EUA: o estranho caso do desaparecimento do consumidor - the Sovereign Investor

Curioso mesmo: se os consumidores americanos desaparecem (maneira de dizer), o que é que os chineses vão fazer?
Passar a consumir tudo aquilo que eles produzem para o mercado americano?
Paulo Roberto de Almeida

America’s Dangerous Addiction
By Jocelynn Smith, Sr. Managing Editor
The Sovereign Investor, August 20, 2016

The American consumer is in trouble.

The first sign that consumer health is fading comes out of the retail sector. We’ve seen retailer after retailer this earnings season either cut its outlook or slash its store count.

Just this quarter:

Macy’s announced that it’s closing more than 100 stores.

Target suffered its first same-store sales drop in more than two years and cut its full-year forecast due to declining sales.

Gap is planning to close roughly 50 stores and cut its outlook for the full year.

J.C. Penney reported weak sales and yet another quarterly loss.

Nordstrom suffered its first quarterly revenue decline in seven years.
Sure, I’ll give you that everyone seems pleased with Wal-Mart’s report that same-stores sales rose 1.6% compared to guidance for a 1% increase, but that doesn’t seem quite enough to get excited about. If shoppers aren’t showing up at Macy’s, Target, Gap and J.C. Penney, it certainly doesn’t look like they’re making a mad dash to Wal-Mart to spend their money.

Part of the decline in traditional sales can be blamed on Amazon and the shift among consumers to buy more online. They enjoy the convenience and ease of shopping online — that way you avoid traffic and other shoppers — combined with cheap, fast shipping.

But the frightening side of the decline comes from the fact that the American consumer is running low on cash. Despite the constantly touted rebound in the jobs market, Americans aren’t making nearly enough to support themselves.

In fact, they’re going back to bad habits. The New York Fed announced earlier this month that U.S. household debt jumped by $35 billion to total $12.3 trillion in the second quarter, with the bulk of the increase coming from auto loans and credit cards.

After everything came crashing down in 2008, consumers worked hard to cut debt from 2008 to 2013, with the total dropping by $1.5 trillion. But since the start of 2014, we’ve been desperate to spend, but don’t have the money. In less than two years, we’ve nearly returned to the 2008 peak.

As Chad Shoop stated at the beginning of August, the consumer is the last pillar supporting a very slowly growing economy. And that support is being built on a mountain of debt. That’s not exactly the sound foundation we could hope for when it comes to seeing stellar future growth.

Eventually, it’s all going to come tumbling down.

Gordon on Economic Growth in the USA, 1870-2014 - book review by William Nordhaus

Why Growth Will Fall

William D. Nordhaus

AUGUST 18, 2016 ISSUE

The Rise and Fall of American Growth: The US Standard of Living Since the Civil War

by Robert J. Gordon

Princeton University Press, 762 pp., $39.95

Musée d’Orsay, Paris

Gustave Caillebotte: The Floor Planers, 1875

Robert Gordon has written a magnificent book on the economic history of the United States over the last one and a half centuries. His study focuses on what he calls the “special century” from 1870 to 1970—in which living standards increased more rapidly than at any time before or after. The book is without peer in providing a statistical analysis of the uneven pace of growth and technological change, in describing the technologies that led to the remarkable progress during the special century, and in concluding with a provocative hypothesis that the future is unlikely to bring anything approaching the economic gains of the earlier period.

The message of Rise and Fall is this. For most of human history, economic progress moved at a crawl. According to the economic historian Bradford DeLong, from the first rock tools used by humanoids three million years ago, to the earliest cities ten thousand years ago, through the Middle Ages, to the beginning of the Industrial Revolution around 1800, living standards doubled (with a growth of 0.00002 percent per year). Another doubling took place over the subsequent period to 1870. Then, according to standard calculations, the world economy took off.

Gordon focuses on growth in the United States. Living standards, as measured by GDP per capita or real wages, accelerated after 1870. The growth rate looks like an inverted U. Productivity growth rose from the late nineteenth century and peaked in the 1950s, but has slowed to a crawl since 1970. In designating 1870–1970 as the special century, Gordon emphasizes that the period since 1970 has been less special. He argues that the pace of innovation has slowed since 1970 (a point that will surprise many people), and furthermore that the gains from technological improvement have been shared less broadly (a point that is widely appreciated and true).

A central aspect of Gordon’s thesis is that the conventional measures of economic growth omit some of the largest gains in living standards and therefore underestimate economic progress. A point that is little appreciated is that the standard measures of economic progress do not include gains in health and life expectancy. Nor do they include the impact of revolutionary technological improvements such as the introduction of electricity or telephones or automobiles. Most of the book is devoted to describing many of history’s crucial technological revolutions, which in Gordon’s view took place in the special century. Moreover, he argues that the innovations of today are much narrower and contribute much less to improvements in living standards than did the innovations of the special century.

Rise and Fall represents the results of a lifetime of research by one of America’s leading macroeconomists. Gordon absorbed the current thinking on economic growth as a graduate student at MIT from 1964 to 1967 (where we were classmates), studying the cutting-edge theories and empirical work of such brilliant economists as Paul Samuelson, Robert Solow, Dale Jorgenson, and Zvi Griliches. He soon settled in at Northwestern University, where his research increasingly focused on long-term growth trends and problems of measuring real income and output.

Gordon’s book is both physically and intellectually weighty. While handsomely produced, at nearly eight hundred pages it weighs as much as a small dog. I found the Kindle version more convenient. Here is a guide to the principal points.

The first chapter summarizes the major arguments succinctly and should be studied carefully. Here is the basic thesis:

The century of revolution in the United States after the Civil War was economic, not political, freeing households from an unremitting daily grind of painful manual labor, household drudgery, darkness, isolation, and early death. Only one hundred years later, daily life had changed beyond recognition. Manual outdoor jobs were replaced by work in air-conditioned environments, housework was increasingly performed by electric appliances, darkness was replaced by light, and isolation was replaced not just by travel, but also by color television images bringing the world into the living room…. The economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could happen only once.

The series of “only once” economic revolutions behind this short summary makes up the next fourteen chapters of the book. Most of the innovations are familiar, but Gordon tells their histories vividly. More important, in many cases, he explains quantitatively the way these economic revolutions boosted the living standards of the statistically average American. Among the most illuminating chapters are those on housing, transportation, health, and computers.

The last two chapters are about the fall in Rise and Fall. This book differs from the Spenglerian “decline of the West” genre in an important respect. As the mathematicians might say, Gordon moves up a derivative. In other words, he is not predicting that living standards in the US will decline; rather he views it as likely that the growth rate of living standards will decline from its very rapid pace in the special century.

