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Annals of the Economically Incorrect



Updated: 2018-01-20T23:45:44.536-05:00

 



Are Voters In Nations With A Poland Problem Especially Sophisticated?

2018-01-16T01:22:34.729-05:00

The argument here is that a nation with a Poland problem has a disconnect between its economic conditions and its political  outcomes.  It could be argued that in such a case the voters of that nation may realize that elected leaders (especially presidents in the US) have much less control over economic outcomes than voters in most nations give them credit or blame for.  So they vote on other issues.

Of course in many such cases, notably the US and Poland itself, those issues seem to revolve heavily around hatred of immigrants and asserting a racist nationalism of an extreme variety.  What is more this has often involved making exaggerated, if not downright incorrect, claims about the impact of immigrants on national economies.  This becomes especially unsophisticated when those making these appeals outright lie about the state of the economy, declaring that the economy is in much worse shape than it is and then blaming the supposed terrible shape on the immigrants.

Thus in the US we had Trump claiming that improving employment numbers were fake news, and that the BLS was engaging in fraudulent and inaccurate measuring and reporting of the improving employment numbers.  Then, of course, the supposedly much worse employment situation in the US that we really had according to him was mostly due to immigrants coming in and taking jobs (he was more accurate in his complaints that in Midwestern rust belt loss of manufacturing jobs was partly due to imports).  Then the minute he got in office and the employment situation continued to improve at about the rate it had been doing so, well, all of a sudden the BLS was accurate, and the improving employment situation was all due to him, as was the rising stock market he had previously ignored was suddenly the most important thing around.

The irony in this particular situation is that the US's Poland problem has come back to bite Trump. Even though indeed the economy is continuing to improve since  Trump has taken power, it is not helping Trump at the polls at all, with him having the lowest poll ratings for a new president we have seen since reliable polling began.  Some of that is indeed that people do not believe he has had much to do with the state of the economy so far, but probably most of it is simply people focusing on the other things he is doing, including the extreme racism of his anti-immigrant policy, which has ceased to be the vote getter it was earlier.

Barkley Rosser  



A Reminder That It Was George W. Bush Who Was Responsible For Letting North Korea Get Nuclear Weapons

2018-01-14T01:33:41.613-05:00

Tyler Cowen on Marginal Revolution has provided a link to a 2004 article from Washington Monthly by Fred Kaplan that lays out in great detail how George W. Bush, strongly backed by Cheney and Rumsfeld and against the views of Colin Powell, undid the agreement that Jimmy Carter and Bill Clinton made with the North Koreans in 1994 to shut down the North's plutonium production program for nuclear weapons.  I have blogged on tis here previously, but this article included more details than I had been aware of while confirming all I had previously said here previously about this unfortunate matter, which remains largely unknown to the vast majority of Americans.  One detail is indeed how Bush's obsession with invading Iraq (ironically supposedly to get rid of nonexistent WMDs there) contributed to his complete failure to stop North Korea from building these weapons.

Ironically even Trump looks almost good in comparison with Bush on the matter of destroying agreements made by predecessors that put a potential nuclear power that is hostile in a box regarding its program.  In the case of Trump it is Obama's agreement with Iran, which he regularly denounces and threatens to repeal and indeed nibbles at the edges of by adding new sanctions on Iran. But he has just for the third time recertified that Iran is keeping to the agreement, even as he threatened once again to repeal it if it does not get "fixed."  It would seem that the difference between the Bush and Trump situations is that while the main foreign policy advisers around Trump, Mattis, McMaster, and Tillerson, are clearly working to keep the agreement going, most of those around Bush, especially Cheney and Rumsfeld, were also keen on ending the agreement with North Korea, convinced that they could bring about the collapse of the North Korean regime, which, needless to  say, they failed to achieve, even as they handed a nuclear North Korea to all of us now.

The article also provides details on the matter of how Bush treated South Korean President Kim Dae Jung in a shameful and disrespectful manner in the months shortly after Bush took office, paving the way to the later collapse of the agreement with North Korea, a matter I have previously posted about here.  All of this is worth keeping in mind when we think that Bush was so much more reasonable than Trump.  Trump has done a lot of blundering, but so far has avoided doing anything nearly as dangerous or destructive as either invading Iraq or acting to push North Korea into getting nuclear weapons.

Barkley Rosser



Negative Interest Rates and a Term Structure Puzzle

2018-01-11T11:27:42.789-05:00

James Hamilton provided us with another interesting discussion on negative interest rates:
we now have several years of experience from Sweden, Denmark, Switzerland, Japan, and the European Central Bank in which the central bank successfully induced negative interest rates in hopes of stimulating a greater level of spending on goods and services.
Please read the entire post including some interesting comments. Alas I must be late to the party as I could not provide a reply to an interesting query from Barkley Rosser:
Does anybody have an explanation as to why when a nation has negative nominal target interest rates it often seems that the time horizon of government securities that end up having the most negative rates are often at the two years time horizon? Look at the Sweden case, where this has been the case, and it has also been in quite a few other nations as well. I have yet to see an explanation of this peculiarly non-monotonic yield curve in this situation so often.
Maybe Europe has turned Japanese. I've been looking at an Excel file of their government bond rates provided by the Ministry of Finance (not the Bank of Japan). Japan had low but not negative interest rates before 2012 with a somewhat upward sloping term structure. Since 2012, two features describe this data: (1) one-year rates hovering around zero - sometimes positive and sometimes negative; (2) two-year rates hovering near the one-year rate and it times just below them. What is driving this? I have no answer.



Does the United States Have A "Poland Problem"?

2018-01-10T22:07:45.471-05:00

It certainly looks like it.

Again, for anybody not having seen one of these, a "Poland problem" involves an apparent disconnect between economics and politics, nations with reasonably well performing economies where the populace becomes unhappy and supports opposition, especially "populist" nationalist authoritarian candidates, with 2015 victory in Poland of the Law and Justice Party the poster boy for this, even though Poland has been one of the best performing economies in Europe for quite some time.

