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Saturday, March 31, 2012

Accelerating Creative Destruction

Not just one, but two liberal friends independently pointed me to a New York Times posting titled "Is This the End of Market Democracy?" I've often been harshly critical of things written by the Times staff, but I think this one actually makes some good points. The most important one is regarding the effects of the "gale of creative destruction" which really isn't being addressed by anyone and I think it may be important to consider when formulating policy.

The phrase "creative destruction" was popularized by Schumpeter as a description of an evolutionary process of continuous innovation. The creation of the automobile destroyed the horse and buggy industry, the creation of the telephone destroyed the telegraph, and in general, the creation of automation and other technologies and business innovations have and will continue to destroy huge numbers of jobs. The job destruction isn't necessarily a problem since when the U.S. economy is healthy, millions of jobs are destroyed every year, but even more jobs are created.

While the creation part of the process makes the general population better off, it's always been true that those who lose their jobs face some or even a great deal of hardship while they transition to something else (or retire or become permanently unemployed or whatever). The next generation always benefits because they don't yet have jobs to be destroyed.

As long as the creation is significantly beneficial and the rate of destruction is not overwhelming (or the cost and effort of transitioning to new jobs isn't too high), significant progress in terms of wealth creation is made without intolerable pain.

The rate of creative destruction has been rapidly increasing over the last few decades, taking us to the point where there's an uncomfortable and perhaps intolerable rate of destruction. While many people like to blame foreign trade (which I lump in with general business innovations), new technology destroys far more jobs than the Chinese. How many bank tellers lost their jobs to ATMs, how many stores have closed due to Amazon's automated order system, how many factory jobs are lost to robots and automation, etc.? Far more than have been lost to the Chinese making cheap widgets. Nonetheless, both technical and business innovations have been aligning to destroy jobs at an ever increasing pace.

Further exacerbating the problem is that the jobs being destroyed are potentially being replaced by jobs that require far more skill and talent and the people whose jobs are being destroyed are simply incapable of filling those new jobs. So they often end up being unemployed for a long time.

I also agree with the article that neither Democrats nor Republicans have discussed the issue of accelerating creative destruction and what, if anything, to do about it. The article is a little short on solutions as well.

So am I.

Wednesday, March 28, 2012

Way Out There Nerd Humor

On a group email thread that consists of my college frat brothers discussing one of the professors at out alma mater (MIT):

Frat Brother 1:
New York Times has article on Emmy Noether, who brought us noetherian rings.

[MIT Course]18.715 Homological Algebra (a)
Prereq: 18.706
Year: G (1)

Abelian categories, derived functors, spectral sequences, the functors Tor and Ext, cohomology of sheaves, homological properties of noetherian rings.
Frat Brother 2:
President Santorum will ban homological algebra in the Republic of Gilead.
Frat Brother 3:
not what i heard; he's just gonna rename it to "heterological algebra" as part of his "sanctity of math & family values" initiative.
And yes, I'm almost (but not quite) too ashamed to admit that I'm such a nerd that I broke out laughing hysterically when I read the last comment.

Blog Friends

Today I had the pleasure of not only having his company, but also of having Hey Skipper of the Daily Duck treat me to lunch. He's every bit as insightful, thought provoking, and witty in person as he in his posts and comments and I thoroughly enjoyed my time with him. This is the first time I've met in person a "virtual" friend from the blogosphere and given the positive experience, I hope to have the opportunity to meet more blog friends in the future.

A second blog friend, Jeff Shattuck from Cerebellum Blues, just finished his first album. I've listened to it several times now and it's an amazingly, stunningly, jaw-droppingly good album. In fact, it's really two amazing albums as there are 14 songs. As a song writer I'm feel very humbled by his accomplishment.

Jeff Shattuck's narrative prior to the release of his album was that he suffered a brain injury and "woke up" with a "rekindled" desire to write songs. My feeling was that this was a great human-interest story that could be leveraged to help sell his music if he wanted, almost regardless of the quality of the songs.

That's all out the window now as he's proven himself to be a truly great song writer. The background is no longer interesting in comparison to the music.

My 15 year old daughter also likes the album a lot so the music appears to have wide appeal. The chord changes are innovative and sophisticated so I was concerned that it might be what I call "an album by and for musicians", where the appeal to mere mortals was limited, but my daughter walked into the room when I was first playing it and quipped, "I really like this song - who is it by?" and has since really enjoyed the rest of it as well, so I think most people will enjoy it.

Monday, March 19, 2012

Double Standards are Good Things?

Columnist Stanley Fish of the New York Times has no problem with that which others might consider to be a double standard:

If we think about the Rush Limbaugh dust-up from the non-liberal — that is, non-formal — perspective, the similarity between what he did and what Schultz and Maher did disappears. Schultz and Maher are the good guys; they are on the side of truth and justice. Limbaugh is the bad guy; he is on the side of every nefarious force that threatens our democracy. Why should he get an even break?

There is no answer to that question once you step outside of the liberal calculus in which all persons, no matter what their moral status as you see it, are weighed in an equal balance. Rather than relaxing or soft-pedaling your convictions about what is right and wrong, stay with them, and treat people you see as morally different differently. Condemn Limbaugh and say that Schultz and Maher may have gone a bit too far but that they’re basically O.K. If you do that you will not be displaying a double standard; you will be affirming a single standard, and moreover it will be a moral one because you will be going with what you think is good rather than what you think is fair. “Fair” is a weak virtue; it is not even a virtue at all because it insists on a withdrawal from moral judgment.

I know the objections to what I have said here. It amounts to an apology for identity politics. It elevates tribal obligations over the universal obligations we owe to each other as citizens. It licenses differential and discriminatory treatment on the basis of contested points of view. It substitutes for the rule “don’t do it to them if you don’t want it done to you” the rule “be sure to do it to them first and more effectively.” It implies finally that might makes right. I can live with that.

At least he's honest in his lying sorta double standard kinda way.

When I first read this, I was wondering if some sort of satire or parody was involved. But given the author and the paper in which this appears, I have to believe it's genuine.