Curt Doolittle

Theme: Crisis

  • Curt Doolittle updated his status.

    (FB 1546630188 Timestamp) MORE ON THE VULNERABILITY OF WESTERN NATIONS (Rule of Threes…three weeks without power, three months without order…) —“an Iranian military journal has floated around the idea of launching an EMP attack as the key to defeating the U.S. In an article titled “Electronics to Determine Fate of Future Wars,” the journal explains how an EMP attack on America’s electronic infrastructure would bring the country to its knees. “Once you confuse the enemy communication network, you can also disrupt the work of the enemy command- and decision-making center,” the article states. “Even worse today when you disable a country’s military high command through disruption of communications, you will, in effect, disrupt all the affairs of that country. If the world’s industrial countries fail to devise effective ways to defend themselves against dangerous electronic assaults, then they will disintegrate within a few years. American soldiers would not be able to find food to eat nor would they be able to fire a single shot.” Reporting to Congress, the EMP Commission concluded that little in the private sector is hardened to withstand an EMP attack, and even the U.S. military itself has only limited protection. In 2005, Former CIA chief James Woolsey affirmed these facts and urged the country to take steps necessary to protect against the potentially devastating consequences. In testimony before the House International Terrorism and Non-Proliferation Subcommittee, Woolsey referred to the nuclear EMP threat as “a SCUD in a bucket” whereby: “…a simple ballistic missile from a stockpile somewhere in the world outfitted on something like a tramp steamer and fired from some distance offshore into an American city or to a high altitude, thereby creating an electromagnetic pulse effect, which could well be one of the most damaging ways of using a nuclear weapon.” “…We do not have the luxury of assuming that Iran, if it develops fissionable materials, for example, would not share it under some circumstances with al-Qaida operatives. We don’t have the luxury of believing that just because North Korea is a communist state, it would not work under some circumstances to sell its fissionable material to Hezbollah or al-Qaida.”—

  • Curt Doolittle updated his status.

    (FB 1546630188 Timestamp) MORE ON THE VULNERABILITY OF WESTERN NATIONS (Rule of Threes…three weeks without power, three months without order…) —“an Iranian military journal has floated around the idea of launching an EMP attack as the key to defeating the U.S. In an article titled “Electronics to Determine Fate of Future Wars,” the journal explains how an EMP attack on America’s electronic infrastructure would bring the country to its knees. “Once you confuse the enemy communication network, you can also disrupt the work of the enemy command- and decision-making center,” the article states. “Even worse today when you disable a country’s military high command through disruption of communications, you will, in effect, disrupt all the affairs of that country. If the world’s industrial countries fail to devise effective ways to defend themselves against dangerous electronic assaults, then they will disintegrate within a few years. American soldiers would not be able to find food to eat nor would they be able to fire a single shot.” Reporting to Congress, the EMP Commission concluded that little in the private sector is hardened to withstand an EMP attack, and even the U.S. military itself has only limited protection. In 2005, Former CIA chief James Woolsey affirmed these facts and urged the country to take steps necessary to protect against the potentially devastating consequences. In testimony before the House International Terrorism and Non-Proliferation Subcommittee, Woolsey referred to the nuclear EMP threat as “a SCUD in a bucket” whereby: “…a simple ballistic missile from a stockpile somewhere in the world outfitted on something like a tramp steamer and fired from some distance offshore into an American city or to a high altitude, thereby creating an electromagnetic pulse effect, which could well be one of the most damaging ways of using a nuclear weapon.” “…We do not have the luxury of assuming that Iran, if it develops fissionable materials, for example, would not share it under some circumstances with al-Qaida operatives. We don’t have the luxury of believing that just because North Korea is a communist state, it would not work under some circumstances to sell its fissionable material to Hezbollah or al-Qaida.”—

  • Curt Doolittle updated his status.

    (FB 1547064064 Timestamp) We are gonna have to go to war men. Not much else to be done.

  • Curt Doolittle updated his status.

    (FB 1547064064 Timestamp) We are gonna have to go to war men. Not much else to be done.

  • Curt Doolittle shared a link.

    (FB 1547250873 Timestamp) ZEIHAN ON AMERICA AT THE EDGE.

  • Curt Doolittle shared a link.

    (FB 1547250873 Timestamp) ZEIHAN ON AMERICA AT THE EDGE.

  • Curt Doolittle updated his status.