The funny thing is that we may be seeing two separate rounds of this in the US. Thus we had Trump defeating Hillary even though the economy had been steadily growing for many years, unemployment steadily falling, and the stock market rising.  Now that Trump is in he has been trying to assert all this that has been going on for some time is due to him, which is silly apart perhaps from some of the upward stock market moves thanks to his pro-corporate profits policies.  But his popularity has fallen and is at lows not seen in many decades for a recently installed president.  Indeed, increasingly columnists of various stripes have begun to notice this disjuncture, alrhough they have not been providing a name for the syndrome as I have with "Poland problem." 

Of course it can be argued that things have not been and really are still not all that good economically.  We all know that that the widely touted unemployment rate overstates the strength  of the labor market given so many having dropped out of the labor force, and upward pressure on wages has remained weak, despite some improvement on that front recently.  Of course, Trump, having heard the story about labor force participation claimed at one point while running that the UR was really 42% and also  accused the BLS of cooking the unemployment numbers for political reasons, only to turn on a dime after getting in office to tout the low and falling standard UR numbers.

As it is, there are major problems in the US economy, deep inequality that has steadily worsened, entrenched poverty, especially in some regions and among certain groups.  But these are phenomena long in place.  Thus it is well known that supposedly the swing to Trump came from long building unhappiness in the rust belt Midwest, hollowed out by import competition, something that has been going on since at least the late 1970s.  It is unclear why that unhappiness has exploded now to support a racist authoritarian nationalist, but it has, and so  far it looks like Trump may be hanging on to this group better than some others, such as suburban women, even as he has done little for them.

More broadly internationally one can attribute much of this sourness to the long and slow recovery from the Great Recession.  Global growth has simply been slower, so that even in nations that have done well relative to others in the past decade such as the US, Germany, and Poland, people compare what has gone on with their own pasts, not with what is going on in other nations.  So a relatively good performance is not perceived as such, and a long building sourness rises to the surface.  We have not seen the end of this.

Barkley Rosser





Round numbers

2018-01-08T14:30:43.712-05:00

0, 3, 6, 8, 9 and all their permutations.

As opposed to straight numbers (1, 4) and hybrids (2, 5, 7).

Presented as a public service.



How Trump Killed The Anti-Government Protests In Iran

2018-01-07T12:26:45.374-05:00

By very strongly and publicly supporting them and dragging the matter to the UN Security Council   Of course, his supporters have been praising his "strong action" in comparison with Obama's quiet approach to the 2009 demonstrations, meant to reduce accusations of the demonstraters being US pawns.  Those demos went on a long time with large numbers eventually killed.  In this case, Trump has made the government's case, and the demos seem to have all but stopped since he took his strong tweeting "action."

As it is, maybe he did them a favor as clearly the government has been prepared to crack down. Only 20 and one security person) this time.  His strong action has reduced the ultimate bloodshed.

Barkley Rosser



Does Germany Have A Poland Problem?

2018-01-05T08:53:30.784-05:00

Most definitely (hahahahahaha!).

Nobody seems to have picked up my coinage yet, but they are suddenly noticing the issue, although unable to label it. Just to be clear, having a "Poland problem" means that a nation's economy has become disconnected from its politics.  Thus Poland is the star transition economy that was the only nation in Europe not experience a decline in GDP in 2009, but its politics have gone sour with an authoritarian, populist, nationalist, and racist government taking control.

In today's Washington Post Charles Lane had a column focusing on Angela Merkel and Germany.  It is all about the irony that it has been this top performing economy (envied even by also good performing neighbor Poland), yet she has been unable to form a government, with a new far right wing anti-immigrant party entering parliament and blocking coalitions.  Title of column is "Actually, it's not (just) the economy, stupid."

He also, accurately in my view, says the problem is also in the US and other high income nations.  I shall post later about the US case, but, yes, the US has a Poland problem also.  I follow with two choice quotes from this column, noting that I am not usually all that impressed with Lane, but agree with him pretty much on this one.

"Germany's economy is the strongest in Europe and was even spared the worst of the 2008-2009 recession.  Yet a significant portion of its people, many more, apparently, than the traditional party system could absorb are angry just the same - about the influx of immigrants from the Middle East and Africa, about crime and violence, or about what Merkel called the "pace of contemporary life."  Now many are angry about the rise of the right.

Later in the column Lane actually quotes a famous line from Marx and Engels' Communist Manifesto:

"Everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones...All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions are swept away, all new-formed ones become antiquated before they can ossify.  All that is solid melts into air, all that is holy is profaned."

Addendum: 1/5/18: As it is, the good economic performance of Poland in 2009 is related to that of Germany at the same time, although Germany did actually go into recession, if not all that deep or long.  Poland had (and has) its own currency, the zloty, and a lot of what kept it having positive growth in 2009 was that it let thr value of the zloty fall, with it thus being able to export a lot to Germany.  But they have both ended up having the same problem, "ungrateful" citizens turning against governments that did better jobs of delivering the economic goods than their neighbors.

Barkley Rosser








Support the Census

2018-01-03T19:09:44.420-05:00

The alarm has been sounded that Trump’s census apparatchiks are planning to include a citizenship question in the short form that will be used to generate the full count in 2020.  This count, mandated by the constitution and conducted every ten years, is the basis for voting district apportionment and formulas for allocating government services.  Since the first census was taken in 1790 the government has enumerated all residents, citizens or not, and it hasn’t asked about legal status in decades.  It’s not difficult to foresee that such a question would lead to a substantial undercount of Hispanics, especially in the current climate of immigration hysteria.  That’s almost certainly the intent of the Trump plan, not an oversight.

Fortunately, there’s a way to fight this scheme through direct action: massive nonparticipation unless the question is withdrawn.  Refusing to take part in the census is theoretically illegal, but since millions of residents fail to return their form by mail, prosecution is a rare event.  The mail response rate for the 2010 census was about 76%, which means almost a quarter of the potential recipients didn’t make life easy for the Census Bureau.  For them to be counted, enumerators had to knock on their doors and complete the process in person.  These home visits are the biggest expense the Bureau faces to do its job.

