Outsourcing is a serious problem, certainly in those areas of the nation where a factory is closed and the jobs shipped overseas, like in Flint, MI. I am fully aware that a corporation is not an eleemosynary institution. However, elected officials are going to be called upon to do something when an area loses its economic base. When a bunch of angry auto workers and their families show up at a Town Hall, the Congressman can't say 'Greg Mankiw at Harvard says it's good for the country,' without being at risk of great bodily harm. I hope I don't have to explain the 'multiplier' effects of outsourcing.

The problem was paying people more than their work was worth--oiutsourcing solves it.

OJ:

I can't even hear the name Paul Samuelson without thinking of that quote. Maybe it's unfair to the man, but let's be honest: that wasn't just a garden-variety mistake. On perhaps the central economic question of the 20th century, Samuelson was toking up on Soviet propaganda.

Hard to believe Robert J. Samuelson of the Post is his son.

Ditto to OJ and Matt.

I didn't know that Robert J. Samuelson of the Post was his son, that's incredible. Guess his mother raised him.

Robert is one of the fairest, least partisan columnists in America on any topic, not just economics. It really is amazing.

OJ, h-man:

Robert Samuelson has a blurb on the back of the fortieth anniversary edition of Milton Friedman's Capitalism and Freedom saying that Friedman has come to be recognized as what he surely is: the most influential living economist since World War II.

If I were his dad, I'd be pissed. :-)

I did not know Paul Samuleson was still alive. Perhaps they need to adjust the dosage of his medacation.

OJ,

You are correct however there is a significant political cost to the theoretically necessary market correction. It is unclear whether American politicians want to pay it or whether the American system could survive that cost.

We survived the loss of all those great blacksmithing jobs.

OJ,

Again you are right but if those blacksmiths were as well organized as today's auto workers, they'd have caused a lot of angst among elected officialdom. America is developing the social structure of the later Roman Empire, a narrow coterie of really rich people supported by a large class of slaves and an essentially mercenary military class. This is not a recipe for stability or progress.

Rome lasted a while.

Bart:

Are you speaking about the America of Dimension X ?

'Cause the nation that I live in isn't reflected in your assessment.

A whole cadre of the founding fathers were in
professions that simply no longer exit and in
some cases were gone by the Civil War. Sure
most made a packet and sent their offspring in
other directions. I'm not even talking about
the gentry like G.W. and T.J. I'm talking about
the successful entrepeneurs and tradesman.

Rome was toast about 200 years after the social structure changed after the death of Aurelius. Things happen much more quickly today.

Michael,

This is a process. When $40/hr autoworker jobs are lost and $7/hr WalMart greeter jobs are added, that is a net loss for the country. I don't know where you live but in Northeastern NJ, the median housing price is over $300K. This means that the type of crappy, energy inefficient 1920s vintage house which working and lower middle class people lived in on one income, now requires two incomes to support. How many single income families did you know about when you were a kid? How many do you see now? When interest rates go back up, we are going to have a real estate and banking crisis that will dwarf the S & L crisis of the 90s.

Stanford Medical School is now $60K a year. Unless you are rich, you are stuck with student loans out the wazoo, even if you make the median salary of an American physician which is high but not stratospheric by any means, $250-$300K. An Ivy League school is $45000/yr for undergraduates. Rutgers is $15000 if you live on campus. BTW, social mobility has been pivotal to Americans accepting the kind of income inequality which causes Europeans and Latins to revolutions or elect Socialist redistributionists. The high cost of education is a bar to that social mobility.

Yeah, I guess you can make a go of things if you are willing to mortgage yourself up to your eyeballs, run the credit cards up and tread water till you get to bankruptcy court. But for people like me, who'd rather shove a hot poker up my nose than get into debt, who believe in personal fiscal responsibility, the current situation has all the indicia of a disaster.

Bart:

Choosing ignorance over debt is certainly something you're entitled to do, but at least hide it.

OJ,

You offer a false choice. Most people around the First World can have educations and no debt. Americans used to be able to afford education without debt, and not that long ago. I paid my way thru Rutgers off a part-time job and lived at home. I went to grad school on a fellowship and came out debt-free. At least the fellowships still exist.

Going to the Sorbonne costs essentially nothing for a Frenchman. British universities impose minimal charges on their students.

This is a huge structural problem for those of us who want an America that will continue to dominate the world's economy and science. We are larding our kids up with unnecessary debt, and killing pure research in the process.

That was the choice you presented.

And France is cranking out the Nobel quality research, huh?

Britain certainly still is. France produces people capable of it, but they have to come to free countries to perform it.

Germany once had a technological edge over the rest of the world. That disappeared after 1933, and has never returned. I'm probably in the last generation of scholars that had to pass a test in written German as part of my math studies. A technological edge can disappear very rapidly if it is not nurtured by the society around it. Because we reward excellence in the private sector, we reward people who produce excellent science. What we are not rewarding is the training of people to do that excellent science, preferring instead to import excellent people from India and the PRC rather than training our own. In the short-run, that is a more effective way to do science, but in the long-run it virtually guarantees that we'll be overtaken by other nations much to our detriment.

They all have to come here to work but we'll be overtaken?

Science is portable. This is very reminiscent of the later Roman Empire, where the money all ended up in the eastern Meditteranean, which necessitated the creation of a capital in Byzantium.

Bart:

There are people in northern NJ with high school diplomas making $300,000 a year selling those $300,000 houses. There are lots of teachers (chemistry, biology, etc.) at medical schools who could not get into medical school themselves, but now probably earn $80,000 to $100,000 a year teaching the would-be doctors.

The steel workers in Pittsburgh made $26/hour, with 6-8 weeks vacation a year (in 1977, with 15-20 years on the job). With overtime, that was about $70,000 a year. Today, that would probably be about $120,000 a year. Were they worth it? Yes and no. The jobs were laborious and sometimes dangerous, but they were also tightly regulated and stultified out the wazoo (by the unoin). Were the workers ready for the coming tidal wave that totally emptied the USW in Pittsburgh by 1988? No.

Did the union ever admit that $70,000 a year was too much? Not really.

The airlines are in the exact same situation today, except their management is probably even worse than the steel companies and the competition is domestic, not foreign. Will a 20-year Delta pilot making $180,000 a year (for 80-100 hours a month) accept that his skills can be found for half that amount? Probably not. And that is just what the US Airways pilot's union did on Wednesday.

Sure, there are strata in the labor force, but the key is to be able to see how to get from one level to the next (if that is what you want). Some people don't want to make the sacrifice (overtime, travel, further education, etc.) and others do.

When interest rates go back up, there will be a lot of happy people who locked in at 6%. And a lot of unhappy people who are trying to buy at 10%.

Bart:

The US still has a huge middle class, and your $ 300,000 homes prove it.

If society were composed of a sliver of rich people, and a vast pool of paupers, why would housing cost so much ?
And, what sane banker would give the unwashed masses loans for that amount ?

A gal fresh out of a 14 month auto mechanics' training course can make $ 50K to start, in your neck o' the woods.
A programme that short doesn't require much debt.

The Robert J. Samuelson who writes for NEWSWEEK is no relation to the economist Paul A. Samuelson who, interestingly, has both a son and a brother named Robert. See slate.msn.com/id/1005629.