The economy baffles even Samuelson!

Well, not Paul Samuelson, but Robert Samuelson.

As always, Samuelson has quite a few interesting observations. His concluding thoughts are the best in that piece:

Today's global economy baffles experts -- corporate executives, bankers, economists -- as much as it puzzles ordinary people. Countries are growing economically more interdependent and politically more nationalistic. This is a combustible combination. The old global economy had few power centers (the United States, Europe, Japan), was defined mainly by trade and was committed to the dollar as the central currency. Its major countries shared democratic values and alliances. Today's global economy has many power centers (including China, Saudi Arabia and Russia), is also defined by finance and is exploring currency alternatives to the dollar. Major trading nations now lack common political values and alliances.

It is no more possible to undo globalization than it was possible, in the 19th century, to undo the Industrial Revolution. But our understanding of international markets, shaped by impersonal economic forces and explicit political decisions, is poor. Countries try to maximize their advantages rather than make the system work for everyone. Considering how much could go wrong, the record is so far remarkably favorable. Alas, that's no guarantee for the future.

Shed no tears over the demise of America's manufacturing. It ain't dead!

I should know by now, after all these years, that political leaders rarely say anything really meaningful in public.  Thus, I should ignore all their chest-thumping on bringing manufacturing back to America, and how we should be worried over manufacturing's decline.

But, I am human and I err--I point my ears towards them and then have an urge to puke!

What decline in manufacturing?

Robert Samuelson tackles this issue of "manufacturing isn't dead":

The transition from factory to office has raised living standards, curbed pollution and reduced the number of grueling, often-monotonous jobs. Yet this largely beneficial transformation suffers in the popular imagination. The vast “service sector,” which now dominates the economy, is seen as inferior, low-paying and even frivolous because it produces nothing tangible.

Exactly!

I bet the same people who talk with fondness for the manufacturing that is "dead" would have been the kinds of people lamenting about the "death of agriculture" a hundred years ago, without understanding that these are positive changes as a result of higher and higher productivity.

Of course, I have traveled this path before.  For instance, in May 2009, I quoted Robert Reich, who was President Clinton's Labor Secretary:

Any job that's even slightly routine is disappearing from the U.S. But this doesn't mean we are left with fewer jobs. It means only that we have fewer routine jobs, including traditional manufacturing. When the U.S. economy gets back on track, many routine jobs won't be returning--but new jobs will take their place. A quarter of all Americans now work in jobs that weren't listed in the Census Bureau's occupation codes in 1967. Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history. You see only the loss of old jobs. You're overlooking all the new ones.

Yet, this logical explanation always loses to a faith that manufacturing is the key to boost up an otherwise anemic economic recovery?  Samuelson again:

Almost everyone seems to yearn for a manufacturing renaissance. This would, the reasoning goes, solve many problems. It would kick-start the sluggish recovery. By providing well-paying jobs, especially for semi-skilled men, it would strengthen the middle class. By restoring a heritage of “making things,” it would reduce U.S. trade deficits and re-establish our global economic pre-eminence. No doubt, millions of Americans endorse this appealing vision. It’s make-believe.

The mirage appeals to politicians and the regular folk alike, it seems.  And these people make it seem that we don't manufacture any damn thing anymore; again, I blogged about this in 2011:

America still makes a ton of stuff, and we make more of it now than ever before in history.’’ In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians — combined. American manufacturing output hits a new high almost every year. US industries are powerhouses of production: Measured in constant dollars, America’s manufacturing output today is more than double what it was in the early 1970s.

Samuelson also reminds readers about the same thing:

[In 2010] U.S. manufacturing production of nearly $1.8 trillion was the largest in the world; it was slightly ahead of China’s, about two-thirds higher than Japan’s and nearly triple Germany’s. China may now be No. 1, but the U.S. remains a manufacturing powerhouse. In 2011, near-record output was 72 percent more than in 1990 and six times greater than in 1950. Recall some American-made products: commercial jets, earth-moving equipment, gas turbines.

Logic and evidence don't capture people's attention and imagination as make-believe scenarios do.  No wonder religions continue to flourish!  But, I digress :)

As I noted in a post two years ago, The Onion, which is awesome at satirizing any issue, took on this notion of American manufacturing is dead.  And, of course, there is that other problem of defining what manufacturing is!

