Mark Thoma at http://economistsview.typepad.com links to Paul Krugman's latest defense of social security on its 75th anniversary, and Dean Baker has been beating the drums too. I have nothing really original to add to this, but as defending social security against misrepresenting critics has been a core activity of this blog and its predecessor, Maxspeak, from early on, I feel the duty to add to the beating of the drum. "Bipartisan" deficit commission after bipartisan deficit commission seems to find their agreement on doing stuff to social security in the name of deficit reduction, even though social security is the part of the federal budget in better shape than pretty much any other. I think it is the thing that brings together these Washington "experts," who, even if they are not being directly paid by the Wall Street firms that are drooling for the billions from a privatization, they are under the influence of those who have been for so long that those who should know better seem to either forget it or ignore it.
As it is, for this go-around they are pushing for a 70-year retirement age, which Krugman accurately points out seriously hits the poorer groups in the US whose life expectancy is not rising (and, indeed, is falling for some groups, particularly poorer women). The bottom line argument continues to be "cut future benefits now, because, eeek!, if we don't future benefits now, we may need to be cut them in the future,eeek!" meh, feh, gah!
What needs cutting or slowing is the rate of increase of medical costs. Ezra Klein pointed out over the weekend in WaPo that the Repubs are now fighting against the cost control board (IPAB) set up by the Obama health reform, even as they support its spending subsidies, no cuts in defense spending, and the continuation of tax cuts for the rich, all the while playing to the anti-deficit tea partiers, although they do seem to be shying away from Paul Ryan's plan to voucherize social security. And people are whining that the Congressional Dems have nothing to run on this fall?
Monday, August 16, 2010
Saturday, August 14, 2010
Burying X-Efficiency: Chicago Economics vs. the World
I am asking for some help. I am ready to send my article for publication. I have already followed instructions to tone way down my critique of Chicago. Anything that can make the story stronger would be appreciated.
http://michaelperelman.files.wordpress.com/2010/08/x2-new.pdf
http://michaelperelman.files.wordpress.com/2010/08/x2-new.pdf
Friday, August 13, 2010
Clawbacks from economists?
This review is not particularly in itself. It is worth skimming to get the flavor. Once you feel comfortable with what you have read, search for the word "ugly." The idea is that these mostly neoliberal economists claim to have created enormous value for the economy. I assume that the essays were composed before the crash, but the editor claims that our profession deserves extra funding for all the value it created. Could the public demand a clawback to penalize these economists for the harm they have done?
Better Living through Economics
Author:
Siegfried, John J.
Reviewer:
Vedder, Richard
Published by EH.NET (August 2010)
John J. Siegfried, editor, Better Living through Economics. Cambridge, MA: Harvard University Press, 2010. viii + 315 pp. $45 (hardcover), ISBN: 978-0-674-03618-5.
Reviewed for EH.Net by Richard Vedder, Department of Economics, Ohio University.
This volume of essays advances the proposition that economic theory and economic research can and has been harnessed to promote human welfare in many different ways, materially improving the quality of our lives and arguably our incomes. Not unusual for compilations of essays, this book contains the good, the bad, and, unfortunately, the ugly. Fortunately, “the good” dominates, and I would say two-thirds of the volume successfully achieves its mission.
John Siegfried, Vanderbilt professor and Secretary-Treasurer of the American Economic Association, seems to be the prime mover on getting this volume published. As Richard Caves states in a cover blurb, many of the “essays are concise, clear and consistently written at a level within the reach of undergraduate economics students.” Good examples include Thomas Tietenberg’s excellent treatment of the evolution of emissions trading to more efficiently deal with restricting environmentally undesirable practices, Elizabeth Bailey’s nice narrative about the benefits of transportation deregulation beginning in the late 1970s, Robert Moffitt’s clear and well balanced discussion of the evolution of the Earned Income Tax Credit, Michael Boskin’s discussion of improvements in measuring inflation, Lawrence White’s analysis of changing views on anti-trust regulation over time, and the Asch, Miller and Warner’s discussion of how the military draft was ended and subsequent issues arising from that. Each of these authors shows that basic propositions taught in any good principles of economics course can be harnessed to make the world work better and more efficiently. Generally speaking, the discipline and self-correcting properties of markets are stronger and more effective in allocating resources than rules-based command decisions made through the political process. Also, aligning incentives with socially desirable objectives pays.
Anne Krueger’s essay stands out in several respects. First, she very convincingly demonstrates that the move away from protectionist/import substitution policies in the 1950s and 1960s harnessed the spirit of enterprise and brought about enormous improvements in the standard of living for literally billions of people. And she appropriately notes that the underlying theory was not discovered by an National Science Foundation grant revealing huge insights, but essentially by the work of Adam Smith and David Ricardo a couple of centuries ago.
This gets to a problem. Economists sometimes get overwhelmed with their own self importance and claim more than they should. John Taylor writes a generally solid essay arguing that reductions in macroeconomic stability in modern times reflects in large part a move to a more intelligent understanding on the role of monetary variables in the economy. Taylor believes the evolution of new economic modeling in recent decades that combine rational expectations with some allowance for price stickiness has brought about enormous policy improvements. Maybe, but I side with commenter Laurence H. Meyer (himself a former Federal Reserve Governor) whose views are “the shifts in monetary policy ... are due more to the rediscovery of classical monetary theory than to advances of modern macroeconomic theory. ... classical monetary theorists had the story basically right” (p. 165). The work of Milton Friedman outlined a half century ago -- itself informed by still earlier work of quantity theorists and neglected practitioners like Clark Warburton -- was far more important than modern-day theoretical refinements.
The less good essays stray a good deal from the stated mission of offering clear, concise explanations of using economics to deal with problems in a language an undergraduate student can understand. Alvin Roth’s paper on deferred-acceptance algorithms is filled with jargon, is exceedingly hard to follow, and deals, frankly, with a far less dramatic advancement in modern economics than improving price indices, promoting the power of comparative advantage, or the gains from transport deregulation. Modest Roth is not -- he cites nearly thirty papers he authored or coauthored in the bibliography. The McAfee, McMillan and Wilkie piece on auctioning spectrum licenses deals with a moderately more important topic, but again gets into too many details of alternative bidding possibilities to be of interest to all but the most gung ho specialists.
