Saturday, April 10, 2021

Of Battenbergs, Brexit, and Brogues

 So, Philip Mountbatten, born Philip Schleswig-Holstein-Sonderbutg-Glucksburg, Duke of Edinburgh, Prince Consort of the United Kingdom, and many other titles, died peacefully at age 99 on April 9 about 2 months shy of making it to 100.  I am not going to either praise him or poke at him, with his long history that contains many things on both sides of that open to judgment.  Certainly he was part of a colonialist monarchy, but them most of its empire broke up and went away during the period he was in his position in the British monarchy.  I am more interested in some related items, noting initially that all sorts of people will be making lots of silly tings out of this ,starting with Brian Kilmeade of Fox News who somehow has decided that it is all the fault of Harry and Meghan having their interview with Oprah Winfrey. Not.

I do not think it triggered his death, which seems to have been coming for some time and almost happened during his recent long stay in the hospital.  But I am noting the odd coincidence that the day before he died saw the worst outbreak of violence in Northern Ireland in decades, possible since the famous Easter Peace agreement came about, which led to a long largely peaceful period between the two sharply split communities in Northern Ireland.  What is sad to me is that I especially saw this coming as an outcome of Brexit since visiting Belfast four years ago, taking a train from Dublin to there and back, no notice of crossing the border at all either way.  We took a tour around the formerly "troubled" neighborhoods, now troubled again.  One does not hear much about them, especially given how quiet they have been for so long. But there are still high walls in places with unpleasant graffiti on them and numerous signs that the people on each side of those walls really do not like each other much and have sharply conflicting memories about what happened back then, even as all then were saying they supported the peace agreement.

An important part of that peace was that UK was in the European Union, which made it easy to have the essentially open border with the Republic of Ireland to the south while remaining part of the United Kingdom, the essential compromise underlying the peace, even as some on each side would prefer different outcomes or situations. It was clear as the negotiations with EU on Brexit proceeded that the Irish question was one of the hardest issues to deal with, and the compromise made has now led to unhappiness and renewed conflict between the communities, with teenagers on both sides engaging in conflict, although it seems to have started with Protestant Unionist ones unhappy with the creeping economic border between Northern Ireland and the rest of UK on the island of Britain in place to keep the border with Ireland open as it has been.  They see this as creeping towards unification with the Republic of Ireland, which has become more likely as the population balance has become more even in Ulster where in the past the Protestant Unionists easily outnumbered the Irish republicans.  It looks like the fears I and others had that Brexit could lead to the end of the peace agreement were unfortunately very well founded.

As for the Battenberg link, well that was what the Mountbattens were called in England prior to World War I, when their blatantly German name came to be an embarrassment, so given that "berg" in Germans means "mountain," changing the name to Mountbatten, with this accruing to Phillip's influential uncle, lord "Dickie" Mountbatten, of whom Prince Charles was reportedly very close to.  Lord Mountbatten was a high commander in the UK navy in WW II and helped arrange the marriage of his nephew to then Princess Elizabeth, who reportedly fell hard for him when they met in 1939. He took the name of his uncle when he became a British citizen on marrying her in 1947.

Anyway, Lord Mountbatten has an estate on the coast of Ireland.  He would be killed along with several other people in 1979 when he was on a yacht off his estate with them in a bomb attack by the IRA, probably their most famous and notorious such bomb attack.  The peace agreement had put all that sort of thing in the past.  But now we may be heading back to such things.  It is indeed ironic that this reappearance of the violence that killed his uncle reappeared on the day before Prince Philip died.

Barkley Rosser 

"...other enjoyments, of a purer, more lasting, and more exquisite nature."

A defense of Weber's Protestant Ethic thesis from the 1940s by Ephraim Fischoff makes the plausible argument that critics -- and many supporters -- of Weber's essay attached unwarranted causality to it, as if "Calvinism caused capitalism." Instead, Fischoff explained:

Weber's thesis must be construed not according to the usual interpretation, as an effort to trace the causative influence of the Protestant ethic upon the emergence of capitalism, but as an exposition of the rich congruency of such diverse aspects of a culture as religion and economics.

