Saturday, September 30, 2017

The Kurdish Independence Vote

Buried on the back pages of this busy week has been the news that in Iraqi Kurdistan on Monday there was a referendum on independence reportedly supported by 92% of the voters.  I imagine that is not inaccurate, and that there was strong support for this referendum, even as Kurdistan Regional Government (KRG) President Massoud Barzani says that it is only advisory and a prelude to negotiations with the central Iraqi government.  As it is, this vote is not being treated as such, and there has been a tremendous negative reaction not only from the Iraqi central government but from all of the neighbors of the KRG, with even their usual ally, the US, not supporting the vote (if not threatening hostile actions against it), with only Israel openly supporting it. The hostile reactions of neighbors and especially the central Iraqi government may well lead to war, even as Daesh/ISIS remains not quite completely defeated within Iraqi territory, with up until now the Kurdish Pesh Merga having been working with the Iraq National Army as well as various Iranian Shia militias against Daesh/ISIS.

Let me be clear that I have enormous sympathy with the aspirations of the Kurdish people for having their own nation.  The 35 million Kurds have long been described as "the largest ethnic group without a nation" (although technically some larger ones merely have a state in India).  They were promised a nation at the Versailles conference back in 1919, but the machinations of the British, French, Turks, and Persians (now Iranians) led to that promise not being fulfilled, and the Kurds being spread among Turkey, Iraq, Syria, and Iran today, and a history over the last century of being crushed and abandoned and lied to by many nations.  They speak an Indo-European language related to Farsi/Persian, and are mostly Sunni Muslim although with a Shia minority.  However, they are largely not as religiously fanatical as most people around them, and the parties representing them in Turkey tend to be secular and leftist.

The three provinces with a Kurdish majority in northeastern Iraq began achieving a de facto autonomy during the first Gulf war, after Saddam Hussein had used gas against them during the 1980s, leading to some of them fleeing to the US, including some to my city of Harrisonburg, Virginia, where they have a large community.  The US supported this autonomous government with a no-fly zone over it, and it achieved a more official autonomy, although not independence from Iraq, after the fall of Saddam Hussein's regime.  During the US invasion, the Kurds were the strongest allies of the US, and their Pesh Merga has been the strong arm of the anti-ISIS military movement in both Iraq and Syria, working especially closely with the US in that.

As part of their autonomy they began developing their oil industry and making deals with international oil companies separate from the Iraq central government, with their exports reaching about 600,000 barrels per day now, not enormous, but also not trivial in a world of about 85 million barrels per day.  They are supposed to share oil revenues with the Iraqi  central government, but there has been ongoing disagreement about this as well as other fiscal matters, with these festering disagreements having worsened over time.  In any case, the KRG has made its deals and exported its oil against the wishes of the Iraqi central government, largely through the Ceyhan pipeline going through  Turkey.

Another important development, arising from during the overthrow of the Saddam regime, is that the Pesh Merga took control of certain areas outside the three provinces directly ruled by the KRG. The most important of these has been the city of Kirkuk, near another center of oil production and which has long had a highly mixed population of Arabs, Turkmen, Kurds, and some others.  The Kurds claim that Kirkuk is a historic cultural center of theirs, and the Kurdish  population there has increased while other groups have left.  But it remains a highly mixed population, and is not officially part of the KRG area.

In general, especially compared to the rest of Iraq, the KRG has largely appeared to do a good job of governing, despite some longstanding internal conflicts between families and factions.  There has not been outright warfare and democratic voting and a reasonably functioning economy, fed especially by their oil exports.  However, this has been deteriorating for some time.  Current President Barzani's term was supposed to end in 2015, but he has extended it by emergency rule.  Also, low world oil prices have led to a slowdown of the economy and increased grumbling.  Also, ambitions for independence have increased as Kurds have achieved military victories in Syria and elsewhere.  All of this has led Barzani to pursue this referendum at this time, which undoubtedly will strengthen his internal  political hand, even as the KRG faces a fierce external  backlash that could lead to war.

The  backlash  includes Iraq demanding that all foreign airlines stop flying to airports in the KRG region.  It appears that those airlines are obeying this demand, and Kurdistan appears to be about to become completely isolated in terms of commercial  air transport.  While it is not clear that they have done it yet and could still back down, Turkey has declared that it will shut off the flow of oil exports through its pipeline from Kurdistan.  If they follow through on that, it will plunge the KRG economy into deep recession.  Iran has declared its opposition and refuses to allow goods to pass through it to the rest of the world and has sent troops to the KRG/Iran border.  Finally, the Iraq central government is demanding that the Kurdish Pesh Merga withdraw from Kirkuk and turn it over to  the Iraq central government.  Reportedly the Iraq army is  on its way to Kirkuk, and this is where war could break out.  Frankly, while I am sympathetic, I have to say that I think this is a terrible time to be making this referendum happen, although clearly President Barzani sees at least short term gains for himself, even if this ends up bringing about serious suffering on the part of his people.

I note as an aside to all this, and perhaps why I am especially concerned, that I have been a friend to people in the Harrisnburg Kurdish community. Back in 2006 I helped save some of them from an FBI effort to  jail them for trying to send money home to relatives in Iraqi Kurdistan.  This was my most proud post on the old Maxspeak, still behind fire walls, as it helped lead to all the local Kurdish men charged getting off. An op ed about all that was put up by me on Juan Cole' site.

Tomorrow (later today technically, Yom Kippur actually) is International Day here in Harrisonburg, when local ethnic groups show up at Hillandale Park to show off crafts and items and information and sell ethnic  food and even play music and dance. A regular highlight each year at 5 PM is when the Kurds dance, and I have joined them in the past in doing so, knowing some of them quite well.  I hope to tomorrow as well and expect them to be especially joyous given this vote.  However, while I am sympathetic and hope for the best, I am afraid that I fear the worst.

Addenda, 6:39 PM, 9/30/17

1)  I suspect that part of the recent runup in world oil prices has been in anticipation of the likely Turkish cutoff of oil coming out of Iraqi Kurdistan.  Prices are at their highest in two years, with Brent crude at between $57 an $58 per barrel yesterday and between $51 and $52 for West Texas Intermediate crude.  OPEC inventories are down, presumably with KSA sticking to their quotas, but "geopolitical uncertainties" have been invoked for part of the price increase, and the Kurdish independence vote and likely Turkish response have looked like part of that.  Until recently the price had been in the 40s for many months.

2)  While many are annoyed with Barzani for doing it prior to the final defeat of Daesh/ISIS in Iraq, it may well be that this has not been achieved playing a role in the timing.  Given the important role of the Pesh Merga in battling Daesh/ISIS Barzani may feel that this need by their erstwhile allies for continued assistance against the common enemy may give him some leverage.  OTOH, it may simply lead to the campaign to finish Daesh/ISIS off falling apart at the final point.

3)  Barzani may be calculating that the Pesh Merga may be stronger than  the Iraq National Army and will be able to hold Kirkuk, and he may be right.  OTOH, the Turks may yet be tempted to intervene due to the large Turkmen population in Kirkuk.  I doubt the Pesh Merga would be able to withstand a full press attack by the Turkish military.  As it is, apparently the Iraq National Army is trying to take control of all border crossings from Iraqi Kurdistan into neighboring Turkey and Iran, as well as with the rest of Iraq.

4)  I did attend the International Festival and I did get to dance with the Kurds there.  They were waving Kurdish flags vigorously and proudly and taking lots of selfies with them.  I spoke with my friend, Rashid, whom I helped keep out of jail and who is probably the main leader of the community.  He told me that two years ago "some ignorant people" had attacked them there because of their waving of Kurdish flags.  I did not express my concerns about what might come to pass in Iraqi Kurdistan.  They may have their fears, but today they were celebrating.

Barkley Rosser

Wednesday, September 27, 2017

How I Came To No Longer Be A Kaldorian Economist

Yes, for a period of time, according to some sources, I was a member of the "Kaldorian" school of Post Keynesian  economic thought, although I had not previously thought of myself as such, indeed, had been unaware that there even was such a school of economic thought.  But now, according to such sources, I am no longer a member of such a school.  Indeed, it is not clear that there even is such a school, if there ever was.  This is a tale of the ongoing tangle of schools of Post Keynesian economics, as well as how Wikipedia operates, and more broadly the history of economic thought.

I note that while it lasted, this matter was taken at least somewhat seriously.  So, a few years ago I was at a conference and walked into a plenary address that was being given by Tyler Cowen of George Mason.  There was a pretty large crowd, but Tyler interrupted his talk when I came in to note, "I see that Barkley Rosser has entered the room, so I had better be careful what I say about Nicholas Kaldor."  Indeed, ironically, he was just about to say something about Kaldor, and I must say that I had no serious disagreement with his remarks, although maybe he cleaned up his act, given my presence as the representative of "the Kaldorian School," if not the late Lord Kaldor's personal representative.  That was then, but this is now, and I am nothing, nothing, I tell you!

