Monday, December 31, 2018

On Some Predictions

I am not somebody who makes endo/beginning of year predictions, and I am not about to stsrt now.  But I have just read a guest post by Jeffrey Frankel on Econbrowser where he brags about making six accurate predictions for 2018 while not reporting on some others he made that did not work out so well.  I happened to largely agree with them when I saw him making them, with some questions on two, while myself quitely making some that failed to come true.  I shall comment.

Frankel's six predictions were: 1) market volatility would increase (presumably across many markets), one I expected and that clearly has come true; 2) the stock market would fall, which I had mixed feelings on, thinking that indeed the bull market of 2017 was over but given my expectation of high volartilty unsure how it would end and indeed the markets did hit new all time highs a few months ago, only to plunge more recently to end the year lower. 3) that Trump would switch from criticizing the Fed for not raising interest rates fast enough to for it raising them too fast, with my only caveat there being that I think he was already in 2017 makking noises about wanting the Fed not to raise interest rates too fast; 4) that minerals prices would fall, with my view on this being basically the same as my view on the stock markets, expecting greater volatility without being sure of where they would be at this point and with them indeed not too long ago being well above starting year levels if now lower; 5) tax cuts wouls raise deficits, for sure, and 6) those deficits would raise both the dollar and the current account deficit, darned tooting.

So where did things not go as I expected, or to be more precise, where I hoped, having fears that what happened might well happen?  The most important was his decision to withdraw from the JCPOA, the Iran nuclea deal.  I feared that he might ddo that, but as of a year ago he had continued to verify that Iran was obeying the agreement, and most importantly he has in place a trio of advisers supporting sticking with the agreement, notable SeeState Tillerson, NatSec Adviser McMaster, and SecDef Mattis.  As it was, he  removed those first two not too long before he withdrew from the agreement, replacing them with Iran hawks, Pompeo at State and Bolton as Nat Sec adviser, with Mattis clearly sidelined and now out as of tomorrow, with this decision a facto in his resignation.

What has surprised me more than that Trump made this withdrawal, which I certainly viewed as a serious possibility, has been that his reimposition of economic sanctions has had as big of an impact as it has.  Aside from the rump of Israel, KSA, Bahrain, UAE, Egypt, and one or  two other minor powers, no other narion has supported Trump's withdrawal from the agreement, in particular none of the other signatories to the agreement: UK, France, Germany, EU, Russia, and China, with the UNSC also a party to it.  But despite this near-solid political opposition, many private corporations, especially those based in Europe, have repsonded to the threat of not having access to  US markets and have withdrawn from doing business with Iran, with France's Total a poster boy for this.  Also, many nstions not part of the agreement have reduced, if not fully elminated, importing oil from Iran.  I did not expect this level of obedience to Trump's reimposition of economic sanctions, given all that political lack of agreement, but indeed  he has gotten away with it and may yet convince the SWIFT system to cut off Iran.  The impact on the already not too-well-performing Iranian economy has by all reports been pretty substantial.

That said, Iran has responded by making no changes in policies.  Some of this is good, most importantly continuing to adhere to the JCPOA with the strong political, if not economic, support of the other signatories (some, especially Russia and to a lesser degree China, have not cut back economic support or have even increased it some).  OTOH, Iran has continued to engage in missile tests and some other activities that are not supported by other nations and which do not particularly add to peace in the region, although I understand that their obvious response is not to cave at all too demands being made by Trump.  Indeed, again, I am glad they have not responded by themselves withdrawing from the agreement and restarting substantial uranium enrichment activities.

I note as sort of an aside that I do not think despite their rhetoric that what has bothered the Israelis so much has been the threat of Iran getting nuclear weapons, which I think they know has been not likely to happen any time soon if at all.  Rather their more immediate concern has been trying to keep Hezbollah weak, whom they were unable to fully defeat in 2006.  So they see the economic sanctions as helping them by making it harder for Iran to arm Hezbollah, although I gather that Iran has not particularly altered its activity on that front.

Something else that has surpised me somewhat has been how little Trump has suffered politically for this move in the US.  Indeed, if anything it seems to have been a hit, with him getting praised for having "fulfilled a campaign promise," even if this has led to widespread condemnation and ridicule around the world.  But I guess this shows how isolated the US public is from the rest of the world, especially thos in the Fox News/Trump news bubble.  Some of his other bad decisions seem to have been similarly motivated: to satisfy unwise campaign promises.  I kind of suspect a motive for this is all the reporting about his constant lying.  Maybe he lies 15 times per day, but, wow, look at him keep this campagin promises! 

