have failed to rationally point them out. I support criticising government agencies but, please, when you make arguments, try to make sure that they are logically sound.
Indeed economics has not been the stagnant science many think in recent years. Get yourself a copy of: The Origin of Wealth by Eric Beinhocker and get reading.
One on the social science side to check out is Robert Wright's work. Nonzero Sum: The Logic of Human Destiny is a good place to start.
Big things are afoot and idiots like Greenspan are about to be exposed for what they are: Charlatans practicing a primitive mumbo-junbo in the interests of their patrons.
Keep in mind Pareto and Smith used math that us physics guys threw in the trash over 400 years ago. Linear equations my aching TI calculator.
Herding presents a classic example of the need for intervention. The individual incentives of herding investors create systemic risks. Moreover, if regulators were so coordinated that they behaved like one global regulator, they would be best placed to make an intervention.
So he's saying transparency to see the herd might assist by the public stopping the stampede.
Now this is going to be a grandiose statement, but it seems they also need to add some prediction models that incorporate the sociological elements, the herd in their mathematical models. (disclaimer, that's a general statement, I'm oblivious to what is contained within those risk models in terms of the algorithms!)
if we rely on market prices in our risk models and in value accounting, we must do so on the understanding that in rowdy times central banks will have to become buyers of last resort of distressed assets to avoid systemic collapse. This is the approach we have stumbled upon. Central bankers now consider mortgage-backed securities as collateral for their loans to banks. But the asymmetry of being a buyer of last resort without also being a seller of last resort during the unsustainable boom will only condemn us to cycles of instability
I understand the issue he's describing but what is the solution offered? He mentions get on the regulation agenda right now since we have the results of these inaccurate econometric models currently but what are the specific recommendations?
That is really significant those layoff estimates from the banking industry.
What do you want to bet they use this crisis to offshore outsource entire divisions of financial services like tech companies did in 2000-2004?
It's astounding to me that corporations go for wage arbitrage when the overall costs often are more than just the wage savings. I believe the last statistic I read of outsourcing projects that failed was ??? 60%? (yet another blog post I guess, I don't know the fail rate current numbers, per project area that has been BPO'ed)
and the wikipedia article is constantly being attacked by the corporate lobbyists so you cannot entirely trust it.
They put up warnings on inaccurate, disputed info for a reason on wikipedia.
Go to Insourcing studies (on left)
and NoSlaves.comblog for some background on my own writings as well as some links to studies. On this site I link to one recent study that's quite accurate (Urban institute). Sloan Foundation has also done some exceptional research work in this area.
You can discuss what you want, as long as it's on topic and has real data to back it up and that is statistically valid data.
But, the entire "racist xenophobe" is a well known media campaign. I was even in on some conference calls demanding all bloggers write posts in this flavor of spin
and as someone interested in objective policy based on real facts, we're keeping that sort of crap off of here.
Now if someone wants to try and post it, well, be prepared to deal with the fall out. As our corporate lobbyist tax writer got.
They want real answers, with accurate statistics and most assuredly no name calling or labeling. It's not a political site per say, it's an economics site that will promote certain policy periodically.
By increasing the population of the lower class, you are furthering class warfare via an immigration policy that allows in mostly poor and unskilled, and now with H1bs etc. is allowing for the 'insourcing' of jobs for lower pay to even middle class levels.
I'm waiting to see if the current batch of bank employees now to be laid off will be replaced by H1bs:
Somehow this got changed into a discussion on immigration and H1B, an area that I don't focus on.
If the rules have changed since I've retired then I'm not aware of all the new ones. There is a nice write-up on Wikipedia, I have no idea if it is accurate or not.
I will now resume discussing issues that I'm interested in. If this doesn't fit your conception of what is suitable for your site, there are many other venues. Some even read what I write before criticizing.
Yes, there are many studies at this point which prove H-1B is being used as a labor arbitrage vehicle. The GAO, Urban Institute, NACE, etc.
Then, a news article article is not real economics. George Borjas is real economist and overall the research shows at the lower skills illegal immigration is negatively affecting wages. Even at the high end, any sudden influxes in supply with wage repress. This is a fundamental law of economics, supply and demand.
I think I appreciated your point just fine and it's right in the about section of this site, the FAQ, user guide to not name call. It's an economics site and you're calling people xenophobes.
It is spin, do you honestly believe examining the notorious unemployment rate or the trade deficit is an accurate statistical method when examining labor markets and real wages per supply within a domestic economy?
