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

Monday, August 28, 2017

No To Unprovoked Violence By Anybody

And, sorry, but no, simply saying things one does not agree with does not justify in engaging in unprovoked violence.  This is directed at the recent events in Berkeley where it appears that masked and self-identified "anarchists," (not "antifa members" as Hannity called them), engaged in violence that was not in self-defense. I am not all that happy about people shutting others down from simply speaking publicly, but I am completely opposed to doing this by means of unprovoked violence (self defense as happened in Charlottesville is a different matter).  This applies to what happened at Middlebury College as well. 

There is a very fine line here, but progressives must not fall into the pit of saying that unprovoked violence is acceptable because "those people are bad."  Sorry, not acceptable.  Peaceful counterprotesting as we saw in Boston is the way to go.  Period.

Barkley Rosser