I saw the NOVA documentary about the Maya kings for the second time last night. It was kind of a strange coincidence since I recently went to an art opening that turned out to be a front for a cult that bases its beliefs around the Maya calendar. But I also began to wonder about the issue of “lost” civilizations.

In The Human Web the McNeills talk about a network of information that slowly spread over the whole world. As the network spread it became more durable and resilient from the periodic crashes that might afflict individual civilizations (nodes).

When we look at the Maya, with their advanced mathematics and literacy we often wonder “what went wrong?” We neglect the continuance of a less spectacular lowland Maya civilization, but nonetheless, the decline in organizational complexity and centralization is notable. I think that the fact that the Maya period spans the middle of our first millennium is important.

After about 500 BCE the Eurasian network of civilizations underwent a turning point. It became progressively more translocal, and the spread of “world religions” helped stitch the various polities together ideologically as well as economically.

But we should think back to the period between 2000 BCE and 1000 BCE. Several literate civilizations simply turned the lights off after hundreds of years of success. Mycenaean Greece, Indus Valley India and Hittite Anatolia are the big examples of civilizations that went into decline. There are lesser known lights, such as the city of Tartessos, that could no doubt populate a constellation of “lost civilizations.” But even around 1000 BCE, the nadir of the old world network at that point, Egypt managed to keep a semblence of order and Assyria rose to fill the power vacuum with the decline of Babylonia and especially the Hittites (this is also the period that the Israelite kindgom is supposed to have had its glory years). India and Greece both “re-discovered” literacy thanks to the stimulus of Aramaic speaking peoples, so the redundancy of the network was crucial.

Looking to the Maya now, we see that there simply wasn’t a large enough informational network to stimulate them to rise to the same heights that they once achieved. There is no “mystery” of why the Maya fell (shit happens), there is only the reality that they had few sister civilizations in close proximity that could spur a second age of greatness through cultural diffusion. There is surely a reason so many ancient peoples had a cyclical view of time, because decline seemed inevitable, it was only after 500 BCE that the corner was turned, and even then there were downward oscillations…. (the Roman Empire and Chinese Empire both collapsed after 300, but in contrast, India was going through its “Golden Age” of the Guptas).

Posted by razib at 01:43 PM

OK, a while back we mentioned how one biologist thinks that the evolution of vision was the cause of the Cambrian Explosion. Well, it turns out that oxygen [aerobic respiration] was also important for the development of complex eukaryotes (select the PDF if you want to see the full article). Perhaps I’m being a carbon-based aerobic metabolizing bigot, but did anyone really imagine that anaerobic metabolism could yield enough energy for complex life? Well, at least it would have been an interesting premise for a science fiction short story-a world of short sprints perhaps?

Posted by razib at 02:44 PM

This article on outsourcing is a skillfully crafted work of fact and fiction.

Let’s do a little deconstruction and not let The New Republic do our thinking for us.

But, like the fears that surrounded NAFTA, those around offshoring are mostly baseless.

This is where the spin starts. The author hasn’t presented a case yet he’s reached a conclusion.

While offshoring is definitely an economic trend, there is no statistical evidence pointing to the massive employment drain activists call the “coring out” of America’s best jobs.

There is however statistical evidence of an overall reduction in these outsourced jobs. Note the author uses the qualifying term “massive.” This allows the gullible reader to misunderstand the argument and go into battle with the protectionists with false armor. No, the trend thus far doesn’t show massive job reduction, but taking a snapshot of a trend in the beginning gives you absolutely no accurate predictive capability for how the trend will develop over time.

In fact, recent studies show that the opposite is true: While offshoring may displace some workers in the short term, in the medium and long terms it represents a net benefit for both domestic businesses and their workers.

The unstated proposition is that the conditions of previous studies will hold true for the current situation. The author hasn’t addressed this premise at all, so the recent studies haven’t been shown to be relevant. I’ll address some of the remaining assumptions later in the post.

In fact, the greatest threat from outsourcing is that its opponents will use it to force a new wave of protectionism.

Here the author speaks of a very real possibility. Whether it would be the greatest threat is a value judgement, but the fact that protectionism reduces economic efficiency is well understood in economics.

“There’s just a lot of anecdotal evidence.” Some point to the jobless recovery as evidence of offshoring’s impact, but the lack of jobs is just as likely the result of booming productivity and the economy’s (until recently) anemic pace. “I think people are confusing the business cycle with long-term trends,” says Daniel Griswold, an economist at the Cato Institute. “People are looking for someone to blame. They say, ‘Aha, it’s because our jobs are moving to India.’ If you look at the late 1990s, though, all these globalizing phenomena were going on.” In other words, it wasn’t that offshoring practices changed; it was that the economy slowed.

I’d agree with this statement. There are disincentives to staffing if you don’t fully maximize your personnel. There is still plenty of slack left in the system with existing personnel and the safer bet is to use them to their fullest before the necessity and expense of hiring additional staff must be incurred. Job creation is a lagging indicator.

The hysteria about outsourcing makes for good drama, and thus political theater. As the article points out, it is still too early to tell what the trend is and what the impact will be.

What’s more, economists don’t even agree on how such data could be collected–for example, many offshoring moves represent not a direct shift of a given job overseas but rather its restructuring, which in turn might create a new job overseas as well as a new job, with a new job description, in the United States. Such restructuring is particularly prevalent in high-tech fields like software and data management–for example, an American employee might be tasked with the design, implementation, and testing of a software program; under restructuring, his employer might hire an Indian, at one-tenth the cost, to do the implementation and testing and then hire an American to do the design work.

First off, the point about how to measure this phenomena is quite valid. Disaggregating the labor data is most likely impossible. Perhaps an academic could study the process at some selected companies and extrapolate a projection for the economy as a whole but the validity of the extrapolation would pretty much be equivalent to voodoo.

The author is being quite disingenuous when he states that an employee that used to do the design, implementation, and testing of a software program and loses his job to outsourcing could be counted as gaining a new job dealing strictly with the design work. First off, if someone is performing 3 interdependent tasks as part of their responsibilty, then they cannot perform only one task at full capacity. Either the firm has outsourced 1,000 similar jobs and now needs 300 new full-time design engineers (having made 700 engineers redundant) or it creates a job for a design engineer and hires additional staff in the outsourcing country, or the design engineer is underutilized.

In answering the critics of outsourcing the author has quite correctly pointed out that they lack data to support their case, yet he has no qualms about blowing smoke up our ass with unsubstatiated scenarios like the one above. He too lacks data, so this part of his argument is pure spin.

IBM, for example, plans to offshore 3,000 programming jobs this year. But, at the same time, it will also create 5,000 jobs in the United States. Does that count as jobs lost, jobs gained, or both? “[Offshoring is] going to lead to individual job loss,” says Gary Burtless, an economist at Brookings, “but that does not mean it will lead to aggregate loss of employment in the United States.”

Here the author spins a story that should quell the critics. Look more jobs will be created than lost. He notes that type of jobs that will be lost – programmers -but gives no details of the jobs to be created. We’d hope that they would be at IBM labs where the former programmers can go after upgrading their training and there they could be put to more productive use. For all we know they could be creating 5,000 call center jobs that would clearly be a step down for the programmers.

