The controversy over medical researchers taking money from drug companies continues. Universities are being called out for their failure to disclose to public agencies the other, private grants researchers are pulling in. The article discusses the competition between research shops for the star grant recipients, but discreetly fails to point out that the universities themselves get a cut of the proceeds, so that the conflict of interest is theirs too.
I’ve mentioned this in the past and will repeat now: there is no corresponding policy, not even rules to be broken, in economics. Public funders and some foundations require an acknowledgment in the published research they support, but this is about “thank you”, not probity. Any disclosure of other, privately-interested funding sources by economists is strictly voluntary, and in practice seldom occurs. Trade researchers can be funded by foreign governments or business associations, health researchers by tobacco companies, law and economics researchers by trade associations facing tort claims, agricultural researchers by agribusiness, and on and on. Turn on the recording function of your iPhone as you saunter the halls in Atlanta in January, and you will pick up lots of tidbits about economists proudly on the take.
Where should we begin to reform this profession? Would an AEA resolution help? Standard disclosure forms required by journals? I’m happy to see that the economic meltdown has prompted some soul-searching about where economists went wrong. Maybe a good starting point would professional transparency.
Thursday, November 19, 2009
Wednesday, November 18, 2009
Monsanto says it has nothing to do with the Food Safety Modernisation Act 2009
"Most people who know Michael Taylor’s name recall that he worked as Monsanto’s lawyer at King & Spalding for years before being appointed to the FDA to oversee the swift introduction into the marketplace of GMOs. He did so by ramming through a faux scientific regulatory conceit called “substantial equivalence.”....Since shedding the title of Vice President of Monsanto, Taylor has been busy promoting the concept of “risk assessment” as a means to deal with food-borne illness as an alternative to urging regulatory agencies to actually enforce laws already on the books and to adequately fund them so they could do so. Like “substantial equivalence,” the risk assessment conceit offers a great opportunity to change the system to benefit corporate interests....."
The Rockefeller name emerges yet again:
"....President Obama’s nominee for Commissioner of the Food and Drug Administration Margaret Hamburg, MD, sits on the board of directors at the Trust for America’s Health. Hamburg, a well-connected player in the public health field, also serves on the board of directors of the Rockefeller Foundation...."
See: 'The 2009 Food ‘Safety’ Bills Harmonize Agribusiness Practices in Service of Corporate Global Governance'
From the Department of Unbiased Research
The U.S. Chamber of Commerce and an assortment of national business groups opposed to President Obama's health-care reform effort are collecting money to finance an economic study that could be used to portray the legislation as a job killer and threat to the nation's economy, according to an e-mail solicitation from a top Chamber official.
The e-mail, written by the Chamber's senior health policy manager and obtained by The Washington Post, proposes spending $50,000 to hire a "respected economist" to study the impact of health-care legislation, which is expected to come to the Senate floor this week, would have on jobs and the economy.
Step two, according to the e-mail, appears to assume the outcome of the economic review: "The economist will then circulate a sign-on letter to hundreds of other economists saying that the bill will kill jobs and hurt the economy. We will then be able to use this open letter to produce advertisements, and as a powerful lobbying and grass-roots document".
Shear, Michael D. 2009. "Health Bill Foes Solicit Funds for Economic Study." Washington Post (16 November).
"The Great Disconnect Between Stocks and Jobs"
Robert Reich at TPM wrings his hands ineffectually:
The Eisenhower speech's theme of "false prosperity" echoes elements of essayist and literary critic Kenneth Burke's satirical essay of twenty-two years earlier, "Waste – the future of prosperity," which Burke subsequently reprised in a 1958 essay, "Borrow. Spend. Buy. Waste. Want." The particular variety of waste that Eisenhower condemned in his speech was the Truman administration's policy of using massive rearmament spending to stimulate the economy -- a policy whose single-mindedly cynical deliberateness would be revealed in 1975 when National Security Council memorandum 68 (NSC-68) was declassified (see especially Fred Block's 1980 Politics and Society article, Economic Instability and Military Strength: The Paradoxes of the 1950 Rearmament Decision).