Fair enough. Then along comes Colin Campbell 43 some odd years later talking about the Other Protestant Ethic. It was Campbell's intention in The Romantic Ethic and the Spirit of Consumerism to update Weber and to fill in what he saw as a significant gap in Weber's thesis -- his failure to account for new consumer attitudes, which Campbell traced back to Sentimentalism and Romanticism, both adaptations of Protestantism. 

If my brief summary doesn't do justice to Campbell's analysis, it is only because his evocative chapter title, "The Other Protestant Ethic" at once evokes and forecloses the possibility of two, three, many Protestant Ethics. Campbell is conspicuously silent on the labour movement, whose conservative motto, "a fair day's wage for a fair day's work," expressed both a work ethic and a consumer ethic. Nor does Campbell mention the radical, socialist and anarchist cults, sects and movements who proudly wore their Protestantism on their sleeves.

Those two omissions are all the more glaring in that the Romanticism Campbell does feature was deeply implicated in both of them. Campbell spends several pages in an analysis of William Wordsworth's preface to the 1802 second edition of his Lyrical Ballads, in which Wordsworth inserted an "Easter egg" of biblical proportions that serves as the title of this post. Wordsworth's "enjoyments... of a more exquisite nature" is almost certainly an appropriation of or allusion to William Godwin's argument about commodities, labour, and leisure from his essay, "Of Avarice and Profusion" in The Enquirer:

The commodities that substantially contribute to the subsistence of the human species form a very short catalogue: they demand from us but a slender portion of industry. If these only were produced, and sufficiently produced, the species of man would be continued. If the labour necessarily required to produce them were equitably divided among the poor, and, still more, if it were equitably divided among all, each man's share of labour would be light, and his portion of leisure would be ample. There was a time when this leisure would have been of small comparative value: it is to be hoped that the time will come, when it will be applied to the most important purposes. Those hours which are not required for the production of the necessaries of life, may be devoted to the cultivation of the understanding, the enlarging our stock of knowledge, the refining our taste, and thus opening to us new and more exquisite sources of enjoyment. It is not necessary that all our hours of leisure should be dedicated to intellectual pursuits; it is probable that the well-being of man would be best promoted by the production of some superfluities and luxuries, though certainly not of such as an ill-imagined and exclusive vanity now teaches to admire; but there is no reason in the system of the universe or the nature of man, why any individual should be deprived of the means of intellectual cultivation.

Incidentally, Godwin's daughter, Mary Shelley, quoted the first five sentences of that passage in her notes to Percy Shelley's poem, Queen Mab. The passage is consistent with Godwin's argument in his Enquiry Concerning Political Justice, in which, as William Stafford mentioned, "[t]he Calvinist doctrine of the calling can be discerned just below the surface..." But it wasn't Calvin's doctrine, it was Godwin's updating and reformulation of the doctrine. In Godwin's version, work and leisure were to have equal status, a point Godwin made explicit in his Thoughts on Man

The river of human life is divided into two streams; occupation and leisure—or, to express the thing more accurately, that occupation, which is prescribed, and may be called the business of life, and that occupation, which arises contingently, and not so much of absolute and set purpose, not being prescribed: such being the more exact description of these two divisions of human life, inasmuch as the latter is often not less earnest and intent in its pursuits than the former.

If Godwin's post-Calvinist ethic is implicated in Romanticism -- which it obviously is, Wordsworth, Shelley, Keats, to name a few -- it is even more so in the emerging labour movement of the 19th century and, most strikingly, in Marx's analysis of surplus value and disposable time through the intermediary of Charles Wentworth Dilke's The Source and Remedy of the National Difficulties

The passage from Marx's Grundrisse that cited Dilke's pamphlet explained how capital both potentially enables but actually impedes the creation of socially available free time for "the cultivation of the understanding, the enlarging our stock of knowledge, the refining our taste, and thus opening to us new and more exquisite sources of enjoyment":

Capital itself is the moving contradiction, [in] that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. ‘Truly wealthy a nation, when the working day is 6 rather than 12 hours. Wealth is not command over surplus labour time’ (real wealth), ‘but rather, disposable time outside that needed in direct production, for every individual and the whole society.’ (The Source and Remedy etc. 1821, p. 6.)

