American History: Public Transport and the Automobile

This keeps coming up, so I'm writing it up here so I can link to it.

Public transport in America is significantly less pervasive than in Europe and many other parts of the world. People often imagine that this is because America is less advanced. But the history is almost the opposite: America adopted a new technology (specifically, the automobile) earlier and faster and more enthusiastically than other countries.

Many Americans believe that the automobile was invented here. It wasn't; but the automobile assembly line, and with it mass production of motor vehicles, was. During both world wars, American industry, which already had quite a bit of experience mass-producing vehicles, supplied the allies with large quantities of military vehicles. Everyone knows about the planes and ships and tanks, but the factories also cranked out large numbers of military trucks and jeeps, because transporting troops and supplies is essential to any war effort.

Americans are often shocked to learn that during WWII, Germany, widely regarded as having been an industrial powerhouse at the time, was heavily reliant on horses for military transport. That feels like an anachronism to Americans; we associate military use of horses, with medieval cavalry, or with our mid-nineteenth-century Civil War, in which most of the soldiers had single-shot muzzle-loading rifles. We don't think of military horses and machine guns as belonging to the same era. (There were both horses and gatling guns in the Spanish American war, but our history classes tend to gloss over that one in a rush to get to WWI and WWII, which are considered more important.) It's quite weird to us that an industrialized country with the ability to make things like airplanes, would use horses in the military.

After WWII, we had a major economic boom. Most of Europe largely missed out on this, because a lot of their infrastructure had been bombed into oblivion, and they were still recovering, rebuilding. America didn't have to rebuild, and with all the soldiers back in the country to work regular jobs, production and income both rose. Many women continued to work outside the home, for the first time (on any kind of large scale) in our history during peacetime, and as a result, families now had two incomes and could afford more stuff than before. The factories turned their production to civilian purposes, and most American families purchased a number of things for the first time in this era: cars, major appliances, cameras, radios, etc. (Many families' earliest family photos are taken in front of the family car, because both were new.)

With so many American households owning cars, public support for building better roads skyrocketed, resulting in, among other things, the Interstate highway system. People often blame the interstates for causing America's love affair with the car, but it's really the other way around. Yes, there were politicians who had other reasons for wanting to build them, but they were able to get popular support because all the new car owners wanted better roads to drive on. Meanwhile, passenger railroads started losing customers left and right, until after a few years they started going out of business like it was going out of style. Yes, America *used* to have fairly pervasive passenger rail service. I live in a city of ten thousand people (called Galion) in central Ohio, that *used* to have passenger rail service, but it was discontinued in the late sixties or early seventies, because people weren't using it any more. Other cities in our area, exactly the same thing happened. Now, the nearest passenger rail station is an hour and a half away by car.

America didn't fail to build a public transport network. We *had* one, and we abandoned it because we didn't need it any more. You talk to Americans about passenger trains, and we think the nineteenth century called and they want their technology back.

Does this mean that widespread use of cars is inherently better than widespread use of passenger rail? Not necessarily. But cars are what America collectively chose, and there were and are reasons for that choice. It doesn't mean we don't know how to build a passenger rail network. We had one, and we stopped using it, mostly on purpose.

Why English Breakfast Tea Hasn't Caught On in America

If you pay attention to the portions of the internet that deal a lot with international travel and cultural differences, and if you watch for patterns, certain questions emerge. This is one of the lesser ones, but it's persistent: British people come to America, and they go to the grocery store and find the tea aisle, and they look for the specific teas that they are used to buying at home. This usually includes something called English Breakfast, and they don't always find it. Why, they want to know, is such an important staple tea so uncommon here?

There's some history that's worth knowing here, and I'll talk about that, but first I want to focus on the present situation. First of all, English Breakfast tea is available here, but it's one of several hundred named teas. It has to compete not only with such old standby teas as Constant Comment, but also with the explosion of flavors we've seen in the tea aisle in recent decades. If you go to any large grocery store (say, Meijer) and find the tea aisle, you're going to see hundreds of shelf-feet of different teas, ranging from the mundane (three or four different orange teas, three or four different lemon teas, three or four mint teas, chamomile, ...) to the peculiar.

Some of the most peculiar teas that you will find on the American grocery store shelf belong to a category that I am going to call gift teas. As far as I know, no one else calls them that, but the only time I have ever seen these sorts of tea, other than on the store shelf, was when they were purchased by one person and given to another. Rather than trying to formally define the category, I'm just going to give a couple of examples, and hopefully the idea will become clear.

