This is a blog starring Four Cheap Sisters. They each have a goal for the year, each for different reasons: reduce the amount they consume. MomCat is here as well, to keep an eye on her kittens.
Sorry--it's a map of economic growth. Every single state is in a period of negative "growth"--that is, contraction. All but two are experiencing large contractions.
So what's with Alaska, Wyoming and especially Louisiana which is still in 3rd world state after Katrina? Why are they doing less bad than the rest of the states?
By "less bad" understand that they are only *barely* less bad. Louisiana is easy to explain: they are still doing massive amounts of post-Katrina rebuilding. That will take many more years. As for Alaska and Wyoming, I don't know. I imagine it has to do with whatever their primary industries are.
In Alaska and Wyoming, I imagine their resilience is because they have very limited exposure to all of the industries that have been collapsing: technology, finance/real estate, manufacturing, etc. The only three industries I know of in Alaska are energy, tourism, and fishing. I guess the collapse in oil (and looming collapse in tourism) hasn't yet swamped the continued vitality of fishing. In Wyoming, the only two industries that I know of are tourism, and agriculture, and again, food prices haven't collapsed (in fact, they've gotten higher, since we've been idiotically turning most of our corn into an inefficient source of energy for the past decade).
But this is just armchair speculation--and doesn't matter anyway since by next month, chances are good that all except for maybe Louisiana are going to be dark red.
Oh, and Uncle Sam--third world countries generally have the highest rates of growth, because they have so much more room to improve. The fact that Louisiana was hurt so badly after Katrina is, ironically, very good for their growth rate.
Actually after I posted, I realized that there is a lot of building and growing in Louisiana BECAUSE of Katrina. So what would zero growth, or even a minimal growth, look like over a long period of time. Would that mean we are maintaining?
UncleSam, your question is sophisticated and complicated, and I don't think anyone knows the answer. Because no one knows, it's basically an ideological divide: extreme right wingers (that "Austrians" based on two famous economists, Von Mises and Hayek, who loathed the New Deal and thought it was ushering in communism) verus everyone else ("Keynesians," after John Maynard Keynes who, obviously, had a huge influence on FDR's administration and has been the dominant voice of Western Economies for most of the last century--though his views that government should spend in times of economic contraction have often been deeply distorted by moderate right wingers like Reagan and Bush 43 who wrongly argued that his message is that "deficits are good" or at least "deficits don't matter" and used that as an excuse to introduce record levels of public debt.)
The essential difference, from what I can make out, is that the Austrians believe that we live in a "fixed pie" universe--there is only so much wealth to go around, and the only question is how to divide it. Because they don't think that government policy can (at least in the long run) actually increase the size of the pie, they think governments should stay out, and let private actors negotiate over the rest.
Keynesians believe in infinite potential for growth (until the earth crashes into the sun, I guess). Indeed, with their core policies (like basing currency on the "full faith and credit" of the issuing government rather than on some commodity, like gold), they *need* slow, steady growth or the system collapses. (This is why deflation is such a dire prediction for Keynesians, while the Austrians see it as a necessary corrective.) The reasons for that are complicated, and I only half understand them, but most everyone seems to agree they are true. Believe it or not, the explanation has something to do with our old friend leverage: leverage literally allows banks to create money where it didn't exist before. Someone deposits $100 into a bank; the bank lends $80 of those dollars to someone else to build a business--suddenly, by magic, the bank has turned $100 into $180.
So what would happen with zero, or even negative, growth over the long run? Who knows. Speculating about it keeps academic macroeconomists employed, though. And you have now pretty much tapped out my entire understanding of the subject!
Are you really in the "fixed pie," anti-stimilus camp? Then yeah, your bedfellows are pretty right wing.
Honestly, the main reason I'm a Keynesian is because of the bedfellows. When I try to reason out which camp is right or wrong I get nowhere. But the people I trust (like Paul Krugman), *because* they are left wing like me, are Keynesians. So I am, too. I wish I were more sophisticated than that, but honestly, I'm just not. I can't make heads nor tails of any of it.
I'm not in the anti-stumilus camp; I know we need to do something but... I don't think the answer is propping up already over valued assets. The rise in home prices primarily in CA did not even follow standard laws of economics like supply and demand. One of the main reasons the prices screamed sky high is because lenders that we trusted to follow the rules ignored the safeguards that should have been enforced (making sure the mortage could be paid by the lendee, having an accurate and truthful assessment, etc.) The banks loaned people 500,000 to buy 100,000 dollar homes. I also think maybe it's good for gas, SUVs, meat and other things we don't need a million of to be expensive. Then maybe we'd conserve gas, eat a healthier amount of food and buy a couple of nice items that cost enought to pay reasonable wages to the people who made them and ran the store where you bought them instead of 20 dresses as Wal-Mart that were made in a sweat shop in China, shipped over here and sold to you by a single mother of three with no medical insurance.
Does this make me right wing?
I am actually in the middle of two books that may be affecting my feeling about this. I'm am planning to blog a mini-book report about them when I'm done. One is on the retail and mass market revolution at the turn of the century and the other is on Web 2.0's take over of our media culture.
Huh, what's this. It didn't come with any expaination to the map.