Fischoff's defense of Weber's The Protestant Ethic and the Spirit of Capitalism that I mentioned earlier characterized Weber's essay as a "conscious reaction to the Marxian hypothesis" and thus considered it understandable that Weber would "overstress the consistency and efficacy of ideal factors." What Weber could not have have known, though, was how precisely those "ideal factors" were every bit as much involved in the "Marxian hypothesis" as they were in the capitalist spirit -- if not more so.

In the conclusion of The Romantic Ethic and the Spirit of Consumerism, Colin Campbell highlighted a phenomenon he referred to as "the irony of social action." "Neither the first Romantics, nor their successors in subsequent decades, ever intended to grant legitimacy to modern consumerism or to that spirit of self-interested hedonism upon which it is based." When I hear the word "irony," I reach for my invisible hand (with my other invisible hand). Irony is a trope, a form of expression, not something that "nature" or "the gods" do to humiliate people for their pretensions. 

When actions have unintended consequences, it is not because of some celestial law of irony. It is because human motives and actions are intrinsically ambivalent. The ambivalence of social action is a proper subject for analysis. The irony of social action is a smug, reactionary sneer masquerading as wisdom of the ages.

The proverbial "work ethic" of the late 1960s and early 1970s (which is still with us) can best be understood as an ambivalent response by both hippies and hippie-punchers to the simultaneous eclipse of post-war full employment and the "Borrow. Spend. Buy. Waste. Want." consumer society Affluenza. The confusion between irony and ambivalence is almost certainly because satire and irony are the literary forms used to call attention to ambivalence, especially in its more unsavory manifestation as hypocrisy.

Wednesday, April 7, 2021

How To Estimate "Rational" Market Expectations Of Future Inflation

 I am not a fan of rational expectations, hence the quotation marks around "rational" in the subject head here.  Nevertheless I have become aware thanks to some posts at Econbrowser by the intrepid Menzie Chinn that the usual way this has been measured and reported by most people needs to be modified, with the understanding of this only developing quite recently.  This came from a paper in 2018 by some Fed Board of Governors economists: S. D'Amico, D.H. Kim, and M. Wei, (although Menzie refers to it as the "DKKW model"), "Tips from TIPS: The Informational Content of Treasury Inflation-Protected Inflation Securities," Journal of Financial and Quantitative Analysis, 2018, 53(1), 395-436. 

For a given time-horizon, it has been conventional for those estimating such a "rational" market forecast of expected inflation to take the appropriate Treasury security nominal yield of that time horizon (say 5 years) and simply subtract from it the yield on the same time horizon TIPS, which covers security holders for inflation.  So it has long looked like this difference is a pretty good estimate of this market expectation of inflation, given that TIPS covers for it while the same time horizon Treasury security does not.

Well, it turns out that there are some other things involved here that need to be taken account, one for each of these securities.  On the Treasury side, it turns out that the proper measure of the expected real yield must take into account the expected time path of shorter term yields up to that time horizon.  This time path has associated with it a risk regarding the path of interest rates throughout the time period.  This is called the Treasury risk premium, or trp.  It can be either positive or negative, with it apparently having been quite high during the inflationary 1979s.

The element that needs to be taken into account with respect to the TIPS is that these securities are apparently not as liquid in general as regular Treasury securities, and the measure of this gap is the Liquidity premium, or lp.  This was apparently quite high when these were first issues and also saw a surge during the 2008-09 financial crisis.  In principle this can also be of either sign, although has apparently been positive.

Anyway, the difference between the nominal T security yield and the appropriate TIPS yield is called the "inflation breakeven," the number that used to be focused on as the measure of market inflation expectations.  But the new view is that this must be adjusted by adding (tpr - lp).

In a post just put up on Econbrowser by Menzie the current inflation breakeven for five years out is 2.52%. But according to Menzie the current (tpr - lp) adjustment factor is -0.64%.  So adding these two together gives as the market expected inflation rate five years from now of 1.88%, although Menzie rounded it out to 1.9%.

If indeed this is what we should be looking at it says the market is not expecting all that much of an increase in the rate of inflation from its current 1.7% five years from now. The Fed and others are looking at a short term spike in prices this year, but the market seems to agree with their apparent nonchalance (shared by Janet Yellen) that this will wain later on, with that expected 5 year rate of inflation still below the Fed's target of 2%.

