Wednesday, January 31, 2018

Lawrence Summers on Those Employee Bonuses – a Redux of the 1990’s?

Lawrence Summers made an interesting comments during a CNBC interview:
Former Treasury Secretary and Obama administration economic advisor Larry Summers said Friday that recent employee bonuses are stunts and not reflective of long-term hopes for prosperity that tax cuts are supposed to bring. "I think it's a gimmick," Summers told CNBC's "Squawk Alley." "I think in many cases the firms have to raise wages because labor markets are tight, and so why not curry some favor with the White House by linking it to the tax cuts."
During the late 1990’s we saw a temporary surge in demand for R&D personal that was driven by the internet revolution. A lot of the compensation for these employees came in the form of employee stock options. One possible rational for this form of compensation is had these companies raised their employee wages then it might be difficult to curtail compensation if the demand for their products and services fell. In fact we know the internet revolution did have a crash at the turn of the century and the issuance and value of these employee stock options took a hit.

Monday, January 29, 2018

Is Treasury Secretary Mnuchin Right About The Impact Of The Dollar On US Trade?

Maybe yes.

In Davos some days ago Treasury Secretary Mnuchin declared that a lower valued dollar would lead to a lower US trade deficit. The dollar promptly fell several percents and various persons and many observers reacted in horror, most prominently former TreasSec Larry Summers.  He did no actually dispute Mnuchin's claim factually, rather he asserted that people holding that position as he did should follow a strong dollar policy and talk it up, that a lower dollar raises prices of imports (true) and that advocating it is just plain irresponsible, even though his predecessor, Lloyd Bentsen, in the Clinton administration also talked down the dollar at one point as a job-increasing policy.

Dean Baker at Beat the Press responded to all this with two days worth of posts defending the factual basis of Mnuchin's claim against his critics (some of whom did not dispute his facts but rather argued the policy was unwise for other reasons).  He argued that indeed lower values of the currency leads to lower trade deficits, noting experience in the 1980s especially when a strong dollar led to a soaring o the US trade deficit that fed into a sharp decline in manufacturing employment in the US Rust Belt, with the deficit declining as the dollar fell after the 1985 Plaza Accord. He pointed out that a lower dollar lowers the price of US exports abroad, which tends to increase the quantity of exports, and raise the price of imports in the US (as Summers noted), which tends to decrease the quantity of imports.  All of this is indeed true, even if the size of those changes may vary a lot.

Over on Facebook, the secret godfather o this blog, Max Sawicky, reposted Dean's claims, which led the estimable data wonk and socialist critic of Wall Street, Doug Henwood, to demand of Dean to specify exactly how much exports would increase by country and by sector. Apparently he issued this initially on something called Cabalist of which I know nothing.  Apparently Dean did not reply to this request, which would have been very difficult to do in any detail with any degree of credibility.  He then criticized Dean (on Max's FB thread) quite strongly for not laying out the impact on income distribution of a fall in the value of the dollar, which I surmise was what he was really after with his question about a detailed breakout by country and sector of the claimed expansion of exports.  I gave Doug a hard time about him giving Dean such a hard time about this, which led Doug and some others to get vigorously on my case.  So, I think it might be worth laying out in more detail what is likely to be true in all this, given that it seems that a lot of people have taken to spouting hyperbolic nonsense about it.

The first thing that should be noted is that the simple claim by Mnuchin that Dean supported regarding the value of the dollar and the trade balance is not strictly true, although it mostly is. The caveat he should have noted is the well-known phenomenon of the J-curve.  If one graphs trade balance over time following a noticeable devaluation/depreciation of a currency, it often looks like the letter J, initially moving more into  deficit before turning around and moving more towards surplus, with that move usually overwhelming the initial move to deficit. In the immediate run a fall in the value of the dollar increase the trade deficit, but then decreases it in the middle and longer runs.  The reason for the initial increase in trade deficit is that price changes tend to happen faster than quantity changes.  So with no quantity changes, the lower price of exports lowers the value of exports, while the higher price of imports raises their value, thus making the overall trade deficit larger.  Indeed, it is possible for the changes in quantities to fail to overcome this worsening of the terms of trade, an old issue in international trade that even Alfred Marshall knew about, with the Marshall-Lerner condition holding for a fall in currency value to lead to a lowering off any trade deficit (basically sum of import and export elasticities of demand must exceed one, a condition that usually holds for most countries).

Where Dean is right, even if a falling dollar increases the trade deficit (making Mnuchin wrong) is that a falling dollar increases the volume of exports and decreases the volume of imports.  This means that one should expect in the reasonably near term for there to be an increase in employment in the exporting and import-competing sectors, even though consumers will be hurt by higher prices.  I do not know if Mnuchin made this narrower and more accurate argument than his broader more contingent claim about trade balances.