Alas, I must come to the “ugly” part of this book. This appears to be not simply a volume of essays to promote the practical dimensions of modern advances in economics, but more an effort to increase the income and prestige of economists relative to other scholars. On page one John Siegfried assets, without a scintilla of supporting evidence, that “the value of the improved policies documented in this volume is likely hundreds of billions of dollars.” His agenda becomes clearer very shortly: “Interestingly ... only a few of the contributions outlined here have been financed or promoted through the private sector” (p. 3). In other words, NSF economics grants have a huge payoff. Charles Plott even goes further: “the social value of the contributions of economics compares well with the contributions of basic research in any field of science.” (p. 6). This, of course, is a normative judgment without a scintilla of rigorous proof, measuring, for example, the rate of return on research in physics or biological sciences with that in economics or psychology (a point that even the NSF’s Daniel Newlon gently takes him to task on).
All and all, this reinforces my own feelings about our profession. For many, Physics Envy is a big cross to bear -- the unwillingness to accept that economics is not considered as respectable as many of the so-called hard sciences. This volume promotes the good economists have done, ignoring the policy disasters that economists have contributed to, for example, the stagflation of the 1970s, or, arguably, even the financial crisis of 2008 -- where were economists in warning about subprime lending, excessive use of untried to financial instruments, etc? Where are we today in opposing stimulus packages that historical experience and economic theory alike say do not work?
But above all, the volume is all about rent-seeking -- a plea to get more economics funding for the NSF and related agencies. It is amazing how much Adam Smith, David Ricardo, A.C. Pigou, Irving Fisher and Milton Friedman contributed to the advancement of human welfare without NSF funds. As Austen Goolsbee notes in a recent NBER working paper, more government grant funding inevitably increases economic rents because of the inherent short-term limits on the supply of good talent. If the authors had stuck to presenting the evidence without its obvious and overplayed commercial message, this would have been a far better volume.
Better Living through Economics
Author:
Siegfried, John J.
Reviewer:
Vedder, Richard
Published by EH.NET (August 2010)
John J. Siegfried, editor, Better Living through Economics. Cambridge, MA: Harvard University Press, 2010. viii + 315 pp. $45 (hardcover), ISBN: 978-0-674-03618-5.
Reviewed for EH.Net by Richard Vedder, Department of Economics, Ohio University.
This volume of essays advances the proposition that economic theory and economic research can and has been harnessed to promote human welfare in many different ways, materially improving the quality of our lives and arguably our incomes. Not unusual for compilations of essays, this book contains the good, the bad, and, unfortunately, the ugly. Fortunately, “the good” dominates, and I would say two-thirds of the volume successfully achieves its mission.
John Siegfried, Vanderbilt professor and Secretary-Treasurer of the American Economic Association, seems to be the prime mover on getting this volume published. As Richard Caves states in a cover blurb, many of the “essays are concise, clear and consistently written at a level within the reach of undergraduate economics students.” Good examples include Thomas Tietenberg’s excellent treatment of the evolution of emissions trading to more efficiently deal with restricting environmentally undesirable practices, Elizabeth Bailey’s nice narrative about the benefits of transportation deregulation beginning in the late 1970s, Robert Moffitt’s clear and well balanced discussion of the evolution of the Earned Income Tax Credit, Michael Boskin’s discussion of improvements in measuring inflation, Lawrence White’s analysis of changing views on anti-trust regulation over time, and the Asch, Miller and Warner’s discussion of how the military draft was ended and subsequent issues arising from that. Each of these authors shows that basic propositions taught in any good principles of economics course can be harnessed to make the world work better and more efficiently. Generally speaking, the discipline and self-correcting properties of markets are stronger and more effective in allocating resources than rules-based command decisions made through the political process. Also, aligning incentives with socially desirable objectives pays.
Anne Krueger’s essay stands out in several respects. First, she very convincingly demonstrates that the move away from protectionist/import substitution policies in the 1950s and 1960s harnessed the spirit of enterprise and brought about enormous improvements in the standard of living for literally billions of people. And she appropriately notes that the underlying theory was not discovered by an National Science Foundation grant revealing huge insights, but essentially by the work of Adam Smith and David Ricardo a couple of centuries ago.
This gets to a problem. Economists sometimes get overwhelmed with their own self importance and claim more than they should. John Taylor writes a generally solid essay arguing that reductions in macroeconomic stability in modern times reflects in large part a move to a more intelligent understanding on the role of monetary variables in the economy. Taylor believes the evolution of new economic modeling in recent decades that combine rational expectations with some allowance for price stickiness has brought about enormous policy improvements. Maybe, but I side with commenter Laurence H. Meyer (himself a former Federal Reserve Governor) whose views are “the shifts in monetary policy ... are due more to the rediscovery of classical monetary theory than to advances of modern macroeconomic theory. ... classical monetary theorists had the story basically right” (p. 165). The work of Milton Friedman outlined a half century ago -- itself informed by still earlier work of quantity theorists and neglected practitioners like Clark Warburton -- was far more important than modern-day theoretical refinements.
The less good essays stray a good deal from the stated mission of offering clear, concise explanations of using economics to deal with problems in a language an undergraduate student can understand. Alvin Roth’s paper on deferred-acceptance algorithms is filled with jargon, is exceedingly hard to follow, and deals, frankly, with a far less dramatic advancement in modern economics than improving price indices, promoting the power of comparative advantage, or the gains from transport deregulation. Modest Roth is not -- he cites nearly thirty papers he authored or coauthored in the bibliography. The McAfee, McMillan and Wilkie piece on auctioning spectrum licenses deals with a moderately more important topic, but again gets into too many details of alternative bidding possibilities to be of interest to all but the most gung ho specialists.
Alas, I must come to the “ugly” part of this book. This appears to be not simply a volume of essays to promote the practical dimensions of modern advances in economics, but more an effort to increase the income and prestige of economists relative to other scholars. On page one John Siegfried assets, without a scintilla of supporting evidence, that “the value of the improved policies documented in this volume is likely hundreds of billions of dollars.” His agenda becomes clearer very shortly: “Interestingly ... only a few of the contributions outlined here have been financed or promoted through the private sector” (p. 3). In other words, NSF economics grants have a huge payoff. Charles Plott even goes further: “the social value of the contributions of economics compares well with the contributions of basic research in any field of science.” (p. 6). This, of course, is a normative judgment without a scintilla of rigorous proof, measuring, for example, the rate of return on research in physics or biological sciences with that in economics or psychology (a point that even the NSF’s Daniel Newlon gently takes him to task on).
All and all, this reinforces my own feelings about our profession. For many, Physics Envy is a big cross to bear -- the unwillingness to accept that economics is not considered as respectable as many of the so-called hard sciences. This volume promotes the good economists have done, ignoring the policy disasters that economists have contributed to, for example, the stagflation of the 1970s, or, arguably, even the financial crisis of 2008 -- where were economists in warning about subprime lending, excessive use of untried to financial instruments, etc? Where are we today in opposing stimulus packages that historical experience and economic theory alike say do not work?