Noncooperation could take one of two forms.  The least demanding would be a massive refusal to respond by mail.  If nonresponse could be increased by even just another 10-20% it could substantially increase the cost and decrease the reliability of the entire operation.  Or, if they could stick together, noncooperators could refuse altogether—although I suspect a few highly publicized prosecutions and giant fines would cause a break in the ranks.  (What would happen if crowds blocked enumerators’ access to houses the way eviction agents have been blocked during foreclosure protests?)

The rationale behind direct action would be simple: count us all or not at all.  There’s even an obvious name for a steering group to organize the action, Common Census.  Unless there was a plan to reimburse activists slapped with fines, it would take only a little funding to support the necessary publicity, and the demand that there be no question asking about citizenship is unambiguous.  I see no reason why “count us in or count me out” wouldn’t be a fight we could win.



Does Iran Have A "Poland Problem"?

2018-01-01T18:18:53.196-05:00

Maybe somewhat, but not as much as Poland does, with a "Poland problem" being where a well performing economy does not prevent political unhappiness.  Iran is experiencing massive demonstrations that are heavily driven by economic complaints, even though economic performance has improved since the adoption and approval of the JCPOA nuclear deal.  Prior to that, in the face of economic sanctions, the Iranian economy was in recession, with GDP actually declining.  Unhappiness with this led to the election of moderate Rouhani as president, who negotiated the JCPOA, which led to the end of most, but not all (especially those by the US), of the economic sanctions.  As a result, oil exports have risen, and GDP has been growing at 4.5% recently, but it seems that few of the gains from this have "trickled down," with inflation now rising above 10%.  Aggravating the situation is perception of corruption by the ruling clerical elite, who control large portions of the economy through the bonyad religious foundations.  An irony is that many of those enterprises were once owned by cronies of the former Shah with his regime accused of corruption.This is a very complicated situation, and I think we do not have full information about all that is going on.  However, while some of the protests have aimed at Rohani, increasingly some of it has been directed at the top leader, the Vali-e-faqi, or Supreme Jurisprudent, the unelected Ayatollah Ali Khameini, with reports of crowds chanting "Death to Khameini" and burning photos of his face.  It also should be noted that while not nearly as deadly as the Green Movement demonstrations against apparent electoral fraud in 2009, they seem much more widespread across many cities in Iran, while the 2009 events were largely in Tehran and a few other largest cities.It is important to keep in mind how power is held and distributed in Iran as one sees all kinds of characterizations about it, including declarations that Iran is a "dictatorship."  It is not, but it is true that the unelected leader (Khameini) has more power than an elected one (Rouhani).  In particular, Khameini is the Commander-in-Chief of the military as well as being in charge of the judicial system based on Shia Sharia, as the proper translation of his official title as "Supreme Jurisprudent" indicates.  While he does not directly control them, it is the clerical hierarchy under him, along with parts of the military, that control the bonyads that constitute probably more than a quarter of the economy, which also has indicative planning and a substantial state-owned sector.  This latter part is more under the control of the elected president and his economics minister, as well as having more control over the Iranian central bank.The "Poland problem" part involves those parts of the economy that can be influenced by Rouhani and his secular ministers and bureaucrats.  Somewhat like in Poland, he can be partly blamed for  not increasing redistribution or aid for the broader population.  The part he does not control is the massive corruption tied to the bonyads and the clerically controlled parts of the economy.  Long simmering unhappiness over this corruption appears to have finally exploded, although  Rouhani and his government are also being blamed.  I have no idea where this is going, but I fear that many more could end up dead than the two who have been killed so far reportedly.I must make a comment about the incoherent response by President Trump.  It looked to be true that a target of the protests has been increasing funding going to the military for Iran's foreign adventures.  But Trump supports the same thing in the US, even though he ran against such a policy.  He is also movi[...]



Evergreen: So Much Stranger than That

2017-12-26T15:42:17.772-05:00

I’m a professor at Evergreen State College, currently on leave.  Last year I lived through the events that were captured on videotape and brought the college a lot of unwanted publicity.  As a social scientist, long interested in organization theory and social movements, I found the experience grimly fascinating, an extraordinary case study.  In my writing on it, I try to focus on understanding how such things could occur, rather than apportioning blame to specific individuals, which, from what I can see, has been the main sport.Today I read another post mortem by Bret Weinstein and Heather Heying, published in the right wing Washington Examiner.  Disclosure: I know both of them, and I had a positive experience co-teaching for a quarter with Heather several years ago in Evergreen’s environmental masters program.  I’m not socially connected to either of them, and I haven’t had political discussions with them either.  I agree with some of what they say in their latest missive, and disagree with other parts.  Readers of this blog, who are far from the scene and wonder who and what to believe, might find my reactions interesting.There is an obvious, fundamental point on which the three of us see eye to eye: Evergreen descended into an atmosphere of intimidation, in which the right to speak, no matter how civilly, was openly attacked.  There was a group solidarity logic at work: if you affiliated with one group on campus, you could speak your mind in public and be immune from any scrutiny regarding the tone or logic of your utterances; if you didn’t you were expected to remain silent.  This pressure was felt by faculty and students alike.  It was in this context that disruptive actions by students escalated over many months until they paralyzed the college.  It’s remarkable that it even needs to be said that this situation is intolerable for an institution of higher education.Personally, I think it is bizarre that Weinstein and Heying would be sent packing by the college under the same terms—the same monetary settlement—as Naima Lowe, whose verbal attacks on her colleagues caused enormous damage to Evergreen.  This is not a verdict of the “which side are you on” sort.  It’s not about whose political views you agree with or who you like or don’t like on a personal level.  Weinstein and Heying had a case against the college, and the college had a case against Lowe.  There wasn’t a shred of symmetry in this situation.One critical aspect of the Evergreen imbroglio goes unmentioned in the Weinstein-Heying account, the barrage of terrifying, intimately threatening emails that bombarded students and faculty after Bret appeared on Fox News.  The wording in these emails reeked of racism and was often graphic, about specific acts of violence, and some students went into hiding because they couldn’t be sure the hatred was only verbal.  To be clear, I don’t blame Bret for that, at least in this sense: I’m pretty sure it never occurred to him that this would result from coverage by conservative media, and no doubt most of it would have taken place even if he had said “no” to Tucker Carlson.  Still, it’s an important part of the larger story, and if you offer an account of what happened you shouldn’t cherry-pick the parts that support your side.  Speaking for myself, I was appalled by this tsunami of hate, and I didn’t feel it was enough to say, this is just the alt-right being the alt-right.  We are all of us responsible for the predictable consequences of our actions, even if we aren’t the ones carrying them out.But there is also an aspect of the Evergreen story, in many ways the most important one of all, that I think Weinstei[...]



