Jlknapp505's Blog

This was written in response to a post I found through Atlantic Monthly.  Excellent magazine; I recommend it.

Consider a school and the surrounding neighborhood. Run by a political entity, a School Board. Who hires a Superintendent, who in turn will select Principals and Vice Principals and establish a personnel office to hire teachers.
If the local school isn’t working very well, the tendency is to look to the quality of teachers as a place to start. Parents have this feeling that “We’re paying you to educate our children!” So every political education entity follows the same logic. And it’s wrong.
Political entities are the real control point. Begin at the top, the Federal agencies who are involved in what schools teach and how they teach it. These are also involved in social engineering. Some of the social engineering comes from congress and some of it from the interpretation of various jurists. But schools are no longer about simply educating children.
At the bottom of this, the school board has one mission. Surprisingly, it’s not about achieving a quality education; it’s about living within a set budget. And budgets are driven not by the success of the education process but by parsimony; school board members are elected because they promise not to raise property taxes. They may mumble something about the need to raise education standards, but if you attend a school board meeting, quality of the education provided within the school district is not on the agenda. The Superintendent is a bureaucrat, a manager who oversees the expenditure of the funds budgeted and who only leaves his office when he’s needed to attend board meetings.  He’s almost never seen at an individual school, and if he does come there, it’s a state visit.

If there are unforeseen developments which would require additional funds for a school, there aren’t any. Schools may be urged to keep the lights off in classrooms to save money. Teachers may be laid off. Programs may be cut. None of these improve the quality of the education provided, and no one pretends they do; it’s just necessary to take these steps in order to live within the budget.

At the bottom of the heap is the teacher. He/she is generally poorly paid compared to other college graduates. They come to the profession bright, shiny, motivated to change things, certain that all they need to do is CARE for the students and do a good job. And within five years, they have either left the profession (almost half) or have begun to be ground-down by the bureaucracy. They’ve attended numerous meetings having to do with one or two special-education students, had assemblies dealing with minority rights, spent their time overseeing students in hallways or on playgrounds, had numerous meetings with parents, and have come to realize that their expertise doesn’t count for much at all. They’ve watched a few students terrorize others through bullying and had students continually interrupt classes because they simply didn’t want to be in school but were compelled to be there (think of it in terms of prisoner mentality, the same thing that makes convicts riot), and have seen that they, the teachers, have no means of effectively controlling this, nor does the school’s administration. Expulsion is never used for bullying or class disruption; that’s reserved for firearms on campus or similar felonious behavior. The slogan is “We can’t deprive a child of an education.” In reality, such behavior by schools deprives hundreds, thousands, of children of a quality education.

Teachers teach WHAT they are told to teach, HOW they are told to teach it, and to students they had no influence in selecting. The better students are removed into Gifted and Talented programs. What are left behind are those considered ‘average’ and many who are handicapped by developmental or behavioral circumstances. Some of these are so retarded, for lack of a better word, that keeping them in school is simply warehousing them. There is no free institution for a child who has a calendar age of 14 but a mental age of 2; but the public school is forced to take him in and provide a ‘teacher’ and assistant to care for him during the day. That’s a (real) extreme example, but there is a gradation of students who are ‘in school’ but not prepared for or willing to be educated. This is the unwanted side effect of all that social engineering.
Want to watch schools be immediately improved? Expel or release the nonproductive ‘students’. They cannot be forced to become educated, despite pious wishes to the contrary. Require teachers to teach, and only teach. Expect them to bring the best information that their branch of learning offers, but don’t tell science teachers (as an example) that they cannot teach evolution or reproductive biology. Hold SCHOOL BOARDS responsible for education, and any judicial interference in education should be subject to a review from a higher court to see what the effects of that court ruling would have on general education. FUND the schools for education, not social engineering. If some degree of social engineering is necessary, then provide FUNDS from the agency or level that requires it.
Or go on doing the same thing you’ve been doing for the last half century.

