Dean Baker is Shrill!

by Tom Walker

Dean Baker wrote:

Okay, I'm not on vacation, but this is a BTP flashback. My original write-up of this NYT news article was way too positive. This article was essentially a diatribe against Germany's welfare state. To make its case, it turned an incredible success story -- Germany's relatively low unemployment rate -- into a failure.

It is obvious that Dean Baker is on a mission -- the one policy that resolves all social ills. As such, he cannot listen to reason. Fine. Good luck, Dean. Work week reduction (or "work sharing") has never, anywhere, eliminated involuntary unemployment and underemployment; indeed, it has never had a significant effect. These schemes have not increased employment... This WILL NOT create many more jobs. If Dean's trying to engage in a dialogue with the New York Times, it might help if the tone of his blog entry was somewhat less snarky. Perhaps snark attracts more internet traffic, but it doesn't encourage dialogue.

The basic deal is that Germany adopted an explicit policy of encouraging employers to shorten work hours rather than lay off workers. The government allows unemployment benefits to be used to pay workers to cover most of the loss in wages due to the shorter workweek.

As a result, Germany's unemployment rate has barely changed in the downturn. Its unemployment rate at present is 7.7 percent. This is down from 7.8 percent earlier in the year. Germany's unemployment rate in 2007 was 8.4 percent, 0.7 percentage points higher than the current level.

"Peter H." Is A Weiner!

"I really don't like this strident new tone of yours, Sandwichman/Walker. What's with all the hostility?" -- Peter H.

Don't even think of coming around the campfire when I'm roastin' marshmallows, Peter H.!

New Thinking With A Blunt Edge

The first round of research grants will be made before the end of the year to cutting-edge scholars working with leading universities around the world. INET’s Executive Director will be Robert Johnson, an economist with long experience in government, academia, and the private sector.

Isn't that an oxymoron? "Cutting-edge"... "leading univerities"? Any way, why not get in on the ground floor? Five million bucks is $5,000,000.00. Age before beauty; pearls before swine.

Dear Robert Johnson,

Love your Mississippi Delta blues guitar-playing, Robert!

Seriously, though, I'm a non-economist who has been doing "new economic thinking" since an over-a-year-long spell of unemployment during the "jobless recovery" of the 1990s. Or, I should say I've been looking at old economic thinking -- pre-World War II and noticing that extremely important parts of the picture that were known at least to some economists in the 1930s -- Keynes, for example -- were simply "assumed" away in the rush to mathematical model building. Post-war "Keynesians" decided to make do with only one of three pillars of Keynes's intellectual theorem.The other two didn't fit in the equation. Robert Skidelsky can tell you more about this. At any rate, I just happen to be finishing up a manuscript that looks at over 200 years of what, for want of a better term, I will call "worktime thought". Some of it is heretical economics, some the masters, Smith, Marx, Keynes. But woven through the whole narrative is the outline of an "economic subject" quite distinct from the Homo economicus or rational economic actor of conventional modern economic analysis.

I guess the issue I want to raise with you has to do with the fragility, artificiality, perhaps even vanity of the idea of "new thinking". There is, as the preacher in Ecclesiastes tells us, "nothing new under the sun." But there is great value in making new again what was already old. In other words, what I have in mind is innovation and improvisation on the basis of a fine tradition that may have been forgotten, set aside and even scorned. I would very much like to hear your thoughts on this matter. I will of course be reading the Institute for New Economic Thinking's website and looking to see if there are any programs or grants that might be suitable for the theme in my manuscript.

Yours sincerely,

Tom Walker

Seven ways to be wise in our time and place

THERE HAS COME a time when it is clear that many Australian citizens have lost sight of the essential nature of things. Where our patterns of thought and behaviour – our everyday social ‘norms’ – are inevitably leading us to an apocalyptical future of deprivation and long-lasting ruin.