Gary Burtless is correct when he points out that the causality between individual job loss leading to an aggregate job loss hasn’t been established. By placing the comments of Gary Burtless within this paragraph the author seeks to lend support to his example. The two strands of the paragraph are completely unrelated.

We can pretty much disregard the hypothetical example used, and take Mr. Burtless at his word that he doesn’t know what will happen. Heck, I don’t know what will happen either.

Even if there were a short-term loss of jobs, the losses would likely have a more muted effect on the economy than the factory flight of the 1980s and ’90s, when most factory workers had to undergo intensive retraining in order to find new jobs. White-collar workers tend to be, both in terms of skills and career perspective, more capable of moving on to other jobs.

This is an acknowledgement of cognitive talent. A very good point but don’t neglect the fact that new jobs that are created for these people could also be created in the outsource countries. For those jobs to be created in the US, the employees would have to be better trained than their foreign competition. Didn’t they just lose their jobs because their training was equivalent to their foreign competitors? Keep in mind that if they can retrain, so too can the outsource competitors.

Also many of those who have lost their jobs are well into their careers and the distortions within the labor market make hiring workers over the age of 50 very unattractive because of the health insurance issue. This is but one example of external forces acting on market forces and I’ll go into this more towards the end of this essay.

The subset of unemployed workers that could benefit would be those who could, and do, seek retraining, and are fortunate enough to have made the prescient decision of choosing the correct field of training and further, to be hired by a company that is breaking new ground in that field.

That employee is now on the coattails of a company that has a comparative a
dvantage over its foreign competitors, in large part because of the employee’s unique skill sets.

For this paragraph I’d say the author is spinning the case once again for he’s not saying anything substantive but just trying to reassure his audience of the purity of the ideological message sans facts.

Another mitigating factor is the wide dispersal of high-tech jobs throughout the country; unlike manufacturing, which tends to clump hundreds or thousands of jobs in the same factory or town, high-tech work can be done anywhere. For example, one of the job sectors frequently cited as “offshoring prone” is medical transcription. Although it’s a $15 billion industry, medical-transcription work is almost always farmed out to small firms around the country; even if all of them closed, the impact on any one community would be small.

He’s reaching with this one. A new frame of reference is introduced – the community. Previously we were discussing individual dislocation but now we’re relieved that the individual dislocation won’t be concentrated within one community. This does nothing to the aggregate dislocation and because whole communities are affected, the dislocations will be more difficult to politicize.

Yes, his argument does mitigate against concentrated job loss but does not explain away the aggregrate job loss. In the end, this is a moot point.

“The lower-level jobs, the programming jobs, a lot of them will not be done in this country,” says Stephanie Moore, an outsourcing expert at Giga, an economic research firm. In their place, she says, “New jobs are going to be created.

I don’t necessarily disagree. This could very well be the case, however her statement is one of pure faith. If the reader is prone to persuasion by appeal to authority, then the quote will be reassuring, otherwise it’s just hot air.

According to the McKinsey Global Institute, for every dollar a U.S. company spends on offshoring to India, the U.S. economy gains $1.14, thanks to a number of factors: savings from the increased operational efficiency, equipment sales to Indian outsourcers, the value of American labor reemployed to higher-wage jobs, and repatriated earnings by U.S. companies that own Indian outsourcing firms.

Did the writer get paid by the word? Is that why he’s filling with this vacuous quote?

savings from the increased operational efficiency – Very true.
equipment sales to Indian outsourcers – no dependency established
American labor reemployed to higher-wage jobs – too presumptuous
repatriated earnings by U.S. companies that own Indian outsourcing firms – data too fluid

“The choice isn’t outsourcing or keeping jobs here,” says Griswold. “It’s outsourcing or going out of business. Which isn’t good for jobs. This is an absolute necessity for many companies.” If companies were somehow prevented from shipping jobs offshore, they would likely turn to other methods of reducing labor costs, such as technological upgrades–a process that has resulted in job loss since the birth of capitalism.

Very disingenuous rhetoric. “It’s outsourcing or going out of business.” Consider this extreme example – I need to firebomb my competitor or I’m going out of business. Clearly, such behavior is illegal. Illegaility puts a course of action out of the realm of possible alternatives. If outsourcing is not an option, for whatever reason, then it isn’t an option for all of the firm’s competitors either. If competitive pressure to outsource is at the root of the dilemma, then absent such pressure the dilemma doesn’t exist. Bad argumentation on the author’s part. Pure spin.

As for the secondary argument that technology would simply replace outsourcing, this too is on weak ground. The case was much stronger for manufacturing, but it is difficult to have technology replace a programmer or an engineer. Moreover, if technology is developed that increases the productivity of an engineer or programmer, then at least the displaced professionals can marginally increase their training to once again be proficient in their field rather than retraining for an entirely different field that can staunch the assault of lower waged-similarly skilled foreign competition. Here as well, the author fails to adequately make his case.

But, while offshoring-related protectionism may stifle economic development and unnecessarily force business closures, its biggest impact may be longer term. That’s because, as the baby-boomers move into retirement, the size of the working population will decline precipitously, by 5 percent by 2015, according to the McKinsey report. Without a readily available source of high-quality, young labor–i.e., the sort provided by offshore outsourcing–the country could find itself in a sort of economic sclerosis.

They’re pulling every skungy rabbit out of the hat. This argument isn’t even coherent. The young labor provided by offshore outsourcing provides absolutely no benefit for the US social safety net. These workers wouldn’t be paying into Social Security nor paying US income tax! This is conflating the situation to make it appear as though the outsourced labor were actually in the US and thus helping alleviate the US demographic timebomb. Failing grade on this point.

Growth could be permanently hamstrung by the high labor costs and booming social spending that have turned Germany, where it’s extraordinarily difficult for companies to lay off employees, from an economic engine into a plodding giant.

The author hasn’t established a causal relationship so this conclusion can’t be attributed to the preceding argument. However, constraints on markets do inhibit growth and they are obstacles to efficiency. That doesn’t though, excuse the sloppy reasoning skills employed in this argument. They should work on this argument and tighten it up some more. Failing grade, but with potential.

Nevertheless, the fact that there are benefits to offshore outsourcing doesn’t mean we should sit back and let it ride. At the individual level, job loss is a painful process, and there is no guarantee that even a relatively mobile white-collar worker whose job is outsourced will be able to find a new one, let alone at the same wage. The response, however, isn’t to fight against offshoring but to find ways to alleviate its negative effects. One approach–advocated by Lori Kletzer, a senior fellow at the Institute for International Economics, and Robert Litan of the Brookings Institution–is to require companies to purchase “outsourcing insurance,” which would cover a portion of displaced employees’ salaries for a fixed period of time in the event their jobs are outsourced. Not only would this help alleviate the pain of layoffs, but it would force companies to internalize the economic cost of their outsourcing decisions. The McKinsey report, which also favors this approach, argues that, “as offshoring volumes rise, the insurance premiums will increase, cutting into the gains from offshoring and, thereby, making offshoring less attractive to companies in periods of high unemployment.”

