Slumdog Outsourcing, Cap and Trade
Linda finally convinced me to rent the movie Slumdog Millionaire; I had been resisting because of the scenes showing little slumdog kids being blinded by a gangster to make them into better beggars. I have to admit that it was a good flick. I particularly liked the scene where the SM’s older brother kills the gangster and the boys escape. Very satisfying! The movie shows the flip-sides of Indian culture, contrasting the opulent lives of the gangsters who live off the destitute slumdog kids.
One scene of a Mumbai call center reminded me of the outsourcing issue that worries Americans so. I recently received a video on “personal outsourcing.”
http://www.theonion.com/content/video/more_american_workers_outsourcingIn it an American accountant, Donald, hates his job (that has not yet been outsourced by his company). Donald has a bright idea. Why not outsource it himself, so he contacts an Indian friend Janahara who is currently unemployed. Donald offers a deal: He will send Janahara his software, data files and daily tasks; Janahara will complete the tasks and return the completed files to Donald for $10 per day. This is a good deal for both men: Janahara is now employed and Donald has time to day-trade in mortgage backed derivatives, play fantasy football and watch MTV.
But that is not the end of the story. Janahara, being an industrious entrepreneur, sees a way to multiply his income by continuing the outsourcing cycle. He sends Donald’s tasks to an Indian worker in a remote village (or in a Mumbai slum) who will do the work for $3 per day. Janahara then signs on to do the work of one of Donald’s co-workers and outsources that to another slumdog, and so on and so forth. What a deal, this globalism. Tom Friedman would be proud.
This scenario reminds me of one of the big boondoggles before the American congress, Cap and Trade. According to Democrats, the Cap and Trade system will create new green jobs, pay for the nationalization of our health care system and save the Earth from global warming. To see how it works consider the following simple example.
One of the byproducts of living is carbon dioxide, CO2, which we exhale with every breath. Since the Kyoto protocol calls for the reduction of CO2 emissions to 1990 levels, while the US population has grown by about 25%, we still living Americans are being asked to breathe less, 25% less. Now I take a breath about every 6 seconds, say 10 times a minute or 600 times an hour. A 25% reduction to 450 breaths an hour would be tough. But that is the “cap” and my government supplied breath-o-meter will inform the Feds if I exceed the mandated limit, for which I will be severely fined. However, the ingenious Democrats, following their European brethren, have devised the Cap and Trade system to lessen the pain.
All I need is a slumdog who is willing to cut his breathing down by 50% for a modest fee. Our combined breaths per hour will then be 600 (me) + 300 (him) = 900, meeting the UN IPCC mandate. The Cap and Trade system will be overseen by a US federal agency, USC&T, an Indian agency, IC&T, and a UN agency, UNC&T, each of which will take a cut from my payment to the slumdog. I figure that everyone will be happy if I pay $10 per day, the C&T agencies each take a 20% fee, and the slumdog pockets the remaining $4 per day. The poor fellow’s health may suffer, but hey, that’s globalization!
The Population Fizzle
America has a demographics problem. Oh, it’s not as bad as Europe’s or Japan’s or Russia’s, but it is a serious problem that promises to get much worse. We hear about it occasionally when, say, entitlements are discussed. As in, “Who’s going to pay for all that?” Early in G. W. Bush’s first term we were told that Social Security would be bankrupt in a few decades, and Medicare was an even worse problem. Bush tried to introduce reforms but was shot down by a bipartisan congress.
The issue stems from demographics. When SS was introduced the US population resembled a stable pyramid with relatively few retirees at the top and the mass of workers underneath. If the Feds had left the SS money in a bank account the compound interest would be sufficient to pay future retirees for a long time. But, like all governments, they spent the money; thus payments to retirees depend on the FICA deposits of current workers. The problem is we haven’t enough workers to fund the entitlements of the rapidly aging population. The formerly stable pyramid is being morphed into a highly unstable inverted pyramid. And the consequences are dire.
Note that the problem is a relative scarcity of young people compared to a glut of older people. And the solution is contrary to that proposed by environmentalists and other fanatics. Reducing the population will not help unless you kill off the old folks. In America we have tried to stave off the problem by allowing massive (illegal) immigration. Those workers from destitute Latin American countries will “do the work that Americans will not do” and contribute to the SS system, but disproportionately use the resources of all the social services. Also, their children, after spending time in our public education system, tend to lack the work ethics of their parents and tend to be less educated and less able to contribute to the general welfare compared to US natives. Immigration is not the long term answer.
The politicians have been able to ignore the problem since it is in the long term compared to their political careers. But there are grave near term consequences that were not generally expected.
In a recent article “Demographics and Depression” by David P. Goldman (First Things, May, 2009), the root cause of our current economic crisis is traced to the same demographics trend that threatens our entitlement systems. Everyone knows that the housing bubble bursting was the trigger that caused the economy to go south. But why did it burst in the first place. The answer lies simply in the immutable laws of supply and demand.