In the hills and valleys of Tasmania I see a merger of humans with machine. Where minds have become twisted and adapted to the dreadful logic and form of industrial tools. The vast destruction of our native forests and the attendant poisoning of our natural environment, the overfished seas, and the now vast weed-and-vermin-filled lands of absentee corporate owners, are merely the physical manifestations of a system of laws and inherent structural rules that have trespassed way beyond human ‘morals’ or concerns for community.

It is an automatic momentum that denies recognition of nature and natural processes.
The moving out of our self-imposed subjugation will not require the piling up of facts. Rather it will require the simple anticipation of consequences. To be wise in our time is to: Read more here.

Transcript from the Future

by Tom Walker

A source who has asked to remain anonymous has just handed me a transcript of tomorrow's panel discussion at UC Berkeley on Global Unemployment, featuring Brad DeLong, John Quigley, David Card and Andy Rose. As a courtesy to the participants, I have taken the liberty of concealing who will have said what by substituting pseudonyms for the names of the participants. Similarly, the panelists themselves have taken the wise precaution of using the more genteel euphemism "your daughter's illness" to refer to mass unemployment, lest the latter term unleash widespread lamentations and gnashing of teeth among the unwashed and untenured.

DR TOMÉS. Sir, we have been discussing your daughter's illness, and my own view is that it arises from overheating of the blood. My advice is therefore--bleeding as early as possible.

DR DES-FONANDRÉS. In my opinion the trouble is a putrefaction of humours caused by a surfeit of er--er--something or other. My view is that she should be given an emetic.

DR TOMÉS. In my opinion an emetic would kill her.

DR DES-FONANDRÉS. On the contrary, I maintain that to bleed her now would be fatal.

DR TOMÉS. You would try to be clever!

DR DES-FONANDRÉS. I know what I'm talking about. I can give you points on any professional question.

DR TOMÉS. Don't forget how you cooked that fellow's goose the other day.

DR DES-FONANDRÉS. What about the woman you sent to glory only three days ago?

DR TOMÉS [to THE UNEMPLOYED]. You have my opinion.

DR DES-FONANDRÉS [to THE UNEMPLOYED]. You know what I think.

DR TOMÉS. If you don't have your daughter bled without delay, you can take it she's done for. [Exit.]

DR DES-FONANDRÉS. If you do have her bled, she won't last a quarter of an hour. [Exit.]

THE UNEMPLOYED. Which am I to believe? What's to be done when you get two such different opinions? Gentlemen, I implore you, set my mind at rest, give me an unprejudiced opinion as to which treatment will save my daughter.

DR MACROTIN [drawling]. Sir! On these oc-cas-ions one must pro-ceed with cir-cum-spec-tion and do nothing, as one might say, in pre-cip-it-a-tion, for mis-takes thus commit-ted may well, as our Master Hippocrates observes-have dan-ger-ous cons-equences!

DR BAHYS [in a quick stammering voice]. Yes, one n.n.needs to be cccareful. Th.th.there's no ch.ch.child's play about such c.c.c.cases as th.th.this. And it it's no.no.not an easy m.m.m.matter to p.put th.things right if.if.if. you m.m.make a m.m.m.mistake. Expcrimentump.p.p.p.p.periculosum,y.you n.need to l.l.look before you l.l.l.leap and weigh th.things w.w.warily, consider the c.c.constitution of the p.p.patient, c.c.cause of the m.m.malady, and the nature of the c.c.c.cure.

THE UNEMPLOYED [aside]. One's as slow as a funeral, t'other c.c.can't s.s.spit it out fast enough!

Professor Randall "Sting" Wray's Non-Reply

by Tom Walker

Previously, Tim Bartik posted a comment in response to the Sandwichman's post about the Last Taboo in employment policy. Jamie Galbraith replied by email and gave permission to post his comment. I regret that although Randall Wray replied by email, he refused permission to publish his reply.