Outsourcing insurance is just a market contaminant. It is a legislative salve. It is an external cost imposed by society. In essence it is a chimera, for while it pays heed to market forces and allows companies the choice of whether they wish to incur the cost of purchasing insurance in order to outsource, it is no different than forcing a company to incur a cost of maintaining employees by prohibiting outsourcing. Both approaches serve to reallocate costs; the former does so my market forces, while the latter does so by fiat.

This is an interesting alternative that the author raises but let’s recognize that it is a market distortion just as an outright ban on outsourcing would be.

Consider the case of outsourcing from a different perspective. Foreign pharmacies are performing a service cheaper than American pharmacies. The response of American pharmacies is not based on market principles but is directed to legislative redress. I realize that I’m stretching the comparison, but we seem to always rail against welfare for individuals
but never put up the same effort to curtail corporate welfare.

Yes, I know that price caps have been instituted in foreign countries to limit the price of drugs and that is why these foreign countries have a competitive advantage but, and this is an important but, no one is forcing the drug companies to sell their products in those countries. Yes, I know, the companies fear that if they stopped selling their drugs that the foreign patent laws would be amended which would prematurely push the drugs into generic status.

The point for my whole essay is that we often forget to account for the fact that economic systems are fictional creations which are subsumed under the operating conditions society imposes. Just like one cannot fire-bomb a competitor, companies must also operate under economic conditions that are arbitrary.

The foreign price caps imposed on drugs are a market distortion. Rather than letting the American consumer benefit from the lower prices, the pharma industry is trying to ban importation and if that fails, they will exert pressure for the foreign countries to harmonize their laws to ours. The critics of outsourcing could use the same tactics and seek to harmonize foreign conditions to our own. Hey, they already are – that’s the whole FAIR TRADE platform. Depending on which side of the ideological chasm you stand you might be inclined to deplore the other side’s tactics. I’m saying that neither side is pure here and the tactics have frightening similarities.

There is much efficiency yet to be gained within the economic system if we find more opportunities to outsource. The often unconsidered point is whether the goal is to to achieve a higher state of economic efficiency (which efficiency seek ing and outsourcing do) or to serve the country’s best interests (the debate is just starting on whether outsourcing helps on this issue). The two are not always the same and the linked article, as I hope I’ve demonstrated, is simply advocacy for a position, and weak advocacy at that. At most it seeks to reassure an audience that is predisposed to receiving a comforting message.

Spin, and little else.

Update from Razib: Wired has put this month’s cover article about outsourcing to brown-land online….

Posted by TangoMan at 10:07 AM

This article on outsourcing is a skillfully crafted work of fact and fiction.

Let’s do a little deconstruction and not let The New Republic do our thinking for us.

But, like the fears that surrounded NAFTA, those around offshoring are mostly baseless.

This is where the spin starts. The author hasn’t presented a case yet he’s reached a conclusion.

While offshoring is definitely an economic trend, there is no statistical evidence pointing to the massive employment drain activists call the “coring out” of America’s best jobs.

There is however statistical evidence of an overall reduction in these outsourced jobs. Note the author uses the qualifying term “massive.” This allows the gullible reader to misunderstand the argument and go into battle with the protectionists with false armor. No, the trend thus far doesn’t show massive job reduction, but taking a snapshot of a trend in the beginning gives you absolutely no accurate predictive capability for how the trend will develop over time.

In fact, recent studies show that the opposite is true: While offshoring may displace some workers in the short term, in the medium and long terms it represents a net benefit for both domestic businesses and their workers.

The unstated proposition is that the conditions of previous studies will hold true for the current situation. The author hasn’t addressed this premise at all, so the recent studies haven’t been shown to be relevant. I’ll address some of the remaining assumptions later in the post.

In fact, the greatest threat from outsourcing is that its opponents will use it to force a new wave of protectionism.

Here the author speaks of a very real possibility. Whether it would be the greatest threat is a value judgement, but the fact that protectionism reduces economic efficiency is well understood in economics.

“There’s just a lot of anecdotal evidence.” Some point to the jobless recovery as evidence of offshoring’s impact, but the lack of jobs is just as likely the result of booming productivity and the economy’s (until recently) anemic pace. “I think people are confusing the business cycle with long-term trends,” says Daniel Griswold, an economist at the Cato Institute. “People are looking for someone to blame. They say, ‘Aha, it’s because our jobs are moving to India.’ If you look at the late 1990s, though, all these globalizing phenomena were going on.” In other words, it wasn’t that offshoring practices changed; it was that the economy slowed.

I’d agree with this statement. There are disincentives to staffing if you don’t fully maximize your personnel. There is still plenty of slack left in the system with existing personnel and the safer bet is to use them to their fullest before the necessity and expense of hiring additional staff must be incurred. Job creation is a lagging indicator.

The hysteria about outsourcing makes for good drama, and thus political theater. As the article points out, it is still too early to tell what the trend is and what the impact will be.

What’s more, economists don’t even agree on how such data could be collected–for example, many offshoring moves represent not a direct shift of a given job overseas but rather its restructuring, which in turn might create a new job overseas as well as a new job, with a new job description, in the United States. Such restructuring is particularly prevalent in high-tech fields like software and data management–for example, an American employee might be tasked with the design, implementation, and testing of a software program; under restructuring, his employer might hire an Indian, at one-tenth the cost, to do the implementation and testing and then hire an American to do the design work.

First off, the point about how to measure this phenomena is quite valid. Disaggregating the labor data is most likely impossible. Perhaps an academic could study the process at some selected companies and extrapolate a projection for the economy as a whole but the validity of the extrapolation would pretty much be equivalent to voodoo.

The author is being quite disingenuous when he states that an employee that used to do the design, implementation, and testing of a software program and loses his job to outsourcing could be counted as gaining a new job dealing strictly with the design work. First off, if someone is performing 3 interdependent tasks as part of their responsibilty, then they cannot perform only one task at full capacity. Either the firm has outsourced 1,000 similar jobs and now needs 300 new full-time design engineers (having made 700 engineers redundant) or it creates a job for a design engineer and hires additional staff in the outsourcing country, or the design engineer is underutilized.

In answering the critics of outsourcing the author has quite correctly pointed out that they lack data to support their case, yet he has no qualms about blowing smoke up our ass with unsubstatiated scenarios like the one above. He too lacks data, so this part of his argument is pure spin.

IBM, for example, plans to offshore 3,000 programming jobs this year. But, at the same time, it will also create 5,000 jobs in the United States. Does that count as jobs lost, jobs gained, or both? “[Offshoring is] going to lead to individual job loss,” says Gary Burtless, an economist at Brookings, “but that does not mean it will lead to aggregate loss of employment in the United States.”

Here the author spins a story that should quell the critics. Look more jobs will be created than lost. He notes that type of jobs that will be lost – programmers -but gives no details of the jobs to be created. We’d hope that they would be at IBM labs where the former programmers can go after upgrading their training and there they could be put to more productive use. For all we know they could be creating 5,000 call center jobs that would clearly be a step down for the programmers.

