| Yes, but can he get it for them wholesale? |
| My good friend and Roosevelt University colleague Steve Balkin -- with whom I have substantial but always-friendly political disagreements -- has suggested I post this modest proposal. Comments are welcome. Sell Michigan to China: Financing a US Economic Recovery ----By Steve Balkin, Professor of Economics, Roosevelt University, October 17, 2008 Sell Michigan to China – that is what I'm proposing as a way to finance the economic recovery for the US. Think of it. Both countries could benefit. Michigan is now a failed state. Of all the 50 states, it has the highest unemployment rate of 9% in August 2008. Its largest city, Detroit, has the highest crime rate of any US City. Real estate values have been dropping precipitously, and the state and local governments are experiencing hemorrhaging budget deficits. There is an abundance of empty land, empty factories, and abandoned buildings. These people are leaving the state to move where they can more likely find work. China has its economic and social problems too. A major problem in China, as the Chinese themselves express it, is "it has too many people", 1.3 billion, over four times the population size of the USA. Managing its environment, creating a safety net, and continuing its high rate of economic growth to create jobs in the cities for its vast underemployed rural population are daunting tasks that China fails at as much as it succeeds. China expects it can eventually capture a major share of the global auto industry and hopes that more of its population will learn English to fit into the advanced global economy. A lot of our debt is held by China, the country we trade with the most after Canada. China holds about a half a trillion in U.S. Treasury securities and has foreign exchange reserves totaling about $1.5 trillion. When an individual is in debt, there are basically five options: save to redirect consumption to pay down debts, work more to generate extra income, reschedule debts, find a friend or relative to pay your debts for you, sell assets, or default. I am suggesting the US sell some assets. So, I did a thought experiment to consider this option, sell Michigan to China. This will settle up with them -- cancel our debt with them -- as well as bring their economic might, thrifty people, and manufacturing prowess to North America -- in addition to a lot more Chinese restaurants. Michigan would become a hybrid state similar to Hong Kong, now a Special Administrative Region of China. English and Mandarin would be the official languages. If this idea is too shocking, then we could instead just lease Michigan to the China for 99 years. Michigan was originally Native American, heavily Chippewa and Iroquois, whose ancient ancestral roots are in Asia. Later Michigan became French; then British; then part of the USA; and with this financing strategy, will become Asian again. There is American precedent for this strategy. In 1803, Napoleon Bonaparte was fiscally in trouble due to his adventurous foreign wars. So he had to sell the French North American territory of Louisiana which now contains all or part of 15 US states in the center of North America. The price was about 20 million dollars, half in cash and half in debt cancellation. As part of the deal to create a Special Administrative Chinese Region of Michigan in North America, China would have to agree to abide with the international North American regulations set up by the USA and Canada such as those of the Great Lakes Commission and NAFTA. People in Michigan, could stay and retain their property rights or sell to the Chinese and move elsewhere. Of course, people in Michigan would have to approve their transfer to China. If approved, China would be sending millions of its people (perhaps 10 to 50 million) to live in its new North American region buying up residential and commercial property, starting new factories, recovering old jobs and creating new ones, and re-populating Detroit. It would be expected that joint partnerships and ventures would be formed between Chinese automobile corporations and the Big Three, injecting capital, manufacturing know-how, and access to the soon to be largest green auto market in the world – China. Math scores at Michigan schools would shoot to world standards. My family moved to Michigan in the 1950s because of the economic boom there. Michigander families of today would likely want to stay and welcome the economic and social renaissance of their state. I think Chinese people would personally enjoy moving to and vacationing in Michigan. I think they would enjoy its natural beauty, the clean air and water (up north), the Blues and Jazz heritage, the culturally rich ethnic enclaves of