Umair Haque has written an article bemoaning the mediocrity of America. Some excerpts:
[W]hat is America still the best at?
Consider this thought experiment. If you were really, really, really rich — say, not just part of the routinely opulent 1%, but a card-carrying member of the eye-poppingly decadent .01% — what part of your life would be American? If you had the money, I'd bet you'd drive a German car, wear British shoes and an Italian suit, keep your savings in a Swiss bank, vacation in Koh Samui with shopping expeditions to Cannes, fly Emirates, develop a palate for South African wine, hire a French-trained chef, buy a few dozen Indian and Chinese companies, and pay Dubai-style taxes.
Were to you have the untrammeled economic freedom to, I'd bet you'd run screaming from big, fat, wheezing American business as usual, and its coterie of lackluster, slightly bizarre, and occasionally grody "innovations": spray cheese, ATM fees, designer diapers, disposable lowest-common-denominator junk made by prison labor, Muzak-filled big-box stores, five thousand channels and nothing on but endless reruns of Toddlers in Tiaras — not to mention toxic mega-debt, oxymoronic "healthcare," decrepit roads, and once-proud cities now crumbling into ruins. Sure, you'd probably still choose to use Google on your iPhone to surf the web — but that's about far as it'd go.Well...
Snarky response #1: "This list is totally cherry-picked. It was probably written using American-made software on an American-made operating system running on a (possibly American-brand) computer with an American-designed and American-made microprocessor, making use of American cloud-computing resources. It was written for an American magazine produced by an American university, to which the author will most likely want to send his kids. And if he really feels like splurging, he'll fly them there on an American-made private jet, which will navigate using American GPS satellites. His kids, of course, will dream of starring in American movies made with American digital cameras, and driving American-made electric sports cars. If they happen to crash those cars, they'll be treated by American surgeons. Etc. etc. etc."
Snarky response #2: "OK, so if America's government launched a massive project to make sure that our country made the highest-quality, fanciest, most expensive cufflinks in the world, then we'd get a spot on Haque's list right next to British shoes and Italian suits, and so avoid the whole line of criticism?"
Snarky response #3: "British shoes??? Ha ha. Ha. Somebody has a sense of humor."
OK, but enough snark. In all seriousness, I just don't think that making niche brand-name luxury goods for the super-rich is an appropriate measure of greatness. By definition, the 0.01% of which Haque speaks are very rare; even in a world as unequal as ours has become, the middle classes spend most of the money. That's why Toyota is the world's #1 carmaker and Ferrari doesn't even crack the top 20.
In other words, a country doesn't necessarily get rich by catering to the rich. Nor is capturing the adulation of the 0.01% the only measure of a business' technical acumen and quality. Sure, it takes quality workmanship to make a nice luxury shoe. But how much more quality workmanship does it take to make thousands and thousands of Boeing jumbo jets that fly thousands upon thousands of times with a nearly perfect overall safety record? Sure, the super-rich probably turn up their noses at Boeing and fly on Gulfstream private jets (another American company, btw). But Boeing is the higher-tech, more impressive company, because successfully catering to all those middle-class masses is hard. Similarly, Wal-Mart has cheap products and ugly stores, but absolutely amazing logistics. And Caterpillar's machines may dig unglamorously in the dirt, but they are a marvel of engineering compared to even the nicest Italian suit. As for spray-cheese, well, just ask a 5-year-old kid whether she prefers that or a nice glass of South African wine.
Still - and I wouldn't have written this blog post otherwise - I think Haque does make a very good point. America does have a serious problem with our acceptance of bland mediocrity.
It's not our businesses or our products that are mediocre, it's our institutions. Our infrastructure, health care system, schools, and cities are, with a few exceptions, disgustingly mediocre. Haque mentions most of these. He makes a very good point.
Take a trip to Japan, and you'll be stunned at how easy it is to get anywhere. The train system is quiet, clean, comfortable, amazingly convenient, and runs on time. Even if you're out in the boonies and need to take a bus, those are much nicer than their American cousins. And it's nice to be able to use a bullet train to get from Osaka to Tokyo in three hours, without wasting two hours waiting for an airplane. (Note that these trains cater to the middle class, not the super-rich.)
Now, much of America is spread out, so it makes more sense to use care rather than trains in many areas. But our auto infrastructure, once the world's best, is decaying, and we're not spending the money to replace it. Meanwhile, in places where a Japan-style train system would make sense, I'm stuck paying $38 for a round trip to New York City on a train that averages about 30 miles per hour and uses old-fashioned paper punch cards. A better system would cost money that we are not willing to allow our government to spend. And it would require systemic reforms that we are not willing to allow our government to carry out.
Meanwhile, one has only to look at the international education rankings to know where we stand. A few simple reforms, like year-round school, increased teacher pay with more stringent qualification requirements, longer school hours, fewer vacation days, and increased ability to fire bad teachers, could probably bring us way up in the rankings. But we do not do these things. These things cost money that we are not willing to allow our government to spend. And they require systemic reforms that we are not willing to allow our government to carry out.
Our health care system, in contrast, is reknowned for its waste. In the case of health care, although the super-rich can enjoy the world's top surgeons, the average American gets worse health outcomes than Europe for a much higher price tag. We're willing to spend the money on health care, but we're not willing to bring in government to control costs.
And don't even get me started on urban blight. Just look at pictures of Detroit.