Gary Burtless is correct when he points out that the causality between individual job loss leading to an aggregate job loss hasn’t been established. By placing the comments of Gary Burtless within this paragraph the author seeks to lend support to his example. The two strands of the paragraph are completely unrelated.

We can pretty much disregard the hypothetical example used, and take Mr. Burtless at his word that he doesn’t know what will happen. Heck, I don’t know what will happen either.

Even if there were a short-term loss of jobs, the losses would likely have a more muted effect on the economy than the factory flight of the 1980s and ’90s, when most factory workers had to undergo intensive retraining in order to find new jobs. White-collar workers tend to be, both in terms of skills and career perspective, more capable of moving on to other jobs.

This is an acknowledgement of cognitive talent. A very good point but don’t neglect the fact that new jobs that are created for these people could also be created in the outsource countries. For those jobs to be created in the US, the employees would have to be better trained than their foreign competition. Didn’t they just lose their jobs because their training was equivalent to their foreign competitors? Keep in mind that if they can retrain, so too can the outsource competitors.

Also many of those who have lost their jobs are well into their careers and the distortions within the labor market make hiring workers over the age of 50 very unattractive because of the health insurance issue. This is but one example of external forces acting on market forces and I’ll go into this more towards the end of this essay.

The subset of unemployed workers that could benefit would be those who could, and do, seek retraining, and are fortunate enough to have made the prescient decision of choosing the correct field of training and further, to be hired by a company that is breaking new ground in that field.

That employee is now on the coattails of a company that has a comparative ad
vantage over its foreign competitors, in large part because of the employee’s unique skill sets.

For this paragraph I’d say the author is spinning the case once again for he’s not saying anything substantive but just trying to reassure his audience of the purity of the ideological message sans facts.

Another mitigating factor is the wide dispersal of high-tech jobs throughout the country; unlike manufacturing, which tends to clump hundreds or thousands of jobs in the same factory or town, high-tech work can be done anywhere. For example, one of the job sectors frequently cited as “offshoring prone” is medical transcription. Although it’s a $15 billion industry, medical-transcription work is almost always farmed out to small firms around the country; even if all of them closed, the impact on any one community would be small.

He’s reaching with this one. A new frame of reference is introduced – the community. Previously we were discussing individual dislocation but now we’re relieved that the individual dislocation won’t be concentrated within one community. This does nothing to the aggregate dislocation and because whole communities are affected, the dislocations will be more difficult to politicize.

Yes, his argument does mitigate against concentrated job loss but does not explain away the aggregrate job loss. In the end, this is a moot point.

“The lower-level jobs, the programming jobs, a lot of them will not be done in this country,” says Stephanie Moore, an outsourcing expert at Giga, an economic research firm. In their place, she says, “New jobs are going to be created.

I don’t necessarily disagree. This could very well be the case, however her statement is one of pure faith. If the reader is prone to persuasion by appeal to authority, then the quote will be reassuring, otherwise it’s just hot air.

According to the McKinsey Global Institute, for every dollar a U.S. company spends on offshoring to India, the U.S. economy gains $1.14, thanks to a number of factors: savings from the increased operational efficiency, equipment sales to Indian outsourcers, the value of American labor reemployed to higher-wage jobs, and repatriated earnings by U.S. companies that own Indian outsourcing firms.

Did the writer get paid by the word? Is that why he’s filling with this vacuous quote?

savings from the increased operational efficiency – Very true.
equipment sales to Indian outsourcers – no dependency established
American labor reemployed to higher-wage jobs – too presumptuous
repatriated earnings by U.S. companies that own Indian outsourcing firms – data too fluid

“The choice isn’t outsourcing or keeping jobs here,” says Griswold. “It’s outsourcing or going out of business. Which isn’t good for jobs. This is an absolute necessity for many companies.” If companies were somehow prevented from shipping jobs offshore, they would likely turn to other methods of reducing labor costs, such as technological upgrades–a process that has resulted in job loss since the birth of capitalism.

Very disingenuous rhetoric. “It’s outsourcing or going out of business.” Consider this extreme example – I need to firebomb my competitor or I’m going out of business. Clearly, such behavior is illegal. Illegaility puts a course of action out of the realm of possible alternatives. If outsourcing is not an option, for whatever reason, then it isn’t an option for all of the firm’s competitors either. If competitive pressure to outsource is at the root of the dilemma, then absent such pressure the dilemma doesn’t exist. Bad argumentation on the author’s part. Pure spin.

As for the secondary argument that technology would simply replace outsourcing, this too is on weak ground. The case was much stronger for manufacturing, but it is difficult to have technology replace a programmer or an engineer. Moreover, if technology is developed that increases the productivity of an engineer or programmer, then at least the displaced professionals can marginally increase their training to once again be proficient in their field rather than retraining for an entirely different field that can staunch the assault of lower waged-similarly skilled foreign competition. Here as well, the author fails to adequately make his case.

But, while offshoring-related protectionism may stifle economic development and unnecessarily force business closures, its biggest impact may be longer term. That’s because, as the baby-boomers move into retirement, the size of the working population will decline precipitously, by 5 percent by 2015, according to the McKinsey report. Without a readily available source of high-quality, young labor–i.e., the sort provided by offshore outsourcing–the country could find itself in a sort of economic sclerosis.

They’re pulling every skungy rabbit out of the hat. This argument isn’t even coherent. The young labor provided by offshore outsourcing provides absolutely no benefit for the US social safety net. These workers wouldn’t be paying into Social Security nor paying US income tax! This is conflating the situation to make it appear as though the outsourced labor were actually in the US and thus helping alleviate the US demographic timebomb. Failing grade on this point.

Growth could be permanently hamstrung by the high labor costs and booming social spending that have turned Germany, where it’s extraordinarily difficult for companies to lay off employees, from an economic engine into a plodding giant.

The author hasn’t established a causal relationship so this conclusion can’t be attributed to the preceding argument. However, constraints on markets do inhibit growth and they are obstacles to efficiency. That doesn’t though, excuse the sloppy reasoning skills employed in this argument. They should work on this argument and tighten it up some more. Failing grade, but with potential.

Nevertheless, the fact that there are benefits to offshore outsourcing doesn’t mean we should sit back and let it ride. At the individual level, job loss is a painful process, and there is no guarantee that even a relatively mobile white-collar worker whose job is outsourced will be able to find a new one, let alone at the same wage. The response, however, isn’t to fight against offshoring but to find ways to alleviate its negative effects. One approach–advocated by Lori Kletzer, a senior fellow at the Institute for International Economics, and Robert Litan of the Brookings Institution–is to require companies to purchase “outsourcing insurance,” which would cover a portion of displaced employees’ salaries for a fixed period of time in the event their jobs are outsourced. Not only would this help alleviate the pain of layoffs, but it would force companies to internalize the economic cost of their outsourcing decisions. The McKinsey report, which also favors this approach, argues that, “as offshoring volumes rise, the insurance premiums will increase, cutting into the gains from offshoring and, thereby, making offshoring less attractive to companies in periods of high unemployment.”