Anyway, as Samuelson concludes:

It’s a mistake to romanticize manufacturing and disparage services, portraying them as separate economic realms in competition with each other.

Finally, as Reason noted a while ago, to focus on Made in America is pretty darn stupid!

Friedman talks crap. Lee Kuan Yew makes sense.

For once, Thomas Friedman's column is not flooded with metaphors.  And that is just about the only good thing about that column.

His column is all about values lost--that the Greatest Generation had all the right values and then it has been downhill since then. Yes, I, too have met and talked with a few of that generation and they were great. Fantastic people. Even a few days ago I was talking about one of them--Ellery--who grew up in the Ozarks, and said his first real shoes were when he joined the army as WWII unfolded. But, the worst thing to do is to deify them and put them way too high of a pedestal. And that is what Friedman does.

My favorite joke about baby-boomers is that all they did was spend everything that their parents saved :)  But, we can't skip over the fact that it was the new values of the boomers that also helped shake up the black/white divide, the role of the female in the household, ... I am not sure whether the values of the Greatest Generation would have achieved these.  A colleague back in California remarked once that his extended family were pretty much forced to change really rapidly their old negative views of blacks, well, non-whites.

And then Friedman throws in, yet again, the cliche about China and India catching up and soon overtaking America. Yeah, right!  Does he really keep track of the news of the poverty in India?  I mean, that is just for starters.

There is another way to talk about the values of now versus that of the past, which is what the Singaporean grand old man, Lee Kuan Yew, articulates in the Saturday profile in the same paper that Friedman writes. I hope Friedman read that.

Now, I am not a big fan of Lee's political philosophy that severely restricted individual rights. But, to give credit when due, this is what Lee says about the youth of today's Singapore:

Younger people worry him, with their demands for more political openness and a free exchange of ideas, secure in their well-being in modern Singapore. “They have come to believe that this is a natural state of affairs, and they can take liberties with it,” he said. “They think you can put it on auto-pilot. I know that is never so.”

I am with the younger people demanding openness.  But, there is a great deal of truth in Lee's comment that we can't ever sit back and have whatever it is on auto-pilot.

I suppose this is the flip side of the fantastic economic and individual security--that there is a certain kind of hedonism that creeps in, as opposed to a conscious realization that the security can be gone soon if we don't maintain and cultivate it.

The only place where Friedman gets close to this idea is when he quotes at length Robert Samuelson's analysis of what is fundamentally wrong with our schools:

“The larger cause of failure is almost unmentionable: shrunken student motivation,” wrote Samuelson. “Students, after all, have to do the work. If they aren’t motivated, even capable teachers may fail. Motivation comes from many sources: curiosity and ambition; parental expectations; the desire to get into a ‘good’ college; inspiring or intimidating teachers; peer pressure. The unstated assumption of much school ‘reform’ is that if students aren’t motivated, it’s mainly the fault of schools and teachers.” Wrong, he said. “Motivation is weak because more students (of all races and economic classes, let it be added) don’t like school, don’t work hard and don’t do well. In a 2008 survey of public high school teachers, 21 percent judged student absenteeism a serious problem; 29 percent cited ‘student apathy.’ ”

The challenge then is to some extent the same across all the rich countries: how do we instill in children and youth the sense of hunger and fight that is needed for a true democracy?  Tough question.

BTW, as I have noted earlier, Lee did great with his son, Lee Hsien Loong, who is the current prime minister. A brilliant fellow with a wonderful and graceful demeanor.

Paulson a la Nixon, says Samuelson

Paulson's plan would not be the largest government intervention in the private economy since World War II. That distinction still belongs to Richard Nixon's imposition of wage and price controls in August 1971. True, Paulson would socialize unprecedented amounts of private debt, but Nixon asserted control over the entire economy. What's fascinating are the possible parallels between the two episodes, starting with a shared irony: Both came from administrations committed to "free markets."

