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Congress allegedly agreed on a budget plan last night. The great thing about this plan is that both sides can blame the other when the economy continues its long march into the crapper. Conservatives will say we didn't cut the budget enough. Liberals will say the decrease in government spending will choke off growth and make things worse. Who's right?

Democrats like to point to the Clinton era as proof that the economy can flourish even as taxes are increased. But how would things have fared in the Clinton years without the Dotcom bubble? Beats me. You don't know either.

Economies usually find their direction from large, unpredictable events, such as wars and other disasters, moving from communism to capitalism, huge demographic shifts, and irrationality that leads to economic bubbles. For any given ten-year period, luck is the biggest driver of a nation's economy. But what single factor is most predictive of, say, a nation's fifty-year economic direction? I think it's the L-to-E ratio (lawyers-to-engineers).

My hypothesis is that the best indicator of long term economic health is the number of engineers a country produces relative to the number of lawyers. A country that is cranking out more engineers than lawyers will trend up. A country that is moving toward a lawyer-heavy economy will grind to a stop.

This idea is nothing more than a wordy way of saying, "To a man who only has a hammer, everything looks like a nail." Engineers build stuff and lawyers sue people. If we assume both professions like to stay busy all the time, you need more engineers than lawyers to create net growth. And I think you'd agree that the countries with the best engineers also win wars and survive disasters the best.

I tried and failed to Google some statistics to back up my hypothesis. Anecdotally, the idea seems about right. I can't think of a country with a strong economy that isn't also known for its engineering prowess.

Some of you will argue that education in general is the biggest predictor of success. But I think you'd agree that if everyone started majoring in English, we'd all starve to death with impeccable grammar.

My take on the budget compromise is that any budget that doesn't kill us right away will be good enough. Our economic fate is primarily in the hands of engineers.  And when our collective cynicism reverts back to its baseline, maybe we'll be lucky enough to have another economic bubble. I hope so. I enjoy those while they last.
 
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Aug 26, 2011
This place has become a giant spamfest.

Find an engineer and get this fixed.
 
 
Aug 13, 2011
I thought of this when I saw the brilliant xkcd comic about computer passwords. We've made them hard for humans to remember and easy for computers to guess, when of course the desired result is exactly the opposite. We can't live without engineers. On the other hand, sometimes they forget the people who use their work are human.
 
 
Aug 8, 2011
I always thought about this during my college years but never made the point publicly fearing it might offend others.
 
 
+11 Rank Up Rank Down
Aug 5, 2011
I'm an engineer in the UK and we are paid starvation wages while the lawyers (even the bad ones) get paid millions. The bankers are off the scale. The UK used to be a great power thanks to it's engineering prowess but now we are a second rate pile of hand-wringing liberals worrying about what everyone else thinks of us. Is there a correlation?
 
 
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Aug 4, 2011
EMU, If you think engineers don't steal from each other, you are either very naive or don't know many engineers.
 
 
Aug 3, 2011
Hey, since the word avocado and abrogado sound alike and abrogado means lawyer in Spanish. I think you should make a character shaped like an avocado with a big moustache that is a lawyer. He shows up and people suddenly freeze because they are afraid to move or speak because he is also a patent troll and has patented the act of speaking, breathing and moving your limbs. Or something like that.
 
 
+2 Rank Up Rank Down
Aug 3, 2011
I am married to a lawyer, so the best I could do it keep L:E at 1:1.

However, I will be starting a new career in teaching high school math or science. Hopefully I will affect the L:E ratio in the right direction.
 
 
+3 Rank Up Rank Down
Aug 3, 2011
The real problem is that the majority of politicians (and judges for that matter) are lawyers. Essentially they have a monopolistic control on their own product, the law and its interpretation. Its like an engineer with the ability to control the laws of physics.

I do think that you may see a problem with a government that is run by engineers which is somewhat apparent with the Chinese system which is engineers have a very difficult time including the human variable into their equation. They will probably find at some point that it will bite them in the ass. They have been sucessful up to this point using the engineering solution of hit them with bullets and tanks whenever there is a problem. The race is currently on to see if they can remove a significant portion of human emotion and illogic from their population before their society blows up.
 
 
Aug 3, 2011
Had to laugh at the First4Lawyers banner add that pops up with this blog. Do they think advertising beside an item slagging lawyers was a good idea?
 
 
Aug 3, 2011
"But what single factor is most predictive of, say, a nation's fifty-year economic direction?"

I would say it is a function of how much a country's government has artificially distorted the economy. The less the distortion, the more robust the economy.

Governments generally distort the economy by transferring the monetary decision making powers from the public (the individuals) unto themselves. Once a government takes away an individual's discretion over how best to use his money, it takes away the disciplinary power of a myriad of small economic decisions taken by millions of people and the economy gradually goes into a tailspin.

An extreme example of this is the Communists thinking that they did not need a free market at all, and could make everybody equally rich (or poor).

Other minor examples might be the a country's healthcare system, if it is made completely free for the public (which effectively removes the public from the monetary decision making process), or a state-funded pension system that determines payout indiscriminately, rather than making each individual responsible for his own retirement corpus. Any sort of legislated price controls, etc also distort the economy.