The Poland Problem: How A Good Economy Does Not Guarantee A Good Politics

2017-12-27T15:34:18.210-05:00

This is personal and professional.  My wife and I have the third edition of our comparative economics textbook now in press at MIT Press.  We have chapters on transition economies, and one is on  the Polish economy.  The standard story is that Poland has been the great success story of transition (now accepted to be over pretty much everywhere for awhile now).  It adopted largely western market capitalist institutions successfully, while avoiding mistakes made by other transition economies.  It avoided dismantling its social safety net.  It was careful about privatizing state-owned enterprises, and in fact continues to have a higher percentage of its output run by them compared to most other such economies, with this tied to its lower rate of corruption than many of them.  While it joined the EU, it avoided giving up its currency, which allowed it to devalue and preserve economic growth even as EU nations fell into recession.Indeed, the ultimate economic success of Poland came during the Great Recession when it was the only nation that did not go into recession at all, steadily growing even through the pit of 2009.  It was the first Soviet bloc transition nation to come out of its transition recession, with a reasonably functioning parliamentary democracy, and it has outperformed all the rest economically.  In 2007, its president, Lech Kaczynski of the conservative Law and Justice Party, signed the Lisbon Treaty, which allows the EU to enforce judicial independence and other features of western democracy.  Later he would die in a plane crash in Russia, which led to his twin brother, the party's current leader to formulate conspiracy theories that Russia was behind the crash.  A souring of attitudes came over the party as it went into a period out of power.  But Poland would become one of the most respected members of the EU, with a former president, Donald Tusk, now an EU leader.On returning to power the Law and Justice party has followed a new track, obsessed by conspiracy theories, it has turned against Russians, Muslims, and Jews, but loves Donald Trump as well as the also neo-authoritarian regime of Victor Orban in Hungary (who is pro-Russia in contrast with the Poles).  Both now thumb their noses at the EU and its rules.  The latest for Poland is a new law that allows the government to remove half the judges and otherwise take firm control of the judicial system in a way violating Section 7 of the Lisbon Treaty.  The EU has formally condemned this move under the treaty, with tis setting up a possible loss of voting rights in the EU for Poland.  But the government seems not to care and is more committed to pursuing its nationalistic and authoritarian policies.An irony of the current situation is that one of the politicians driving the changes. Stanislaw Piotrowicz, was a prosecutor during the period of Communist rule prior to 1989 who helped put dissidents in jail.  The irony here is the extreme anti-communism of the Law and Justice party.What is mysterious is that there is not some obvious economic crisis or problem that is driving this "populist" political trend.  Again, economic inequality is not high and corruption is low.  The unemployment rate could be lower, but the economy has seen much growth reasonably well distributed, and it is broadly stable without inflation or major control by foreigners, even the hated German neighbors.That said, one subtle issue of economics may be playing into this, even if it still seems to be secondary.  Moving out of the Soviet bloc into the EU has changed the frame of reference.  Whereas preciously the Poles could se[...]



Catalonia Imitates US Dysfunctional Election

2017-12-22T15:46:42.357-05:00

With 98% of the vote counted, reportedly (WaPo today) 52% of the vote in Catalonia has gone for pro-union (with Spain) parties, while 48% has gone for pro-secession parties.  However, apparently the pro-secession parties have won a solid majority in the parliament.  This looks to me like last year's US presidential election, where Trump was elected while losing the popular vote.

I do not know what will happen there, nor do I have some nice neat recommendation for what they should do.  Obviously the province is deeply and sharply and closely split over the secession issue.  This election will not resolve it.  Presumably the new government will push more for independence, but the central government, along with pretty much all of the EU and most of the rest of the world pushing back.

I am on record already expressing my own lack of sympathy for this movement.  They gain credibility when the central government arrests their leaders and sends in police to beat and arrest demonstraters.  But they already have language and educational autonomy.  The main thing they seem to want is not to have their tax monies going to poorer regions of Spain.  In this they resemblr the neo-fascist separatist parties of northern Italy, even as they invoke ant-fascism for their movement based on former Spanish history.  I am not impressed.

I find all this to be sad as I like Catalonia and especially Barcelona.  I worry that like so many other places that were doing well and now are not due to internal conflicts, this could happen there also.

Barkley Rosser



Black Mirror Big Data Becomes Big Brother In China

2017-12-21T00:18:29.144-05:00

And maybe coming soon to the US as well, enough to make Orwell sit up and take notice.

The first show of the 2016 season of the sci fi TV show, "Black Mirror," called "Nosedive," showed a future society where people have overall social scores (1-5) that are constantly being changed based on what they do and who they interact with and how.  Access to many things is based on one's rating.  The female lead has a middling score and wants to raise it by attending wedding of friend with higher rating,  Her efforts to do so lead her to do things that make her rating fall, which then leads it to nosedive as others downrate her and dump her,with her ending up in prison.  While not quite that far gone, a system like this seems to be emerging in China, including the phenomenon of people dumping others whose social rating is falling, thus putting them into such a nosedive.  However, the scores are 350-950, resembling FICO financial ratings used initially by mortgage lenders in the US.

