Category: speculations

beaten tracks

Talk of how we’ve entered a new “gilded age” tends to center on questions of inequality, but it has also led a number of people to draw analogies (sometimes well, sometimes poorly) between the old Gilded Age and our time. I remember during the internet boom of the late 90s hearing people say that the internet – or the information superhighway, as they said back then – was a lot like the 19th century railroad: annihilation of time and space, generation of great fortunes, boom and bust, and so on. But lately it’s been looking like the 19th century railroad might be more like the 21st century railroad.

There’s political influence and looming battles over regulation:

Two western railroad companies are donating an unusually high amount — more than $1 million — to the Denver National Convention (DNC) host committee — at the same time that railroad regulation proponents say they’re close, for the first time in decades, to winning additional oversight of the rail industry.

The companies offering up their political support include Union Pacific (UP) and Burlington Northern Santa Fe’s (BNSF). Nebraska-based UP disclosed its $1 million donation to Democratic convention organizers; company officials have said that an additional donation has been made to the Republican National Convention, which will be held in Minneapolis-St. Paul, though they haven’t revealed that amount.

And there are likely to be fights over rates ahead:

Meanwhile, the railroad industry’s long-standing antitrust exemption has attracted the attention of lawmakers. They seek to eliminate the exemption and closely examine the rates railroads charge to haul freight, which the industry says would cripple its expansion at a critical time.

The railroads’ rate structure has also drawn the ire of some of their customers: Nearly 30 antitrust lawsuits have been filed against major railroads in recent months, including one by agri-giant Archer Daniels Midland last month, alleging collusion and price-fixing.

For some lawmakers and advocacy groups, today’s rail industry recalls that of the late 1800s, when the only ceiling on rates was the limit of a rail baron’s avarice. The railroads say today’s rates are reasonable and reflect something the industry has not had in decades: pricing power.

Meanwhile, what’s the Gilded Age internet? The telephone. Seriously, that’s a very well-drawn analogy, from the story of the replacement of “the people’s telephone” (or “telephone 2.0”) with “telephone 1.0”, to the sobering concluding speculation. I couldn’t help but think of net neutrality while reading it.

the other side of outsourcing

Following up on my recent immigration/emigration post: it appears that the U.S. economic slowdown is leading American jobs lost overseas to be lost – overseas:

That does not mean the emerging world is buffered completely, particularly if both the United States and Europe slip into recession or if the financial crisis in the United States claims more and bigger financial institutions. And without question, sectors of emerging economies are already being stung.

There is growing fear especially in the fastest-growing Indian technology markets, which include outsourcing, back-office operations and call centers. Those sectors are 70 percent dependent on the United States. Several Indian technology companies have slowed their hiring because of the U.S. economy’s slowdown. In May, industrial output was up 3.3 percent, half the 6 percent increase in May 2007.

“I will have to lay off more if things don’t pick up,” said Rajiv Prem, a clothing manufacturer for U.S. retailers, including Anthropologie and Motherworks, who said the drop in orders has meant he had to close two of his three factories outside New Delhi.

Exports in China — the darling of the 21st-century economy — are also being hammered by slackening demand caused by the global slowdown and rising labor and material costs. Chen Gong, who runs a factory that makes plastic cleaning devices in Ningbo, a manufacturing city near Shanghai in the Yangtze River delta, has seen profits slip partly from the yuan’s controlled but steady rise against the dollar. It has slashed profit margins for many mid-size manufacturers from 15 to 3 percent. Many factories in nearby Guangdong province have closed their doors, and thousands of workers have lost their jobs.

“We’ll just see who can survive this,” Chen said. Experts predict as many as one-third of export manufacturers will close in the next three years.

Ultimately, that might not turn out so bad for China

Chinese exports to the United States have been flat this year and will likely experience a rare, overall decline by year-end, said Arthur Kroeber, managing director at Dragonomics, a research firm in Beijing. Yet experts said that might be exactly what China needs. A global slowdown — if tempered — could help China stage a soft landing for its breakneck economic growth.

“In some ways, this is not only welcome but desired by the Chinese,” said Vikram Nehru, the World Bank‘s chief economist for East Asia and the Pacific.

However,

Yet in Europe and Japan, the situation is decidedly more gloomy. In Japan, a new government forecast shows slowing economic growth and rising inflation in the coming year….

In Europe, which analysts once hoped would be a pillar of economic strength in the event of a U.S. recession, analysts are now warning of possible recession. The weakening dollar has made German chemicals and cars exceedingly expensive overseas — particularly in the United States — stinging the manufacturing industry in the euro zone’s largest economy. Spain, Ireland and Britain are mired in painful housing slumps with their financial institutions squeezed by the U.S.-sparked global credit crunch.

So to reiterate, chances of American emigration for better employment: still not likely.

a nation of immigrants

I’ve been wondering for some time if there’s a chance that if there’s a prolonged economic downturn, a significant number of Americans won’t just see their jobs moved overseas, they’ll begin to follow them. I’m sure it’s extremely unlikely: a significant depression in the US would almost certainly be accompanied by a more or less worldwide one. Anyway, it’s not like Americans left the country in huge numbers in the 1930s, and even if a depression were a push factor, there still would have to be some pull factors drawing people elsewhere.

That said, I found myself wondering about American emigration again when I read this:

Why does Germany have an engineering shortage while U.S. engineers are forced into “sales”? If our engineers didn’t go into sales, they’d be unemployed. It also puzzles me how, in 2008, German industry, with an ever higher euro, keeps outcompeting the U.S. in sales abroad. The Germans are actually looking for more than half a million skilled workers, including 100,000 engineers.

Of course unemployment in the US is still fairly low, sales can pay well enough, there are restrictions on Americans working in the EU, and Germany is attracting workers from other parts of the world who likely earn less than an American would ask for. So there are some pretty easy answers to the question: why aren’t American engineers trying for those jobs? And that’s before you get to the question of whether Americans are not inclined to emigrate, not even temporarily, with the intention of sending money back and eventually returning.**

*Though the article itself is actually on an entirely different topic from this post, by the way, namely: what effect will growing numbers of wealthy young wealth-managing liberals have on Democratic (and by extension, American,) politics?

**I know very little about American emigration history. I think quite a few Americans actually left for Canada in the late 19th and early 20th centuries when the American economy was growing rapidly (outside of panics/depressions). A chart in Eric‘s book indicates that the United States was second only to the British Isles as a source region for immigrants to Canada between 1891-1910 (figure 3.2, page 68). I wonder if that number includes immigrants to the United States who later went to Canada.

voting interests

This raises – and by “raises” I mean “led me to think of, off-hand, for no particular reason” – a couple of questions to which I don’t expect any answers, but find interesting nevertheless.

1. In terms of platforms, who was Lincoln closer to: Douglass or Bell? It may be that many Bell voters would have moved to Douglas in a runoff, but is that what they should have done? (Leaving aside the fact that voters don’t always do what others think they “should” do.) Lincoln and Douglas are of course associated with disagreement and debates; Bell is not really known, but both he and Lincoln were former Whigs.

2. In the 1858 Senatorial race, who would have won a direct election: Lincoln or Douglas? (The state legislature still determined Senators back then.)