The Somali 'pirates' another media lie?

In 1991, the government of Somalia - in the Horn of Africa - collapsed. Its nine million people have been teetering on starvation ever since - and many of the ugliest forces in the Western world have seen this as a great opportunity to steal the country's food supply and dump our nuclear waste in their seas. Yes: nuclear waste. As soon as the government was gone, mysterious European ships started appearing off the coast of Somalia, dumping vast barrels into the ocean. The coastal population began to sicken

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You Are Being Lied to About Pirates
By Johann Hari
April 12, 2009 "Huffington Post"
http://informationclearinghouse.info/article22399.htm

Isn’t Cash Income is Taxed at the Same Rate as Direct Deposits to Your Checking Account?

Steve Benen reviews the political fuss over Senator Richard Burr’s calls to his wife to have their own run on their bank. Steve also notes the following from Brian Walsh, the communications director for the NRSC:

The Democrats' response highlights perfectly the competing views of the two parties when it comes to strengthening the economy.... In just the first three months of this year, Senate Democrats have voted for more spending than the previous Administration spent on Iraq, Afghanistan and Katrina recovery combined so it's little wonder Americans want to keep their hard earned money away from the grips of Washington.

Steve thinks makes no sense. It might make sense if cash income were not taxed. But I have sad news for Mr. Walsh – if your employer pays you in cash, you still have to pay taxes on that income. I’m beginning to wonder if any of our Washington Republicans know anything about even the basic notions of economic policy.

Micromanagement: Medicine and Education

A few months ago, I commented on a New York Times article bemoaning efforts to micromanage medical care -- medicine by the numbers:

http://michaelperelman.wordpress.com/2008/09/19/two-vignettes-of-regulation-i/

A few days ago, Wall Street Journal published a similar article, arguing that good medical care requires considerable discretion on the part of doctors and that micromanaging is destructive.
Groopman, Jerome and Pamela Hartzband. 2009. "Why 'Quality' Care Is Dangerous: The Growing Number of Rigid Protocols Meant to Guide Doctors Have Perverse Consequences." Wall Street Journal (8 April): p. A 13.

http://online.wsj.com/article/SB123914878625199185.html

Yesterday's New York Times informed its readers that the Obama administration is going to continue the No Child Left Behind nonsense of the Bush administration.

http://www.nytimes.com/2009/04/15/education/15educ.html?_r=1&em

While tens of thousands are getting fired and schools are cutting back vital programs, mandating multiple-choice tests will somehow save public education. Of course, the schools that cannot afford teachers who have to lay out money for tests and to waste valuable teaching time teaching toward the test.

My own university is asking us to us provide some sort of quantitative measure of our success in educating students. Because we teach a broader mix of subjects, we are not faced a cookie cutter approach as extreme as K-12, education. The demand is that we devise our own metric. Are economics students to demonstrate the quality of their education by regurgitating market fundamentalism?

Wouldn't it be nice if finance and other forms of business were held to strict standards?

Growthaholics Anonymous

by the Sandwichman

The UK Sustainable Development Commission's Prosperity without Growth report even contains a 12-step program for overcoming our addiction to economic growth. Personally, I think the first step should be to admit that the growth imperative is an addiction that it has made our society and unjust and unstable and ecologically unsustainable:

12 Steps To a Sustainable Economy

Building a Sustainable Macro-Economy

Debt-driven materialistic consumption is deeply unsatisfactory as the basis for our macro-economy. The time is now ripe to develop a new macro-economics for sustainability that does not rely for its stability on relentless growth and expanding material throughput. Four specific policy areas are identified to achieve this:

1. Developing macro-economic capability
2. Investing in public assets and infrastructures
3. Increasing financial and fiscal prudence
4. Reforming macro-economic accounting

Protecting Capabilities for Flourishing

The social logic that locks people into materialistic consumerism is extremely powerful, but detrimental ecologically and psychologically. A lasting prosperity can only be achieved by freeing people from this damaging dynamic and providing creative opportunities for people to flourish – within the ecological limits of the planet. Five policy areas address this challenge.

5. Sharing the available work and improving the work-life balance
6. Tackling systemic inequality
7. Measuring capabilities and flourishing
8. Strengthening human and social capital
9. Reversing the culture of consumerism

Respecting Ecological Limits

The material profligacy of consumer society is depleting natural resources and placing unsustainable burdens on the planet’s ecosystems. There is an urgent need to establish clear resource and environmental limits on economic activity and develop policies to achieve them. Three policy suggestions contribute to that task.

10. Imposing clearly defined resource/emissions caps
11. Implementing fiscal reform for sustainability
12. Promoting technology transfer and international ecosystem protection.

Rush Leads A [Socialist] Revolution?