The emerging system is described in a recent Wired article by Mara Hvistendahl (probably Norwegian or Danish) who is currently living in China and has a low rating she has been trying to raise as she is shut out of buying various things due to it,  I suspect part of her low rating is because she is a foreigner, which she never mentions as a possible reason, but her description of how the system works and is being developed jointly by the Chinese government in conjunction with Alibaba through its Alipay system, particularly its Zhima "credit scoring system."  It was initially a commercial system based on what people buy, but using big data goes much further to rate more broadly how people behave and with whom.  Thus a journalist who reported on corruption now has a low rating and cannot do many things.  Tyler Cowen has a link to this in his assorted links for Tuesday the 19th on Marginal Revolution, but I am having trouble linking either to either,

Curiously in yesterday's "China Watch," a pro-Chinese government monthly newspaper that comes with the Washington Post, bragged about parts of this system in two articles.  One entitled "Alibaba credit scorer looks past deposits" reports on how its advanced "risk control" system is bringing in insurance companies  to help businesses avoid not getting paid.  The other, "Recruiters Switch On To Social Media," reports how businesses search for possible employees by looking at their social networks on social media..  The benefits to those who might gain are stressed, but no possible downsides or criticism are mentioned.

Hvistendahl points out that much of this already going on in the US, with all of us being rated constantly by far more entities than we are aware of on grounds we shall never discover. What is missing here so far is a government drive to centralize it and exploit it for broader purposes of political and social control at least for now.

The article concludes with how the system in China is increasingly shifting to using facial recognition systems in all this, with one person she spoke with having experienced false facial recognition.  As it is, the Washington Post itself had a story on Wednesday on the main guy in China developing the system.  There was no mention of failures in it, although there was a brief mention of how privacy activists are concerned about with the spread of ubiquitous public surveillance cameras, something happening in the US as well, if a bit more slowly.

Indeed, George Orwell would be proud.

Barkley Rosser






The Missing Piece in Plans for an All-Electric Vehicle Fleet: Electricity

2017-12-19T18:45:04.008-05:00

The New York Times has a piece today on barriers to the replacement of internal combustion-powered vehicles to an all-electric fleet in the United States.  It talks about production costs, the availability of key minerals and the need for a charging station infrastructure, but it oddly passes over the most obvious impediment, at least from the perspective of climate change, the large increase it would require in electrical generating capacity.If the goal is, at it should be, rapid decarbonization of the economy, conversion to electric powertrains is worth doing only if it results in the replacement of petroleum by renewable energy sources, so lets look at the arithmetic.According to the latest version of Lawrence Livermore’s invaluable energy spaghetti diagram, 25.7 quads of energy, in the form of petroleum, were used as inputs to the transportation sector.  (A quad is a quadrillion BTUs, approximately the amount of energy in eight billions gallons of gasoline.)  Electric vehicles vary in their efficiency, and there might be improvements on this front in the future, but lets use the common assumption that EV’s are four times as energy efficient as ICV’s; that means we are looking at about 6.4 quads of added electrical demand.Electricity output in 2016 was 12.6 quads, which implies we would need a bit over 50% more capacity to accommodate an all-electric fleet.  Of course, the actual expansion would be less than this because EV’s could take advantage of off-peak capacity.  Nevertheless, from a decarbonization perspective, the critical constraint is not capacity as such but energy inputs as fuel.  A natural gas plant might be able to put out more electricity over a 24-hour cycle without additional capital investment, but only by burning more gas.  Those with greater expertise than I can summon can tell us how much efficiency we can squeeze from existing and prospective electrical generating technology.So somewhat more than 50% additional electricity is needed; how much of this can come from non-carbon sources?  The most optimistic scenario is one in which nuclear energy is included in this (non-carbon) mix, so assume the goal is simply to zero out coal and gas.  These two sources currently account for 62% of inputs into the electrical generating sector.  No doubt we can get significant reductions simply through efficiency measures; think of all those electrically-heated buildings leaking energy through poor insulation.  If for convenience we lump together increases in non-carbon inputs and efficiency savings, this would need to total 23.3 quads, the current delivery of coal and gas to US electrical power stations, if the services provided by electricity use were to remain constant.  If a shift to EV’s boosts electrical demand by, say, 40%, the need for renewable sources and efficiency savings would go up to 38.3 quads (23.3 current carbon input plus 15 new input), an increase of almost two-thirds.  It is difficult see how this could be achieved in the space of a generation or so, which is the timescale we face if we are to meet our declared carbon goals.The bottom line as I see it is that, while a shift to electrical powertrains is necessary if we are to have motorized vehicles in a post-carbon world, realistic scenarios for the electrical sector require a massive shrinkage of the number of such vehicles we’ll be able to operate, at least for the foreseeable future.  This is unfortunate on two counts—it will make it more difficult to sustain living standards across the transition ahead of us, and it will increase the political barriers to getting the job done—but[...]



From Employer Coverage to Single Payer Health Insurance

2017-12-19T11:57:38.654-05:00

This holiday season I’ve heard several tales of woe from working class acquaintances, mostly self-employed, about Obamacare: how they are just above the subsidy cutoff and would rather pay the fine than buy expensive individual policies, or how they are just below and can’t afford to put in more hours per week.  I can understand why there is a lot of disappointment with the Democrats.

So what about single payer?  Along with free public higher ed, it’s supposed to be the leitmotif of the resurgence of the left, with even moderate politicians signing on, or claiming to, to save their skins.  And I’m all for it too.

But a big political obstacle is widespread employer-based health coverage, a benefit that would disappear under a universal system.  As a public employee, I have coverage of this sort myself, and it’s a big part of my overall compensation.  How do we fold the millions with adequate-to-good health plans into a new system financed through taxes?

I have an idea.  As single payer goes into effect, require every employer to publicly report how much it pays in the form of contributions to employee health insurance, documented by its payment record over the past twelve months.  The health care law would then mandate that this sum be returned as added wage payments to employees for some transitional period (such as six months) or the term of the employment contract, whichever is greater.  Ideally the law would specify a reasonably progressive apportionment of this payment across the workforce, such as equal lump sums.  At the end of the transition, wages increases and decreases would fall under the same employment law rules, such as they are, as before.

From the worker’s point of view, there would be no loss under the switch to single-payer, even if existing coverage were gold-plated; it would generate that much more wage income.  To the extent that the new system can reduce America’s bloated medical costs, workers could even come out ahead over time.  From the employer’s perspective it should be revenue expenditure-neutral, and changes in the composition of the compensation package should have little effect on HR.  In principle, then, it ought to address most of the political concern over how we can get from here—a fragmented, employment based health care system with both bright spots and gaping holes—to there.