I was once given a box of tea for Christmas, the exact name of which I no longer recall, but it had Christmas in it. It might have been something like Christmas Brunch or Country Christmas, or some similarly vague holiday-themed name. It was a flavored black tea, meaning that someone took ordinary black tea and added flavors to it. (This in itself is not odd. The aforementioned Constant Comment is a flavored black tea, and it's perfectly normal and reasonable and good.) Unfortunately, I don't remember the exact list of flavors it had in it: there were at least six, and I'm certain that almond and cherry were among them. If it had just been an almond and cherry flavored black tea, that might have been good, but there were several other flavors as well, and it just came out as a muddle. I only ever made one cup of it, which I didn't finish.

My mom currently has in her cupboard a box of Sugar Cookie Sleigh Ride, which was, of course, also a gift. It's an herbal blend containing, again, at least half a dozen different flavors. Among them are, I swear on Dave Barry's soul that I am not making this up, thistle and barley. It's been in the cupboard for at least a year. It was a gift, and you can't throw away a gift. Realistically, nobody's ever going to drink it.

Given the existence of these sorts of teas, with vague, non-flavor-related names, can you begin to get a picture of why Americans see English Breakfast tea and don't immediately think that sounds good, we should try that. Frankly, most Americans are more likely to buy this product for someone they know who is planning a trip to England, than for themselves. Oh, you're interested in England? Well, here you go, here's a gift tea that has England in its name, so even if it's no bloody good, you'll know that I was thinking about you and what your interests are. It's the thought that counts, right? And no, to preempt an obvious question, I don't think most Americans are aware that English Breakfast tea is a thing in England. We get lots of things here that purport to be of various national origins and in fact are not. Why should this English tea we've never heard of before be different? The only way people are going to know otherwise, is if they see British people talking about it on the internet. Which, admittedly, is now possible.

I've glossed over something, though: how is it that Americans have not previously heard of English Breakfast tea?

The really weird thing is, if you look up the history of English Breakfast tea, it is believed to be of American origin. Well, the name, English Breakfast is believed to be of American origin, though it's hard to be quite certain of the particulars. As odd as it may seem, this is a clue. It is worth noting that the blend that went by that name in nineteenth-century America, is not the same blend that goes by that name in England now. In fact, it appears to have been composed of teas imported from China. (The British English Breakfast tea is, according to Wikipedia, made of teas from India, Sri Lanka, and Africa.) Why is this relevant? The thing is, pretty much all American teas in the nineteenth and twentieth centuries, were made of local American products (sassafras, mint, etc.), black tea (mostly pekoe grade) imported in bulk from China, or some combination thereof. Going across the Pacific, China is just plain closer than India. Also, prior to the advent of containerized shipping, it was cheaper and more practical to get all the tea from one port of origin, because you had to fill an entire bulk hauler with nothing but tea if you wanted the shipping to be at all affordable. Today, an importer can fill a single shipping container with palettes of various goods; but that is a relatively recent development.

We didn't start to see imported named teas in our stores until the nineties, by which time we already had several major competing tea companies (Bigelow, Celestial Seasonings, Arizona, Nestea, Snapple, and of course the old and much maligned standby Lipton, which ironically enough was originally British), each pushing their own line of teas (some more bottled-and-served-cold than others). We already had a pretty well stocked tea aisle. All of the real, tea-containing teas on the aisle had certain things in common, but this was not obvious from their names alone, and of course there were always the herbal teas. Into this mix we now add green tea (which we started to see in stores in the nineties), oolang tea (some time around the turn of the century), white tea (subsequently), and any number of imported blends and specialty teas. But they don't have a long history here, and they have to compete with everything that's already on the shelf. Earl Grey got free publicity from Star Trek, but that doesn't help English Breakfast.

Of course, it's early days yet. If we've only been getting imported named tea blends here for less than a generation, it follows that some that haven't yet caught on, still may do so in the future.

Luxury Spending Up

According to an article in USA Today, spending on luxury goods and services (wine, pet care, televisions, jewelry, etc.) is up, while spending on essentials (bread, milk, eggs, etc.) is still lagging. Now, the conclusion the article draws is that this represents an increase in the divide between those who have (money) and those who do not. That's valid (although it should be noted that this observation reflects a short-term trend).

However, there's another, perhaps more practical conclusion that can be drawn from the same data: if you're looking for work, the local five and dime, or similar places where people tend to apply when they're desperate, isn't necessarily your best bet. Look for industries and businesses that primarily sell luxuries or cater to people with a little more money. They're more likely to be hiring at the moment.

The Unemployed... and Unemployable

Normally, the term "unemployed" means that you are between jobs, that (by choice or by circumstance or occasionally by fiat) you have completed your work at one employer and are ready to move on to another employer. I've been unemployed. Most of us have, at one point or another. No big deal.

