Sunday, February 1, 2009

The Case for a Big Government

Loved this post.

Especially the last half:

"Meanwhile, one needs to understand that, somewhat counterinuitively, when you have a very efficient economic sector what happens is that it tends to go away. Consider agriculture. Our modern-day agricultural technology is way better than what was available 200 years ago. But agricultural progress hasn’t meant that everyone goes to work in the super-charged high-tech agriculture of the future. It’s meant that more food than ever is grown with fewer person-hours of labor than ever. We should expect this to continue apace. For all the talk of trade’s impact on American manufacturing, the bigger issue has been automation and robots. But either way, even though people will continue to consume manufactured goods—just as we still eat—manufacturing will be a less-and-less important part of the economy. Not because manufacturing “isn’t important” but because it’ll get more efficient. And that’s how the whole private sector part of the economy will go. Markets, doing their work, will make those sectors more and more efficient leading them to shrink as a share of the overall economic pie.

What will be left is big government. Or, rather, bigger and bigger government. Teaching kids. Taking care of the elderly. Patrolling the streets. Making the SUPERTRAINS run on time. And it’s going to be fine.

Which isn’t to say we should crank spending up to 93 percent of GDP next year. But it does mean I don’t think we should set an arbitrary limit. And it also does mean that it’s always important to find ways to make the public sector more efficient and more effective. It can be done. Public agencies are better-and-worse managed and offer better-and-worse performance. But it’s difficult to do and it doesn’t happen automatically the way it does in a well-functioning market. And it also means, as I’ve been taking to saying lately, that we need to think about garnering more revenue in ways that have non-revenue benefits. For example, market-rate prices for street parking not only raise revenue, but allow for more efficient allocation of parking spaces. Similarly with congestion pricing on crowded roads. Auctioning carbon permits will keep the planet habitable and raise some money. Taxes on alcohol and sweeteners would have public health benefits. And on and on down the road."

I do think the author overstates the elimination of private sector jobs through automation a bit. The automation of manufacturing and agriculture has eliminated a lot of previously labor intensive and manual jobs, but they have been replaced with smarter jobs many in the service industry. They don't all necessarily need to be replaced by public sector jobs.

But I think the point is a good one, that just because government is growing bigger doesn't mean we're heading toward socialism, it just means the dynamics of our economy is changing and more government is required.

But more automation I feel is an exciting opportunity especially in context of the recession we're currently facing. In many ways, we no longer need to work. Technology has allowed us to cheaply mass produce plasma tv's for every single house in the world if we wanted to. Or mass produce houses for everyone (which is what we did here in Phoenix and now we're stuck with a glut of homes and a credit crunch and the potential stupid mix of homelessness and empty houses), or feed the world. If we wanted to live simply and possession free, we could just idle our lives away in our mass produced house, eat our mass produced food, and be fat, dumb and eventually die young, Wall-E style.

But we don't have to do that. We can spend our excess money on education, art, the local gym, on yoga instructors, on travel, on living more sustainably in the world, on all kinds of wonderful research. We can strive to cure previously incurable diseases. We can strive to make sure every single child receive incredible music lessons, and as we do that, we can then enjoy incredible music firesides in our old age when our children entertain us.

We can strive for more. And all of this doesn't necessarily have to be government driven. It would be better if most of it was not. It would be better if the strivings for something better were both top down and bottom up driven. We definitely need smart, driven leaders to drive our communities toward something better. But what we need more is for every single one of us, standing up and demanding more from both ourselves and our leaders.

This whole idea of a world where the necessities of life being produced in an ever more automated and less expensive ways opening up employment opportunities in ways previously unimaginable is a really exciting thought of mine. I want to write more about this another time.

But its also why the prospects of heading toward double digit unemployment is so distressing for me, because it also implies that many more will be out of work at least a portion of the time and still more will be massively underemployed. Its a sign that our society is broken, that we are misusing our talents, and that we are not garnering the most out of ourselves. The longer we get entrenched into it, the deeper sense of tragedy this is. And government alone is insufficient in solving the problem. Again, it requires all of us becoming more interdependent with each other. We need to trust in each other more.

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