In today's Washington Post, Harold Meyerson reports on findings of the Rasmussen poll, which find that while overall Americans favor "capitalism" over "socialism" by 53% to 20% (rest undecided), among those under age 30, that ratio is only 37% to 33% (rest undecided). This leads Meyerson to speculate that partly this is due to the end of the Soviet Union, and the shift in terminology of "socialism" to mean the "social capitalism" of the Social Democratic parties of Western Europe. Or, as he puts it, "the left bank of the Seine in Paris does not invoke the same terror that Stalin's gulag did." I note that rather than "social capitalism," the much older term is "social market economy" from the German "sozialmarktwirtschaften," which was cooked up after WW II in West Germany by such Ordo-liberals as Walter Eucken, who, ironically, were friendly with Friedrich Hayek.

Meyerson goes on to speculate that besides the fading away of the Soviet threat, and the apparent capitalism of the still-officially "communist" China, another reason why younger people might have a more favorable impression of "socialism" than their elders is because of Rush Limbaugh and his cronies in the right wing nucase media. They have been loudly denouncing Obama as a "socialist," and his popularity ratings among younger people is much higher than the 60+% one finds overall in the US. So, by linking this very popular president among young people with the term "socialism" so deeply, Rush and company are leading the "socialist" revolution!

Who Will Bear Those Deferred Taxes?

Mark Thoma blogged on the issue of tax progressivity and received a lot of comments. My two cents on this ended with this:

Besides – a lot of Federal taxation was deferred under the previous Administration. Who will pay those deferred taxes? It seems that the past White House wanted to claim no one had to. Now that was very dishonest.

Economist’s View reader Blissex made this important point:

over time the take of the federal level is around 20% of GNP and the take of the local level is around 10%. Higher incomes contribute a bit more to the federal level and lower incomes a bit more to the local level. Overall for most incomes the total tax take is around 30%, and very much flat, except perhaps for the top 10% and the bottom 10%, where various funny things happen.

His point is that the total tax bite including deferred taxation is around 30 percent – the ratio of government spending to GDP. If all income groups ended up paying an effective tax rate equal to 30 percent, then we would have overall balanced budgets. While the Republican Party pretends to be about limited government so everyone can have lower tax rates, the reality is that Republican governments spend as much if not more than Democratic governments. What the Republican Party is really about is seeking ways that the burden of these deferred taxes be shifted onto lower income groups so the higher income groups will not have to pay for them. Alas – we rarely hear Republican politicians and their apologists admitting that this is their real agenda.

A conversation with the US ambassador

I said `what would you do if our government decided to nationalise the Australian subsidiaries of the various American multinational corporations?' and he'd been caught by surprise, he wasn't accustomed to a minister asking that sort of question whilst he was in the process of taking his seat, and he blurted out: `oh, we'll move in'. I said, `oh, move in? like bringing the marines in?. He said, `oh...' he looked a bit uncomfortable by now, although he's a senior man he didn't expect being caught off guard, he was very uncomfortable and he said, `oh, no, the days of sending the marines has passed but there are plenty of other things we could do'. I said, `for example?'. He said, `well, trade'. And I said, `do you realise that if you stop trading with Australia you would be the loser to the extent of 600 million dollars a year', that was the balance of trade figures at that time. He said, `oh, well, there are other things'.

A conversation between Australian Labor Minister Clyde Cameron and US Ambassador Marshall Green before the Whitlam Coup of November 1975.

"It is of vital importance that, with not one day's delay, we decide to take matters out into the wider field, establishing and developing now, the means fully to research the causes of authoritarian human behaviour; to educate and to publish our results; and to begin to establish here and now those forms of 'life style' which are alternatives to the acquisitive, alienated, conflict-ridden society which we have inherited from the past."

Jim Cairns [See image], former Deputy Prime Minister in the Whitlam Administration of 1975.
Final paragraph in is 1976 book entitled "Oil in Troubled Waters".

Does Anyone Only Pay Federal Taxes?

Mark Thoma treats us to an important analysis from Citizens for Tax Justice with hat tip to Catherine Rampell who writes:

Data released last week by the Congressional Budget Office underscored the progressive nature of the federal tax system. And in an op-ed article today in The Wall Street Journal, Ari Fleischer, who served as President George W. Bush’s press secretary, used that data — in particular, the income tax numbers — to argue that the wealthiest Americans bear an unfair share of the tax burden. Other research has found that many states and local governments have more regressive tax systems, though, that might offset the progressiveness of federal tax rates.

Ari Fleischer is not the only member of George W. Bush’s Administration to argue that the tax system is highly progressive by presenting only Federal taxes paid as if you and don’t pay state and local taxes too. Greg Mankiw has highlighted the CBO data on Federal taxes many times.

