Short intermezzio...

Forecasting is almost done, but I thought I'd touch on two things.


First of all, the ports nonsense. This is an excellent example of sheer idiocy and ignorance of the press and of stupid politicians.

1) The ports are already run by foreigners: if this was a national security issue, then why hasn't it been adressed over, say, the last decade or so? I can give you the answer: because it doesn't matter. It doesn't matter who handles the day-by-day: what matters for national security is, duh, security of the port. Which is done by the US government. End of story: there is no story here, merely yet another attempt to drum up a tempest in a teapot.

2) Thanks to these fools, including the press, we've come close to insulting the folks who want to do business with us. Not a good idea, and it certainly gives rise to the notion that there is some institutionalized racism in certain circles in the US - Hi, Hillary - against them thar Ay-rabs.  Idiots. Idiots. Idiots.

3) Varifranks has it right: this undermines US logistics efforts.

For those who have never been in the military and have a disdain for it, this is a simple truth: professional soldiers do not study tactics and strategy, they study logistics. The US has won its wars because it has mastered the science of logistics, and other nations lose wars because they disdain it (Hi, Germany, Italy and Japan).


Second, Samuel Brittan has a column in the FT today (unfortunately behind the $ barrier...) that makes me just want to scream havoc and start swinging the axe.

Basically, he argues that having little or no growth is just peachy-keen and dandy-do because GDP doesn't really measure anything and there might be people out there who are just thrilled with working (and earning) less so that they have more leisure time.

Take it to the logical end, Sam! Look at all those folks out there who have lots and lots of leisure time and don't worry about GDP at all: the unemployed.

Jeez. What Brittan tries but ultimately fails to argue is that GDP doesn't take into account quality of life.


Duh. If I had a cent for each time this old canard is drug up, I'd be able to buy myself lunch.

Of COURSE GDP doesn't measure quality of life: it's NOT supposed to do that at all. All that GDP measures is an economy's ability to add value over time to the economic process. GDP is nothing more than that: fundamental GDP growth rates are a function of two and only two things: productivity and depreciation on capital.

Huh?

Adding value in the economic process is nothing more than a simple formula: you take goods and transform them into something else, using a combination of human and financial capital to do so. Human capital doesn't get used up, but increases over time (unless you're like some ex-colleagues of mine), while financial capital wants to be paid.

What Brittan appears to be arguing is that low rates of GDP growth are just fine as long as people make the choice to work less.

But that's not what's happening in the real world: European productivity growth is terrible, either way you measure it (per worker or per hour). There are exceptions, but generally speaking it's pretty abysmal.

And that is why European growth rates are low: they are not being as productive as workers elsewhere. It's an uncomfortable fact, but one that cannot be dismissed.

Brittan appears to be more than willing here to stick his head into the sand and ignore one of the key facts of modern day industrial capitalism: your competitors are getting better at making things. Either you adjust to that fact or you stick your head into the sand and talk about "leisure preferences" and how terrible GDP is because it doesn't take into account the feel-good factor.

Bullshit: GDP, as the value added in the economy, is basic to being able to measure how wealth, which is created in the economy, can be distributed. People can't make the decision to work less and have more leisure when the value added isn't there: this is symptomatic of ignoring the fundamental problem, which is fundamentally weak productivity.

And I don't have a solution (actually, I do, but that's another story entirely): but by choosing to ignore the problem, blaming it on externaltities, and hoping that weak growth rates is a function of people choosing to work less (because they have higher hourly productivity, meaning they can choose to work less and maintain their income, as opposed to working the same amount and earning more money), rather than indicative of much deeper, fundamental problems.

Sheesh. I wonder sometimes if historians will look back at our age and wonder how so many people could be so dumb. Sort of like a modern-day historian looking back at the actions that led up to WW2 and wondering how people could be so dumb and ignore the gathering storm.

Remember, history when it repeats isn't tragedy, it's farce.