Archive for May, 2007

Does an aging demographic structure lead to an export-oriented economy?

Monday, May 28th, 2007

As part of their work on the Fertility Trap Hypothesis, Edward Hugh and Claus Vistesen argue that an aging demographic profile will lead to an export-oriented economy. More controversially (at least to me), they argue that a move towards an export economy will make it hard to raise birth rates to replacement levels. They think that the process of moving towards an export-based economy will put pressure on wages of young people which in turn will make them less likely to have children.

Mr. Hugh and Mr. Vistesen’s argument revolves around the Life Cycle Model of consumption and savings. The special twist that Mr. Hugh and Mr. Vistesen bring to the idea of the Life Cycle Model is that it can explain things on a macro level based on the demographic profile of the country in question.

Now there are many ideas in the Fertility Trap Hypothesis that I think are quite strong and likely to hold up across all cultures. But I don’t think the Huge and Vistesen’s work with the Life Cycle Model will be one of the successful ideas. I see no reason to think that fertility will be negatively affected even if savings/consumption behaves as the Life Cycle model says that they will. In other words, even if the Life Cycle Model holds true across all cultures (a big if, that), the economic effects that will result are not part of the “Fertility Trap.”

It’s a little bit cheeky for me to say all that. After all, Mr. Hugh is macroeconomist with many years of study. And though Claus Vistesen is still a student, he has done far more studying on this matter than I have. By comparison, my background as an ignorant hillbilly means that my credentials are a little thin for tackling such issues as the Life Cycle Model of consumption and savings and how it relates to demographic age structures on a macro scale.

But Mr. Hugh’s response to a comment I made over at Vistesen’s blog has stirred up my thinking on the issue. So in between trying to get over sinus issues (otherwise known as the common cold, apeman style), trying to fix my truck, and trying contribute my fair share towards getting a garden in, I have been pondering Mr. Hugh’s and Mr. Vistesen’s idea.

In an effort to get this issue off my mind, I thought I might share with the world some of my thoughts on Hugh’s and Vistesen’s idea. I should warn everyone that the following is going to be long on theory and short on facts. I think that the facts generally support what I am trying to say, but I don’t have time to dig up the supporting data that I have read in the past to make sure it really supports what I am trying say. In other words, I am being an ass, but I know I am being an ass.

Anyway, the beginning of my approach to Hugh’s and Vistesen idea was an attempt to formulate a model that would help me understand it.

My Problem

Monday, May 28th, 2007

Though you would not know it by how infrequently I update my essay site, I have lots of subjects that I would like to write an essay about. Yet, on this blog I rarely touch upon those subjects about which I wish to write an essay because I am afraid of ruining the effect of my future essay. To understand this absurd hang up, you need to understand my conception of what makes a good essay.

Does anyone care if the culture of Quebec dies?

Tuesday, May 22nd, 2007

This from the New York Times….

As cultural coordinator for a resource center for new Quebecers, Gabriel Garcia is leading an effort to bridge the gap between the growing number of immigrants here and the mostly French-speaking society into which they have moved.

But one issue is proving to be a bridge too far for the province’s first-generation immigrant population: the long struggle for independence. “I realize it is important for many,” said Mr. Garcia, who mainly works with people from Central and South America, voicing a sentiment shared by almost all the recent immigrants. “But for me, sovereignty is not my primary passion.”

The number of immigrants entering Quebec each year has nearly doubled since the last referendum on independence in 1995 failed by a razor-thin margin, and immigrants now represent more than 10 percent of the electorate.

That rapidly expanding demographic consists of people who have no historical stake in the traditional French-English divide. The evolving society is one of many challenges facing the political vehicle of the separatist movement, the Parti Québécois, after the resignation on May 8 of the party’s leader, André Boisclair.

Mr. Boisclair, 41, became increasingly unpopular during his 18 months at the party’s helm, especially after elections in March when the Parti Québécois finished in third place, its worst showing in more than 30 years.

Although French-speaking Quebecers continue to form a clear majority of the population, the growing number of immigrants, along with a greatly reduced birthrate, point to a shift that is forcing political parties, separatist and federalist, to rethink their political foundations.