Are you even aware that illegal labor was recruited in order to union bust and is a known method? It started with the Farm workers union in the 1980's and then with the meatpackers union.
Technically H1-B jobs can only be filled if it can be demonstrated that there is no suitable candidate available in the US.
If you look in Computerworld, for example, you will see boilerplate ads from firms fulfilling the letter of the law by running these ads. I'm perfectly willing to concede that this is a sham, but then why does the situation exist?
The reason workers (whether technical or meat packers) get screwed is because they are not organized. If you read my essay (cited above) you will see that there is a high degree of correlation between the level of unionization and the degree of economic equality in a society. This is true over time (as the decline of unionization chart illustrates) as well as between countries.
For some reason technical and professional workers have been led to believe that they can fend for themselves and that organizing so that they can bargain collectively is only for blue collar jobs.
This is the type of class-based propaganda that the capitalists use to keep the labor force from becoming unified and working for the benefit of all. There are many highly skilled people who belong to unions, this ranges from nurses to college professors.
If the traditional industrial union model is not suitable for those who deal more in mind work then it is up to them to devise a new type of organization. I proposed such a possible arrangement a couple of years ago and I see that there are now several groups doing something similar.
For many skilled workers salary isn't their only concern, they also are interested in keeping their skills up-to-date, job transfer assistance and portable retirement and health plans.
I'm not aware that I said anything about globalization, inevitable or not, why does everyone keep putting words into my mouth?
I'll repeat my point again. If people spend all their time demonizing other workers then they are missing the real target, the class that has no allegiance to the country and can pickup and move themselves or their capital whenever they wish.
Lumping many issues into "immigration" and then making the leap the leap to "xenophobia" is an easy trick used by the expansionists.
Let's focus on the H-1B/L-1:
H-1B jobs are not advertised to American workers- they are reserved for citizens of foreign countries.
The H-1B expansionists claim that U.S. citizens can't fill these jobs. Since the jobs aren't advertised, how can they know this?
When the H-1B returns to his country of origin, he gets his social security back. An L-1 need not contribute anything to our economy since he can be paid in country of origin bypassing the U.S. Treasury altogether.
The majority of H-1B applications are for entry-level (check the LCAs). Why can't we train American youth.
The H-1B/L-1 is a great enabler of gender and racial discrimination. 20 years ago, the tech industry had a growing number of women and African-Americans. Sadly, that trend has been reversed.
And please, spare us the aphorism that "globalization is inevitable". Globalization amounts to moving capital to where the labor is cheapest and, where possible, moving cheap labor to where the capital is.
I'll tell you what, you post an entry laying out your understanding of immigration and then we can all start from the same place.
As to the issue of immigration depressing wages, this is more complicated than you suggest. There is some evidence that low wage jobs (such as those in slaughter houses) are depressed by immigration, the issue with H1-B's is not as clear.
I don't know why you call my essay "spin", there is nothing in there that isn't based upon publicly available data.
Just today there is an article in the NY Times about tomato farmers in PA not planting this year because the heightened enforcement on undocumented workers means that the pickers won't be available. If the immigrants were really displacing native workers then this shortage would be made up from the ranks of the unemployed. Apparently there is more to this story then simple job displacement.
There is another article which shows that Social Security is getting as much as 15% of its revenue from undocumented workers who have to pay in, but will never collect benefits.
To put things in old-fashioned language: the various sectors of the working class are being set against each other by the capitalists who gain by keeping the workers from uniting. Immigration policy is just another of the areas used to split workers into subgroups.
I think that was my original point, which you seem to have failed to appreciate and have gone off on a tangent.
"One of the speculations I have made from time to time is that the very assumptions underlying neoclassical economic theory are so flawed in comparison with reality ...."
Truer words were never spoken! I'd like to serve up another example. In 1815, Ricardo introduced his "principle of oomparative advantage" in which he hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. He offered up hypothetical examples to support this theory, but no empirical evidence.
But no matter. Although the United States had built itself into the wealthiest nation on earth - its preeminent industrial power - our leaders believed that Ricardo's theory was a path to even greater riches. So in 1947 we signed the Global Agreement on Tariffs and Trade and "bet the ranch" on Ricardo's unproven theory. Six decades later, the U.S. has been transformed into a skid row bum, literally begging the rest of the world for cash to keep us afloat. While this free trade policy has certainly benefitted global corporations, it has been an unmitigated disaster for the common good of the American people. Median income and net worth have fallen. Debt has soared out of control. The life blood has been drained from our economy.
