I agree this is a pretty interesting thread. I am one that puts my faith mostly in the free market, but also proposed government financial aid to engineering and science degrees only, which is admittedly an indirect form on intervention. This was based on my experience in industry, where offshoring R&D efforts was sometimes driven by cost, but often driven by a lack of engineers here (where the company would, for many reasons, prefer to do the work and was willing to pay a certain premium for it) and they were forced to go abroad to find them.

Now, government re-tooling of industry from the blinkered ivory towers of Washington by a few hundred or thousand poli-sci, politically appointed bureaucrats who will face no reward or consequence for success or failure is almost certainly bound to pick worse winners than the distributed, in the trenches decisions of tens to hundreds of thousands of engineers and managers personally vested in coming to the best solution for themselves. That’s one reason why I support the free market. But you are right, this doesn’t necessarily mean we’ll come out on top, and very well could mean we start losing jobs and much of our economy. Which gets to the second reason why I generally support the free market, although it’s not a warm fuzzy. In the free market you get what you deserve, and its thus morally superior in my little universe. If American college students are going to college to party, drink and f&%k (which they are) without much thought to actually getting a job skill, while Chinese and Indian students are going to some of the best engineering colleges on the planet and studying their butts off (which they are), well, it doesn’t take much to see the writing on the wall there does it? What grates me though is that most of the American students wasting their time and pissing away their (and the nation’s collective) future, are also wasting YOUR money since they’re on federal financial aid anyway. So I’ll break with my principals to support federal financial aid for science and engineering only.

Ideally too, as India and China catch up with us making rubber dog toys and hub caps (using exaggeration to make a point more clear) this should free us up to make new products, like personal jets or 3D home entertainment systems. Who in the 1890′s ever imagined massive swaths of people making cars vice the few craftsmen at the time who made the horse drawn buggies. Who in the 1920′s ever imagined people making TV’s? In the 1960′s who predicted how many people the computer and then internet industries would employ? I think our best bet (and most unsettling and un-comforting) is waiting for something we haven’t thought of yet to come along. Scientists and engineers tend to be better at making those things a reality than psych majors.

But it does get to an interesting philosophical question: At what point is enough materialism enough? For the Amish it was apparently the year 1600. But it might be natural to see more people moving away from mass production to things more in line with my John Adams quote: more artists (even if they suck), more chefs (with prosperity why not eat out more and live life to the fullest?), more landscape designers, more beauticians, more clothing designers, etc. (A completely ‘nother topic but materialism no matter how far it goes without a moral base will be unsatisfying, but built on that moral base the more can be merrier IMO.)

Last, although I certainly prefer the free market I try not to hang myself with my ideologies. Taken from a game theory perspective some US government intervention may become necessary when other foreign government do so much intervention themselves. (And like almost all game theory results, this leads to a race to the bottom with the lowest total production.) A historical example which may be apt but which I know very little about is the experience of the Dutch in the 1600′s or so. Under the United Provinces the Dutch were the most free-market oriented free trading economy in the world and became greatly wealthy as a result. However, the English finally picked up on this, and through a little free market reform in their domestic economy, and a lot of British naval intervention to forcibly take and monopolize international trade, in a very un-free market manner, became far more powerful than the Dutch, maybe got a little richer, and the Dutch just got pretty much hosed. Possibly something similar can be happening to us right now, and some, preferably minimal, government intervention may be necessary just to play defense. My college aid proposal is made in that vein.

From what I gather based on the comments above, the decline in people actually having a job that creates things goes away as China, India, etal, can do it cheaper. There seems to be little concern about this. Then why would anyone be shocked at the number of public employees actually increasing? Where else can people find work? I’m not 100% sold on the free market magically providing good jobs in other industries when even IT is outsourcing. As others have noted above, and elsewhere, the free market as it is currently set up in this country seems to only benefit the few who are connected, have the means, etc.

I am in no way advocating anything like nationalising industries, etc. That will not work in the long run. But I do see a place for gov’t incentives to retrain workers, retool factories, and most likely retool the entire domestic economy. It’s an overused phrase but this recession is truly different this time. I don’t think a total hands’off, gov’t just should step back and left people suffer, etc, approach advocated by many will work. I also don’t think the massive bailouts using taxpayer cash will work either. Is there another way?

I guess my question is – okay, what will these people do for a job? Not everyone can be an engineer, doctor, etc. I like the idea of gov’t loans for only certain areas of study that may actually increase innovation, design new products, new treatments, etc. I guess my question there though isn’t that a case of the gov’t choosing a winner? Why not let the free market decide which types of education are more valuable? It seems to be doing that already with law degrees, psychology, MBA’s, accountants, etc. I’m not sold on the idea that more engineers and scientists will solve the problems, either, as so many companies are moving R&D work offshore as well. So what’s left? We’ll all become barbers and give each other haircuts?

I forget which poster mentioned trade polices above. I think it’s past time to stop what I have seen as totally one-sided policies that have moved so much work offshore while other countries are free to export to us with no restrictions. The only people I can see gaining from such a policy is, again, the few with the means and commections to exploit the policies. Usually this means large coporations.

I’m not a Nader fan by any means. He did have a good observation on corporations. Originally when a company was incorporated, said company would have to go to Congress every 10 years to justify still having to be incorporated. I would have no problem with that being enforced now. Hopefully I am remembering this correctly!

So anyway, there’s my ramblings. I see a lot of interesting comments in this thread. I am very disturbed at what Mr. Scott mentions above in regards to the idea of means-testing military pensions. There’s one idea that needs to be terminated with prejudice.

regards,

Phalanx08

All the blame assigning, and semi-tortured justification doesn’t change one inescapable conclusion: just like the UAW member, I had an agreement to work so many years in return for something, and just like them, my guarrantor is upside down.

Just wait – the time is coming for means-testing of military pensions. The trial balloon of higher Tricare For Life premiums for retired officers is just the first, and won’t be the last as the fiscal house continues to crumble.

According to Thomas we’re 94% of the way to my Sci-fi worlds of yore where no one works. And I still haven’t come up with an answer to the questions I asked myself as a 5th-grader…

Because, while the obvious answer to our present condition is that increasingly it is the STATE that decides who gets what and how much, what happens to us when, as Dame Thatcher so unerringly put it: “the Socialists run out of other people’s money?”

I’m thinkin’ Zimbabwae…

They produce nothing in this regard, they’re not producers in the classical economic sense. But they save you time and effort that you can devote to producing things. That’s the whole division of labor thing, you do what you do best and I’ll do the same and we’ll probably trade services at some point when we’ve a need.

I’m in IT, I make the 1′s and 0′s line up and go where they’re supposed to, keep those computers running, etc.. I don’t produce a darned thing. I allow others who do produce spend more of their time producing rather than doing my job.

– Max