    (FB 1547640050 Timestamp) THE HIDDEN DECLINE IN HUMAN CAPITAL—AND THE DANGER AHEAD by Peter Temin, Professor Emeritus of Economics, Massachusetts Institute of Technology(MIT). U.S. GDP accounting underestimates intangible capital, overstates financial capital, and is all but oblivious to the the erosion of human and social capital. A serious growth slowdown is coming. The American economy changed rapidly in the last half-century. We kept track of this transformation through the National Income and Product Accounts (NIPA), a set of statistical constructs that were designed before these changes started. Our national accounts have stretched to accommodate new and growing service activities, but they are still organized by their original design. This can be seen in the growth of financial activity and the efforts of many economists to fit finance into our measurement of national product and of economic growth. I argue in my paper that our current economic data fail to describe accurately the path of growth in our new economy. They fail to see that the United States is consuming its capital stock now and will suffer later, rather like killing the family cow to have a steak dinner. Modern growth theory started with two papers by Robert M. Solow in the late 1950s. The first paper showed that it was possible to create a stable model of economic growth using a Keynesian model of investment and capital. The second paper showed that this model failed to explain most of American growth in the first half of the 20th century (Solow, 1956, 1957). Other economists expanded Solow’s model by adding additional types of capital: human capital, social capital, financial capital. The first addition was to add human capital by measuring the effect of education on productivity. This enabled economists to work with an expanded Solow model. The second addition was to add social capital. This was added in cross-sectional regressions and has not been applied to ongoing growth estimates. The third addition was added by assuming that wealth equals physical capital, that is, financial capital is indistinguishable from physical assets (Mankiw, Romer and Weil, 1992; Hall and Jones, 1999; Dasgupta, 2007; Piketty 2014). These additions furnished explanations of economic growth in the United States and other countries. The importance of these contributions was confirmed in many empirical studies, but the NIPA continues to calculate Private Fixed Investment, a Keynesian construct, as the investment part of GDP. This problem is acute in the data for finance. Philippon (2015, 1435) concluded that, “The unit cost of financial intermediation does not seem to have decreased significantly in recent years.” As he says, this is surprising on several grounds. I build on his work to understand whether this result is the result of how the underlying data were collected. This disconnect infects the calculation of economic growth. Griliches (1990, 1994) noted over two decades ago that more and more of GDP is composed of services, which also have been called intangibles. It is hard to estimate the output of the financial sector, for example, so it is measured by its inputs. As I will show, although this may give a useful measure of current activity, it is less informative about economic growth. There are two problems. It is hard to measure productivity if inputs and outputs are conflated. If we fail to include productivity growth of an increasing part of the national product, we increasingly will underestimate the growth of the national product. Further, if we do not have a good measure of output, it is almost impossible to measure investments in finance and other intangibles. If we do not have good measures of the various forms of capital listed here, we will not be able to think hard about longer-run growth. Concern about this latter point provides the motivation for this paper. Outside the literature on the national product, there are many treatments of these new forms of capital. In addition to financial capital, human capital has been the center of explanations for the United States’ economic domination in the twentieth century as well as the progress of individuals within the United States (Golden and Katz, 2008; Heckman, Pinto and Savelyev, 2013). Social capital has been the center of analyses of economic growth in the United States and elsewhere and in the long and short run (Putnam, 1993, 2000; Dasgupta, 2007). Measuring these forms of capital poses many of the same problems as measuring financial capital. I review in this paper the accounting methods used to compile investment data to understand how these other forms of capital behave in an economy that has changed markedly since the 1950s. I conclude that current accounting of growth in GDP fails to include the kind of investment that generates these other forms of capital. This conclusion has three implications. First, short-run growth as currently calculated bears more relation to short-run Keynesian analysis than to what we know about long-run economic growth. Second, financial capital increases inequality more than it generates growth for the entire economy. Third, we are now allowing human and social capital to depreciate, auguring ill for future economic growth in the United States. Peter Temin is Elisha Gray II Professor Emeritus of Economics at the Massachusetts Institute of Technology (MIT). His “The Political Economy of Mass Incarceration and Crime: An Analytic Model,” has just been published by the International Journal of Political Economy. A revised version of an earlier INET Working Paper, it will be freely available on line for the month after January 5, 2019: https://www.tandfonline.com/do… References Dasgupta, Partha. 2007. Economics: A Very Short Introduction. Oxford: Oxford University Press. Golden, Claudia, and Lawrence F. Katz. 2008. The Race between Eduction and Technology. Cambridge, MA Harvard University Press. Griliches, Zvi (ed.). Output Measurement in the Service Sectors. Chicago: Chicago University Press, 1990. Griliches, Zvi. 1994. “Productivity, R&D, and the Data Constraint.” American Economic Review, 84 (1): 1-23. Hall, Robert E., and Charles I. Jones. 1999. “Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics, 83-116. Heckman, James, Rodrigo Pinto, and Peter Savelyev. 2013. “Understanding the Mechanisms Through Which an Influential Early Childhood Program Boosted Adult Outcomes.” American Economic Review, 103 (6): 2052-2086. Mankiw, N. Gregory, David Romer and David N. Weil. 1992. “A Contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics 107 (2): 407-37. Philippon, Thomas. 2015. “Has the US Financial Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation.” American Economic Review 105 (4), 1408-1438. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Putnam, Robert D. 1993. Making Democracy Work: Civic Tradition in Modern Italy. Princeton: Princeton University Press. Putnam, Robert D. 2000. Bowling Alone: The Collapse and Revival of American Community. New York: Simon and Shuster. Solow, Robert M. 1956. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70: 65-94. Solow, Robert M. 1957. “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics 39: 312-20. VIA: https://www.ineteconomics.org/perspectives/blog/the-hidden-decline-in-human-capital-and-the-danger-ahead? PAPER: https://www.ineteconomics.org/uploads/papers/WP_86-Temin-Finance-in-Economic-Growth.pdf