Presidents and politicians come and go and leave nothing of substance in their wake.  The latest bandaid solution had to do with repairing roads and bridges and dams, and certainly this is a start.  The infrastructure needs help or it will begin to collapse as did the bridge on I-35.

But is this an example of the vision we really need?

I would suggest a new endeavor.

I noted back in December that the Northeast was buried in snow, and more came in through the winter and increased the snow cover into the middle of the nation.  Inevitably, snow eventually melts and existing rivers can’t handle the runoff.  Floods result.  Remember those?  Remember all the floods every year, as far back as I can remember?  Sometimes they result from winter snow, sometimes from hurricanes that hit cities or states in the Old South, but every year, there are floods.

Meantime, there is drought.  The West inevitably has drought, somewhere.  This year it’s Texas and New Mexico, but count on it; it’ll come, as it has for centuries.  The Dust Bowl didn’t just happen because of poor farming practices; a long-term drought was the underlying cause that poor land management made worse.  The major cities of the West are chronically short of water.  Irrigation is getting more difficult and expensive all the time.  Whatever water is available gets reused over and over, resulting in salt buildup in irrigated lands that are some of the most productive in the nation.

I would argue that we can, and should, do something about this.

Put simply, I suggest we harvest excess water wherever it exists and move it to wherever it will do the most good.

There are advantages and disadvantages to this plan.  It won’t happen immediately, any more than the Interstate Highway system did.  There is a shortage of money to do this, some of the technology would need to be developed, and it would cause some disruption to existing systems.  It would, however, soak up excess labor and begin to put people to work almost immediately.  The process might easily take 20 years or more to complete, and that excess labor would be employed during this time and the economy would be helped.  It would begin to show some benefits within a year or two.  And those people working on the project wouldn’t be unemployed, and they’d start paying taxes back to the system.  Taxes multiply as the money cycles through the various affected economies.  Some of it would go to the federal government, some to states and municipalities.  Seed money would grow.  And the necessary funds could ‘bootstrap’ themselves, using taxes and decreases in social programs to continue funding.  Meantime, we’re already paying in assistance to people whose lives have been damaged by flood or drought or wildfire.

What would the project consist of: I suggest canals and pipelines, with the canals being favored where practical.  Use a system of gates and locks to control water flow.  Canals should link reservoirs in the east with those westward, and either tunnel through highlands or use a system of pumps and pipelines to move water over barriers.  I suggest hybrid wind/solar power for the necessary pump systems.  Eventually, when the process is complete, there would be a need to maintain the system, just as the highway system needs to be maintained now.   That would employ workers.  Canals serve as a transport system as well as a means of moving water and fees for use can help with costs of maintaining the system.  Plus, any material moved by barge or boat is material that isn’t being moved by the railway system or road nets.

This increases economic activity within the nation, and it can’t be exported.  It’s a win-win, in my opinion.

In the early stages, water would be harvested and used immediately; later, excess water might be used to recharge the depleted aquifer system.

Where to build the canals and pipelines?  I’d suggest in the north, at the beginning.  Later systems could be built across the south.  The reason for this is snowfall.  Currently, there’s little to do with snow that falls in the north except to wait for it to melt, and it generally melts all at the same time.  But some of the snow could be dumped into the reservoir/canal system and this could be continued all during the winter, weather conditions permitting.  A steady effort to remove snow, to harvest it in other words, would pay off in lesser flooding later.  A system of feeder ditches along major roadways would allow collecting of snow from roadways and surrounding lands.  We in the west have such systems; we use them to divert water from rivers such as the Rio Grande and the Pecos.  The rivers are often dry in summer, when the irrigation season is in full swing, because all the water is in the ditches.  Ditches can collect water as well as divert it.  Ditch to river or reservoir, canal from the rivers or reservoirs, pipelines where that’s the most practical solution.

My thinking.  Perhaps you might let your politicians know about it?

This was originally written in response to an article from The Atlantic.

I wrote a series of short essays and posted them on the International Mensa Economics Forum.  I’ve now collected them and I’ll post them here.  There may be some overlap and repetition, but hopefully not too much.