Robert Samuelson offers an interesting observation, as always. He adds:

The rescue is being constructed so hastily that it may include all manner of flawed provisions: too much power for the Treasury secretary; authority for bankruptcy judges to modify mortgages. Congress faces a wrenching dilemma, imposed on it by financial markets and Paulson. If it dawdles, it may invite the panic that Paulson has brazenly predicted. But if it acts quickly, it may create a monster whose full implications emerge only with time.

It is so easy to live the American Dream ... even in Timbuktu

The American Declaration of Independence boldly proclaims that we, the people, enjoy valuable inalienable rights to "Life, Liberty and the pursuit of Happiness."  Translating this ideal into everyday reality has always been a challenge.  It will become more of a challenge for one simple reason: We seem to want to reduce the wonderful ideal of "Life, Liberty and the pursuit of Happiness" to mere material possessions.

For centuries, philosophers and religious thinkers have advised us that happiness cannot be found in pursuing a life of fame and fortune.  If I interpret "heaven" to mean nothing but a blissful life, then that bliss simply cannot be attained with more stuff--whether that stuff is the latest gadget or the mansions that we want.  Maniacally pursuing the material possessions will lead us to the tragic end that King Midas met.

We apparently forget all those secular and religious lessons.  And then we wonder why we are unhappy!

Robert Samuelson says all those without saying all those.  Using a less philosophical framework, and more of an empirical approach, Samuelson writes:

The proper question may be: Is the American Dream killing us?

American culture emphasizes striving for and achieving economic success. In practice, realizing the American Dream is the standard of success, vague though it is. It surely includes homeownership, modest financial and job security, and a bright outlook for our children. When striving accomplishes these goals, it strengthens a sense of accomplishment and self-worth.

But when the striving falters and fails — when the American Dream becomes unattainable — it’s a judgment on our lives. By our late 40s or 50s, the reckoning is on us. It’s harder to do then what we might have done earlier. We become hostage to unrealized hopes. More Americans are now in this precarious position. Our obsession with the American Dream measures our ambition — and anger.

The American Dream has been equated to economic success, which is exactly where the problems begin.  If only the American Dream is truly understood as "life, liberty, and the pursuit of happiness" instead!  Liberty would then guide us to value the other and the other's life.  We will strive towards whatever makes us happy in ways that do not interfere with the life and liberty of others. It is so simple.  But apparently very hard for us--we, the people--to comprehend.  The unhappy people we are, well, we live nightmares every single day!

One of the best grad students ever?

An excerpt from Robert Samuelson's column: "I cannot detect powerful convictions in Obama. He seems merely expedient in peddling his convenient conflicts. He strikes me as a super-successful graduate student: the brightest, quickest, most articulate guy in the seminar. In his career, he has advanced mainly by talking and writing -- not doing -- and may harbor a delusion common to the well-educated: that he can argue and explain his way around any problem."

Who is a true progressive?

My problem with Bernie Sanders and his Berniacs has always been--yes, even from back when he was battling it out with Hillary Clinton--that their positions on many issues are no different from tRump's own awful ideas.  Like bringing manufacturing back to America.  The complaints about offshoring.  Putting tighter limits on immigration.

Yet, Bernie and the Berniacs are considered to be "progressives," while these progressives criticize tRump and his trumpeters!

I worried about this even back in May 2015, when the campaign fever was barely above normal.  In this post, I quoted a bunch of experts, one of whom asked:

Wouldn’t a true progressive support equal opportunity for all people on the planet, rather than just for those of us lucky enough to have been born and raised in rich countries?

That's what I expect from a true progressive.  Yes, I consider myself to be a true progressive, in contrast to, for instance, Bernie Sanders, who has a long track record of anti-immigrant positions.

But, wouldn't a true progressive want to provide opportunities for all people on the planet, and not merely for the luck ones who were accidentally born here in the US?

tRump and his toadies have now used the cover of COVID-19 in order to suspend immigration.

“By pausing immigration, we will help put unemployed Americans first in line for jobs as America reopens. So important,” the president said. “It would be wrong and unjust for Americans laid off by the virus to be replaced with new immigrant labor flown in from abroad. We must first take care of the American worker.”

Chances are most Bernie supporters would agree with that, even though logic and evidence point to another direction: "numerous studies have concluded that immigration has an overall positive effect on the American work force and wages for workers".