  • Curt Doolittle updated his status.

    (FB 1547640050 Timestamp) THE HIDDEN DECLINE IN HUMAN CAPITAL—AND THE DANGER AHEAD by Peter Temin, Professor Emeritus of Economics, Massachusetts Institute of Technology(MIT). U.S. GDP accounting underestimates intangible capital, overstates financial capital, and is all but oblivious to the the erosion of human and social capital. A serious growth slowdown is coming. The American economy changed rapidly in the last half-century. We kept track of this transformation through the National Income and Product Accounts (NIPA), a set of statistical constructs that were designed before these changes started. Our national accounts have stretched to accommodate new and growing service activities, but they are still organized by their original design. This can be seen in the growth of financial activity and the efforts of many economists to fit finance into our measurement of national product and of economic growth. I argue in my paper that our current economic data fail to describe accurately the path of growth in our new economy. They fail to see that the United States is consuming its capital stock now and will suffer later, rather like killing the family cow to have a steak dinner. Modern growth theory started with two papers by Robert M. Solow in the late 1950s. The first paper showed that it was possible to create a stable model of economic growth using a Keynesian model of investment and capital. The second paper showed that this model failed to explain most of American growth in the first half of the 20th century (Solow, 1956, 1957). Other economists expanded Solow’s model by adding additional types of capital: human capital, social capital, financial capital. The first addition was to add human capital by measuring the effect of education on productivity. This enabled economists to work with an expanded Solow model. The second addition was to add social capital. This was added in cross-sectional regressions and has not been applied to ongoing growth estimates. The third addition was added by assuming that wealth equals physical capital, that is, financial capital is indistinguishable from physical assets (Mankiw, Romer and Weil, 1992; Hall and Jones, 1999; Dasgupta, 2007; Piketty 2014). These additions furnished explanations of economic growth in the United States and other countries. The importance of these contributions was confirmed in many empirical studies, but the NIPA continues to calculate Private Fixed Investment, a Keynesian construct, as the investment part of GDP. This problem is acute in the data for finance. Philippon (2015, 1435) concluded that, “The unit cost of financial intermediation does not seem to have decreased significantly in recent years.” As he says, this is surprising on several grounds. I build on his work to understand whether this result is the result of how the underlying data were collected. This disconnect infects the calculation of economic growth. Griliches (1990, 1994) noted over two decades ago that more and more of GDP is composed of services, which also have been called intangibles. It is hard to estimate the output of the financial sector, for example, so it is measured by its inputs. As I will show, although this may give a useful measure of current activity, it is less informative about economic growth. There are two problems. It is hard to measure productivity if inputs and outputs are conflated. If we fail to include productivity growth of an increasing part of the national product, we increasingly will underestimate the growth of the national product. Further, if we do not have a good measure of output, it is almost impossible to measure investments in finance and other intangibles. If we do not have good measures of the various forms of capital listed here, we will not be able to think hard about longer-run growth. Concern about this latter point provides the motivation for this paper. Outside the literature on the national product, there are many treatments of these new forms of capital. In addition to financial capital, human capital has been the center of explanations for the United States’ economic domination in the twentieth century as well as the progress of individuals within the United States (Golden and Katz, 2008; Heckman, Pinto and Savelyev, 2013). Social capital has been the center of analyses of economic growth in the United States and elsewhere and in the long and short run (Putnam, 1993, 2000; Dasgupta, 2007). Measuring these forms of capital poses many of the same problems as measuring financial capital. I review in this paper the accounting methods used to compile investment data to understand how these other forms of capital behave in an economy that has changed markedly since the 1950s. I conclude that current accounting of growth in GDP fails to include the kind of investment that generates these other forms of capital. This conclusion has three implications. First, short-run growth as currently calculated bears more relation to short-run Keynesian analysis than to what we know about long-run economic growth. Second, financial capital increases inequality more than it generates growth for the entire economy. Third, we are now allowing human and social capital to depreciate, auguring ill for future economic growth in the United States. Peter Temin is Elisha Gray II Professor Emeritus of Economics at the Massachusetts Institute of Technology (MIT). His “The Political Economy of Mass Incarceration and Crime: An Analytic Model,” has just been published by the International Journal of Political Economy. A revised version of an earlier INET Working Paper, it will be freely available on line for the month after January 5, 2019: https://www.tandfonline.com/do… References Dasgupta, Partha. 2007. Economics: A Very Short Introduction. Oxford: Oxford University Press. Golden, Claudia, and Lawrence F. Katz. 2008. The Race between Eduction and Technology. Cambridge, MA Harvard University Press. Griliches, Zvi (ed.). Output Measurement in the Service Sectors. Chicago: Chicago University Press, 1990. Griliches, Zvi. 1994. “Productivity, R&D, and the Data Constraint.” American Economic Review, 84 (1): 1-23. Hall, Robert E., and Charles I. Jones. 1999. “Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics, 83-116. Heckman, James, Rodrigo Pinto, and Peter Savelyev. 2013. “Understanding the Mechanisms Through Which an Influential Early Childhood Program Boosted Adult Outcomes.” American Economic Review, 103 (6): 2052-2086. Mankiw, N. Gregory, David Romer and David N. Weil. 1992. “A Contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics 107 (2): 407-37. Philippon, Thomas. 2015. “Has the US Financial Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation.” American Economic Review 105 (4), 1408-1438. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Putnam, Robert D. 1993. Making Democracy Work: Civic Tradition in Modern Italy. Princeton: Princeton University Press. Putnam, Robert D. 2000. Bowling Alone: The Collapse and Revival of American Community. New York: Simon and Shuster. Solow, Robert M. 1956. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70: 65-94. Solow, Robert M. 1957. “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics 39: 312-20. VIA: https://www.ineteconomics.org/perspectives/blog/the-hidden-decline-in-human-capital-and-the-danger-ahead? PAPER: https://www.ineteconomics.org/uploads/papers/WP_86-Temin-Finance-in-Economic-Growth.pdf

