In today's Washington Post the usually egregious Robert A. Samuelson has written a column, "Dump the debt ceiling," whose main message I agree with. It is about time the VSPs in Washington figure out that the US debt ceiling is utter nonsense, with the US the only nation ever to have such a nonsensical mechanism, even though we have had it in some form or other since 1917, only four years after we got our income tax (of course, many nations have limits on budget deficits, a very different thing). He goes over this history and repeats arguments I have made on numerous occasions in the past such as here.
So, where do I have a problem with him? Of course he went from his reasonable discussion of the silliness of the debt ceiling to talking about how we could achieve a balanced budget, something that we do not need to do. He dumps on Republicans because they are unrealistic about various plans they have put forward that the spending cuts they propose would leave anything meaningful left of the government, without admitting that this implies getting rid of such things as air traffic control and the weather service. This is also not unreasonable.
But then for going after the Dems he revives his usual VSP rant against Social Security, Medicare, and Medicaid, arguing that benefits for these should be cut. Otherwise we are facing 20 to 25 percent tax increases, not doable only on the rich. No discussion that lowering the rate of increase in health care costs might help out on all this.
To quote Dean Baker, who I am surprised did not comment on this, "It is Monday, and the columnists at WaPo are calling for cuts in Social Security and healthcare."
Barkley Rosser
Monday, October 26, 2015
The Distemper of Our Times: it's the business model, stupid
Ipod spawned the talk radio star.
Last summer I had the pleasure of attending the 50th anniversary reunion of my high school graduating class. One of the highlights was talking and joking around with an old chum who happens to be on the very conservative side of the political spectrum. We are facebook friends and from time to time he posts "provocative" tidbits like Fox News videos and placards extolling timeless libertarian "truths."
I have no objection to my friend having opinions diametrically opposed to mine or even to his reliance on sources -- such as Fox News -- that I consider to be without merit. But that doesn't mean I have to stifle my opinions about the credibility and lack of persuasiveness of his sources. Last night, after presenting documentation of why I found Fox News less than credible on the issues, I received a reply from a facebook friend of my friend in effect calling me an "intellectual coward" and instructing me to "Man up or shut up."
I have no retort for an uncivil "friend of a friend." But I am interested in the outrage phenomenon that seems to promote this kind of behavior. Sarah Sobieraj and Jeffery Berry are, respectively, a sociologist and a political scientist at Tufts University, whose book, The Outrage Industry: Political Opinion Media and the New Incivility, I look forward to reading. In the meanwhile, I've read several of their recent articles and I am particularly intrigued by their argument in "Understanding the Rise of Talk Radio."
In that article, Berry and Sobieraj point to the deregulation of the broadcasting industry -- increasing concentration of ownership and elimination of the fairness doctrine -- along with the appearance of new and more appealing technologies for listening to music as creating an environment that has fostered the proliferation of political talk radio programming.
On the audience side, differences in the demographic make-up of conservatives and liberals and greater conservative distrust for the mainstream media may account for the overwhelmingly conservative bias of political outrage-fueled talk radio. Political talk radio is disproportionately white, male and conservative. Furthermore, "conservatives like talk radio because they believe it tells them the truth." Berry and Sobieraj conclude their article with the following observation about the talk radio business model:
Last summer I had the pleasure of attending the 50th anniversary reunion of my high school graduating class. One of the highlights was talking and joking around with an old chum who happens to be on the very conservative side of the political spectrum. We are facebook friends and from time to time he posts "provocative" tidbits like Fox News videos and placards extolling timeless libertarian "truths."
I have no objection to my friend having opinions diametrically opposed to mine or even to his reliance on sources -- such as Fox News -- that I consider to be without merit. But that doesn't mean I have to stifle my opinions about the credibility and lack of persuasiveness of his sources. Last night, after presenting documentation of why I found Fox News less than credible on the issues, I received a reply from a facebook friend of my friend in effect calling me an "intellectual coward" and instructing me to "Man up or shut up."
I have no retort for an uncivil "friend of a friend." But I am interested in the outrage phenomenon that seems to promote this kind of behavior. Sarah Sobieraj and Jeffery Berry are, respectively, a sociologist and a political scientist at Tufts University, whose book, The Outrage Industry: Political Opinion Media and the New Incivility, I look forward to reading. In the meanwhile, I've read several of their recent articles and I am particularly intrigued by their argument in "Understanding the Rise of Talk Radio."