This topic, free trade, has been in the back of my mind for a long time.  Two recent reports have revived my interest and cause me to develop my thinking further.

It has recently been reported that US corporations are stockpiling major cash reserves; the theory is that they’re waiting for an improvement in the economy before they invest.  Also, at this time the Boeing Aircraft Company is attempting to move the production of their new Dreamliner airplane to South Carolina.  There’s a connection here.

A little background: we have two sets of labor laws generally in the USA.  They’re set by states, and political systems and attitudes determine which sort of laws exist.  It is common in most industrialized states such as New York and Massachusetts and Washington to have ‘union’ labor laws.  These permissive laws allow unions to dictate to workers that they must pay dues to the union, whether they might wish to belong to such or not.  In other states, mostly found in the old South, labor is regulated by ‘right to work’ laws.  Unions have much less power in these states.  With greater power, unions can coerce manufacturers to pay ever-higher wages to workers by threatening strikes which will shut down the manufacturing plant.  This is the way unions survive.

Unions overwhelmingly support the US Democratic Party.  The Democrats depend on union members to provide funding and votes for their election campaigns.

So now the Boeing Company wants to move manufacturing of their new airplane to a right-to-work state, which would reduce the ability of the various unions to coerce higher wages by threatening to shut down the manufacturing plant.  The union(s) are challenging the company’s right to do this by complaining to the US National Labor Relations Board, an arm of the US Federal Government.  Which is, of course, controlled largely by Pres. Obama and the Democratic Party.  The matter is now going to court for adjudication.

Back to the corporations that are hoarding cash.  They currently have the right to move their operations overseas rather than pay prevailing US wages to workers.  In essence, they’re doing the same thing that Boeing is doing.

And by a series of ‘free trade’ agreements, the government can’t do anything to stop them.  These companies want the US market for their goods, but they don’t want to pay the workers here a fair share of the income from sales of their products.  Instead, the income goes largely to management, and management is composed of a series of interlocked oligarchs.  They manage businesses and sit on boards of other businesses and pay themselves hundreds of times what a production worker makes.  Upper management routinely receives salaries and benefits that bring them millions of dollars each year; and if stock prices or economic conditions waver, they simply lay off workers and ‘downsize’, with the intention of picking up necessary product from factories where the workers aren’t paid as much and can’t demand better wages or working conditions.  This has been shown by any number of researchers, who graph the income of the managerial elite (an ever-rising line) versus that of the production workers; either a flat or slightly-decreasing line.

This practice isn’t corrupt, but it certainly is exploitative.  And nothing can be done about it in the present climate, where ‘free trade’ is supposed to be so good for the economy.

Lacking all those free trade agreements, such as NAFTA here in the US Southwest, governments could adjust the price of goods coming into the country by imposing tariffs.  Take away the excess-profit motive and companies will start to pay American workers again, because they are here (no transport costs) and because they routinely work very hard.  They work longer hours, are at least as productive as, and take fewer vacations than is common in other industrialized nations.

Unions need to be controlled better than they currently are.  Unions, by the nature of their operation, must always demand more in wages and benefits for their members; but at the moment they’ve priced American labor out of the market.  There was a time when American workers were victimized by company executives, and unions were necessary to change conditions for the better.  But that’s no longer the case, and in many cases national agencies now protect the rights and safety of employees.  Meantime, unions have used the political process to aggrandize power and influence so that controlling them is going to take a major political effort, so I don’t foresee it happening without a change at the upper levels of American politics.

As an example, in New Mexico construction workers might receive $15 an hour for non-union jobs.  That same worker would expect twice that rate if the job was ‘union’.  Same worker, same kind of work, possibly unskilled or low-skill labor.

To summarize briefly: workers have no real protection except for national agencies, because companies can simply move their operations to a place where workers are paid less, where unions don’t have control, and where regulations aren’t so binding.  And nations can’t really do much about this because they’re hampered by free trade agreements.  And such agreements favor the oligarchs at the top, and they also favor nations who can produce goods cheaply.