The matter of the income distribution impacts of all this is much more complicated.  On the import side it operates somewhat like protectionism, and in recent years it has been thought that imports have hurt labor incomes as compared with capital incomes, with increased trade having played a role in the rise of capital share in national income.  I am not certain that is the case, but it is widely believed, and it is certainly the case that at least some openings to trade have hurt manufacturing employment as documented by Autor et al recently regarding the outcome of China entering the WTO.  However, the impact of increasing exports from the US  seems far less clear than the impact of reducing imports, and I do not have even the beginning of an  answer, much less some generalization, despite Doug Henwood sneering at Dean Baker that he did not just pop up with one.  US exports have a substantial agricultural component as well as a substantial high skill labor component in software, films, and various services.  Perhaps Dean was looking at those later sectors and viewing their gains as helping out high income workers, although much of agricultural labor is quite low income, and to the extent that loweing imports helps lower to  middle income workers, that  further complicates the picture.  In any case, I do not see some clear or neat outcome regarding the income distribution impact of a lowering the value of the dollar.

Let me conclude that while I agree with Dean that lowering the value of the dollar may will certainly tend to increase the quantity of exports and lower the quantity of imports as well as tend therefore to increase employment somewhat, this does not mean that I necessarily support a "talking down the dollar" policy.  One obvious problem, mentioned by Summers, is that a too obvious and aggressive such  nationalist policy is likely to  call forth retaliation from other nations, just as an aggressively protectionist policy is likely to do.  They will start talking down their currencies and perhaps engage in more direct policies to lower their values, which can easily end up in a "beggar thy neighbor" war as described by Joan Robinson in 1937.  More often than not a wiser policy for a TeasSec is not to push either a strong or weak currency policy and just keep quiet, just as such a policy is often best for central bankers as well, even though the TreasSec is "in charge" of the dollar.  Sometimes asserting that authority is nothing more than a pointless macho exercise.

Barkley Rosser

The Black Unemployment Rate

Josh Marshall listens to Donald Trump so we do not have to:
President Trump has been out bragging that “because of my policies” the African-American unemployment rate has dropped to its lowest level ever. This appears to be technically true. But I thought it made sense to give some context for the nonsensical nature of this claim. As you can see, the idea that this is “because of my policies” is a bit hard to square with the actual data.
Josh provides the data on the black unemployment rate from January 1972 to December 2017. This rate spiked during the Great Recession but fell dramatically during the Obama term and continued its decline. Far enough but this is a very misleading metric. While the black unemployment rate is lower than it was even in 2000, let’s note why. The black labor force participation rate was only 62.1% as of December 2017 as opposed to 66.0 percent in April 2000. A better metric would be to compare the black employment to population rate which reached 61.4% but was only 57.9% as of December 2017. One has to wonder if Trump just thinks we are stupid or if he has just incredibly low expectations.

Friday, January 26, 2018

The Subtle Art of Recognizing a Scam

The following was sent out to the all-faculty-and-staff email list at Evergreen State College today by the chief of campus police.  Some background: The Evergreen State College is abbreviated as TESC and is situated in Thurston County.
A faculty member reported that a person phoned her campus phone impersonating a Thurston County Sheriff.  The person advised them to take money out of their account and go to a local store and wire them the money, otherwise they would be arrested. 
THIS IS A SCAM.  Our TESC employee was lucky that the store employee advised them it was a scam.
 It’s unfair for scam artists to target gullible populations like college professors, don’t you think?

UPDATE: I've just learned that the email quoted above didn't really describe what happened, and I shouldn't have made so much light of the scam.  The scammer had lots of private information about the faculty member and used it to be extremely threatening.  It was a very creepy episode, and not one to get snarky about.  My apologies.

Thursday, January 25, 2018

Parsing the Poland Problem Paradox: Local Versus National Outcomes

As argued in numerous posts here, we have seen an apparently emerging disconnect between economic conditions and political outcomes in a variety of nations, with anti-immigrant or more generally nationalist or populist parties with authoritarian tendencies gaining strength in many nations despite apparently improving or even largely pretty good economic conditions.  A list of those showing this includes Poland, the US, Germany, UK with the Brexit vote, Austria, Sweden, the Netherlands, and some others (I had Iran on the list, but it seems to a more complicated case).  I labeled this phenomenon to be the "Poland problem," with the Law and Justice Party coming to power in 2015, despite Poland having been probably the best economically performing of all the European transition economies, as well as being the only European nation not to having gone into recession in 2009.

Now a study by Yann Algan, Sergei Guriev, Elias Papaionnou, and Eugenia Passari at Pro Market (and linked to today by Mark Thoma at Economistsview) finds that if one looks closely at local economic conditions in parts of European nations over recent years, specifically changes in unemployment rates, one finds that there seems to be a relationship between such increases and increased support for "populist" parties, a "specter hanging over Europe."  I find the study reasonably persuasive.  So this would mean that a possible explanation for the Poland problem is that unhappiness in suffering and poorer regions overwhelms broader good economic performance in nations, leading in some cases to actual takeovers by these parties.