  • Curt Doolittle updated his status.

    (FB 1548005988 Timestamp) MISSION STATEMENT: DEAL WITH THE PROBLEM AT ONCE —“Therefore, the Romans, foreseeing troubles, dealt with them at once, and, even to avoid a war, would not let them come to a head, for they knew that war is not to be avoided, but is only to be put off to the advantage of others.” — Machiavelli, The Prince —“Even today, putting off that which must be done is not to our advantage. If it must come, let it be in my time.”- Noah J Revoy We are in our current predicament because we did not deal with the problem at once.

  • Curt Doolittle updated his status.

    (FB 1548129337 Timestamp) WHEN THE OPPOSITION DOES YOUR PLANNING FOR YOU —“The NIAC was challenged to think beyond even our most severe power disruptions, imagining an outage that stretches beyond days and weeks to months or years, and affects large swaths of the country. Unlike severe weather disasters, a catastrophic power outage may occur with little or no notice and result from myriad types of scenarios: for example, a sophisticated cyber physical attack resulting in severe physical infrastructure damage; attacks timed to follow and exacerbate a major natural disaster; a large-scale wildfire, earthquake, or geomagnetic event; or a series of attacks or events over a short period of time that compound to create significant physical damage to our nation’s infrastructure. An event of this severity may also be an act of war, requiring a simultaneous military response that further draws upon limited resources. For the purpose of this study, the NIAC focused not on the cause, but rather on the consequences, which are best categorized as severe, widespread, and long-lasting. The type of event contemplated will include not only an extended loss of power, but also a cascading loss of other critical services—drinking water and wastewater, communications, financial services, transportation, fuel, healthcare, and others—which may slow recovery and impede re-energizing the grid. Most importantly, the scale of the event—stretching across states and regions, affecting tens of millions of people—would exceed and exhaust mutual aid resources and capabilities. The ability to share public and private resources across businesses and jurisdictions underpins our nation’s emergency response plans and strategies today. (See Appendix C for a more detailed definition of a catastrophic outage). This profound threat requires a new national focus. The NIAC found that our existing plans, response resources, and coordination strategies would be outmatched by an event of this severity.”— https://www.dhs.gov/sites/default/files/publications/NIAC%20Catastrophic%20Power%20Outage%20Study_508%20FINAL.pdf?