Other things remaining equal, the less a country's government is involved in the day-to-day financial life of its citizen, the more robust the country's economy is likely to be. A simple thumb rule may be that the less a government taxes its citizens, the more robust the economy.
 
 
-1 Rank Up Rank Down
Aug 3, 2011
Scott,

Thank you for promoting conversation about differences between the creation of wealth and the distribution of wealth. Here are a few thoughts that might help with concerns about the economy:

a) Everything is driven by demographics. Specifically, the baby boom, that is a ripple effect from WWII, drives economic activity in different sectors of our economy as it progressively ages.

b) The economies with the most flexible work forces do well as demand shifts by sector and geography. The unemployment rate observed in Mexico is half that observed in the United States.

c) The time constant between the end of the Civil War and the beginning of Great Depression is the same as the time between the end of WWII and the begging of this depression.

If you picture the banking industry ramping off of the back edge of the baby boom, in the same way that Wile E Coyote goes off a cliff in his quest for that bird… All that TARP money went to making his legs spin trying to get traction on a market that was suddenly much smaller and over served.

So skill in redirecting the workforce as others have pointed out is key. There are proven changeover techniques from production engineering that could go a long way toward improving our economy. Mexico might have more production engineers than the United States has.

Ed

By the way, if you know Steve Jobs, some of these proven production-engineering techniques, if integrated into iOS, could reduce the size and the cost of the garage he is building at his new facility by half. Once in the OS and demonstrated, iOS would dominate the corporate smart phone market because of a better business case. Once adopted, the cost savings with fast changeover techniques at the core of the OS would make a real difference in our economy.

Thank you for associating mobile communications and economic improvement. There is room for an order of magnitude improvement in the economic contribution from that technology.
 
 
-1 Rank Up Rank Down
Aug 3, 2011
Scott,

Where do patent lawyers fit into that equation? They are trained as engineers and keep engineers from stealing from each other (if the glass is half full) or help engineers steal from each other (if the glass is half empty).
 
 
Aug 2, 2011
Lawyers to Engineers is nice, but you might include bankers too. Once upon a time banking was a useful part of society. Bankers collected money and decided who to loan money to based on the financial worthiness and trustworthiness of the borrower. Nowadays they don't even make money by holding your money (because they get money for free from the treasury), and they make all of their money by charging you fees to access the money you gave them. The interest that they pay you is only there to lure you in so that they can charge you fees.

I once pondered that many professions are useful, in that they can easily be traced to the successful functioning of a happy and healthy society, and other professions less so. A Teacher or a policeman, or a farmer, those are things that we can easily see are very important. A lawyer, or a modern banker..not so much. I believe that if you assigned a number to the usefulness of professions and then correlated that number with how much money those professions receive, that you would find a nice inverse correlation.

This might be because money itself is kind of imaginary in the first place...no?
 
 
Aug 2, 2011
We need to focus on the difference between the global economy and our own natiional economy. At this time it would appear that we have a lot of creativity, but the implementation (manufacture) of this ideals is outside our borders. We need to make sure that our creativity is a positive influence on the growth of our own workforce.
It would seem that we are largely a service economy in the US, which does not allow for significant growth or living wages.
 
 
Aug 2, 2011
Has anyone acused Adams of being a sexist yet?
 
 
Aug 2, 2011
Scott, I think Glenn McCoy, who produces the comic Duplex, is poking fun at you today...

http://www.gocomics.com/duplex/2011/08/02
 
 
Aug 2, 2011
@BobNL, that's stuff about Sweden is a load of BS. I am from Sweden and I left, primarily to escape the high taxes.

Like most socialist inspired states, the only thing you got from the high taxes in Sweden was the right to stand in a queue for things like medical care and a police state. And the poor knowledge most Swedes have about life outside of their little socialist state is frightening. No wonder some of them claim to be "happy".

Thankfully, the current government have made strong efforts to reduce the abnormally high taxes Sweden have been cursed with.
 
 
+6 Rank Up Rank Down
Aug 2, 2011
"Democrats like to point to the Clinton era as proof ..."
They might also point to Denmark and Sweden, two countries with the highest tax rates, and a population that is the most satisfied among the countries in Europe. After all the succesive tax cutsin the US, it might do the country good to raise them to more normal levels, so that the government can actually execute some of their plans.

Now you can call me a communist.

And as an engineer I totally agree with your opinion that the world needs more engineers.

[There's probably no legitimate way to compare tax rates across countries. To pick just one problem, national debt is an effective tax in the sense that taxpayers eventually have to pay it off. Then you have property taxes, differences in charitable giving, sales taxes and more. If corporations generally provide health care benefits in one country, and the government handles health care in another, you have another comparison problem. The list goes on. I doubt you can get a clean comparison, and if you did, you still couldn't deduce causation about the state of the economy. (And what the hell is a "normal" tax rate? -- Scott]
 
 
0 Rank Up Rank Down
Aug 1, 2011
Series idea!

I heard about this on CNBC a couple of weeks ago: http://www.cnbc.com/id/43774562/Mendhro_Avatar_Kinect_s_Invisible_Technology

How about a series of Dilbert cartoons featuring a company run by a CEO who is only presented as an avatar?
 
 
+2 Rank Up Rank Down
Aug 1, 2011
Maybe we should take a clue from the food industry, and pay lawyers not to sue anybody.
 
 
 
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