Anyway, as I said, I had not been aware of such a school, much less that I was supposedly a part of it, but then in 2014, my friend Marc Lavoie published his excellent Post-Keynesian Economics: New Foundations.  In it he provided set of supposed schools of Post Keynesian economic thought.  I note that there has long been a history of arguing and battling and generally warring among various strands of Post Keynesian thought, with some expelling others, although not necessarily totally.  Joan Robinson coined the term back in the 1950s, and for a while Paul Samuelson was using the term for an eclectic bunch of Keynesian economists of the early 1960s.  But the term became narrower as the 1960s moved on and journals were started, and battle lines were drawn.  Going into the 1980s, and focused on Post-Keynesian summer schools being held in Trieste, Italy, there was a sharp split between Sraffian neo-Ricardians based in Italy, led by the late Pierangelo Garegnani, and American Post Keynesians who focused on uncertainty and the role of money led by Paul Davidson.  In between them was a more British and Australian based group, some of whom were thought to be followers of Michal Kalecki, and probably Joan Robinson, some of whom made efforts to overcome the sharp split between these other two.  The most important leader of that group was probably Geoff Harcourt, he of the "different horses for different courses," how open-minded of him.  Anyway, those summer schools fell apart, with each of the more sharply opposed groups not attending the seminars of the other, and after this the Americans all but expelling the Italian Sraffian-neo-Ricardians from Post Keynesianism, even if they were still counted by others.

Well, Marc moved beyond this to list five different schools of Post Keynesian thought, providing a small group of people supposedly in each of these groups.  They were fundamentalists, which included Davidson (who has long emphasized going back to Keynes to see what he wrote), Kaleckians, and Sraffians, which pretty much gave us what appeared to have come out of the 1980s arguments.  But then he added two more, Institutionalists and (ah ha!) Kaldorians.  This last group had in it, of course, Kaldor himself, as well as three other dead men: Wynne Godley, Richard Goodwin, and Roy Harrod. A leading Institutionalist was John Kenneth Galbraith on his list.  As it is, I suspect that Marc coined this supposed school of "Kaldorians" because he himself identified with it.  He was disgusted, as have been many of us, with the wrangling warfare between the fundamentalists, Sraffians, and Kaleckians.  So, cook up another school.  My bet that he views himself as part of the Kaldorians is that he coauthored a lot with Wynne Godley, and he identified an interest in nonlinear dynamics as part of Kaldorianism, which indeed was an interest of Kaldor who emphasized economies of scale as breaking down neoclassical equilibrias.

Needless to say, I have long been interested in nonlinear dynamics, so that set up the next development.  That was that on the Wikipedia entry for "Post-Keynesian economics," somebody imported Marc's lists and then added to them massively, but then replaced the Institutionalists with the Modern Monetary School (MMT), led by people like Randy Wray and Warren Mosler and Stephanie Kelton.  On these longer lists, there I was in with people like Godley and Goodwin (whom I especially admire) on the list of the supposed Kaldorian strand of Post Keynesian economics. Hot stuff, whoop de doo.  Not long after that, there I was with Tyler Cowen publicly identifiying me as one, although when I discussed the matter with Marc Lavoie himself, I think he was sort of annoyed that somehow I had gotten added to this list.  As it is, I do not know who put that stuff in the Wikipedia entry, although I saw such a list put up on the internet by a blogger calling him(her?)self "Lord Keynes."  Yeah, some people are a bit full  of themselves.

I had not checked on any of this for some time but was revising a paper for a journal in which I and coauthors quoted Kaldor on equilibrium, ("Consistency and Completeness in General Equilibrium" with Simone Landini and Mauro Gallegati).  Looking at the quote I thought I would check on this on Wikipedia, only to find that those lists of schools are gone.  The verbiage starts out mentioning Kalecki, Joan Robinson, Kaldor, Davidson, Sraffa, and Jan Kregel, also noting Robert Skidelsky's role in defining Keynesianism.  It then later mentions the Cambridge capital controversy, Sraffa and the neo-Ricardians are mentioned.  Kaldor is mentioned as is Paul Davison.  Then money circuit theory is mentioned as is modern monetary theory (MMT).  Wynne Godley and Hyman Minsky (who always rejected the "Post Keynesian" label for himself) get mentioned, with final shoutouts to chartalism and functional finance, both well regarded by the MMT school (there is also a tour of nations and journals and groups).  This is followed by a list of 26 supposed "leading first and second generation" Post-Keynesian economists, of whom I note that 14 are dead.  I list them here for the record:

Victoria Chick, Alfred Eichner, James Crotty, Paul Davidson, Wynne Godley, Geoff Harcourt, Michael Hudson, Nicholas Kaldor, Michal Kalecki, Fred Lee, Augustus Graziani, Steve Keen, Marc Lavoie, Paolo Leon, Abba Lerner, Hyman Minsky, Basil Moore, Ed Nell, Luigi Psinetti, Joan Robinson, George Shackle, A.P. Thirlwall (who once wrote a book about "Kaldorian economics"), Fernando Vianello, William Vickrey, and Sidney Weintraub.

Just to further stir the pot, there is now a new post about "Post-Keynesian economics" up on Rational Wiki, whatever it is.  It has clearly been put up by strong advocates of the MMT school, whom many think view themselves as the true heirs and new leaders of Post Keynesian economics.  If that is the case, this Rational Wiki post would appear to be part of that effort.  After a very brief boilerplate opening, modern monetary theory is presented as the main idea in Post Keynesian economics.  That is it. The rest can go shove it.  The list of external links go to sites run by Warren Mosler, Stephanie Kelton, Steve Keen (more a Minsky-money circuit guy than a hard core MMT person), and two to Bill Mitchell, up there with Mosler and Kelton as an MMT leading figure.  There is a further external links list that go to John Maynard Keynes, Dean Baker, and "Market monetarism."  I think Dean Baker mostly thinks of himself as a Post Keynesian economist, but has mostly stayed out of all these controversies.

Anyway, probably this is all  just picking at minor niggling and unmportant divisions and wrangles, but standing back from it I find it curious, both in terms of the development of these labels and controversies, as well as what the heck is going on with the Wikipedia accounts of all this.  On the latter, this makes me more skeptical of Wikipedia, having also recently run into some outright errors on that source I shall not get into, but just encourages me in continuing to refuse to accept Wikipedia as a source on papers by either students or actual professional economists.

Barkley Rosser


Worse Than The Usual Hypocrisy: Trump, Puerto Rico, And The Jones Act

The Jones Act was passed 97 years ago to protect US shipping within the US from foreign-made ships.  I doubt I ever would have supported such an act, but at least back then there were plenty of US-made ships to fulfill the demand. Despite the Jones Act, the US shipping industry has collapsed in the last century so that the number of such ships is far below demand in normal circumstances, so that intra-US shipping costs are far higher than those outside the US.  Puerto Rico was covered by he Jones Act and remains so.

After Hurricanes Harvey and Irma the Jones Act was temporarily suspended for Texas, Louisiana, and Florida on orders of President Trump, going through the Department of Homeland Security.  The Jones Act is not being suspended for Puerto Rico in the wake of Hurrican Maria, although damage to PR seems to be far greater than what happened on the mainland during Harvey and Irma (with those areas also accessible to supplies and aid by ground transportation, not relying nearly as much on ocean shipping).  The supposed reason is that PR's ports are damaged, which is certainly the case, but even if suspending the Jones Act will only slightly speed up deliveries, it will certainly reduce the costs of supplies, allowing cheaper natural gas from Pennsylvania in place of more expensive oil from Venezuela, for example.

Which brings us to the worse then usual hypocrisy on the part of our president.  While he has been all worked up over football players kneeling and moved to get aid to Texas and Florida as rapidly as possible while expressing lots of sympathetic sentiments for the victims in those states, his initial reaction to Hurricane Maria, after several days delay, was to talk about how bad their infrastructure was before the hurricane and how they have a massive debt situation.  Of course, if he were really concerned about helping them, he could suspend their debt, but at a minimum, given that he is aware that they are poor and debt ridden, on top of having 80% of their crops destroyed and all their power out among other problems, he is insisting that they pay top dollar on supplies brought in by water, where almost all supplies will come.  His refusal to suspend the Jones Act for Puerto Rico after having done so for mainland US territories is far worse than the usual hypocrisy from any president, even this far more hypocritical than pretty much all others one.