African-Americans, Mexicans, Polish, and Arabs; the prowess of its sports teams, its museums, universities, and casinos; and its indigenous foods such as Coney Island hot dogs, Detroit style pan pizza, grilled onion laden sliders, and Yooper meat pasties. A side benefit of this is a demonstration that borders of nation states can be fluid. The USA and China are already bound together in a marriage of economics. It would be advantageous for China to have a region in North America (in the Midwest right between Canada and the USA) and it would be advantageous for the USA to be relieved of much of its foreign debt so it can pay for the finance industry bailout as well as better education, universal access to health care, and an improved infrastructure. Selling Michigan to China would show the world that it is economic and cultural exchanges that define a place and not its borders. It would demonstrate that expending resources to fight over sovereign borders is wasteful and that in its place, cooperation and exchange, for goods and services and also debt removal for land, is not only peace-promoting but also economically smart. Both China and the USA have their faults. People in the USA can learn a lot from China and the Chinese can learn a lot from the USA. Bringing part of China into the heartland of North America is a way to foster and accelerate that process of bilateral learning and get America moving ahead. |
| Link posted by Steve Antler : 12:03 PM |
Friday, October 17, 2008
| How many plumbers do you know who make a quarter of a million? |
| Well, maybe not too many, but here are some numbers: If you are a self employed experienced licensed plumber you can charge between $35-$150 per hour, depending on which part of the United States you live. In larger cities the rates are at the highest end of the spectrum. I believe Boston plumbers charge over $125 per hour. Mid Coast Maine is between $45 & $75 per hour. So, at varying hourly rates here's what someone working a 40 hour week for fifty weeks per year would gross: HOURLY/GROSS $75 / $150,000 $100 / $200,000 $125 / $250,000 $150 / $300,000 $175 / $350,000 $200 / $400,000 I'd have to do some checking on it, but I think any small manufacturer (like myself) would confirm there are many skilled tradespeople in Chicago who bill out their work at $125 per hour. Those who claim to speak for "the people" sometimes don't actually know a lot about the daily lives of workers and the businesses employing them. |
| Link posted by Steve Antler : 7:10 AM |
| Joe the Plumber and his False Class Consciousness... |
| His taxes won't go up but he doesn't know it. Why do I suspect that's really not the point? |
| Link posted by Steve Antler : 6:31 AM |
Monday, October 13, 2008
| Roosevelt lite... |
| Here's the Obama Economic Plan -- a kind of New Deal II that shares its ancestor's dangerous economic incoherence in a major way. Attacks of major social engineering from all angles shout down rational thought and reasonable private sector planning. |
| Link posted by Steve Antler : 1:09 PM |
| Take from the poor, give to the poorer... |
This is a wide-ranging critique of the Obama tax proposals, but the most disturbing feature is shown in this graph: In terms of marginal tax rates the "95% tax cut" represents a massive tax increase on the working poor, and massive redistribution from poor people who work to poor people who do not. |
| Link posted by Steve Antler : 9:14 AM |
| Take the money and run... |
| To me this looks like discounting of a likely Obama/Democrat victory. US withdrawal means defeat and loss of current power holders' ownership/control of natural resources. Therefore, it would be wise for them to get whatever money they can raise out of the country ASAP. What am I missing? |
| Link posted by Steve Antler : 8:57 AM |
| Victims with more money than you... |
| Tribune reports on Highland Park homes (average value, say, $3M?) being "short sold" owing to the housing price crash. This is a good test of your ability to feel others' pain. Try real hard to imagine how bad folks feel when their $3M house is worth only $2.6M. Actually, you'll soon get a chance to really feel the pain. The banks wind up eating the loss, and you'll soon own a major chunk of those banks. Feel it. Feel the pain. |
| Link posted by Steve Antler : 8:28 AM |
| Democracy at risk... |
| People actually voting to tax themselves less. |
| Link posted by Steve Antler : 8:07 AM |
| Recession interruptus? |