Why? We were already the most productive nation on earth and we continue to improve. While our quality may not have measured up at one time, we are now on a par with the best in the world. Our workers have taken cuts in pay and benefits and have worked tirelessly to improve their competitiveness, but still our trade deficit grows and manufacturing jobs flee the country.
Clearly, something is amiss with free trade and Ricardo's theory. Is it possible that he missed something?
At this point, I should introduce myself. I am a self-published author of a book titled "Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America." To make a long story short, my theory is that, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (which always rises), inevitably yields rising unemployment and poverty.
This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It's because these effects of an excessive population density - rising unemployment and poverty - are actually imported when a nation attempts to engage in free trade in manufactured goods with a nation that is much more densely populated. Their economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.
One need look no further than the U.S.'s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!
Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. In fact, our largest per capita trade deficit in manufactured goods is with Ireland, a nation twice as densely populated as the U.S. Our per capita deficit with Ireland is twenty-five times worse than China's. My point is not that our deficit with China isn't a problem, but rather that it's exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one sixth of the world's population.
Ricardo's principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it is a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.
If you're willing to consider a new economic theory that has originated beyond the hallowed halls of academia, one that sheds new light on how trade actually functions in the real world, then I invite you to visit my web site at OpenWindowPublishingCo.com where you can read the preface for free, join in the blog discussion and, of course, buy the book if you like. (It's also available at Amazon.com where you'll be able to have it shipped outside the U.S.) However, because your site obviously has a large following, I'd be very happy to send you a free copy. Just E-mail me your shipping address.
Please forgive me for the somewhat "spammish" nature of the previous paragraph, but I don't know how else to inject this new theory into the debate about trade without drawing attention to the book that explains the theory.
Thanks for your time and attention.
Pete Murphy
Author, Five Short Blasts
....non-linear, discontinuous functions means in real life. Actually, it's vice-versa as homo economicus does NOT function in a linear, continuous fashion. He/She just doesn't and the results of that range from being unable to consistently pick winners in the market to the apparent fact that every economic entity, corporation etc., has a finite life span.
An example: The 'Beer Distributor' Conundrum
The similarity of what happens here in this example to the Heisenberg principle arises from a different causation than in quantum physics. Or maybe not....
We really don't know enough about the brain's functioning to say.
But we do know a lot more than Smith and Pareto did and that knowledge is being applied more and more every day.
The day is not too far distant when Greenspan, Friedman and their ilk will be regarded as painted and befeathered witch doctors by modern economists working in the field.
Paulson proposals are not "Regulation" in a reform sense, as in reform to improve, but dismissal and consolidation of statutory agencies to render them superfluous and ineffective in regulation. Combining the OCC, SEC and trade/commodity future market regulators and meshing commercial banks, brokerages, hedge funds and private banking, and others sounds like a good deal because of streamlining and efficiency, but it jumbles together well regulated and transparent organizations and processes with those those that are now "old boy's club" and completely unreported and untraceable for all intents and purposes. That is an untenable combination.
The 3 commissars(his proposals) that have the Uber powers and rule by decree for the most part is not a good tradeoff when the source of the problems is allowed to fester and boil and gets dealt with after the fact of the disaster, not in its roots and development. This is an issue that requires a far more detailed response and exposure than a 4 paragraph post but will get dealt with in the coming weeks and months.
Remember H Paulson is defending the practices and grasp and future reach of predatory finance capitalism. It includes his own financial "tribe" and holdings, since he is not an guru that happens to be a benign neutral balanced player who wears the title of Treasury Secretary at the moment. He is one of sources of the economic problems we have at present
Paulson proposals are not "Regulation" in a reform sense, as in reform to improve, but dismissal and consolidation of statutory agencies to render them superfluous and ineffective in regulation. Combining the OCC, SEC and trade/commodity future market regulators and meshing commercial banks, brokerages, hedge funds and private banking, and others sounds like a good deal because of streamlining and efficiency, but it jumbles together well regulated and transparent organizations and processes with those those that are now "old boy's club" and completely unreported and untraceable for all intents and purposes. That is an untenable combination.
The 3 commissars(his proposals) that have the Uber powers and rule by decree for the most part is not a good tradeoff when the source of the problems is allowed to fester and boil and gets dealt with after the fact of the disaster, not in its roots and development. This is an issue that requires a far more detailed response and exposure than a 4 paragraph post but will get dealt with in the coming weeks and months.