Gordon sees two sources for his pessimistic outlook. The first is that the long list of “only once” social and economic changes cannot be repeated. A second source is what he calls “headwinds.” These are structural changes in the economy that reduce actual output below the country’s technological potential and provide another reason for slow growth in living standards in the decades ahead.

The central subject in Rise and Fall is the rapid growth of output in the 1870–1970 period, followed by a period of slower growth. We must clarify that “growth” in Gordon’s view involves intensive rather than extensive expansion. Intensive growth is that of output per unit of input, also called productivity, while extensive growth refers to total output. A standard productivity measure that encompasses all inputs is called “total factor productivity” or TFP.1

What are the underlying trends? Figure 1 on this page shows the growth in total factor productivity by decade since 1890. I show two estimates to provide an idea of how robust Gordon’s conclusions are. The one labeled “Gordon” is from his Figure 16.5. The alternative measure, which I have constructed for this review, combines other sources, with private GDP for the first half of the period covered and business output for the second half.2 (The data were provided by Gordon. A shortcoming of his book is the absence of an online appendix, and in this respect it is behind best practice.)

The main result of both measures is to confirm that there was a marked slowdown in productivity growth when we compare the earlier period (1890–1970) to the latest period (1970–2014). Both series give a slowdown of 0.6 percentage points per year in productivity growth. The alternative estimate is that the growth in productivity slowed from 1.7 percent per year in the earlier period to 1.0 percent per year in the second period.

The alternative series shows a smoother increase from the 1890–1920 period to the 1920–1970 period, and then a sharp drop after 1970. Gordon makes much of the robust productivity growth during the Great Depression and World War II, but this is not apparent in the alternative series.

Productivity growth slowed sharply after 1970, with little variability from decade to decade. The slowdown has been puzzling scholars for four decades. My own view is that it is a decline from one thousand cuts. Important ones are rising energy prices, growing regulatory burdens, a structural shift from high- to low-productivity growth sectors (such as from manufacturing to services), as well as the source that Gordon emphasizes, the decline of fundamentally important inventions.

So Gordon’s basic hypothesis looks rock solid: there has been a substantial slowdown in productivity growth since the end of the special century in 1970.

It is commonplace to complain that gross domestic product does a poor job of representing true economic welfare because it omits harmful elements such as pollutionn.3 This is true. However, most readers will be surprised to learn that the major shortcoming of conventional measures is that they underestimategrowth. Moreover, according to Gordon, the understatement was arguably much larger in the special century than before or after.

Why do conventional measures understate actual improvements in living standards? Gordon gives two principal reasons. First, the growth of real income is systematically understated because of flawed price indexes. The price indexes used to convert current dollars of output into inflation-corrected or “real” output overestimate price increases and consequently understate real output growth. Second, GDP omits many aspects of economic activity that are not captured in market transactions. The common omissions are environmental degradation, leisure time, nonmarket work, and improvements in health.

We can begin with the price-index problem. For this, I take an example familiar to most people, lighting. If you were to examine the US economic accounts, you would not find a component that measures the price of lighting or the real output of lighting. Instead, you would find elements such as the price of fuel (whale oil or electricity) and the price of lighting devices (oil lamps or lightbulbs). For each of these prices, we today have carefully designed techniques for collecting prices and spending. So, you might think, by combining correctly the prices of the lighting devices and the fuels (the input prices), we might accurately track the price of producing a certain amount of light (the output price).

Or so we thought until the actual estimates were made. It turns out for lighting that the output price fell much more sharply than the input prices. We can take the example of standard incandescent lightbulbs and LEDbulbs to illustrate. Assume that we need 800 lumens to light a space (a candle produces about thirteen lumens). Suppose that we light the space for 50,000 hours. This would require about 50 incandescent bulbs and 60 watts x 50,000 hours or 3,000 kilowatt-hours (kwh) of electricity. At the current US average electricity price of ten cents per kwh, the cost of incandescent lighting over the period would be about $350 ($50 for the bulbs and $300 for the electricity). Now assume that a new technology, LED bulbs, becomes available. You can get the same illumination with one $5 six-watt LED bulb lasting 50,000 hours. When you calculate the life-cycle costs, the 800 lumens x 50,000 hours cost only $35 ($5 for the bulb + $30 for the electricity).

So the price of lighting declined by 90 percent. And—the critical point for Gordon’s story—with the introduction of LED bulbs, every $100 of expenditures on lighting produced ten times the real output. This is not an isolated example. This same quantum jump came with each improvement in lighting technologies: from oil lamps, to kerosene lamps, to incandescent, to compact fluorescent, to LED lighting. A more detailed look at the history of lighting indicates indeed that conventional measures have understated the growth in the output of lighting by a huge margin.

How do conventional measures of prices or real output treat this major change in prices and real output? They simply ignore it. More precisely, the LED bulb is “linked” to price and output indexes when it is introduced. This means that the amount or efficiency of lighting per dollar is assumed to be unchanged.

Gordon emphasizes that this tiny but revealing story about lighting is told time and again during the special century. The major inventions that revolutionized American living standards were seldom captured in the standard indexes. Examples include running water, toilets, telephones, air travel, phonographs, television, air conditioning, central heating, antibiotics, automobiles, financial instruments, and better working conditions. These tectonic shifts in technology and living standards would generally go unrecorded in “real GDP” growth and in the growth of “real wages.”

The second source of mismeasurement concerns activities that are outside the purview of standard output measures. On close examination, many of these have little effect on the growth of real output when included. For example, if you included a correction for carbon dioxide emissions, it would reduce the level of output, but such a correction would not reduce real output growth at all over the last decade.

However, one specific measurement of error makes an enormous difference—the omission of improvements in health status. Gordon has a fascinating chapter on the sharp “only once” improvements in health and life expectancy. While some of his views on the sources of improvements in health are not persuasive, his final conclusion on the importance for living standards seems justified:

A consistent theme of this book is that the major inventions and their subsequent complementary innovations increased the quality of life far more than their contributions to market-produced GDP…. But no improvement matches the welfare benefits of the decline in mortality and increase in life expectancy….

His statement refers to a strange aspect of output measurement. Suppose we lived on average fifty years, and the average consumption of housing, food, etc. rose by 10 percent. Then our measures of living standards (real GDP or real income) would rise by 10 percent. However, assume that we had the same consumption every year, but had less illness because of antibiotics, or less pain because of anesthetics, or lived twenty years longer. Then there would be no measured gain in living standards. This seems strange, but that is the way our methods for measuring output and income are designed.