Again, from that post in May 2015:

Unfortunately, most of the debate in rich countries today, on both the left and the right, centers on how to keep other people out. That may be practical, but it certainly is not morally defensible.

Morally indefensible.  Let them in poor countries eat cakes!

The following is a slightly edited post from May 10, 2015.
***********************************************************

The last few days I came across one too many commentaries about income and wealth inequality. Inequality within the US, and across the world.  Robert Samuelson's column is in the context of an anniversary.

In 1975, the Brookings Institution — perhaps Washington’s best known think tank — published an elegant essay by Arthur Okun, who had been one of the leading economists of the Johnson administration. The essay was called “Equality and Efficiency: The Big Tradeoff.” Its premise, as the title suggests, was that government faced a choice in fashioning its economic and social policies. A bias toward more equality might weaken economic growth by dulling the incentives to work, save and invest; on the other hand, leaving matters to the market could worsen inequality by widening income and wealth gaps. We could balance equality and efficiency. Once stated, the logic seems impeccable.

Inequality is now worse than it was forty years ago!

But, that is within the US.

If we, however, looked at the entire seven-billion-plus that we are on this planet, global inequality has reduced.  So much so that the managing editor of the Journal of Economic Perspectives concludes his blog-post with:

the 21st century would be a time of rising equality across the global income distribution.

Data do show that globally inequality is decreasing even as within-country inequality is rising in many countries.  And that is Kenneth Rogoff's point of departure:

Wouldn’t a true progressive support equal opportunity for all people on the planet, rather than just for those of us lucky enough to have been born and raised in rich countries?

He explains:

If current concerns about inequality were cast entirely in political terms, this inward-looking focus would be understandable; after all, citizens of poor countries cannot vote in rich ones. But the rhetoric of the inequality debate in rich countries betrays a moral certitude that conveniently ignores the billions of people elsewhere who are far worse off.

Whenever I ask students in my classes whether we should worry about the increasing inequality in the US, or about the welfare of the economically disadvantaged billions outside the US, after they look at the data, not a student whimpers about the grossness of the inequality in America.  Rogoff reminds us about some of that data:

the middle class in rich countries remains an upper class from a global perspective. Only about 15% of the world’s population lives in developed economies. Yet advanced countries still account for more than 40% of global consumption and resource depletion.

People in America complain because the "ovarian lottery" seems to have lost its value:

global inequality has been reduced significantly over the past three decades, implying that capitalism has succeeded spectacularly. Capitalism has perhaps eroded rents that workers in advanced countries enjoy by virtue of where they were born. But it has done even more to help the world’s true middle-income workers in Asia and emerging markets.

Keep in mind that despite all that economic progress (I won't worry about the non-economic issues for now, because I do that in many other posts) in China and India and Vietnam and wherever, the average American is immensely richer than the average person in many countries around the world.

There is one more way in which all those people in other countries can be given a fair shot at improving their economic conditions:

Allowing freer flows of people across borders would equalize opportunities even faster than trade, but resistance is fierce.

However, when I bring up this point in my classes, students suddenly become a tad defensive.  

Rogoff doesn't mince words:

Unfortunately, most of the debate in rich countries today, on both the left and the right, centers on how to keep other people out. That may be practical, but it certainly is not morally defensible.

And for a good measure, he reminds us about this too:

Europe’s long history of exploitative colonialism makes it hard to guess how Asian and African institutions would have evolved in a parallel universe where Europeans came only to trade, not to conquer.

Add to that America's slave trade.  And there are more to the list.

We lack definitive answers only when we frame the inequality problem a certain way.  It is just that we don't want to work towards those answers.  We choose to avoid them.  We are being cunningly political.

Our grade-inflated world makes college that much more worthless!

I semi-seriously note in my classes that neither the students, nor my colleagues, nor the world outside ever listens to what I have to say.  I refer to this as the Rodney Dangerfield syndrome, but the reality is that hundreds of thousands of people paid to hear what Dangerfield had to say!