America's mediocrity does not stem from the failure of its companies. It stems from the failure of its governments - federal, state, and local. If we want to become an excellent country in all respects - if we really decide that we've had enough of mediocrity - it is our government which we must focus on improving.
...Oh, and guess what. America does make the world's fanciest cufflinks. What up now, Britain??
I think this is mostly a result of our weird politics. We have to compromise between the moderately conservative Democrats, and the no-government-spending-no-matter-what Republicans, so the result is usually a compromise where we can only do public spending in the most miserly, tight-fisted way. Most government institutions are way overworked and understaffed.ReplyDelete
??? You are right about the weird politics but are unfair to the the Republican point of view. I would state thier view as "money spent by the government is misspent and unproductive, so we don't want to fund anymore of it". In contrast, Democrats always want to throw money at the problem as the only idea to fix it. Read the history of public education system in this country. Spending has outpaced GDP growth (not really miserly in any way) but outcomes have gotten worse by many measures. Look back at the Chicago school board episode in the fall - the city tried to claw back simple work rules that allowed them to consider evaluations in re-hiring laid off teachers. The cost was they had already agreed to 4% per annum salary increases, more than twice the level of TIPS implied inflation. The Democrats dependence on public sector unions is the enormous 800 lb gorilla in every discussion of government spending.Delete
As someone who has spent a career working with both public and private sector entities in the pension management space, I can tell you that the public ones are always more overstaffed and underworked than the private ones. However, the public ones are typically underpaid, with the expected result of generally less competent.
You've (partially) explained education.Delete
What's the explanation for under-investing in roads and trains? The private sector will fix it all for us?
I know we under-spend on infrastructure, but I also know that we have higher costs than other countries; I don't know why this is the case, though I suspect it's because of eminent domain issues...Delete
I agree that under investing in roads is a problem. Not so sure about trains (on balance) because I find it hard to imagine a worse government expenditure than what we have done with Amtrak over the years.Delete
I am curious about Noah's view on eminent domain. Are you suggesting that paying a nominally fair price raises our cost versus countries that simply take private property to infrastructure needs.
Pemakin - re eminent domainDelete
1. I suspect it has nothing to do with fair price, but with ability to obstruct
2. It maybe has something to do with planning in the first place.
"Not so sure about trains because I find it hard to imagine a worse government expenditure than what we have done with Amtrak over the years."Delete
I don't find it hard to imagine at all.
Amtrak cost the government $1 billion over its entire history, and provided 31.2 million rides last year with a steadily increasing customer base and ticket revenue.
The F-35 fighter cost the government approximately $40 billion. The F-35 wasn't a necessity, because none of the enemies of the US have anything that could even come close to competing with our existing air fleet. The general population got nothing at all for that expenditure.
So which would you rather have: Something useful to a lot of people for $1 billion, or something completely useless for $40 billion?
"the result is usually a compromise where we can only do public spending in the most miserly, tight-fisted way"Delete
Um, then why is the federal budget over $3.5 trillion? If the political discussion is taking place between moderate Dems and zero government GOPers, why are we spending so much damn money?
Even a tight fisted miser can end up spending a whole lot of money if they have enough things they have to spend money on.Delete
And more specifically, most of Federal government spending is on a very specific subset of things: the military and entitlements. Those programs have fairly specific properties which make them appealing even to relatively tight-fisted governments. Entitlement spending as it is currently organized is destined to be rather expensive, since paying for the health care and retirement of tens of millions of Americans is going to expensive no matter how cheaply you try to do it. And radically reorganizing entitlement spending is greatly unpopular. The military could stand to be quite a lot cheaper, but it has some very strong support from many constituencies, which conveniently enough often overlap with people otherwise opposed to government spending.
The military in particularly is spectacularly bloated, with the US spending approximately as much as every other military in the entire world COMBINED. (And some of those, like China, hide civilian projects in their military budget!)Delete
The spending to which we are ENTITLED ("entitlement spending") costs nothing; we pay payroll taxes, we get what we are entitled to. It has very low overhead and very few federal employees, since it's basically just transfers of money. Social Security is a system of transferring money from working people to retirees, and calling it spending is confusing, even inaccurate.
Man, that was a lousy and trite article by Mr. Haque -- and it seems like I've been reading crap like that periodically all my life (and the lives before). And they usually come out around the New Year, when most people reflect upon themselves but a few take it upon themselves to reflect for the masses at large.ReplyDelete
Of course, you can (and many of his commenters did) point to many technologies and institutions where America is near the top.
But the broader question is why we even ask or care about this extremely superficial and silly question. Does anyone really measure their personal happiness mainly by the society where they live and what goods it produces? I suppose if you lived a war zone or a country in perpetual poverty you would. But when you are essentially comparing one relatively wealthy country with another, who really cares about this false metric? Personal situations dominate over this superficial nonsense. IMO, its for entertainment purposes only -- like arguing about who was the best Super Bowl team or something of that ilk. But even the Economist has gotten into the act this year: http://www.economist.com/blogs/graphicdetail/2013/01/daily-chart?fsrc=scn/tw/te/dc/birthright
P.S. -- they are better at it than Mr. Haque.
If you want to understand a better perspective of where we are, I'd suggest the generational histories of Strauss & Howe (4th Turning, etc.). Everything that goes around, comes around,including profoundly dysfunctional governments; this time is not different, just another echo of past eras.