Remember H Paulson is defending the practices and grasp and future reach of predatory finance capitalism. It includes his own financial "tribe" and holdings, since he is not an guru that happens to be a benign neutral balanced player who wears the title of Treasury Secretary at the moment. He is one of sources of the economic problems we have at present
so in a nutshell, regulation acts as an maxima and minima or fence around the influence of the observation, correct?
Here is a paper I found that discusses applications of the Heisenberg uncertainty principle in economics.
If equilibrium is merely a set of probabilities, and the act of any person's observing that equilibrium changes it, that inherently introduces instability into the system.
Re herding. If every market participant uses the same program that monitors herding behavior, then they will still behave like a herd. With the same results.
In high-tech, employers are afraid of highly-skilled people. Basically, our wages were becoming commensurate with the let's-do-lunch class, corporate lawyers, managers etc.
Instead of simply raising retails costs, they've chosen to pound wages down on the supply-side, without lowering retail costs.
My estimate is that over 50% of computer-related occupations are now held by temporary residents. As the USD continues to decline, what will stop the temporary residents from simply abandoning our economy?
Where will industry come up with 1.5 million highly-skilled workers who are up to speed with the latest technologies?
OPIC is a net US Treasury contributor -- even though it has funds appropriated to it, it is a profitable organization which gives back to the Treasury more than it takes out. It really is financially "self-sustained."
And I haven't seen any evidence of military support for projects in your quotes above...
And why doesn't OPIC support projects in the U.S.? Because it is not mandated to do so. There are other agencies which have this jurisdiction -- SBA rings a bell... heard of it?
There may be ethically dodgy issues at hand, but you have failed to rationally point them out. I support criticising government agencies but, please, when you make arguments, try to make sure that they are logically sound.
Indeed economics has not been the stagnant science many think in recent years. Get yourself a copy of: The Origin of Wealth by Eric Beinhocker and get reading.
One on the social science side to check out is Robert Wright's work. Nonzero Sum: The Logic of Human Destiny is a good place to start.
Big things are afoot and idiots like Greenspan are about to be exposed for what they are: Charlatans practicing a primitive mumbo-junbo in the interests of their patrons.
Keep in mind Pareto and Smith used math that us physics guys threw in the trash over 400 years ago. Linear equations my aching TI calculator.
I found his original essay, Sending the herd off the cliff edge: the disturbing interaction between herding and market-sensitive risk management practices.
So he's saying transparency to see the herd might assist by the public stopping the stampede.
Now this is going to be a grandiose statement, but it seems they also need to add some prediction models that incorporate the sociological elements, the herd in their mathematical models. (disclaimer, that's a general statement, I'm oblivious to what is contained within those risk models in terms of the algorithms!)
I understand the issue he's describing but what is the solution offered? He mentions get on the regulation agenda right now since we have the results of these inaccurate econometric models currently but what are the specific recommendations?
Has anyone proposed more accurate models as well?
That is really significant those layoff estimates from the banking industry.
What do you want to bet they use this crisis to offshore outsource entire divisions of financial services like tech companies did in 2000-2004?
It's astounding to me that corporations go for wage arbitrage when the overall costs often are more than just the wage savings. I believe the last statistic I read of outsourcing projects that failed was ??? 60%? (yet another blog post I guess, I don't know the fail rate current numbers, per project area that has been BPO'ed)
and the wikipedia article is constantly being attacked by the corporate lobbyists so you cannot entirely trust it.
They put up warnings on inaccurate, disputed info for a reason on wikipedia.
Go to Insourcing studies (on left)
and NoSlaves.comblog for some background on my own writings as well as some links to studies. On this site I link to one recent study that's quite accurate (Urban institute). Sloan Foundation has also done some exceptional research work in this area.
You can discuss what you want, as long as it's on topic and has real data to back it up and that is statistically valid data.
But, the entire "racist xenophobe" is a well known media campaign. I was even in on some conference calls demanding all bloggers write posts in this flavor of spin
and as someone interested in objective policy based on real facts, we're keeping that sort of crap off of here.
Now if someone wants to try and post it, well, be prepared to deal with the fall out. As our corporate lobbyist tax writer got.
They want real answers, with accurate statistics and most assuredly no name calling or labeling. It's not a political site per say, it's an economics site that will promote certain policy periodically.
By increasing the population of the lower class, you are furthering class warfare via an immigration policy that allows in mostly poor and unskilled, and now with H1bs etc. is allowing for the 'insourcing' of jobs for lower pay to even middle class levels.