I bring this up for two reasons. One is simply to point out that demographic change is very real and it is happening before our eyes. One would think that I would not have to make this point but a surprising number of otherwise sensible people seem to be in denial about this.

For example, yesterday I was involved in a discussion about the fertility trap over at the Alpha.Source. During that discussion one commentator said (speaking about demographic effects)…

I think this is hocus pocus, given the uncertainty. It’s like studying macroeconomics during the next ice age: meaningless.

This is common reaction when anyone starts talking about the economic effects of changing demographics. Most people deny that demographic data has any relevance. After all, it is all about the future and nobody knows what the future will bring.

But as the New York Times article on Québec shows, that is just not true. Demographics are changing the way we live right now. More to the point, even those demographic concerns about what will happen in the future are based on demographic changes that have already happened. As CV of Alpha.Source said in response to comment above….

I think this is hocus pocus, given the uncertainty.’

I am not sure what kind of uncertainty you are talking about here. One thing which we know will happen during the next 10-20 years is rapid ageing in key societies on earth. Basically, Germany, Italy and Japan are at the forefront of this but even France will age rapidly since she too has been through a transition from about replacement levels in the 1970s to about 1.4 in the mid 1990s.

The reason we can talk so confidently of the rapid ageing of certain societies is that the demographic change has already occurred. It just has not worked itself out yet. True, massive immigration might prevent a change the age structure. But as Québec shows, immigration still changes the demographics and that change has consequences. Massive change is coming to Europe and most Asian countries no matter what.

But a lot of people just don’t want to face that. The skeptical commentator on the Alpha.Source blog was not calling into question some overly precise forecast of the future. Rather he was challenging the very idea that change was coming. As he said later in his comment….

But before your dire scenarios come to pass, methinks some folks would be willing to support the hard work of (working) motherhood with some effective policies.

Let us assume that he (at least I assume that the anonymous commentator is a he) is right and all you need to do to raise birth rates is to support working mothers with governmental help. Let us say that Japan implements all the right polices to bring that about tomorrow at 12 noon. How will this affect Japan’s coming aging?

In the short term, it won’t. Children born tomorrow will be going to college when Japan starts to rapidly age. If anything, that will make the problem worse. You will have an increase in the non-working elderly and you will have a bunch more kids to support. All this will strain society even more in the short term than if it only had to deal with the increase in elderly.

The unavoidable truth is that if you let your replacement rate fall too far below 2.1 for more then a couple of years, then you are going to have to pay a serious cultural price at some point to dig yourself out of the hole. As a society, you are either going to have support a massive burden of non-working young kids and health-failing older people until you can straighten out your demographic profile, or you are going to have to let in large amounts of immigrants. But immigrants impose their own cost, especially on a nation like Japan that defines itself on an ethnic basis.

No matter what, a birth rate below 2.1 will result in a dramatic change a nation’s culture. The only uncertainty is will this happen from a massive inflow of outsiders or just from the societal breakdown caused by unsustainable demographics.

Should we care?

Who is going to miss Québec? In 60 years from now, the French speaking culture of Québec will just be a curiosity. It will fail to have any real influence on the way that the province is run. Yet I can’t say that I really care.

You would think that the people of Quebec would care. After all, the separatist cause was all about culture. The separatists proudly proclaimed that their cause was all about preserving the special culture of Quebec. And they almost convinced a majority of the people of Quebec to vote to leave Canada in 1995 even though the rest of Canada was subsidizing Quebec. But the people of Quebec could not be bothered to have kids so the separatist.

This is what separates me from most conservatives today. I don’t really care about immigration. Every developed society today needs immigration just to keep its population from falling. Even America would be below replacement rate without immigration.

Speaking as someone who lives in America, I find it difficult to get all worked up over the fear that immigrants are going to destroy this nation’s culture when current birth rates would destroy our culture even in the absence of immigrants.

To be blunt, immigrants don’t destroy a culture, birth/death rates do. And birth/death rates are just a reflection of the flaws inherent in a culture.
And what are the flaws in this culture that keep the birth rates low? I think it is summed up quite nicely in this post of the Economist’s Free Exchange blog….