I note that for at least some nations where I know the geographic details better, this fits with the odd situation where those regions voting most vigorously for strongly anti-immigrant parties are also th regions with fewest immigrants.  This reminds me of the old wisecrack about Poland from 1968 when there was a major outbreak of anti-Semitism that Poland was showing how to have anti-Semitism while having few Jews.

We should note that while this local outcome finding reasserts the standard link between economic conditions and political outcomes, the Poland problem does not completely go away.  The hard fact is that while indeed we see worsened economic conditions leading to voting for political change, we see these cases where in fact conditions in the nations as a whole are/were pretty good.  But those good conditions in other parts of these nations fail to deliver satisfaction sufficient to save the incumbent parties.  We have seen such local behavior previously without this sort of outcome happening at the national level.

I shall add two further notes on the case of the US, some of which I already made in my earlier post on the US having a Poland problem.  One is that in fact looking at the popular vote, the better national conditions did offset the locally bad ones in the Rust Belt in that in fact Clinton won the popular vote fairly solidly over Trump.  But the shifts in those Rust Belt states crucially shifted electoral votes so that Trump won the electoral vote and became president.

There is also a more complicating aspect to this.  Without doubt parts of the states that shifted between 2012 and 2016 in the Rust Belt, IA, WI, MI, OH, and PA, fit the ProMarket story. : especially in PA and OH.  We see locations such as Scranton-Wilkes Barre and Erie in PA having bad economic conditions and switching sharply from Dem to GOP between 2012 and 2016.  In OH Youngstown also fits this as well as some manufacturing urban areas in MI.  But important lrgions in these states did not fit the story.  In particular reasonably well-off rural areas in parts of OH, MI, WI, and IA, with these areas the key for the switch in state outcomes in the latter two, especially southwestern Wisconsin and southern Iowa, the state with the largest percentage change in vote.  These changes were not driven by bad economic conditions.  Some of these, especially in SW WI, switched just prior to the election, with the infamous Comey email story likely playing a major role.

Of course today we have Trump facing a Poland problem: US economy clearly growing solidly, with well over 50% of voters saying so.  But Trump's support is a good 20% lower.  I have read that Trump and some of his associates quoting James Carville on "It's the economy, stupid," hoping that a big advertising campaign pushing the supposedly stimulative effect of the GOP tax cut.  It may well be that they are not going to succeed, and Trump and GOP will fall victim to the US version of the Poland program as the GOP takes a large hit this fall in a Dem wave, despite the economy doing well.

Barkley Rosser


Is Trump's Washing Machine Tariff To Punish South Korea For Being Too Friendly With North Korea?

I have seen nobody claim this, and this may simply be a matter of collateral damage, as Trump has officially approved of the recent openings related to the forthcoming Winter Olympics in South Korea, especially since South Korean President Moon went out of his way to give credit to Trump publicly for this opening, credit Trump publicly accepted.  It is probably more that Trump simply is not thinking, but it is also the case that he had previously dissed moves by Moon to follow a more peaceful approach to North Korea.

For anybody who does not know, South Korea is the leading source of washing machines imported into the US, so South Korea will take the largest hit from the recently announced by Trump tariff hike on washing machines.  It may have nothing to do with South Korea at all, with the fact that domestic producer Whirlpool being located in politically sensitive Ohio that played a major role, with Dem Sen. Sherrod Brown praising Trump's move (and the tariff on solar cells probably part of his ongoing effort to help domestic fossil fuels, especially coal).

OTOH, Trump has for some time been railing against the free trade agreement with South Korea, even as South Korea has been under this war threat from North Korea.  Trump preferred disgraced former President Park to leftier current President Moon.  But aside from his general protectionist MAGA theme, probably the most likely reason Trump has fussed about the Korean agreement rather than some other strictly bilateral ones is that it came about while Obama was president.  And we know well that he seems obsessed with undoing every jot and wiggle of anything Obama did.  That this would harm a nation his foreign policy actions have been putting under serious threat has not slowed him down much on this, although this washing machine tariff seems to be the first actual move against South Korea economically.

In any case, probably this move was not primarily driven by a desire to punish South Korea for being to wussy soft with North Korea, but it is certainly consistent with such a motive.

Barkley Rosser

Tuesday, January 16, 2018

Are Voters In Nations With A Poland Problem Especially Sophisticated?

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

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

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

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

Barkley Rosser  

Sunday, January 14, 2018

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

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

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

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

Barkley Rosser

Thursday, January 11, 2018

Negative Interest Rates and a Term Structure Puzzle

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

Wednesday, January 10, 2018

Does the United States Have A "Poland Problem"?