I want to quote resonating paragraphs from Burke's 1930, Ike's 1952 speech and NSC-68 and also to suggest that a profound amnesia and denial about the manifestly wasteful sources of "economic growth" massively constrain and distort American political discourse and thought -- both popular and academic.
Burke: "If all our people are to be kept straining at their jobs, the duty of the public as wasters becomes obvious...
"But by expanding this principle, we find even greater encouragement. For long we have worried about war, driven by a pre-industrial feeling that war is the enemy of mankind. But by the theory of the economic value of waste we find that war is the basis of culture. War is our great economic safety-valve. For if waste lets up, if people simply won't throw out things fast enough to create new needs in keeping with the increased output under improved methods of manufacture, we always have recourse to the still more thoroughgoing wastage of war. An intelligently managed war can leave whole nations to be rebuilt, thus providing work at peak productivity for millions of the surviving population."
Ike: "The inflation we suffer is not an accident; it is a policy. It is not, as the Administration would have us believe some queer and deadly kind of economic bacteria breathed into the atmosphere by Soviet communism.
"This is the way a recent editorial in a great metropolitan newspaper put it: "Inflation is the calculated policy of the White House on the labor front, the fiscal front, the agricultural front." The point and purpose of this policy I have already indicated: to fool the people with a deceptive prosperity. The method is very simple: to give more people more money that is worth less....
"There is in certain quarters the view that national prosperity depends on the production of armaments and that any reduction in arms output might bring on another recession. Does this mean, then that the continued failure of our foreign policy is the only way to pay for the failure of our fiscal policy? According to this way of thinking, the success of our foreign policy would mean a depression."
NSC-68: " Furthermore, the United States could achieve a substantial absolute increase in output and could thereby increase the allocation of resources to a build-up of the economic and military strength of itself and its allies without suffering a decline in its real standard of living. Industrial production declined by 10 percent between the first quarter of 1948 and the last quarter of 1949, and by approximately one-fourth between 1944 and 1949. In March 1950 there were approximately 4,750,000 unemployed, as compared to 1,070,000 in 1943 and 670,000 in 1944. The gross national product declined slowly in 1949 from the peak reached in 1948 ($262 billion in 1948 to an annual rate of $256 billion in the last six months of 1949), and in terms of constant prices declined by about 20 percent between 1944 and 1948.
"With a high level of economic activity, the United States could soon attain a gross national product of $300 billion per year, as was pointed out in the President's Economic Report (January 1950). Progress in this direction would permit, and might itself be aided by, a buildup of the economic and military strength of the United States and the free world; furthermore, if a dynamic expansion of the economy were achieved, the necessary build-up could be accomplished without a decrease in the national standard of living because the required resources could be obtained by siphoning off a part of the annual increment in the gross national product. These are facts of fundamental importance in considering the courses of action open to the United States."
It's the WASTE, stupid. The stock market knows that the more unemployment there is, the more waste the federal government will be encouraged to buy. There is no alternative. As Kenneth Burke observed in his 1930 satire, "We have simply to make sure that the increase in the number of labor-saving devices does not shorten the hours of labor." Even Paul Krugman has dipped his toe in that water, as had Alec MacGillis of the Washington Post the week before. Larry Summers has tipped off Wall Street that the White House won't make any such "mistake": "It may be desirable [to the unemployed] to have a given amount of work shared among more people. But that's not as desirable [to Wall Street] as expanding the total amount of work."
Robert Reich, along with the AFL-CIO, appears to still be sitting on the fence on this one. Shame!
How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise.On the evening of September 23, 1952, General Dwight D. Eisenhower, the Republican nominee for President of the United States, was scheduled to deliver a campaign speech in Cleveland, Ohio. That night however, his vice-presidential running mate, Richard M. Nixon, gave his famous "Checkers" speech defending himself from charges that he had received inappropriate financial gifts. Instead of his originally scheduled address, whose topic was inflation and "false prosperity", Eisenhower substituted his reaction to Nixon's televised appearance. The text of Ike's unspoken speech was published the next day in the Washington Post and Eisenhower essentially "the same" speech a month later in Troy, New York. But that later version of the speech, coming just a week and a half before election day, would have had little impact on framing the election campaign.