Certainly this contrasts with the scary talk coming from Larry Summers and Olivier Blanchard, not to mention most GOP commentators, regarding what the impact of current fiscal policies passed and proposed by Biden will do to the future rate of inflation.  Not a whole lot, although, of course, rational expectations is not something that always forecasts all that well, so the pessimists might still prove to be right.

Barkley Rosser

The Hippie Dog Whistle Work Ethic Silent-Majority Counter-Offensive

Following up on my last post, I was searching for coverage of Ronald Reagan's infamous "strapping young buck" comment from 1976 and found this wonderful commentary by Ian Haney López on Bill Moyers's show.

In his book, Dog Whistle Politics, López mentions the "work ethic" angle several times.

The narratives promoted alike by the ethnic turn and racial-demagogues—a lack of work ethic, a preference for welfare, a propensity toward crime, or their opposites— reinvigorated racial stereotypes, giving them renewed life in explaining why minorities lagged behind whites.... they became the staples of political discourse, repeated ad nauseam by politicians, think tanks, and media.

 ...

In accord with the stories spun by dog whistle politicians, many whites have come to believe that they prosper because they possess the values, orientations, and work ethic needed by the self-making individual in a capitalist society. In contrast, they have come to suppose that nonwhites, lacking these attributes, slip to the bottom, handicapped by their inferior cultures and pushed down by the market’s invisible hand, where they remain, beyond the responsibility, or even ability, of government to help. 

...

Many older whites nostalgically pine for the days when a solid work ethic meant a good job, a decent home, a new car every few years, an affordable college education for the kids, and a nice vacation by the lake or seashore every August.

Dog whistle politics (as opposed to overt racist rhetoric) got its start with George Wallace's 1968 presidential campaign. Wallace addressed his speeches to the proverbial hard-working, tax-paying, church-going, law-abiding, gun-toting patriotic citizen:

You people work hard, you save your money, you teach your children to respect the law. Then when someone goes out and burns down half a city and murders someone, pseudo-intellectuals explain it away by saying the killer didn’t get any watermelon to eat when he was ten years old.

As far as I can determine, though, the phrase "work ethic" never crossed George Wallace's lips during his 1968 campaign. If it happened, it wasn't reported. If it was reported, it wasn't archived anywhere I could find it. It would be surprising if Wallace did use the phrase in 1968. It wasn't a huge vernacular term.

Understandably, perhaps, some readers are ignoring the specificity of my argument. It is not about Weber's theory or Luther's or Calvin's doctrine of calling or predestination. It is about the usage, particularly the vernacular usage of the term, "work ethic" as a synonym and/or substitute for Weber's "Protestant ethic." Unless preceded by the modifier "Protestant" or "Puritan," the work ethic is explicitly not Weber's theory. Weber was seeking specifically to differentiate between the beliefs and behaviors of Protestants and Catholics. 

In his 1971 appeal to the presumably traditional American work ethic, Nixon was seeking to appeal especially to Italian, Polish, Irish, etc. "ethnics" who were exactly the opposite of the people Weber was talking about. As Nixon said, "Keep religion out of it." Well, if you "keep religion out" of the Protestant ethic, it no longer has anything to do with Weber's theory. The Protestant ethic and the work ethic are not synonyms.

Nixon was not the first to put the words "work" and "ethic" together in a single phrase without the religious modifier. But before Labor Day, 1971 the usage was sparse. Usage was sparse enough to permit examination of each time the phrase was used in a journal or newspaper. 

There is one instance that stands out. In a Nation article published in April, 1968, Roszak took "good liberal" Hans Tuch to task for invoking "the Protestant work ethic to give the hippies a fatherly tongue-lashing..." Note the residual Protestant modifier. Tuch, in turn, had cited (disparagingly) a Time magazine essay from July 30, 1967 in which the author had mused:

What offends, perplexes and yet also beguiles the straight sector is hippie-dom’s total disregard for approbation or disapproval. “Do your own thing,” they say, and never mind what anyone else may think or do. Yet this and many hippie attitudes represent only a slight and rather engaging distortion of the Protestant Ethic that they purport to reject.