People do care about that stuff, mainly for the same psychological reason they care about sports teams; identification. Most people strongly identify themselves with their country. But even those that don't have some class/sociological group that they define themselves with implicitly. Economists seem to be among the strongest at this as a professional group.Delete
I think the reason for all of these problems can be summed up in one word: federalism. Everybody can pass the buck to someone else, so nobody takes responsibility.ReplyDelete
This is what comes of having a political system that reflects a) the political preferences of landowners and slaveowners in 1787, and b) the efforts of subsequent judges to broaden its powers. It's no way to run a modern country.
Seems to me that federalism is less and less relevant every year, which is part of the problem. Also, federalism is hardly something unique to the US, and is also practiced by other countries such as Canada, Switzerland and Germany. Don't think it has really cost them anything, and likely even explains at least some of their success.Delete
Federalism per se isn't the issue; it's the blocking power, which was used for 70 years by slaveowners to prevent slavery from being abolished.Delete
No other country has a system quite like the US Senate.
In Germany or Canada, a large majority in their equivalent of the House can simply override their equivalent of the Senate.
In Switzerland, a national initiative-and-referendum system can override practically anything.
We have neither. The Senate therefore is capable of blocking anything good.
Oh Noah! Government's the issue? Really?ReplyDelete
So when Rick Waggoner spent nearly two decades in the C-suite at GM and his company ended up with a huge government bailout - his inability to run a sustainable company was not an issue? And the failure of the auto industry has nothing to do with the debacle known as Detroit?
Or when John Thain moved into the CEO suite at Merrill Lynch, and got paid $83.8 million compensation package - and he seemed to view that as a mandate to decorate his office, rather than pull his company out of a terrible nose-dive, that's not a problem of mediocrity in business? Or when no one at AIG understood their business model was putting the entire US economy at risk - this is not a factor in our mediocrity?
Walmart as an icon of "logistics?" Please don't ignore the fact that they are embroiled in growing labor problems. And they don't like to provide benefits for many employees. Which becomes part of our issue with healthcare in America.
When you talk about the mediocrity of American healthcare, please note that this is a market failure at this point - ObamaCare has not fully kicked in. The millions of uninsured, the "pre-existing condition" snafus - these are market-driven catastrophes (fueled in part by companies like WalMart!) And yes, now the government must step in to fix them.
We have a terrible malaise in this country. But it is unfortunately NOT limited to our "institutions" and our government. If the business of America is business, can we really only blame government for business failures? No.
"If the business of America is business, can we really only blame government for business failures? No."Delete
If the business failures which you note have become apparent following legislative and regulatory changes which have made it much harder to achieve any kind of control or leverage over said companies and CEOs, then focussing attention on how government might adequately restore such control is most definitely the correct thing to do.
I was going to say that massive CEO pay didn't just happen in a vacuum. Except that isn't true - it did happen in a vacuum - where responsible regulation and legislation used to be. That's a government function: market failure of whatever kind requires something from outside the market to fix the problem.
It's going to keep getting worse so long as the modern American dream is to escape from all of the other Americans. It goes beyond institutions. The social fabric is unraveling. You can't build an actual society based entirely on the entrepreneurial satisfaction of narcissistic cravings. At some point people have to want to chip in to do things like educate the strangers of other people, and do these things for reasons that go beyond convoluted calculations of self-interest or even generic codes of disinterested moralism. A critical mass of people have to love their country, share an ambitious vision of its future that extends beyond their own puny lives, and feel a bond of something approaching brotherhood toward their countrymen. I don't know how a country recovers its fraternité after it loses it.ReplyDelete
Everybody seems to agree that the country is in decline, and yet we just had a big debate on the best way to spend less money fixing it. Washington is leading us backward.
You realize that we're educating the children of half of Mexico? For free? And then providing access to the US labor market to another 12 million "strangers"? The problem isn't a lack of "fraternite," it's that fraternite has no limits, which leads to less communaute.Delete
How many people do you think there are in Mexico?Delete
Everybody seems to agree that the country is in decline, and yet we just had a big debate on the best way to spend less money fixing it.Delete
If you believe the country is in decline, then you should reflect on the fact that this decline has correlated with an expansion of government.
Colin: more accurately, it's correlated with an expansion of the MILITARY, which is admittedly part of government.Delete
It is typical historically for a declining country to blow great wads of money on the military. So this does make sense. And yes, we need to shrink our mega-bloated military budget.
Hmm. You CAN run an economy based on catering to the very rich. It just can't be a large economy. Venice did it for a century or so.ReplyDelete
The US is slipping slowly down the ladder when it comes to making really good things cheaply, as Britain did before it. EG, US tools (and general metalware items) of all kinds used to be the best. Not so any longer. Cars? Japan. Software? Not Microsoft. The computer, camera and phone are all made in China. Boeing is playing catch-up to Airbus. China is pushing up the ladder - I saw them take contracts for large x-ray machines off US makers, based on slightly better quality, much better service and lower prices.
The answer elsewhere has been for the government to pick winners and invest in what it picks. That seems not to be in the standard economist playbook.
More like No-informed-ah'pinion.
Go back to physics; you are an unintelligent, uncreative hack who has generated 100% of his publicity from being a contrarian blogger who holds political priors that coincide with other uninformed blogger's priors.
Really, Umair, that's pretty mediocre stuff.Delete
Oh my God, that's just terrible. Where on Earth did that apostrophe come from???