While I think this is an incredibly silly exercise, Mark got this comment from cynicalone:

Can you please explain how this rebuts the CBO. The CBO looked at the effective average federal tax rates. This throws in state and local taxes and you somehow imply that this proves federal taxes are not progressive. If you believe that your state and local taxes are not progressive enough then go complain to the state legislature or your local council. This has nothing to do with the progressivity of federal taxes and certainly has no bearing on the CBO report. The entire argument is disingenous. i.e. I don't like this CBO report so I am going to include some completely irrelevant data until I get the outcome I desire.

While we should tell cynicalone that his argument is disingenuous, we hear this a lot from certain conservatives. The problem with this argument is that we citizens really don’t care which government services we get from Washington versus which ones we get locally (in my case, New York City and Albany, New York). We also pay more attention to our total tax bill rather than where we end up sending the various checks. Besides, the Federal government has this habit of mandating that the local governments do certain things and only often only partially fund these mandates. To slice and dice tax obligations in the fashion that Ari Fleischer et al. do is either just or dishonest in my opinion.

Besides – a lot of Federal taxation was deferred under the previous Administration. Who will pay those deferred taxes? It seems that the past White House wanted to claim no one had to. Now that was very dishonest.

Interview with Michael Perelman

Politics and Culture, an excellent online publication, just posted an interview with me.
Michael Perelman. 2009. "On Globalization, Economics, and the History of Food Crises: An Interview with Michael Perelman by Max Haiven." Politics and Culture, No. 2. Special Issue on Food and Sovereignty."
http://aspen.conncoll.edu/politicsandculture/page.cfm?key=720

Parsing Prosperity

by the Sandwichman

Here is a quick narrative analysis of the Prosperity without Growth report from the perspective of the proposed Persona parsimoniae counter-narrative to Economic Man:

As the economy expands, so do the resource implications associated with it. These impacts are already unsustainable....

A world in which things simply go on as usual is already inconceivable. But what about a world in which nine billion peole all aspire to the level of affluence achieved in the OECD nations?

Absolute limits? Check. The means for satisfying material desires are limited absolutely, not just transiently, by physical laws and/or social institutions.

Material possession do play an important symbolic role in our lives, allowing us to participate in the life of society.

Two kinds of preferences? Check. Persona parsimoniae has two different kinds of preferences -- organic needs and aspirations for social distinction, the latter of which is referred to in PwG as the symbolic role of material goods.

...the current turmoil is not the result of isolated malpractice or simple failures of vigilance... It was undone by growth itself.

The growth imperative has shaped the architecture of the modern economy...

This model was always unstable ecologically. It has now proven itself unstable economically. The age of irresponsibility is not about casual oversight or individual greed. If there was irresponsibility it was systematic, sanctioned widely and with one clear aim in mind: the continuation and protection of economic growth.

Habit rather than calculation? Check. Utility "maximization" is mostly a function of habit [and emulation] rather than calculation. The key term here is "imperative". Growth is thus not seen as an option but as a compulsion. The system imposes this compulsion, not individual motives of greed.

Conclusion: Prosperity without Growth contains a virtually ideal instantiation of the Persona parsimoniae model.

Why am I doing this? Because not only are the assumptions about Economic Man, in the words of Walter Bagehot, trivially "not so" but they are also, more importantly, not so simple. And because no one can stand against a universal Subject unless it is a universal Subject itself. What I am proposing is an more plausible, but at least as parsimonious, alternative to the faux simplicity of Piltdown Economic Man.

Reparations

A couple of months ago I was invited to give a guest lecture in a class on colonialism at Evergreen. My topic was North-South relations, and after I had finished, several students asked me what I thought about the concept of reparations. I expressed some doubts, and this resulted in quite a bit of angry response. As a white male, wasn’t I morally compelled to give reparations to those who had been oppressed?

My answers must not have been very convincing. I’ve continued to think about the question and have come up with these two general thoughts.



First, the feasibility of reparations depends on how much time has passed and how diffuse the relations of exploitation or dispossession have become. I think, for instance, that the United States certainly owed reparations to Vietnam at the conclusion of the war, and that reparations are still warranted today. If we delay for several generations, however, this imperative will diminish, and the rights and obligations of future Americans and Vietnamese will be more difficult to sort out. We saw this process at work in the various attempts to compensate families whose property had been seized in Eastern Europe with the installation of Communism after WWII. Those who benefitted from restitution often had tenuous connections to those who were dispossessed. Worse, it turned out that some of the properties returned to them had even earlier been taken from Jewish owners: stolen goods were being returned to thieves. On the other hand, America as a nation continues to owe reparations to the Indian tribes whose land and livelihood were taken by force. In part this is because the tribes are still relatively well-defined entities (although fuzzy around the edges), but mostly because the dispossession is ongoing.