But above all, the volume is all about rent-seeking -- a plea to get more economics funding for the NSF and related agencies. It is amazing how much Adam Smith, David Ricardo, A.C. Pigou, Irving Fisher and Milton Friedman contributed to the advancement of human welfare without NSF funds. As Austen Goolsbee notes in a recent NBER working paper, more government grant funding inevitably increases economic rents because of the inherent short-term limits on the supply of good talent. If the authors had stuck to presenting the evidence without its obvious and overplayed commercial message, this would have been a far better volume.
Thursday, August 12, 2010
Arnold Zellner, RIP
The leading Bayesian econometrician in the world died last night, Arnold Zellner. A very feisty and provocative individual, he will be missed. I knew him and always found him to be lots of fun and very interesting to talk to. He was one of the first of the econometricians to be hired at the University of Wisconsin around 1960, to be followed shortly by Arthur Goldberger, moving that department from being a near zero in that area to the top ranks, although Zellner did not stay around all that long, moving on to the University of Chicago. However, he was originally attracted to Wisconsin by Bayesians and good time series people in the Statistics Department, such as George Box, who in turn had been attracted by the strong biometricians in the genetics department, the most prominent of whom was the late Sewall Wright, one of the three founders of the neo-Darwinian synthesis in the 1930s, and who invented path coefficients in the teens while co-discovering the identification problem with his economist father in the 1920s while studying corn-hog cycles and other agricultural economics questions.
Anyway, Zellner was a great econometrician and a great guy, and I think that in the long run, we will all become Bayesians, or at least a lot of us.
Anyway, Zellner was a great econometrician and a great guy, and I think that in the long run, we will all become Bayesians, or at least a lot of us.
Reinhart and Rogoff: There’s No There There
Here’s the core problem with Reinhart and Rogoff’s claim that public debt levels above 90% of GDP cause reduced growth: it’s all correlation and no mechanism. It epitomizes the worst aspects of empirical economics, searching tirelessly for statistical regularities, but not the mechanisms that might underlie them. Because economic contexts are highly diverse, often singular, it’s the processes at work, not generalizations about outcomes, that economics has the power to elucidate.
Sorry to be so abstract.
The R&R dataset, as the authors proudly explain, encompasses 44 countries over two centuries. We’ve got Finland, Spain, Japan and the US, Thailand, Mexico and Colombia. We’ve got the aftermath of the American Revolution against England and WWII, banking crises under the gold standard, the third world debt crisis of 1982. It’s all there in one hopper, ready to be crunched. I would convert to Rosicrucianism before I would embrace the belief that a single statistical relationship captures all these places and times.
Paul Krugman has highlighted two cases in particular, the US demobilization following WWII and the Japanese lost decades (still lost). Yes, he says, there is a correlation between public debt and slow growth, but in the US episode it’s spurious (war gave us the debt, demobilization the slow growth), and in Japan the causation runs from slow growth to high debt.
Just scanning the R&R list, I see lots of countries that have battled external deficits, a condition that weakens growth and puts governments in the position of running deficits in order to delay adjustment. And what about price shocks that cripple countries with a narrow export base or particular import dependencies? The R&R list is thick with these cases too. Given these interrelationships, it is revealing that, under “Debt and growth causality”, R&R consider only “Growth-to-debt” and “Debt-to-growth”, without the vast third category of “joint causation by other factors”.
Which gets us back to mechanisms. What are the forces, economic, political or otherwise, that cause runups of public debt? Under what circumstances does debt feed back to these other factors? What mechanisms govern the expansion and contraction of fiscal space? These are the kinds of things we need to know.
R&R have it backwards: they are looking for broad generalizations that might be identified over large samples but have uncertain application to any particular case. A better kind of economics would be one that identified processes that, while they generate diverse outcomes with no discernible central tendency over large samples, can be applied precisely to individual cases.
Like, for instance, ours.
Sorry to be so abstract.
The R&R dataset, as the authors proudly explain, encompasses 44 countries over two centuries. We’ve got Finland, Spain, Japan and the US, Thailand, Mexico and Colombia. We’ve got the aftermath of the American Revolution against England and WWII, banking crises under the gold standard, the third world debt crisis of 1982. It’s all there in one hopper, ready to be crunched. I would convert to Rosicrucianism before I would embrace the belief that a single statistical relationship captures all these places and times.
Paul Krugman has highlighted two cases in particular, the US demobilization following WWII and the Japanese lost decades (still lost). Yes, he says, there is a correlation between public debt and slow growth, but in the US episode it’s spurious (war gave us the debt, demobilization the slow growth), and in Japan the causation runs from slow growth to high debt.
Just scanning the R&R list, I see lots of countries that have battled external deficits, a condition that weakens growth and puts governments in the position of running deficits in order to delay adjustment. And what about price shocks that cripple countries with a narrow export base or particular import dependencies? The R&R list is thick with these cases too. Given these interrelationships, it is revealing that, under “Debt and growth causality”, R&R consider only “Growth-to-debt” and “Debt-to-growth”, without the vast third category of “joint causation by other factors”.
Which gets us back to mechanisms. What are the forces, economic, political or otherwise, that cause runups of public debt? Under what circumstances does debt feed back to these other factors? What mechanisms govern the expansion and contraction of fiscal space? These are the kinds of things we need to know.
R&R have it backwards: they are looking for broad generalizations that might be identified over large samples but have uncertain application to any particular case. A better kind of economics would be one that identified processes that, while they generate diverse outcomes with no discernible central tendency over large samples, can be applied precisely to individual cases.
Like, for instance, ours.
Wednesday, August 11, 2010
A Keyhole View of the Banking/Real Estate Crisis
The press has been discussing that banks are holding onto a great deal of real estate rather than completing the foreclosure process. I asked a prominent real estate figure in Chico about how large this phenomenon was. He replied that although no public data exists, he could show me houses that have ceased payments more than 18 months ago. He said that the banks are even paying the taxes on the properties rather than booking a write-down.