Increasingly, however, I am running into people who are a different sort of unemployed: people who are NOT ready to move on to another employer, because they have been unwilling, for at least two decades, to ever learn a new job skill. No wonder they are unemployed!

Let me be a little more specific. I'm not talking about people who for some reason have missed some particular new technology and are otherwise generally able to function in society. "Oh, man, I haven't learned ZYML yet, and I'd kind of like to apply for this job, but it requires ZYML. What can I do?"

No, those people can either find another job, or pick up the new skill, or both. They're not the ones I'm talking about.

I'm talking about people who are unwilling to function in the twenty-first century at all.

They want to apply for white-collar jobs, but they don't have, and don't want, an email address. The job application requires an email address, of course (duh), so they ask, "Can I use yours?" Umm, no. *I* already have a job. The prospective employer wants to contact the prospective employee, which would be you. Are you going to give them my name and phone number as well? What do you use your head for, just holding down your shoulders? You're going to need an email account. There are a number of websites that offer them for free. I'd be happy to recommend one. But you're going to have to actually start checking your mail, if you want to, you know, hear from anyone who might be trying to contact you, such as a prospective employer.

It's not just about email. It's much more general than that. They want me to "help them" fill out online job applications (where "help" is often vanishingly close to "please just do it for me"), because they've never used a computer before, and now their job has evaporated. Of course it has evaporated. Any white-collar job that does not require using a computer was destined to evaporate sooner or later. Frankly most blue-collar jobs that don't require using a computer have evaporated at this point. Is this a surprise to anyone? Anyone? Anyone with a brain, I mean? Come on.

But they don't want to see it that way. They want me to basically fill out the online job applications for them, so they can avoid ever using a computer. Learn? What does that mean? You don't think your new employer will notice that you can't or won't learn to do anything you've not done before? I picked up on it in thirty seconds flat, so I'm guessing the employer will probably notice sooner or later.

Has it occurred to these people that if the job application is online, the job itself probably requires using a computer? If the employer assumes that prospective employees will be able to fill out an online application, it probably means their employees use computers as a matter of course. (After all, who doesn't? Neanderthals?) Similarly, if they insist on an email address from all applicants so they can contact prospective employees by email, it's probably a sign they use email within the organization. Duh. Not only does your prospective employer use email within the organization, they probably takes it for granted. You might have some difficulty functioning on the job if you don't know how to do these things. You'll probably have to (shock, horror) learn.

Can you even think of a job, in the developed world, that doesn't require using computers or electronics in some way or at some point? What kind of employment do these people think they want, migrant berry picking? Even the old saw "would you like fries with that" may be out at this point, since most cash registers are computerized these days.

I wouldn't be surprised if even janitors use computers for something or another. Why not? It's the easiest way to do some kinds of things. I mean, you probably don't need a computer to sweep the floor, but I bet it might be the easiest way to order replacement light bulbs, and it might be pretty handy for tracking how many of them you use, too...

The thing is, this is not some new sudden revelation. We've known since the eighties, maybe even since the seventies, that more and more of society was running on computers and that learning to operate them was going to become an increasingly necessary life skill. That was *decades* ago, PLENTY of time for even the slowest learners to pick up at least the basics. I can see putting it off until the nineties (because, until then, even used computers could be fairly expensive to obtain), but now?

Now, granted, the Amish (well, the conservative ones) don't use computers. But the Amish nonetheless manage to maintain useful skills and contribute things that have value to society. Granted, their job options are limited, but how many of them are unemployed? No, the Amish are industrious. They find *useful* things to do with their time, things for which people are willing to pay money.

That brings up an important point: there ARE non-computer jobs out there. But they're hard work. You want to do a job that doesn't involve computers these days, you're going to break a sweat. There's no magical fairy-tale job where you can sit at a desk in the air conditioning all day and talk on the phone and NOT use computers and somehow get paid for it. No, if you want a job where you don't have to use computers, you're going to have to bail hay or pour concrete or something. Are you willing to do that? Would you rather work that hard than ever learn anything new? Because that's what it's gonna take.

Society does not owe you a job unless you are willing to cough up something society can use. That's what a job is, when it comes down to brass tacks: something you do that seems useful to the rest of society and provides enough value to motivate others to do stuff for you in return. In a modern economy, that means something people are willing to pay money for.

But the people I'm talking about are chronically unemployed because they apparently either don't know how to do or aren't willing to do anything that society as a whole values enough to add up to a steady paycheck.