ReplyDeleteSorry--it's a map of economic growth. Every single state is in a period of negative "growth"--that is, contraction. All but two are experiencing large contractions.
ReplyDeleteWe're making history with this economy every day!
So what's with Alaska, Wyoming and especially Louisiana which is still in 3rd world state after Katrina? Why are they doing less bad than the rest of the states?
ReplyDeleteBy "less bad" understand that they are only *barely* less bad. Louisiana is easy to explain: they are still doing massive amounts of post-Katrina rebuilding. That will take many more years. As for Alaska and Wyoming, I don't know. I imagine it has to do with whatever their primary industries are.
ReplyDeleteIn Alaska and Wyoming, I imagine their resilience is because they have very limited exposure to all of the industries that have been collapsing: technology, finance/real estate, manufacturing, etc. The only three industries I know of in Alaska are energy, tourism, and fishing. I guess the collapse in oil (and looming collapse in tourism) hasn't yet swamped the continued vitality of fishing. In Wyoming, the only two industries that I know of are tourism, and agriculture, and again, food prices haven't collapsed (in fact, they've gotten higher, since we've been idiotically turning most of our corn into an inefficient source of energy for the past decade).
But this is just armchair speculation--and doesn't matter anyway since by next month, chances are good that all except for maybe Louisiana are going to be dark red.
Oh, and Uncle Sam--third world countries generally have the highest rates of growth, because they have so much more room to improve. The fact that Louisiana was hurt so badly after Katrina is, ironically, very good for their growth rate.
ReplyDeleteActually after I posted, I realized that there is a lot of building and growing in Louisiana BECAUSE of Katrina. So what would zero growth, or even a minimal growth, look like over a long period of time. Would that mean we are maintaining?
ReplyDeleteUncleSam, your question is sophisticated and complicated, and I don't think anyone knows the answer. Because no one knows, it's basically an ideological divide: extreme right wingers (that "Austrians" based on two famous economists, Von Mises and Hayek, who loathed the New Deal and thought it was ushering in communism) verus everyone else ("Keynesians," after John Maynard Keynes who, obviously, had a huge influence on FDR's administration and has been the dominant voice of Western Economies for most of the last century--though his views that government should spend in times of economic contraction have often been deeply distorted by moderate right wingers like Reagan and Bush 43 who wrongly argued that his message is that "deficits are good" or at least "deficits don't matter" and used that as an excuse to introduce record levels of public debt.)
ReplyDeleteThe essential difference, from what I can make out, is that the Austrians believe that we live in a "fixed pie" universe--there is only so much wealth to go around, and the only question is how to divide it. Because they don't think that government policy can (at least in the long run) actually increase the size of the pie, they think governments should stay out, and let private actors negotiate over the rest.
Keynesians believe in infinite potential for growth (until the earth crashes into the sun, I guess). Indeed, with their core policies (like basing currency on the "full faith and credit" of the issuing government rather than on some commodity, like gold), they *need* slow, steady growth or the system collapses. (This is why deflation is such a dire prediction for Keynesians, while the Austrians see it as a necessary corrective.) The reasons for that are complicated, and I only half understand them, but most everyone seems to agree they are true. Believe it or not, the explanation has something to do with our old friend leverage: leverage literally allows banks to create money where it didn't exist before. Someone deposits $100 into a bank; the bank lends $80 of those dollars to someone else to build a business--suddenly, by magic, the bank has turned $100 into $180.
So what would happen with zero, or even negative, growth over the long run? Who knows. Speculating about it keeps academic macroeconomists employed, though. And you have now pretty much tapped out my entire understanding of the subject!
Hey, did you just call ME right-wing?!
ReplyDelete(sorry, it took me a while to read this)
Are you really in the "fixed pie," anti-stimilus camp? Then yeah, your bedfellows are pretty right wing.
ReplyDeleteHonestly, the main reason I'm a Keynesian is because of the bedfellows. When I try to reason out which camp is right or wrong I get nowhere. But the people I trust (like Paul Krugman), *because* they are left wing like me, are Keynesians. So I am, too. I wish I were more sophisticated than that, but honestly, I'm just not. I can't make heads nor tails of any of it.
I'm not in the anti-stumilus camp; I know we need to do something but... I don't think the answer is propping up already over valued assets. The rise in home prices primarily in CA did not even follow standard laws of economics like supply and demand. One of the main reasons the prices screamed sky high is because lenders that we trusted to follow the rules ignored the safeguards that should have been enforced (making sure the mortage could be paid by the lendee, having an accurate and truthful assessment, etc.) The banks loaned people 500,000 to buy 100,000 dollar homes. I also think maybe it's good for gas, SUVs, meat and other things we don't need a million of to be expensive. Then maybe we'd conserve gas, eat a healthier amount of food and buy a couple of nice items that cost enought to pay reasonable wages to the people who made them and ran the store where you bought them instead of 20 dresses as Wal-Mart that were made in a sweat shop in China, shipped over here and sold to you by a single mother of three with no medical insurance.
ReplyDeleteDoes this make me right wing?
I am actually in the middle of two books that may be affecting my feeling about this. I'm am planning to blog a mini-book report about them when I'm done. One is on the retail and mass market revolution at the turn of the century and the other is on Web 2.0's take over of our media culture.