The Eisenhower speech's theme of "false prosperity" echoes elements of essayist and literary critic Kenneth Burke's satirical essay of twenty-two years earlier, "Waste – the future of prosperity," which Burke subsequently reprised in a 1958 essay, "Borrow. Spend. Buy. Waste. Want." The particular variety of waste that Eisenhower condemned in his speech was the Truman administration's policy of using massive rearmament spending to stimulate the economy -- a policy whose single-mindedly cynical deliberateness would be revealed in 1975 when National Security Council memorandum 68 (NSC-68) was declassified (see especially Fred Block's 1980 Politics and Society article, Economic Instability and Military Strength: The Paradoxes of the 1950 Rearmament Decision).
I want to quote resonating paragraphs from Burke's 1930, Ike's 1952 speech and NSC-68 and also to suggest that a profound amnesia and denial about the manifestly wasteful sources of "economic growth" massively constrain and distort American political discourse and thought -- both popular and academic.
Burke: "If all our people are to be kept straining at their jobs, the duty of the public as wasters becomes obvious...
"But by expanding this principle, we find even greater encouragement. For long we have worried about war, driven by a pre-industrial feeling that war is the enemy of mankind. But by the theory of the economic value of waste we find that war is the basis of culture. War is our great economic safety-valve. For if waste lets up, if people simply won't throw out things fast enough to create new needs in keeping with the increased output under improved methods of manufacture, we always have recourse to the still more thoroughgoing wastage of war. An intelligently managed war can leave whole nations to be rebuilt, thus providing work at peak productivity for millions of the surviving population."
Ike: "The inflation we suffer is not an accident; it is a policy. It is not, as the Administration would have us believe some queer and deadly kind of economic bacteria breathed into the atmosphere by Soviet communism.
"This is the way a recent editorial in a great metropolitan newspaper put it: "Inflation is the calculated policy of the White House on the labor front, the fiscal front, the agricultural front." The point and purpose of this policy I have already indicated: to fool the people with a deceptive prosperity. The method is very simple: to give more people more money that is worth less....
"There is in certain quarters the view that national prosperity depends on the production of armaments and that any reduction in arms output might bring on another recession. Does this mean, then that the continued failure of our foreign policy is the only way to pay for the failure of our fiscal policy? According to this way of thinking, the success of our foreign policy would mean a depression."
NSC-68: " Furthermore, the United States could achieve a substantial absolute increase in output and could thereby increase the allocation of resources to a build-up of the economic and military strength of itself and its allies without suffering a decline in its real standard of living. Industrial production declined by 10 percent between the first quarter of 1948 and the last quarter of 1949, and by approximately one-fourth between 1944 and 1949. In March 1950 there were approximately 4,750,000 unemployed, as compared to 1,070,000 in 1943 and 670,000 in 1944. The gross national product declined slowly in 1949 from the peak reached in 1948 ($262 billion in 1948 to an annual rate of $256 billion in the last six months of 1949), and in terms of constant prices declined by about 20 percent between 1944 and 1948.
"With a high level of economic activity, the United States could soon attain a gross national product of $300 billion per year, as was pointed out in the President's Economic Report (January 1950). Progress in this direction would permit, and might itself be aided by, a buildup of the economic and military strength of the United States and the free world; furthermore, if a dynamic expansion of the economy were achieved, the necessary build-up could be accomplished without a decrease in the national standard of living because the required resources could be obtained by siphoning off a part of the annual increment in the gross national product. These are facts of fundamental importance in considering the courses of action open to the United States."