Western nations and probably most of the developed nations of the world share economies to the point that it’s not really just to lay too much blame on the nations that are now in trouble.

As a sign of how linked we all are, some $36 billion of the US stimulus money went to German and French banks, via AIG.  That money was borrowed, largely from China, and so it added to the US debt.

Greece is in the news just now; but a part of the problem is that Greece is in Europe, and they want the same sort of life that Frenchmen and Germans and North Europeans/Nordics want, with the government providing jobs and services such as vacations and retirement and health care.  And the Greek economy just can’t support all of that.  What sort of industries support the Greek economy?  Shipping, tourism, some agriculture (in the valleys; much of the land is mountainous and rocky), fishing (but that’s no longer what it once was, economically speaking) and probably a few things I’m not aware of.  But the Greek economy is not nearly so robust as the French or German or British.  This is also true of the Spanish and Italian economies, although both have more of an agricultural economy that does Greece, simply because of the landscape and the climate.  Plus Spain and Italy are dealing just now with refugees from Africa.

There are  costs and profit to be considered, and other matters like depletion and intangibles must be somehow addressed, when discussing international trade.

For illustration, consider two nations: why should they trade anything?  Why not simply do business with persons in their own nation?  I think that the main reasons for trade involve the other nation producing something that the home nation can’t produce, or it produces something of better quality, or there are cost advantages involved because of local conditions.  Each of these can produce inequality, economic advantage, for one nation or the other.

Take cotton as an example.  The US produces much cotton, so why should it buy cotton from Egypt?  Egyptian cotton is prized for longer fibers (better quality) and possibly for lower costs (Egyptian labor is cheaper than what is usually available in the US, but offsetting this is the heavy use of machinery in the US, which reduces labor costs to something like parity), and so Egyptian cotton is imported to the US, but not in amounts that would threaten the home industry.  No real advantage for either, so trade can continue indefinitely.

But then there’s the case of mineral wealth.  It might be oil in the Middle East or Copper in Chile.  The US has oil and Copper, but neither are in the qualities or quantities they once were.  It’s cheaper to extract both in the named regions.  A complication here is quality of the producing nation post-extraction (pollution, conditions of the exhausted mine, etc) and depletion.  The actual production costs might be quite low; but if the mineral is sold at cost plus say, 10%, then soon the minerals are gone and the producing nation is left with a mess on its hands and no money to clean the land up.  If the profit is set higher, then the producing nation is left with excess money, dollars in this case, euros if the oil/copper are sold to European nations.  What to do with those dollars?  They can’t be maintained indefinitely without inevitably losing some of their value.

Another complication: political advantage.  Producing nations may decide to form a cartel and control prices to provide an advantage to themselves or to force the purchasing/trading nation to act in some way that they might not if left to their own devices.

Quite often, excess money is invested in military hardware.  Fast planes and tanks and ships and submarines are sexy and appealing to the ruling government, regardless of whether there’s a real need for them beyond what’s necessary for homeland defense.  This is almost always a foolish use of excess funds; only first-rank developed nations have the infrastructure in terms of manufacturing, trained populace to operate and maintain the purchased tanks or planes, an ongoing training program that keeps pilots or tankers at the top of their game, a modernization program to keep the hardware and training ‘current’, more or less; it’s not a simple purchase, buy it and use it, but an ongoing program.  Real costs are not a few millions worth of hardware, but a few billions in ancillary costs.  And if the program isn’t kept up-to-date, it’s not really very effective; note Libya as an example.  Whatever Khaddafi spent on hardware and mercenaries to operate it, it was money wasted.  Mubarak armed Egypt, with the purchased armaments aimed at Israel; his true enemy turned out to be the Egyptian people.   The funds expended might better have been used to build roads and schools and such that could have benefited his people.

