Thursday, September 8, 2011

What Can We Expect?

Melody Barnes is the administration’s director of Domestic Policy. Melody Barnes is a lawyer. Christina Romer has gone back to California. The chairman position of the 3-member Council of Economic Advisors is vacant. Gene Sperling, an American lawyer and political figure, has replaced Larry Summers as Director of the National Economic Council. Summers is back at Harvard. Although Sperling is a lawyer, he “did time” at The Wharton School of The University of Pennsylvania. Perhaps he can translate economics to our Sage Constitutional lawyer Commander-in-Chief.

It looks like September 8, 2011, will be a Melody Barnes night. She does not have the background necessary to understand the paradigm shifts of the past 3 decades.
Melody Barnes’ interest is “education”. How is education related to knowledge?
The University of Michigan is almost as good as my alma mater The University of Wisconsin. The University of North Carolina at Chapel Hill is better known than my undergraduate alma mater Drury University. However, I have many more years of experience in the college of hard knocks.

John Maynard Keynes didn’t invent economics. Milton Friedman, the Chicago School, and Friederick August von Hayek didn’t/don’t think he got it right. He probably understood the economy better than most of today’s Keynesians.

We have just completed a paradigm shift. We are recovering from Postmodernism. Former Secretary of Labor Robert Reich got it almost right today on CNN. Extension of the tax cut as well as the extension of Unemployment Benefits shouldn’t even be counted. These are basically MAINTAINING the current situation.

When Dwight Eisenhower was President, spending on the Interstate System was spending on a significant ADDITION (or EXTENSION) of Infrastructure. Now, nearly all highway shovel-ready construction as well as not so shovel ready should be considered needed MAINTENANCE.

If we want the US Economy to “recover”, we should avoid nearly all “res” as in rebuild, rehire, relearn, … Also, we should be FRONT/forward oriented. Trying to get people “back to work” is misleading us.

Rather than Jobs, Jobs, Jobs, …,Jobs, Jobs, Jobs, as suggested by foul-mouthed Jimmie Hoffa, Jr., the President, and his advisors, should focus on “forming a more perfect Union, establishing Justice, insuring domestic Tranquility, providing for the common defence, promoting the general Welfare, and securing the Blessings of Liberty. We should throw in a little promoting Science and the useful Arts.
The lawyers have totally missed the paradigm shifts of the Post-Industrial Society and The Systems Age.

The Founding Fathers made the Federal Government responsible for the US Post and Post roads. They didn’t foresee electronic mail or the internet. If we can’t fit wireless Broadband under the Commerce Clause, we should be able to fit it under the Post Office which needs some restructuring. Adding a (wireless?) broadband internet highway to the nation’s infrastructure would be analogous to adding the Interstate System when Eisenhower was President. It is consistent with what we need now based on Daniel Bell’s description.

I believe that “unintended consequences” is more appropriately described as “fools rush in where angels fear to tread” than a “finding” or “fact” of science. Robert Hazen of George Mason University includes the law of unintended consequences in his Joy of Science course, one of The Great Courses available from The Teaching Company. The Washington, DC Area has been the center of the Systems Integration market. The last time I checked, we had evolved to “Systems of systems”.

Somewhere, in the past, I heard of Open Systems and Closed Systems. The closed systems are the “nicest” and easiest to analyze and describe. While working on several government contracts in the DC area, I noticed that you had to complete some quantum of work between briefings to the customer or you never made any progress. If there is real work to be done, one has to do some work, translate it into a presentation, and give it to the customer. A part of the folklore of physics is that Enrico Fermi (or an equally well known physicist) submitted proposals to the government to fund doing work he had already done. This worked well until he proposed something that was judged to be not doable.

Investing in infrastructure worked in the Industrial Society. It may also in the Post-Industrial Society. However, we need to move Jimmie Hoffa, Jr., to being president of the Communications Workers of America, or something like that. Daniel Bell's article about the Post –Industrial Society states the following"

"6. Infrastructure: The infrastructure of industrial society was transportation … The infrastructure of the post-industrial society is communication …

"7. A knowledge theory of value: An industrial society … is based on a labor theory of value, and the development of industry proceeds by labor-saving devices, substituting capital for labor. Knowledge is the source of invention and innovation. It creates value-added and increasing returns to scale and is often capital-saving."

Rather than Robert Hazen’s law of unintended consequences, I prefer Jay W Forrester’s “Counterintuitive Behavior of Social Systems”. See
People for whom “System of systems” is the highest hierarchical level they have encountered should read about System Dynamics

The Council of Economic Advisors is comprised of a Chairman and two Members. The Chair is currently vacant. Katharine Abraham and Carl Shapiro have been confirmed by the United States Senate as the Council's members. The Council is supported by a staff of professional senior economists, staff economists and research assistants, as well as a statistical office.

Robert Reich and Christina Romer have both indicated that a $300 Billion proposal is too low. Both have stated on CNN that anything less than $500 Billion is too low. If you are a Republican, you may remember the third big lie from the time of Reagan, "I'm from the Government and I am here to help you."

The Whitehouse’s Guiding Principles on the Economy are listed as:

"Guiding Principles

"President Obama’s central focus is on stimulating economic recovery and helping America emerge a stronger and more prosperous nation. The current economic crisis is the result of many years of irresponsibility, both in government and in the private sector. As we look toward the future, we must confront the many dimensions of this crisis while laying the foundation for a new era of responsibility and transparency."