Barkley Rosser

Saudi Women Can Drive

As someone who has denounced the Saudi leadership and its new crown prince, Muhammed bin Salman, for maintaining their nation's position as the only one in the world where women are not allowed to drive, I must salute them for changing their law.  They are joining the rest of the world and will allow women to drive now, by all reports the top demand by women in the kingdom for their rights.  Welcome to the rest of the world, Saudi Arabia and Prince Muhammed bin Salman, of whom it had long been rumored that he would bring this about.  It is about time, and congratulations.

Barkley Rosser

Addendum:  This new rule does not take effect until next June, and the women will need to get licenses, so it will be some time before women are actually driving in KSA.  It is not "now," but "in awhile," but it is coming.

Sunday, September 24, 2017

On Not Rising for the National Anthem

Apropos #takeaknee and the previous post:

Most of the discussion about whether NFL and other athletes should stay on their feet during the pre-game singing of the Star Spangled Banner miss the point.  Kneeling is a political statement, but so is not kneeling.

The public staging of the national anthem is a political event.  It began in professional baseball during World War I as a demonstration of support for the war effort (before the SSB was even officially the anthem), at a time when propaganda and repression against dissent were fierce.  But you don’t need to know much history to recognize “all rise for the national anthem” for what it is.

The public singing of the anthem is a nationalist ceremony.  Through it, those present confirm their loyalty to the government as a value that supersedes all others.  If we had a different song about democracy and popular sovereignty as supreme values, that might be better, but it would be political too.  Nationalism is simply one particular political value system, and the unthinking acceptance most people give to it doesn’t change that fact.

So athletes who make a show of not embracing the nationalist display are not injecting politics into anything; they are responding to one political statement with another that expresses their own point of view.  If you don’t want to mix sports and politics, eliminate the enforced display of nationalism.

Also, the SSB is a terrible song, with crappy music and lyrics.

Friday, September 22, 2017

Gentrification

This is the bane of urban development, right?  Old housing stock, built for yesterday’s working class, is spiffed up and priced far out of reach of today’s regular folk.  High end shops replace hardware stores, bric-a-brac recyclers and appliance repair centers; a tide of designer coffee flushes out the cheap, refillable kind.  Who can afford to live there?

But wait!  Those refurbished old houses are beautiful.  It’s a pleasure to peruse delicate artisanal fabrics and custom-designed furniture.  The food is fresher, healthier and tastier.  And what’s the alternative—to put a blanket over everything old and keep out all improvements?  Is gentrification even a problem?

It is.  It’s wrong if whole neighborhoods are uprooted, unable to afford housing and services available to them for generations, and the dynamism of city life is crippled if only those who have already made it can make their home there.

Regulations that restrict the development of new housing have rightly come under attack.  Encouraging infilling and greater density benefits the environment and keeps housing costs down, but that only moderates the impact of gentrification.  The luxury apartments that replace old single family houses are still beyond the means of most of us.

My hypothesis is that the basis of gentrification as an urban problem, rather than a type of broad-based development that benefits everyone, is extreme inequality of income.  Gentrified neighborhoods are those outfitted for the upper echelon to spend their money on, and prices are geared to what the traffic will bear.  The rest of us can’t afford it.

Imagine that income were distributed much more equally in this country.  Maybe a few people would be rich, but there wouldn’t be enough of them to fill up whole cities.  And the gap between the better and lesser off wouldn’t be so large as to preclude mixed neighborhoods.  As overall incomes rose over time, so would the quality of housing, shopping options and services.

If I’m right, the solution to gentrification isn’t a prohibition on investments that upgrade urban life, but serious measures to reduce economic inequality itself.  The test is whether countries without the great divide between the rich and the rest are as subject to gentrification as the US.

Thursday, September 21, 2017

Ta-Nehisi Coates and the Limited Art of Interpretation

Among the least persuasive writers on contemporary politics, for me, is Ta-Nehisi Coates.  Mind you, I often agree with him, but only because I agreed with him before reading him.  If I go into a piece of his with a different perspective, nothing he says has an effect on me.

Now, if I were intellectually stubborn, the sort of person who rarely changes his mind, that would be a statement about me, not Coates.  In fact, I’m always changing my mind.  Nearly every day my views are shifting, sometimes only slightly, sometimes a lot.  When I go back and read what I wrote several years ago, my first instinct is to grab an editor’s pen.  Maybe I’m too susceptible to persuasion.

But not by Coates.  The thing is, he seldom makes arguments in the sense I understand that term.  There isn’t extended reasoning through assumptions and implications or careful sifting through evidence to see which hypotheses are supported or disconfirmed.  No, he offers an articulate, finely honed expression of his worldview, and that’s it.  He is obviously a man of vast talents, but he uses them the same way much less refined thinkers simply bloviate.

But that raises the question, why is he so influential?  Why does he reach so many people?  What’s his secret?

No doubt there are multiple aspects to this, but here’s one that just dawned on me.  Those who respond to Coates are not looking for argumentation—they’re looking for interpretation.

The demand for someone like Coates reflects the broad influence that what might be called interpretivism has had on American political culture.  This current emerged a few decades ago from literature, cultural studies and related academic home ports.  Its method was an application of the interpretive act of criticism.  A critic “reads”, which is to say interprets, a work of art or some other cultural product, and readers gravitate toward critics whose interpretations provide a sense of heightened awareness or insight into the object of criticism.  There’s nothing wrong with this.  I read criticism all the time to deepen my engagement with music, art, film and fiction.

But criticism jumped channel and entered the political realm.  Now events like elections, wars, ecological crises and economic disruptions are interpreted according to the same standards developed for portraits and poetry.  And maybe there is good in that too, except that theories about why social, economic or political events occur are subject to analytical support or disconfirmation in a way that works of art are not.  How should we hear The Rite of Spring in the twenty-first century?  Colonial or pre-postcolonial?  Racist or deracializing?  These are meaningful questions, and thoughtful criticism can help us explore them more deeply, but neither evidence nor reasoning can resolve them.  If you want to know why the US election last year turned out the way it did, however, reasoning and evidence are the way to go.

Coates is an interpreter.  His latest piece in the Atlantic, The First White President, reads the election the way a film critic would read a film.  There are references to factual events, like quotes taken from the campaign trail, but they serve the same function that references to camera angles serve for a critic interpreting the latest from Darren Aronofsky.  In the end, Coates wants to convey his sense of what the election means, that it is a reflection of the deep racism that was, is and will continue to be the core truth of America.  If anything was different, it was that eight years of a black president ratcheted up the racism and allowed a sociopathic white extremist to prevail.  Post-election concern for the well-being of the white working class by white pundits is itself a further reflection of this truth, a turning away from the ugly reality of bigotry. This is a reading of the election as a cultural artifact.

The problem, of course, is that much about the election is subject to social science investigation.  We have opinion polling and the factual record of specific campaign strategies and tactics.  We have a variety of models that predict voting behavior—testable models.  If you go through Coates’ article, you’ll find statements (especially sweeping generalizations) that are dubious in light of the evidence or even flatly refutable.  This isn’t because Coates isn’t well informed or unable to examine the data, but because he is applying the method of cultural interpretation, not evaluating hypotheses.

In the end, Coates is expressing how the election feels to him, and that’s OK.  But his feelings tell us little about why Trump, and not somebody else, is sitting in the oval office.  Is there massive racism in America?  Yes.  Could someone like Trump be elected president if racism were not so widespread?  Almost certainly not.  But like the man says, racism has been a major factor in every election, yet they don’t all come out the same.  It looks like other factors were at work too, especially since Obama outperformed Clinton across most demographics.  Time to get deeper into the data.

Tuesday, September 19, 2017

Another Year of Equity at Evergreen

The following email was forwarded to me and many other Evergreen faculty:
On [date deleted], students, staff and faculty of The Evergreen State College will hold a Re-Convocation Rally on Red Square to express and affirm their commitment to goals of equity, inclusion and success for all in pursuit of higher education. The rally is organized by Staff and Faculty Acting for Equity, a group that works in partnership with Evergreen students. Rally organizers stated that the “focus will be on healing from the events of last spring and celebrating our collective cultural wealth as the Evergreen community.” Evergreen community members and friends are invited to participate in an afternoon of speakers, music, dancing, discussion, and creative expression.  
Staff and Faculty Acting for Equity said in a statement that “the Re-Convocation Rally will carry forward the community spirit and dedication to equity that motivates Evergreen. We believe that our success as members of a community is dependent not only on ourselves, but on the success of the most vulnerable. We acknowledge the particular strengths of and challenges faced by first-generation, Black and Brown, undocumented, Latinx, trans*, queer, veteran, and disabled students who have been traditionally underserved by higher education. We strive to center their voices as we move toward more equitable outcomes for all our students.”  (I deleted the date—PD)
Needless to say, I agree with nearly all the sentiments expressed here—until I come to the final sentence, which manages to pack, depending on how you count them, two-and-a-half to three untenable and politically destructive assumptions in just its first six words.