The other area where I feel I have not made good predictions, although in fact I made none and I think I accurately understood that it was unwise to make any given the unpredictability of Trump, has been with regard to his trade wars.  Really, I am not sure  what I expected, but I know that I thought that if he actually would come to an agreement with Canada and Mexico on a new NAFTA, which I did not expect, I did not expect that it would involve him keeping in place the steel and aluminum tariffs against them with them going along with that.  Of course, it may well be that his NAFTA 2.0 may fail to get ratified by the incoming Congress, but I did not expect this.  I suspect that his adherence to those tariffs really is tied to his obsession with helping the coal industry as well as more generally the industrial Midwest, even as the steel tariffs have hurt the Midwest auto industry.  But metallurgical coal output and employment is up, even if electric power demand for coal has continues to decline.  This is probably the political motive behind this particulae outcome.  But, again, I really do not know what he is up to with trade or where he is going, esepcially given that he clearly believes strongly in a lot of rank nonsense such as that bilateral trade balances indicate one nation winning at the expense od the other.

In the meantime, Happy Gegorian New Year to one and all.

Barkley Rosser

30 comments:

2slugbaits said...

Barkley, You follow this closer than I do, but my understanding was that the lid on Iranian oil exports was not actually quite as tight as initially advertised. Trump agreed to a number of important exceptions and these exceptions surprised the Saudis, who had agreed to increase production under the assumption that Iranian exports would fall off the cliff.

I suspect the Iranians have concluded that the pain from Trump's withdrawing from the JCPOA is only a temporary issue and they are betting that Trump loses in 2020, as seems likely. That said, I agree that our allies are spineless.

rosserjb@jmu.edu said...

You are right 2slugbaits, there a bunch of exceptions especially regarding the oil saanctionns matter, with those exceptionns related to close US allies, especially South Korea.

Anonymous said...

"The problem with your comment is that Klein is not an economist, although she pretends to be one...."

-- Barkley Rosser

Really, really creepy. Do keep trying to demean and intimidate a superb scholar, who happens to be a woman. I am so impressed by such creepy sexism.

Anonymous said...

"The problem with your comment is that Klein is not an economist, although she pretends to be one...."

-- Barkley Rosser

Definitive, intimidating sexism. Be proud.

Anonymous said...

Oh, this end of year, beginning of year discussion was well done, however angry I may be for the previous sexism which I will not be forgetting.

Anonymous said...

What you might do of course is apologize.

rosserjb@jmu.edu said...

Why, Anonymous? I criticize plenty of people, mostly males. When I dump on Egmont I get much rougher than my remarkss on Klein, which made no reference to her gender. `Are women not to be criticized for what they write? Thst is just stupid snd silly.

Sorry, she is overrated. No apologies. And you are making an ass of yourself with this silliness. No wonder you are posting this nonsense anonymously.


And, btw, it is simply a fact that she is not an economist, although maybe some of her scholarly work is good. I would grant that not everything she writes on econ is either wrong or stupid, but some of it is.

Anonymous said...

Barkley Rosser, you are a vicious sexist. Your comments about Naomi Klein are rotten and shameless, but at least there is no mistaking how viciously sexist you are.

Of course your vicious sexism means any woman must post anonymously.

Anonymous said...

"Anonymous," you are the sexist here. And if you really do value efforts to combat sexism, you should understand that you are doing no justice to that cause with what is a groundless criticism with no backing whatsoever--just the kind of baseless claims that the Right love to bandy about when they talk about "snowflakes" and "SJW."

Sandwichman said...

Barkley Rosser is NOT a vicious sexist. Anonymous is undermining her(?) case by overstating it. As I mentioned in a comment on the previous post, I think there are some structural factors at play here that have to do with male socialization. That is a different matter.

Barkley Rosser said...


Oh dear, Anonymous 1: let me promise that if you are a woman and you post under your own name, I shall not call you "overrated," unless you happen to Naomi Klein or somebody else who I think is overrated. Have you written some big-selling books? As it is, I have a long list of males, both economists and non-economists, whom I consider to be overrated, but I am not going to bore people by spouting it out, although if somebody starts praising one of them excessively in my view, I shall most definitely report my view that they are overrated.