Here is the URL for my Second Talk
Here I move from investment and technical change to macroeconomic conditions and the run-up to the crisis.
http://www.ustream.tv/recorded/8850114
http://www.ustream.tv/recorded/8850114
Identity and Interests
I believe that the "economic way of thinking," as the textbooks have it, destroys the world we have in common, because that world is a world constructed in a normative, not a natural, space and rationality, as economists understand it, is inconsistent with, indeed makes nonsense of, the notion of normative authority. In effect, this point was made 30 years ago by Amartya Sen in "Rational Fools," where he argued that while the economic conception of rationality can make sense of "sympathy," - preference structures that made the utility of others part of the agent's objective function - it cannot make sense of what Sen called "commitment," which he defined as "counter-preferential choice." The idea that we sometimes sacrifice something - lower our utility - to do what is right is absolutely inconsistent with rational choice. I don't doubt that there are people who are well described as rational choosers - and more of them, unfortunately, than there would be had rational choice theory never been invented - but they are damaged humans, sociopaths.
The history of attempts to make sense of normative authority without giving up utility maximization is sad and pathetic and I will not rehearse it here. (The crudest is the attempt to make values a species of meta- or second-order preferences; the problem is that this approach cannot explain why their "second-orderness" gives them any more authority than the first-order preferences they are about.)
At one time, influenced by Mark Sagoff and early Bowles and Gintis, I thought that a reasonable way of "assimilating" the normative, taming it, in effect, was to distinguish between our concern with pursuing our interests and our concern with our identities, with the latter concern giving rise to commitment and making sense of normativity. So I refrain from doing something that would serve my interests because I am (we are) not the sort of person (people) who would do such a thing. This sort of thing is perfectly compatible with utility maximization, as the Akerlof/Krainton papers have shown, and therefore perfectly inconsistent with Senian commitment.
Here is the deeper problem with using "identity" to make sense of commitment: the criteria of identity are, if identity is to underpin the normative, themselves normative, not natural. My commitment to honest inquiry is tied to my identity as a "scientist," say- but scientists understood as honest inquirers, not scientists per se -many of whom are not honest. So appeal to identity to make sense of normative authority is, or can be, question-begging.
The normative, I submit, is irreducible. Hic rosa, hic salta!
e.
The history of attempts to make sense of normative authority without giving up utility maximization is sad and pathetic and I will not rehearse it here. (The crudest is the attempt to make values a species of meta- or second-order preferences; the problem is that this approach cannot explain why their "second-orderness" gives them any more authority than the first-order preferences they are about.)
At one time, influenced by Mark Sagoff and early Bowles and Gintis, I thought that a reasonable way of "assimilating" the normative, taming it, in effect, was to distinguish between our concern with pursuing our interests and our concern with our identities, with the latter concern giving rise to commitment and making sense of normativity. So I refrain from doing something that would serve my interests because I am (we are) not the sort of person (people) who would do such a thing. This sort of thing is perfectly compatible with utility maximization, as the Akerlof/Krainton papers have shown, and therefore perfectly inconsistent with Senian commitment.
Here is the deeper problem with using "identity" to make sense of commitment: the criteria of identity are, if identity is to underpin the normative, themselves normative, not natural. My commitment to honest inquiry is tied to my identity as a "scientist," say- but scientists understood as honest inquirers, not scientists per se -many of whom are not honest. So appeal to identity to make sense of normative authority is, or can be, question-begging.
The normative, I submit, is irreducible. Hic rosa, hic salta!
e.
Reframing Rebalancing
I have a couple of overdue reports to get out, so I have to be brief. Raghuram Rajan has played an important role in keeping attention focused on global imbalances, but his solutions are hardly solutions at all.
1. Differential savings rates, too low in the US and other deficit countries, too high in China and the other surplus countries, are primarily the consequence and not the cause of imbalances. I presented the evidence for this three years ago and see no reason to change my assessment. In any case, the surplus-deficit conundrum has been with us for more than a century, and historians have no trouble in identifying the problem. Deficit countries are uncompetitive; surplus countries have organized their economy to take maximum advantage of export opportunities.
2. China’s main problem in rebalancing is not simply the structural difficulty of converting an export-oriented capital stock to one that serves the domestic market. This will be hard, but my rough reading of history is that it is a mistake to assume that capital is all clay and no putty. (Vice versa too.) The real challenge is that successful surplus countries have managed to outcompete those who are less successful, and it is all but impossible to simply discard these victories. Can China adopt policies whose result is the conquest of markets by other developing countries that China used to dominate? This is an economic problem, because the shift of export production out of any one country in a competitive environment can be uncontrollable. It is a political problem, because Chinese firms will use all available influence to prevent it. (See this sensible overview by Jeffrey Frieden.)
3. The US problem is not that consumers spend too much, but that (1) given a trade deficit that is a substantial share of GDP, consumption can be maintained only by borrowing, and (2) US producers are uncompetitive in tradables. This will not be fixed overnight, and we won’t even begin repairs until we see what’s broken. Of course, the root cause of the US external deficit is not poor eyesight, but political economy: wealthy individuals and institutions changed the rules over several decades so they could maximize their global returns. They still run the show.
4. The conventional short run/long run dichotomy is associated with fiscal policy: we need deficits today to shore up demand and fiscal rectitude in the long run to achieve sustainability. In a sense, this is right, but it is drastically incomplete because it fails to take account of the relationship between public budgets, private budgets and the trade (or current) account. The real short run problem is that, given the lack of US competitiveness, a devastating austerity can be avoided only through high levels of borrowing, either by households, firms or the government. Since private borrowing is at a standstill, that leaves the US Treasury as the last line of defense. But this solution is not sustainable. The long run goal has to be approximate trade balance, especially since there is no reason why private investment prospects, and therefore global demand for US financial assets, should be counted on to be superior to foreign prospects over the long haul. Only by balancing trade can the US households, firms and government all achieve viable budget positions.
5. Can the US rebalance trade on its own? I doubt it. Will a coordinated dollar devaluation do the trick? Maybe, if you can get coordination (no easy feat), but it is also possible that US capacity in tradables has deteriorated too far for price adjustment alone to succeed. My view: we need a trading system that institutionalizes the collective interest in avoiding destabilizing imbalances. That will take a global political movement that I can’t even begin to visualize.
1. Differential savings rates, too low in the US and other deficit countries, too high in China and the other surplus countries, are primarily the consequence and not the cause of imbalances. I presented the evidence for this three years ago and see no reason to change my assessment. In any case, the surplus-deficit conundrum has been with us for more than a century, and historians have no trouble in identifying the problem. Deficit countries are uncompetitive; surplus countries have organized their economy to take maximum advantage of export opportunities.