Take, for instance, the issue of higher education, about which I have blogged a lot. I mean, a lot!  I have also authored op-eds in newspapers, like this most recent one.  But, I bet people pay a lot more attention when, say, a Robert Samuelson says the same thing, even though I beat him to these arguments by quite a few years :)

Thus, here I am blogging more about higher education, and about grade inflation, even though this merely adds to my collection:

A University of Minnesota chemistry professor has thrust the U into a national debate about grade inflation and the rigor of college, pushing his colleagues to stop pretending that average students are excellent and start making clear to employers which students are earning their A's.
"I would like to state my own alarm and dismay at the degree to which grade compression ... has infected some of our colleges," said Christopher Cramer, chairman of the Faculty Consultative Committee. "I think we are at serious risk, through the abandonment of our own commitment of rigorous academic standards, of having outside standards imposed upon us."

Well, in this age of every kid getting a standing ovation for merely doing the routine work, grade inflation ought not to surprise us at all anymore.  Yet, I am, every time I read yet another report on this. 

University of Minnesota anthropology professor Karen-Sue Taussig suspects that today's "grade-inflated world" can be traced to the growing cost of a college degree, i.e. today's "tuition-inflated world." As Taussig told the Star Tribune, "They're paying for it, and they worked really hard, and they put in time, and therefore they think they should get a good grade."

Makes sense to me--the more we operate in a business-like world, the more we are tempted to tell customers what they want to hear.  And what they want to hear is that they are all above-average.

We also devise elaborate shenanigans so that students can even begin to feel awesome about their routine work.  I need not go outside my own academic walls for that--we have an Academic Excellence Showcase coming up in a couple of days. 

The entire day will be dedicated to the presentation of student scholarly activities, including original research papers, projects, artwork, performances, and upper-division course projects, presentations, and papers. 

Such a description might convey a notion that there would be presentations galore that resulted from "original research."  Except, it is not.  Here, the term "research" is used in the meaning that students and I use when we deal with assignments.  Like, when I tell them, "do your research on this topic before you write the three-page paper."  "Research" is nothing but, well, do your homework.

It turns out that the celebration of "academic excellence" is often nothing more than standing ovations for routine coursework.  And lost in this circus is real accomplishment when that happens.  Like a former student, "A," who presented a philosophy paper at a regional conference as a true freshman.  Yes, a true freshman.  Now, when the excellent work like hers is granted the same ranking that a routine coursework gets, you now get an idea of the Lake Wobegon traits in colleges.

Full disclosure: when the idea of undergraduate research was kicked around on campus, I was one of the very few involved in that original effort.  But, I got severely disillusioned when the discussions quickly morphed into how to make students feel great, and how faculty ought to get workload compensation.  I stopped my involvement right there.  Because, remember, nobody listens to what I say, which was the story at those meetings, too :(

Feeling a lot poorer in a rich country :-(

More than once, I have blogged about Robert Samuelson's analyses and opinions. His lengthy piece in Newsweek gives us an idea of the challenges ahead. And, again, I am confident that my intro students know the situation really well--that they are screwed :-(

The bad news is that recovery, though boosting employment, may prove unsatisfying. Our new economic era may lapse into a state of "affluent deprivation." That's an unfamiliar term. It doesn't mean poverty. The United States will remain a wealthy society. Rather, "affluent deprivation" signifies a state of mind. People feel poorer, because their sluggish income gains get siphoned off into higher taxes, energy costs and health spending. Though these all involve benefits, they don't pay everyday bills or cover people's routine pleasures. There's an approaching collision between private and public wants—government spending for everything from retirement benefits to defense to the repair of roads and bridges. ....

A dilemma for the new president is how to reconcile the needs of the present with those of the future. The immediate need is to revive confidence—to rev up demand and spending, thereby absorbing the jobless and increasing the production of underutilized businesses. But the long-term problem is different. It is to mediate between all the competing demands on the nation's income and to expand the economy's capacity to produce the output that satisfies those demands. The closer the economy comes to stagnation, the more Americans will succumb to distributional struggles—not just between the rich and the poor, but also between the young and the old and between immigrants and natives.