| Paul the EconoMaven sends a link to this new gloomy prediction of doom fueled by Brad DeLong's analysis. Falling oil prices may reverse the cycle. An extra $30/week in each driver's pocket (do the arithmetic yourself) might turn things around. The "expectations factor" is the wild card in this situation. The MSM has been generating economic pessimism for years -- even in the middle of one of the strongest economic booms in American history. Now we actually, finally, genuinely face a downturn in the cycle. And MSM economic reportage may now have lost its brand and much of its influence. If the boy who cried "wolf!" was finally eaten with everyone in the town watching wouldn't his posthumous credibility have actually gone lower than in the story as we know it? Peoples' daily experience, rather than what they read in the newspaper, may now do more to fuel their economic expectations. Can an extra $30/week fuel a major recovery? In a world with diminished influence of MSM pessimism, the answer may well be "yes." UPDATE: O, my prophetic soul! |
| Link posted by Steve Antler : 7:41 AM |
| Scroll down for blogroll... |
| Please scroll to bottom to find the blogroll. (I've made the usual beginner's mistake of fooling around with my template without a backup. Will try to restore things later today.) |
| Link posted by Steve Antler : 6:29 AM |
Friday, October 10, 2008
| Obama and Acorn |
| Okay, I obtained a document some time ago but decided to leave things alone and not post it. Since The Cleveland Leader is now publishing excerpts from the article, and since (according to the Leader) Social Policy has pulled the article from its web site, here's a .pdf of the whole thing. |
| Link posted by Steve Antler : 10:18 AM |
Wednesday, October 08, 2008
| The "Asian Financial Crisis" -- anyone remember that? |
| Gary Becker: Is this a final "Crisis of Global Capitalism" -- to borrow the title of a book by George Soros written shortly after the Asian financial crisis of 1997-98? The crisis that kills capitalism has been said to happen during every major recession and financial crisis ever since Karl Marx prophesized the collapse of capitalism in the middle of the 19th century. Although I admit to having greatly underestimated the severity of the current crisis, I am confident that sizable world economic growth will resume before very long under a mainly capitalist world economy. Consider, for example, that in the decade after various predictions of the collapse of global capitalism following the Asian crisis, both world GDP and world trade experienced unprecedented growth thanks to the power of market competition on a global scale. The South Korean economy, for example, was pummeled during that crisis, but has had significant economic growth since. World economic growth will recover once we are over the present severe financial difficulties. |
| Link posted by Steve Antler : 9:59 AM |
| Sorry to say he just doesn't get it... |
| Max Schulz: McCain clawed his way back into the race this summer by riding the wave of outrage over the offshore-drilling ban. He further helped his cause by picking a running mate from one of the most important energy-producing states in the Union. How ironic that he is giving back those gains by failing to appreciate that the 2008 contest will go down as the Energy Election. |
| Link posted by Steve Antler : 9:36 AM |
Tuesday, October 07, 2008
| This /....../ Just /...................../------/ In |
| Hulu is /===========================/ going to stream tonight's / ====== / debate. |
| Link posted by Steve Antler : 8:10 AM |
| Depression, Obama, and FDR... |
| The argument FDR prolonged the Great Depression is resurfacing on the web; here's a link to an early working-paper draft of the Cole/Ohanian paper that's probably the latest peer reviewed contribution to this literature. |
| Link posted by Steve Antler : 8:03 AM |
Monday, October 06, 2008
| Weight problem? |
| Are the polls using an incorrect weighting scheme? Is their math wrong? UPDATE: A brief tech guide to foibles of political polling can be found here. |
| Link posted by Steve Antler : 9:19 PM |
| Yes, but... |
| Paul ("EconoMaven") H. sends us a link to this article with the following comment: Trillions will be needed to save the world banking system. Since only the Chinese, the Russians and some of the Arab states have spare cash, they will have to take over. Bye bye cronie capitalism, hurray to not sure what. This is all well and good, but as Arnold Kling points out (in an editorial he complains nobody will publish -- "Earth to Arnolt: it's the title, "Lamps are going Out," that's scaring people!") the only spare cash they hold is in the form of US dollar reserves. My low-value two cents are as follows: from the leading economic indicator frontlines we can tell you buyers have been dramatically switching out of credit card purchases and into checking account drawdowns for about six weeks now. We might even see the first indicators of winding down of consumer credit with tomorrow's release of new numbers. |