There have been several studies attempting to incorporate the benefits of improved health into measures of living standards.4 These show two important points. First, including health status increases sharply the improvement in living standards over the last century. And second, this health-status bonus was larger during the special century than before or after.

In recent years, trends in average living standards interacted with rising income inequality to produce stagnant wages in the lower and middle income groups. Table 1 shows the basic trends over recent decades. The first row shows the results of the last part of the special century. The last two rows show the period of slower growth.

The column labeled “average” shows the growth in per capita, inflation-corrected, post-tax income. This shows an income slowdown that parallels the productivity slowdown, with a decline of 1.4 percentage points from the first to the third subperiod. The slowdown in the growth of real income was largely due to the slowdown in productivity growth from the special century to the more recent period.

The last three columns show how the growth was divided between the bottom fifth, the middle fifth, and the top 1 percent of the income distribution. The first subperiod was one of shared prosperity; indeed, the bottom groups fared slightly better than the top. However, in the most recent years, particularly since 2000, the decline in average income growth was further exacerbated for the lowest income groups by a declining share of the total. So, for the bottom fifth, the growth in real income declined from 3 percent at the end of the special century to essentially zero in the last fifteen years. Of this catastrophic decline, about half was due to the slower overall growth, while half was due to rising inequality. Gordon has an extensive review of the sources of rising inequality, but his emphasis on the role of declining productivity growth is an important and durable part of the story of stagnant incomes.

The last chapter of the book suggests that the US faces major “headwinds” that will continue to drag down living standards relative to underlying productivity growth. In Gordon’s account, these headwinds are rising inequality, poor-quality education, the aging population, and rising government debt. Gordon forecasts that average growth in real income per person over the next quarter-century will be 0.7 percent per year—even lower than the 1.3 percent per year in the 2000–2015 period. If inequality continues to grow, this might lead to declining incomes of the bottom part of the distribution—and therefore to true Spenglerian decline. I emphasize that these forecasts are highly speculative and contingent on many economic, fiscal, and demographic forces.

What of the future of economic growth? Here Gordon is a leading proponent of the view emphasizing the likelihood of “secular stagnation.” There are actually two variants of the stagnation. The first, emphasized by Lawrence Summers, is “demand-side”: a global savings glut along with low inflation is leading to weak aggregate demand in the high-income regions. This syndrome is consistent with zero or negative interest rates in Europe and Japan.

Gordon’s view of stagnation is “supply-side”—referring to a slackening in the growth of productivity rather than persistent weakness caused by the business cycle and high unemployment. His pessimism does not involve the neo-Malthusianism of groups like the Club of Rome, which foretold resource exhaustion, or concerns of those like Nicholas Stern, who sees future climate-driven catastrophes. Rather, Gordon’s concept of stagnation comes from his view about the slow future pace of technological change. He recognizes the perils of forecasting technological futures. But in the end he sees the slow growth of decades since 1970 shown in Figure 1—not those of the special century—as the norm for the years to come. He does not argue that returning to rapid growth is impossible. Instead, he thinks that we have exhausted the major society-changing “only once” inventions, and he sees no prospect that we will find a similar set of inventions of such breadth and depth in the near future.

In discussing the future, Gordon dissects the arguments of the technological optimists who see a growing part in the economy for robots and artificial intelligence. An extreme pole of technological futurism is a theory called “the Singularity.” As computer scientists look into their crystal ball, they foresee artificial intelligence moving toward superintelligence, which denotes intellect that is much smarter than the best human brains in practically every field, including not just games like Go but also scientific creativity, general wisdom, and social skills. At the point where computers have achieved superintelligence, we have reached the Singularity, where humans become economically superfluous. Superintelligent computers are the last human invention, as imagined by the mathematician Irving Good:

Let an ultraintelligent machine be defined as a machine that can far surpass all the intellectual activities of any man however clever. Since the design of machines is one of these intellectual activities, an ultraintelligent machine could design even better machines; there would then unquestionably be an “intelligence explosion,” and the intelligence of man would be left far behind. Thus the first ultraintelligent machine is the last invention that man need ever make.

Gordon has no sympathy for these futuristic views. Moreover, the economic data (such as those shown in the figure and table) show no trace of a coming Singularity. If anything, growth has slowed even more since the financial crisis of 2008. But as we observe that games like chess or Go are won by a computer, it seems prudent to keep an eye on the evolution of superintelligence.

To summarize, Rise and Fall is a magnificent book on American economic history of the last century and a half. This review can touch only the major themes and has necessarily skimmed over many of the fascinating discussions of individual sectors and historical episodes. If you want to understand our history and the economic dilemmas faced by the nation today, you can spend many a fruitful hour reading Gordon’s landmark study.

Notes:

1. 1
   Productivity comes in several varieties. The simplest to measure is labor productivity, or output per hour worked. However, this does not account for improvements in education, or for changes in the access of the average worker to a larger stock of more productive capital. Total factor productivity (TFP) is a more complicated concept to measure than labor productivity because it involves measuring the contribution of capital and education, as well as determining how to weigh the different inputs, but today these are standard procedures.
   
   A final detail is whether productivity relates to business output, to private output, or to total GDP (the latter also includes government output). Accurate measures are usually confined to business output because government output in such areas as education and military forces is difficult to measure and therefore these areas customarily are measured as inputs (teachers) rather than outputs (learning). Gordon generally uses the more comprehensive GDP because it is available for longer periods. It must be reemphasized that all productivity figures refer to measured output and omit the unmeasured contributions of important new and improved products discussed in Gordon’s main text. ↩
2. 2
   The alternative is a splicing of the following sources: data for the early part is total factor productivity for the private economy (private GDP), 1890–1950, from Historical Statistics of the United States, Millennial Edition(Cambridge University Press, Vol. 3, Series Cg270, Cg278). The data are based on an early study by John Kendrick in Productivity Trends in the United States (Princeton University Press, 1967). These data are used for the TFP growth rates for 1890–1900 to 1940–1950. For the period 1948–2014, I use total factor productivity for the US private business sector from the US Bureau of Labor Statistics. These are available at www.bls.gov/mfp/#tables, “Historical multifactor productivity measures (SIC 1948–1987 linked to NAICS 1987–2014).” These data are used for the TFP growth rates for 1950–1960 to 2000–2014. Note that for the two periods of overlap (1950–1960 and 1960–1970), the early (Kendrick) series and the BLS series are virtually identical. From 1948 to 1970, the private GDP TFP growth rate averaged 2.13 percent per year while the BLS series averaged 2.03 percent per year.  ↩
3. 3
   Economic statisticians have developed techniques for incorporating external effects like pollution into the measurement of national output. The method is straightforward. You would begin with a measure of the physical emissions, such as annual carbon dioxide (CO2) emissions or sulfur dioxide emissions. These would be parallel to the production of new houses, currently included in the accounts. You then multiply the quantity by a “shadow price,” which would measure the social cost of the emissions. Again, the parallel here would be multiplying the quantity of new houses by the price of the houses. Since the emissions price is a damage, or negative price, the price times quantity of emissions would be subtracted from total output.
   