The scold points one finger, three to itself. One finger quavers, the others shake.Delete
Public transportation, schools and Detroit, what do they all have in common? Why do Americans try so hard to avoid public transportation, living in Detroit or sending their kids to some public schools? And how is Japan different in that respect? Hmmmm. I bet I could find one thing to tie all of those together, but what is it? Why isn't Detroit just like Osaka?ReplyDelete
Are you trying to imply that it's because America has black people, and that nonblacks want to avoid black people, so they avoid using public transit or public schools?Delete
That's a well-known fact, isn't it? It's called white flight. Just visit the left-wing blogs, they're convinced white racism is the sole source of US conservatism. If it weren't for racism, we'd be living in socialist utopia. They might have a point.Delete
Couldn't agree with you more. I spent 30 minutes in a post office yesterday waiting in line to retrieve a package. It occurred to me while waiting that in many respects we've become a third world country. I remembered waiting in a long line at a post office in Spain in the early 70's and thinking then how the poor service and dilapidated surroundings were so different from post offices in the United States. Well, after 40 years we've definitely caught up with Franco's Spain. Spain, of course, has moved on.ReplyDelete
Really? I was in a post office in Madrid last year and had a longer wait than any I have ever encountered at my local post office. In any case, I would love to see the post office privatized, as has been done in other countries.Delete
Colin: there is no country where the post office has been successfully privatized. Every place (outside the failed states of Africa, whose postal services often never worked to start with) which tried it has ended up losing local delivery to a large part of the country, raising prices, and providing worse service. But if that's what you like...Delete
Seriously Noah, you need to try British footwear before you sniff at it.ReplyDelete
Aziz, there is no way I'm sniffing your footwear...Delete
and you would be writing it on your American computer from the comfort of an American style 20,000 sq ft mansion with 30 acres, drinking an American microbrew, with enough land to hunt with an American style rifle or shotgun (ok, well almost - if you have the $ you will probably own at least one Holland and Holland or fancy Italian bespoke shotgunReplyDelete
I guess I should add that the plebes who built the fancy 20,000 sq ft house like all those mediocre things.
the more serious point is that "mediocrity" is really a matter of 1) taste; and 2)income distribution. Middle class America does not live in cities, they live in the suburbs of those cities (the Baltimore washington metro area has 8.6 million people, only ~1.4 m live in the cities proper). People buy the best product they can afford (like microbrews and suburban houses). There is a pretty strong trend in housing - as people get richer they want more space, either land or living area, or both, and housing consumes a big chunk of income (because people want it, trust me they could live in a lot smaller cheaper places). If you are really rich you can afford excellent health care regardless of the cost (eg Cleveland Clinic, Mayo Clinic, or Johns Hopkins for care).Income distribution matters because it cost me a lot to make 1 yacht, but if there are 10 slightly less rich people who can afford a yacht i can spread the average factory cost over those people. The ipad 2 I buy now is a zillion times better than the early 80s $5000 IBM PC "laptop" the size of a suitcase, a rich or corporate plaything back then - the factory and research cost is spread over many more people. I think its kinda silly to write an article in the HBR about essentially peoples tastes, as if they are victims who don't know how to spend their own money. The reason money-economies have thrived over barter systems is that it enables me to spend my hard earned money on whatever i want, even if its 40k on season ticket to football.Delete
Has there ever been an attempt to compare the productivity of government employees in different countries? Folks seem to assume that if we spend as much on X as the Japanese we'll get the same results, but I doubt that's true.ReplyDelete
America is rather like an underdeveloped kleptocracy in the sense that your super-rich, as a class, have hardly any 'skin in the game' with regard to infrastructure like mass-transport, roads, public education, much of the healthcare system, police & fire departments and so forth. they choose to pay as little tax as possible and own the political system somewhat more than their peers in other developed countries, thus allowing themselves to pay so little tax relative to their income or wealth. In the short-medium term, as they live in real or virtual gated communities they do not need to worry about all this 'infrastructure', while in the longer term they can always emigrate anywhere they like.ReplyDelete
they choose to pay as little tax as possibleDelete
as opposed to all those other taxpayers who seek to maximize their tax liabilty?
thus allowing themselves to pay so little tax relative to their income or wealth.
What the hell are you talking about? The top 1% make 17% of all income and pay 37% of all taxes. (source: http://static2.businessinsider.com/image/5033e60decad04c11d000000-900/and-the-top-1-who-all-make-more-than-350000-a-year-make-about-17-of-the-income-and-pay-37-of-the-tax.jpg) For the top 5% the figures are 32% and 59%, and for the top 10% it's 43% and 70%.
People who blame our fiscal situation on the rich really make me laugh.
You had me convinced until this line: " . . . we're not willing to bring in government to control costs."ReplyDelete
The only place I disagree is the recommendation for year-round schooling.ReplyDelete
Two findings. Broadly, and I guess motivating, (A) kids forget what they learned over the summer.
Replicated but not very,
(B) 10 year-olds in Brazil who never attended school possessed stature superior to those attending. And, on your theme, why don't the great private schools run year-round?
As to (B), 1. Human growth and development include both good nutrition and optimal activity. I haven't tried to establish this, it may already be, but observed data suggests growth velocity is seasonal. Now, that's in schooled countries, and less apparent in upper-income children. 1.a. Try to remember how you felt at end of school year. My impression, the other kids were visibly growing larger day by day. Some of that may have been psychological, but even there perhaps hormonally driven.