So they are unemployable. I don't mean just "unemployable by a few bleeding-edge employers who insist on embracing all the new technology as soon as it's available". We're at least a quarter of a century past that point. A quarter of a century, by the way, is generally at least half of one person's career, often more. What kind of worker spends half his career not learning any new job skills? A worker no competent boss wants working under him.

Employers willing to even look at applications from these people are dropping like flies, and for good reasons. Quite aside from the fact that a computer-free work environment is a good deal less efficient and means paying for significantly more labor per unit of work accomplished, there's also this other small matter: how on earth can a business compete against its competitors if its employees are unwilling to ever learn anything? How could you hope to deal with *any* change in circumstance, if that's the mindset of your workforce?

Today it's the internet. In another decade or two it'll be something else. The point is, you have to be willing to learn new job skills if you want to stay employable. Any employer who claims to offer you job security without requiring you to learn new skills is either lying through their teeth or doomed eventually to go out of business and take your supposedly secure job along with them.

Housing Credit Crisis

I ran across this video (via Gerv Markham's blog) that tries to explain in layman's terms why the banks have run into trouble. On the whole, I think it does a pretty fair job of breaking down some of the basic points and making them understandable.

It basically comes down to this: sub-prime mortgages are a somewhat riskier investment, and the risk was underplayed, and some funds were invested in sub-prime mortgages that really could not tolerate that level of risk.

Book Review: The Age of Turbulence: Adventures in a New World

One of the things various people have said over the years about Alan Greenspan is that he tends to underestimate his own influence. Reading his book, I think I'm seeing that too. For example, in the introduction, he relates how after 9/11 he made a speech that put a brave face on things, saying that the economy had become resiliant to shocks, but he didn't fully believe it and didn't expect he was fooling anyone. Then he turned out to be right: the economy recovered relatively quickly. It's obvious to me that at least part of the reason the economy recovered so quickly is because Greenspan suggested that it would. People believed (correctly, in my opinion) that he was the leading economics expert in the world, and so when he made positive statements, that gave people confidence, which generally has a lifting effect on the economy. Another example: barely a page later, he relates that after a meeting with lawmakers, he went home thinking all he'd done was reinforce what the lawmakers were already thinking, but the press acted like it was his agreement that made the whole thing happen. Well, it probably was. Apparently the lawmakers in question actually believe that the Chairman of the Fed is some kind of expert on economics, and if he agrees with what they're thinking, that gives them the confidence to go forward with it, and if he has reservations (as at the previous meeting) they hesitate (as they did). So now when out of retirement he comes out with a book saying that we are now living in a world with a "global capitalist economy that is more flexible, resilient, open, self-correcting, and fast-changing than it was even a quarter of a century earlier", people are going to believe that, too, and they're going to behave accordingly. I wouldn't have been very surprised if in the wake of the book's publication the economy surged up a bit: Greenspan just said a bunch of positive things about the economy, so let's all go out and do stuff with money. (It didn't work out that way because there were other forces at work, some of which I mention below...)

The historical narrative in the first half of the book is fascinating, not because I wasn't familiar with the basic events (I lived through and remember most of chapters 5-11), but because the perspective of an economist lights things up just differently enough to show up some things (trends, causes, and generalities) that I'd not been aware of before. Greenspan is a much better writer than I would have expected, and his story is compelling.

After going through the economic history of the last several decades, the author goes on to explore the economic issues that are currently facing various parts of the world, and the cultural and political issues that have important implications for economic policy and development. This is interesting material, as well, though of course much remains to be seen regarding how history will bear out his predictions.

Reading this book has raised in my mind some questions.

First, why is the short-term federal funds rate the only lever that the central bank in the US has to effect monetary policy? (I'm not saying, necessarily, that there should be other levers; I'm asking the question because I don't know the answer.) Greenspan indicates that the Fed was aware of the risk to the economy posed by the "irrational exuberance" of the dot-com bubble but was unable to do anything about it. Indeed, they briefly attempted to control the rising stock prices but found their measures ineffective and possibly counterproductive over the long term, so they left off trying. We can't fight market forces, they concluded. So then we had the dot-com bust and several years of pretty hard times for the IT industry, which had an impact on the entire economy. Not much later the Fed again saw a sudden inflation in another market they cannot effectively oversee, the real-estate market. There was nothing they could do about it, and when the bubble popped the housing market deteriorated quite significantly. The results include a credit crunch and the bankruptcy or collapse of a number of major lenders, especially in the subprime market (i.e., creditors that lend to normal people who don't have the 20% downpayment and other resources needed to get the best interest rates). A lot of first-time home buyers have been foreclosed, as I understand it not so much because of wrong that they've done as merely because the market now cannot support the loans they were offered during the real-estate boom. The home (which is the collateral) is not worth the outstanding loan amount, so if they can't make a payment they're stuck: there's no basis for an extension, and they can't sell their way out. This sort of thing is obviously not good for the overall long-term health of the economy, but what could be done about it? Are there additional levers that could (if Congress were so inclined) be granted to the Fed to assist them in more effectively smoothing out short-term economic forces and promoting the long-term health of the economy? And if so, what would be the other consequences of giving the central bank these additional powers?

