Finding a solution to the energy problem will not be easy. Water is an even more challenging problem. In my Hainan talk, I mentioned the tension between water and power. Here is another article on the subject, noting the tension between water and solar energy.
http://michaelperelman.files.wordpress.com/2009/04/hainan1.pdf
Beamish, Rita (AP). 2009. "Future Cloudy for Desert Solar Drive." Sacramento Bee (19 April): p. A 4.
"A westward dash to power electricity-hungry cities by cashing in on the desert's most abundant resource -- sunshine -- is clashing with efforts to protect the tiny pupfish and desert tortoise and stinginess over the region's rarest resource: water. Water is the cooling agent for what traditionally has been the most cost-efficient type of large-scale solar plants. To some solar companies answering Washington's push for renewable energy on vast government lands, it's also an environmental thorn. The unusual collision pits natural resources protections against President Barack Obama's plans to produce more environmentally friendly energy."
Sunday, April 19, 2009
Animal Cracker
by the Sandwichman
"Picture a square divided into four boxes, denoting motives that are economic or noneconomic and responses that are rational or irrational."
George Akerlof and Robert Schiller are doing narrative policy analysis in their book, Animal Spirits. The 'square divided into four boxes' is also known as a semiotic square and is related to an Aristotelian square of opposition.
If they were writing a dissertation...
If they were graduate students writing a dissertation, one of the requirements would be a literature review situating their own work within the established tradition of the methodology they propose to use. There is scant precedent for narrative policy analysis in the contemporary economic literature. So their literature review would have to be interdisciplinary. Authors such as Emery Roe, Hayden White, Paul Ricouer, Roland Barthes, A. J. Greimas and Kenneth Burke would be appropriate references. They might also detour into historical tidbits involving Goethe's Faust and Giambattista Vico's New Science.
The disadvantage of a literature review is that it may appear to many readers as a digression that delays chomping into the meat of the authors' analysis. The benefit is that, presumably, the authors get and demonstrate a more solid grounding in the analytical techniques they are using.
Akerlof and Schiller correctly point out that standard macroeconomics focuses on only one corner of the economic box. They claim that goal of their book is to fill in the other three boxes. The way they attempt to do this, though, is both simplistic -- 'it's the animal spirits, stupid!' -- and overly complex and convoluted: animal spirits is confidence, fairness, bad faith, money illusion and stories. This is not adding apples and oranges. It's adding coconuts, pineapples, broccoli sprouts, condensed milk and hockey pucks.
What Akerlof and Schiller are trying to do here -- propose a counter-narrative to the traditional rational actor model in economics -- is laudable and timely. However, it is also awkwardly executed. The rule is a counter narrative must be at least as parsimonious as the dominant story it seeks to displace (Occam's razor). Akerlof & Schiller's "animal spirits" is a loose and baggy monster made even looser and baggier by the catch-all category of "stories". It's also a doubtful stretch to try to pin credit for their concoction on Keynes. Sure, he referred to animal spirits somewhere but he also talked about green cheese (in reference to money illusion). So what makes money illusion an 'animal spirit' rather than a 'green cheese'? Instead of applying Occam's razor to their animal spirits, the authors have tied themselves up in a Gordian knot.
Previously I have proposed an appropriately parsimonious alternative to the rational actor model. I call it Persona parsimoniae. Instead of rational calculation, Pp's behaviors are guided by habit and custom. Pp has two distinct kinds of needs, absolute or relative, material or symbolic, subsistence or status, necessary or superfluous. And instead of maximizing individual utility through market transactions, physical and social limits to production necessitate non-market social co-ordination of consumption to avoid excessive waste and deprivation. See how simple that is? Three elements, not five, each of them keyed to a characteristic of the dominant model.
Getting back to Akerlof and Schiller's square divided into four boxes, there is a way to label the elements more substantively. They opt for 'noneconomic motives' and 'irrational responses' as the alternatives to 'economic motives' and 'rational responses'. Their alternatives are too vague as a consequence of an over-reach by the standard set. My alternative suggestions would be positional vs. material motives and habitual vs. calculated responses.