In a March 11, 1969 memorandum to President Nixon, Daniel Moynihan lamented the "emotional strain for people who may still share a Southern Protestant outlook about the work ethic." The context for this remark was survey research showing a very high concurrence among welfare recipients toward the work ethic. Note that three words intervene between Protestant and work ethic. "Keep religion out of it."

Notice that there are two distinct threads that are being woven into a narrative. One is the disdain for, critique of, or "slight and rather engaging distortion" of the Protestant (work) Ethic. The other is a large number of destitute people who depend on welfare but who subscribe to the (Protestant) work ethic. 

Nixon: "We see some members of disadvantaged groups being told to take the welfare road rather than the road of hard work, self-reliance, and self-respect."

Hard work, work hard. hard-working... What's ethic got to do with it? Ethics have to do with morality. Ethical people are good, unethical people are bad. For Weber, Protestants worked hard because of their ethics. For the audiences conjured by Wallace and Nixon, was it that people were good because they worked hard? No. The point was that people they felt hostile toward (hippies, Blacks, protesters, intellectuals) deserved to be punished because they were bad people attacking morality. 

Nixon: "Recently we have seen that work ethic come under attack."

Good Signs On Renewing US-Iran JCPOA Nuclear Deal

 One should probably not get too optimistic yet, although I have been getting quite worried about it, but a report in today;s New York Times seems to indicate that via the rather indirect negotiations going on in Vienna the US and Iran may have worked out a mutually acceptable path of actions that will lead to both nations getting back into compliance with the JCPOA, which the US pulled out of for no good reason in 2018 due to former President Trump.  President Biden has said he intended to get back into the deal, and after a bunch of delays, it looks like it might actually be happening before the forthcoming Iranian presidentrial election in June, thought likely to lead to the replacement of current Iran President Rouhani, who negotiated the original deal in 2015, with somebody likely to take a harder line. So, about time.

Barkley Rosser

Saturday, April 3, 2021

The "Work Ethic" Hoax

The story has been told that Martin Luther invented the doctrine of the "calling" and that John Calvin ("my friends call me Jean") intensified it with his doctrine of predestination. Subsequent pastoral literature softened the predestination blow with the Protestant ethic that working hard and succeeding would show that you were one of the elect. Max Weber told that story. 

It was, of course, a fable. But that is beside the point. Max Weber's fable wallowed in relative academic obscurity and sports clichés until... [wait for it]... 1971 when Dick Nixon dusted it off as a cudgel to bludgeon those folks driving around in their Welfare Cadillacs -- we all know who they are -- and the nattering nabobs of negativism enabling them. Pure backlash dog whistle. 

“Keep religion out of it,” Nixon told a speechwriter who labeled it “the Protestant ethic” for a Labor Day address in 1971, “Let's just call it the work ethic.”

I would like you to join me in exploring one of the basic elements that gives character to a people and which will make it possible for the American people to earn a generation of prosperity in peace.

Central to that character is the competitive spirit. That is the inner drive that for two centuries has made the American workingman unique in the world, that has enabled him to make this land the citadel of individual freedom and of opportunity.

The competitive spirit goes by many names. Most simply and directly, it is called the work ethic.

As the name implies, the work ethic holds that labor is good in itself; that a man or woman at work not only makes a contribution to his fellow man but becomes a better person by virtue of the act of working.

That work ethic is ingrained in the American character. That is why most of us consider it immoral to be lazy or slothful-even if a person is well off enough not to have to work or deliberately avoids work by going on welfare.

That work ethic is why Americans are considered an industrious, purposeful people, and why a poor nation of 3 million people, over a course of two centuries, lifted itself into the position of the most powerful and respected leader of the free world today.

Recently we have seen that work ethic come under attack. We hear voices saying that it is immoral or materialistic to strive for an ever-higher standard of living. We are told that the desire to get ahead must be curbed because it will leave others behind. We are told that it doesn't matter whether America continues to be number one in the world economically and that we should resign ourselves to being number two or number three or even number four. We see some members of disadvantaged groups being told to take the welfare road rather than the road of hard work, self-reliance, and self-respect.