Corporatizatizing The All-Administrative University

2017-12-17T13:24:29.896-05:00

One of the few good things that appears to have happened in the conference committee on the generally awful impending GOP tax bill is that the hits students were going to take have been eliminated.  However, even without that additional burden, college students face costs that are far higher than any other nation and have been rising above inflation rates for decades.  While` students in Denmark actually get paid, costs are closing on $70,000 per year at the most expensive US institutions, with public schools having costs rising more rapidly than in the privates over the last decade, as states have cut public support in the wake of the revenue shortfalls that came with the Great Recession.  This is not likely to be reversed in many states as favorable views of universities among Republicans have fallen from nearly 60% to about 30% (with little change among Dems, still between 55 and 60%).I would like to focus on a long-running trend that has been known for some time but somehow keeps disappearing from view.  This trend was best presented in the ever more relevant 2011 book by Johns Hopkins poli sci prof, Benjamin Ginsberg, The Fall of the Faculty: The Rise of the All-Administrative University and Why it Matters.  This rise of an all-powerful professional administration is tied to a corporatization of American academia.  From 1975 to 2005 while student populations rose 56%, faculty increased by 51%, administrators rose 85%, and their professional staffs rose 240%.  Around 2005 the total numbers of admins and staff surpassed that of faculty, with that trend simply continuing.  Admin salaries have risen faster than the other categories. On top of that, even as faculty numbers and salaries have not kept pace, there has also  been the weakening of status and pay arising  from the ongoing steady shift from tenure track faculty to temporary adjuncts who have risen   from 22% of faculty in 1970 to about 50% in 2017.Ginsberg argues that this rise of administrative bloat has become administrative blight.  While admins claim that corporatization brings efficiencies and flexibility, the evidence looks just the opposite with the ridiculous rise of tuition and fees showing the lie to this claim.  Some argue that the explosion of admins is a response to expanding government mandates, this can explain only a portion of this.  Indeed, Ginsberg documents that admins have increased more at private than at public unis, which looks to be the opposite of what we expect if it were public mandates lying behind this trend.Rather he poses a "Malthusian" theory whereby admins breed more admins.  Deans breed "deanlets" and "deanlings" or as they are more usually known, ass. deans (some associates and their underling assistants).  At JMU where I am there were precisely zero of these creatures when I arrived 40 years ago.  Now my college alone has three associate deans, and we have had an explosion of colleges, each with their plethoras of deanlets.  We now have assistants to deputy vice provosts, whereas back then two of those layers did not exist.  As it is, many of these people have too little useful to do for their overblown salaries, so they have lots of meetings, which generate initiatives to formulate strategic plans nobody gives a damn about or follows, but developing these is imperative for unis that are becoming efficient by corporatizing.  As it is these deanlets insist on dragging faculty into these horrendously nauseating exercises, even as they make it harder for faculty to teach and do research.There is [...]



The Pope's Long Con

2017-12-13T23:09:20.095-05:00

This is an amazing piece of investigative journalism. Whatever you are doing, drop it and listen to the first three episodes. The fourth episode is coming Thursday.



The End Of The "Islamic State."

2017-12-11T14:56:19.524-05:00

There are two aspects of this debate, one about the term, "Islamic State," and the other about the its application. So, until about a month ago the entity calling itself " al-Dawla al Islamiyya fi al-Iraq wa al Sham(s)," was claiming to be the most important Muslim political entity in the world, the center of its "Caliphate" which claimed to be the only legitimate and supreme ruler and polltical state for the entire Islamic/Muslim world. As of this moment it remains unclear what the status of the self-proclaimed al-Khalifa, Abu-Bakr al Baghdadi. Rumors have had him dead while others say he remains alive and in charge of the remnants of his group.Regarding its real world actual existence, well, I am posting this because about a month ago this group lost control of the last good sized town that it controlled, Abu Kamal, reported by the seriously ignorant western media as "Bukamel," about 40,000 in population, a town on the Euphrates River just over the border from Iraq on the Syrian side.  Apparently it now controls no town or city of any size, although supposedly it continues to operate in rural desert areas along the Syria/Iraq border. But as an entity that rules any sort of meaningful government as a "state," well, it has ceased to exist  as that as of the takeover of Abu Kamal by Syrian state forces backed by both Russia and  Iran as well as the US to a lesser degree, and has returned to its earlier roots as a guerrilla rebel movement, not a status as a "state," according to any serious definition of that term.The second part of this involves mainstream western media.  Somehow somebody in control of these things decided and enforced that what al-Dawla al Islamiyya fi al-Iraq wa al Sham(s) would be known as "officially" in western mainstream media (to be specific the "papers of record," the New York Times and the Washington Post), would be the seriously misleading and ideologically/theocratically inaccurate term, "the Islamic State."The term "Islamic State" in the eyes of many observers implies that indeed the entity follows the views of a variety of observers or dissidents oppressed,    It is the defining form of a state devoted to Islam; that its claim to represent a universal ruling caliphate of greater Islamic legitimacy in the entire world is correct.  No one knows which media maven decided that this was the term that should be used over all others, including ones used by the western population among themeelves. When even government officials spoke referring this group as the far more popularly used "ISIS," stories in the Washington Post and other such outlets relentlessly corrected such people by adding after their preferred term, "another term used to describe the Islamic State." These official guardians of official truth knew better than the masses, although some who defend their continuing usage even in the face of the collapse of any real rule over a state may have insisted on using this IS formulation over ISIS (or ISIL) because it is shorter and easier to read and understand.Of course, "ISIS" has long been the most widely popularly used named for this outfit in at least the US, and it is not a bad translation of the Arabic acronym for "al-Dawla al Islamiyya fi al-Iraq wa al Sham(s)"   as "the Islamic State of Iraq and Syria." Calling it just "the Islamic State(IS)" cuts off everything in that name after "Islamiyya" and grants them implicitly their claim to be the one and only true Islamic state in the world, the real caliphate rejevanated since the end of the Ottoman Empire, whose [...]