Reparations for slavery are more complicated. There is a general duty of everyone in the US to combat racism and poverty, but what about monetary reparations in particular? Some students told me I had a personal responsibility because of my “ancestors”. Now, it happens that my particular forebears were in Europe until the late 19th century, but does that change anything? Do I have any more or less responsibility than anyone else in my social position? Here I think the ravages of time do matter. It is true that the effects of racism—advantages for some, hardships for others—linger on, but they are impossible to parse at an individual level. In fact, many of the descendants of slaves are now also in ways beneficiaries of slavery; think of a black student at Brown University, for instance. I have absolutely no doubt that white America owed the newly freed slaves enormous reparations after the Civil War, and the failure of Reconstruction to take even the smallest steps in this direction cast a dark shadow over our subsequent history. But there is no going back to that moment, and who owes whom how much is no longer discernable.

The second point is one I made at the time, but which didn’t seem to register. The rhetoric of reparations centers on the responsibility of those who benefitted at the expense of others. It summons a sense of guilt and offers an opportunity for expiation. This is certainly better than apathy, cynicism or callous neglect. But it still suffers from the defect of focusing attention on the duties of the well-off rather than the needs of those who were harmed. To put it bluntly, it measures performance by how much is paid and not by how much benefit is actually produced. What I wanted to tell the students is that this is not about you. It’s good that you feel a sense of obligation, but your feelings are ultimately not very important; what matters are the lives and well-being of those who lack the essential resources they need to survive. For this the moral principle of human solidarity is foundation enough.

Which Has the Greater Fiscal Impact: Tax Cuts or Defense Spending Increases?

Paul Krugman noted that Georgia’s Senator Saxby Chambliss has hypocritical views when it comes to the current fiscal policy debate:

"[W]hen it comes to stimulating the economy," Chambliss said, there's no better way to do it than to spend it in the defense community." On Sunday, Paul Krugman appeared on ABC's This Week, and picked up on the same thing, and called out Congressional Republicans for what one might call the "Chambliss hypocrisy". Here's Krugman: What's so wonderful is watching Republican congressmen saying, "But this will cost jobs!" The very same Republican congressmen who were denouncing the stimulus, saying government spending never creates jobs, but cutting defense spending costs jobs. It's wonderful.

It is also standard faire for Republicans to argue for more defense spending and less taxes at the same time. Earlier in this debate, we heard some Republicans telling us that tax cuts would lead to more bang for the buck than increases in domestic government spending as if the marginal propensity to consume were actually greater than unity. So why not argue that the direct impact on aggregate demand for spending a dollar on additional weapons would be greater than the direct impact on aggregate demand for spending a dollar on school buildings? Yes, the proposition is absurd but so is most of the rhetoric coming from the Washingtonian Republicans!

Zombie Banks

Zombie bank [it's a music video] goes something like this:

from my laboratory in the nation's east
comes zombies hungry for some bailout treats
just a little more flesh will keep them alive
they've got much bigger worries than how YOU'LL survive

Counter-narrative Flow Diagram

by the Sandwichman

I promised media I would post a flow diagram so here is it, ugly (and provisional) as it may be.
The blue green arrows running clockwise show the direction of influence for the Persona parsimoniae counter-narrative(Pp). From the top, it begins at leisure/disposable time, an increase in which results in an increase in Income/consumption, Production and, finally, Accumulation/investment. Because there is an inherent limit to accumulation, the excess not absorbed into further increases in leisure becomes superfluous consumption and overproduction. There could also be an arrow added from the superfluous box to indicate that today's excess could become tomorrow's standard.*

Conversely, the purple arrows running counter-clockwise indicate the flow for the traditional Economic Man model(EM). These start (hypothetically) at Investment/accumulation (the order of priority reversed) and proceed through Production, Consumption/income and back to Accumulation. In this direction of flow, leisure or disposable time is conceived of as a subtraction from the flow.

*As media suggested, such a chart may be thought of as representing a two-way flow, with elements of either Pp or EM coming into play depending on the circumstances. That two-way flow could obviate the need for an arrow leading back into consumption (or production) from the superfluous consumption node.

The organized campaign to suppress the truth and divert our attention continues...

by the Sandwichman

Rather than delete the 18,000 word Anonymous "comment" posted to the original entry previously located at this URL, I've reposted that original entry elsewhere and I'll leave the rant here for the benefit of researchers who might be interested in the phenomena of rant spamming. To view other locations where this rant was spammed, click on this Google link.

"SOMETIMES, I WONDER WHY I BOTHER FIGHTING SO HARD FOR THE LITTLE GUY!" (emphasis added)