It's the WASTE, stupid. The stock market knows that the more unemployment there is, the more waste the federal government will be encouraged to buy. There is no alternative. As Kenneth Burke observed in his 1930 satire, "We have simply to make sure that the increase in the number of labor-saving devices does not shorten the hours of labor." Even Paul Krugman has dipped his toe in that water, as had Alec MacGillis of the Washington Post the week before. Larry Summers has tipped off Wall Street that the White House won't make any such "mistake": "It may be desirable [to the unemployed] to have a given amount of work shared among more people. But that's not as desirable [to Wall Street] as expanding the total amount of work."
Robert Reich, along with the AFL-CIO, appears to still be sitting on the fence on this one. Shame!
"Is Work Sharing A Viable Solution To The Unemployment Problem?"
Pat Garofalo at Think Progress Wonk Room:
Down through the ages, philosophers, theologians and even economists (Mill, Marx, Marshall, Veblen, Keynes…) have extolled the virtues of leisure and downplayed the accumulation of material possessions. The trauma of the 1930s Depression and the subsequent World War II seem to have locked the American psyche into the fixed idea that economic growth — by whatever means necessary — is the holy grail. This has produced six decades of what Dwight Eisenhower called "false prosperity", that is to say increase of gross output, fueled by military spending and other wasteful indulgences, and heedless of its impact on the environment, the social fabric and the character of individuals.
Over 200 years ago, Benjamin Franklin observed,
Two months before his assassination, President John F. Kennedy mused, "we are going to find the workweek reduced, and we are going to find people wondering what they should do…" Two years later, his brother, Bobby, delivered a famous critique of the GNP inability to measure a country's health. The measure "counts special locks for our doors and the jails for those who break them" but not "the health of our children, the quality of their education or the joy of their play." That speech, by the way, was cited by President Obama during the election campaign to illustrate his conviction that a "paradigm shift" was needed in economics before it became too late.
Just last March, the UK's Sustainable Development Commission issued a report, "Prosperity without Growth?", pointing out that the ongoing obsession with economic growth was making environmental catastrophe inevitable even as it was not delivering on its mythical promises of stability and reduction of poverty. The report called the continuing growth imperative a delusion.
Even if work-sharing is "still only a B- idea" it is at least a step in the right direction and, perhaps, the thin edge of a wedge that will ultimately pull down the temple of idolatry dedicated to economic growth. The growth imperative's ideological foundations in the Cold War NSC-68 doctrine and economic competition with the "Soviet Menace" have been long forgotten, even as their analytically-incoherent economic justifications have been elevated to the status of incontestable dogma.
An A+ idea would consist of consigning the entire putrefying economic paradigm to its appropriate dust bin. For now, we would do well to settle for B-.
Both Baker and Paul Krugman point to the example of Germany, which has a work sharing program, along with strong labor protections. As Krugman wrote, the measures "didn’t prevent a nasty recession, but Germany got through the recession with remarkably few job losses." Plus, as Peter Dorman at EconoSpeak noted, work sharing helps preserve human capital, as firms don’t have to re-hire and re-train workers down the line — they just increase their hours back to where they were previously.Compared to utter failure, B minus looks like genius. In terms of "doing better" one first has to take stock of what "progress" might conceivably mean. I like to start with Adam Smith's summary of "what constitutes the real happiness of human life": ease of body and peace of mind. Then there is Thomas Jefferson's prescription, "If we can prevent government from wasting the labors of the people under the pretense of taking care of them, they must become happy."
All that said, this is still only a B- idea. (Krugman acknowledges this, calling it the "third-best" economic policy available, after committing to moderate inflation to lower interest rates or further fiscal stimulus.) In the absence of stronger stimulus measures, such as aid to states or a direct job program, it will do some good — and it may be the only thing that a deficit-crazed Congress is willing to consider. But it is inefficient, has the potential to be wasteful, and obviously does nothing for those already out of work. Work sharing isn’t terrible, but I’d like to think that we can do better.