| Link posted by Steve Antler : 8:14 AM |
| Involvement with Keating Five: Bug or Feature? |
| I think this is a terrible mistake for the Obama side. It draws attention to the fact McCain has been around long enough to have dealt with similar crises and their attendant scandals and systemic economic problems. |
| Link posted by Steve Antler : 7:53 AM |
Sunday, October 05, 2008
| Postutilitarian redistribution... |
| I'm not even going to bother to show you the numbers, but I'll just say it: right now the average US public sector employee has a higher income than the average private sector employee, meaning any increase in taxes to deal with public sector salaries redistributes income from lower- to higher-income people. Currently a popular essay on the web, Michael Malone's "The End of an Era" predicts a bright technological future following an unsettled present. But still, disturbing but possible, this comment on the essay (scroll down to find it) raises the credible spectre of a permanently postutilitarian America: Rather than expecting technological advances to overcome Washington corruption, I would predict another scenario: In a few years the U.S. will come to look like Argentina. Argentina has defaulted on foreign debt and as a result has been cut off from outside funding for seven years. It depends entirely on Hugo Chavez' government for help in papering over its large budget deficits. In turn, government welfare expands. We won't look like Venezuela, with its "Bolivarian brigades" that sustain the Chavez regime, because we do not have oil available for export via a state-owned enterprise. But politicians in Washington nevertheless have become enamored of the Chavez-statist business model, which includes increasing the already very large public employment rolls. The new minority in the U.S. will be non-government employees and business owners, who will basically have no say in how things are run but will be taxed to help pay for it. Don't count on the internet -- or any other technology -- to restore the U.S. to fiscal sanity. It can't be done. Before long, most Americans will be dependent on a (broke) federal government for their livelihoods, and thus will be in no mood to buck the system. Without fiscal sanity, freedom goes out the window, by the way. That's fine with the folks in the Capital. No problem. Argentina, here we come. |
| Link posted by Steve Antler : 7:39 AM |
Saturday, October 04, 2008
| MSM should read as well as cite, perhaps? |
| Mark Stricherz gets it mostly right and does a good job integrating Thomas and Mary Edsall's Chain Reaction into a larger context, but he shortchanges the Edsalls by, it would seem, not actually having read their book. The 28 member body called the "Commission on Party Structure and Delegate Selection" -- the McGovern Commission -- is dealt with in detail by the Edsalls, and they credit it, rather than racial prejudice alone, as the main cause of the Democrats' perennial problems. |
| Link posted by Steve Antler : 11:58 AM |
| U herd it here 1st... |
| Mike Allen and the Obama folks who are feeding him these very basic talking points will soon be embarassed when they realize how close is McCain's to the old Democratic health care plan constructed by none other than Hillary Clinton. The crucial element, as she wound up seeing it, was lack of national competition for a "standardized" product. True, she had a tin ear when dealing with businesses smaller than GM, but in proposing consolidated regional markets and standardized plans she came quite close to what will probably be the final draft of the McCain plan. Just wait. The Clintons may soon point to weakness and naivety (lack of "nuance," perhaps?) in Obama's critique of the McCain health proposals. |
| Link posted by Steve Antler : 10:55 AM |
| Good news from Karl Case... |
The latest numbers for the Case/Schiller S&P multicity US home price index appeared Sept. 30th. No time to post all the diagrams, but here's Chicago's plot: No question but the index says everywhere the falling trend in home prices is moderating. UPDATE: It would appear Martin Feldstein, who suggests a positive feedback loop (falling home prices are causing additional price declines), is ignoring the most recent numbers. |
| Link posted by Steve Antler : 10:17 AM |
Friday, October 03, 2008
| Why not add voter registration and an automatic vote for Democratic Party? |