To begin, although the word “centering” has become commonplace in the language of a certain swath of the political spectrum, it offers a false metaphor for the space of social communication.  When it comes to a place like, say, a college campus, the notion of a center simply doesn’t apply.  The good folks of Staff and Faculty Acting for Equity, by their organizing and publicity, offer what you might call a node.  The college administration constitutes at least one more node, probably several if you think about all its various levels and units.  We have two unions, one for faculty, another for staff, and they are very nodal.  Of course, more important than all these are the myriad formal and informal clusters of students, staff and faculty who communicate intra- and cross-nodally.

This mis-metaphor is important because it implicitly invokes a zero-sum interpretation of voice.  If voice is arrayed around a single center, and only one point of view can be centered, then enhancing the voice of some requires decentering the voices of others.  As we’ve seen at Evergreen and elsewhere, the actual practices that accomplish this—discouraging or suppressing the voices that must give way for the center to be occupied by others—are rather nasty.  But public speech in most contexts, and certainly at a place like Evergreen, is not generally zero-sum.  Some do not have to speak less so others can speak more.*

That centering business really needs to be, um, decentered.

The second assumption is that the voices listed in the next-to-last paragraph share enough characteristics that it is even conceivable they could all be centered together.  If I say one thing and you say the opposite, how could both our voices occupy this same all-important discursive turf?  Or if they could, on what basis would we deny anyone else’s voice the same status?  No single identity-category is homogeneous; experiences and perspectives differ enormously across individuals.  Add to this the extraordinary diversity of the full list, and the notion of these voices constituting a center is meaningless.  The best you can say for this statement is that its authors want to express their support for many of the students on campus who need it the most, and this is how they try to say it.  If that’s all it is, I share their convictions (and I’ve struggled in my own way to try to put them in practice), but I can’t buy the idea that these groups speak with a common voice.

Incidentally, because racial, sexual and other categories encompass many viewpoints, the political assumption that there is a single viewpoint for each such group often leads to an unsavory process by which people in the majority, like whites, pick which organization or ideology represents the “true” expression of the oppressed.  When I read references at Evergreen to the need to support “the students”, I can infer that a particular subset of students has been elevated to this status.  As for me, I don’t consider it my business to decide who speaks for whom, ever.

The half-assumption I quarrel with is the notion that centering some voices by decentering others is at the center of the political agenda.  This isn’t exactly stated, so I can’t give it full noncredit along with the other two, but it’s there to the extent that no other political goal is put forward.  Of course, truly listening to others, especially those who have not gotten the hearing they merit, is very important.  It is not, however, the most important goal in political activism, or to put it differently, political expression is important mainly as a means and not as an end.  Evergreen has urgent equity needs, especially in its lack of services for students who come to it from the short end of America’s grotesque economic and educational inequality.  This is a matter of programs, staff and money.  It’s worth fighting for.  There may be other high priority equity issues, although we haven’t gathered the information we need to identify and understand them, which suggests that putting resources into serious self-study is also crucial.  Perhaps the social justice advocates at Evergreen share this position, and for them the focus on expression is just a step along the path.  I hope so, but there has been little evidence so far to support it.

So what’s the point of scrutinizing equity-speak in such detail?  Maybe I’m just being picky, but I’ve seen how misguided mental frameworks can lead to terrible political practices.  I also suspect that, while most readers who have made it this far may have scant interest in my strange but wondrous little institution, they see parallels with social justice activism in their own backyards.

*Where speech is truly zero-sum, as at a single large meeting, I support the use of a progressive stack at least some of the time.

Monday, September 18, 2017

Obamacare Could Die

We are at this very odd moment now.  We thought ACA was saved by a narrow vote some months ago, when John McCain joined Susan Collins and Lisa Murkowski to block the last version of Trumpcare.  Whew!  No need to worry about millions of people having their health insurance taken away!  Time to start pushing for single payer, Medicare for all, hah hah!  But, ooops!

So here we are with only 12 days to go before the window in which the US Senate can pass a repeal and replace of ACA using budget resolution, and thus with only a majority vote.  But, hey, here we have Cassidy-Graham, which would turn the whole thing into block grants to the states, allowing them to allow insurance companies to charge more for preexisting conditions and pretty much get rid of all those things people have liked about ACA once they began to realize that it might disappear.  But now hardly anybody is aware of what is going down at all, with near zero media attention, since we all moved on to Korea and DACA and whatever..   But this stealth Cassidy-Graham bill could very well pass.

It looks like Collinis and Murkowski will again vote no, realizing that it slashes the Medicaid expansion, among other things, and would kill insurance for many people in their states who currently have health insurance thanks to ACA.  But one of the co-sponsors, Lindsey Graham of SC, is John McCain's closest ally and friend in the Senate, maybe in all of Washington now.  Reports have it that McCain is in fact thinking seriously of voting for this bill, which most reports say is actually worse than what got shot down previously by McCain's swing vote.  The only other reported possible negative vote is  Rand Paul, who is claiming this bill still contains too  much of ACA, but he voted for the "slim repeal" after  similar complaining last time.  He could easily vote for this.

The hard bottom line is that we could wake up in a week or so with this awful bill passed, ready to whiz through the House for Trump to sign, and Obamacare dead after all, with millions set to lose their insurance, with barely anybody even knowing what is up.  This is a seriously bad business.

Barkley Rosser

Sunday, September 17, 2017

Carbon Gridlock Redux in Washington State

A year ago—it already seems like another era—an initiative to set up a carbon tax in Washington State, I-732, was defeated by the voters.  The proposal was to use the money for tax reductions in accordance with the standard economic view that taxing “bads” rather than goods generates a double dividend.  I disagree with that (I think the deadweight loss case against taxes is weak), but I agree that carbon prices operate like a sales tax and are regressive, so it’s a good idea to return the money according to an egalitarian formula, preferably equal rebates per person.

But most of the political left sees it differently.  When they look at carbon pricing they see a big new revenue stream that can be used to fund all the things they have been unable to get in a period of conservative (or neoliberal) political dominance.  They want infrastructure, mass transit, community development projects and environmental restoration, and for them returning the money is unthinkable.  So the left in Washington State, including unions, social justice organizations and most of the environmental activist community, opposed 732, denouncing it as a corporate subterfuge.  A carbon tax is always going to face headwinds, but with the left as well as much of the right in opposition, it was doomed.

So here we are again, looking at another round of state carbon tax initiatives for 2018.  The group that organized the left campaign against 732, the Alliance for Jobs and Clean Energy, is drafting their version, which will surely funnel most of the money to the causes (and in some cases the organizations) of their constituents.  But, perhaps in a play to get a bigger voice in the process, the Affiliated Tribes of Northwest Indians, an umbrella group of 57 tribal governments in the region, has just announced it has begun drafting its own initiative, one that earmarks most of the money for environmental purposes, with a chunk dedicated to the tribes.  The prospect is for heated backroom meetings, where the leadership of various organizations push and pull to divvy up the potential carbon cash.  Whether the product of this process can survive at the polls is another question.

As I’ve written before here and elsewhere, I’m appalled at this deformation of carbon politics.  It doesn’t take into account who pays the carbon tax and the effect higher energy prices will have on living standards.  It naively assumes that governments will spend carbon money only on new projects and not shift existing spending in order to free up more funds for whatever they really want to finance.  There is no pretense of democracy in the way it establishes its earmarks.  And it puts the fight to get a piece of carbon revenues ahead of the urgent need to address the climate crisis, with predictable political consequences.  Revenue recycling in the simplest, most transparent fashion is the way to go, but if there are to be earmarks they should be decided democratically.

The politics of carbon activism are tangled in knots, and year after year goes by without serious action to avert an almost unimaginable climate catastrophe.

Saturday, September 16, 2017

Does Single Payer Pay for Itself?