Down through the ages, philosophers, theologians and even economists (Mill, Marx, Marshall, Veblen, Keynes…) have extolled the virtues of leisure and downplayed the accumulation of material possessions. The trauma of the 1930s Depression and the subsequent World War II seem to have locked the American psyche into the fixed idea that economic growth — by whatever means necessary — is the holy grail. This has produced six decades of what Dwight Eisenhower called "false prosperity", that is to say increase of gross output, fueled by military spending and other wasteful indulgences, and heedless of its impact on the environment, the social fabric and the character of individuals.
Over 200 years ago, Benjamin Franklin observed,
"It has been computed by some political arithmetician, that if every man and woman would work for four hours each day on something useful, that labor would produce sufficient to procure all the necessaries and comforts of life ; want and misery would be banished out of the world, and the rest of the twenty-four hours might be leisure and pleasure."Nearly a century ago, in the wake of World War I, Stephen Leacock observed, "The nerves of our industrial civilization are worn thin with the rattle of its own machinery," Leacock wrote, "The industrial world is restless, over-strained and quarrelsome. It seethes with furious discontent, and looks about it eagerly for a fight. It needs a rest." Leacock argued that reducing the hours of work "should be among the primary aims of social reform," and recommended "such a shortening as will strain the machine to a breaking point, but never break it." Keynes concurred with a vision of a 15-hour work week as a realistic prospect for the future.
Two months before his assassination, President John F. Kennedy mused, "we are going to find the workweek reduced, and we are going to find people wondering what they should do…" Two years later, his brother, Bobby, delivered a famous critique of the GNP inability to measure a country's health. The measure "counts special locks for our doors and the jails for those who break them" but not "the health of our children, the quality of their education or the joy of their play." That speech, by the way, was cited by President Obama during the election campaign to illustrate his conviction that a "paradigm shift" was needed in economics before it became too late.
Just last March, the UK's Sustainable Development Commission issued a report, "Prosperity without Growth?", pointing out that the ongoing obsession with economic growth was making environmental catastrophe inevitable even as it was not delivering on its mythical promises of stability and reduction of poverty. The report called the continuing growth imperative a delusion.
Even if work-sharing is "still only a B- idea" it is at least a step in the right direction and, perhaps, the thin edge of a wedge that will ultimately pull down the temple of idolatry dedicated to economic growth. The growth imperative's ideological foundations in the Cold War NSC-68 doctrine and economic competition with the "Soviet Menace" have been long forgotten, even as their analytically-incoherent economic justifications have been elevated to the status of incontestable dogma.
An A+ idea would consist of consigning the entire putrefying economic paradigm to its appropriate dust bin. For now, we would do well to settle for B-.
From Global Imbalances to Financial Meltdown: Uncovering the Missing Link
Last January, I presented a paper at the ASSA meetings offering my own take on the state of the world, entitled “The Financial Crisis Through the Lens of Global Imbalances”. My main point was that dollar recycling broke down as many of us expected it would, but not at the international level; rather, the breakdown occurred in the transmission mechanism that linked households to capital inflows. There were other surprises too, but nothing that would alter the conclusion that astronomic US current account deficits were ultimately culpable.
I revised the paper over the summer with the intention of publishing it, but, having received a request to make additional changes, decided it was a creature of its moment, and I should just let it be. The next iteration is on my calendar for December; I will consider the arguments of Obstfeld and Rogoff, among others, and try once more to slay the conventional wisdom. Meanwhile, if you want to see what I was thinking back in the day, you can find it here.
I revised the paper over the summer with the intention of publishing it, but, having received a request to make additional changes, decided it was a creature of its moment, and I should just let it be. The next iteration is on my calendar for December; I will consider the arguments of Obstfeld and Rogoff, among others, and try once more to slay the conventional wisdom. Meanwhile, if you want to see what I was thinking back in the day, you can find it here.
Tuesday, November 17, 2009
Is The Media Being Hysterical About The Dollar?