There is, in my view, a third element that needs to be incorporated into the semiotic square analysis: outcomes. Makes sense? 1. motives; 2. responses; 3. outcomes. The semiotic square thus becomes a semiotic cube with eight nodes instead of four but potentially six faces instead of only one. Akerlof and Schiller's more limited square is convenient for arguing that there really is only one alternative to the prevailing conventional wisdom of the last 30 or 40 years. They advocate exchanging one set of blinkers for another that perhaps enables a bit more peripheral vision but still blocks out depth perception. I would draw a picture of the semiotic cube but I have a headache. Maybe some other time.
"Picture a square divided into four boxes, denoting motives that are economic or noneconomic and responses that are rational or irrational."
George Akerlof and Robert Schiller are doing narrative policy analysis in their book, Animal Spirits. The 'square divided into four boxes' is also known as a semiotic square and is related to an Aristotelian square of opposition.If they were writing a dissertation...
If they were graduate students writing a dissertation, one of the requirements would be a literature review situating their own work within the established tradition of the methodology they propose to use. There is scant precedent for narrative policy analysis in the contemporary economic literature. So their literature review would have to be interdisciplinary. Authors such as Emery Roe, Hayden White, Paul Ricouer, Roland Barthes, A. J. Greimas and Kenneth Burke would be appropriate references. They might also detour into historical tidbits involving Goethe's Faust and Giambattista Vico's New Science.
The disadvantage of a literature review is that it may appear to many readers as a digression that delays chomping into the meat of the authors' analysis. The benefit is that, presumably, the authors get and demonstrate a more solid grounding in the analytical techniques they are using.
Akerlof and Schiller correctly point out that standard macroeconomics focuses on only one corner of the economic box. They claim that goal of their book is to fill in the other three boxes. The way they attempt to do this, though, is both simplistic -- 'it's the animal spirits, stupid!' -- and overly complex and convoluted: animal spirits is confidence, fairness, bad faith, money illusion and stories. This is not adding apples and oranges. It's adding coconuts, pineapples, broccoli sprouts, condensed milk and hockey pucks.
What Akerlof and Schiller are trying to do here -- propose a counter-narrative to the traditional rational actor model in economics -- is laudable and timely. However, it is also awkwardly executed. The rule is a counter narrative must be at least as parsimonious as the dominant story it seeks to displace (Occam's razor). Akerlof & Schiller's "animal spirits" is a loose and baggy monster made even looser and baggier by the catch-all category of "stories". It's also a doubtful stretch to try to pin credit for their concoction on Keynes. Sure, he referred to animal spirits somewhere but he also talked about green cheese (in reference to money illusion). So what makes money illusion an 'animal spirit' rather than a 'green cheese'? Instead of applying Occam's razor to their animal spirits, the authors have tied themselves up in a Gordian knot.
Previously I have proposed an appropriately parsimonious alternative to the rational actor model. I call it Persona parsimoniae. Instead of rational calculation, Pp's behaviors are guided by habit and custom. Pp has two distinct kinds of needs, absolute or relative, material or symbolic, subsistence or status, necessary or superfluous. And instead of maximizing individual utility through market transactions, physical and social limits to production necessitate non-market social co-ordination of consumption to avoid excessive waste and deprivation. See how simple that is? Three elements, not five, each of them keyed to a characteristic of the dominant model.
Getting back to Akerlof and Schiller's square divided into four boxes, there is a way to label the elements more substantively. They opt for 'noneconomic motives' and 'irrational responses' as the alternatives to 'economic motives' and 'rational responses'. Their alternatives are too vague as a consequence of an over-reach by the standard set. My alternative suggestions would be positional vs. material motives and habitual vs. calculated responses.
There is, in my view, a third element that needs to be incorporated into the semiotic square analysis: outcomes. Makes sense? 1. motives; 2. responses; 3. outcomes. The semiotic square thus becomes a semiotic cube with eight nodes instead of four but potentially six faces instead of only one. Akerlof and Schiller's more limited square is convenient for arguing that there really is only one alternative to the prevailing conventional wisdom of the last 30 or 40 years. They advocate exchanging one set of blinkers for another that perhaps enables a bit more peripheral vision but still blocks out depth perception. I would draw a picture of the semiotic cube but I have a headache. Maybe some other time.
Mankiw: This Has to Be a Joke, Right?
Nominal interests rates have a zero bound, because it is preferable to hold money rather than lend it if rates go negative. But Mankiw and his clever grad student have a solution: let the Fed randomly pick an integer from 0 to 9 once a year and invalidate all currency whose serial number ends with it. Then people would gladly accept negative interest rates to unload their disintegrating cash.