­­­­The only way a nation can compete as equals with another country is to either make things cheaper, make them better (e.g., of higher quality), or produce things that the other country simply cannot produce for themselves.  At one time, we could produce aircraft (Boeing and others) but now there’s a European consortium competing, Airbus.  We still produce farm goods, but improvements in strains available to plant have made other nations more competitive in this, and also development of farming regions and a farming infrastructure have helped to reduce American competitiveness.  We produced cars and trucks, but our manufacturers produced poor quality and they produced for the American market; Europeans and Asians produced better quality and their products could function easily in either part of the world.  The advantage went away.

So I’ve concluded that any long-term solution to the trade imbalance needs to start with Free Trade Agreements.

Why is trade imbalance so important?  Simply, it means that money/value inevitably flows out of the nation on the low end of the ‘balance’.  That drop in economic activity must either result in a decline in standard of living in the losing nation, or in debt.  The gaining nations in this imbalance have money to lend, and now it’s a kind of double-whammy; the excess funds from trade imbalance now generate even more excess funds for the nation favored by the imbalance.

There was once a mechanism to address this imbalance, by currency revaluation.  But that’s not possible for Greece or Italy or Spain, because they now use the euro, and Germany and France want to see the euro set at a level that favors exports for their nations.  It’s also not possible for the US, because the US dollar is the standard; it can’t be lowered unilaterally by the US.  So Europe and Asian and Middle Eastern nations set their currencies to a point that favors export of their products.  The imbalance continues.

None of the Western nations can compete with the Asians and others in the undeveloped world in terms of price.  German workers and French workers and American workers expect wages and benefits that are far above what are paid to Chinese and Indonesian and Vietnamese and even Indian workers.  The practices involving safety in those nations would horrify an American or German worker.  There would likely be a strike or at least some job action to correct those conditions; I’ve read that in China, injured workers are simply dismissed and new ones hired.  Medical care is paid for through state agencies, I imagine, but that worker doesn’t get the kind of disability retirement that is common in the developed nations.

Conclusion: we can’t compete on the basis of cost with the Third World.  And where we produce quality goods, those Third World workers can’t afford to buy what we’ve produced.  Plus there’s piracy, notably in China, where we produce things they can’t make on their own.  Music, computer programs, even the computers or cell phones that are US designed and manufactured in Asia get diverted to markets there to compete with those produced for American or European firms.  And copying things such as cell networks that were developed over here is much cheaper than developing new intellectual property, new processes, from zero.

It may be that the process, the cycle, is too far advanced to be stabilized or reversed.  All the work done by our people, all the things we’ve developed, may now go to benefit others in other parts of the world.  The nation that put men on the Moon no longer has a manned space program.  The workers who staffed Cape Canaveral have been laid off and have dispersed.  The Russians, who inherited the USSR’s program, just lost a cargo craft and there’s discussion of abandoning the ISS.

Work is still being done over here in the sciences, but intellectual advances go freely about the world, so that whatever knowledge might be developed in the supercollider, for example, will be shared, whether or not other countries contributed to the expenses of gaining that knowledge.  It’s the same with things such as the US space program, which was expensive but contributed much knowledge that now enriches the life of people around the world.  The expenses weren’t shared…but the benefits were.  We in the US, and some in Europe, benefited from discoveries made in other places; discoveries in mathematics, in astronomy, in medicine, any number of other sciences.  Some of this particular cycle is now beginning to change; China and India are producing engineers and scientists, and they are publishing work that will benefit the world.  Chinese engineers are building bridges and buildings, and the intellectual property developed in the doing of that will come inevitably to the West.  It seems likely, to me anyway, that intellectual exchange among nations and peoples is something that could fairly be described as ‘free trade’.  But economically, trade isn’t free; that’s why there are imbalances, and why debt begins to build among developed nations.

And unless this process can be arrested and reversed, nothing but decline is in the future of the developed world.

ADDENDUM: I wrote the first of my essays almost exactly two years ago.  This week, in Time Magazine, Joseph Stiglitz was interviewed.  He is a Nobel Laureate who coined the term “the 1%”.  And in the interview, he used the exact terminology that I’ve used here: ‘The concept of the free market is a myth.’  I feel a bit better about my writings in economics after that!