Outsourcing insurance is just a market contaminant. It is a legislative salve. It is an external cost imposed by society. In essence it is a chimera, for while it pays heed to market forces and allows companies the choice of whether they wish to incur the cost of purchasing insurance in order to outsource, it is no different than forcing a company to incur a cost of maintaining employees by prohibiting outsourcing. Both approaches serve to reallocate costs; the former does so my market forces, while the latter does so by fiat.

This is an interesting alternative that the author raises but let’s recognize that it is a market distortion just as an outright ban on outsourcing would be.

Consider the case of outsourcing from a different perspective. Foreign pharmacies are performing a service cheaper than American pharmacies. The response of American pharmacies is not based on market principles but is directed to legislative redress. I realize that I’m stretching the comparison, but we seem to always rail against welfare for individuals b
ut never put up the same effort to curtail corporate welfare.

Yes, I know that price caps have been instituted in foreign countries to limit the price of drugs and that is why these foreign countries have a competitive advantage but, and this is an important but, no one is forcing the drug companies to sell their products in those countries. Yes, I know, the companies fear that if they stopped selling their drugs that the foreign patent laws would be amended which would prematurely push the drugs into generic status.

The point for my whole essay is that we often forget to account for the fact that economic systems are fictional creations which are subsumed under the operating conditions society imposes. Just like one cannot fire-bomb a competitor, companies must also operate under economic conditions that are arbitrary.

The foreign price caps imposed on drugs are a market distortion. Rather than letting the American consumer benefit from the lower prices, the pharma industry is trying to ban importation and if that fails, they will exert pressure for the foreign countries to harmonize their laws to ours. The critics of outsourcing could use the same tactics and seek to harmonize foreign conditions to our own. Hey, they already are – that’s the whole FAIR TRADE platform. Depending on which side of the ideological chasm you stand you might be inclined to deplore the other side’s tactics. I’m saying that neither side is pure here and the tactics have frightening similarities.

There is much efficiency yet to be gained within the economic system if we find more opportunities to outsource. The often unconsidered point is whether the goal is to to achieve a higher state of economic efficiency (which efficiency seek ing and outsourcing do) or to serve the country’s best interests (the debate is just starting on whether outsourcing helps on this issue). The two are not always the same and the linked article, as I hope I’ve demonstrated, is simply advocacy for a position, and weak advocacy at that. At most it seeks to reassure an audience that is predisposed to receiving a comforting message.

Spin, and little else.

Update from Razib: Wired has put this month’s cover article about outsourcing to brown-land online….

Posted by TangoMan at 10:07 AM | | TrackBack

I recently read several books on race relations in Brazil. They shook me,because some Brazilians of African ancestry sometimes espouse a very individualistic ethos, but seem to take rational discrimination from whites for granted. In any case, I was thinking of Brazil’s similarities with India, another nation that is racially diverse, but attempts to mold its identity as a unified whole based on a common civilizational mythology.

But the analogy just didn’t work in my head. Dalits, unlike Afro-Brazilians, have been active in pushing for group rights for 50 years, like African Americans. Indian society is explicitly segmented, with various caste-groupings overlaying individualistic values and undergirding the national identity. In some ways, it resembles the end-state that the United States seems to be evolving toward.

Then I thought of an better model-Pakistan!. Muslims Pakistanis reject caste on principle, and are apt to assert that they are a casteless society. This is true de jure, but South Asian Muslims do have their own forms of caste, and some have asserted that foreign ashraf Muslims have used the myth of Islamic unity to mask their domination of the indigenous converts.

Any comments from Pakistani readers?

Posted by razib at 11:09 PM

A reader sent me a link to this article which concludes: “This contrasting pattern of diversity in Ashkenazi populations is evidence for a reduction in male effective population size, possibly resulting from a series of founder events and high rates of endogamy within Europe.” Fine and dandy, but I just keep recalling this article in Discover from 1995 which made many simlar points, it pointed out that the majority of Hungarian Jews in any given generation were paupers, and that wealthy mercentile and rabbinical families were the ones that had high fertility rates and perpetuated the Jewish people (through historical research of records). In other words, a small effective population size….

Excerpt below….

Update: Henry cautions me about relying on one locus (the Y chromosome). I guess I will make my assumption explicit for readers-when I post links to papers like this, I don’t expect them to be definitive, rather, over the years, the multitude of studies will form a composite understanding of the history of various parts of the genome (especially nonrecombining regions like the Y & mtDNA obviously). The current methods of historical genetics just keep getting better, when I was in college I remember reading papers that talked about the problems with distinguishing between the Irish and Norwegians, as the noise overwhelmed the ability to distinguish the two groups statistically. This isn’t true anymore it seems. Those who have ideological axes to grind will cherry pick from the studies to “prove” their points, that’s not my intention, rather, each study is just another data point in a portrait that is only beginning to be clear.

Admixture estimates
Table 6 shows the haplogroups with the highest frequency differentials between European non-Jewish and non-Ashkenazi Jewish (Hammer et al. 2000) parental populations (see above) and a summary of the admixture estimates for AJ populations. Among the western AJ populations, haplogroups J-12f2b* and R-P25 were the most diagnostic for distinguishing the parental Jewish (P1) and the parental western NJ European population (P2W) components. Among the eastern AJ populations, haplogroups J-12f2b* and R-M17 were the most diagnostic for distinguishing the parental Jewish (P1) and the parental eastern NJ European population (P2E) components. All other haplogroups had values below 20% (data not shown). When these diagnostic haplogroups were used for analysis, the m y value was 8.1%±11.4%, suggesting an even smaller contribution of European Y chromosomes to the Ashkenazi paternal gene pool than in the previous study by Hammer et al. (2000). Because of the apparently high level of admixture in Dutch Jews (m y value of 46.0%±18.3%), we repeated the admixture calculation excluding the Dutch sample and found a lower estimate of admixture (~5%). Although not statistically significant, there was a higher level of admixture in eastern AJ versus western AJ populations. This is similar to differences in the levels of mtDNA introgression observed in western and eastern AJ populations (Behar et al. 2004).

[. . .]

Discussion
This survey of variation at 32 binary (SNP) and 10 STR markers in a sample of 442 Ashkenazi males from 10 different western and eastern Europe communities represents the largest study of Ashkenazi paternal genetic variation to date. In a previous study by Hammer et al. (2000), a set of 18 SNPs was typed in a diverse Jewish sample that included 113 Ashkenazim from the US (the European provenance of these samples was unknown). This AJ sample was characterized by nine haplogroups that were also found in several other Jewish populations. Similarly, studies by Nebel et al. (2001) and Thomas et al. (2002) have included a modest Ashkenazi sample (i.e., 25%) and I-P19 (>10%). These results are not surprising in view of the longstanding religious tolerance in this region. However, Dutch Jews do not appear to have increased levels of European mtDNA introgression (Behar et al. 2004), suggesting that admixture in this population is mainly the result of higher rates of intermarriage between Jewish woman and non-Jewish men.