Yes. Anyway, that is the way I and Dean Baker see it ("What would a rout of the dollar look like?"). For quite some time now, there have been lots of articles in leading newspapers and magazines, as well as gobs of commentators on TV talk shows, all hyperventilating about the decline of the dollar and how it is likely to get much worse, with a terrible crash likely in the near future, and so on. This story has gotten so widespread that it is now taken as simply a stylized fact. Buried partway down in a front page story today in WaPo was the phrase "rapid decline of the dollar," referring to recent events.
Well, the dollar has been declining with some wiggles since a high around 1.26 per euro in mid-February to 1.48 something a few minutes ago. However, since it hit 1.5 in late October, it has basically been oscillating in a narrow range, no trend, with the Chinese holding the yuan/rmb fixed against it. That high in February recreated a high in November, which followed the upward rush of the dollar (as a "safe haven") in the midst of the general global financial crash following the Minsky moment on Sept. 18. Earlier that summer the dollar was noticeably lower than it is now, hitting 1.6 against the euro at one point. This is just hysteria.
Dean points out that if somehow the dollar were to fall sharply, one would almost certainly see Europeans and Chinese and Japanese intervening in the market to stop it. Why? No way they want to face trade competition from a super low dollar, and indeed, the dollar currently seems to go up when domestic economic news is bad and down when it is good. All of this frothing at the mouth is just congealed propaganda by those who want to see a tightening of monetary policy and an ending of the fiscal stimulus. That the media so widely has bought into it is nauseating.
Well, the dollar has been declining with some wiggles since a high around 1.26 per euro in mid-February to 1.48 something a few minutes ago. However, since it hit 1.5 in late October, it has basically been oscillating in a narrow range, no trend, with the Chinese holding the yuan/rmb fixed against it. That high in February recreated a high in November, which followed the upward rush of the dollar (as a "safe haven") in the midst of the general global financial crash following the Minsky moment on Sept. 18. Earlier that summer the dollar was noticeably lower than it is now, hitting 1.6 against the euro at one point. This is just hysteria.
Dean points out that if somehow the dollar were to fall sharply, one would almost certainly see Europeans and Chinese and Japanese intervening in the market to stop it. Why? No way they want to face trade competition from a super low dollar, and indeed, the dollar currently seems to go up when domestic economic news is bad and down when it is good. All of this frothing at the mouth is just congealed propaganda by those who want to see a tightening of monetary policy and an ending of the fiscal stimulus. That the media so widely has bought into it is nauseating.
Prosperity without growth
Jeremy Lovell asks Can You Have Prosperity Without Growth? at the New York Times.
Monday, November 16, 2009
How the Australian Gulf Country was Settled in the 1880s
"…Adults and children received a bullet to the brain, while babies – whether injured or not – were held by the ankles “just like goanna”, their skulls smashed against trees or rocks.30 A crying baby left behind when Garrwa people fled a camp on the Robinson River was thrown onto the hot coals of a cooking fire, still crying."[1]
In 'The Monthly' this November Tony Roberts has written an account of the history of white pastoral settlement in the Gulf Country of the Northern Territory in the years following 1881. At that time the colonial government (administered from the Southern city of Adelaide) handed over an area equivalent in size to the Australian state of Victoria to just 14 landholders. All but two had a policy of shooting dead the local aboriginal population to facilitate the easy commercialisation of land-use.
It's interesting to note that Tony Roberts has pointed his finger for these unhindered massacres at particular individuals in power at the time. All with a 'Sir' in front of their names; a reward from the British global empire.
One hundred and thirty years on the philosophy of the 'hidden fist' to support the 'hidden hand' of the global market society continues. This time emanating from the ebbing American empire:
"For globalism to work, America can't be afraid to act like the almighty superpower that it is....The hidden hand of the market will never work without a hidden fist-McDonald's cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies is called the United States Army, Air Force, Navy and Marine Corps (Friedman, 1999)."