   As an example, total CO2 emissions for the United States in 2015 were 5,270 million tons. The US government estimates that the social cost of emissions is $37 per ton (all in 2009 dollars). So the total subtraction is $37 x 5,270 = $195 billion. This would be a debit from the $16,200 billion of total output in that year, or slightly more than 1 percent of output. (These data are from the Bureau of Economic Analysis and the Energy Information Administration.)
   
   Note, however, that CO2 emissions declined over the decade from 2005 to 2015, from 5,993 billion to 5,270 billion tons per year. So the subtraction from GDP to correct for CO2 emissions was smaller in 2015 than in 2005. Growth of corrected GDP was therefore a tiny bit higher after correcting for CO2 emissions than before the correction. To be precise, after correction, the real growth rates over the 2005–2015 period would be 1.394 percent per year using the corrected figures instead of 1.385 per year using the official figures.So correcting for CO2 emissions would lower the estimate of output, but would raise by a tiny amount the estimate of growth. ↩
4. 4
   Studies on the impact of adding health to the national economic accounts include an early example from William Nordhaus, “The Health of Nations,” in Measuring the Gains from Medical Research: An Economic Approach, edited by Kevin Murphy and Robert Topel (University of Chicago Press, 2010).  ↩

Um livro sobre os progressos economicos nos EUA, desde 1870, um modelo para o Brasil - Book review

Trata-se de uma obra de largo escopo, num modelo que poderia ser adotado pelo IPEA para analisar também onde o Brasil avançou, e onde precisamos avançar.
Um modelo, talvez, de metodologia analítica para ser reproduzido aqui também.
Paulo Roberto de Almeida

Robert J. Gordon:
The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War.  
 Princeton, NJ: Princeton University Press, 2016. vii + 762 pp. $40 (cloth), ISBN: 978-0-691-14772-7.

Reviewed for EH.Net by Robert A. Margo, Department of Economics, Boston University.

This is the age of blockbuster books in economics. By any metric, Robert Gordon’s new tome qualifies.  It tackles a grand subject, the productivity slowdown, by placing the slowdown in the context of the historical evolution of the American standard of living.  Gordon, who is the Stanley G. Harris Professor in the Social Sciences at Northwestern University, needs no introduction, having long been one of the most famous macroeconomists on planet Earth.

The Rise and Fall of American Growth is divided into three parts.  Part One (chapters 2-9) examines various components of the standard of living, in levels and changes from 1870 to 1940.  Part Two (chapters 10-15) does the same from 1940 to the present, maintaining the same relative order of topics (e.g. transportation appears after housing in both parts).  Part Three (chapters 16-18) provides explanations and offers predictions up through 2040.  There are brief interludes (“Entre’acte”) between parts, a Postscript, and a detailed Data Appendix.

Chapter 1 is an overview of the focus, approach, and structure of the book.  Gordon’s focus is on the standard of living of American households from 1870 to the present.  The approach is both quantitative — familiar to economists — and qualitative — familiar to historians.  As already noted, the organization is symmetric — Part One considers the pre-World War II period, and Part Two, the post-war.  The fundamental point of the book is that that some post-1970 slowdown in growth was inevitable, because so much of what was revolutionary about technology in the first half of the twentieth century was revolutionary only once.

Chapter 2 draws a bleak picture of the standard of living ca. 1870, the dawn of Robert Gordon’s modern America.  From the standpoint of a household in 2016, conditions of life in 1870 would appear to be revolting.  The diet was terrible and monotonous to boot; homemade clothing was ill-fitting and crudely made; transportation was dependent principally on the horse, which generated phenomenal amounts of waste; indoor plumbing was all but non-existent; rural Americans lived their lives largely in isolation of the wider world.  In Gordon’s view, much of this is missing from conventional real GNP estimates.  Chapter 3 continues the initial story, focusing on changes in food and clothing consumption.  Gordon contends there was not much change in underlying quality but he argues that, by the 1920s, consumers were paying lower prices for food — having shifted to lower-priced sources (chain stores as opposed to country merchants) — and that most clothing was store-bought rather than homemade.

Chapter 4 studies housing quality.  As with other consumer goods, housing also improved sharply in quality from 1870 to 1940.  Gordon argues that much farm housing was poor in quality, while new urban housing was typically larger and more durably built.  Indoor plumbing, appliances and, ultimately, electrification dramatically enhanced the quality of life while people were indoors.  As elsewhere in the book, reference is made to hedonic estimates of the value of these improvements as revealed in higher rents. Chapter 5 details improvements in transportation between 1870 and 1940. These are grouped into three categories.  The first is improvement in inter-city and inter-regional transportation in rail.  This occurs chiefly through improvements in the density of lines and in the speed of transit. The second is intra-city which occurred with the adoption of the electric streetcar.  The third, and most important arguably, is the internal combustion engine and its use in the automobile (and bus).  Gordon especially highlights improvements in the quality of automobiles, noting that the car is not reflected in standard price indices until the middle of the Great Depression.

Chapter 6 details advances in communication from 1870 to 1940.  By current standards, the relevant changes — the telegraph, telephone, the phonograph, and the radio — might not seem like much but from the point of view of a household in 1870, these technologies enabled Americans to dramatically reduce their isolation.  As Gordon points out, one could phone a neighbor to see if she had a cup of sugar rather than visit in person, or listen to Enrico Caruso’s voice on the phonograph if it were not possible to hear him in concert.  The radio brought millions of Americans into the national conversation, whether it was to hear one of Franklin Roosevelt’s fireside chats or listen to a baseball game.  Chapter 7 discusses improvements in health and mortality from 1870 to 1940 which, according to Gordon, were unprecedented.  After summarizing these, he turns to causes, chief among which are improved urban sanitation, clean water, and uncontaminated milk.   Gordon also highlights improvements in medical knowledge, particularly the diffusion (and understanding) of the germ theory of disease.  Chapter 8 studies changes in the quality of work from 1870 to 1940.  These changes were wholly for the better, according to Gordon.  Work became less dangerous, more interesting, and more rewarding in terms of real wages.  Most importantly, there was less working per se, as weekly hours fell, freeing up time for leisure activity.  There was a marked reduction in child labor, as children spent more of their time in school, particularly at older ages in high school.   This was also the period leading up, as Claudia Goldin has told us, to the “Quiet Revolution” in the labor force participation of married women, which was to increase substantially after World War II. Credit and insurance, private and social, is the topic of Chapter 9.  The ability to better smooth consumption and also insure against calamity are certainly improvements in living standards that are not captured by standard GNP price deflators.  Initially the shift of households from rural to urban areas arguably coincided with a decrease in consumer credit but by the 1920s credit was on the rise due to several innovations previously documented by economic historians such as Martha Olney.   Households were also better able to obtain insurance of various types (e.g. life, fire, automobile); in particular, loans against life insurance were frequently used as a source for a down payment on a house or car.  Government contributed by expanding social insurance and other programs that helped reduced systemic risks.