Max Zilch: A New Game for Three People

2017-12-09T13:54:40.348-05:00

So for something not economics or politics, my oldest daughter and oldest grandson and I have invented a new game for three people, which we call Max Zilch.  it is a variation on the game known as Zilch or Oh Hell.  in those games, usually played with four people, you start out dealing out one card to each person, then two for the second round and on up.  At each round except the last (which is no trump) next card is turned up and determines trump suit (play is like Bridge).  At each round people bid the number of tricks they think they will take.  If they make their bid, they get 10 points plus the square of the number of tricks they bid.  If they miss either up or down, the lose the square of by how much they missed in points.  Dealer cannot bid amount that would make total tricks taken equal total tricks bid, so dealing moves around.  That is standard Zilch (a zero bid) or with some variation, Oh Hell.

Our variation is to play with three people and simply deal out all  the cards every hand.  There is then always a trump suit with the last card.  It removes the probability calculation over whether cards are out or not, making it more like Bridge.  It is quite challenging with 17 tricks.  We have really enjoyed playing it.  Good for holiday season and family gatherings.

Barkley Rosser



A First Step for Organizing Counterpower from Below

2017-12-04T19:24:59.739-05:00

I’ve been posting a lot of critical stuff on gaps and faulty assumptions in the rhetoric and strategy (such as it is) of the US Left.  A reasonable person might say, OK, enough already.  We know what we’re doing isn’t working, but what would?  What’s the alternative?Good question—I’m glad you asked.  Actually, for about 40+ years I’ve had the same idea, which I’ll now try out on you. First, consider the basic conundrum of organizing the Left.  On the one hand, what’s needed is structure on every scale from your neighborhood or workplace to the whole country.  We need to bring the millions of people who share our outlook, in some general sense, into a common organization.  Conservatives will always have more money to draw on; those on the other side have to rely on numbers—and not hypothetical or once-in-a-blue-moon election numbers, but everyday, signed up and available for mobilization numbers.  In other words, the organizational basis for ongoing collective action.But here’s the thing: the Left has had only flashes of success at this game because it has a powerful tendency to factionalize.  Every time it looks like an organization is getting over the hump it breaks apart.  Why this is so is an interesting question, but I won’t go into it here.  In some ways the dissentious character of the Left is a good thing, since social change is complicated and we need many points of view.  Still, it gets in the way of solving the organizational dilemma, and I will assume this will remain the case.So how to build a measure of organizational unity on a fractious base?  Scale down the scope of this hypothetical organization in order to scale up across differences in beliefs and strategy.  Imagine an organization with many of the characteristics organizations are supposed to have, like membership rosters, officers, budgets, facilities, and activities, but prohibit it from taking sides in any electoral, legislative or judicial dispute, or promulgate manifestos as an organization.  Make it so there is no political program to fight over, nothing to make members want to quit or drive out those who disagree.  Then allow it to succeed at a more limited role.And what would this role be?  Above all, it would make visible, countable even, the existence of a massive Left constituency in America.  People would feel differently—they would have more self-confidence and be willing to take bolder action—if they knew they were not alone but part of a movement with millions of supporters.  They could begin to think in “we” terms, where “we” is a fairly well-defined group with game-changing potential.  In addition, such an organization could create opportunities for networking, incubating smaller groups centered on particular issues or ideologies or self-identities, free to be as political as they want, and facilitate media with a wider reach than what we currently have.  It could schedule debates and film series, organize festivals and commemorations, and foster other activities to keep people informed and connected to one another.  It would not do everything—we would still need explicit political organizations to take stands, lobby, organize protests and win elections—but it would be a giant step forward.The issue of membership is crucial, because it essentially defines what it means to be on the Left.  Here I think the key move is to emphasize values and [...]



Has Dean Baker Joined Team Republican?

2017-12-04T12:30:46.091-05:00

The dishonesty ab out the Trump tax cut for the rich from certain Republican leading conservatives are been extensively noted so let’s not go there. But why is Dean Baker writing this?
There are two ways in which we can say that a deficit/debt is will hurt our children. The first is by slowing economic growth and therefore making the economy and our kids less wealthy in the future than they otherwise would be. The route through which this is supposed to happen is that deficit pushes up interest rates and crowds out investment, thereby slowing productivity growth. (We can also see a rise in the value of the dollar, which means larger trade deficits and more foreign debt.) There are no projections that show any substantial negative effect in this way. In fact, most projections show at least a modest positive boost to growth. So this one doesn't make any sense.
There are no projections that the Trump tax cuts for the rich will lower national savings? If not, there should be. We tried this back in 1981 and what was the result? A massive increase in real interest rates and a massive appreciation of the dollar. The former did crowd out investment and the latter did lead to large trade deficits. I’m sure Dean remembers this. I would assert that the proposed tax cut today is a lot like the 1981 tax cut. If Dean disagrees – might he tell us why.



The Great Awokening

2017-12-04T01:42:12.351-05:00


There’s a theory about the sins and shortcomings of society: they are all due to our failures of consciousness.  If people were purer, given to understanding and following the true path, the problems of this world would cease to exist.  According to this view, poverty and inequality are the result of greed, wars occur because people fail to see the humanity in the “enemy”, and bigotry feeds on fear and ignorance.  The solution is to cleanse our consciousness and achieve enlightenment.  This is the way of religion, which has endeavored to perfect the world for thousands of years, with mixed results.

I’d like to think a more promising approach is to identify the structures in society—the laws, customs, institutions, and rules—that are responsible for these problems and change them.  This is the way of politics, preferably informed by deliberation and experience.  From a political perspective, trying to change people’s consciousness has some value as an end, but it is mainly important as a means, part of building a movement for collective action.

What I sense is that, for many on what considers itself the left, politics in the sense of the previous paragraph is a delusion, a repeating nightmare that one can only awake from, not transform.  Instead, passionate energy is funneled into demanding changes in language, personal behavior and conceptions of one’s identity.  Done right, that’s worth doing—better consciousness and behavior is better for all of us—but not as a substitute for politics.  And if you take politics seriously, battles over culture and consciousness should be strategic, taking into consideration how they can best contribute to collective action.