[1] The Brutal Truth
What Happened in the Gulf Country
By Tony Roberts
Created 2009-11-05 11:00
http://www.themonthly.com.au/print/2127
Stuff you can't make up
Many Smith scholars have noted the oddity of taking "The Invisible Hand" as an important theme in Smith, given that it appears in one short passage in The Wealth of Nations and one short passage in the Theory of Moral Sentiments (and in the second case means something altogether different from the meaning it is taken to have today and arguably has in the first case). Gavin Kennedy has made this point on his blog. Emma Rothschild's book, Economic Sentiments, makes it as well. But a new paper by Daniel Klein argues, contrarily, for the centrality of the concept to Smith's thought, and here, I kid you not, is why: these two tiny passages each occur at the exact midpoint of the books in which they appear!!!
Sunday, November 15, 2009
I LIKE Ike! (sort of)
There is in certain quarters the view that national prosperity depends on the production of armaments and that any reduction in arms output might bring on another recession. Does this mean, then that the continued failure of our foreign policy is the only way to pay for the failure of our fiscal policy? According to this way of thinking, the success of our foreign policy would mean a depression.On September 23, 1952, General Dwight D. Eisenhower, the Republican Party nominee for the office of President of the United States, was scheduled to give a speech in Cleveland, Ohio. That speech was preempted, however by Richard M. Nixon's Checker's Speech. Instead of delivering his prepared speech, Eisenhower presented his reaction to Nixon's defense of his finances.
Nevertheless, the text of Ike's unspoken speech was published in the Washington Post and New York Times. It's theme was to have been "Prosperity without War." Fifty-seven years later, that theme resonates in the title of the Sustainable Development Commission report, Prosperity without Growth?, first published last March, with a revised, second edition (sans question mark) published last week.
Eisenhower's speech was a sustained polemic expressly directed at the Truman administration policies conceived by Leon Keyserling. Although Ike didn't name Keyserling in the speech, he did the next best thing. He cited the protest resignation of the Edwin G. Nourse, whom Keyserling succeeded as Chairman of the Council of Economic Advisors. To anyone familiar with Keyserling's conceptual role with regard to the economics of NSC-68, several passages in Ike's speech stand out as direct indictments.
The inflation we suffer is not an accident; it is a policy. It is not, as the Administration would have us believe some queer and deadly kind of economic bacteria breathed into the atmosphere by Soviet communism...Now, Ike's feeble prescriptions were woefully inadequate to the magnitude of the problems he so acutely critiqued in his speech. That's why I only sort of like Ike. It's not as if Truman and his advisors didn't have some pretty wicked problems to try to manage. And the military-industrial complex that President Eisenhower warned about in his farewell address didn't exactly evaporate during his term in office.
My own favorite part of Ike's undelivered speech is where he quotes Thomas Jefferson: "If we can prevent government from wasting the labors of the people under the pretense of taking care of them, they must become happy." Sounds almost like Ronald Reagan, eh? But not quite. Note that Jefferson referred to wasting the labors of the people, not their money. It's a short, sweet paraphrase of a more convoluted formula given by Jefferson's friend, the Marquis de Chastellux:
First: how many days in the year, or hours in the day, can a man work, without either incommoding himself, or becoming unhappy? One may perceive, at the first glance, that this question refers to the nature of the climate; to the constitution, and to the strength of men; to their education, to their aliments; &c. &c. all cases, which may be easily resolved.For an opposing view to that of Chastellux and Jefferson (and the US Declaration of Independence), see Larry Summers: "It may be desirable to have a given amount of work shared among more people. But that's not as desirable as expanding the total amount of work."
Secondly, how many days must a man work in the year, or, how many hours must he work in the day, to procure for himself that which is necessary to his preservation, and his ease? Having resolved these questions, it will be no difficult matter to determine how many days in the year, or how many hours in the day, may remain for this man to dispose of: that is to say, how many may be demanded of him, without robbing him either of the means of subsistence, or of welfare; so that now, the whole matter rests upon an examination, whether the performance of that duty, which the sovereign exacts from him, be within, or beyond the time, which each man can spare from his absolutely necessary avocations.
Time for Summers vacation (thanks to Peggy Dobbins for the slogan). School's out.