In that article, Berry and Sobieraj point to the deregulation of the broadcasting industry -- increasing concentration of ownership and elimination of the fairness doctrine -- along with the appearance of new and more appealing technologies for listening to music as creating an environment that has fostered the proliferation of political talk radio programming.
On the audience side, differences in the demographic make-up of conservatives and liberals and greater conservative distrust for the mainstream media may account for the overwhelmingly conservative bias of political outrage-fueled talk radio. Political talk radio is disproportionately white, male and conservative. Furthermore, "conservatives like talk radio because they believe it tells them the truth." Berry and Sobieraj conclude their article with the following observation about the talk radio business model:
The talk radio business model is worrisome because it represents the growth of an industry that makes profits in large part by peddling political outrage and fueling the fires of polarization. America has always had such businesses (think yellow journalism) but never on the scale of what is available today. Embedded in the successful business model for talk radio is an incentive for hosts to be provocative to the point of being offensive to people who are not among the loyal following. The program content we have described in this article may be part and parcel of a free society with a strong First Amendment, but that is no less reason to be concerned about the prevalence of political commentary designed to make us as angry and fearful as possible.
Friday, October 23, 2015
Libya And The Hillary Select Committee Showdown
OK, so now we have had the long awaited showdown between Hillary Clinton and the Benghazi Select Committee, which looks to have been a triumph for Hillary, especially with Joe Biden deciding not to run and her surprisingly good debate performance last week (not unconnected with Biden deciding not to run). She managed to finally have good hair for both performances, with the most important element being her keeping her cool and looking competent, aka "presidential," in both. The latter was more of a challenge, not because she was really seriously challenged by much new from the committee, which seemed obsessed mostly by silliness and her emails, but that the thing went on for 11 hours, with her never cracking or making a slip, while they degenerated into increasing apoplexy at their inability to either nail her or get her to provide a good gotcha for later use.
That said, they did get one item out, and based on what the GOP prez candidates are saying as well as such party warhorses on Fox News as Sean Hannity, it does look like they will continue a pile-on, mostly based on untruths. Their one new item is the email Hillary apparently sent to a leader in Egypt the day after the Benghazi attack saying that it was planned and not tied to the video, in contrast to what she was saying publicly. Nailed her! Well, there have already been complaints about confused stories on this, and the hard fact is that while there had clearly been planning for an attack on US facilities in Benghazi, the video reportedly did provide the excuse and trigger, especially after the rioting in Cairo and attack on the embassy there erupted in response. I think we are going to hear a lot about this supposed gotcha lie by her.
I note the following total nonsense items that Hannity repeated endlessly, and that I am sure we shall continue to hear repeatedly.
1) There was a "stand down" order from Hillary to security people in Benghazi. Hannity claims to have interviewed people who received such an order, however all the previous committees have supposedly shown that this claim is false. There was no such order, and Hillary denied it again at this hearing, almost certianly factually. But Hannity repeated his claim last night several times. This dog is going to continue to run, even if it is a ghost hound.
2) The facility in Benghazi was a "consulate." Marco Rubio said this, and so did many on the committee. But this is simply false. Apparently Amb. Stevens wanted to have it upgraded to being one, which would have led to it having more security, and he had used it as a de facto embassy to the rebels against Qaddafi during the uprising. But it was nothing at all, merely a facility, being used for nearly nothing and with nothing to secure there, except for Amb. Stevens showing up for a couple of days to hang out there, unfortunately at the wrong time (it remains unclear if the attackers knew he was there or not before they attacked).
3) There were 600 requests for increased security in Benghazi, which she ignored. Now it may be that some of these requests got to her, but the detail mostly ignored is that this list included requests for more security in all of Libya, with the top priority being to secure the embassy in Tripoli, where classified documents were located, unlike the facility in Benghazi, and with the situation in Tripoli at least as dangerous as that in Benghazi. We do not in fact have a count of how many of those requests were related to Benghazi. In any case, as a mere "facility" rather than a consulate, it was at the lowest priority for those under Hillary who made these security decisions in terms of allocating personnel. And, of course, in the height of hypocrisy, Congress has been steadily cutting State Department security budgets while demanding that more secuirity should have been placed at the Benghazi facility.