Chapter 10 begins the second part of the book, which focuses on the period from 1940 to the present.  As noted, the topic order of Part Two is the same as Part One, so Chapter 10 focuses on food, clothing, and shelter.  Gordon considers the changes in quality in these dimensions of the standard of living to be less monumental than as occurred before World War II.  For example, frozen food became a ubiquitous option after World War II but this change is far less important than the pre-1940 improvement in the milk supply.  Quantitatively, perhaps the most important change was a reduction in relative food prices which, predictably, led to increase in the quantity demanded.  Calories jumped, and so did obesity and many related health problems.  For clothing, the chief difference is in the diversity of styles and, as with food, a sharp reduction in relative price holding quality constant.  In Chapter 11 Gordon notes that automobiles continued to improve in quality after World War II, mostly in terms of amenities and gas mileage; and their usefulness as transportation improved with the building of the interstate highway system.  Gordon is less sanguine about air transportation, arguing that quality of the travel experience deteriorated after deregulation which was not offset by reductions in relative prices.  For housing, the major changes was suburbanization and a concomitant increase in square footage.  The early postwar period witnessed some sharp improvements in the quality of basic household appliances, and somewhat later, the widespread diffusion of air conditioning and microwaves.

Chapter 12 focuses on media and entertainment post-1940.  Certain older forms of entertainment gave way to television, the initial benefits of which were followed by steady improvements in the quality of transmission and reception.  Similarly, there were sharp improvements in the various platforms for listening to music, with substantial advances in recording technology and delivery — the 78 gave way to the LP to the CD to music streaming and YouTube.  The technology to deliver entertainment also delivered the news in ever greater quantity (quality is in the eye of the beholder, I suppose).  Americans today are connected almost immediately to every part of the world, a level of communications unthinkable a century ago.  A surprisingly brief Chapter 13, recounts the history of the modern computer.  There is no way to tell this history without emphasizing just how unprecedented the improvements have been, from the very first post-war computers to today’s laptops and supercomputers.  Moore’s Law, understandably, takes center stage, followed by the Internet and e-commerce.   Gordon has a few negative things to say about the worldwide web, but the main act — why haven’t computers led a revolution in productivity — is saved for later in the book.

Chapter 14 continues the story of health improvements to the present day.  As everyone knows, the U.S. health care system changed markedly after World War II, in terms of delivery of services, organization, and payment schemes.  Great advances were made in cardiovascular care and treatment of infectious disease through the use of antibiotics.   There were also advances in cancer treatment, mostly achieved by the 1970s; the subsequent “war” on cancer has not been as successful.  Most of the benefits were achieved through diffusion of public health and expansion of health knowledge in the general public (e.g. the harmful effects of smoking).  Since 1970 the health care system has shifted to more expensive, capital intensive treatments primarily provided in hospitals that have led to an inexorable growth in medical care’s share of GNP, increases that most scholars agree exceed any improvements in health outcomes.  The chapter concludes with a mixed assessment of Obamacare.  Chapter 15, on the labor force, is also rather short for its subject matter.  Gordon recounts the major changes in the structure and composition of work since World War II.  Again, it is a familiar tale — improved working conditions due to the shift towards the service sector and “indoor” jobs; rising labor force participation for married women; rising educational attainment, at least until recently; and the retirement revolution.  Your faithful reviewer gets a shout-out in a brief discussion of the “Great Compression” of the 1940s; my collaborator in that work, Claudia Goldin (and her collaborator, Lawrence Katz) gets much more attention for her scholarly contributions on the subject matter of Chapter 15, understandably so.

Part Three addresses explanations for the time series pattern in the standard of living.  Chapter 16 focuses on the first half of the twentieth century, which experienced a marked jump in total factor productivity (TFP) growth and the standard of living.  Gordon considers several explanations, dismissing two prominent ones — education and urbanization — right out of the gate.   In paeans to Paul David and Alex Field, he argues that the speed-up in TFP growth can be attributed to the eventual diffusion of key inventions of the “Second” industrial revolution, such as electricity; to the New Deal; and, finally, to World War II.  Chapters 17 and 18 tackle the disappointing performance of TFP growth and the standard of living in the last several decades of U.S. economic history.  Despite remarkable accomplishments in science and technology the impact on average living standards has been small, compared with the 1920-70 period.  Rising inequality since 1970, which can be tied in part to skill-biased technical change, has made matters worse, as did the Great Recession.  While Gordon is not all doom and gloom, he definitely falls on the pessimist side of the optimist-pessimist spectrum — his prediction for labor productivity growth over the 2015-40 period is 1.2 percent per year, a full third lower than the observed rate of growth from 1970 to 2014.

I think it is next to impossible to write a blockbuster economics book without it being a mixed bag in some way or other.  Gordon’s is no exception.  On the plus side, the book is well written, and one can only be in awe of Gordon’s mastery of the factual history of the American standard of living.  We all know macroeconomists who dabble in the past.  Gordon is no dabbler.  One can find interesting ideas for future (professional-level) research in every chapter — graduate students in search of topics for second year or job market papers, take note.  Many previous reviewers have chided Gordon for his pessimistic assessment of future prospects.  Of course, no one knows the future, and that includes Gordon.  It is certainly possible that he will be wrong about productivity growth over the next quarter-century — but I for one will be surprised if his prediction is off by, say, an order of magnitude.

I am less sanguine about the mixed qualitative-quantitative method of the book.  I gave up reading the history-of-technology-as-written-by-historians-of-technology a long time ago because it was just one-damn-invention-after-another.  At the end of a typical article recounting the history of improvements in, say, food processing, I was supposed to conclude that no amount of money would get me to travel back in the past before said improvements took place — except I never did reach this conclusion, knowing it to be fundamentally wrong.  Despite references to hedonic estimation, TFP, and the like, in the end Gordon’s book reads very much like conventional history of technology.  More than a half century ago Robert Fogel showed how one could quantify the social savings of a particular invention, thereby truly advancing scholarly knowledge of the treatment effects. Yet Railroads and American Economic Growth is not even cited in Gordon’s bibliography, let alone discussed in the text.  If one’s focus is the aggregate, I suppose a Fogelian approach is impossible — there are too many inventions, and (presumably) an adding-up problem to boot.  What exactly, though, do we learn from going back and forth between quantitative TFP and qualitative one-damn-invention-after-another? I’m not sure.  There’s the rub, or rather, the tradeoff.