Perhaps the most interesting point was made by Will Wilkinson of Cato, who guest-blogged here a few weeks ago. He gave the response to Mr Barber’s talk, and theorised that on the veldt, we developed strong collective preferences in order to enforce the solidary necessary for survival. Those preferences were “thick” — binding, and enforceable by those around you. The farther we get from those small communities, both demographically and economically, the more we are free to develop our own preferences. Those preferences are “thin”–less strongly reinforced–but they are in some sense authentically ours in the way that “thick” preferences never can be.

Mr Wilkinson gave a strong brief in favour of thin preferences. I think this is the right approach to answering Mr Barber, in that it concedes that something has been lost in moving away from tight communities with binding norms. There was something unique and joyful about that kind of community. My grandfather died surrounded by friends and family, bathed in a network of social relations impossible to replicate in this day of economic, social, and geographic mobility.

The correct response is not to deny this, but to note that much has also been gained. Those small communities were brutal to many of their members. The outliers in taste, intelligence, or almost any other metric except beauty and charm, could be brutally punished for their deviance. People worked harder at their friendships, because ties gone wrong in a small town are hard to bear; but they had to work harder at their friendships, because they were less likely to be compatible. And of course, cultures that prize compliance also have great difficulty with change.

What the Free Exchange is trying to put a nice spin on the fact that to be a modern person is to be selfish. A modern person feels no obligation towards others and imagines that this is a virtue. If your neighbor is sick, it is the government’s problem, not yours. Becoming authentically ourselves is considered the only valid goal worth pursuing. There is nothing that transcends ourselves to which we must owe allegiance. We are our own demigods.

But though we imagine ourselves to be demigods, we nonetheless need a solid base of support to face life’s travails. In past history, this base of support was supplied by a closely knit network of family and friends. But where does a modern person get this base of support?

The answer is obviously the government. It is the government that we rely on to take care of us when we get sick. It is the government that we rely on to take care of us when we get old. It is the government that we rely on to educate us and provide us with work.

It is true that the government’s care for us provides us with freedom from the demands of a tightly woven social community, but I question whether we truly wind up with any more true freedom. Is it really better to have bureaucrats regulating our behavior through the force of law as opposed to a social community regulating our behavior through peer pressure? In any case, shucking off the social ties that used to bind has a real economic cost even if you think that price was worth paying.

I would also question Free Exchange’s claim that replacing a communal life with the government enables us to better deal with change. It has yet to be proven that bureaucracies can respond to change better than a traditional society. Most traditional societies manage to last for generations yet the welfare state is scarcely a generation old and already demographics call into question its survival. Besides, America was built by people who had to face great change in order to come here. Yet for the first 150+ years they managed quite fine with a traditional cultural.

What kind of culture is there to preserve in a welfare state? If all social benefits come from the government, why should one expect immigrants to integrate into the surrounding culture? If all social benefits come from the government, why should immigrants value the culture in the country that they come to? If there are no obligations that transcend our own selfish desires, why should immigrants adopt our values?

What about modern culture is worth saving?

It is not healthy to be a vegan.

Monday, May 21st, 2007

All of us barbarians here in the ethereal land are down on vegan’s for a variety of reasons. But their fundamental problem is that they are not connected to reality. This from the New York Times….

When Crown Shakur died of starvation, he was 6 weeks old and weighed 3.5 pounds. His vegan parents, who fed him mainly soy milk and apple juice, were convicted in Atlanta recently of murder, involuntary manslaughter and cruelty.

This particular calamity — at least the third such conviction of vegan parents in four years — may be largely due to ignorance. But it should prompt frank discussion about nutrition.

Now I think that it is unfair that Crown’s parents were convicted of murder and cruelty. At best, I can see involuntary manslaughter.

I mean, if they had gone back 6 weeks in time and diced Crown up while he was still in the womb their right to do so would have been protected as a matter of law. How come people are entitled to their own opinions on when life starts but not on the morality of eating meat?

