The Age Of Turbulence

Adventures in a New World by Alan Greenspan and summarized by Walter Antoniotti of 21st Century Learning Products

This summary is part of The War section of our Current Events Internet Library

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The mood of the country is that economic rewards are not being distributed fairly. A populist political majority  "...could turn a state of bad feeling into a truly serious economic crisis."  Competition is seen as the culprit even though  "... well-documented evidence that competitive markets over the decades have elevated standards of living for the vast majority of Americans...". p393 Lowering competition by erecting barriers to free trade would eventually cause the American standard of living to stagnate.

"The only way to temper the bias against an economy that entails the timely repositioning of labor is to continue to support market incentives that create jobs and to find productive ways to ease the pain of job loses. The problem is not new. The growing inequality of income, however, is new and it requires analysis as to its roots, and policy action where appropriate." p396

From the editor: Alan is not specific on "policy action where appropriate."

Here are some ideas from The Economist

Buying off the opposition 
New ideas to shore up support for open markets
Nov 8th 2007 p94

" Manufacturing jobs can no longer be highly paid..." as the consumer ultimately pays and they would put up severe resistance to paying higher than market prices to pay these higher than market wages. They want to shop at Wall Mart. p395

The computer has replaced moderately skilled jobs. Technology is moving faster than we can educate ourselves.   "... the income concentration of today owes more to the generation of high income spurred by the imbalances between the demand for skilled workers and their available supply." p398

Lower-income workers did poorly in the 1980's, then recovered "somewhat" and the "...fears of American workers that immigration is undercutting wages is yet to be supported by hard evidence."

The impact of technology and globalization on other developing countries has been "significantly milder" than being experience in the United states. p 399  Part of the reason for this milder affect is other   countries have engaged in far more extensive programs to redistributes income than has been deemed acceptable in the United States.

Part of the explanation of recent developments "...appears to be explained by the dysfunction of elementary and secondary education in the United States."  p399 "."... although our forth grade students on an international comparison scale were above average in math and science, by the time they reached there last year of high school they had fallen well below the international average." p399

Math and science teachers should have proven subject mater "competency". p404

Teachers should be paid according to  society's need for the skill levels they teach and teaching ability, not some "lockstep single salary schedule..." p404

A degree in "education"  should not be required for hard to find subjects like mathematics. p 405

Vouchers were good enough for R. and M. Friedman, they're probably on the "right track" p405

"The cost of educational egalitarianism is doubtlessly high and may be difficult to justify in terms of economic efficiency and short term productivity. Some students can achieve a given level of education far more easily, and therefore at a far less cost, than others. Yet there to a danger to a democratic society in leaving some children out of sync with its institutions. Such neglect contributes to exaggerated income concentration, and could conceivably be far more costly to the sustaining of capitalism and globalization in the long run. The value judgments involved in making such choices reach beyond the imperatives of the marketplace."

From the editor: It sounds like Alan is most concerned about "sustaining capitalism and globalization in the long run" and less about income concentrations.

Education reform "...at best, will take years" and we need to ...address quickly a double disability: the increasing income concentration and the increasing cost of staffing our highly complex capital stock. Both disabilities could be solve "... were we to allow open migration of skilled workers to this country, there would soon be a lower wage premium of skilled over lesser skilled and an end to our shortage of skilled workers." p407

From the editor: Personally, I would rather solve the  "increasing income concentration" disability" with "policy action" to help those in the "middle and bottom" rather than make American supervisory workers currently at the top compete with foreigners and have to take a pay cut have to.

  "These education driven mismatches of skills coupled with the forces of globalization and innovation appear to explain much, if not most, of the failure of real wages at the middle and bottom of our income distribution to rise measurably during the past quarter century."

From the editor: Earlier he stated that  "... well-documented evidence that competitive markets over the decades have elevated standards of living for the vast majority of Americans..." and now he states that there has been a "...failure of real wages at the middle and bottom of our income distribution to rise measurably during the past quarter century..." A god question would be when do we reach the long run!