I'm waiting to see if the current batch of bank employees now to be laid off will be replaced by H1bs:
Analysts see 200,000 banking industry layoffs
http://www.msnbc.msn.com/id/23904759 /
Somehow this got changed into a discussion on immigration and H1B, an area that I don't focus on.
If the rules have changed since I've retired then I'm not aware of all the new ones. There is a nice write-up on Wikipedia, I have no idea if it is accurate or not.
http://en.wikipedia.org/wiki/H1B_visa
I will now resume discussing issues that I'm interested in. If this doesn't fit your conception of what is suitable for your site, there are many other venues. Some even read what I write before criticizing.
now you are posting false information on H-1B. No, they do not have to find or consider a US worker first.
Yes, there are many studies at this point which prove H-1B is being used as a labor arbitrage vehicle. The GAO, Urban Institute, NACE, etc.
Then, a news article article is not real economics. George Borjas is real economist and overall the research shows at the lower skills illegal immigration is negatively affecting wages. Even at the high end, any sudden influxes in supply with wage repress. This is a fundamental law of economics, supply and demand.
I think I appreciated your point just fine and it's right in the about section of this site, the FAQ, user guide to not name call. It's an economics site and you're calling people xenophobes.
It is spin, do you honestly believe examining the notorious unemployment rate or the trade deficit is an accurate statistical method when examining labor markets and real wages per supply within a domestic economy?
Are you even aware that illegal labor was recruited in order to union bust and is a known method? It started with the Farm workers union in the 1980's and then with the meatpackers union.
Technically H1-B jobs can only be filled if it can be demonstrated that there is no suitable candidate available in the US.
If you look in Computerworld, for example, you will see boilerplate ads from firms fulfilling the letter of the law by running these ads. I'm perfectly willing to concede that this is a sham, but then why does the situation exist?
The reason workers (whether technical or meat packers) get screwed is because they are not organized. If you read my essay (cited above) you will see that there is a high degree of correlation between the level of unionization and the degree of economic equality in a society. This is true over time (as the decline of unionization chart illustrates) as well as between countries.
For some reason technical and professional workers have been led to believe that they can fend for themselves and that organizing so that they can bargain collectively is only for blue collar jobs.
This is the type of class-based propaganda that the capitalists use to keep the labor force from becoming unified and working for the benefit of all. There are many highly skilled people who belong to unions, this ranges from nurses to college professors.
If the traditional industrial union model is not suitable for those who deal more in mind work then it is up to them to devise a new type of organization. I proposed such a possible arrangement a couple of years ago and I see that there are now several groups doing something similar.
Here's my original proposal:
A proposal for a worker's affinity group
For many skilled workers salary isn't their only concern, they also are interested in keeping their skills up-to-date, job transfer assistance and portable retirement and health plans.
I'm not aware that I said anything about globalization, inevitable or not, why does everyone keep putting words into my mouth?
I'll repeat my point again. If people spend all their time demonizing other workers then they are missing the real target, the class that has no allegiance to the country and can pickup and move themselves or their capital whenever they wish.
Lumping many issues into "immigration" and then making the leap the leap to "xenophobia" is an easy trick used by the expansionists.
Let's focus on the H-1B/L-1:
And please, spare us the aphorism that "globalization is inevitable". Globalization amounts to moving capital to where the labor is cheapest and, where possible, moving cheap labor to where the capital is.
Mr. Feinman, I'm a populist and damn proud of it.
I'll tell you what, you post an entry laying out your understanding of immigration and then we can all start from the same place.
As to the issue of immigration depressing wages, this is more complicated than you suggest. There is some evidence that low wage jobs (such as those in slaughter houses) are depressed by immigration, the issue with H1-B's is not as clear.
I don't know why you call my essay "spin", there is nothing in there that isn't based upon publicly available data.
Just today there is an article in the NY Times about tomato farmers in PA not planting this year because the heightened enforcement on undocumented workers means that the pickers won't be available. If the immigrants were really displacing native workers then this shortage would be made up from the ranks of the unemployed. Apparently there is more to this story then simple job displacement.
There is another article which shows that Social Security is getting as much as 15% of its revenue from undocumented workers who have to pay in, but will never collect benefits.
To put things in old-fashioned language: the various sectors of the working class are being set against each other by the capitalists who gain by keeping the workers from uniting. Immigration policy is just another of the areas used to split workers into subgroups.
I think that was my original point, which you seem to have failed to appreciate and have gone off on a tangent.
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