2. China’s main problem in rebalancing is not simply the structural difficulty of converting an export-oriented capital stock to one that serves the domestic market. This will be hard, but my rough reading of history is that it is a mistake to assume that capital is all clay and no putty. (Vice versa too.) The real challenge is that successful surplus countries have managed to outcompete those who are less successful, and it is all but impossible to simply discard these victories. Can China adopt policies whose result is the conquest of markets by other developing countries that China used to dominate? This is an economic problem, because the shift of export production out of any one country in a competitive environment can be uncontrollable. It is a political problem, because Chinese firms will use all available influence to prevent it. (See this sensible overview by Jeffrey Frieden.)
3. The US problem is not that consumers spend too much, but that (1) given a trade deficit that is a substantial share of GDP, consumption can be maintained only by borrowing, and (2) US producers are uncompetitive in tradables. This will not be fixed overnight, and we won’t even begin repairs until we see what’s broken. Of course, the root cause of the US external deficit is not poor eyesight, but political economy: wealthy individuals and institutions changed the rules over several decades so they could maximize their global returns. They still run the show.
4. The conventional short run/long run dichotomy is associated with fiscal policy: we need deficits today to shore up demand and fiscal rectitude in the long run to achieve sustainability. In a sense, this is right, but it is drastically incomplete because it fails to take account of the relationship between public budgets, private budgets and the trade (or current) account. The real short run problem is that, given the lack of US competitiveness, a devastating austerity can be avoided only through high levels of borrowing, either by households, firms or the government. Since private borrowing is at a standstill, that leaves the US Treasury as the last line of defense. But this solution is not sustainable. The long run goal has to be approximate trade balance, especially since there is no reason why private investment prospects, and therefore global demand for US financial assets, should be counted on to be superior to foreign prospects over the long haul. Only by balancing trade can the US households, firms and government all achieve viable budget positions.
5. Can the US rebalance trade on its own? I doubt it. Will a coordinated dollar devaluation do the trick? Maybe, if you can get coordination (no easy feat), but it is also possible that US capacity in tradables has deteriorated too far for price adjustment alone to succeed. My view: we need a trading system that institutionalizes the collective interest in avoiding destabilizing imbalances. That will take a global political movement that I can’t even begin to visualize.
Has It Been Proven That P Does Not Equal NP?
In the last two days a firestorm has erupted over a claim by HP Labs computer scientist, Vinay Deolalikar, http://wwww.hpl.hp.com/personal/Vinay_Deolalikar/Papers that he has proven one of the six remaining Clay problems for which a million dollar prize is offered. In particular, he claims to have proven that polynomial time algorithms (P) cannot in general solve exponential time problems (NP), or are not equivalent in power to them. It has long been suspected that this is the case, but has not been proven so far. This has implications for computational complexity theory and computable and computational economics.
The paper is over 100 pages long and involves ideas drawn from model theory in logic as well as statistical physics, an approach not used for anything previously, and so far in the enormous debate that has erupted, there is not yet a definite answer if Deolalikar is right or not, although some minor errors have definitely been found. An aggregator site for this debate is at http://michaelnielson.org/polymath1/indep.php?title=Deolalikar%27s_P!%3DNP_paper. This site provides links to others where more detailed debates have been occurring, with the ones starting with http://rjlipton.wordpress.com being especially insightful and providing most of the mathematical meat picked up on the aggregator site.
The paper is over 100 pages long and involves ideas drawn from model theory in logic as well as statistical physics, an approach not used for anything previously, and so far in the enormous debate that has erupted, there is not yet a definite answer if Deolalikar is right or not, although some minor errors have definitely been found. An aggregator site for this debate is at http://michaelnielson.org/polymath1/indep.php?title=Deolalikar%27s_P!%3DNP_paper. This site provides links to others where more detailed debates have been occurring, with the ones starting with http://rjlipton.wordpress.com being especially insightful and providing most of the mathematical meat picked up on the aggregator site.
Tuesday, August 10, 2010
Reminder About My 2d Streaming Video Tonight
Tonight's talk will answer some questions about the first talk, then discuss new technology and replacement investment – all leading up to crisis theory, but that is a way off.
http://www.ustream.tv/broadcaster/5149208
http://www.ustream.tv/broadcaster/5149208
Monday, August 9, 2010
Is US Contemplating War With Iran?
Juan Cole (http://www.juancole.com) has a guest editorial today by Mahan Abedin who reports that US Joint Chiefs Chairman, Mike Mullen, has made statements that the US is contemplating a "limited war" to block Iran from getting nuclear weapons. Abedin reports that this appears to be a shift of policy, at least in the open, and warns it would not work, with Iran likely to fight back very hard with great impact.
It should also be kept in mind that there continues to be no evidence of Iran actually pursuing nuclear weapons, although arguably it has been pursuing a possible capability to build them. However, the fatwa of the Commander-in-Chief, Ali Khamenei, against nuclear weapons remains in place, as does the official US NIE supported by all US intel agencies declaring that they are not actively pursuing nuclear weapons, despite all the shouting in the media claiming that they are. This may be the result of rumblings arising from the new anti-Iran UN sanctions reportedly biting, with who knows what going on in the background, although there are clearly parties who would just love to have the US go after Iran militarily. Very. Bad. Idea.
It should also be kept in mind that there continues to be no evidence of Iran actually pursuing nuclear weapons, although arguably it has been pursuing a possible capability to build them. However, the fatwa of the Commander-in-Chief, Ali Khamenei, against nuclear weapons remains in place, as does the official US NIE supported by all US intel agencies declaring that they are not actively pursuing nuclear weapons, despite all the shouting in the media claiming that they are. This may be the result of rumblings arising from the new anti-Iran UN sanctions reportedly biting, with who knows what going on in the background, although there are clearly parties who would just love to have the US go after Iran militarily. Very. Bad. Idea.
Murders In Afghanistan Hit Home
Where I live, Harrisonburg, Virginia, has only 45,000 people in it. Yet, somehow two of the ten people killed in Afghanistan on a medical mission of mercy have connections to here. One was Glenn Lapp, a 40 year old nurse who has been involved with administration at the International Assistance Mission (IAM), but went on this trip. He was a 1991 graduate of Eastern Mennonite University here in Harrisonburg, and has been involved with Mennonite missions abroad. I note that the Mennonites are a pacifist church and do not actively proselytize abroad, in contrast with the claims made by the supposed Taliban defenders of this killing.
The other was Brian Carderelli, age 25, a graduate of James Madison University here in 2009, whose parents apparently teach in Kabul. His identity has only just been confirmed within the last few hours. The claims that these people were spying or handing out Bibles in Dari are just ridiculous. The group's leader, Tom Little, has been there since 1983 doing these activities, the period when there was a Soviet-dominated government. He survived through the years of outright Taliban rule. Some are suggesting that the real reason for the killings was robbery, being covered up by these ridiculous claims of spying and Bible handing out.