So, I now want to focus on the bigger picture regarding Libya, with Hillary on the one hand saying she did a good job (in the debate, not at the hearing), while her critics say she was awful, but with not any really serious discussion of what went down there in general or is going down there now by anybody concerned. Indeed, I think that as the leader of the hawks in the Obama administration to get the US to support the Arab League and British and French campaign to support the rebels in Libya against Qaddafi (when we "led from behind"), she does bear much responsibility for the mess that has arisen since, although arguably the problem was not helping with a proper follow-through to get a functioning government there. I note that the Republican position on this then and since has simply been incoherence, with people like Lindsey Graham at the time within the space of a single sentence declaring that we should do nothing and go into there full force with "boots on the ground."
So, I shall now brag about my own prescience on what would go down in Libya. Back in March, 2011, when all this was getting going, I predicted that the ultimate result of this would be a partition of Libya into its eastern and western halves, the former long knows as Tripolitania and the latter long known as Cyrenaica (Roman provincial names), with almost no history of them being unified and with ethnic and religious differences between them. That forecast was made here and I followed it up this past February to note that it had in fact happened here. Given that between these two I provide most of the details, let me simply add three further points that remain relevant now, although not discussed at all in this showdown hearing (or much otherwise in most media).
1) In the east-west divide, the one that the US recognizes as the legitimate government of Libya as a whole is the one based in Benghazi in the east, not the one in the official capital of Tripoli.
2) This past week there was an effort led by the US to cobble the two together into a unified government, but it failed. The de facto partition remains in place, and I suspect it will for some time come.
3) As a final complication, in both locations neither of these "governments" is at all secure, being simply the leaders of the most powerful militias, with competing militias and groups contesting them for power, some of these groups tied to various branches of international radical Islamist groups, with even the awful ISIS/ISIL/IS/Daech showing up in the eastern part fairly recently to commit some violence and make it known that they are around, if not all that important. All of this makes it even more likely that Libya will remain a failed state that is even only barely divided into its eastern and western halves, if not effectively subdivided much furher, something that has also happened in both Iraq and Syria. But none of this is of concern to the committee aside from attempting to blame Hillary for the whole mess
Barkley Rosser
That said, they did get one item out, and based on what the GOP prez candidates are saying as well as such party warhorses on Fox News as Sean Hannity, it does look like they will continue a pile-on, mostly based on untruths. Their one new item is the email Hillary apparently sent to a leader in Egypt the day after the Benghazi attack saying that it was planned and not tied to the video, in contrast to what she was saying publicly. Nailed her! Well, there have already been complaints about confused stories on this, and the hard fact is that while there had clearly been planning for an attack on US facilities in Benghazi, the video reportedly did provide the excuse and trigger, especially after the rioting in Cairo and attack on the embassy there erupted in response. I think we are going to hear a lot about this supposed gotcha lie by her.
I note the following total nonsense items that Hannity repeated endlessly, and that I am sure we shall continue to hear repeatedly.
1) There was a "stand down" order from Hillary to security people in Benghazi. Hannity claims to have interviewed people who received such an order, however all the previous committees have supposedly shown that this claim is false. There was no such order, and Hillary denied it again at this hearing, almost certianly factually. But Hannity repeated his claim last night several times. This dog is going to continue to run, even if it is a ghost hound.
2) The facility in Benghazi was a "consulate." Marco Rubio said this, and so did many on the committee. But this is simply false. Apparently Amb. Stevens wanted to have it upgraded to being one, which would have led to it having more security, and he had used it as a de facto embassy to the rebels against Qaddafi during the uprising. But it was nothing at all, merely a facility, being used for nearly nothing and with nothing to secure there, except for Amb. Stevens showing up for a couple of days to hang out there, unfortunately at the wrong time (it remains unclear if the attackers knew he was there or not before they attacked).
3) There were 600 requests for increased security in Benghazi, which she ignored. Now it may be that some of these requests got to her, but the detail mostly ignored is that this list included requests for more security in all of Libya, with the top priority being to secure the embassy in Tripoli, where classified documents were located, unlike the facility in Benghazi, and with the situation in Tripoli at least as dangerous as that in Benghazi. We do not in fact have a count of how many of those requests were related to Benghazi. In any case, as a mere "facility" rather than a consulate, it was at the lowest priority for those under Hillary who made these security decisions in terms of allocating personnel. And, of course, in the height of hypocrisy, Congress has been steadily cutting State Department security budgets while demanding that more secuirity should have been placed at the Benghazi facility.
