Neurotic to the Core

James Hamilton presents a balanced apprisal of Oil pricing, but he stands far too sanguine for my own Taste. He ignores the impact of the Oil increases on the World economy. What exactly happens to the American economy in Chinese Imports rise a projected 16% in Price? A switch to India or Central America seems doubtful, though Chavas may provide Central America with cheaper Oil–He adopting the Saddam neurosis of buying friends with cheap Oil. Of course, American purchase practices have already destroyed Central American Production capacity. Am I being extreme in claiming a 16% Price rise for Chinese Imports because of Oil–I doubt it, but who knows. This is all Third-Generation stuff, and will not show up until Chinese Production has to engage in productivity with the higher raw materials–do you think the Chinese have ever heard of arbritage? It is known that if the American Consumer stops buying Chinese products, the Chinese central banks will stop buying Treasuries. James is complacent, and I am happy for him. I myself suffer from various neuroses, many accumulated since Graduate School days.

Mark Perry also fails to spot Recessionary pressures, because he presently sees no increase in college-educated unemployment. This may be true, but I would be more comfortable if this assessment was not based on documentary evidence from one specialized Recession incited by the Tech Balloon. Every Recession remembered and studied had distinct causation, often quite different from other experienced Recessions, and some engendered by remedial actions taken to forestall occurrence of previous-style Recessions. What exactly happens to the Economy when the Income levels of half the Labor force cannot face the sharp rise in Consumption Pricing?

Tim Haab wonders if immigrants actually lower the Wages of native Workers, and provide a link to a Paper which disputes this contention. I do believe, like George Borjas, that immigrants will suppress the Wages of low-skilled labor, suggesting that a real pattern of gumbo-increase in base Wage for half of the Working Population since 1980 comes from rapid Immigration. This might not give fair evaluation to the Paper. There is still a further Problem, though, in the fact that the Paper’s data was drawn from 1990 onward; years of economic growth outnumbered numbers of contraction years, and the years of growth has rates of expansion much higher than the rates of Contraction in Recession years. It is here where I would find a Problem: Recession years have high levels of Unemployment with corresponding higher Costs of Social Welfare; can We withstand several years of high Unemployment with a equal high level of immigration? lgl