The gist of Professor Wray's position, though, would seem to be, roughly, "when I say something three times with the third time in ALL CAPS, it's true." My asking for evidence only makes it obvious that I cannot listen to reason. Apparently, I have offended Professor Wray by insisting on substance rather than mere assertion. I most humbly apologize for that offense. I don't know where I could have gotten the impression that there is some sort of obstinacy and defensiveness about this issue. As B. Traven might have rewritten it:

"Evidence? To god-damned hell with evidence! We have no evidence. In fact, we don't need evidence. I don't have to show you any stinking evidence, you god-damned cabrón and ching' tu madre! Go back into that shit-hole of yours. I don't want to speak to you."

Some Questions on Unemployment for Economists

by Tom Walker

1. Over the last decade, in how many months have you a) had no income from employment? and b) were unsure how long it would be before you would again receive a paycheck?

2. How many times in your working life have you had to "change careers" because there were meager prospects in the field of work you had become proficient at?

3. How likely do you believe it is that you will be laid off as a professor in a) the next six months? b) the next year? c) the next five years?

4. How many of your fellow tenured economics professors do you know of who are currently laid off from their positions?

5. What do you think of the Pope's views on birth control?

EconoSpeak readers, please contribute your suggestions to this list of questions for economists on unemployment.

No Taxation Without Representation

Remind me again, Brad, which of the panelists is currently unemployed?

Happy Motoring

All I can say is thank God for James Howard Kunstler.

Like a lot of other observer-interlocutors, I'd like to know what folks imagine we are recovering to. To a renewed orgy of credit-card spending? To yet another round of suburban expansion, with the boys in the yellow hard-hats driving stakes out in the sagebrush for another new thousand-unit pop-up "community?" For a next generation of super-cars built to look like medieval war wagons? That's the "hope" that our officials seem to pretend to offer. It's completely inconsistent with any reality-based trend-lines, by the way.

Hurrah! Jobs Crisis Averted!

"Governments have known how to 'stimulate' sickly economies -- usually by war -- as long as they have known anything." -- Skidelsky

Happy Days are here again
The skies above are clear again
So lets sing a song of cheer again
Happy days are here again...

Any resemblance between the ways that governments have always known how to stimulate economies and policies proposed by big-hearted progressives for perpetually stimulating the economy is purely accidental. Trust us.

Note to Self

If an Austrian or a libertarian ever happens to observe that the sky is blue, it would be best to deny it, lest confirmation should backfire or do political damage.

Quote for the Day

by Tom Walker

"For reasons which will become clearer as the book goes on, I have come to see economics as a fundamentally regressive discipline, its regressive nature disguised by increasingly sophisticated mathematics and statistics." -- Robert Skidelsy, Keynes: The Return of the Master

The only quibble I would have with Skidelsky's formulation is that the "disguise" also functions as a screen and turnstile. The way that these "increasingly sophisticated" mathematics and statistics are held together precludes the most salient critical analysis. At the very foundation of the "math" program are a set of ideological assumptions about welfare and "revealed preferences." Remove those patently unwarranted assumptions and the whole edifice comes tumbling down. Oh, but "relax" them cleverly and you might win a dissertation and even an assistant professorship. It is this phony game of provisional relaxation and perpetual restoration that demarcates the bounds of acceptable dissent in the discipline.

Against Oreodoxy!

by Tom Walker

Among tenured economists who fancy themselves heterodox are a considerable number who might better be described as "oreodox". That is to say, they are hetero with regard to method but ortho to the core when it comes to the economic imperative of growth. Post-Keynesians, traditional Marxists, Institutionalists, Minskyites and what have you. Have they never heard of Herman Daly?

I understand the pressures of "fitting in" to the academy, where most colleagues are more concerned with climbing the career ladder (or at least not falling entirely off it) than with the "fate of the planet" or the unemployed. On the other hand, unemployment and/or environmental externalities are always good topics for a seminar, a journal article or an op-ed piece in the local paper. It would be a pity if they could be too easily banished, throwing scores of marginalized, oreodox economists out of a job.

Degrees of orthodoxy can best be gaged by the economist's position on unemployment.