Price controls obviously are NOT the answer. Just about all modern economists take it as an axiom that if the markets get too far out of touch with reality they will eventually correct themselves, and it is these market corrections that cause all the problems. The sorts of controls that characterize central planning (socialism and especially marxism) are only good for forcing markets further out of touch with reality, which invariably causes more problems than it solves, as Eastern Europe discovered.

However, the role of the central bank, primarily, is to control macroeconomic forces, most especially the value of money. (This is why we call it monetary policy, after all.) Controlling inflation (and deflation, if that becomes an issue) is very clearly within their mandate. But if the inflation occurs because of a situation in a market over which they have little or no influence, how can they control that inflation and keep the value of the currency stable? Besides the stock market and real estate, what other markets are there that the Fed cannot readily influence? What dangers does our economy face in the future? Just for instance (and purely *cough* hypothetically, ahem), what if labor becomes significantly overvalued? What kinds of havoc would the resulting market correction wreak?

The economy: near death, or cuts and scrapes?

Last night somebody told me that the stock market has lost trillions of dollars (he said how many trillion, but I don't remember) in a few days. Okay. My immediate response was, "What's that as a percentage?" I mean, yeah, trillions of dollars sounds like a lot, but the US economy is bigger than most people realize. It can afford to lose a few dollars here or there, from time to time.

As it turns out, the overall percentage of loss, since the last major peak (in 2007) is around 30%, depending on which index you look at. That sounds like a lot, and for a short-term drop it is a pretty good-sized chunk, but it's hardly the end of the world as we know it. There are peaks and bubbles (the fruits of periodic irrational exuberance), and then there are corrections back down to a more sane, gradual, and sustainable growth rate. 30% is a pretty large correction, but it's not out of line with what we've seen in the past.

So I went to a website that does stock charts. There are a number of sites out there that do basically the same thing, but in this instance I happened to select MSN Money, because it came up first in the search results. I went to the financial site, and I asked for charts of the Dow Jones Industrial Average, because that's a well-known index. It's not the only index we could look at, but it's a common choice, and, I believe, an instructive one.

I'm going to show two different charts here. The first represents the short-term view, on a linear scale.


Okay, yeah, that looks pretty bad. Actually, it looks worse than it should, because they've left off the bottom portion of the chart, starting the linear scale with eight thousand at the x axis. When you have to leave off more than half the numbers at the bottom of the scale in order to show the interesting part without making the chart too big, it usually means you should have used a logarithmic scale.

Now, let's step back and look at the larger picture. This second chart is on a logarithmic picture. (Otherwise the first three quarters of it would sort of resemble a flat line across the bottom.) Take a look:



What a difference! The black lines are original. I've taken the liberty of putting a red circle around the current economic crisis. On the one hand, yes, that's one of the biggest drops on the chart. On the other hand, it's clearly nothing very far out of the ordinary. If anything, that weird bulge around the (most recent) turn of the century is more unusual. The big dip at the left, of course, corresponds with the Great Depression.

I said I was going to show two charts, but here's an extra bonus image of the second chart, this time with a trend line drawn in, in green:


On the one hand, we're not seeing the steep growth of the eighties and nineties, but on the other hand this crisis has got to go some to look anything like the sharp drop of the early thirties.

That flat section across the seventies is called "stagflation", and in some ways that was worse than the current crisis, because it just went on and on and on, and then it went on and on and on some more, some twelve or thirteen years before things really started to pick up in the early eighties.

Of course, I don't know the future, and it's conceivable that things could keep going down until the current crisis turns into a second Great Depression. But there's no reason to assume that's what's going to happen. What we've seen so far is part of the normal up and down motion that happens all the time.

I don't want to be accused of being an unbridled optimist, so I'll say now that just because the economy hasn't completely collapsed doesn't mean our society isn't headed for a peck of trouble in other ways. All I'm saying is, some people are blowing the current economic crisis out of proportion. It's not really our gravest concern. There are, indeed, much more worrisome things to be upset about. (The condition of the public education system, just for instance, is outright terrifying. But that's a topic for another day.)