On the broader issue this is all very depressing. I supported going into Afghanistan, in contrast to Iraq, and I agree with Obama that invading Iraq really messed up the situation in Afghanistan. But that is a very complicated and difficult place, and it is unclear it would have been all that great if we had not invaded Iraq. It looks like it is time to get out, although this will have to be done with some care. In the meantime, we get tragedies such as these murders.
The other was Brian Carderelli, age 25, a graduate of James Madison University here in 2009, whose parents apparently teach in Kabul. His identity has only just been confirmed within the last few hours. The claims that these people were spying or handing out Bibles in Dari are just ridiculous. The group's leader, Tom Little, has been there since 1983 doing these activities, the period when there was a Soviet-dominated government. He survived through the years of outright Taliban rule. Some are suggesting that the real reason for the killings was robbery, being covered up by these ridiculous claims of spying and Bible handing out.
On the broader issue this is all very depressing. I supported going into Afghanistan, in contrast to Iraq, and I agree with Obama that invading Iraq really messed up the situation in Afghanistan. But that is a very complicated and difficult place, and it is unclear it would have been all that great if we had not invaded Iraq. It looks like it is time to get out, although this will have to be done with some care. In the meantime, we get tragedies such as these murders.
Sunday, August 8, 2010
The Corporate Scandal of Higher Education
I have been meaning for some time to offer a series of posts about the plague that is devastating education, even though education is supposed to fuel economic growth. I was stirred to stop procrastinating by a note in yesterday's Wall Street Journal, which reported that the Washington Post's Kaplan "education division, which accounts for more than 60% of total revenue, increased 15% to $747.3 million. The bulk of Kaplan's revenue comes from the higher-education unit, consisting of a group of for-profit colleges that primarily offer certificate, associate's and bachelor's degrees."
I am going to start out with a shocking piece from the New York Times, which describes the enormous salaries given to presidents of elite universities to serve on corporate boards. Administrative salaries alone should be enough to create an outrage now that money for teaching is drying up. These presidents might be expected to offer a patina of respectability for the corporations. Even more, presidents, who want to keep their lucrative board positions, will be careful not to offend corporate America. Others who want to have comparable money thrown at them will be equally careful. Here is the article:
Bowley, Graham. 2010. "The Academic-Industrial Complex." New York Times (1 August): p. BU 1.
http://www.nytimes.com/2010/08/01/business/01prez.html?_r=1&hpw=&pagewanted=all
"What does Shirley Ann Jackson know about shipping parcels? For that matter, what does Steven B. Sample understand about mutual funds? Dr. Jackson, who is a theoretical physicist and the president of Rensselaer Polytechnic Institute in Troy, N.Y., has served as an outside director on the board of FedEx since 1999."
"Dr. Sample, an electrical engineer and the retiring president of the University of Southern California, sits on the boards of directors of the American Mutual and Amcap mutual funds. He is also a director of another company, and stepped down two years ago from the board of the Wm. Wrigley Jr. Company, the candy maker."
"Dr. Jackson and Dr. Sample are part of a cozy and lucrative club: presidents and other senior university officials who cross from academia into the business world to serve on corporate boards. While academics can often bring fresh perspectives, managerial experience and the imprimatur of a respected institution to a board, they are also serving in an era when corporations wrestling with fallout from the financial crisis (think Bank of America, Citigroup and Goldman Sachs) or very public mishaps (think BP, Johnson & Johnson and Toyota) have raised the stakes for board members expected to guide corporations."
"Some analysts worry that academics are possibly imperiling or compromising the independence of their universities when they venture onto boards. Others question whether scholars have the time -- and financial sophistication -- needed to police the country’s biggest corporations while simultaneously juggling the demands of running a large university. "It is prestigious for a company to have a major university president on their board,"says Pablo Eisenberg, senior fellow at the Georgetown Public Policy Institute. "But few college and university C.E.O.’s are even qualified to understand the workings of a major public company"."
"According to a 2008 survey by The Chronicle of Higher Education, presidents from 19 of the top 40 research universities with the largest operating budgets sat on at least one company board. The trend is more widespread among public universities, but the private ones are catching up: the American Council on Education says that from 2001 to 2006, the proportion of presidents from all doctorate-granting institutions sitting on corporate boards rose to 52.1 percent from 47.8 percent at public institutions, and to 50.9 percent from 40.6 percent at private ones."
"Some of the more high-profile and ubiquitous academics include the president of Stanford, John L. Hennessy, who sits on three boards, including that of Google. (Google also has the president of Princeton, Shirley M. Tilghman, on its board.) The chancellor of the University of California, San Diego, Marye Anne Fox, is on three boards. And then there is Dr. Jackson of Rensselaer, the highest-paid private college president and one of the most prominent black university leaders. In addition to FedEx, she sits on the boards of four other companies, including I.B.M. and Marathon Oil, and she recently stepped down from the board of NYSE Euronext."
"The attractions are clear for the president: lucrative extra pay and useful networking, among other reasons. For a dozen hours or so each month for each board served, in addition to preparation time, and their wise advice, they can receive hundreds of thousands of dollars a year. Ruth J. Simmons, the president of Brown University and the first African-American woman to lead an Ivy League university, sat on the Goldman Sachs board until she stepped down this year. In 2009, she earned $323,539 from her Goldman directorship, including stock grants and options, as calculated by Goldman, and left the board with stock worth at the time around $4.3 million. This is in addition to her salary from Brown, $576,000 this year."
"Dr. Jackson earned $1.38 million from her directorships, comprising both cash and stock. That’s in addition to $1.6 million from her day job, including bonuses and other benefits. Beyond personal financial benefits, the interchange of ideas between campus and corporation can allow for a fruitful cross-fertilization. For example, Dr. Hennessy sits on the boards of Cisco Systems and Atheros Communications as well as Google. As an electrical engineer and a pioneer in computer architecture, he is well placed to bring industry expertise to the boards he serves."
"William G. Bowen was president of Princeton University for 16 years and served on two boards, including Merck’s. It was an experience, he says, that was invaluable in helping him build up Princeton’s then-fledgling life sciences activities. "It influenced my understanding of how the field was evolving, where new ideas were most likely to appear, where to look for talent,"he recalls. "It was one long seminar in the sciences and molecular biology"."