Down that path lies "affluent deprivation." To use an old but apt cliché: people will fight over pieces of a fairly fixed economic pie rather than sharing ever-larger pieces of an expanding pie. The winners may be pleased, but the losers will feel short-changed—and so the conflicts may intensify, with yesterday's winners possibly becoming tomorrow's losers. Politics, which is often about rewarding some and punishing others, may become more so.

Waiting to exhale on Afghanistan ... egalitarian faux-democracy?

I have made my position clear.  Now, I am with billions of others on the planet waiting for Obama to tell us what his decision is.

If he still planning on a surge, hey may want to think more about it.  Why? Pakistan is not keen on a surge, particularly if the US does not share its plans. (ht)

Pakistan expressed fear Friday that a large increase in foreign troops in Afghanistan could push militants across the border into its territory and called on the U.S. to factor in that concern as part of its new war strategy.....
...The Pakistani concerns, raised by the prime minister during a meeting with visiting CIA director Leon Panetta, could pose another headache for President Barack Obama as he weighs military proposals to send 10,000 to 40,000 additional U.S. troops to Afghanistan next year.

And, that same AP story ends with this BTW kind of an observation, which is a nasty reminder of how we got to where we are:

Pakistan helped nurture a generation of Islamic militants after the Soviet Union invaded Afghanistan in 1979. Following the Soviet withdrawal a decade later, Pakistan helped the Taliban seize control. Many of these militants fled to Pakistan after the U.S.-led invasion of Afghanistan in late 2001.

Meanwhile, Obama taking his longest time trying to come up with a solution that pleases all is beginning to get noticed, finally.  The ever caustic Dowd, who is good at playing with words (I don't care for her columns at all; but, to borrow from Rumsfeld--did I really quote this war criminal?--we have to go to engage in discussions with the columnists we have!)

If we could see a Reduced Shakespeare summary of Obama’s presidency so far, it would read:
Dither, dither, speech. Foreign trip, bow, reassure. Seminar, summit. Shoot a jump shot with the guys, throw out the first pitch in mom jeans. Compromise, concede, close the deal. Dither, dither, water down, news conference.
It’s time for the president to reinvent this formula and convey a more three-dimensional person.

Lee Siegel describes the un-decider's approach as:

egalitarian faux-democracy, in which the illusion of responding to every side in a debate undercuts the democratic process of actually arriving at a decision.

How exactly does this work? Siegel explains:

This illusion of national participation in his decision-making process, with the promise of a happy ending that excludes no one, has been Obama’s method almost from Day One. Call it the American Idol style of governing—except that no possibility ever gets voted out of the competition.
No one must feel marginalized by a tyrannical majority. Obama allows the responses of the public, and the political establishment, and the media to break down every issue into a million parts, so that the multi-faceted clamor outside his head ends up looking a lot like the multi-faceted way he considers the world from inside his head. And by the time a decision comes—and yet it seems that Obama has not come to a single consequential decision since his inauguration—some people will feel unsatisfied, but no one will feel defeated.

Not looking good, man.  Not looking good at all. 
Update: later I was reminded of this comment on candidate Obama by Robert Samuelson--back in June 2008 that he might be the best graduate student ever:

I cannot detect powerful convictions in Obama. He seems merely expedient in peddling his convenient conflicts. He strikes me as a super-successful graduate student: the brightest, quickest, most articulate guy in the seminar. In his career, he has advanced mainly by talking and writing -- not doing -- and may harbor a delusion common to the well-educated: that he can argue and explain his way around any problem.

An unholy alliance of the left and the right screws the world's poor!

The last few days I came across one too many commentaries about income and wealth inequality. Inequality within the US, and across the world.  Robert Samuelson's column is in the context of an anniversary.

In 1975, the Brookings Institution — perhaps Washington’s best known think tank — published an elegant essay by Arthur Okun, who had been one of the leading economists of the Johnson administration. The essay was called “Equality and Efficiency: The Big Tradeoff.” Its premise, as the title suggests, was that government faced a choice in fashioning its economic and social policies. A bias toward more equality might weaken economic growth by dulling the incentives to work, save and invest; on the other hand, leaving matters to the market could worsen inequality by widening income and wealth gaps. We could balance equality and efficiency. Once stated, the logic seems impeccable.

Inequality is now worse than it was forty years ago!