Anonymous said...

"The problem with your comment is that Klein is not an economist, although she pretends to be one...."

-- Barkley Rosser

Sickening sexism, and a lie, since Naomi Klein pretends nothing of the sort and since Naomi Klein is a superb writer.

Oh, I have no idea what "snowflake" means and do not care.

Anonymous said...

Sandwichman:

That Brad DeLong and Tyler Cowen made a point of profanely (yes, profanely) savaging Klein was no accident but a way of intimidating any woman writing on economics with whom they might disagree.

Naomi Klein never "pretends" to be other than the researcher, writer she is.

Sandwichman said...

Anonymous,

I am not defending Brad DeLong or Tyler Cowen and I am not criticizing Naomi Klein. Addressing your last comment to me is a non sequitur.

rosserjb@jmu.edu said...

You are completely losing it here, Anonymous 1, although you had already pretty much put whatever respect I might have had totallly into a toilet. Now you seem to be completely losing your mind.

"snowflake"? Nobody here at all has used this word at all. Why are you dragging it in? This is nuts.

I do not know what either Brad DeLong or Tyler Cowen has recently said about Naomi Klein's work, but I not that they are economists who do not agree with each other on all that much. As with "snowflake" I do not know what relevance anything either of them has had to say about Klein's work is for this thread. Despite their disagreements with each other, both are pretty smart and knowledgeable about a lot.

BTW, speaking of Cowen, just four days ago I accused Cown on his blog of "overrating" Scott Sumner, yes that word, and Sumner is a guy. He rather foolishly saaid that the drug war was caused by behavioral economics, something pretty stupid to say, but Tyler was linking to this nonsense with apparent approval. So, as I previously said, I can and do call both men and women "overrated" when it seems it is deserved.

As for veing a "good writer," that may be true, but it is more important to present accurate facts and arguments than to state them in well-written language.

Anonymous said...

https://twitter.com/paulkrugman/status/1081570604610916357

Paul Krugman @paulkrugman

Mostly right, but there is also a fair amount of male economists being assholes to other male economists. Don't mean to suggest absence of sexism -- far from it -- but it's broader than that. Also, by the way, difference between subfields. Intl trade not nearly as bad as macro

Jim Tankersley @jimtankersley

“Aggressiveness” — a word this panel keeps bringing up — is more or less a polite way of saying, male economists being assholes to women.

7:18 AM - 5 Jan 2019

Anonymous said...

So that I am perfectly clear, the sexism here is shamelessly rotten. Do go on with the rotten bullying however which is what sexists are always about when complaining about being so accomodating to women.

The criticism of Naomi Klein here is definitively creepily sexist, but do go on and criticize me now to show how much you really do appreciate women.

Anonymous said...

So that the pretenders to be decent here not forget:

"The problem with your comment is that Klein is not an economist, although she pretends to be one...."

-- Barkley Rosser

Anonymous said...

I know, I know, the problem is women being snow-flakes or snow-geese or whatever:

http://delong.typepad.com/sdj/2010/04/hoisted-from-the-archives-tyler-cowen-thinks-naomi-klein-believes-her-own-bulls------grasping-reality-with-tractor-beams.html

April 8, 2010

Hoisted from the Archives: Tyler Cowen Thinks Naomi Klein Believes Her Own Bulls---

He reads her book. He doesn't think it meets minimum intellectual standards. I think he is right: now I can borrow Tyler's ideas and have an informed view....

Sandwichman said...

I don't think it is much a matter of male economists BEING assholes as that the rules of engagement in the discipline emphasize and validate the asshole qualities of male economists, just as contact sports validate physical aggression of the athletes. In that context, the economist can tell himself "I'm not an asshole, I'm just doing economics," which is both true and false. It is true in the sense that the discipline has constructed a behavioral template; it is false in that conformity to that template is a choice and often a strategy for advancement.

rosserjb@jmu.edu said...

I am not at all an asshole in person, but I often behave like one on the internet, just as you are doing here, Anonynous 1, a totally worthless one as a matter of facrt. Are also one in person as well?

rosserjb@jmu.edu said...

It occurs to me that I have made one inaccurate and unfair remark about Naomi Klein. It was that she "claims to be an economist." I am unawre that she has ever made such a claim, so I apologize for that.