The New York Times was on to the hustle:

But the chattering classes couldn't resist the work ethic mantra -- pro or con.



The Death Of Yeshua Bin Yusuf

Or if you prefer, "bin Miriam," although no way he would have ever been called that in his life, but near as I know "Yeshua bin Yusuf" ("Jesus son of Joseph") was probably how he was most frequently identified in real life in the Aramaic language he mostly operated in, his mother tongue. It has been reported that he knew Hebrew, then strictly a liturgical language, given the reports of him at age 12 discoursing seriously with priests at the temple in Jerusalem. Greek was the lingua franca for business and ultimately the language the New Testament was written in where he was labeled "Iesos Christos," translated into English as "Jesus Christ."

When he was crucified, almost certainly the only clearly documented event of his life beyond the Bible, thanks to Josephus, all of the four Gospels have it in super capitalized letters what they put over his head approved of by the local Roman governor, Pontius Pilate, was "KING OF THE JEWS" (all four gospels in the King James version have this in full capital letters as I have written, with variations across them in specifics, but all including this). We do not know which language was put on the sign he carried to Golgotha, but the Gospel of John, who was supposedly an eyewitness, says that this declaration was made in Hebrew, Greek, and Latin, curiously none of these the language he or most of the local population actually spoke in their homes.

Here is the hard core line from me: this guy really lived and most of what he said is for real. The one thing we know for almost sure is that he was crucified in Jerusalem, as reported by Josephus.  This was a major public event.  I happen to think that once people are dead that is it, so, I do not get excited about the supposed "resurrection." If that is the bottom line on being a "Christian," I am not one.

But I have now been twice to what is almost certainly the site of his crucifixion in Jerusalem in the very weird Church of the Holy Sepulchre. It really happened and probably there. What happened after that looks to be up for grabs.

So, whatever one thinks about his death or later events, he presented a serious moral vison, which included multiple appeals for charity for the poor, along with his disruption of the money changers in the temple in Jerusalem, which may have fed in to the local interests supporting shutting him down.

Things Yeshua bin Yusuf never said a word about:

abortion

sexual identity or preference

guns

As it is scholars note that the Qur'an has far more references to charity for the poor than does either book of the King James version of the Bible. This is true.

Bottom line is that I take seriously that this clearly world-historical individual died a horrific death on a cross, a form of execution I am glad we have moved beyond. Given the many wise and moral things he is reported to have said, I regret that he had to die in such an awful way.

So, getting to current commentary on this long ago event, I note Michael Gerson's column in yesterday's WaPo (the appropriate date). He focused on the positive remarks of Yeshua on his death, which appear in Luke, a gospel written by a Greek follower of  Paul long after the actual events. This included two items long and widely repeated, although probably not actually said by Yeshua.

I nw provide the last words Yeshua said on the cross according to the four Gospel versions in the seriously flawed but magnificent King James version:

Gospel of Matthew: "Eli, Eli, lama sabachtani."

Gospel of Mark: "Eloi, Eloi, lama sabacthani."

Gospel of Luke: "Father, into thy hands I commend my spirit."

Gospel of John: "It is finished."

I note that of these accounts, while John was supposedly an eyewitness, his gospel is viewed as the latest written, and the one more widely disagreeing with various consensuses of the former. Mark is supposed the oldest of them while Matthew was written to please Jewish readers. 

A bottom line is that "lama sabachthani" is Aramaic, one of the very few places in any gospel that the language in the New Testament. All translations of that passage are minor variations on the KJV "My God, why hast thou forsaken me."

Michael Gerson, in WaPo, is just out of it in pushing the almost-certainly inaccurate Luke versions of this, even as he admits the existence of the grimmer laba sabachtani version. Gerson understands that this harder line version of what Yeshua said at the end is a serious competitor to his less creditable and more nicey-nice version of the whole thing.

Whatever the reality of the above, I respect the hard death we know for near certain happened this person who probably mostly went by the name, "Yeshua bin Jusuf" (Jesus son of Joeph, not "the son of God," who, after all, let Yeshua down in the end. 

Happy Easter, you all who celebrate it.

Barkley Rosser

Barkley Rosser