So, I now want to focus on the bigger picture regarding Libya, with Hillary on the one hand saying she did a good job (in the debate, not at the hearing), while her critics say she was awful, but with not any really serious discussion of what went down there in general or is going down there now by anybody concerned. Indeed, I think that as the leader of the hawks in the Obama administration to get the US to support the Arab League and British and French campaign to support the rebels in Libya against Qaddafi (when we "led from behind"), she does bear much responsibility for the mess that has arisen since, although arguably the problem was not helping with a proper follow-through to get a functioning government there. I note that the Republican position on this then and since has simply been incoherence, with people like Lindsey Graham at the time within the space of a single sentence declaring that we should do nothing and go into there full force with "boots on the ground."
So, I shall now brag about my own prescience on what would go down in Libya. Back in March, 2011, when all this was getting going, I predicted that the ultimate result of this would be a partition of Libya into its eastern and western halves, the former long knows as Tripolitania and the latter long known as Cyrenaica (Roman provincial names), with almost no history of them being unified and with ethnic and religious differences between them. That forecast was made here and I followed it up this past February to note that it had in fact happened here. Given that between these two I provide most of the details, let me simply add three further points that remain relevant now, although not discussed at all in this showdown hearing (or much otherwise in most media).
1) In the east-west divide, the one that the US recognizes as the legitimate government of Libya as a whole is the one based in Benghazi in the east, not the one in the official capital of Tripoli.
2) This past week there was an effort led by the US to cobble the two together into a unified government, but it failed. The de facto partition remains in place, and I suspect it will for some time come.
3) As a final complication, in both locations neither of these "governments" is at all secure, being simply the leaders of the most powerful militias, with competing militias and groups contesting them for power, some of these groups tied to various branches of international radical Islamist groups, with even the awful ISIS/ISIL/IS/Daech showing up in the eastern part fairly recently to commit some violence and make it known that they are around, if not all that important. All of this makes it even more likely that Libya will remain a failed state that is even only barely divided into its eastern and western halves, if not effectively subdivided much furher, something that has also happened in both Iraq and Syria. But none of this is of concern to the committee aside from attempting to blame Hillary for the whole mess
Barkley Rosser
Tuesday, October 20, 2015
Hollywood And The Economist: Bridge of Spies and Frederic L. Pryor
So, once again I must declare spoiler alert as I am going to correct errors in a big Hollywood movie about historical events, although Steven Spielberg does have it said it upfront that the movie is "inspired" by real events rather than claiming actual accuracy. In any case, just-released Bridge of Spies is probably more historically accurate than either The Imitation Game or A Beautiful Mind. To get to an important point, it turns out that a surprisingly important character in Bridge of Spies, whose events occurred during 1957-62, is 82-year old Swarthmore College economist, Frederic L. Pryor, the only one of the major characters in this movie who is still alive. And, it turns out that nobody associated with making the movie ever contacted him, not Spielberg, not the Coen Brothers, not the actor (with the all-American name of Will Rogers). They did not bother to talk to the one living witness to the events when they wrote and made the movie.
For those who have not seen the movie and do not know what it is about, I shall give a quick synopsis before pointing out where it is off. So, in 1957 Soviet master spy, Rudolf Abel (real name: Vilyam Genrikhovich Fisher, played admirably by Mark Rylance) was arrested in New York. Former OSS and Nuremberg attorney, James B. Donovan (played well by Tom Hanks), then in private practice, agreed to defend him and managed to get him a 30 year sentence rather than the death sentence that most of the public wanted for him (with Donovan suffering criticism and ostracism, with him looking like Gregory Peck in To Kill a Mockingbird at one point). In the meantime, Francis Gary Powers (played by Austin Stowell) got himself shot down in 1960 in a high-flying U-2 spy plane and was captured by the Soviets, who put him on a show trial and sentenced him to a long term in their prisons. After a letter arrived from Berlin from a fake wife of Abel, Donovan went to Berlin unofficially at the end of January, 1962, and after a lot of harrowing Cold War adventures with atmospherics of The Spy Who Came in from the Cold, negotiated an exchange of Abel for Powers. However, a complication arose for this in the form of Fred Pryor who had been studying trade patterns of Eastern European nations for a PhD at Yale (received later that year) when he got captured in East Berlin in an essentially snafu situation. CIA wanted Donovan to abandon Pryor, but Donovan heroically insisted on him also being released along with Powers, and in the end got his way, with the final exchange of Abel and Powers on the cinematic Glienicke Bridge getting held up for about half an hour while they waited for Pryor to be released at Checkpoint Charlie, which he was, letting the whole thing go through, with all-American hero Donovan/Hanks going home to well-deserved praise, and with what I have described here also corresponding relatively well to the historical facts. It is in details where things get messed up.