Posted by razib at 10:42 PM

From Chris Brand—

EUGENIC INFANTICIDE SUPPORTED   One of Britain’s top bioethicists endorsed infanticide in the case of infants born with previously unsuspected genetic problems or brain damage (Sunday Telegraph, 25 i; Scotland on Sunday, 25 i; Sunday Times, 25 i; Times, 25 i). In a debate organized by the House of Commons, handsome young Professor John Harris, a member of the British Medical Association’s Ethics Committee, said there was no detectable ethical difference between abortion and infanticide undertaken for serious conditions, and added that there should be more openness about the fact that such infanticide was “a very widespread and accepted pratce in most countries.” ”People who think there is a difference between infanticide and late abortion have to ask the question: What has happened to the fetus in the time it takes to pass down the birth canal and into the world which changes its moral status? I don’t think anything has happened in that time," he said. The Manchester Uni philosopher’s remarks infuriated pretty young ‘pro-life’ campaigner, the Reverend Joanna Jepson, curate of St Michael’s Church in Chester, best known for her determination to outlaw abortions for cleft palate (with which she herself had been born). Julia Millington, the political director of the ProLife Party, said: “It is frightening to hear anyone endorsing infanticide, but it is shocking when that person is responsible for teaching others.” Professor Harris, Oxford-educated and a founder of the International Association of Bioethics, had fifteen books to his credit on the ethics of genetics. The professor had in the past supported people being allowed to sell their organs for transplant operations and being allowed to select the sex of their babies. A spokeswoman for the British Medical Association tried to dissociate from Professor Harris, saying: "These views of Prof. Harris are personal views and do not reflect the views of the Ethics Committee or the BMA, which is utterly opposed to the idea of infanticide." But socialist groups were expected to resist the enforced pregnancies on which ‘pro-lifers’ were determined, and thus to support the relaxed attitude about infanticide (at least by mothers) that had developed in 20th-century Britain.

“People who think there is a difference between infanticide and late abortion have to ask the question: What has happened to the fetus in the time it takes to pass down the birth canal and into the world which changes its moral status? I don’t think anything has happened in that time.”

True, that.

Posted by Thrasymachus at 07:42 AM

An oft-cited benefit of eliminating affirmative action is that the non-Asian/Jewish minority members who are admitted would no longer be suspected to be “affirmative action admits”, of lesser expected competence.

I was shocked a few days ago when I realized that eliminating affirmative action does NOT in fact accomplish this!

To illustrate the problem, suppose all undergraduate institutions graduated all applicants with IQ greater than the mean, and no others. Surely, being easily identifiable as a member of a group X with mean IQ one standard deviation below the mean (and, as another simplifying assumption, let’s say this subpopulation’s IQ distribution has standard deviation identical to that of the majority, and the population as a whole as well) would no longer be disadvantageous as long as you could also demonstrate you were a college graduate?

WRONG. Members of this group X would tend to be “barely good enough”, while everyone else would tend to exceed the minimum requirement by a greater margin. Specifically,

~31.7% of graduates in the general population would exceed the mean by at least one standard deviation. Only ~14.4% of group X graduates would. This is a greater than 2x difference.
~4.6% of graduates in the general population would exceed the mean by at least two standard deviations. Only ~0.8% of group X graduates would. This is almost a 6x difference.
In ANY interval above the mean, group X graduates would cluster toward the bottom of the interval more than the graduate population as a whole.

Thus, it would be rational for any employer incapable of measuring IQ perfectly, and with greater use for people with higher IQs than lower IQs, to discriminate against group X. Even if they can estimate IQ, if they can’t do so perfectly, knowledge that you’re a member of group X gives them additional information that would cause them to adjust the estimate downwards, if they were behaving perfectly rationally. (Griffe discussed this in the past in his post on differential cutoff.)

The corollary: to make race next to worthless with respect to making hiring decisions, colleges would need to APPLY AFFIRMATIVE ACTION IN REVERSE, not just eliminate it! To make the mean IQ of group X graduates match that of the graduate population as a whole, the bottom ~42% of qualified group X applicants would need to be rejected, while all other qualified applicants were graduated. To make the overall IQ distribution of group X graduates emulate that of the overall graduate population, even more qualified group X members would need to be rejected.

In other words, this is essentially an unattainable goal. Barring extensive genetic engineering or the like, the informational content of race and other visible attributes can only be reduced (which elimination of affirmative action would accomplish), not eliminated.

Godless comments:

As “minority” is inaccurate (since there are numerically significant minorities with high achievement statistics), I have made the minor edit of replacing “minority” with “group X” where group X has a trait one SD below that of the population. Note that this substitution is very relevant when it comes to the actual composition of elite institutions like Microsoft and MIT. Consider, for example, the demographics of MIT:

(MIT stats)
8% of MIT’s undergrads are foreign
27% of MIT’s undergrads are Asian.
20% are black/Hispanic
Hillel counts another 10% as Jewish.
That leaves 35% white gentiles

Subtracting the blacks/Hispanics gives about 80% of the seats assigned on a merit basis. Of the 72% that went to Americans, slightly more than half (37%) went to Jews and Asians, while the rest (35%) went to white gentiles. Again, Jews and Asians only make up 5-6% of the population, while white gentiles make up 69%. In other words, a tiny fraction of the population beat out the largest group in the population for the merit-based seats at arguably the best engineering school in the country (alongside Caltech and Stanford).

Note that this assumes there to be no negative discrimination against Asians and Jews, which is not necessarily a valid assumption. Lowell High School in San Francisco had quotas on the number of Asians for quite a while, and elite universities still intentionally set the bar higher for Asians.

Posted by Dog of Justice at 05:06 PM

In a follow-up to my previous post I thought I’d eleaborate on why I think that the social contract between generations in this country is being broken.

This article details the trevails facing those on their quest for higher education and the institutional responses to the costs that grow faster than inflation.

To stay alive, these schools are firing personnel, increasing class size, snuffing courses, limiting enrollment and cutting out some majors. But most of all, they’re hiking their tuition and fees. Tom Mortenson, a higher-education policy analyst, calls this “creeping privatization.” If the public can’t or won’t pay enough for state schools (“no new taxes”), then the students must.

Within the ideological spectrum of debate there are some who would say that these institutional responses are entirely appropriate as free-market responses. That’s all well and good if we render the social contract null and void and release the students from further financial obligations to the elder citizenry of the country, but rather than doing so, we’re burdening them and their children with ever increasing future obligations. The social contract is becoming a one-way street and the obligations are borne by one generation with the benefits flowing to another.

Now of course there is an ideological debate in this country on the scope and role of government and on redistributive tax policies. What strikes me as shortsighted and hypocritical is the different policy prescriptions accorded to Medicare/Prescription Drug Coverage and Education. It’s clearly evident that these two programs serve two distinct demographic groups seperated by decades of life span.

I consider the disparate levels of commitment to these programs to be hypocritical because the success of Medicare is dependent on the success of Education and to shortchange the latter is to further jeopardize the viability of the former.