The prime owners of family homes are families, those with two parents and children. Well the number of such families has stayed constant at about 25 million since the late nineteen sixties while the US population has grown by 50%, from 200 million to 300 million. During those decades the number of single parent families has tripled and the number of elderly has doubled (to 30% today). But the former cannot usually afford a family home and the latter want or need to downsize.
At the same time the number of family homes (with 3 or more bedrooms) in the US has doubled from about 36 million to 72 million. The 25 million nuclear families just do not need 72 million family homes. Thus: the bursting bubble. All the gimmicks (subprime loans, unverified incomes, mortgage-backed securities, etc, etc) that were used to get unqualified people into homes they did not need prolonged the bubble but could not overturn the laws of economics.
So, what is the solution? Goldman points out that “credit markets tend to derive from the cycle of human life. Young people need to borrow capital to start families and businesses; old people need to earn income on the capital they have saved.” But there are not enough young people. Americans need to get married and have babies! It is your patriotic duty. (Hint to John and Mark, our two single thirty-something sons.)
And the government can actually help. (Hint to President Obama). Goldman proposes several measures: (1) Cut taxes on families; (2) Shift the burden of social insurance more to the childless; (3) change the immigration laws (to allow many more productive people in their prime earning years to enter.) I will add, fix the educational system and focus on achievement, character and job skills.
Ps: Happy Earth Day – It keeps getting better and better, despite global warming.
The End of Ends
On this fine Easter Sunday, as we celebrate the end of eternal death, it is perhaps appropriate to think about some ends of another sort. Lately, it has become fashionable to pontificate about the end of this and the end of that.
Just last week David Brooks wrote in the New York Times about “The End of Philosophy.” According to Brooks, the Socratic Method that relies on reasoning to arrive at moral truths has been shown to be faulty. In a new book called simply Human, Michael Gazzaniga writes that “it has been hard to find any correlation between moral reasoning and proactive moral behavior, such as helping other people. In fact, in most studies, none has been found.” The conclusion right out of Evo-Psycho is that morality is an evolved trait.
Notice that intellectuals so easily overlook the most obvious solution: Morality is the most fundamental law of human nature. C. S. Lewis wrote books about it: “Human beings,” he said, “all over the Earth (and for all times), have this curious idea that they ought to behave in a certain way, and cannot really get rid of it.” In Mere Christianity, Lewis explains that God’s hand in the universe is evident in the “moral law that is urging me to do right, and making me feel uncomfortable when I do wrong.”
There is no “end of philosophy,” only a mistaken way of looking at the world.
In his 1989 essay “The End of History?” Francis Fukuyama argued that the triumph of Western liberal democracy signaled the end of worldwide human conflict. "What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government.”
Events, including especially 9-11 and the rise of Islamo-Fascism, unfortunately, interfered with Fukuyama’s utopian vision. History is very much alive. We are besieged by pirates, for heaven’s sake.
In 1968 (and several times since) Paul R. Ehrlich predicted the end of civilization. His book The Population Bomb predicted disaster for humanity due to the "population explosion". Ehrlich forecast that “the battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death” unless radical action was taken to limit population so as to avoid mass famine greater than any in history. History proved Ehrlich wrong. World food production grows at a rate much higher than population growth due to advances in farming technology, chemistry and biology.
Before the turn of the 20th century the scientific world was convinced that the end of physics was nigh. At his Munich high school, Max Planck’s physics professor advised his student against a career in physics. “In this field,” he said, “almost everything is already discovered, and all that remains is to fill a few holes.” After all, Newton and Maxwell had done all the really interesting work. Then came Einstein, and the world of physics was stood on its head. The first half of the 20th century were the most explosive decades in the history of physics.
Yet scientists and other pundits persisted in their predictions of the end of this and that.
The great Paul Dirac, who combined relativity and quantum mechanics, and predicted the existence of anti-particles, was convinced that the end of chemistry was imminent. Recognizing that quantum physics was the basis of chemistry, but that quantum mechanical calculations were formidably difficult for molecules of even moderate size, he wrote: “The fundamental laws necessary for the mathematical treatment of a large part of physics and the whole of chemistry are thus completely known, and the difficulty lies only in the fact that application of these laws leads to equations that are too complex to be solved.”
That was in 1933. In the intervening seven decades enormous progress has been made in finding solutions of Schrodinger’s equation for complex multi-atom systems with accuracy sufficient for explanation and prediction of chemical properties. The end of chemistry was grossly overstated.
Aside from a lack of imagination, it seems to me that the pundits who foresaw the end of this and that missed two important factors. One is the boundless ingenuity of human beings. Given a scientific genius and the technological advances, eg lasers, computers and such at his disposal, it is foolhardy to set limits on scientific achievement.
The other mistake is to underestimate the creativity of the Divinity, Who has made a world of infinite variety for our enjoyment. As long as humans do not give up the quest to know God’s mind, the future is boundless.