"Indeed, the path from academia to corporate boards began broadening in the late 1990s when companies sought to break up the traditionally white, male composition of their boards. Academia, and in particular university presidents, were a good source of prominent minority leaders and women who were established in their fields and had experience running big organizations."
"Phyllis M. Wise, the provost of the University of Washington, is on Nike’s board. Nike said it hired Dr. Wise, an Asian-American, "because of her impressive accomplishments and her record of independent thought, and we believe that through the exchange of ideas, both Nike and the University of Washington will benefit"."
"But according to James H. Finkelstein, a professor in the George Mason School of Public Policy, probably the biggest reason companies have sought out academics is the prestige they bring. Universities are among the few institutions trusted by the public, he says, and companies believe they can associate themselves with this quality by installing an academic on the board."
"Corporations think this is a way of enhancing their prestige and legitimacy, especially in the case of Ivy League presidents,"he says. "I suspect that’s the principal motivation. It’s probably not for their business sense."
"John Gillespie, who has written a book on corporate boards, "Money for Nothing,"says academics are often selected for another reason -- because they are less likely to rock the boat than directors from the business world. Academics may be trained to ask tough questions in their own fields, but when confronted with tricky business issues far above their level of expertise they "often become as meek as church mice,"he says."
"Most corporate governance experts think that a president serving on one board brings benefits to both the company and the university, but the situation becomes problematic as these academics serve on more boards. There may be diminishing returns to the university and less time to be an effective board member."
"Nell Minow, editor of the Corporate Library, an independent research firm focusing on corporate governance, says Goldman Sachs was hurt having Dr. Simmons as a director because she lacks financial expertise and was focused more than she should have been on other things like the firm’s philanthropy. She was chairwoman of the advisory board for a Goldman initiative, 10,000 Women, that provides women outside the firm with business and management education."
"That seat could have been held by someone who understood derivatives,"says Ms. Minow. "What we have learned from the financial crisis is that boards of directors have failed miserably in their No. 1 task of risk management. You don’t go on a board for networking, seeking contributions or working for minorities. You go on a board for one purpose -- to manage risk for the long-term benefit of the shareholder."
"Dr. Simmons declined to comment for this article. In an interview early this year after she announced she was retiring from the Goldman board, she said filling boards with specialists was "exactly the wrong direction." "You need people close to the industry to provide depth of experience, but you also need people with perspective,"she says."
"In the case of Dr. Jackson and her five board appointments, Ms. Minow says, "it is just physically impossible to do the work necessary to be a good director"on so many boards. The Corporate Library estimates that board members must invest 240 hours a year, including meetings and preparation, to do the work properly. But it can become a full-time job if the company runs into trouble."
"At the time, Goldman was being battered by questions about its involvement in the financial crisis and the lucrative pay it doled out to executives and employees even after the firm had received a huge taxpayer bailout. As a director, Dr. Simmons was partly responsible for approving Goldman’s bonuses during the boom years — including the $68 million pay package awarded to its chairman, Lloyd C. Blankfein, in 2007, the largest ever on Wall Street. Early this year Dr. Simmons said the criticism directed at Goldman was not the reason she gave up her position. She would not comment on whether the salaries the board had approved over the past decade were appropriate, except to say, "The environment for salaries on Wall Street has evolved over a period of time, and the environment today is different"."
"As a further sign of how complicated the issue can become, some academics at the University of Washington protested that Dr. Wise’s presence on the board meant they would not be able to criticize Nike over its labor policy, in particular the treatment of workers at factories in the developing world. "She is the chief academic officer of the university, to whom all faculty report, and her affiliation with Nike creates incentives for faculty to be less vocal about Nike’s human rights record," said Angelina S. Godoy, director of the university’s Center for Human Rights. However, Ms. Godoy said a recent landmark agreement between Nike and unions in Honduras made her less concerned about the university’s relationship with Nike."
I am going to start out with a shocking piece from the New York Times, which describes the enormous salaries given to presidents of elite universities to serve on corporate boards. Administrative salaries alone should be enough to create an outrage now that money for teaching is drying up. These presidents might be expected to offer a patina of respectability for the corporations. Even more, presidents, who want to keep their lucrative board positions, will be careful not to offend corporate America. Others who want to have comparable money thrown at them will be equally careful. Here is the article:
Bowley, Graham. 2010. "The Academic-Industrial Complex." New York Times (1 August): p. BU 1.
http://www.nytimes.com/2010/08/01/business/01prez.html?_r=1&hpw=&pagewanted=all
"What does Shirley Ann Jackson know about shipping parcels? For that matter, what does Steven B. Sample understand about mutual funds? Dr. Jackson, who is a theoretical physicist and the president of Rensselaer Polytechnic Institute in Troy, N.Y., has served as an outside director on the board of FedEx since 1999."
"Dr. Sample, an electrical engineer and the retiring president of the University of Southern California, sits on the boards of directors of the American Mutual and Amcap mutual funds. He is also a director of another company, and stepped down two years ago from the board of the Wm. Wrigley Jr. Company, the candy maker."
"Dr. Jackson and Dr. Sample are part of a cozy and lucrative club: presidents and other senior university officials who cross from academia into the business world to serve on corporate boards. While academics can often bring fresh perspectives, managerial experience and the imprimatur of a respected institution to a board, they are also serving in an era when corporations wrestling with fallout from the financial crisis (think Bank of America, Citigroup and Goldman Sachs) or very public mishaps (think BP, Johnson & Johnson and Toyota) have raised the stakes for board members expected to guide corporations."
"Some analysts worry that academics are possibly imperiling or compromising the independence of their universities when they venture onto boards. Others question whether scholars have the time -- and financial sophistication -- needed to police the country’s biggest corporations while simultaneously juggling the demands of running a large university. "It is prestigious for a company to have a major university president on their board,"says Pablo Eisenberg, senior fellow at the Georgetown Public Policy Institute. "But few college and university C.E.O.’s are even qualified to understand the workings of a major public company"."
"According to a 2008 survey by The Chronicle of Higher Education, presidents from 19 of the top 40 research universities with the largest operating budgets sat on at least one company board. The trend is more widespread among public universities, but the private ones are catching up: the American Council on Education says that from 2001 to 2006, the proportion of presidents from all doctorate-granting institutions sitting on corporate boards rose to 52.1 percent from 47.8 percent at public institutions, and to 50.9 percent from 40.6 percent at private ones."