(A) OK, they forget because other matters were more important to their prosperity over the summer. Also, the presence of children is important to adults. We are not schools of fish who spawn and move on. Children, I'm afraid, are a vital part of our evolutionary nature.
A.1. I have only seen chimps a few times, but their social awareness and acting out rather reminded me of children. I always show students "The Birth of Childhood." Science, 11/14/2008 v322 p1040. Humans have an extended period between sexual maturation and childbearing, whose social implications are that 'adults' are 'different', and don't see things the same way.
People need to learn their monkey-moves.
Conclusion - at some point or other we have to let them out. Better to have a little practice first.
And, for the nerds, schooling? or just projects? Adults don't have to vanish, but should be there casually, leaving time for society among equals.
1) Part of the deterioration of our infrastructure is due to privatization, not simply lack of spending (consumers often end up spending more, not less).
2) Our education crisis is much more complex than stated–it's our poor students (schools with >25% eligible for lunch subsidies) who are failing. Students at non-poor schools do very well, or excel. The other educational problem that is never mentioned is the massive gap among states (even controlling for demography): some states are world-class, others are abysmal. If we don't correctly identify why the U.S., in aggregate, is mediocre educationally, we can't improve test performance.
Our best states don't come close to the top countries (Finland, Korea, Taiwan. So I don't buy this. Even our "good" schools are mediocre when compared to schools in other countries.Delete
Noah, the data completely contradict that statement. MA surpasses Finland is close (math) or equivalent (science) to Korea. C'mon, those are data. I expect better than faith-based analysis.Delete
Massachusetts also has the highest percentage of population with a graduate or undergraduate degree in the nation. Don't you think that has something to do with the performance of their kids?
If you look at NAEP data (http://nces.ed.gov/nationsreportcard/naepdata/), which admittedly are U.S. only, the high performance in MA persists across race, poverty and parental education. MA still does better than would be expected. It's also worth noting that MA's child poverty rate is not particularly low, and that MA does better than expected in state to state comparisons.Delete
The point isn't to claim MA is awesome, but to realize that there are large models (i.e., not a school) that are highly competitive with other nations. Why we don't duplicate them, as opposed to reinventing a square wheel, is a mystery to me.
OK, Mike, you're right that only 4 countries beat Massachusetts.Delete
However, if you took the top regions within countries and compared them, Massachusetts would probably not do so well.
That's not a "faith-based" statement, though I don't have the facts to back it up; it seems reasonably obvious from the data.
I spent nine years living in MA. Five years in Worcester (where I did my grad school) and another four in Fall River (I was teaching at UMASS Dartmouth). I love MA, and consider it my second home (after Greece where I am originally from). Having said that, my experience with kids from the Worcester and Fall River-New Bedford school system is pretty bad. According to what I saw, the best school districts are the ones were university professors, IT professionals (west of Boston along Rt. 9), and employees of the UMASS medical center and the biotech labs (north east of Worcester) live. My impession is consistent with this map: http://www.neighborhoodscout.com/ma/schools/
The northeastern and western areas perform quite poorly! Note that Cambridge itself also performs poorly (despite the presence of Harvard and MIT) because the faculty does not live in Cambdridge but rather in the nearby towns of Newton, Weston, Wellesley, etc. Same is true for Worcester (which has about 10 colleges and universities) because most of its high-skilled workforce lives in Princeton, Boylston, Schrewsburry, Westborough, Southborough, etc.
So my conclusion is that MA schools benefit from the high concentration of top-notch universities and colleges as well as high-tech professionals, which helps create a culture of learning in the areas where these schools and industries are located. But I am willing to be convinced otherwise. What do Massachusetts schools do that schools in other states don't?
Correction: Southeastern and western areas...Delete
Actually, 'stats' say American students are roughly with the other leaders conceptually, and ahead in self-confidence. That's important, we can learn.Delete
It's the math and applied where we fall behind. So at least we're only ignorant, not stupid.
Noah: Finland has a slightly smaller population than Massachusetts, so at least there you have a relatively apples to apples comparison.Delete
Excellent. Please tell movement conservatives.ReplyDelete
Or maybe we could get Soros or someone to take conservative thought leaders on a tour of the world. They could see how much better German roads, for example, are than our interstate highway system. They could ride the Paris Metro for a day getting quickly and easily to all kinds of different points of interest/business. And of course ride Japanese bullet trains.
But it's probably futile to hope for a "conservative" party that is able to distinguish between socialism (bad!) and public goods (good!).
Interesting. So state, local and federal government spends a combined $6 trillion per year (source: usgovernmentspending.com) and manages to provide us with substandard infrastructure, despite that being a core government function. And this is an argument for even more government? Bizarre.Delete
dollar values are irrelevant. What matters is spending as a percent of GDP, and that number is lower in the U.S. than it is in other countries. While I agree with you that we should also be looking at how to increase efficiency, we need to be fair about this.
Why is percentage of GDP a particularly good metric? European countries (with the exception of pretty much Norway) have a lower per capita GDP than the US. It's not by a trivial amount either. Germany's, for example, is about $10,000 lower. If a bridge costs $100 million (a number I pulled out of thin air), it will necessarily require the Germans to devote a higher percentage of GDP to build it than the Americans, even though the end result (construction of the bridge) will be exactly the same.Delete
So no, I don't think dollar values are irrelevant. In fact, I think they are the best metric we have.