Um, no. I don’t know what they teach at Harvard, but where I work we don’t postpone past grad school the following rather elementary observation: most money is not currency. The most recent Fed data put the monetary base at just under $1.6T, of which about half is in the form of reserves held by member banks at the Fed. M2, which includes the deposit accounts you and I have at our banks and represents a more relevant measure of the money supply, is a bit over 8.3T (not seasonally adjusted). In other words, about 90% of the money supply under a reasonably conservative definition is not cash and bears no serial numbers.
Imagine that.
And even if we could force everyone to trade in the coin of the realm and abjure those newfangled bank accounts, there would still be the international dimension to consider. About half of our dollars circulate abroad; whole countries are even dollarized. Now here’s something for Mankiw to consider: Panama, to take one example, pegs its currency to the dollar but prints the stuff itself to put a local face on legal tender. Can you foresee a spike in demand if they decide to not play the self-destructing digit game?
All of this is bonkers, of course. The more serious proposal in Mankiw’s column is for the Fed to target a particular rate of inflation, but effectively, by publicly opposing deflation, they are already doing that. Money growth has been ample so far (for instance, a 9.4% growth in M2 over the past year); there has been no repetition of the monetary contraction that accompanied the early stages of the Great Depression, just like Bernanke promised. The Fed’s toxic asset buying spree has been a form of open market operations, and monetary expansion has been one of the main sources of its bailout finance. There is general agreement, however, that this particular spigot cannot be opened much further. Enough money creation can always crank out high rates of inflation, but this would set off a run on the dollar, and the willingness of portfolios to accept ungodly amounts of dollars, and dollar-denominated T-bills, is the underpinning for the entire bailout strategy. Surely Mankiw must know this too.
So what’s the point?
Um, no. I don’t know what they teach at Harvard, but where I work we don’t postpone past grad school the following rather elementary observation: most money is not currency. The most recent Fed data put the monetary base at just under $1.6T, of which about half is in the form of reserves held by member banks at the Fed. M2, which includes the deposit accounts you and I have at our banks and represents a more relevant measure of the money supply, is a bit over 8.3T (not seasonally adjusted). In other words, about 90% of the money supply under a reasonably conservative definition is not cash and bears no serial numbers.
Imagine that.
And even if we could force everyone to trade in the coin of the realm and abjure those newfangled bank accounts, there would still be the international dimension to consider. About half of our dollars circulate abroad; whole countries are even dollarized. Now here’s something for Mankiw to consider: Panama, to take one example, pegs its currency to the dollar but prints the stuff itself to put a local face on legal tender. Can you foresee a spike in demand if they decide to not play the self-destructing digit game?
All of this is bonkers, of course. The more serious proposal in Mankiw’s column is for the Fed to target a particular rate of inflation, but effectively, by publicly opposing deflation, they are already doing that. Money growth has been ample so far (for instance, a 9.4% growth in M2 over the past year); there has been no repetition of the monetary contraction that accompanied the early stages of the Great Depression, just like Bernanke promised. The Fed’s toxic asset buying spree has been a form of open market operations, and monetary expansion has been one of the main sources of its bailout finance. There is general agreement, however, that this particular spigot cannot be opened much further. Enough money creation can always crank out high rates of inflation, but this would set off a run on the dollar, and the willingness of portfolios to accept ungodly amounts of dollars, and dollar-denominated T-bills, is the underpinning for the entire bailout strategy. Surely Mankiw must know this too.
So what’s the point?
Saturday, April 18, 2009
Finance Question
What happened what happened with the debate about whether speculation or market manipulation could affect oil prices? I'm wondering because of the recent discussion about the urgency of preventing shortselling. Why would shortselling in stocks have an effect, but not speculation in oil?
Friday, April 17, 2009
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.
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:
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.
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?
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?
Thursday, April 16, 2009
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:
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.
Wednesday, April 15, 2009
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!
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:
Economist’s View reader Blissex made this important point:
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.
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".
Tuesday, April 14, 2009
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:
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:
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.
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
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
Monday, April 13, 2009
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:
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 ofPiltdown Economic Man.
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.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.
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.
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
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.
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.
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