Criticisms aside, if you are into economics blockbusters, The Rise and Fall of American Growth belongs on your bookshelf, next to Piketty and the like.  Just be sure it is a heavy-duty bookshelf.

Robert A. Margo’s Economic History Association presidential address, “Obama, Katrina, and the Persistence of Racial Inequality,” was published in the Journal of Economic History in June 2016.

Copyright (c) 2016 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (July 2016). All EH.Net reviews are archived at http://eh.net/book-reviews/

The Next Great War?: USA vs China? - Introduction to the book, Steven Miller

"The Sarajevo Centenary—1914 and the Rise of China"

Introduction

Book Chapter, The Next Great War? The Roots of World War I and the Risk of U.S.-China Conflict, pages ix-xxiii

December 2014

Author: Steven E. Miller, Director, International Security Program; Editor-in-Chief, International Security; Co-Principal Investigator, Project on Managing the Atom

Belfer Center Programs or Projects: International Security

NOTE

Steven E. Miller's introduction to The Next Great War? The Roots of World War I and the Risk of U.S.-China Conflict appears below in an excerpted version.

The drama of 1914 draws our gaze backward, but an equally haunting question arises if we look ahead: Could 1914 happen again? Could the forces and factors that put the great powers on what turned out to be an unstoppable path to war operate in our own time? If there is to be a great power conflict in the era ahead, it seems most likely that this will involve a rising China challenging a predominant America. Could there be a 1914 redux between these two powerful states?

The analyses that follow highlight or reveal at least as many differences as similarities; 2014 does not wholly resemble 1914. Many of the factors that are thought to have contributed to the outbreak of war in 1914 do not exist today. In particular, many of the intellectual and internal pathologies that made war more likely and made the crisis difficult to resolve peacefully are absent from the current environment. Put simply, many of those making fateful choices in 1914 (as well as the elites around them and the publics they governed) were influenced by a toxic stew of pernicious beliefs. Bad ideas fed bad decisions, which led to war in 1914. The bad ideas flourished in various domestic settings and were incorporated into the worldview of dominant domestic coalitions in several key countries.

The 1914 analogy is clearly an imperfect framework for assessing U.S.-China relations, but nevertheless war between Washington and Beijing remains possible. Full recreation of the environment of 1914 is not a prerequisite for war. Further, some lessons from the outbreak of World War I do seem at least potentially relevant today and identify sources of worry and grounds for vigilance. On the international level, the stage is clearly set for rivalry. If U.S.-China relations turn significantly more hostile and competitive, there is a clear potential for arms racing, for destructive diplomatic maneuvering, for Cold War, and for conflict. In a more toxic environment, one of Asia’s many potential flash points could ignite a war; the United States’ alliances make it likely that Washington will be involved.

As the years leading up to 1914 demonstrate, adapting to shifts in the balance of power is difficult and can lead to a pattern of repeated crises as challengers seek to upend the status quo and claim a larger role in international politics while the dominant powers act to protect their place in the international hierarchy. Managing relations between rising and declining powers is particularly fraught with risk and danger.

It is not hard to see how U.S.-China relations could go badly wrong: the potential for much more intense hostility and military competition clearly exists. These considerations imply that particular care should be taken in tending this relationship and that every effort should be made to avoid the mistakes and pitfalls of the past.

One of the most troublesome aspects of the international order in 1914 is partially reproduced today. If there is one warning that particularly leaps out from the pages of this volume, it is the danger of entrapping alliances. The most likely route to war with China is via a dispute involving one or more of the United States' Asian allies. This is not a purely hypothetical danger. Asia's many territorial disputes, on both land and sea, are potential flash points. Japan and China are feuding over disputed North Pacific islands. Taiwan and China remain stalemated. Confrontations and crises have already happened and more are likely. There could well emerge a pattern of recurrent crises, as was true in the decade before 1914. If crises are handled without escalation, complacency could set in. But if such crises gradually grown more malignant, more difficult to handle; mistakes could be made; and complacency could turn out to be a glide path to war.

Many of the factors that seem in retrospect to have facilitated war in 1914 had been present for years or decades without producing war, so the war that came was in some sense a surprise, was in some sense unexpected. In a similar manner, war with China seems unlikely. There are strong arguments (economic and otherwise) for preserving the peace. The relationship between Washington and Beijing has its ups and downs, but overall relations are not that bad and contain some reassuring elements of consultation and cooperation. There are occasional crises in Asia (involving sovereignty over island and maritime boundary disputes, for example) but these are handled without recourse to war. As was true in the first half of 1914, one could justify the conclusion that we should expect some "unremarkable years" ahead. But corrosive factors lurk in the background: the perilous dynamic between the predominant and the challenger, the arms race pressures, the web of alliances that connects the United States to potential conflicts in Asia and to allies who want to harness American power to advance their claims in the region, the flash points across Asia that could, in the manner of a remote assassination in the Balkans, ignite a wider war. If war were to come, no doubt many would look back and say it was inevitable, it was predicted, the signs were there, the pressures were understood, there were so many war-promoting factors that it was impossible to preserve the peace.

It will matter enormously whether U.S.-China relations are managed wisely or poorly. There are many in the American debate who favor a primarily competitive response to the rise of China, seeking to preserve and maximize American primacy while encircling and containing China. In this volume we find instead—in the analyses of Alexandroff, Rudd, and Rosecrance, for example—the argument that the wise course involves bringing China closer, drawing it into shared institutions, making it a partner in the provision of international public goods, building strategic trust, preserving and strengthening lines of communication between the two potential antagonists. But even if one accepts that this is the wise course—and clearly many will not—surely one of the lessons of 1914 is that wisdom does not always prevail. To make their way to war, leaders in Washington and Beijing do not have to echo the beliefs and reproduce the realities and mistakes of 1914. They can invent their own flawed beliefs and make their own mistakes.  

For more information about this publication please contact the ISP Program Coordinator at 617-496-1981.

For Academic Citation:

Miller, Steven E. "The Sarajevo Centenary—1914 and the Rise of China." Chap. Introduction in The Next Great War? The Roots of World War I and the Risk of U.S.-China Conflict. Cambridge, Mass.: MIT Press, December 2014.