Was this the message of the title of the latest from Dean Baker:
The economies of a single system can be viewed as analogous to the Social Security system, which has administrative costs that are less than 1/20th as much as privatized systems in places like Chile and the United Kingdom. The analogous institution in the health-care sector is of course Medicare, which has administrative costs of less than 2 percent of benefits in the traditional fee-for-service portion of the program, roughly a tenth the cost for private insurers.
I will agree that the 20% gross margins received by the health insurance companies are obscene. This margin breaks down into a 14% operating expense to premium revenue ratio and a 6% operating margin. I would imagine competition could cut the former in half and the latter by a factor of two-thirds. I’m suggesting a 2% operating margin is reasonable as the reserve to premium revenue ratio is close to 25% for health insurance and an 8% cost of capital is more than reasonable. But Dean is arguing that we can live on a 1% gross margin, which seems to be very ambitious. OK- governments might be able to lower the cost of capital but nearly eliminating administrative costs sounds incredible. But what do I know – so I did a Google search and came across this interesting discussion:
The correct way to estimate administrative savings is to use actual data from real world experience with single-payer systems such as that in Canada or Scotland, rather than using projections of costs in Vermont’s non-single-payer plan. In our study published in the New England Journal of Medicine we found that the administrative costs of insurers and providers accounted for 16.7 percent of total health care expenditures in Canada, versus. 31.0 percent in the U.S. - a difference of 14.3 percent. In subsequent studies, we have found that U.S. hospital administrative costs have continued to rise, while Canada’s have not. Moreover, hospital administrative costs in Scotland’s single-payer system were virtually identical those in Canada.
Their study is worth the read as it does show we can reduce administrative costs even if Dean’s claim still strikes me as an exaggeration. But the point of this discussion is to question the latest from Kenneth Thorpe:
Professor Kenneth Thorpe recently issued an analysis of Senator Bernie Sanders’ single-payer national health insurance proposal. Thorpe, an Emory University professor who served in the Clinton administration, claims the single-payer plan would break the bank. Thorpe’s analysis rests on several incorrect, and occasionally outlandish, assumptions. Moreover, it is at odds with analyses of the costs of single-payer programs that he produced in the past, which projected large savings from such reform
Back in 2005, Professor Thorpe was the darling of progressives as his analysis back then was used to promote Vermont’s proposal to go for single payer. Let me return to Dean’s discussion for a moment:
Per-person health-care costs in Canada are 47 percent of the costs in the United States. The per-person cost for the single-payer system in the United Kingdom, where health care is provided directly by the government, is 42 percent of the U.S. system.
That is accurate whereas promising administrative costs that are only 10% of what we currently see is not. I guess we are about to have a battle of the experts. My only plea is for the experts to inform us rather than push some particular agenda. Let me also note the portions of Dean’s latest that the proponents of this single payer should pay close attention to:
While a single-payer system is probably the most efficient way to provide universal coverage, it is not the only way. Most wealthy countries do not provide coverage to their population through single-payer systems. Many countries, including Germany, France, and the Netherlands, provide coverage through heavily regulated non-profit insurers. This is important to keep in mind, since it means we can have universal health-care coverage without single payer. It’s not clear that it is a good thing for progressives to gain power if they are committed to a program that really is unworkable policy… University of Massachusetts economist Gerald Friedman bravely picked up this job for the Sanders campaign, as he tried to design a plan to pay for the single-payer proposal Sanders put forward in his campaign. I think it’s fair to say the plan comes up somewhat short. Even with generous assumptions about potential revenue and savings, there would still be a substantial gap between the additional spending and the new revenue.
This discussion from Dean is an excellent one even as I picked on some of what he wrote on the alleged reductions in administrative costs. Yes – reducing administrative costs is a good thing but let’s be clear that single payer by itself does not pay for itself. Nor is it the only step we can take to reduce the per capita coverage of health care in the U.S. Going after the doctor’s cartel by letting more foreign trained doctors move here and reigning in the insane pharmaceutical patent system are likely even more important. And yes – Dean Baker has pushed both of these ideas quite admirably.

On The Relationship Between Wahhabism And Salafism

I apologize if this seems an esoteric topic, but it is one that seems to be a matter of seriously contentious dispute, as well as one that Iis relevant to various controversies and issues in the Middle East now. It is triggered by the biggest argument I have ever had with Juan Cole, whom I usually agree with, and indeed I agree with the vast majority of his recent posthttp://juancole.com/2017/09/saudi-arabia-improve.html that advises Saudi Arabia on how they can make themselves look better to the rest of the world, which includes such obvious items as allowing women to drive (the last of 7).

My disagreement with him was over a line just dropped incidentally that he would later defend ardently, that the official Saudi theology/ideology of "Wahhabism" is "not Sunni." I challenged this, pointing out that 1) the Kingdom of Saudi Arabia (KSA) officially uses as its official Shari'a law code the Hanbali code, one of the four Sunni Shari'a codes, and 2) that KSA is currently claiming to lead a global Sunni movement against the global Shia movement, even if this may well boil down simply to a local power struggle between KSA and Iran. I think Juan agrees with those two points, and also that Wahhabism and Salafism are not identical, in contrast to claims by many ignorant commentators.

I now accept that Juan is right about certain matters I differed with him about. The founder of Wahhabism, Muhammed ibn Abdel-Wahhab, who formed an alliance in 1744 with the founder of the Saudi dynasty, Muhammed ibn Sa'ud, did not make as his primal demand that the very strict Hanbali code be adopted by the Saudi family as part of their alliance. He had his own idiosyncratic theology that mostly attacked local practices such as worship of saints and their shrines. And he denounced the existing Sunnis and all other Muslims who did not follow his version of Islam to the point that they could be killed, although it seems that his worst wrath was against Shia and Sufis. But his stance led and justified the view by many that his followers were not proper Sunnis, even though later they would adopt the proper, if extreme, Hanbali Shari'a code, although that would be following ibn Hanbal's follower, ibn Tamiyyah more specifically when they did so by a century or so ago. It was also the case that from the beginning Abdel-Wahhab's views were close to those of advocates of the Hanbali code, who included members of his family, including his influential grandfather.

Before we proceed to the relationship with Salafism, I recognize that part of the problem here more broadly is that the Saudis do not like being called "Wahhabi." It was a term first applied by their enemies in the past, the Ottomans, and taken up from them by the British, who established it in the general literature and discussion. Although most Wahhabis dislike the term, reportedly especially the new king of KSA, Salman bin Abdulaziz bin Abdul Rahman al Sa'ud, it has been also reportedly accepted by some scholars within that tradition. Nevertheless it must be recognized that what these Saudi Wahhabis prefer to be called is "Muwahuddin," which is usually translated into English as "Unitarian." Big surprise, nobody besides themselves or people super kissing their behinds calls them that. OTOH, they are not averse to being labeled "Salafi," which gets us to the core of this.

Before proceeding further I must note that all of this is highly controversial with many scholars, not to mention theologians and ideological propagandists spouting many lines on all this. But as near as I can tell Salafism ("Salaf" referring to the early period of Islam, during its first three or four caliphs) originated in Egypt in the mid-19th century at the world's second oldest university, al-Azhar in Cairo, with such figures as Jamal al-din al-Afghani and Muhammed Abduh. Following what my wife, Marina, and I have labeled a "new traditionalist" approach, they tried to reconcile both a return to the roots of Islam, the "Salaf," with modernism and science given the fall of Egypt under British control. In the early 20th century their followers would become more attuned to a more traditionalist view against such currents as socialism, with the founding of the Muslim Brotherhood (Ikhwan) in the 1920s by al Banna with more radical support form al Qutb.

In the 1950s and 60s Nasser would suppress their followers, and in 1962 King Faisal in Saudi Arabia invited many of them into KSA as he founded the Muslim League.  Many moved there, becoming high school and university teachers.  This would lead to a partial convergence of the traditions, with some calling what King Faisal advocated "pan-Islamic Salafism."  This would be spread globally by Faisal as he funded madrassas around the world, many of them staffed by Egyptian Salafis.  Eventually some of the Egyptian Salafis would split from the Muslim Brotherhood there to pursue a violent quest for their views, the Qutbist strand, with some of these becoming prominent in al Qaeda, such as its current leader, al Zuwahiri, formerly second in command after Osama bin Laden.

Wahhabism has its own historical origin prior to that of Salafism, nevertheless many now argue that either they are identical or that Wahhabism is a sup-part of Salafism, a possibly defensible position. Again, the Saudis themselves reject being called Wahhabi, prefer to be called Muwahuddi, and accept being called Salafi.  Some claim they are not Sunnis, but even if ab-del-Wahhab did not initially accept the Hanbali code, they do now, and it is Sunni.  I can understand that many Sunnis may not wish to be associated with them, but then many Christians do not wish to be associated with the KKK or the Inquisition. Tough.

I could go on as there is a lot more to this, but I think this will do for now.  Good night.

Addendum:  Oh yes.  The violent extremist Sunni groups Daesh/ISIL and al Qaeda all claim to be Salafi, and some observers also claim that they are Wahhabi as well, although that remains not universally accepted.  Hopefully I have helped clarify somewhat why that is the case.

Barkley Rosser

Wednesday, September 13, 2017

Douglas F. Dowd Is Dead

Douglas Fitzgerald Dowd has died at age 97 in Bologna, Italy.  A scholar of Thorstein Veblen and expounder of a radical view of US economic history that strongly influenced Howard Zinn and Daniel Ellsberg, among others, he was also a serious political activist.  After serving as a bomber pilot in the Pacific in World War II, he managed the 1948 presidential campaign of Progressive Party candidate Henry Wallace from Berkeley, CA, his home town, he later was a major organizer of anti-Vietnam War sitins and campus teach-ins and was vice presidential candidate with Eldridge Cleaver in 1968 on the Peace and Freedom ticket.  His best known book was probably Blues for America (1997).  He taught at Cornell, Berkeley, San Jose State, Johns Hopkins, and the University of Modena in Italy, where he was lecturing until well into his 90s.  His New York Times obituary is here, which has many more details.

I have old and deep personal connections with Doug.  When I was a kid living in Ithaca, NY in the 1950s, his son, Jeff, was my best friend, and I got to know Doug from that perspective.  I came from a conservative family, but Doug spoke directly and openly about his views to me as if I was an adult. Hid kids, Jeff and Jenny, called their parents by theiri first names, Doug and Zirel, the only family where I saw such behavior.  Doug made me aware of many of his views about the nature of the US and its society. I would move away to Madison, Wisconsin in 1963 to enter high school, but I would remain in contact with Doug off and on until quite recently.  I regret that I did not visit him recently when I was in Florence for an extended period, with him living in Bologna, Italy, not far away, where he was living with his third wife, who owned a feminist book store.  He was always honest and direct and forthright in his views and expressions.

It turns out that his son, Jeff, would become "The Dude," the model for the character in the movie, "The Big Lebowsky."  He is a major behind the scenes figure in Hollywood as producer and director and organizer of film festivals and a variety of other things.  If you google him, you can see him talk about political issues, and he talks about his dad and his economics views.  During the early 1970s, Jeff was part of the Seattle Seven who were arrested for organizing an antiwar demonstration there that turned violent against the wishes of the organizers.  Jeff would be convicted of contempt of court for denying in the course that he was the "leader" of that anarchist group.  I feel sorry for him and his sister on the death of their dad, although he did manage to live until age 97, and was active and lively until very near the end.

RIP, Doug.

Barkley Rosser

Tuesday, September 12, 2017

Price Gouging

Whenever there’s a natural disaster, a famine or some other such crisis, people zero in on price gouging.  Are grain merchants jacking up prices to take advantage of a food shortage?  What about airlines raising fares to cash in on desperate attempts to flee an impending hurricane, or stores that double or triple the price on bottled water?  And generators that suddenly only the rich can afford?

Most think this type of exploitation is unjust and even wicked, but Econ 101 says the opposite: it’s a rational, socially desirably market response to a change in supply and demand.  Higher prices for goods made scarce and valuable by a disaster encourage both more provision and greater care in use, exactly what you would want in such a situation.  For details, see the writeup in today’s New York Times.

According to the Times, the main flaw in the free market argument is that it allows the poor to be completely priced out.  This is an application of the argument, made by many social theorists, that distinguishes between essential goods, which should be rationed more or less equally among all, and inessentials, which can be left to the market.  There’s a lot to be said in its favor, and I won’t dispute it.

But the Times and most commentators miss a second point, which is about the same issue of social utility as the case for markets.  Societies depend on a general willingness to share, volunteer and reciprocate, especially in desperate times.  When a hurricane or earthquake strikes, or when war or some other spasm of human destructiveness occurs, we depend on friends and strangers to help locate survivors, pick up the rubble, share their homes and meals and generally pitch in.  There have been a number of stories, for instance, about ordinary people from other parts of the country who, hearing about Harvey’s devastation of Houston, made their way their to help out however they could.  Most of us won’t drop everything and head to Texas, but it’s safe to say that Houston won’t recover, or at least not so much or so quickly, unless hundreds of thousands in Texas and elsewhere lend a hand.

The problem with price gouging is that it undermines the spirit of voluntary provision.  Who will make a personal sacrifice to help the community rebuild if those with the most means are using disaster as a golden profit opportunity?  Pecuniary incentives crowd out intrinsic ones.  This is true at the individual level and also socially.  A society in which the market performs rationally but spontaneous cooperation is snuffed out is cold, cruel and ultimately not rational at all.

Disaster relief for sale is not so different from love for sale.

It Is Monday, And WaPo Bashes Social Security Again

What a surprise, the Washington Post is at it again, and it is the usual culprit, Robert J. Samuelson. Of course he has his attack buried under a title that appears to point more broadly, "The deficit is everybody's fault," although not if "everybody" includes people who die before they become eligible for Social Security and Medicare (and those parts of Medicaid that go to old people).  He even has further cover in that the new numbers come from the "left-leaning" Center on Budget and Policy Priorities in a report issued on Sept. 6 written by Paul van der Water, and I grant that the numbers he shows do come from that report, which makes projections out to 2035, the year when the adjustment for baby boomers going onto elderly entitlement programs will have been largely completed.

While in fact the report shows a slightly lower budget deficit as percent of GDP in 2035 than now (3.0% to 3.1%), that does involve a tax increase of 2.7% of GDP, along with cuts in spending on numerous categories of the budget.  These are in place to offset increases on four items: Social Security at the top of the list with an increase of 1.3% of GDP (from 4.9% to 6.2%), followed by Medicare with an increase of 1.2% (from 3.2% to 4.4%), interest on the national debt of 1.1% (from 1.3% to 2.4%), followed by "other health" (mostly Medicaid) of 0.5% (from 2.3% to 2.8%).  With maybe 60% of the latter not being due to more old people, and interest payments also not due to them, that leaves those aging baby boomers responsible for about 2.7%, just equal to the amount of the tax increase assumed to have the budget deficit decline by 0.1% of GDP, and although it is implied otherwise, some of that tax increase presumably would be paid by those elderly.

OK, I agree that old people will increase as a percentage of the population.  The number that appears in the CBPP report shows them rising as a percentage of the population from 15% today to about 20% in 2035, an increase of a third, or 33 and 1/3%.  But the increase in Social Security spending is only a 26% increase, not as much as the increase in the share of old people in the population. The underlying report notes that indeed cuts in Social Security spending already passed will be responsible for this gap, but Samuelson somehow does not note this, and calls for more cuts.  It is the one item he specifically mentions.

However, two of the other three items are projected to increase by more than the rate of increase of the elderly population.  Medicaid is to increase by 37.5% (3/8), an extra 4.5% beyond the population increase and interest on the national debt is to increase by a whopping 84.6%.   Only "other health" to increase by less at 21.7%. In the underlying report slight lip service is given to reining in rising overall medical care costs, but this is largely shoved aside by noting that new techniques will probably cost a lot (far from certain) and that there will be more super old, above 85 years, who really cost a lot.  But, as Dean Baker and others have relentlessly pointed out, we already spend way more than other nations on health care.  At a minimum a serious reining in of future increases ought to be very high on the agenda for the US.  This remains an obvious way to go.

As for the increase in the interest payments, the report does take this projection from a CBO estimate, and so I am not going to say that van der Water is cooking up some unreasonable number.  But this also depends on something else, future Federal Reserve policy.  It is true the Fed has been talking a lot about interest rate increases, but in fact they have delivered much less on that front than they have talked about, and with not that much increase in national debt as a percentage of the GDP projected, it would not take all that much restraint to reduce the increase due to this number.

As it is, as usual, Samuelson says nothing about reducing the interest rate increase number and nothing about reducing the rate of overall health care cost increases.  His only proposal is his usual one, to make further reductions in increased per capita Social Security payments as a percent of GDP beyond those already cooked into the books, although he does not recognize or admit that this is what he is doing.  But then, we have seen this before from him repeatedly, so this is not a surprise.

Barkley Rosser





Saturday, September 9, 2017

What is a Reasonable Royalty for Restasis?

Dean Baker is on the case with respect to the abuse of the patent systems by Allergan:
If you thought the pharmaceutical industry couldn't possibly sink any lower in its pursuit of profits Allergan just proved you wrong. The geniuses at Allergan came up with the brilliant idea of turning over one of its patents on the dry-eye drug Restasis to the Mohawk tribe. The tribe will then lease the patent back to the Allergan. The reason for this silly trick is that the Mohawk tribe, based on its sovereign status, is disputing the right of generic competitors to pursue a case before the Patent Trial and Appeal Board.
Dean says sales are $1.3 billion but last year they almost reached $1.5 billion. This story provides some background:
Allergan could face a new patent risk for its key eye drug Restasis, facing off against generics and specialty pharma Mylan Pharmaceuticals, a subsidiary of the global Mylan N.V. The U.S. Patent Office's Patent Trial and Appeal Board (PTAB) granted Mylan's petition to launch an inter partes review of six Restasis patents, which are due to expire on August 27, 2024. A decision on the reviews, which will assess the patentability of Allergan's claims, is expected in late 2017.
So this gimmick extends the patent life for another 7 years. My understanding of this deal is that the Tribe will receive $15 million in license revenues per year, which represents a royalty rate equal to only 1 percent. I checked the 10-K filing of Allergan and it suggests that the segment operating margin is 75 percent as cost of production is only 5.5 percent of sales and operating expenses are 19.5 percent of sales. Given these financials, one could argue that a reasonable royalty rate is closer to 70 percent rather than only 1 percent. Two thoughts here with the first being that the Tribe should sue arguing for a much higher royalty rate. Of course Allergan could protest that the Tribe never paid Allergan for these patent rights. But of course that would expose just how much of a sham this deal really is.

Thursday, September 7, 2017

The Othering of "Economic Illiteracy"

Noah Smith has written a column at BloombergView, "Don't Believe What Jeff Sessions Said About Jobs," which scolds Attorney General Jeff Sessions for "terrible economics." That may be a bit like carping about Charles Manson's hairstyle or critiquing David Duke's academic integrity. But there is something far more dangerous going on with Smith's knee-jerk invocation of the lump-of-labor fallacy to rebuke Sessions and, presumably, those who might find Sessions's claims credible.

In effect, Smith is falsely equating Sessions's rationale for the expulsion of 800,000 young people who have grown up in the U.S. to Dean Baker's advocacy of work-sharing. Lest that appear to be hyperbole, here is how Smith described Sessions's terrible economics: "It's a classic application of a well-known fallacy called the Lump of Labor  -- the idea that there are a fixed number of jobs in the world, and those jobs get divvied up among people." And here is how Omar al-Ubaydli framed his counterpoint to Dean Baker's case for shorter workweeks: "Proponents of work-sharing believe an economy requires a fixed amount of work to be performed by a limited number of people."

But Smith's is only a relatively tame implementation of the fixed amount of false equivalency racket. Would you believe "collective bargaining = genocide"? Pierre Cahuc and ‎André Zylberberg traversed the obscene false equivalence distance from work-time reduction to genocide in The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy:
The idea that any country's economy, and a fortiori the world economy, contains a fixed number of jobs or hours of work that can be parceled out in different ways is false. When used to justify the policies that reduce the length of the individual work week, it may lead to unintended consequences. ... It can even be dangerous, as when it leads to the notion that getting rid of "superfluous" manpower (the Jews of Nazi Germany in the past, immigrants from many countries in the present) will give work back to indigenous residents.
Of course the above claim is not only false but absurd in the extreme. Work is "parceled out" all the time. A shift manager at Starbucks fills available hours with interchangeable baristas. The number of jobs or number of hours doesn't have to be "fixed" to allow them to be parceled out in different ways. Nevertheless, Cahuc and Zylberberg ride their vile hobby horse from the ominous-sounding "unintended consequences" of reducing the work week to the downright dangerous notion of getting rid of unwanted populations, which somehow begins to sound almost benign compared to those terrifyingly vague unintended consequences. The slippery slope only needed to be greased one short step to encompass the principle of collective bargaining. That step was taken by Thomas Cree in  "The Evils of Collective Bargaining in Trades' Unions" when he described the "economics upside down" that underpinned trade unionism and collective bargaining:
But now, there is a more serious evil than any of the foregoing. It is this, that the power of the union is exercised to enforce regulations which limit production and waste labour. Most workmen believe (and the belief is not confined to workmen) that increase of production per man is an evil. They think they are benefiting their class by doing each as little as possible, so as to make the work go over a greater number; and the desire to relieve the society of out-of-work allowance is a reason for enforcing that view. This is at the root of the demand for an eight hours' day, and for a say in the management in shops, and also a cause of the objections to piecework. In this view exceptional industry is no longer a virtue—it is a fault to be punished not only by disapproval of fellow-workmen but, in some cases, by penalties. In some trades, if a man earns more than a certain wage he is fined, and his employer is fined as well.
As did many of his fellow dogmatists, Cree felt it instructive to obscure the claim of a false belief in a fixed amount of work by embedding it in the "regulations which limited production" and the supposed impulse toward slacking and shirking. The rationale, however is that "most workmen believe... that increase of production per man is evil"... because they assume that there is only a fixed amount of work to be done and thus if one man does more of it than there will be less left for others. This argument was explicated in David Schloss's canonical explanation of "the Theory of the Lump of Labour":
In accordance with this theory it is held that there is a certain fixed amount of work to be done, and that it is best in the interests of the workmen that each shall take care not to do too much work, in order that thus the Lump of Labour may be spread out thin over the whole body of work-people.
Schloss's "Theory of the Lump of Labour" conformed to a template that already was more than a century old, having been expressed in similar terms in 1780 by the Lancashire magistrate, Dorning Rasbotham, in response to factory riots the previous year. Successive iterations of the complaint against the economic illiteracy of workers, handed down from Rasbotham to Schloss, adhered to what Albert O. Hirschman diagnosed as the "rhetoric of reaction." Workers enjoyed "the best of all possible worlds." Any effort on their part to "coerce" employers into paying higher wages or operating shorter hours would inevitably result in -- as Cahuc and Zylberberg put it -- "unintended consequences" that would make them worse off.

But, in what Noah Smith calls "one case where economists get it absolutely right" the consensus of economists -- outside of Econ 101 textbook orthodoxy -- is far less unanimous than he presumes. Among those economists who directly refuted the fallacy claim are Maurice Dobb, A.C. Pigou and Robert Hoxie. Economists who indirectly countered the fallacy claim in their analysis include Sydney J. Chapman, John Maynard Keynes, Joan Robinson, Luigi Pasinetti, John R. Commons, Dorothy W. Douglas, John Maurice Clark and Thorsten Veblen. Amazingly, objections and counter-arguments raised by these economists are never mentioned -- and obviously never addressed -- when the fallacy claim is trotted out. What kind of getting it "absolutely right" is that?

In my view, two of the most effective repudiations of the fallacy claim came from Dobb and Hoxie, both of whom presented alternative explanations for why workers might appear to want to "restrict output." Dobb argued that what workers were after was not maximizing aggregate earnings but maximizing earnings relative to expenditure of time, effort and bodily "wear and tear." Hoxie argued that the tactics and strategies of trade unions were not based on some abstract idea of what was happening in the "economy as a whole" but on everyday experience in a local economy. Dobb referred to the "Work Fund" fallacy, which was another name for the lump of labor:
...trade unionists in the nineteenth century were severely castigated by economists for adhering, it was alleged, to a vicious 'Work Fund' fallacy, which held that there was a limited amount of work to go round and that workers could benefit themselves by restricting the amount of work they did. But the argument as it stands is incorrect. It is not aggregate earnings which are the measure of the benefit obtained by the worker, but his earnings in relation to the work he does — to his output of physical energy or his bodily wear and tear. Just as an employer is interested in his receipts compared with his outgoings, so the worker is presumably interested in what he gets compared with what he gives. A man who works longer hours or is put on piece-rates, and increases the intensity of his work as a result, may earn more money in the course of the week; but he is also suffering more fatigue, and probably requires to spend more on food and recreation and perhaps on doctor’s bills.
Hoxie re-branded the lump of labor as the "fixed group demand theory" and concluded that this theory, in practice, "is simply the application by the unions of the principle of monopoly, admittedly valid":
There is much scorn of unionists by economists and employers because of this lump of labor theory with its corollaries. This scorn is based on the classical supply and demand theory and its variants. Supply is demand. Increased efficiency in production means an increase of social dividend and increased shares, which in turn increase production and saving. Therefore, the workers cut off their own noses when they limit output or limit numbers. The classical position is undoubtedly valid when applied to society as a whole, if there is any such thing, and in the long run. But the trouble is that, so far as the workers are concerned, there is no society as a whole, and no long run, but immediate need and rival social groups.
Both Dobb and Hoxie called attention to the central conceit of the economists' scorn for unionist "theories" -- that somehow those who do not embrace the economic orthodoxy must have a view of economics that is "upside down" relative to the "true" theory. which is to say, same-but-different, with difference indicating deficiency. To put it bluntly, othering

What the hell is "othering"? In a nutshell it is the practice of constituting the self as sovereign Subject by constituting the other as subjugated. 

In the seminal text for the analysis of othering, "The Rani of Sirmur: An Essay in Reading the Archives," Gayatri Chakravorty Spivak presented "three random examples of othering." I'm not sure how "random" these examples were or even if they were random at all. Maybe she meant random as a kind of joke. At any rate, the first example had to do with s young Captain, Geoffrey Birch, riding through the countryside from Delhi to Calcutta "to acquaint the people who they are subject too." 

Spivak's second example was General Sir David Ochterlony, a gentleman, who saw in the locals "all the brutality and purfidy [sic] of the rudest times without the courage and all the depravity and treachery of the modern days without the knowledge or refinement." Her third example concerns some deletions in a letter drafted by the Court of Directors of the East India Company but expunged by the Board of Control. These deletions explicitly spelled out the rationale for withholding technology and knowledge from the natives. The final communique enacted the restrictions without disclosing the reasons.

So what does Spivak's narrative of power, disparagement and knowledge have to do with the lump of labor fallacy or, for that matter, with the expulsion of colonial subjects "dreamers"? My point is that Noah Smith's recourse to the bogus lump-of-labor fallacy claim has a much closer affinity to Attorney General Sessions's remarks blaming "illegal aliens" for denying jobs to Americans than do the latter remarks to Dean Baker's advocacy of shorter work weeks. 

Dorning Rasbotham, Sir David Ochterlony and Jeffrey Beauregard Sessions are reactionary birds of a colonialist feather, along with Thomas Cree,  Pierre Cahuc and ‎André Zylberberg. Sessions's economics is indeed terrible... as is the economics that opposes to it a fraudulent fallacy claim.

Tuesday, September 5, 2017

Sessions, Krugman, DACA and the Lump-of-Labor Fallacy

Now may be a good time to remind people that there can be bad arguments for good causes. There may even be good arguments for bad causes.

Sessions is wrong:
The effect of this unilateral executive amnesty, among other things, contributed to a surge of unaccompanied minors on the southern border that yielded terrible humanitarian consequences. It also denied jobs to hundreds of thousands of Americans by allowing those same jobs to go to illegal aliens.
This is a lie. DACA has not "denied jobs to hundreds of thousands of Americans." But it isn't a lie because it assumes the amount of work to be done is fixed. To make that claim trivializes both the mendacity of the Trump administration and the gullibility of people who believe the lies that demagogues tell them. The alleged "fixed amount of work" has nothing to do with it.

To the extent there is economic illiteracy, the economics profession is the main culprit. Economists have shamelessly touted policies that enrich the rich and impoverish the poor and pooh-poohed egalitarian proposals like work-time reduction. For all too many of them, it's their job. When those policies have exactly the effects they were designed to have, economists become puzzled about where all the inequality is coming from.

In simple terms, when things are not going well for people they tend to scapegoat vulnerable others. This is not "economic illiteracy." It is scapegoating. Ironically, the economic illiteracy claim is itself a form of scapegoating. People stop listening to the experts because the experts have sold their credibility to the highest bidder. Instead of reflecting on why people don't trust them any more, the experts blame it on economic illiteracy.

UPDATE: Here Paul Krugman makes good arguments in defense of DACA and avoids the fixed-amount-of-work straw man distraction. The Very Bad Economics of Killing DACA. Much better.

Monday, September 4, 2017

Why Are We Not Keeping Track Of The Dead From Hurricane Harvey?

It is not surprising that as Hurricane Harvey has finally moved off the Atlantic coast and is over, and the flood waters recede in the various places that it caused damage, it is unsurprising that reporting has moved onto the inside pages of papers and even seems on the verge of disappearing.  But somehow a piece of information that I would think is important, and that I have seen reported more substantially in past disasters, is the number who died as a result of the hurricane.  If one googles "dead from Hurricane Harvey," one gets as the top hits reports from many days ago in which one learns that the number who died is in single digits.

As it is, by digging hard I have found that the number is much higher, but seems unclear, but is only barely being mentioned deep in stories on the event.  After digging hard, I found scattered reports within the last 12 hours.  The number dead are reported to be either 38, 40, 43, 45, 46, or 50.  Those searching through badly flooded buildings, now free from the water, are gradually discovering those who could not escape and drowned.  But somehow these numbers seem to be of little interest.  I remember previous disasters where a few died, and that number would be the big headline, and people would keep track.  But somehow, for reasons I do not understand, the number dead from this event somehow seems to be of little interest to the media, and perhaps even the public. Is this really true, and if so, why?

Somehow I doubt that it is because over 1,200 people have died this season in South Asia from floods as that piece of information has received even less media attention.

Barkley Rosser

Yet Another Republican President Stabs A South Korean President In The Back

[Able to get on here from my home laptop]

Donald Trump has long had a record of doing things one finds not just unbelievable, but seriously outrageous.  However, we may now have seen him do so in a situation involving a really dangerous foreign policy situation, the threat of a war on the Korean peninsula, a war that could involve nuclear weapons and could involve not just thousands, but possibly millions of people dying. The DMZ that separates North and South Korea is the most heavily armed place on the face of this planet, by a long shot, with most of those armaments piled up on the northern side.  It may be of a lower qualitative technological level than what faces it from the southern side, but it is simply enormous in quantity, and quite capable of inflicting massive damage on metropolitan Seoul, only 30 miles south of the DMZ, whose population in the greater metro area approaches 20 million people, a very large number of sitting ducks.

As it is, the DPRK, or North Korea, has been provocatively testing ever more capable missiles and bombs.  A missile that flew over Japan, more or less freaking them out, supposedly has the ability to hit even the east coast of the US.  Kim Jong-un made noises about firing missiles at Guam and Trump made a lot of loud noises.  That Kim backed down led Trump to brag that he knew how to handle Kim.  Meanwhile, new President Moon Jae-in of the ROK, South Korea, supported engaging in peace negotiations, even though Kim Jong-un has so far made no positive responses to that.  Then over the weekend Kim put the cherry on the top by testing a 100 kiloton device that has been advertised as a fusion H-bomb, a qualitative jump to a much more dangerous type of weapon.  Trump's response was to tweet that Moon was pursuing "appeasement" in contrast to his tough way of handling things, which he claims works, despite all this glaring evidence to the contrary.  Kim seems not deterred or suppressed in the least.

But the really outrageous move here is on top of this Trump has declared that he is planning to terminate the free trade agreement with South Korea, not even renogiate it, just cancel it.  Really?  The South Koreans do not support this and like the agreement.  Trump claims that the bilateral trade deficit of the US has increased, which was the immediate outcome of the agreement, but over the last year that has turned around with the deficit declining and has now returned to about what it was when the agreement was signed and continues to move in that direction.  But not to put too fine a point on it, Trump is lying about this as well as stabbing Moon in the back just as he denounces Moon for advocating what Xi Jinping, Vladimir Putin, Angela Merkel, and pretty much every other leader in the world advocates, and even Trump has said he supports on certain days, ready to talk face to face to Kim under the right conditions. But if Moon says it, well, time to cancel that trade agreement, especially since it was another of those things that Obama did.  So, it must go.  The South Koreans are mystified and simply do not even know how to respond to this outrage.  What can they say?  They need the US alliance, even if the man in the White House is a lunatic, which is what they say he is.

I shall note that this is not the first time a Republican president has stabbed a peace-seeking South Korean president in the back. I have blogged on this previously, but back in March 2001, President Bush killed the peace efforts of then ROK President Kim Dae-Jung.  He came to dinner, thinking that the peace process under way from the previous administration and supported by Secretary of State, Colin Powell, would continue.  He was to have a dinner at the White House. But Cheney and Rumsfeld got to Bush and convinced him that a hard line against the DPRK would bring about regime change, a much better outcome, ha ha!  We can see how that turned out.  Kim Dae-Jung went home humiliated.

Most of the discussion of this now goes on about how the North Koreans cheated on nuclear agreements by enriching uranium.  However, those commentators somehow fail to note that the agreements were only about plutonium, not uranium. But "history" has the North Koreans violating agreements, with everybody forgetting how Bush undercut the agreements (and the US never fulfilled parts of it in terms of supplying DPRK with various items).  Trump's back stab is worse, but this is not the first time.

Oh, Moon has responded to Trump's outrageous tweet.  He has pointed out that Korea suffered a "fratricidal war," which he does not want to see again.  He intends to "pursue denuclearization" on the peninsula "by peaceful means" in agreement "with our allies."  Sounds reasonable to me, but at the moment reason does not seem to be in charge of what is going on here.  Let us hope for Moon's view to prevail, somehow or other.

Barkley Rosser

 

Saturday, September 2, 2017

Let Trump Continue To Fail To Appoint People

There has been much moaning and wailing and gnashing of teeth by many commentators and politicians over the failure of President Donald Trump to appoint people to fill numerous now vacant positions within the executive branch of government, with the State Department often being put forward as one of many agencies with many empty chairs in official positions.  However, the other night I heard Lawrence O'Donnell make an interesting point: those empty chairs are being filled in the meantime by long-in-place civil servants who actually know what they are doing and are not Trump-loving hacks and fools.  In departments where he has made appointments, such as the EPA, his appointees have wreaked havoc and done mostly awful things. 

So, let us hope that he gets bogged down in tweeting and blocking possible candidates for these positions because they are insufficiently kowtowing to him.  That way we might have at least some parts of some government agencies run by non-crazy knowledgeable individuals. We can only hope.

Barkley Rosser