Let me begin with my friend Fred Pryor, who is one of the world's most important comparative economists, the man the film makers did not talk to. He has actually publicly spoken now in an interview in his hometown newspaper a few days ago, the Mansfield (OH) News Journal. He has dismissed his own role as "I don't think I was an important part. I was just a throwaway." Some years ago he told my wife my Marina that he was "just a pawn in their game," with us not knowing if he was consciously quoting Bob Dylan or not. Anyway, reading this interview one can get straight how things went down with him, which is not too far off from the movie version, although he is a much more substantial and acerbic character than Will Rogers played, whom Fred describes unhappily in his interview as "He looks like a delinquent." They show him passing through the half-completed wall in August, 1961 with a copy of his dissertation to give to an East Berlin economics professor. He encounters this professor's daughter, and seeing her appeals to her to get her father and escape to West Berlin, but then where he came in is sealed off and police see him and seize him while the young woman, apparently fond of him, escapes (and later appeals to the police about him). He is seen being knocked to the ground with a rifle butt, but little is seen of him being "interrogated" in jail or of his solitary confinement. His copy of his thesis is seized from him when he is arrested.
According to him, while he had mainly gone to the eastern side to attend a lecture, he was indeed taking a copy of his thesis to a prof he had attended the lectures of at the Free University, with his thesis on trade relations leading the police to think he was "doing legwork for a foreign trade blockade." There was a girl, but she was the sister of a friend who had requested he get news from her given that communications between the two Berlins had been mostly cut. However, it turned out she had already fled to the west when he got to her apartment. He was arrested while leaving her apartment, with them initially thinking he was there to "get her stuff."
It was the East Germans who dragged him into the deal and tried to turn the whole thing into a trade of just Pryor for Powers, which became a sticking point. They were trying to assert themselves with both the Americans and the Soviets. In the film at the climactic moment he is not at Checkpoint Charlie during the final wait, but is only driven up at the last moment (his father was on the other side to receive him when he crossed). In reality apparently the East Germans had him there for that whole time and only finally released him after pressure from the Soviets.
As near as I can tell, aside from not mentioning his previous work with the OSS (his Nuremberg trial work was mentioned), and a few minor details and exaggerations, it looks like Donovan was presented pretty accurately.
When we get to Abel/Fisher, things are more complicated, with only a small amount of the following shown in the movie. Born in 1903 near Newcastle-on-Tyne in northern England of German-Russian parents who were strong Bolsheviks who had fled tsarist Russia and then returned, Abel-Fisher had been with Soviet intelligence except for a few years from 1927 on based on his knowing five languages and being good with radios, aside from numerous other talents, including serious artistic ones (shown in the movie), with him indeed marrying a well-known Moscow harpist. During WW II he trained the real Rudolf Abel to do radio transmissions from behind German lines. Abel died in 1955 after being expelled from China, which Fisher knew. While he is known mostly to history as "Rudolf Abel," he never used that name until his arrest in the US in 1957. The film shows him being addressed by the arresting FBI agents as "Colonel Abel," but in fact all they knew that he was a colonel code-named "Mark." He had been betrayed by an incompetent underling who was being recalled to Moscow, but who managed to defect to the the US in Paris on the way back. He only knew the code name and "Mark's" rank, although Fisher had made the mistake of once letting him visit the hotel room where he stayed in Brooklyn, posing as an artist-photographer named Emil Gusfel, with this location the key to the FBI busting Abel/Fisher. Giving the FBI the name of this dead agent was his way of signaling to Moscow that he was loyal and would not leak, which he did not.