U.S. Intelligence with a lack of... Intelligence? - Foreign Policy

Percorrendo o noticiário internacional nesta manhã, encontro esta "pérola" no site da Foreign Policy:

U.S. Intelligence No Closer to Pinning MH17 Downing on Russia
by Shane Harris
 Foreign Policy, July 23, 2014
Five days after Malaysia Airlines Flight 17 was shot down over eastern Ukraine, U.S. intelligence officials are still not certain who fired the missile that felled the doomed airliner, nor have they conclusively linked the attack to Russian military forces, according to senior intelligence officials.

Não sei se é auto-ironia, ou apenas excesso de zelo com os cuidados que se deve ter com o novo czar do Kremlin, mas algumas perguntas são de rigor:
Os "rebeldes" pró-russos do leste da Ucrânia dispunham de baterias anti-aéreas ou de mísseis sofisticados quando se "rebeleram"?
Eles compraram esses artefatos no mercado livre de armas?
Sua intenção é formar um novo estado independente, tipo Ucrânia oriental, ou Ucrânia russa?
Onde estão os radares que certamente seguiram a trajetória de todos os objetos voadores no fatídico dia do acidente?
Por que não começar respondendo essas questões?
A Inteligência americana sofreu um apagão?
Paulo Roberto de Almeida

PS.: Quase todos os países que contam na comunidade internacional soltaram notas e enviaram pêsames aos governos da Ucrâna, da Malásia, dos Países Baixos, pela tragédia. Ainda não vi nada no gênero vindo do Brasil. Estamos esperando o final das investigações para dar pêsames?

EUA a caminho do desastre europeu: cada vez mais dependentes do Estado

The New Welfare Map

                                                         

11 States of the USA now have More People on Welfare than they do Employed! Last month, the Senate Budget

Committee reports that in fiscal year 2012, between food stamps, housing support, child care, Medicaid and other benefits, the average U.S. Household below the poverty line received $168.00 a day in government support.

What's the problem with that much support? Well, the median household income in America is just over $50,000,

which averages out to $137.13 a day.To put it another way, being on welfare now pays the equivalent of $30.00 an hour for a 40-hour week, while the average job pays $20.00 an hour. 

*************************************

Furthermore:
There are actually two messages here. The first is very interesting, but the second is absolutely astounding - and

explains a lot. 

A recent "Investor's Business Daily" article provided very interesting statistics from a survey by the United Nations

International Health Organization. 

Percentage of men and women who survived a cancer five years after diagnosis:

U.S. 65%
England 46%
Canada 42%

Percentage of patients diagnosed with diabetes who received treatment within six months:

U.S. 93%
England 15%
Canada 43%

Percentage of seniors needing hip replacement who received it within six months:

U.S. 90%
England 15%
Canada 43%

Percentage referred to a medical specialist who see one within one month:

U.S. 77%
England 40%
Canada 43%

Number of MRI scanners (a prime diagnostic tool) per million people:

U.S. 71
England 14
Canada 18

Percentage of seniors (65+), with low income, who say they are in "excellent health":

U.S. 12%
England 2%
Canada 6%

*************************************
And now..for the last statistic:

National Health Insurance?

U.S. NO
England YES
Canada YES
*************************************
Check the last set of statistics!!

The percentage of each past president's cabinet... who had worked in the private business sector...prior to their

appointment to the cabinet. You know what the private business sector is; a real-life business...not a government

job.Here are the percentages. 

T. Roosevelt................38%
Taft.............................40%
Wilson .......................52%
Harding.......................49%
Coolidge......................48%
Hoover.........................42%
F. Roosevelt.................50%
Truman........................50%
Eisenhower..................57%
Kennedy.......................30%
Johnson.......................47%
Nixon............................53%
Ford.............................42%
Carter...........................32%
Reagan........................56%
GH Bush......................51%
Clinton ........................39%
GW Bush.....................55%
Obama............... 8%

This helps explain the incompetence of this administration: 

ONLY 8% of them...have ever worked in private business! 

That's right! Only eight percent---the least, by far, of the last 19 presidents!And these people are trying to tell our big corporations...how to run their business?

How can the president of a major nation and society...the one with the most successful economic system in world history, stand and talk about business...when he's never worked for one? Or about jobs...when he has never really had one? And, when it's the same for 92% of his senior staff and closest advisers?They've spent most of their time in academia, government, and/or non-profit jobs.Or...as "community organizers."

Nafta, 20 anos depois: nem sucesso, nem fracasso - BusinessWeek

Nafta 20 Years After: Neither Miracle nor Disaster

By Mark Glassman BusinessWeek, December 30, 2013

---

      

Photograph by David Maung/Bloomberg

Cargo trucks entering the United States from Mexico in 2011

Bill Clinton made the North American Free Trade Agreement a cornerstone of his 1992 presidential campaign, saying it would help level the playing field for U.S. businesses trying to sell their products abroad. Candidate Ross Perot predicted Nafta would result in “a giant sucking sound going south”—the sound of American manufacturing jobs and factories being funneled into Mexico.

Nafta went into effect on Jan. 1, 1994, which now gives us 20 years’ worth of data on economic growth, trade volume, and employment to figure out who was right. The bottom line? Nafta has been neither as good as Clinton promised nor as bad as Perot warned.

Let’s start with the most basic measure of economic growth: gross domestic product. Since 1993, the year before Nafta was enacted, U.S. GDP has grown about 63 percent, while Canadian and Mexican GDP have grown 66 percent and 65 percent, respectively, according to data compiled by the Organization for Economic Cooperation and Development. Those tightly clustered growth rates are significantly better than the industrialized nations of the Organization for Economic Cooperation and Development as a whole; their composite GDP has grown about 53 percent since Nafta.

Of course, plenty of factors have contributed to North American economic growth, and Nafta’s direct impact on GDP is difficult to measure. However, the Congressional Budget Office estimated (PDF) in 2003 that the impact had probably been positive, if slight, and that it had grown consistently since the agreement was enacted.

BLOG: The U.S. Needs Tourists. Why Make Visiting So Hard?

Let’s move on to what Nafta was specifically designed to do: encourage trade. In the early ’90s, the Clintonites promised that free trade would create a more favorable environment for the U.S. to sell its goods and services. Since 1993, U.S. exports to Canada and Mexico have climbed 201 percent and 370 percent, respectively.

Exports are only half of the trade equation. Nafta’s supporters said it would also trigger a rise in imports, leading to lower-priced goods and services for consumers and more competitive companies. Since 1993, the value of imports into the U.S. from Canada and Mexico has jumped by 194 percent and 621 percent, respectively.