You can see it in the numbers. In 1973, 40.5 percent of the students receiving federal Pell Grants (for the needy) attended four-year public schools. In 2001, that portion was only 31 percent. More of the needy went to community colleges instead.

Before I contiinue my analysis of why funding to assist students in their education should be enhanced, let me first take a moment to examine what such an endeavor would entail.

Let’s take the 1973 level of 40.5 % of students receiving Pell Grants attending 4-year institutions as the goal for today’s generation. Thus a further 9.5% of students would need increased financial assistance to attend a 4-year institution.

Tuition hikes have reached double digits. Two-year publics raised their charges by an average of 13.8 percent last year (to $1,905), according to the College Board. That brings the increase to 53 percent over the past decade—nearly twice the inflation rate. Four-year tuitions were up 14.1 percent (to $4,694—and $10,636 including room and board). That’s an 85 percent jump over the past 10 years.

So 30.5% of students are able to meet the $10,636 4-year expense and I’m going to asssume that the 9.5% shortfall of students we’re targeting are enrolled in community colleges but would rather be in a 4-year institution.

Here is data on Pell Grant allocations. Here is data on the characteristics of recipients and the institutions attended. Here is more data from the 92-93 fiscal year.

Federal aid doesn’t buy nearly as much education as it used to. When the Pell program began, the maximum grant, for the poorest students, covered 84 percent of the cost of a public four-year college. Today, at $4,050, it covers only 39 percent. The maximum federally subsidized student loan hasn’t risen in a decade.

I’m going to look at two scenarios. The first is to make up the difference in tuition that separates the community college ($1,905) from the 4-year institution ($4,694), which amounts to $2,789 per year. The second is to restore Pell Grants, for the poorest students, to the point where they can cover 84% of the cost of a 4-year institution, rather than the current 39%, and this amounts to ($10,636 * 0.84) $8,934 per year.

In the first scenario, the student would expect an increase in aid of $11,156 for a 4-year educational program. In the second scenario, the poorest of students, would expect to receive in increase of aid amounting to $35,736 over 4 years.

Both are big aid increases. Are they worth it? Let’s see.

I’m going to do some back of the envelope calculations rather than a completely sound methodological study. I’m going to assume that this increased aid to the student will be taxed back over a 30 year period so it would be appropriate to use the 30-year T-Bill rate that is currently at 5.38% and I’m going to treat it much like a mortgage.

In the first scenario, the monthly payment due would be $62.51. In the second scenario, the monthly payment due would be $200.22.

Now that we have an idea of the costs involved in expanding access to higher education let’s go back to the issue of why a society should make these opportunities available to those who can’t afford them.

Here is some data on Median Annual Income by Level of Education. In the year 2000, men with an Associate’s Degree earned a median income of $41,952 and those with a Bachelor’s Degree earned a median income of $56,334. Women with an Associate’s Degree earned a median income of $31,071 and those with a Bachelor’s Degree earned a median income of $40,415

Because this is a back-of-the-envelope exercise I’m just going to assume that this level of income will remain constant over the person’s working life and that salary differentials due to experience are already factored into the statistic.

The income differential, averaged between the sexes, amounts to $11,863 per year. The marginal tax rate for a single filer would be 28%. This would result in $276.80 per month more tax revenue. Furthermore, there would be an increase of $61.29 more in Social Security taxes and $14.33 in Medicare taxes per month.

All told, there would be an increase of tax revenue amounting to $352.42 per month for the entire working career of the individual. This compares to a cost of $62.51 for the first scenario mentioned above and a cost of $200.22 for the most generous assistance to help the poorest students attain a 4-year degree at the same level of sacrifice as that found in 1973.

In the first, modest scenario, the additional revenue generated via tax receipts, over a 30 year period, discounted by the T-Bill Rate is equal to a present value of $5,388.66. In the more generous second proposal, the present value is $2,829.00. Clearly, in both cases there is a compelling financial argument to be made for increasing access to higher education by easing the financial burden.

It’s unfortunate that students don’t have the voting clout of seniors for the case they can make for more financial aid is one that would actually contribute to the fiscal health of the nation. Seni
ors, on the other hand, do have voting clout and politicans are known to fear the wrath of this demographic. Unfortunately for all of us there are limited financial means to maintain the entitlement programs that are so dear to many of our fellow citizens and politicians have to make allocation decisions.

Under extreme pressure from the elderly they repeatedly have expanded entitlements for seniors without adjusting the acturial foundations for those programs.

The reason I like this blog and am pleased to be invited to post here is because the readership is willing to accept for discussion many topics that are difficult to raise in other forums for fear of being shouted down. Here all arguments are accepted if they are made with care and accuracy, no matter how many sacred cows are attacked. As I stated in my earlier post, the senior lobby is selfishly looking after its own interest to the detriment of their collective children and grandchildren. Imagine trying to argue this in another forum!

Maybe you don’t accept my thesis yet. Let me continue on with my analysis.

Consider this fact:

In Michigan, annual Medicaid services cost $907 per child but $9,615 per elderly adult. As the number of elderly who qualify for the program grows, so will the cost.

Consider how entitlement programs start. Usually they make financial sense, but mission creep and demographics turn them into tails that wag the dog. When Social Security started the worker to recipient ratio was 42:1

The very first recipient of Social Security in the United States was Ida Fuller, a legal secretary who retired in 1940. Before retirement, Miss Fuller and her employer had paid only $45.08 in Social Security taxes. By the time she died at age 100, she had collected more than $20,000 in Social Security benefits. The year Ida Fuller retired, there were 42 workers for every retiree. That’s why the tax rate needed back then was only 2 percent on the first $3,000 of wages. By the time Miss Fuller received the first cost-of-living increase in 1951, there were 16 workers for every retiree. And by the time she died in 1975, the ratio had fallen to 3.2 workers for every beneficiary. For the future, things look bleak. By the middle of the next century, the ratio is expected to fall still further, with only 1.5 to 2 workers for every beneficiary. That means each worker will be supporting two-thirds of the cost of an elderly person in addition to all other taxes and all other family responsibilities.

So the concept began modestly and the social contract between generations was quite tolerable to bear, and for the amount of suffering the entitlement alleviated, I’m sure that society thought it had done well. Unfortunately, a dependency and sense of entitlement developed and people expected more and more enhancements but were unwilling to pay for such enhancements themselves.

This process led to Medicare and now that same clamoring for more enhancements has led to this situation:

In recent years, there have been proposals to lower the Medicare-eligibility age and allow others—the uninsured and those aged 55–64—to buy into the program with a $300–400 monthly premium. Others have proposed raising the eligibility age, from 65 to 67, but many believe that the idea failed because it is unpopular with the elderly, who are a powerful lobbying force and tend to vote regularly and in great number.

You’ll note that a $400 monthly premium is $4,800 per annum and this is less than half of the expected expense of $9,615 per adult in the Medicare system. Unlike the Educational Aid, which returns a net present value to society, most proposals that are directed at expanding Medicare are a direct drain on society.