While most of the problems with the film's depiction of Abel/Fisher involve things left out, there is one important error relevant to the worsening condition of US-Russian relations today. At the end of the exchange on the bridge, Abel/Fisher is seen as being put into the back seat of the receiving car without being hugged or even his hands shaken, with him looking significantly at Donovan still left at the other end of the bridge. Just prior to his release Donovan asked him how he would be treated by the Soviets when he returned to which he said he did not know. But he then said that if they hugged him he would be fine, but if they just put him in the back seat of the car he would not be.
Well, what was shown was inaccurate. In fact, he was hugged and treated not only well but as a major hero to the point of overstating his skill and exploits. Apparently the KGB decided to use him for propaganda purposes precisely as that, a hero of Soviet intelligence, sort of like how Stakhanov was a hero-worker in the 1930s. In 1968 a movie was made about his exploits called "Dead Season," which having seen some of it appears to be less accurate than Bridge of Spies, although the latter really shows very little of what he was spying on or what he was actually doing, with probably the most important of that being in the late 40s when he was in Santa Fe serving as a major link in the network associated with the Rosenbergs spying on nuclear activities at Los Alamos (if Julius Rosenberg had cooperated with the FBI and thus probably saved the life of his wife, Ethel, it is probably the case that ratting on Abel/Fisher would have been the biggest catch he could have revealed to them). Dead Season had him chasing after German Nazi scientists working on chemical weapons for the US, which does not appear to have been what he was up to in reality, but a handsome and famous actor played him, and he provided an introduction at the beginning praising in general the KGB's work abroad. This movie was played many times and was very popular. Abel/Gutsfel/Fisher would die peacefully in bed in 1971, a full-blown Hero of the Soviet Union. Donovan died of a heart attack in 1970 at the age of 53.
So, here is the thing. This movie is back. It is now being played repeatedly on Russian TV, a movie that heroizes the old KGB and suggests that the US was working with Nazi German scientists on chemical weapons. Of course there were many former German scientists in the US working on military stuff, but the most important were those associated with Werrnher von Braun (whom my late father knew) who worked on rockets, as is widely known (and the Soviets managed to get some of the German military scientists, although the majority went over to the US of their own volition, particularly the group led by von Braun). But I find it curious that while in the US we have a major movie being made about Abel/Fisher that suggests falsely that he was mistreated by the Soviets after he was returned to them, whereas at the same time an old movie made glamorizing him is now being repeatedly played on Russian TV.
Regarding Powers there are some apparent discrepancies about details of how he was shot down with the movie version probably partly inaccurate. There remains controversy about those details to this day, with an NSA report on it still classified, even though Powers wrote a book on it that was made into a movie with Lee Majors in 1976 the year before Powers died in a helicopter crash. While Powers was mistreated initially on his return for failing to destroy the U-2 plane and for not killing himself with a device he was given before he flew, he has come to be viewed more favorably, receiving a Silver Star posthumously in 2012 for not breaking or leaking classified information during his harrowing interrogation in the Lubyanka. But much about what really happened with Powers, especially the details of his shoot down, remain unclear.
As it was, Donovan died in 1970, Abel/Fisher in 1971, and Powers in 1977. But Fred Pryor remains alive and active and a most admirable and interesting person, a highly innovative economist whose work showed the way to doing comparative economics after the fall of Soviet bloc communism, on which he was (and still is) an expert. I shall note that a major part of this innovation was to consider broader cultural influences as economic systems as well, such as Islamic economics or the Catholic economics that led to corporatism (an invention of the 19th century Catholic Church, as he has pointed out), among others. But I shall not pursue this topic here further at this time, other than to say it has strongly influenced the work of me and my wife.