"Some of the more high-profile and ubiquitous academics include the president of Stanford, John L. Hennessy, who sits on three boards, including that of Google. (Google also has the president of Princeton, Shirley M. Tilghman, on its board.) The chancellor of the University of California, San Diego, Marye Anne Fox, is on three boards. And then there is Dr. Jackson of Rensselaer, the highest-paid private college president and one of the most prominent black university leaders. In addition to FedEx, she sits on the boards of four other companies, including I.B.M. and Marathon Oil, and she recently stepped down from the board of NYSE Euronext."
"The attractions are clear for the president: lucrative extra pay and useful networking, among other reasons. For a dozen hours or so each month for each board served, in addition to preparation time, and their wise advice, they can receive hundreds of thousands of dollars a year. Ruth J. Simmons, the president of Brown University and the first African-American woman to lead an Ivy League university, sat on the Goldman Sachs board until she stepped down this year. In 2009, she earned $323,539 from her Goldman directorship, including stock grants and options, as calculated by Goldman, and left the board with stock worth at the time around $4.3 million. This is in addition to her salary from Brown, $576,000 this year."
"Dr. Jackson earned $1.38 million from her directorships, comprising both cash and stock. That’s in addition to $1.6 million from her day job, including bonuses and other benefits. Beyond personal financial benefits, the interchange of ideas between campus and corporation can allow for a fruitful cross-fertilization. For example, Dr. Hennessy sits on the boards of Cisco Systems and Atheros Communications as well as Google. As an electrical engineer and a pioneer in computer architecture, he is well placed to bring industry expertise to the boards he serves."
"William G. Bowen was president of Princeton University for 16 years and served on two boards, including Merck’s. It was an experience, he says, that was invaluable in helping him build up Princeton’s then-fledgling life sciences activities. "It influenced my understanding of how the field was evolving, where new ideas were most likely to appear, where to look for talent,"he recalls. "It was one long seminar in the sciences and molecular biology"."
"Indeed, the path from academia to corporate boards began broadening in the late 1990s when companies sought to break up the traditionally white, male composition of their boards. Academia, and in particular university presidents, were a good source of prominent minority leaders and women who were established in their fields and had experience running big organizations."
"Phyllis M. Wise, the provost of the University of Washington, is on Nike’s board. Nike said it hired Dr. Wise, an Asian-American, "because of her impressive accomplishments and her record of independent thought, and we believe that through the exchange of ideas, both Nike and the University of Washington will benefit"."
"But according to James H. Finkelstein, a professor in the George Mason School of Public Policy, probably the biggest reason companies have sought out academics is the prestige they bring. Universities are among the few institutions trusted by the public, he says, and companies believe they can associate themselves with this quality by installing an academic on the board."
"Corporations think this is a way of enhancing their prestige and legitimacy, especially in the case of Ivy League presidents,"he says. "I suspect that’s the principal motivation. It’s probably not for their business sense."
"John Gillespie, who has written a book on corporate boards, "Money for Nothing,"says academics are often selected for another reason -- because they are less likely to rock the boat than directors from the business world. Academics may be trained to ask tough questions in their own fields, but when confronted with tricky business issues far above their level of expertise they "often become as meek as church mice,"he says."
"Most corporate governance experts think that a president serving on one board brings benefits to both the company and the university, but the situation becomes problematic as these academics serve on more boards. There may be diminishing returns to the university and less time to be an effective board member."
"Nell Minow, editor of the Corporate Library, an independent research firm focusing on corporate governance, says Goldman Sachs was hurt having Dr. Simmons as a director because she lacks financial expertise and was focused more than she should have been on other things like the firm’s philanthropy. She was chairwoman of the advisory board for a Goldman initiative, 10,000 Women, that provides women outside the firm with business and management education."
"That seat could have been held by someone who understood derivatives,"says Ms. Minow. "What we have learned from the financial crisis is that boards of directors have failed miserably in their No. 1 task of risk management. You don’t go on a board for networking, seeking contributions or working for minorities. You go on a board for one purpose -- to manage risk for the long-term benefit of the shareholder."
"Dr. Simmons declined to comment for this article. In an interview early this year after she announced she was retiring from the Goldman board, she said filling boards with specialists was "exactly the wrong direction." "You need people close to the industry to provide depth of experience, but you also need people with perspective,"she says."
"In the case of Dr. Jackson and her five board appointments, Ms. Minow says, "it is just physically impossible to do the work necessary to be a good director"on so many boards. The Corporate Library estimates that board members must invest 240 hours a year, including meetings and preparation, to do the work properly. But it can become a full-time job if the company runs into trouble."
"At the time, Goldman was being battered by questions about its involvement in the financial crisis and the lucrative pay it doled out to executives and employees even after the firm had received a huge taxpayer bailout. As a director, Dr. Simmons was partly responsible for approving Goldman’s bonuses during the boom years — including the $68 million pay package awarded to its chairman, Lloyd C. Blankfein, in 2007, the largest ever on Wall Street. Early this year Dr. Simmons said the criticism directed at Goldman was not the reason she gave up her position. She would not comment on whether the salaries the board had approved over the past decade were appropriate, except to say, "The environment for salaries on Wall Street has evolved over a period of time, and the environment today is different"."
"As a further sign of how complicated the issue can become, some academics at the University of Washington protested that Dr. Wise’s presence on the board meant they would not be able to criticize Nike over its labor policy, in particular the treatment of workers at factories in the developing world. "She is the chief academic officer of the university, to whom all faculty report, and her affiliation with Nike creates incentives for faculty to be less vocal about Nike’s human rights record," said Angelina S. Godoy, director of the university’s Center for Human Rights. However, Ms. Godoy said a recent landmark agreement between Nike and unions in Honduras made her less concerned about the university’s relationship with Nike."
The Defamation League
This report in today’s New York Times makes it clear why the opposition of the Anti-Defamation League to a Manhattan mosque was so squalid. It is not just about one building downtown; it’s an episode in a nationwide assault on the rights of a minority—exactly the kind of group the ADL of old could be relied on to protect.
The old guard Jewish organizations are radically out of step with the values of most Jews in America, who continue to support equality and inclusion as core social principles. Bigotry may rule in Israel, but it remains anathema here, at least among the liberal half of the population, where most Jews are to be found. Either the misguided leadership of the mainstream Jewish organizations must be retired, or the organizations themselves have to be replaced.
The old guard Jewish organizations are radically out of step with the values of most Jews in America, who continue to support equality and inclusion as core social principles. Bigotry may rule in Israel, but it remains anathema here, at least among the liberal half of the population, where most Jews are to be found. Either the misguided leadership of the mainstream Jewish organizations must be retired, or the organizations themselves have to be replaced.
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