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Thursday, September 13, 2012

David Brooks, "Après Rahm, Le Déluge," Versus Paul Krugman, "The iPhone Stimulus"

Note the stark dichotomy.

Approving the no-nonsense handling of the Chicago teachers' strike by Rahm Emanuel in his latest New York Times op-ed entitled "Après Rahm, Le Déluge" (, David Brooks observes that there are two economies which "exist side by side" in modern nations.

According to Brooks, "Economy I" consists of manufacturing companies which "are compelled to constantly innovate and streamline" owing to global competition.

In contrast, Brooks's "Economy II" includes governmental bodies active in "health care, education, prisons and homeland security."

Brooks writes:

"Over the past 50 years, spending on K-12 education has also skyrocketed. In 1960, Americans spent roughly $2,800 per student, in today’s dollars. Now we spend roughly $11,000 per student. This spending binge has not produced comparable gains in student outcomes. Education productivity is down, too.

If Economy I is great at generating output without generating employment, Economy II is great at generating employment without generating output."

The problem is that the bloated Economy II is becoming a burden that Economy I can no longer carry. Unless we reform Economy II and control its spending, the bloat will crush us. National productivity will slide. The economy will stagnate."

Meanwhile, Paul Krugman, in his Times op-ed entitled "The iPhone Stimulus" (, notes that spending on the new iPhone 5 could provide an instant boost to the US economy. And if spending on the iPhone could provide significant stimulation, Krugman argues that the government should now provide similar assistance:

"Long ago, John Maynard Keynes suggested that the answer was 'use, decay, and obsolescence': even in a depressed economy, at some point businesses will start replacing equipment, either because the stuff they have has worn out, or because much better stuff has come along; and, once they start doing that, the economy perks up. Sure enough, that’s what Apple is doing. It’s bringing on the obsolescence. Good.

But why suffer through years of depressed output and high unemployment while waiting for enough obsolescence to accumulate? Why not have the government step in and spend more, say on education and infrastructure, to help the economy through its rough patch?"

Well, I won't be buying an iPhone 5. I own an "obsolescent" BlackBerry and will somehow made do. On the other hand, I respect the free market decision of persons desiring to purchase and enjoy this latest technological marvel.

But hire more educators in Chicago, where, according to Brooks, "The average Chicago teacher makes $76,000 a year in a city where the average worker makes $47,000 a year"?

Or, consider Obama's proposed American Jobs Act. This legislation would have added 1.3 million jobs at a price of $447 billion. So divide $447 billion by 1.3 million jobs, and what do you get? Taxpayers would have been saddled with a cost of $344,000 per job.

Excuse me, Paul, but economic stimulation managed by the federal government during the first term of the Obama administration has already taken US debt over $16 trillion with nothing to show for it. (Yeah, sure, the recession might have been worse without it.) Ultimately, however, someone, who had no say in how the federal government distributed these funds, will be forced to foot the bill.

Thank you, but I think I will side with David in this instance.


  1. I don't know ...
    "Economy I" consists of manufacturing companies which "are compelled to constantly innovate and streamline" owing to global competition."
    Sadly, their "innovation" has one goal and result - higher "salaries" for CEOs.
    Personally, I live perfectly fine without knowing exactly what Blackberry is (and without TV), so I happen to believe that maybe firefighters (yes, I saw some recently on top of some shaky ladder fighting a fire in my neighborhood) and teachers are more important than "Blackberry" companies even though they assure that some people are insanely rich (and corrupt my political and economic system) and some people in China have some slave labor.
    Secondly, the average salary in corporate world has a different meaning than that in non-corporate. Although, the disparities increase in non-profit and government sectors (corporatisation of everything), they still don't pay their CEOs salaries which are 1000 times higher than that of an average person.
    So average in corporate world is ... just that.
    I tend to repeat that Gates and I have together some 50 billion, but I don't have 25 billion.
    So, in other words, there is a problem with dismantling of the more balanced world with total madness of 1 to 1000 ratio of the present day American corporate world.
    I happen to believe that unions are an important mechanism in democracy.
    The last time I checked, the Bible doesn't say that outsourcing is God given (I think it does mention Jack Welch) and doesn't insist that CEOs salaries must be in 8 figures (but I think it does talk about justice and fair treatment of people), so I don't understand why we should reward CEOs with tax money for exporting jobs and devastating this land.
    Why not introduce a civilized labor law which would prevent enslavement of the population, outsourcing of jobs and destruction of the country instead of blaming teachers and teachers only?

