From: dlw@odi.com (Dan Weinreb)
Subject: Re: Efficiency
Reply-To: dlw@odi.com
Organization: Object Design, Inc.
Distribution: ne
Date: Sun, 6 Sep 92 04:19:41 GMT

In article <1992Sep05.144415.82582@kronos.com> richb@kronos.com (Rich Braun) writes:

   Governments of the world have failed to come up with an economic system
   which will distribute wealth fairly among people while providing
   incentive for higher productivity.  

I'm not exactly sure what distribution would be "fair".  Would it have
to equality of income and wealth?  You're certainly right that it's
very hard to have anything like income equality at the same time as
you have an incentive-based system such as capitalism, and systems
without an incentive basis seem to end up with a lot less wealth to go
around.  Have you read "The End of Equality" by Mickey Kaus, or his
article-length version of the same thesis in a recent issue of The New
Republic?  It's all about this phenomenon, and one of the things it
argues is that liberalism should stop attempting to aim at income
equality (since it's fundamentally incompatible with capitalism) and
instead strive for a sort of civic equality.  (The book and the article
go to some lengths to explain what he means.)  His argument definitely
has weak spots but it's a very interesting idea.

				       Without wealth redistribution, the
   inevitable result of higher productivity is gradually decreasing demand
   as economic powerlessness spreads.

Why is that?  If ordinary working folks produce more, they should be
able to have a better standard of living.  Naturally I acknowledge
that part of the ability to produce is the ability to have markets
into which to sell, i.e. for there to be demand.  But as everyone else
becomes more productive, they have more to spend, and so their demand
increases.  I'm not saying this is inevitable, just that it's
possible; why should decreasing demand be inevitable?

   To address point number 2, generalists in almost any field (who were
   in high demand as recently as 10 or 20 years ago) are at a severe disad-
   vantage compared to specialists.  The number of new specialties created
   each year is staggering (just look at the fields of computing and medicine).
   This is not a short-term phase:  it will continue over the long haul,
   consuming large amounts of educational resources and redistributing
   economic power among the world's countries.

That's true.  The countries with the more educated workforces are
going to have the higher standards of living.  (Note that some
economically valuable training happens on-the-job.  Worker who have
successfully learned how to manufacture cars in the "lean production"
style, a la Toyota, have a valuable education, and car companies will
prefer to locate plants where such workers abound, all else being
equal.)

   To respond to this by saying, OK, let's buck the trend and get back to
   basics and get rid of all this automation is to ignore the difficulty of
   competing with currently low-wage countries in a global economy.

Yes, I agree.

   The USA is likely to wind up like Great Britain: a shadow of its
   former self.  The only thing we can do to prevent this is to get rid
   of that $4 trillion international debt as quickly as we can, and put
   our people back to work.  Can it be done?

Besides the debt, we have to invest in education and infrastructure.
I know it sounds like a hackneyed phrase, but it's *those* basics that
we have to get back to, in my opinion.