Barkley Rosser
For those who have not seen the movie and do not know what it is about, I shall give a quick synopsis before pointing out where it is off. So, in 1957 Soviet master spy, Rudolf Abel (real name: Vilyam Genrikhovich Fisher, played admirably by Mark Rylance) was arrested in New York. Former OSS and Nuremberg attorney, James B. Donovan (played well by Tom Hanks), then in private practice, agreed to defend him and managed to get him a 30 year sentence rather than the death sentence that most of the public wanted for him (with Donovan suffering criticism and ostracism, with him looking like Gregory Peck in To Kill a Mockingbird at one point). In the meantime, Francis Gary Powers (played by Austin Stowell) got himself shot down in 1960 in a high-flying U-2 spy plane and was captured by the Soviets, who put him on a show trial and sentenced him to a long term in their prisons. After a letter arrived from Berlin from a fake wife of Abel, Donovan went to Berlin unofficially at the end of January, 1962, and after a lot of harrowing Cold War adventures with atmospherics of The Spy Who Came in from the Cold, negotiated an exchange of Abel for Powers. However, a complication arose for this in the form of Fred Pryor who had been studying trade patterns of Eastern European nations for a PhD at Yale (received later that year) when he got captured in East Berlin in an essentially snafu situation. CIA wanted Donovan to abandon Pryor, but Donovan heroically insisted on him also being released along with Powers, and in the end got his way, with the final exchange of Abel and Powers on the cinematic Glienicke Bridge getting held up for about half an hour while they waited for Pryor to be released at Checkpoint Charlie, which he was, letting the whole thing go through, with all-American hero Donovan/Hanks going home to well-deserved praise, and with what I have described here also corresponding relatively well to the historical facts. It is in details where things get messed up.
Let me begin with my friend Fred Pryor, who is one of the world's most important comparative economists, the man the film makers did not talk to. He has actually publicly spoken now in an interview in his hometown newspaper a few days ago, the Mansfield (OH) News Journal. He has dismissed his own role as "I don't think I was an important part. I was just a throwaway." Some years ago he told my wife my Marina that he was "just a pawn in their game," with us not knowing if he was consciously quoting Bob Dylan or not. Anyway, reading this interview one can get straight how things went down with him, which is not too far off from the movie version, although he is a much more substantial and acerbic character than Will Rogers played, whom Fred describes unhappily in his interview as "He looks like a delinquent." They show him passing through the half-completed wall in August, 1961 with a copy of his dissertation to give to an East Berlin economics professor. He encounters this professor's daughter, and seeing her appeals to her to get her father and escape to West Berlin, but then where he came in is sealed off and police see him and seize him while the young woman, apparently fond of him, escapes (and later appeals to the police about him). He is seen being knocked to the ground with a rifle butt, but little is seen of him being "interrogated" in jail or of his solitary confinement. His copy of his thesis is seized from him when he is arrested.
According to him, while he had mainly gone to the eastern side to attend a lecture, he was indeed taking a copy of his thesis to a prof he had attended the lectures of at the Free University, with his thesis on trade relations leading the police to think he was "doing legwork for a foreign trade blockade." There was a girl, but she was the sister of a friend who had requested he get news from her given that communications between the two Berlins had been mostly cut. However, it turned out she had already fled to the west when he got to her apartment. He was arrested while leaving her apartment, with them initially thinking he was there to "get her stuff."
It was the East Germans who dragged him into the deal and tried to turn the whole thing into a trade of just Pryor for Powers, which became a sticking point. They were trying to assert themselves with both the Americans and the Soviets. In the film at the climactic moment he is not at Checkpoint Charlie during the final wait, but is only driven up at the last moment (his father was on the other side to receive him when he crossed). In reality apparently the East Germans had him there for that whole time and only finally released him after pressure from the Soviets.
As near as I can tell, aside from not mentioning his previous work with the OSS (his Nuremberg trial work was mentioned), and a few minor details and exaggerations, it looks like Donovan was presented pretty accurately.
When we get to Abel/Fisher, things are more complicated, with only a small amount of the following shown in the movie. Born in 1903 near Newcastle-on-Tyne in northern England of German-Russian parents who were strong Bolsheviks who had fled tsarist Russia and then returned, Abel-Fisher had been with Soviet intelligence except for a few years from 1927 on based on his knowing five languages and being good with radios, aside from numerous other talents, including serious artistic ones (shown in the movie), with him indeed marrying a well-known Moscow harpist. During WW II he trained the real Rudolf Abel to do radio transmissions from behind German lines. Abel died in 1955 after being expelled from China, which Fisher knew. While he is known mostly to history as "Rudolf Abel," he never used that name until his arrest in the US in 1957. The film shows him being addressed by the arresting FBI agents as "Colonel Abel," but in fact all they knew that he was a colonel code-named "Mark." He had been betrayed by an incompetent underling who was being recalled to Moscow, but who managed to defect to the the US in Paris on the way back. He only knew the code name and "Mark's" rank, although Fisher had made the mistake of once letting him visit the hotel room where he stayed in Brooklyn, posing as an artist-photographer named Emil Gusfel, with this location the key to the FBI busting Abel/Fisher. Giving the FBI the name of this dead agent was his way of signaling to Moscow that he was loyal and would not leak, which he did not.