Ultra-orthodox: there is no such thing as unemployment
Orthodox: there is unemployment; it is regrettable but unavoidable
Oreodox: there is unemployment but it can be eliminated by State policy
Reality: unemployment IS the State's policy

(Berlin) Wall to Wall (Street)

by Tom Walker

Twenty years ago next month, the Berlin Wall fell. One year ago last month, Lehman Brothers collapsed -- the "second shoe" dropped. Just as the dismantling of the wall was the symbolic climax of a long process of disintegration that had begun in the 1970s and was not completed until several years after November 1989, the financial crisis that erupted in 2008 had deep historical roots and it will not be resolved with a recovery to business as usual. At this point it would be prudent to banish the word "recovery" from the analytical vocabulary. This is not a recession. Nor is it a depression. It is the systemic collapse of a system that has rotted from the inside out.

America's Stalin and the new New Deal

In popular mythology, the Soviet system and Western capitalism were polar opposites: communism on the one-hand and free enterprise on the other. In reality, they were very distinctive variations of what Burnham called "managerial society" or, in Galbraith's terminology, "the new industrial state". The Western version may have been more durable than the Soviet one but, on the other hand, it may have lasted longer just because it had a head start in the accumulation of material wealth, which enabled it to "coast" longer on its momentum.

The now largely forgotten corporate accounting scandals of 2001-2002 -- Enron, Arthur Anderson, WorldCom, Adelphia, Dynergy, Duke Energy, Tyco International, etc., etc. -- clearly demonstrated that the accounting system in place in the U.S. was no less prone to manipulation and gaming than had been the account for Soviet state-owned enterprises. The financial crisis of 2008-2009 has shown that the corruption is endemic and not accidental.

None of this, of course, would be of any interest to top rank economists, who operate on phantasmagorical models that bear no resemblance to the actual world where money changes hands. For thirty years, an ideological fig leaf of markets and competition, free trade and tax cuts has covered up for a system of brokered privilege that has little to do with any of those things. Many people believed these fantasies, though, simply because they wanted to believe. Certainly not because the veneer was all that convincing. The alternative was too bleak to acknowledge. But the jig is up. The genie is out of the bottle. The shit has hit the fan.

Since it is clear to too many people that a return to business as usual is not going to happen, what's the alternative? Some folks are putting their faith in the idea of a new New Deal. This involves, first, projecting an old New Deal significantly different from the real deal and, second, dreaming that we can somehow use the fictional successes of that fairy tail New Deal as a guide to future policies.

Similarly, when the Soviet Union was collapsing, there was a fair-sized constituency who looked back on the Stalin period as a time of stability and patriotic victory. Imagine how well a return to Stalinist five-year plans would have worked for Russia in the 1990s. That's the prognosis for a new New Deal in the 2010s. With FDR as the American Stalin. A kinder, gentler Stalin no doubt. But a Stalin in the pure, unadulterated sense of anachronism. In the sense, that is, that a time traveling 1930s American would feel more alien in 2010 America than he or she would in 1930s Russia.

Ladies and Gentlemen, we've already just lived through a pretend nostalgic return to an earlier, "more authentic" era. Hayek, Thatcher and Reagan choreographed a promenade through a Disneyfied 19th century gilded age where laissez faire, rugged individualism, robber barons and that old time religion prevailed. A phonier crock of horse piss you couldn't imagine -- unless it's the wished-for new New Deal.

The oligarchy would prefer to go back to the heyday of neo-liberalism, but they'll settle for a new New Deal because, for one thing, it won't be a real New Deal but only New Deal lite. More importantly, the new New Deal will start from a baseline of the compromises and concessions ironed out during the old one. There will be no Black-Connery Bill or GM Flint factory occupations to threaten a more radical outcome on the horizon. How's that for a negotiating strategy, then? Make your opening offer the absolute worst settlement that you can imagine living with. Then hope for the other side to offer you more than you've asked for.

Separated at Birth?

(Stolen from Re: The People.)