As I’ve tried to imply in my subtler moments, the biggest, hugest, screamingest problem we face is a grotesque imbalance of power, and amid all the chatter over policy, investigations and reports, and cultural struggles, hardly any work is going into the organizing we need to build a counterpower to that of the Right.  My fearless prediction is that, unless power is rebalanced, no accumulation of evidence, clever policy idea or righteous act of cultural subversion is going to make a damned bit of difference.

(Night thoughts on reading “The Koch Network and Republican Party Extremism” by Theda Skocpol and Alexander Hertel-Fernandez.  Image credit: Venngage.)



Is Bitcoin A Speculative Bubble?

2017-12-06T02:51:57.338-05:00

There are at least two definitions of a speculative bubble.  The first, and most widely accepted, is that it involves a price of an asset that rises substantially above its fundamental and then falls back towards that fundamental.  The other, not necessarily all that clearly distinguishable from the former, involves an asset price that rises due to people buying due to an expectation that they will get a capital gain from its expected future price rise, with this then happening due to a self-fulfilling prophecy, with eventually the price falling sharply, with this not necessarily involving a fall towards a fundamental because the asset may have no fundamental at all.I note before proceeding futher that there is an enormous debate and literature on identifying fundamentals at all, even when they might theoretically exist.  There is a serious body of opinion dating from Flood and Garber a quarter of a century ago that one cannot identify them econometrically ("Tulipmania").  This has been shown to be false by me and many others in various papers, including particularly on closed-end funds where the net asset value of the fund minus taxes and fees is a fundamental, and when those soar to twice the value of the underlying net asset value, well, we are looking at a bubble. The lit is there and decisive.  I asked Garber to comment on a paper presented a long time ago at a conference on this point, but the chicken shit did not show up to admit that he was just plain wrong.  He had no legitimate excuse for his absence.Of course Bob Shiller has made pretty reliable estimates regarding housing prices based on price to rent and price to income ratios.  His studies of these by 2005 were pretty decisive to anybody who was remotely paying attention (including at the Fed, Janet Yellen, the only one there to take this seriously at the time), that the US housing market was in a serious bubble that was going to crash big time.  The matter of forecasting how bad it would get with the Great Recession became a matter of who had figured out how deeply the financing for all that had gotten involved in world financial markets at a fundamental level, and very few did figure that out.But then there are assets that have no fundamental at all, even theoretically, quite aside from all the horrendous econometric identification problems pointed out by such serious people as Jim Hamilton, for whom I have the deepest respect. The question for cryptocurrencies in general is whether they have a fundamental, and it may well be that they do not. If that is the case, then only the second definition of a speculative bubble may be relevant, and that is much harder to determine than the former, already admittedly a difficult matter.How might bitcoin have a fundamental?  One reason might be for its use as a medium of exchange.  However, while it is certainly being used as that, for regular commodity transactions as of now it remains as a sometimes difficult alternative to cash dollars.  As near as I know there are no regular commodity transactions in the real economy that require it.  So, it may have no fundamental, and from what I have heard, this is widely accepted among the more sophisticated bitcoin traders.  This would make it like art, such as the recent sale for $450 million of the possibly faked "Salvator Mundi" supposedly by Leonardo da Vinci.  And, of course, there i[...]



Flynn Bails, but Don’t Get Your Hopes Up

2017-12-01T18:50:35.260-05:00

I haven’t seen anything yet to convince me that the Putin-Trump collaboration was a big deal.  Ugly and unprincipled, sure, but politically consequential, probably not.A contrary view, expressed by Harry Litman in today’s New York Times, is that this is the beginning of the end for the Trumpster.  The evidence is accumulating that, between his election in November of last year and his inauguration on January 20 of this one, Trump and his inner coterie worked back channels to undermine Obama’s foreign policy.  Litman characterizes these efforts as “abuses of power arguably well beyond those in the Watergate and Iran-contra affairs.”  He further sees the possibility that Trump will be cited for obstruction of justice in his attempts to keep these activities secret.I’m not convinced.  On the face of it, Trump intervening in foreign policy after his election is less condemnable than Nixon’s secret disruption of a Vietnam peace deal during the 1968 campaign.  The Nixon escapade was an open secret almost from the beginning, and he got away with it.  Iran-Contra was nasty stuff, but Reagan made it through intact, as did his Nicaragua policy, and even the underlings caught red-handed survived and prospered.But let’s not compare Trump to Nixon and Reagan; that just shows how old some of us are.  Let’s speculate on the political fallout from a potential prosecutor’s report that Trump cut deals with Putin before taking office.  Litman says this is something “that nobody on either side of the aisle could possibly defend.”  Why not?  What happens if the Republicans in the House and Senate say, hey, it’s just a bureaucratic detail, since he was already elected?  And why wouldn’t they say this?  How would that be any more outrageous than anything else they’ve said or done in recent memory?  Who would stop them?The “who would stop them” thing is what it’s all about.  Modern movement conservatism is about winning, period.  To worry about honesty, consistency or any other check on your political options is to be a loser.  This is why we hear made-up stories about the effect of taxes and voter fraud laws, when the ones promulgating them know they’re false and know you and I know they’re false.  They don’t care, except about winning, which they’ve become good at.  Give me a scenario in which the Republican congressional establishment shrugs off a report against Trump, and some other force pushes Trump out anyway.  Oh right, there will be editorials in the New York Times screaming bloody murder; that should do it.Trump is not invulnerable, and scandal may drag him down, but it won’t be over points of law that matter only to people who believe in the rule of law.  The 2018 election could change that, but only if it breaks a lot bluer than currently expected.  A damning report against Trump could influence the vote, but only if it appears in the last week or two of the campaign, before tribal cohesion reestablishes itself.The underlying problem with the Times piece and similar obsessions with the l’Affaire Russe is that they are based on the belief that what we need is some additional bit of evidence—of foreign meddling, the effect of tax cuts on inequality and revenues, the impact of climate change on storms or our coastline, something the Ri[...]