The fundamental fact is that the Vegan diet is not particularly healthy. Even the Vegan Groups admit that you have to take supplements to make it work. But that does not mean that Crown’s parents should have got a life sentence.

It does not take long for cities to die…..

Thursday, May 17th, 2007

In the absences of human support, how long do you think it would take before an urban neighborhood to turn into wilderness rural again? I have always wondered about that question.

But apparently, I need not speculate too much. The process is actually happening in Detroit. This from Detroitblog…..

It’s always fun to go up north here in Michigan, to the country, where people are scattered and open land is plenty. You find little towns where small, old houses sit on grasslands or prairies, seen only by the few cars that drive through on old roads that go unnoticed by most people as they pass the area on the highway. Most homes up there, like this little house nestled in a wilderness of trees and underbrush, are the only houses nearby.

The only thing is, this house and the backwoods that contains it aren’t up north; they’re in the middle of the city of Detroit.

But that brief quote does not do justice to the post. You really need to go over to the Detroit Blog and read the post for yourself. More importantly, you need to see the pictures. (h/t The Grumpy Old Man).

How George Bush got a cost free trillion dollars for the US economy.

Sunday, May 13th, 2007

Although a lot of liberals would rather die then admit it, the Bush administration has been very good for the US economy. In fact, it has been a long time since this country has had it so good. Tax revenue is up. Unemployment has stayed low. People complain about the widening disparities in wealth, but in absolute terms, blue collar working class families seem to be doing pretty well.

But why has the Bush administration been good for the economy? I would argue that is it because he has brought in over one trillion dollars of investment into the US economy that otherwise would have never showed up. How do I think he did this? By being stone cold stupid.

Of course, that might be a little unfair. The Chinese leadership is arguably stupider than President Bush. If they were not so stupid, maybe President Bush would have taken a different course. (I should note here that I am perfectly aware that there are other actors in my little story besides the Chinese political leadership and the American leadership, but I think their policies have been driving everyone else’s actions and besides, I want to keep this story simple).

Does the growing demographic divide favor the right?

Thursday, May 10th, 2007

In America older people tend to vote more conservatively than the rest of the population. Apparently, the French are no different. According to this article in the in The Independent (h/t tompeters! and the Brussels’s Journal) Sarkozy would not have won the recent election in France if it were not for the over 60 crowd. As they put it…

Mme Royal, the Socialist candidate, dismissed by the Right as the candidate of the past, scored heavily among the young and the middle-aged (with the exception of those aged 25 to 34). In an election restricted to French voters aged 18 to 59, Mme Royal would have won handsomely. M. Sarkozy owes his victory to a “wrinkly” landslide with an overwhelming triumph among French voters in their sixties (61 per cent of the vote) and a jackpot among the over-seventies (68 per cent).

But I wonder, is the conservative nature of the elderly a reflection of their age or a reflection of the values prevalent in their formative years?

My gut reaction is to say that the answer is a little bit of both. It seems likely that people place a higher value on order as they get older. And order tends to be associated with conservative parties in most countries.

On the other hand, old people are the mainstay of the communist party’s support in Russia. That is surely a reflection of the values that those people were raised on in their younger days and not a reflection of natural progression towards communistic values as people age. This principle might also explain some of the conservative beliefs of the older population in this country.

Another thing I wonder is to what extent does immigration play a role in sharpening the divide in political ideology between the age groups. It seems obvious (though I am too lazy to look up any statistics) that the older demographics would be composed of a larger percentage of “natives” than the younger demographic set.

Since immigration is just beginning to change European demographics, would it be reasonable to assume that politics in Europe is going to move towards a more confrontational style? Could it be that the unusually divisive Royal/Sarkozy contest heralds the start of a new trend in Europe?

And what does this mean for America? The older age groups in this country are ¾ white whereas the younger generation is more like 50/50. What does this mean for the future of US politics?

But we should not get carried away here. Even though Royal would have won had the voting in France been confined to under 59’s, she still would not have carried all age groups. Quoting from the same story in The Independent ….