Protectionists argued that the disparity between imports and exports was cause for concern because it could put pressure on U.S. companies to lower prices in order to compete in an oversaturated market.

The U.S. trade deficit with Mexico has grown dramatically since Nafta—from a trade surplus of $4 billion in 1993 to a deficit of $54 billion in 2012. Yet in most industries, corporate profit margins have risen over that period. Recently, the U.S.’s deficits with Mexico and Canada have contracted as export growth has accelerated.

As with economic growth, it’s difficult to say with certainty how much of the rise in trade between the U.S. and the other nations is directly attributable to Nafta. Trade liberalization among the U.S., Canada, and Mexico was already underway, and economists say the economic cycle plays a significantly larger role in determining trade volume than Nafta does. In its 2003 report, the CBO found Nafta’s effect on trade had been positive and that had grown in each year since the agreement was enacted. The CBO also concluded that Nafta had wielded a larger effect on U.S. exports than imports.

So what about Perot’s big fear, the labor market? Estimates of Nafta’s effect on U.S. payrolls vary wildly and depend on methodology. Here’s an unfavorable statistic: Today, there are 12 million manufacturing jobs in the U.S., down from about 17 million when Nafta was enacted.

Of course, to lay all the blame on Nafta would be to ignore a fundamental shift in the makeup of the global labor force. Relatively lax labor laws and lower wage requirements have moved a significant portion of the world’s factories to China and India since Nafta.

The Economic Policy Institute, a left-leaning think tank based in Washington, estimates that Nafta was responsible for the loss or displacement of more than half a million American jobs, mainly in manufacturing. Some Nafta supporters say certain job losses were inevitable but that the agreement was so broadly stimulative that the net effect on employment was either negligible or positive. (For what it’s worth, total U.S. employment is up about 22 percent since Nafta was enacted.)

What do you think? Was Nafta good or bad for the U.S.? Share your thoughts in the comments below.

USA and the Syria question: much ado (from Obama) about nothing - Max Fisher (WP)

Why Obama’s big U.N. speech on Syria was so awkwardly inconsistent

By Max Fisher, The Washington Post Blog: September 24, 2013

In his address to the United Nations on Tuesday, President Obama did his best to rally the organization to action on Syria. His case was forceful but, at moments, the logic seemed strained, even contradictory. And it was all made a bit awkward by the fact that Obama's urgent call to action came more than two years into the war, after two far milder U.N. addresses.

There were two contradictions in Obama's comments to the United Nations on Syria. The first was with the Obama of General Assemblies past, who espoused a very different view of the war and how to handle it. Previously, Obama had not advocated any of the military and diplomatic actions that, today, he declared so vital that failing to pursue them could undermine the legitimacy of the United Nations itself. The second contradiction was in Obama's two goals in Syria – punishing Assad for his chemical weapons and ending the war – which he framed as complimentary even though they would appear to work at cross-purposes.

This gets to the bigger, underlying contradiction: Obama has a habit of conflating his case for punishing chemical weapons use with his case for ending the war, and says we can do both at the same time. But he advocates contradictory actions in pursuit of those two goals.

To be clear, this is not to argue that Obama is hypocritical or somehow dishonest. But he's got a very tough needle to thread: he's trying to rally an action-resistant United Nations into very difficult and unpopular action; he's also trying to push it toward two very different forms of action. Those are really difficult goals. That Obama is back-bending through some less-than-consistent rhetoric is a sign of just how difficult.

Still, the shift in Obama's position is revealing. Just one year ago, in his United Nations General Assembly speech, Obama said of Syria only that "we must stand with those Syrians who believe in a different vision." The war, at that point, was already horrifically violent; President Bashar al-Assad's forces had not used chemical weapons but they had committed plenty of the slaughter that Obama cited today as cause for action. Yet, in his previous addresses, he'd made no call for action, no declaration that the "legitimacy" of the U.N. was on the line, as he argued today.

If the United Nations Security Council failed to pass a sufficiently tough resolution to force Assad to give up his chemical weapons, Obama warned, "then it will show that the United Nations is incapable of enforcing the most basic of international laws." Those are pretty high stakes, after two years of relative U.S. inaction on Syria, despite tens of thousands killed. Obama's prior U.N. addresses since the war began, in 2011 and 2012, somewhat undermined his big call to action today. In those two speeches, he did not demand U.N. action – nor pledge any concrete U.S. steps.

You could argue that Assad's alleged use of chemical weapons on Aug. 21 changed all that, justifying Obama's radically different approach. But Obama, in making his case for action today, cited not just chemical weapons growing sectarianism, the danger of regional destabilization, extremism and the larger human costs of the war. Those were all present a year ago. And Obama argued for specific action not just to end chemical weapons but to end the war itself – which did not seem to merit the same sort of response for him last year.

On paper, Obama's two overriding goals in Syria are actually pretty straightforward. First, he wants to uphold the international norm against the use of chemical weapons, which he believes Assad violated by using chemical weapons against civilians on Aug 21. Second, he wants for Assad to step down voluntarily as part of a negotiated peace deal with the rebels that would also leave elements of Assad's government intact.

The problem comes when Obama explains how to achieve those goals. He told the United Nations today that the threat of force could compel Assad to give up his chemical weapons, but that actual military force could not end the war. He argued, on the one hand, "I do not believe that military action by those within Syria or by external powers can achieve a lasting peace." On the other, he said that only the threat of military strikes had compelled Assad to accept the chemical weapons deal.

One might reasonably conclude, taking Obama's arguments at face value, that the world would have to pursue these goals separately. At one point, it would have to pick: threaten and maybe use force to get rid of the chemical weapons, or instead of force pursue a diplomatic peace deal.

The problem, though, is that Obama has linked his two pursuit, saying that the one complements the other. "Our agreement on chemical weapons should energize a larger diplomatic effort to reach a political settlement within Syria," he said. That's a bit of a contradiction: military force would undermine a peace deal, but it would force Assad to give up his chemical weapons and thus "energize" a peace deal.

How do you square that circle? Some hawkish analysts argue that Obama should use a credible threat of military action, or military action itself, to compel Assad to the negotiating table, just as that action compelled Assad to volunteer his chemical weapons. More dovish analysts would say that strikes should be off the table in both cases. Others might suggest that the goal of ending the war is simply out of Obama's reach and that, if he were brutally honest, he would drop it from his speeches. Those are all reasonable and internally consistent cases. But perhaps they're not what Obama believes can sell at the United Nations this year.

Max Fisher is the Post's foreign affairs blogger. He has a master's degree in security studies from Johns Hopkins University. Sign up for his daily newsletter here. Also, follow him on Twitter orFacebook.