  2. Ah, I didn't see any Blackberry CEO on that ladder.

    1. The question persists whether BlackBerry will be around in another few years, owing to the iPhone. I wouldn't want to be their CEO, no matter what the salary.

      Teachers? No one is only blaming teachers. Rather, the question is what bankrupt local governments can afford to pay.

      Tax CEO incomes by 70% or even 90%? Although this will contribute to egalitarianism, it won't make a dent in federal or state debt, as even Obama acknowledges.

      Me? I take pleasure in assisting small drug and medical device companies bring life-saving products to the market. As I have personally discovered, were this left to government or universities, products would never reach the market, owing to their relaxed work schedules.

      And just maybe, if I get my wish, I will be able to provide full-time assistance to disadvantaged families and children before I punch the clock for the last time.

      Corporations and their executives? Although there can be no denying the greed that has become pervasive among executives at leading corporations, there are also exceptions.

    2. Jeff, you are American born and I am not and we can't communicate in certain areas.
      I am talking about "normal" labor law and you are talking about taxing CEOs salaries.
      I talked several times about Calvinist nonsense "the rich are rich because they deserve to be rich.
      Jeff, sorry but I have to capitalize the following:
      In other countries, employees usually check the value of management by WALKING OUT. Guess what - what it turns out very fast that CEOs are worth NOTHING when their employees are not on the job.
      Frankly, Jeff, why is it so difficult to understand?
      Just yesterday, I had a brief (I am not known for patience) conversation with some Teapartier and I am not in a mood of tolerating nonsense.

    3. "Although there can be no denying the greed that has become pervasive among executives at leading corporations, there are also exceptions."
      Civilized societies have laws preventing barbarity which eliminate/reduce the need to wait ... for exceptions.

  3. I'm afraid many the values of what America once stood for are going down the drain in this political campaign Déluge.

    From today's New York Post:
    "Samuel L. Jackson will film a provocative spot supporting President Obama’s re-election bid as early as tomorrow — telling voters to “Wake the f--k up, Vote for Obama.”
    The ad is a riff on Jackson’s viral video “Go the F--k to Sleep,” where he narrates a children’s book written by Adam Mansbach.
    It’s paid for by the Jewish Council for Education and Research Super PAC — which earlier this summer aired an ad of comedian Sarah Silverman offering “free lesbian sex” to billionaire Sheldon Adelson if he stopped supporting GOP nominee Mitt Romney".

    I liked Samuel Jackson so much more in his leading role in "Rules of Engagement". Considering the movie was made almost 13 years ago, Hollywood pretty much got the first part right as far as what happened this week at the US embassies in Libya, Egypt and Yemen although they failed to predict that it would be Americans who would be "wasted" and not anyone in the attacking mob.
    (Viewer discretion advised)

    Is anyone blogging about these 'Hollywood Firsters'?

  4. Anonymous (5:11), a very good comment.
    I am the other anonymous, clearly not a Republican (even though not a Democrat any longer).
    Anna Wintour praises Assad when people are tortured. Scarlett Johansson is embracing the son of the Sultan of Brunei or other "sons" and "fathers" when people are murdered, a "journalist" publishes a piece about Obama which reminds the production of "scribes" of Stalin (no I am not comparing Obama to Stalin, just the quality of "journalistic efforts" in Vanity Fair)
    Then all these prostitutes (the correct description) order to me vote the way they "know" I should. I am multicultural and all my cultures (except for American) dictate me to be outraged when the circumstances "outrage." My natural response is thus: "How dare you?"
    This is madness - an absolute ethical decline.