Rwanda: The Case for Humanitarian Intervention
Rwanda is the watchword for those who support humanitarian intervention, just as the example Hitler is used to justify war. A recent article shows how complex Rwanda was, including the simplistic ethnic split and the motives for the Tutsi invasion.
The article deserves a wide dissemination.
http://www.miller-mccune.com/culture_society/what-really-happened-in-rwanda-1504
The article deserves a wide dissemination.
http://www.miller-mccune.com/culture_society/what-really-happened-in-rwanda-1504
Putting Two and Two Together on Afghanistan
Let’s begin with a homework assignment: read this about where our money in Afghanistan is going.
Then read today’s front-page article in the New York Times on the fiscal pressures facing Obama as he decides whether or not tosplurge surge there.
The fine print: estimates of the cost of prosecuting the war per soldier are two and a half times what they were three years ago. Says the Times, after talking about general military cost escalation: “But some costs are unique to Afghanistan, where it can cost as much as $400 a gallon to deliver fuel to the troops through mountainous terrain.”
I wonder how they can afford to heat their homes in Switzerland.
Then read today’s front-page article in the New York Times on the fiscal pressures facing Obama as he decides whether or not to
The fine print: estimates of the cost of prosecuting the war per soldier are two and a half times what they were three years ago. Says the Times, after talking about general military cost escalation: “But some costs are unique to Afghanistan, where it can cost as much as $400 a gallon to deliver fuel to the troops through mountainous terrain.”
I wonder how they can afford to heat their homes in Switzerland.
Krugman Misses the Point about Kurzarbeit
Give him credit for recognizing that a society-wide policy of work-sharing is much more humane and rational than America’s current slash-and-burn labor market devastation. Especially in light of the increased unemployment risk faced by minorities and youth, it would be much better for government to push companies to reduce hours rather than bodies. So far so good.
But this is not the main reason Germany has an institutionalized short-work (that’s the translation of Kurzarbeit) program. The Germans have this strange belief that working builds skill: you go through an apprenticeship, you work with master craftspeople, you learn the subtle ins and outs of the particular firm you are attached to (in German you work “with” and not “for”), and lo and behold you become more productive. The key purpose behind Kurzarbeit is to not lose this accumulation of human capital.
Oddly, Krugman writes, “Now, the usual objection to European-style employment policies is that they’re bad for long-run growth — that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. And in normal times there’s something to be said for American-style “free to lose” labor markets, in which employers can fire workers at will but also face few barriers to new hiring.....But these aren’t normal times.”
In normal times the US runs a massive trade deficit with Germany, unable to compete in industry after industry on quality-price comparisons. Labor in this country is strictly an expense, not an asset, and therefore quickly shed when sales go down. Note Krugman’s language: it is “occupations”, not workers who are productive. Even our most knowledgeable pundits can’t imagine an economy in which the skill of the average worker is the main competitive advantage, the last resource you would want to shove out the door.
But this is not the main reason Germany has an institutionalized short-work (that’s the translation of Kurzarbeit) program. The Germans have this strange belief that working builds skill: you go through an apprenticeship, you work with master craftspeople, you learn the subtle ins and outs of the particular firm you are attached to (in German you work “with” and not “for”), and lo and behold you become more productive. The key purpose behind Kurzarbeit is to not lose this accumulation of human capital.
Oddly, Krugman writes, “Now, the usual objection to European-style employment policies is that they’re bad for long-run growth — that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. And in normal times there’s something to be said for American-style “free to lose” labor markets, in which employers can fire workers at will but also face few barriers to new hiring.....But these aren’t normal times.”
In normal times the US runs a massive trade deficit with Germany, unable to compete in industry after industry on quality-price comparisons. Labor in this country is strictly an expense, not an asset, and therefore quickly shed when sales go down. Note Krugman’s language: it is “occupations”, not workers who are productive. Even our most knowledgeable pundits can’t imagine an economy in which the skill of the average worker is the main competitive advantage, the last resource you would want to shove out the door.
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