Follow this link to the blog posting Giving Up on Policymakers by Mark Thoma, an economist in Eugene, Oregon (Awr’-i-gun, not Or-a-gone’).

He starts off by saying:

I’ve been pushing hard for more help for labor markets for quite awhile — at times I’ve thought it was a bit repetitive, but necessary — but it’s probably time for me to give up and accept that we are going to have a slower recovery than we could have had with more aggressive fiscal policy. Unless there is a dramatic reversal of recent indications that we are at the beginning of a recovery, Congress is not going to provide anything more than token help from here forward.

He has a very good analysis of why fiscal stimulus is needed, in general.  However disappointed he may be, he has to recognize political reality.  The uproar from the economically uneducated would be deafening if the President and Democrats in Congress tried for another large stimulus.

The economically uneducated (which appears to be a huge segment of our society) thinks that cutting taxes and the deficit is a better solution.  Just staving off this ruinous idea is an accomplishment of the President in and of itself.

In a democracy, politicians can’t just institute any old policy they want, and expect to stay in power for long.  If what they want to do is right, then they must first educate the electorate.  Such education does not last long, so it must be continuously reinforced.  This is what President Obama is doing for Health Care Reform.

It would sure be helpful if the President wasn’t the only one trying to educate the electorate.

Mark Thoma tries to do his part with his blog.  I try to do the same with mine.

I also try to recognize who is on the same side as I am.  I believe more in praising them for what they have accomplished rather than constantly carping about what they have not accomplished.

On the pronunciation of Oregon, try this audio ->

This audio comes from reference.com.

My signature is among the ones discussed in the video.

Follow this link if you’d like to help congressional candidates how fought for health reform.

Follow this link to the VoteVets.org page where you can support the the airing of the above ad.

I frequently hear and read remarks that we cannot afford the expensive Health Care Reform bill.

I find this argument incomprehensible when faced with the fact that the bill will cut the deficit over its first 10 years.  The cut in deficit will be even greater in the ensuing ten years and beyond.  How can we not afford to do something that will save us money?

I think one problem is the way the money is discussed by the media and the pundits, and even by proponents of the legislation.

You will see articles about the fact that the bill will cost $788 billion in its first ten years.  This seems unaffordable.  Then you read that the deficit will be cut by $143 billion over the time period.  These numbers come from the Congressional Budget Office report H.R. 4872, Reconciliation Act of 2010 (Final Health Care Legislation).

If you look at those numbers without thinking too much, you might think something like the cost of $788 billion dwarfs the savings of $143 billion.  Think a little more and you will realize that $143 billion is not the amount saved, but it is the difference between the amount saved and the cost.

The amount saved by the bill must be $931 billion. Spending $788 billion on something that saves $931 billion leaves you a net savings (spending reduction) of the $143 billion labeled as a deficit reduction.

The headlines should be

Health Care Reform Saves $931 billion

In the article under that headline it could say taking costs into account the net savings is $143 billion.

Follow this link to the blog posting by Clay Shirky. I found the link to this item on the Facebook page of my friend RogerG.

There is great food for thought about the role of complexity in the downfall of both businesses and civilizations.

In the Shirky post, he discusses the book The Collapse of Complex Societies written by Joseph Tainter and published in 1988.

Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.

The ‘and them some’ is what causes the trouble. Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn’t these societies just re-tool in less complex ways? The answer Tainter gives is the simplest one: When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.

Maybe this explanation is more understandable than the way I put it in electrical engineering terms. In the electrical engineering world there is something known as an operational amplifier.  It has extremely high gain from the input to the output.  It is also very unstable in its isolated incarnation. Engineers add negative feedback around the amplifier which cuts down on the gain, but adds stability and accuracy.  So negative feedback is a good thing, but there is only so much gain in the original amplifier that you can trade for other good characteristics.

I have always likened running the economy to this amplifier example.  When allowed to run free, it produces tremendous wealth, but it is also susceptible to wild fluctuations.  Put in some regulation, you give up a little wealth production, but you diminish the oscillations.  If you go too far with regulation, you have no more wealth production and the system is economically stable around the poverty level.  Though, at this point, it is probably not politically stable.

My friend RogerG thinks,

Isn’t North Korea a counterexample? It’s been stable for decades despite all manner of destabilizing factors.

To further clarify his comment, he added:

My comment referred to this text in your blog: “If you go too far with regulation, you have no more wealth production and the system is economically stable around the poverty level. Though, at this point, it is probably not politically stable.”

Which brings me to comment on the feedback analogy as applied to the political system for this example. Allowed to run free, the political system operational amplifier would be unstable. Put in massive negative feedback of a million man army to suppress dissent and you can have stability in the political system.

However, what you see is the adding of more and more complexity in every domain. This is also a perfect example of the inflexibility brought on by this complexity. The book by Joseph Tainter was an archaeological study. Decades of time in the Korean example is not much time on an archaeological scale.