| Here's a novel idea from the oddly-titled blog "The Moderate Voice": If we provided that any illegal alien could secure all necessary working papers to become "legal" so long as they join a recognized American union and remain in good standing, we would solve all of the problems associated with Mexican workers. Then employers have no excuse. If they need more low-skilled workers, they need only turn to the unions. Any illegal alien who chooses not to join a union, will not be able to find work. Unions will help workers adjust to our culture, language and work ethic. They will help them secure training and better wages, make sure they are not competing with Americans, and help insure they have health and other insurance. American workers, whether in guilds, trades or unions, have always been there to help immigrants adapt. They will do it again. |
| Link posted by Steve Antler : 11:08 AM |
| The easiest thing to spend... |
| ...is other people's money: ...before we conclude that markets failed, we need a careful analysis of public policy's role in creating this mess. Greedy investors obviously played a part, but investors have always been greedy, and some inevitably overreach and destroy themselves. Why did they take so many down with them this time? Part of the answer is a political class greedy to push home-ownership rates to historic highs -- from 64% in 1994 to 69% in 2004. This was mostly the result of loans to low-income, higher-risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted that rise as it occurred. The consequence? On top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets. Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis. |
| Link posted by Steve Antler : 9:58 AM |
| Today is Friday... |
| The old Two-Ton-Baker song went "Friday: fish-day, everybody happy , well I should say!" Well, it's Friday and it's payday and now we'll see just how many anecdotes appear about credit shortages around the nation. If I'm wrong we'll all review Irving Fisher's debt-deflation theory of the Great Depression and its early role in the eventual creation of the Cowles Commission. (Despite the recent more-optimistic forecast memo I ran the latest Eviews version of Ray Fair's US Model and got a recession prediction, by the way. First time ever.) |
| Link posted by Steve Antler : 5:28 AM |
| Trouble in social paradise... |
| It turns out European banks are as greedy and prone to cowboy-behavior as are all those Wall Street tycoons: The storyline is evolving much as eurosceptics predicted, yet the final chapter could end either way as the recriminations fly. Germany has already shot down the French idea. The nationalists are digging in their heels in Berlin and Madrid. We are fast approaching the moment when events decide whether Europe will bind together to save monetary union, or fracture into angry camps. Will the Teutons bail out Club Med? If not, check those serial numbers on your euro notes for the country of issue. It may start to matter. |
| Link posted by Steve Antler : 5:24 AM |
Thursday, October 02, 2008
| The second time as farce, yet again... |
| The NYT now warns American universities -- Vermont, for example -- are losing full losing access to their short term investment funds. Oh no! American education is in danger! Lest you worry too much about University of Vermont here's the latest on its endowment and its over 13% growth during the previous fiscal year. These institutions are like the English monastaries of Henry VIII's time -- fat, wealthy, growing, and quite uninterested in sharing anything with, you know, those starving "poor" people on the other side of town. Don't worry about the universities. They've wallowed in government subsidies as their endowments have grown almost beyond measure. With only one exception that we know of, they've spent nothing to make higher education more affordable for all families. |
| Link posted by Steve Antler : 2:37 PM |
| The second time is farce? |
| I've been joking (joking?) with friends for weeks that I'm just waiting for news that the Reichstag is burning. I think the building is burning. |
| Link posted by Steve Antler : 8:13 AM |
Wednesday, October 01, 2008
| He speaks who signed the legislation into law... |
| Bill Clinton explains why repeal of Glass-Steagall has nothing to do with the current situation. (We're not calling it a "crisis" until Friday -- payday -- generates the payroll problems so many are predicting.) |
| Link posted by Steve Antler : 7:39 AM |
| But how many Americans know what "percentage" means? |
| At last David Cay Johnston writes something I can agree with. |
| Link posted by Steve Antler : 7:30 AM |
| In the emailbox... |
| A good friend and former colleague at Memorial University sends us the following news from the once-impoverished Province of Newfoundland and Labrador: Newfoundland is awash in petrodollars and next year is forecast to become "Have Province" with money going the other way to Ottawa. What's the lesson? I think it is "drill here, drill now, pay less." |
| Link posted by Steve Antler : 7:24 AM |
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