Here is an example.Delete
Forget inflation and population growth (which are two additional reasons). Suppose that productivity in the private sector is rising. This means that wages in the private sector will keep going up and so will GDP. This has been happening over the past few centuries. Suppose now that public spending stays the same. This means that wages in the public sector will be constant, so public spending relative to GDP will be declining. Then the ability of the public sector to attract employees, contractors, and so on, will also be declining. With it, so will the quantity and quality of public services and infrastructure. In fact, such a decline will take place even if public spending is rising so long as it is rising slower than private sector productivity and therefore GDP. To maintain the same level of public services we need to keep the proportion of GDP spent on them the same.
This is why the share of GDP is the appropriate metric!
OK, except now you are changing your argument from saying that we are not spending enough as a percentage of GDP relative to other countries to now arguing that we need to keep the proportion spent of GDP the same. Fine, except that our percentage of GDP spent by the public sector is currently at its highest level since WWII (source: http://www.usgovernmentspending.com/include/usgs_chart2p21.png), so I still don't buy the argument that current spending is insufficient.Delete
Further, it seems your argument about the ability to attract employees, etc. would only apply in a full employment model, which suffice to say does not currently apply.
No, I am not changing my argument. I am explaining why the appropriate metric is the share of GDP. To use your example, the U.S. has more people than Germany, so it needs more bridges, roads, etc. Moreover, private sector wages are higher in the U.S. so the U.S. needs to pay contractors more to build things. Therefore one would expect expenditure in dollar terms to be higher. What matters is expenditure relative to GDP. This is true both across time and across countries.Delete
The figure you linked includes transfer payments (e.g. Medicare and Social Security), defense spending, etc. What does that have to do with infrastructure? If you look at infastructural spending, it has declined as a share of GDP. See for example the graph in page 3 of this report by the Congressional Budget Office (CBO):
Currently, transportation and water infrastructure take about 2.4% of GDP, as opposed to about 4% in other advanced countries. I suspect the pattern is similar regarding energy infrastructure. This difference in funding is reflected in the quality of our infrustructure relative to other countries. According to this survey (2nd page)
the U.S. ranks 24th.
Moreover, private sector wages are higher in the U.S. so the U.S. needs to pay contractors more to build things.Delete
Really? The BLS lists hourly compensation costs in the US as $35.53 in 2011 vs. $47.38 in Germany (source: http://www.bls.gov/fls/). Maybe the wage structure is different in construction, but I am not aware of that (although possible given that we artificially boost our wage costs via Davis-Bacon).
The figure you linked includes transfer payments (e.g. Medicare and Social Security), defense spending, etc. What does that have to do with infrastructure?
The point is that the money is there. That it isn't being properly allocated in such a way that we can have adequate infrastructure is more an indictment of government than a justification for handing over yet more money to it.
See for example the graph in page 3 of this report by the Congressional Budget Office (CBO)
Interesting chart. In 1965 -- during the middle of the construction of the interstate highway system (not officially completed until 1991) -- it seems we spent something like $185 billion on transport and water infrastructure. Now we spend somewhere around $350 billion). So while population has increased by 55% since that time (from 194 million to 301 million in 2007, the last year for that chart), infrastructure spending has gone up 89%. Again, this does not scream insufficient funding.
Currently, transportation and water infrastructure take about 2.4% of GDP, as opposed to about 4% in other advanced countries.
Again, if you are richer, you can spent a smaller percentage of your income to achieve the same result, so this isn't terribly informative. However, running the numbers for Germany, a 4% GDP expenditure vs 2.4 for the US means germany is spending more than us in absolute numbers, which is more meaningful.
I am sympathetic to the argument that US infrastructure needs to be improved, but I am not convinced that higher taxes -- or even necessarily money -- is the solution. If the government needs more money, perhaps it could do with a few less F-35s or ending farm subidy programs. Questions need to be asked of why US infrastructure projects cost so much more than in other advanced countries: http://www.bloomberg.com/news/2012-08-26/u-s-taxpayers-are-gouged-on-mass-transit-costs.html
I also have to think that (as previously mentioned) measures such as Davis-Bacon drive up costs, and it is not obvious why so many projects involve federal funding, which adds more inefficiency (states send money to Washington, which then turns around and hands it back to states -- why not cut out the middle man?).
The point is that the money is there. That it isn't being properly allocated in such a way that we can have adequate infrastructure is more an indictment of government than a justification for handing over yet more money to it.Delete
This seems to be a bit of backpedaling -- if moving money from defense or Medicare to infrastructure will fix our infrastructure, then so will funding it with new taxes. And the fact that the number of seniors on Medicare and Social Security has been growing and growing isn't exactly an indictment of government.
So while population has increased by 55% since that time (from 194 million to 301 million in 2007, the last year for that chart), infrastructure spending has gone up 89%. Again, this does not scream insufficient funding.
But it isn't just population that's grown. So have commutes. So have goods shipped per capita -- and this is particularly important because trucks do a disproportionate share of damage to roads. This is expected; the economy has grown, and so has the activity underlying it, and if you view that as a positive thing we want to continue then the infrastructure should grow with it.
In addition to Eric's response let me add, in regards to Germany, that the estimations the BLS conducts uses the average exchange rate without adjusting for Purchasing Power Parity. Technical appendix here:(http://www.bls.gov/fls/ichcctn.pdf).
