Month: April 2014

The space shuttle and the Great depression

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People complain about the demise of the shuttle program, usually with some sort of political grumbling, but the fact remains that the old shuttle program was obsolete and dysfunctional.  Instead, the Bush and especially Obama administrations have created the world’s first viable commercial space program.  The space race is no longer about which government has the biggest program.  That ship has sailed or will sail eventually.  In the long run, it’s about which nation’s businesses will develop a global monopoly on the space race.  This will have huge economic, geopolitical, and technological implications.  The role of government is a question for the ages with a broad spectrum of potential answers, but one of the things government is really good at is developing basic technology and then passing that off to the private sector for economic benefits and further development.  NASA may no longer have a space shuttle.  It doesn’t really need one, but it’s still working on it’s  mandate: discovering fundamental science and developing new technologies.

 The point is that is that while the government could have focused on short term (and expensive) shuttle program, instead the government made a decision for long term gains.  This is what governments should do, make investments.  Consider the New Deal.  Economists have mixed opinions about how effective the New Deal was in ending the Great Depression.  There are arguments on both sides.  It probably helped some, but what’s missing from most analysis is what was the effect of the New Deal beyond the Great Depression.  When I was a kid our favorite field trips to grand coulee dam (ok, maybe it was just my favorite trip).  It’s one of the largest structures in the country.  Half the people on the west coast still get their power from Grand Coulee or Hoover Dam and will for generations to come.  They were a key economic factor during World War II.  More than the dams all over the country, trails, camp sites, water ways, irrigation, cultural achievements, did more than anything else to build the west.  Can anyone say “Hollywood?”.  If you’ve ever eaten an apple in your life it almost certainly came from Washington and grown with power and an irrigation system that got it’s start during the great depression.   These are the kinds of investments that pay off in dollars, jobs, and technology.
The New Deal more than paid for itself in economic benefits many times over.  Maybe not in the short run where it was expensive, and some considered it a failure, but certainly in the long run.  In fact, the return on investment is literally incalculable.  I’m not even going to talk about the Eisenhower highway act.  The 2007 and 2008 stimulus programs were a failure because they didn’t create anything of substance.  Governments are exceedingly effective at planning for the short term, but highly proficient over the long term especially when it comes to infrastructure.  Something to bear in mind when talking about current economic policy.  It’s not about immediate tax cuts, or spending programs.  It’s about planning for the long term.
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The insufficiency of moral outrage

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Something caught my attention this week and it deserved a note. It was Equal Pay Day. In case you missed it this year was full of spectacular political drama. Democrats tried to drum up some justified outrage over an important cause, and Republicans tried desperately not to look like enormous asses on the issue and failed miserably. But we’ve been there, we’ve seen that bit before. The evilness of the Republican Party is more than this blog can handle without a lot of foaming at the mouth and enough *headdesk* for a bloody concussion.  However, if all you want is to make points at the expense of Republicans then congratulations, Equal Pay Day has been a tremendous success, but all the moral outraging at this issue is not enough.

Let’s start with the moral outrage.  Who are we mad at?  I mean specifically.  The rhetoric does little more than pit men against women.  Which not only isn’t true, but it’s poor politics. I know I’m not discriminating against women.  The worst you could say about me is that I’m passively tolerating a patriarchal hierarchy that is refusing to deal with institutional barriers to parity.  Mostly because my time and energy are spent in other places, and secondly because I have no idea how to fix the problem.  Neither does anyone else.

The number that is trotted out at these things is 77.  That’s 77 cents that a woman makes for every dollar of male income.  It’s a good number.  It’s even an accurate number as far as such things go.  But that number lacks context.  If you add up every dollar that every woman in the country makes and compare it to every dollar a man makes it’s true, 77c.  And so every woman goes around demanding “equal pay for equal work”.  It’s a good number and a great slogan.  There’s even a bill in congress that Republicans are obstructing called “The Equal Pay Act”.  Here’s the problem, generally speaking, women aren’t doing equal work as men.  Women loose a tremendous amount of time from their careers to their families.  If you account for that time, experience, education, and other factors, the pay disparity virtually disappears.  Let’s say a woman loses 5 years of work to raise a family.  She’s going to permanently loose 5 years of prime economic activity.  That economic loss isn’t just issue for women, that’s an issue for everyone.  It’ll have a huge long term financial impact for her and her family and by extension, the rest of the economy.  The second thing that happens is they loose 5 years of experience.  Finally, the loss of economic productivity and experience is directly harmful to the economy, and by the economy I mean me personally.  Now it’s not that women’s aligned groups aren’t talking about this, but when they do, they do a terrible job at making a case for economic advantage.  They almost always put it in terms of how outraged everyone should be.  And people should be outraged; it’s just idiotic politics.