As it is, that was really directed at those who are overrating her, which was my original point, supporting Peter Dorman on this. He made the point that his problem is less with her, who is clearly smart, knowledgeable, and working hard at her research and writing. It is with people who think she is greater than Noam Chomsky and an expert voice on economics. She writes about econmics with some knowledge, but she has her limits and makes mistakes, some of these indeed tied to her lack of background in the discipline. So, it is her overly eager fans who overrate her who are the problem, not Naomi Klein herself.

rosserjb@jmu.edu said...

A further comment to Anonymous 1.

You may not have been around here enough to know it, but I have on numerous occasions expressed that I seriously lack respect for people who post anonymously, which obviously means you. This is longstanding. I understand that somebody may have professional reasons for not wishing to use a name. Ub that case of course one can use a made up name, which is something very popular and considered more or less cool. While I more substantially respect actual naames, at least with that one knows one is dealing with a given person. What has gone on here is that another Anonymous appeared to criticize you, forcing me to start calling you"Anonymous 1." So, ironically, if you went Anonymous to vaoid bing "bullied," you ended up getting beaten up far more than if you had posted under a name. Again, Iseriously diesrespect anonymous posting, although most others think I overdo this and should get with all the cool anonymous posters.

Actually somewhat over 20 years ago on an internet list I made comments defending the late John Kenneth Galbraith. A semi-prominent economist who was also editor of a pretty respected mainstream journal somehow decided that this showed that I was a "communist," and this person was so incensed that they made formal complaints to my department head and ean about how I should be fired because of my alleged communism. As it was, I had tenure and they clearly did not take too seriously that defending JK Galbraith was grounds for firing me. I was annoyed by all this, but at least that individual used his own name when making his ridiculous accusations, in contrast to you, Anonymous 1.

As it is, if you had provided a name, even a phony one, you would have been treated more politely. Really.

Anonymous said...

Sandwichman said...

"I don't think it is much a matter of male economists BEING assholes as that the rules of engagement in the discipline emphasize and validate the asshole qualities of male economists, just as contact sports validate physical aggression of the athletes. In that context, the economist can tell himself 'I'm not an asshole, I'm just doing economics,' which is both true and false. It is true in the sense that the discipline has constructed a behavioral template; it is false in that conformity to that template is a choice and often a strategy for advancement."

What a superb and helpful comment. I really appreciate this explanation.

Anonymous said...

Mr. Rosser,

I made my point and accept your defense. The problem was not that Naomi Klein was being criticized but that she was dismissed and I had heard and read that from professional economists for too long and never complained where I was known because I would not dare. So, here I complained because I am safe.

Go after Klein on her arguments, but dismissing her without looking sat to Chile after Allende or Brazil with Bolsonaro just now is unfair. Paul Krugman made this point after Noah Smith used Klein without crediting her.

Anonymous said...

http://krugman.blogs.nytimes.com/2013/05/16/the-smithkleinkalecki-theory-of-austerity/

May 16, 2013

The Smith/Klein/Kalecki Theory of Austerity
By Paul Krugman

What Smith didn’t note, somewhat surprisingly, is that his argument is very close to Naomi Klein’s "Shock Doctrine," with its argument that elites systematically exploit disasters to push through neoliberal policies even if these policies are essentially irrelevant to the sources of disaster. I have to admit that I was predisposed to dislike Klein’s book when it came out, probably out of professional turf-defending and whatever — but her thesis really helps explain a lot about what’s going on in Europe in particular....

Anonymous said...

Cowen and DeLong tear apart Klein without paying any attention to her argument. Smith just ignored Kein. And so on... So, I was upset by the dismissal by Mr. Rosser and thought I would finally complain which I did.

I am no longer angry, and I do not care about arguing against Klein but only that she be taken seriously.

I am sorry I was so rough and grateful to be listened to.

Anonymous said...

I appreciate the consideration.

Anonymous said...

Think of Naomi Klein and think of Bolsonaro appointing Chicago "guys" to re-make Brazil and think of the Economist suddenly gushing over Bolsonaro then think to Chile and Allende and "Shock Doctrine."

Yes, the Economist * among other media sees Brazil as Chile and they gush.

* Latest issue

rosserjb@jmu.edu said...

For what it is worth, I think NK makes a strong argument in Shock Docttrine.