Prices in Germany are about 10% higher (see here: http://stats.oecd.org/Index.aspx?DataSetCode=CPL)
Once you adjust the number falls closer to $43. Secondly, manufacturing is cleraly not a representative sector (Germany has strong manufacturing, the U.S. does not). Think about it, if the average German worker earns more than the average American worker then how on earth is it possible that German GDP per person is lower?
Finally, once again, no, absolute numbers are not what matters, for reasons that I have already explained. Whenever any analyst wants to figure the quantity and quality of any good or service produced, whether that is education, R&D, defense, etc, they look at spending relative to GDP. Now if you want to start your own school of thought, well, good luck.
Haque left out the Russian/Ukrainian/Swedish 23 year old girlfriend.ReplyDelete
There was a time when each American generation left the country a better place than they found it. Around the time of Proposition 13 in California in 1978, a decision seems to have been made to liquidate, rather than add to, the national stock of capital. As infrastructure deteriorates as a result of a lack of willingness to pay to maintain it the day will come when infrastructure will have to be decommissioned and not replaced.
Thankfully it's not everywhere. Here in Minneapolis, we are slowing adding a light rail network. It will never equal the trolley system we foolishly ripped out decades ago, but it's a start back in the right direction.Delete
In DC, they continue to expand the Metro (although they have funding and cost issues that challenge the system too).
I'm sure there are lots of other examples, probably primarily from states with Democractic governance.
I largely agree with you, so I will quarrel about the details.
a) Yes, conservatives oppose public investment but to a large extent this is because liberal unions oppose reforms that will bring costs down and raise standards and accountability. This has become a chicken-and-egg problem. In my opinion, you first need to convince people that an institution is working efficiently before you ask them to throw more money at it.
b) How do you figure that our health care system delivers worse outcomes? Japan is certainly an outlier when it comes to life expectancy, I believe because of cultural (and dietary) habits. But if you look at survival rates for cancer patients or life expectancy for people already in their 1960s, the U.S. ranks at or close to the top. Now, whether the performance justifies such a big difference in cost is a different issue. However, many of the healthcare costs in those other countries are hidden (e.g. tuition exemptions to medical students that are picked up by taxpayers).
c) We have a mediocre government? Relative to who, to Japan or Italy? You may want to think this over.
Oops, in their 60s, not 1960s, lol.Delete
Yes, conservatives oppose public investment but to a large extent this is because liberal unions oppose reforms that will bring costs down and raise standards and accountability.Delete
If you are right then there should be differences state to state. However, I expect that we would find very little correlation between strong unions and deteriorating infrastructure.
Not sure what you mean.Delete
One example I have in mind, and Noah mentioned this also, is the cost relative to the quality of service of the Long Island Rail Road. New York's MTA is very problematic, and strong union contracts are part of the problem. Which taxpayer would agree to increase funding to the MTA knowing that the increase would most likely result in better contracts for the union rather than better infrastructure?
Another example is public schools. Increasing teacher accountability and flexibility and extending the school year are reforms that are usually opposed by teachers' unions.
I am not saying that this is the only problem, I am saying it is part of the problem.
CA: it's not "strong union contracts" which are the problem with the LIRR. It's a collection of unions (plural!) with extremely regressive, and dare I say it, *conservative* attitudes, trying to maintain the rules of the Age of Steam.Delete
It's an institutional culture problem, and it extends to the management of LIRR as well. Institutional economists have useful things to say about this. The idiotic union-busters have nothing useful to say.
Public schools: anyone who suggests extending the school year knows absolutely nothing about schools. Try learning something. Try talking to actual students, who are the ones who actually know whether something helps them learn or not.
There are serious problems with teacher accountability, but they don't come from the unions, they come from completely incompetent or uninterested administrations, who fail to exercise the powers which are already available to them. The only teachers I had who should have been fired were actually clearly guilty of malfeasance (1 case), misfeasance (1 case), or nonfeasance (1 case), but the administration didn't even bother to prosecute for tenure removal.
For whoever has the time and interest, here is an interesting article on the LIRR, in the New York Times (clearly not a conservative publication):ReplyDelete
Shallow, shallow analysis. See my comment above: institutional culture (both management and union) is the problem at the LIRR, and you need an institutional economist to understand it.Delete
If you want the details on the management attitude problems, they've been discussed extensively by transit bloggers. In short, LIRR is treated as a separate fiefdom.Delete
It would benefit everyone massively and be very economically efficient if LIRR trains "ran through" with NJT trains, but nobody in LIRR will consider it. Currently there is massive waste in storing both LIRR and NJT trains in the middle of the day.
It would also lead to a great savings on administrative overhead if LIRR management were merged with Metro-North management, but LIRR managed to scuttle that proposal.
Year-round school, longer school hours, and fewer vacation days? Do you think that more time in classes taught by incompetent bozos would be helpful? These "few simple reforms" would have, in most US schools, zero marginal benefit. Sure, better teachers could help a lot. But do you picture a scheme of "increased teacher pay" in which the bulk of that increase does not go to the mass of teaching mediocrities? Really?ReplyDelete
"Meanwhile, one has only to look at the international education rankings to know where we stand. A few simple reforms, like year-round school, increased teacher pay with more stringent qualification requirements, longer school hours, fewer vacation days, and increased ability to fire bad teachers, could probably bring us way up in the rankings."ReplyDelete
Almost everything Finland doesn't do?