The “internet” generation of 18- to 24-year-olds voted 58 per cent for Mme Royal. The 25- to 34-year-olds voted 57 per cent for M. Sarkozy. The “May 1968”- Mitterrand generation of 45- to 59-year-olds voted 55 per cent for Mme Royal. The 35 to 44 generation split 50-50.

Why did a majority of 18-24 year olds vote for Royal and a majority of 25-34 year olds vote for Sarkozy? Even more confusingly, why does the trend go against Sarkozy after that?

My guess is that the 25-32 year olds have gotten tired of having such a hard time getting a job and starting a career. Thus they are ready for the economic system in France to be shaken up. But I will bet that that those older than them feel protected by France’s current labor regulations and are not interested in making it easier for their younger compatriots to compete with them.

I am sure that this is greatly oversimplifying things. Life is just not that simple. But I think that the differing economic interests of the various age groups is going to produce increasing political competition amongst the various age groups. This is a natural result of the welfare state and the breakdown of the extended family.

The Financial product this country needs.

Wednesday, May 9th, 2007

Well, the title might be overplaying it a little bit. But I have been thinking about a financial product that I think I ought to be able to buy, but can’t (at least to my knowledge).

To start off, let me explain the problem that this product needs to fix.

To put it succinctly, I think that the form that medical insurance commonly takes in this county is absurd. The root of the problem with medical insurance in this country is that it is commonly bought or subsidized by a third party. This gives people every incentive to use as much as possible regardless of need. To make matters worse, insurance commonly covers too much. Insurance ought to be used only to guard against those things that we do not expect. To use it for anything else is create economic inefficiencies.

Many medical expenses are common and predictable. Examples of these type of expenses would be going to the doctor for the flu or a back ache. We know that it is likely that we are going to need those common medical services and the insurance companies know it too. Thus, insurance companies don’t really provide any insurance against common medical expenses. Instead they act like one of those budget plans you can set up with your utilities provider where they agree to bill you a set amount each month even though they know that your usage will vary.

Now it makes economic sense to engage in such a service with your utility company because they are going to be the ones who bill you in any case. But I don’t think that it makes economic sense to use insurance to pay for common medical expenses. By paying for those common medical expenses with insurance we added a third party and extra costs to the transaction for no real benefit.

Did Winslow Homer put hidden images in his paintings?

Monday, May 7th, 2007

When I was writing an essay a while back, I came across this web site put out by Peter Bueschen that argued that Winslow Homer put hidden images in his paintings. Now I dismissed that idea out of hand at the time, but I just can’t get that idea out of my head.

On the one hand, I don’t find the evidence that Bueschen presents convincing. I think he is just seeing images in the clouds as it were. The human mind is great at imputing meaning where there is none. On the other hand, Winslow Homer is just the type of guy who would stick hidden pictures in his artwork.

In spite of my doubts, I still come down on the side of not believing that Winslow Homer put hidden pictures in his art work. Much of Bueschen’s evidence just seems too forced to me. In most of the visual evidence he provides, I find it hard to believe that the images were put there deliberately. I think in any painting you can see sub images if you wanted to just like you can see images in a cloud. But that does not mean that those images were put there deliberately.

What really irks me about Bueschen’s argument though, is his use of the literary source material. He quotes extensively from people who knew Homer to argue that Homer and some of his close friends felt that Homer’s art was not properly appreciated (as in understood) in his time.

Well, no duh. It was not properly appreciated then and I don’t think it is properly appreciated now. I don’t think that many people get the depth that is in Homer’s paintings. But that does not mean that Homer deliberately put hidden little images in his paintings.

Yet, I still can’t get rid of the nagging little voice that whispers “what if you are wrong?” This is odd, because I am not one to doubt my own judgment on such matters.

I think the main cause for my self-doubt is that I can easily imagine Homer putting in secret images. It just fits with his personality and his aesthetic sense. The other cause for my self-doubt is that I have always been bad at seeing hidden images even when I know that people deliberately put them there.

So I am curious about what other people think. Of all of Bueschen’s examples, this is the one that I find easiest to see myself (this is how Bueschen sees the picture). Here is a picture in which I would never find the image that Bueschen sees (and here is how Bueschen sees the picture). There are many more examples at Bueschen’s site.