How did this happen? How did we end up with degraded efficiency and equality? Why did Okun’s sensible-sounding scheme not survive contact with the real world?

But, that is within the US.  If we, however, looked at the entire seven-billion-plus that we are on this planet, global inequality has reduced.  So much so that the managing editor of the Journal of Economic Perspectives concludes his blog-post with:

the 21st century would be a time of rising equality across the global income distribution.

Data do show that globally inequality is decreasing even as within-country inequality is rising in many countries.  And that is Kenneth Rogoff's point of departure:

Wouldn’t a true progressive support equal opportunity for all people on the planet, rather than just for those of us lucky enough to have been born and raised in rich countries?

He explains:

If current concerns about inequality were cast entirely in political terms, this inward-looking focus would be understandable; after all, citizens of poor countries cannot vote in rich ones. But the rhetoric of the inequality debate in rich countries betrays a moral certitude that conveniently ignores the billions of people elsewhere who are far worse off.

Whenever I ask students in my classes whether we should worry about the increasing inequality in the US, or about the welfare of the economically disadvantaged billions outside the US, after they look at the data, not a student whimpers about the grossness of the inequality in America.  Rogoff reminds us about some of that data:

the middle class in rich countries remains an upper class from a global perspective. Only about 15% of the world’s population lives in developed economies. Yet advanced countries still account for more than 40% of global consumption and resource depletion.

People in America complain because the "ovarian lottery" seems to have lost its value:

global inequality has been reduced significantly over the past three decades, implying that capitalism has succeeded spectacularly. Capitalism has perhaps eroded rents that workers in advanced countries enjoy by virtue of where they were born. But it has done even more to help the world’s true middle-income workers in Asia and emerging markets.

Keep in mind that despite all that economic progress (I won't worry about the non-economic issues for now, because I do that in many other posts) in China and India and Vietnam and wherever, the average American is immensely richer than the average person in many countries around the world.

There is one more way in which all those people in other countries can be given a fair shot at improving their economic conditions:

Allowing freer flows of people across borders would equalize opportunities even faster than trade, but resistance is fierce.

When I bring up this point in my classes, students suddenly become a tad defensive.  I ease them by noting that it is a hot political issue, yes, and even progressives line up against immigration.  

Rogoff doesn't mince words:

Unfortunately, most of the debate in rich countries today, on both the left and the right, centers on how to keep other people out. That may be practical, but it certainly is not morally defensible.

And for a good measure, he reminds us about this too:

Europe’s long history of exploitative colonialism makes it hard to guess how Asian and African institutions would have evolved in a parallel universe where Europeans came only to trade, not to conquer.

Add to that America's slave trade.  And there are more to the list.

We lack definitive answers only when we frame the inequality problem a certain way.  It is just that we don't want to work towards those answers.  We choose to avoid them.  We are being cunningly political.

Bailout fails: 228 to 205

A hallmark of the crisis has been the stark contrast between the "real economy" of production and jobs and the tumultuous financial markets of stocks, bonds, banks, money funds and the like. Even with the 60 percent drop in housing construction since early 2006, the real economy has so far suffered only modest setbacks. Yes, there are 605,000 fewer payroll jobs than there were in December; still, 137.5 million jobs remain. Meanwhile, financial markets verge on hysteria. The question is whether this hysteria will drive the real economy into a deep recession or worse -- and what we can do to prevent that.

That was Robert Samuelson in Newsweek. I wonder what his reactions will be in his next column, which will surely be on the House voting down the bailout bill

Our local congressman, Peter DeFazio, opposed the bill all the way, and also explained his reasons in a commentary in the Register Guard. I applaud him for explaining his position so clearly to his constituents. Interestingly enough, only one Democrat from Oregon voted for the bill, and she is not up for re-election. The lone Republican voted for the bill. Details here.

Daniel Gross is livid that the House voted it down. He writes:

For in the meantime, the chaos they've created by coming to the table and then throwing a fit works to their disadvantage. Each time a deal is close to done and then gets scuppered, the market (and its many participants) freaks out. Huge quantities of wealth are destroyed. The markets fell about 8 percent after today's stunt, likely wiping out close to $1 trillion in wealth.