While most of the problems with the film's depiction of Abel/Fisher involve things left out, there is one important error relevant to the worsening condition of US-Russian relations today. At the end of the exchange on the bridge, Abel/Fisher is seen as being put into the back seat of the receiving car without being hugged or even his hands shaken, with him looking significantly at Donovan still left at the other end of the bridge. Just prior to his release Donovan asked him how he would be treated by the Soviets when he returned to which he said he did not know. But he then said that if they hugged him he would be fine, but if they just put him in the back seat of the car he would not be.
Well, what was shown was inaccurate. In fact, he was hugged and treated not only well but as a major hero to the point of overstating his skill and exploits. Apparently the KGB decided to use him for propaganda purposes precisely as that, a hero of Soviet intelligence, sort of like how Stakhanov was a hero-worker in the 1930s. In 1968 a movie was made about his exploits called "Dead Season," which having seen some of it appears to be less accurate than Bridge of Spies, although the latter really shows very little of what he was spying on or what he was actually doing, with probably the most important of that being in the late 40s when he was in Santa Fe serving as a major link in the network associated with the Rosenbergs spying on nuclear activities at Los Alamos (if Julius Rosenberg had cooperated with the FBI and thus probably saved the life of his wife, Ethel, it is probably the case that ratting on Abel/Fisher would have been the biggest catch he could have revealed to them). Dead Season had him chasing after German Nazi scientists working on chemical weapons for the US, which does not appear to have been what he was up to in reality, but a handsome and famous actor played him, and he provided an introduction at the beginning praising in general the KGB's work abroad. This movie was played many times and was very popular. Abel/Gutsfel/Fisher would die peacefully in bed in 1971, a full-blown Hero of the Soviet Union. Donovan died of a heart attack in 1970 at the age of 53.
So, here is the thing. This movie is back. It is now being played repeatedly on Russian TV, a movie that heroizes the old KGB and suggests that the US was working with Nazi German scientists on chemical weapons. Of course there were many former German scientists in the US working on military stuff, but the most important were those associated with Werrnher von Braun (whom my late father knew) who worked on rockets, as is widely known (and the Soviets managed to get some of the German military scientists, although the majority went over to the US of their own volition, particularly the group led by von Braun). But I find it curious that while in the US we have a major movie being made about Abel/Fisher that suggests falsely that he was mistreated by the Soviets after he was returned to them, whereas at the same time an old movie made glamorizing him is now being repeatedly played on Russian TV.
Regarding Powers there are some apparent discrepancies about details of how he was shot down with the movie version probably partly inaccurate. There remains controversy about those details to this day, with an NSA report on it still classified, even though Powers wrote a book on it that was made into a movie with Lee Majors in 1976 the year before Powers died in a helicopter crash. While Powers was mistreated initially on his return for failing to destroy the U-2 plane and for not killing himself with a device he was given before he flew, he has come to be viewed more favorably, receiving a Silver Star posthumously in 2012 for not breaking or leaking classified information during his harrowing interrogation in the Lubyanka. But much about what really happened with Powers, especially the details of his shoot down, remain unclear.
As it was, Donovan died in 1970, Abel/Fisher in 1971, and Powers in 1977. But Fred Pryor remains alive and active and a most admirable and interesting person, a highly innovative economist whose work showed the way to doing comparative economics after the fall of Soviet bloc communism, on which he was (and still is) an expert. I shall note that a major part of this innovation was to consider broader cultural influences as economic systems as well, such as Islamic economics or the Catholic economics that led to corporatism (an invention of the 19th century Catholic Church, as he has pointed out), among others. But I shall not pursue this topic here further at this time, other than to say it has strongly influenced the work of me and my wife.
Barkley Rosser
Saturday, October 17, 2015
What Oil Companies Can Do if They Care About Climate Change
Nice to see that a consortium of oil companies wants to keep global warming at 2ºC. Here’s the thing, though: preventing catastrophic climate change comes down primarily to leaving as much fossil fuel as possible in the ground—petroleum, gas and coal. