Wednesday, July 30, 2014


Two Problems in One


In the decadence of the Soviet system the saying was "they pretend to pay us and we pretend to work." Something like that may be happening in our country, though it's hard to quantify. I think the phenomenon is manifesting itself in the lousy morale of government workers and the corresponding mediocre performance by employees in the VA, IRS, and government labs. I've got to believe that the combination of years of wage freezes and non-stop public abuse of government workers—bureaucrats, teachers, scientists—is taking a toll. And why would you expect the people who clean houses and flip burgers to go on trying one iota more than they absolutely must if they have nothing whatsoever to look forward to and everybody keeps telling them that the only reason they haven't risen into prosperity is their own human worthlessness? 

Positive reinforcement works, but it isn't just millionaires who need it. Part of the problem with great inequality is that paying so much to the very top of the distribution leaves little left to reward the efforts of those below.

There are two problems we've got to deal with:

1. The distribution of incomes between bottom and top is too great

2. There is insufficient social mobility.

These are distinct problems, and confusing 'em messes up the debate. It's a good thing if burger flippers can go back to school and rise in the world, but not everybody is going to rise and those burgers still need to be flipped. Not every body is going to be a Horatio Alger hero. After all, the boss has only so many daughters. Considerations of fairness or decency aside, what’s the upside of leaving so many people in a state of wretchedness?

Time was people spoke about the dignity of work, not the dignity of work as a steppingstone to becoming a manager and owning 168 pizza restaurants, but the dignity of doing the job itself. In any case, if you expect people to do their jobs well year after year, you better figure out some way of rewarding them for their efforts instead of treating them with non-stop disrespect. The meritocratic ideology implies that the losers are dreck. Those of us who are doing OK may not notice the implication, but I'm pretty sure that much of the population is very well aware of it—no Protestant ethic without a large and populous hell.

Monday, June 16, 2014

The Garden of F****** Paths

The situation in the Middle East is so complex that it is impossible even to come up with a single adequate metaphor: Borromean rings? Russian dolls? the Chinese finger trap? Jenga? Pick up sticks? Evidently, an epic poem on these events will have to written in fractalic hexameter. But I will be told it’s all really very simple when you factor in: 
The energy crisis, fundamentalisms and other versions of reactionary modernism, the injured pride of Islamic nations, the unresolved stress of modernization, sexual politics, globalization, various ghosts of the 19th Century’s Great Game, the desire of the Persians to finally get even with the Arabs, the cyclic struggle of the nomads and the city dwellers (ibn Khaldun!), the mutual hatred of Sunnis and Shias, America’s quest for the mirage of ultimate safety, the forceful imposition of liberal democracy overseas sponsored by people who hate liberal democracy at home, climate change with accompanying drought and environmental degradation, the final collapse of the Sykes Picot agreement as part of the ongoing demise of the Westfalian system of international relations, the clash of civilizations, demographic trends (too many adolescent males), Facebook and Twitter, the covert alliance of the Saudis and the Israelis, the inability of states to control their intelligence apparatuses, irredentist nationalisms (Turks, Israelis, Kurds, and Syrians), the revived Cold War between Russia and U.S., the aspirations awakened during the Arab Spring, the persistence of archaic forms of government (sheiks and kings), the activities of irresponsible plutocrats, political paralysis in America, European disunity and economic stagnation, state breakdown in Pakistan, entrepreneurial terrorism, and whatever else I’m too lazy to write down.
People search for the basic cause of every great historical catastrophe, but the true explanation of such explosions is precisely the absence of a single basic cause. The French Revolution, the outbreak of World War I, the current impasse in the Middle East are crises made out of crises, knots of imbricated contradictions too intricate to unravel except with a sword. Unfortunately, there are always many would-be Alexanders around who are likely to lose patience at the same time. Hence the otherwise inexplicable suicidal stupidities that characterize such conjunctions, mostly committed by leaders trying to be statesmen when the situation calls out for politicians.

Sunday, May 25, 2014



Spell Pneumonia 

I’ve been anticipating the counterattack for some time. The media success of Piketty’s Capital in the 21st Century guaranteed that the defenders of the oligarchic order of our times would come up with a more effective defense than the purely reflexive preliminary spasms, which pretty well came down to a combination of “He’s a Marxist!” and “Our shit does not stink!” I note that after a series of brainstorming sessions that probably played like a scene from the twenty-third season of Mad Men, the consultants decided to fall back on the same denialist script that had proven so successful in service to the Book of Genesis, tobacco, and fossil fuels. In law, the technique is known as pettyfogging. In war, it is pretty much the strategy used in another bad cause by Kesselring in the Italian campaign. The basic idea is to exhaust the opponent or at least delay defeat by making the contest a series of bitter struggles about trifling technical details or meaningless hilltops. The Creationists claim that evolution is in doubt because there is an overturned stratum in Wyoming. The tobacco lobby points to a misplaced decimal point in a government study. “It’s snowing!” So now we’re going to be treated to a campaign of nitpicking about the statistics in Piketty’s book. The aim is to create the impression that there is some genuine dispute about whether wealth and income inequality is increasing.

That there are errors in Piketty’s tome is quite inevitable. A big book is a big evil, as Callimachus opined a couple of millennia ago and I can assure you is true having served as the editor of a three-semester calculus textbook. Specific errors are of less moment in a work drawing general conclusions from history than in proving a theorem. Unlike many other economists, Piketty’s preferred style of argument is inductive, which is why his book is more reminiscent of The Origin of Species than Das Kapital. Like Darwin, Piketty piled up corroborating data in enormous heaps, an approach whose validity depends on the balance of evidence, not the accuracy of any given data point. In contrast, the patented denialist PR methodology appeals to a Popperian or perhaps pop Popperian epistemology, that is, it depends on the thesis that only negative results really matter in science because of the logic of conditional sentences. If p implies q, q doesn’t imply p. Not q, however, does imply not p. Which would be decisive indeed in a piece of deductive reasoning. The logic doesn’t really apply to empirical work; but for polemic purposes, the focus on falsification is convenient because it means that the critic doesn’t have to worry about the mass of positive evidence. It’s not an accident that creationists don’t know much geology, biogeography, or biology. If all you want to do is cast doubt, all that’s needed is a counter example or two. Why fill your precious mind with irrelevances?

Evidence does matter, and Piketty will have to address any errors discovered in the vast databases that underlie Capital in the Twenty First Century. That’s the normal process of research conducted in good faith. Unlike many other economists, notably Reinhart and Rogoff whose influential paper really did have meaningful errors, Piketty shows his work so as to facilitate both criticism and improvement. Everything has always been available either in the text itself or on the net. Meanwhile, the op/ed writers at WSJ will leap on any imperfection as definitive proof that there’s nothing to the general conclusions of this ongoing work and that we can safely ignore the multiple strands of evidence for a powerful worldwide trend because of technical issues about the proper way to construe a single English time series. Meanwhile, the evidence for a new Gilded Age was overwhelming before Piketty and remains so.

Old joke: a black guy dies and shows up at the Pearly Gates where he finds he’s third in line. St. Peter explains to the first man in line, who's white, that everything seems to be in order but there is the formality of one last test. “Spell ‘cat.’” Same drill with the next person, a white lady, “Spell ‘dog.’” Well, you see where this is going. In economics, it’s slightly different. If you’re furthering the approved politics, demonstration consists of drawing two intersecting straight lines in a rectangle and triumphantly asserting “See!” If, like Piketty, you’ve made an elaborate case for the proposition that everything doesn’t work out for the best in the best of all possible worlds, that there is no working thermostat that automatically prevents the runaway concentration of wealth and incomes, it’s time to spell pneumonia.

Friday, May 02, 2014


Publishing News


In an attempt to widen the appeal of the best seller to conservatives, Belknap Press has made a deal with Regency Publishing to jointly publish an alternative edition of Thomas Piketty’s Capitalism in the 21st Century. The new version will retain all the charts, graphs, and data from the old book but will feature a long forward by Paul Ryan that puts the growth of inequality in a different light. Writes Ryan, “It may be true that capitalism has an in-built tendency to redistribute wealth upward, but that doesn’t mean that human effort wasn’t needed. It would be unfair not to recognize the contributions of the Republican party to the process.”  The new version is slated to appear in October of this year. Tentative title: The Victory Lap.

Thursday, February 06, 2014


What Homer Called Stealing in the Mind


There really isn’t a debate going on about the meaning of the Congressional Budget Office’s report on the economic effects of the ACA. There’s a spinning contest, though a one-sided one so far. For right wing types, the strategy is to ignore the bulk of the report, which basically concludes that Obamacare won’t hurt the budget and is succeeding in insuring millions of the formerly insured, in order to claim that it will cost a couple of million jobs.  The report doesn’t actually say that. It projects that Obamacare will reduce the number of hours that people will chose to work. To quote the report itself:   



The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses' demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).



When called on their misrepresentation of the facts, the Conservatives switch to a slightly different line. One of them argued to me “in the macro fewer folks choosing to work means lower output and living standards.” Ignoring the obvious dishonesty involved in changing your story when you get caught in a lie, this argument, which sounds like it comes from the 40s—the 1840s—has an interesting implication. Any universal health care system whatsoever has the effect of reducing the need for some people to work and thus the number of hours worked. Of course, the eight-hour working day, restrictions on child labor, and social security have exactly the same tendency, except to a vastly greater extent, which no doubt explains why the U.S. experienced a marked decline in output and living standards in the years after the introduction of these well-meaning but economically na├»ve measures. They all have the effect of reducing the desperation that is the only effective means of getting the slackers to move off their ass, at least in the view of the latest generation of Manchester mill owners.



One of the ironies here is that the probable net effect of measures like Obamacare is to increase employment because we’re obviously in a period of depressed demand and the ACA transfers wealth to people who will spend it—the Congressional Budget Office report makes that point, too, not that we’ll be able to read about it in the Wall Street Journal. That we don’t have a problem of lower output caused by insufficient factors of supply is pretty obvious when you consider the piles of cash that so many corporations are currently sitting on and the armies of people clamoring for work. The genuine objection to the ACA is not that it reduces living standards but that it doesn't increase the living standards of the right kind of people, that, and it doesn’t properly chastise the slackers.


Well, what’s going on here is not really a debate about economic theories but much more a matter of values or rather, what’s going on in economics is a debate about values. Behind the Neo-Scroogian economics of the plutocrats is a sort of upside down version of an argument of John Rawls. For liberals, inequality is defensible if a system with different rewards leads to an improvement in everyone’s condition of life. For conservatives, a lower level of general prosperity is defensible if that’s what’s required to maintain an appropriate level of inequality. The problem with measures to reduce inequality is that they reduce inequality, not that they harm the economy.

Monday, January 27, 2014


Not Merely a Theoretical Deduction


Libertarians wish to limit the role of the state to specific, sharply circumscribed tasks, among which the protection of property rights is by far the most important. It is therefore not correct to assume that libertarians are calling for a smaller state since the imperative need to protect property calls for any means necessary and that often includes a much larger state. No doubt Libertarians would prefer a tiny state, indeed one small enough to drown in the bathtub, but that’s a utopian goal impractical for the foreseeable future for existing Libertarianism, aka Libertarianism in one country. In fact, under contemporary circumstances, the Libertarian program is a recipe for a greatly enlarged state. That’s because the greater the degree of inequality in a society, the more pressing the need for a powerful government to protect the possessors of great wealth by maintaining an enormous military, by hiring additional police and giving them a freer hand, by making the justice system more punitive and arbitrary, by building more prisons and filling them up, by instituting comprehensive surveillance systems, and by infiltrating possible dissident groups with spies and provocateurs. Of course, one could hope—one could have hoped—that inequality would not grow to the point that all this would be necessary; but here’s the problem. While libertarianism is keen on the state’s police power, it insists that government has no business doing anything that would effectively lessen inequality. Unfortunately, the existing economic system has a built-in tendency to increase disparities of wealth and income if only because the best way to acquire money is to already possess it. This built-in positive feedback loop has profoundly destabilizing effects, which is why all the developed nations have developed mechanisms of income and wealth redistribution, not to destroy capitalism, but precisely to allow it to continue. Libertarianism maintains that all of these mechanisms—progressive income and inheritance taxes, welfare, public education, social insurance schemes, universal health insurance—are illegitimate. In the absence of effective redistribution, the only option is greater state power to protect the haves from the have nots. Libertarianism, for all its advertised hostility to government, promotes a larger state much as the Bolsheviks created a totalitarian state in the name of a philosophy that called for the withering away of the state.

Friday, December 27, 2013


Because I Say So


Religions commonly make obviously false assertions—resurrection, transubstantiation, personal immortality—because it wouldn't be enough of a test of loyalty to ask believers to believe in something that was likely or even possible. I think the tenacity with which police and courts cling to outlawing pot has a similar rationale. How would it demonstrate the unquestionable power of the state to outlaw behavior that everybody, including criminals, knows to be wrong? You might as well have a plausible religion. What fun would that be? Which is why the more evidence accumulates for the relative harmlessness or even medical value of marijuana, the more the authorities will resist legalizing it. Of course they may eventually lose that fight. If so, I predict they’ll find some other practice of equivalent triviality and outlaw that, particularly if it is associated with minorities since the other great function of unreasonable laws is to provide a pretext for keeping the nigras down.