Wednesday, August 15, 2012

Simple Minds In Complex Ivory Towers


It is always amusing to come upon the work of a one-dimensional academic because these people are supposed to be the multi-dimensional gods who look at the world from their ivory towers as they think of ways to make round all the intellectual flat-landers they see below – those creatures that exist in a one-dimensional world, and are unable to imagine what a surface area feels like, much less grasp what a volumetric space would look like. But then, politics has the ability to play tricks not just on ordinary mortals but on the gods themselves as they sit in their ivory towers not realizing how simple minded they are.

We have a stark example of this paradox in the article that was published on August 15, 2012 in the Wall Street Journal under the title: “Ryan and the Fundamental Economic Debate” and the subtitle: “It's time to get back to first principles. A general increase in socialistic policies tends to lower economic growth.” The article was written by Robert J. Barro who is professor of economics at Harvard and a senior fellow at Stanford University's Hoover Institution.

If you define being a one dimensional man he who draws two columns to list all the good things inside of one, and all the bad things inside of the other, you will see why Robert Barro ought to be regarded as a one dimensional man from this paragraph: “Outsourcing is essentially the same as importing a good from a foreign country. In the former, a company buys foreign labor services. In the latter, a company buys the good that embodies foreign inputs, particularly labor services. So, it makes no sense to be a free trader with respect to imports and exports of goods while opposing outsourcing. Opposing either is protectionism.”

Obviously, one of Barro's fictitious columns is labeled “free trade” which means good things to him. And the other column is labeled “protectionism” which means bad things to him. And so, he lists the outsourcing of jobs as well as the importing of products inside the good things column. He does not only say there is an equivalence between the two; he says they are essentially the same. Because he looks at the matter in this fashion, we must conclude that he either fails to see the difference between the two, or he deliberately ignores the difference because he has a more important axe to grind. In fact, it may be that he is both at the same time.

Barro goes on to explain why the things which he listed in the good things column are good for the country. But look here, what he says actually does make sense! Yes, it does make sense but only – yes it is only -- if you look at the subject matter from the one dimensional point of view which he has adopted for whatever the reason. It could be a deliberate reason or it could be that he knows not any better. So now we look at the same subject from the multi-dimensional point of view to see the difference. And the best way to do this is to take examples.

Example one: The Japanese outsource a great deal of their manufacturing because they have a shrinking population, and they do not accept immigrants. To remain a viable economy, they must build manufacturing plants outside of Japan, or their economy will die a slow death. By contrast, America welcomes immigration even though it has a growing population of its own. It does not really need to outsource, especially that it remains the largest market where everybody wants to sell their products, and it has the highest purchasing power in the world. Thus, Japan is doing what is good for Japan whereas America is doing what is good for the outsourcers. The Japanese are multi-dimensional thinkers, America is not.

Example two: Saudi Arabia also takes in people from other countries, yet it has outsourced a number of enterprises to other countries. Yes, Saudi Arabia did that. But look closely what it is that it did. It took people in from other countries but considered them guest workers who are routinely let go when they are no longer needed. This happens when someone local has been trained well enough to occupy the position that the foreigner used to fill. As to the outsourcing of its enterprises, these are agricultural companies that grow food in the fertile lands of Africa and South Asia to be shipped to Saudi Arabia where very little is grown given that it is an arid desert. But believe you me, if the Saudis could transfer the water or the soil to their country, they would have done it. Thus, unlike America, the Saudis are doing what is good for Saudi Arabia. The Saudis are multi-dimensional thinkers, America is not.

Example three: The Chinese welcome insourcing, and they insist that technology, industrial processes and know how be transferred to them -- brought in by those who respond to the invitation. In the meantime, the only outsourcing they do is that they buy mines of base metals, and buy fields of energy such as coal, oil, natural gas and uranium to exploit them, and send the raw material home. And believe you me, if they could transfer the mines or the fields to China, they would have done it. Thus, unlike the Americans, the Chinese are doing what is good for China. The Chinese are multi-dimensional thinkers, America is not.

And so we ask, what do the Japanese, the Saudis and the Chinese know that Robert Barro and the other occupants of the ivory towers are ignorant of? They know that when you grow your own food, and you produce your own goods and services, you have some control over them, therefore have control over your own destiny. In fact, America uses the energy equivalent of something like 45 million barrels of oil a day, most of which is produced from local sources. And yet, because it imports one million barrels of oil a day – this is only one million barrels a day -- from Saudi Arabia, you hear from a million pundits as they express their apoplectic disposition at the phenomenon. Why is that? you ask. And they respond that to rely on the importation of oil is to be subjected to a national security threat.

Did you say national security? What about the weapon systems which are produced by the American military industrial complex, made with sophisticated high technology Chinese components? Is this not a bigger threat to American national security? Whoa! Didn't think of it.

The trouble is that you're talking to one dimensional characters who believe they are multi-dimensional gods who wish to turn the world into carbon copies of themselves. Mind boggling.

Robert Barro ends the article this way: “With the addition of conservative thinker and budget expert Rep. Paul Ryan to the Republican presidential ticket, we can hope that the economic dialogue will become more serious. And perhaps this added substance will extend beyond the important issue of long-term fiscal reform to encompass the enduring but still crucial debate about socialism versus capitalism.”

No Sir, it will not happen if Paul Ryan turns out to be as one dimensional as Robert Barro. What is needed at a time like this is someone that can look at a question from all the angles, and address the many possible implications, not just speak to the one dogma that is dictated by the political cry of the day.