Anyone out there have their own opinions?

Minorities and the countryside

Saturday, May 5th, 2007

Life brings its share of surprises. But few things have surprised me more in life than finding out that almost everyone in America who is not white fears rural areas. I never would have thought the only areas of the country left where people do not lock their doors would inspire such fear, but apparently it is so.

Their fear is apparently very real. This was demonstrated to me in very vivid way a couple of years ago. I invited this fellow (we will call him Sam) up to where I live so that a computer problem he was having could be worked on and he accepted. Now in the days leading up to the time he was supposed to come up, I heard another person of color busting on him on how dangerous this trip was going to be. But I did not pay them any mind. I just thought it was their idea of a joke.

Since Sam did not have a car and the buses don’t run to where I am, I was going to take him there and back myself. But as it turned out, I needed to be dropped off to pick up my vehicle. So my dad (who in any case was the one who was going to fix the problem) gave me a ride to where I needed to pick up my vehicle, then he and Sam went on ahead while I stayed behind to take care of business.

I could tell even as we were riding in the car together that Sam was getting nervous as the scenery was becoming more rural. But when I was dropped off and Sam and my dad went deeper into the countryside, that nervousness got a lot worse. As he later told me, the further they got from the highway, the more frightened he got. His nerves got so bad that he eventually threw up.

I had heard Sam and other minorities express fear about rural areas before, but I never would have dreamed that it really bothered them that bad. I just could not imagine that Sam would really find my rural abode that frightening. After all, he came from the worst parts of New York City. He had had a bullet in his arm as result of gang related violence. How could my neighborhood possibly be frightening in comparison?

But apparently it is. All the Black and Hispanic people that I have ever talked to seem convinced that everyone in the country is armed, racist, an excellent shot, and determined to shoot everyone darker than themselves on sight. This in spite of the fact that they have had no personal experience in rural areas. In fact, I have heard a lot of references to horror movies to explain the kinds of things they are afraid of.

Such references to those horror movies are usual done in a somewhat joking manner. But I have learned that such jokes sometimes have a good deal of seriousness underlying them. Given that very few people with any kind of color to them actually have relatives who live in the country, you have to wonder how much those horror movies where hillbillies do unspeakable things to innocent city people affects their view of reality.

The issue of horror movies causes me to wonder how much of minorities’ fears of rural areas is due to insecurities regarding how they will be received because of their race and how much relates to phobias that many urban people seem to have. From what I have heard, most of the victims in hillbilly horror movies are white. So they must be playing off of some kind of general urban fear.

Some people just seem to feel very unsettled by not being surrounded by a lot of people and lights. I know one lady who told me that she felt more comfortable stepping out in a dark alley in New York City at night then she did stepping off her back porch at night. She came from New York City to marry a country boy. I have heard similar comments from many other white urban people.

But I don’t think this generalized urban phobia accounts for all of the fear that people with a little bit of skin coloration have of rural areas. The race factor itself also plays a part I am sure. Not that I think that supposed racism of rural residents is the real reason. Or if it is, it is a reason founded on ignorance.

In my experience, poor urban white people are far more racist than their country equivalents. Nothing breeds hatred like competition for the same resources and sharing the same jails. But at least when you are facing an urban racist you have a crowd of people who look like you at your back. Going out into the country you would be all alone. That has got to make the prospect of coming across a racist in a country setting awful unpleasant.

To make matters worse, there is the culture gap. There are all sorts of unwritten rules in a rural neighborhood. The more rural it is, the more unwritten the rules are. These rules can be hard enough for any urban person to understand and navigate, but I imagine that it would be even harder for a person of color to handle. You would always have to be wondering if people were being hostile to you because you broke an unwritten rule, or if people were being hostile to you because of your skin color.

Given all of these challenges, I have often pondered how I would move to the country if I were black. (There is no way I would stay in a city.) But such thoughts have little practical value. You can’t really walk in other peoples’ shoes.

Still, I would be interested in finding a book or an article by a person of color that moved with their family out into a rural area to homestead. It would be a fascinating adventure, I am sure.