It certainly looks like it.

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

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

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

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

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

Barkley Rosser

Monday, January 8, 2018

Round numbers

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

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

Presented as a public service.

Sunday, January 7, 2018

How Trump Killed The Anti-Government Protests In Iran

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

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

Barkley Rosser

Thursday, January 4, 2018

Does Germany Have A Poland Problem?

Most definitely (hahahahahaha!).

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

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

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

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

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

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

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

Barkley Rosser

Wednesday, January 3, 2018

Who said there is only a certain quantity of work to be done?

Support the Census

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

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

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

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

Monday, January 1, 2018

Does Iran Have A "Poland Problem"?

Maybe somewhat, but not as much as Poland does, with a "Poland problem" being where a well performing economy does not prevent political unhappiness.  Iran is experiencing massive demonstrations that are heavily driven by economic complaints, even though economic performance has improved since the adoption and approval of the JCPOA nuclear deal.  Prior to that, in the face of economic sanctions, the Iranian economy was in recession, with GDP actually declining.  Unhappiness with this led to the election of moderate Rouhani as president, who negotiated the JCPOA, which led to the end of most, but not all (especially those by the US), of the economic sanctions.  As a result, oil exports have risen, and GDP has been growing at 4.5% recently, but it seems that few of the gains from this have "trickled down," with inflation now rising above 10%.  Aggravating the situation is perception of corruption by the ruling clerical elite, who control large portions of the economy through the bonyad religious foundations.  An irony is that many of those enterprises were once owned by cronies of the former Shah with his regime accused of corruption.

This is a very complicated situation, and I think we do not have full information about all that is going on.  However, while some of the protests have aimed at Rohani, increasingly some of it has been directed at the top leader, the Vali-e-faqi, or Supreme Jurisprudent, the unelected Ayatollah Ali Khameini, with reports of crowds chanting "Death to Khameini" and burning photos of his face.  It also should be noted that while not nearly as deadly as the Green Movement demonstrations against apparent electoral fraud in 2009, they seem much more widespread across many cities in Iran, while the 2009 events were largely in Tehran and a few other largest cities.

It is important to keep in mind how power is held and distributed in Iran as one sees all kinds of characterizations about it, including declarations that Iran is a "dictatorship."  It is not, but it is true that the unelected leader (Khameini) has more power than an elected one (Rouhani).  In particular, Khameini is the Commander-in-Chief of the military as well as being in charge of the judicial system based on Shia Sharia, as the proper translation of his official title as "Supreme Jurisprudent" indicates.  While he does not directly control them, it is the clerical hierarchy under him, along with parts of the military, that control the bonyads that constitute probably more than a quarter of the economy, which also has indicative planning and a substantial state-owned sector.  This latter part is more under the control of the elected president and his economics minister, as well as having more control over the Iranian central bank.

The "Poland problem" part involves those parts of the economy that can be influenced by Rouhani and his secular ministers and bureaucrats.  Somewhat like in Poland, he can be partly blamed for  not increasing redistribution or aid for the broader population.  The part he does not control is the massive corruption tied to the bonyads and the clerically controlled parts of the economy.  Long simmering unhappiness over this corruption appears to have finally exploded, although  Rouhani and his government are also being blamed.  I have no idea where this is going, but I fear that many more could end up dead than the two who have been killed so far reportedly.

I must make a comment about the incoherent response by President Trump.  It looked to be true that a target of the protests has been increasing funding going to the military for Iran's foreign adventures.  But Trump supports the same thing in the US, even though he ran against such a policy.  He is also moving to increase both inequality as well as "swampy" corruption, even though he also ran against those.

Of course the biggest problem from him has been his ongoing efforts to undo the JCPOA nuclear deal that led to what economic improvement Iran has experienced.  He has resisted removing remaining sanctions (in place against human rights violations and missile development), thus aggravating the Iran economic problems, and he clearly wants to simply end the JCPOA and reimpose harsher sanctions.  His proclaimed sympathy for protesting Iranian citizens looks hypocritical (along with the fact that he is blocking any Iranians wanting to escape to the US from doing so).

A final point many do not realize.  Those who want to end the JCPOA have also called for a regime change end of the theocratic regime, which could happen.  However, those pushing for this, many of whom thought the US should have given more active support to the failed Green Movement in 2009, do not realize that civilian nuclear power is very popular in Iran.  The Green Movement supported civilian nuclear power, even as they did not support it military nuclear program.  This was basically the position of Rouhani, who was not only elected on such a platform but reelected, even as Trump has ignored that and praised the truly dictatorial absolute monarchy of Saudi Arabia.  If indeed the theocracy of Khameini were to  be overthrown, Iran would almost certainly continue to pursue a civilian nuclear power program, if not a military one.

Barkley Rosser