Heh heh heh. Indeed. Everything which Finland, the country with the best educational system (by outcomes) in the world, does NOT do.Delete
Ideology before facts, always, with right-wingers.
Sir, I currently have a pair of British shoes on my feet (Gaziano & Girling St James, in vintage oak, google them at your own risk if you have a heart condition) and I can state without bias that they have brought more joy to my life than the smile on the face of my first-born child. Certainly a lot more than those gimpy cufflinks.ReplyDelete
I can state without bias that they have brought more joy to my life than the smile on the face of my first-born childDelete
You are a liar or a fool.
I think what Umar Haque is saying at the start is that the US is behind in the luxury goods business. I agree: so what? I think (gross simplification) is that the US consumer is very focussed on price/value. 100% quality/0% value is not really what US Inc does. Europe is more quality focussed for example.ReplyDelete
Also, for the record, I'm a big fan of British shoes.
Noah - I don't think the inability to fire bad teachers is the key point - I think the key point is not paying teachers enough to attract talented people to the profession in the first place is more important.ReplyDelete
The stuff about teachers is cocktail party received wisdom. It's clear that Noah has not stopped to look at the data.ReplyDelete
Comparing Detroit to Osaka might be instructive, if you stopped to think about it. How is Detroit different from Osaka? Historically, how might American blacks have been treated differently from oppressed minorities in Japan (or Finland or Taiwan or Hong Kong)? How might 400 years of oppression of one specific race affect educational outcomes in the 21st century US? What challenges does the US face that those coutries may not?
If we sort out historically discrete and insular minorities US students fair quite well on these measures? White students are right there with the countries at the top. You may accuse me of cherry picking (or racism), but it seems to be the more relevant comparison.
Other relevant questions: How does the US compare to other large, diverse countries on the TIMSS and PIRLs? It appears to me that we mostly seem to be beating comparable countries based on these measures. How has educational achievement changed over the last 50 years? (The US finished last in international testing in 1964. On the NAEP, black students today rate higher than white students in the early 90's.)
To me, the striking question is, why are Germany and UK and France and some Scandinavian countries, etc. doing so much worse than the US? I mean some of those coutries have bullet trains and stuff.
We import lots of ideas, things, and people? The American motto: We shall take your biological, technological, and cultural distinctiveness and make it part of our own.ReplyDelete
I'm happy to see the debate coming round to serious discussion of something Noah's readers care about, reading.ReplyDelete
And his commenters? writing.
What we say is less important though, to U.S., tenured in self-confidence.
(periods out for pun)
Let's allow a provocative dipothesis.
A) you decide to educate a small part of your population so they can give orders to others. Aa) public education in how to take orders.
B) you decide everybody in your population needs to be educated, so they can give orders to each other. Ba) incongruity with long-embedded stratification, so teachers continue instructing how to take orders.
C) universal broadband and country-wide subscriptions to all peer-reviewed journals. Enough trying to get into kids' heads. Offer them adventures!!
Sound's like 3rd grade, but that's where we need to be.
Implications internationally: In the A countries taking orders was necessary for survival. Too bad, but also good, when the orders are that everybody should be educated - a clear improvement in standard of living is implied and the kids try hard. Somebody might know whether A countries have lots of kids in college, yet. Perhaps not.
In B countries, the whole thing is chaotic. Take the U.S. and China. China has a stronger revolution, so once they hit the wall without money to bribe their way into a good college, do what they can. In the U.S., once we flunk out, we buy a gun to signal that we can both give orders and march to them, or go to a college with no books.
The Emperor's New College!
Anyway, last night, I asked my students (International) who was a "world figure." They were stumped. Then, "Is Obama?" Immediate yes from all. "Everybody in the world sees Obama as a world figure?" Yes, "Does everybody see the same thing in Obama as a world figure?" Even more resoundingly, "No!" I then asked for other world figures, expecting Hitler, Napoleon or Gengis Kahn. I got instead, "Mother Theresa," and "Ghandi."
They never cease to surprise, so here in the U.S., we have a much larger constituency to fight for "C," and it ain't over 'till the fat ladies can all sing!
Odd my reaction to the title was that the USA is mediocre in nothing (except maybe soccer). Our inner cities are horrible not mediocre. The US is the best at many things and worse than other rich countries in many ways, but mediocre in very little.ReplyDelete
To answer the questions I can safely say that I never thought of English shoes. If I were in the0.01% I would certainly not wear an Italian suit. I had to buy one for my wedding (in Italy you know) and wore it as little as possible even when it fit (OK so I've gained a few pounds).
I did drive a German car for a while -- a Ford Fiesta (designed and made in Germany)
What's most mediocre about the US?ReplyDelete
Our political system.
Ask someone who studies systems of government how to design a democracy. They'll suggest something similar to the German system.
As the *US* experts did, in fact, suggest to Germany after WWII. They told Germany emphatically NOT to copy the US system.
We can forgive the Founders for designing a mediocre system back in 1789, because they didn't know of any better systems. We've known of better systems for about 150 years now, though.
(Party-)proportional representation is key (and eliminates gerrymandering). Approval voting or range voting is best for single-winner offices. We have neither.
And malapportioned bodies (like the Senate) should never be able to stop anything. The British fought this battle in the 1910s and passed the Parliament Act to overrule the House of Lords. We never got a Parliament Act, and we're overdue.
And don't get me started on our sick, sick, pay-to-play, prosecutors-can-railroad-anyone judicial system.