The earliest data I can find on US population distribution is from 1950. Here is the population pyramid for that year. You’ll note that there were only 12,398,000 citizens over the age of 65, and they accounted for 8.1% of the populace and 14.12% were over 80 years of age.

Compare the situation in 1965 when Medicare received legislative approval. Here is the population pyramid. Now there were 18,451,000 citizens over the age of 65, accounting for 9.5% of the populace and 16.55% were in the over 80 age grouping.

In 1973, when the Pell Grant information noted above, enabled 40.5% of students to attend a 4-year institution, the population pyramid looked like this and there were now 21,523,000 citizens over the age of 65, accounting for 10.1% of the populace and those over the age of 80 accounted for 19.57% of the senior cohort.

Today, the population pyramid looks like this and there are 36,251,160 citizens over the age of 65, accounting for 12.4% of the population and those over 80 accounted for 28.71% of the senior cohort.

Here is more census data going back to 1900 (See page 170.)

Here is a lot more data on Medicare for 2001.

As should be evident, the proportion of the population drawing drawing Medicare is growing, and the over 80 group is growing as well. I’ve drawn particular attention to the increased longevity of our seniors for they incur a disproportionate share of Medicare expenses.

The social contract that was formed between generations never envisioned that Social Security and Medicare would grow to such gargantuan proportions, squeeze other programs which are directed at younger generations, and continue to grow to the point where 2 workers will be required to support each retired citizen.

Because Medicare funds rely on employee payroll taxes to pay for recipient services, the ratio of those employed to those drawing on Medicare benefits is crucial to maintaining future solvency. Currently, there are 3.7 workers for every person receiving Medicare benefits. HI Fund trustees calculate that there will be 2.4 workers for every retiree in 2030 and only 2 workers per retiree in 2075; each individual employee will be responsible for a far greater share in supporting each recipient.

With fewer workers to support Medicare recipients, one of three things will have to happen — either payroll taxes on the working population will need to be increased, or the government will need to pay a greater share, or the government will have to limit or change benefits.

As it is structured now, the cost to keep Medicare running will increase by 5.9 percent in 2003 and then 6.8 percent annually over the next ten years. Considering Medicare in the broader picture of the federal budget, the CBO sees Medicare costs increasing from 2.5 percent of the 2002 GDP to 9.2 percent of the GDP in 2075.

Now Medicare has been expanded to include Prescription Drug Coverage and:

For the period 2004 through 2013, CBO estimates that spending for prescription drugs by and on behalf of the Medicare population will total roughly $1.8 trillion, or nearly 50 percent of the projected $3.9 trillion in Medicare outlays over that same period.

The drug coverage will be an unfunded liability of nearly $2 trillion. Look here for more information on future Medicare obligations.

So let me be blunt in my conclusion. The social contract that was formed in the New Deal, and when Mrs. Fuller received the first Social Security benefit in 1940 has been transformed into intergenerational theft. As a society we are avoiding some very difficult choices on our ability to have it all. The voting power of the senior lobby is impressive and afterall, who among us wouldn’t fight for benefits if our lives and quality of life were at stake. As Alexis de Tocqueville noted “The American Republic will endure, until politicians realize they can bribe the people with their own money” and our politicians are hard pressed to manage our affairs in a fiscally responsible manner.

By avoiding making some hard choices, benefits will continue to flow to the senior-aged demographic, thus robbing us of vitality in the younger generations and inhibiting the development of the very wealth producing qualities (i.e. education and child health care) that could lessen the trauma we will encounter in future years as we support our elderly.

As Governor Richard Lamm has already pointed out, the elderly have a duty to die. This of course is a hard concept to realize because the social contract is still maintained and our seniors do not conceptually connect their demands for more entitlements to the robbing of other, more productive, and fiscally responsible, programs.

If our social contract wasn’t depersonalized via the social welfare model, and instead there was a life-long savings program or family support for our elderly, then the extreme costs and sacrifices that the children and grandchildren had to make on behalf of the elderly would be plainly evident. When it is your grandchild who can’t afford to go to college because you need a expensive medical treatment regime after your heart transplant, then the sacrifices become more real.

No one is advocating some cruel policy to neglect the health and well-being of our respected elders, but when our elders show no shame in their blatant demands for more of our taxes and are thus sapping future generations of their potential, then this activity has to be called to everyone’s attention. We can’t afford to have it all. There have to be limits and sometimes those limits mean that we can’t afford to offer a medical procedure which is available. The elderly have had full lives. The future belongs to their grandchildren and they deserve the best start in life that we can offer them.

A group of scientists claims that multiple factors (via Dienekes) led to the extinction of the Neandertals. The title in The New Scientist asserts that the “Big chill killed off the Neanderthals.” But upon closer reading, it seems that the arrival of a new human culture (Gravettians) and the concomitant cultural explosion swept aside a very low basal population of Neandertals, and, the Aurignacians! As noted in the article, it is latter point is interesting, because the Aurignacians were anatomically modern humans, and creators of the famous cave art that indicates a qualitative change in our cultural history. Nonetheless, the article indicates that the Neandertals and Aurignacians co-existed in diminished numbers until the arrival of the new toolkit.

The moral of the story is that first aproximations always hide a great deal of nuance and subtlety. This research might be unsupported by later studies, but let us assume it is correct. The idea that there was a “Great Leap” 40,000 years ago in mental capacities of human beings that allowed them to engage in symbolic abstraction and consciously develop new and innovative cultural motifs is seductive. Researchers, assuming that language was a crucial part of this leap, are already on the hunt for genes that might have arisen during this period and altered our hardware so that it could run more powerful software. Anthropologist Henry Harpending asserts that the “Great Leap” did not seem to impact the material culture of all anatomically modern humans at the same time (a series of hops, not a leap?).

I also believe that the recent history of our species, especially since the period from around 500 BCE, might have instilled in us preconceptions of the Eternal March of Human Progress that allows us to disregard possible epicyclic deviations from the arrow of change. For instance, Tasmanian Aboriginals, isolated from the mainland for 10,000 years, suffered degredation in their toolkit. The Bronze Age Greeks and Indians both forgot their native literate traditions after socio-cultural decline, and literacy was revived through cultural diffusion from the Middle East. Joseph Needham documented the engineering genius of the Chinese civilization, but he also noted that some discoveries were left fallow, and mechanical wonders forgotten, only to be re-introduced by Europeans!

The Out-of-Africa scenario that posits an expansion of modern humans ~50,000 years ago is seductive in its parsimonious elegance. The genetic evidence points to some form of this. Nevertheless, I think that the simplistic beauty of this model has convinced some anthropologists & paleontologists to brush aside the details in specific locales and points in history and pre-history.

Back to the thrust of the above article. The modification of the “standard model” of Neandertal extinction is not extreme, instead of extreme climatic conditions + the presence of modern humans facilitating the demise of the Neandertal, climatic conditions + the presence of a modern human subculture might be the root cause. But the implication is that the “Great Leap” was just the first step, that human cultural superiority was not created ex nihilo from the DNA.

Posted by razib at 01:53 PM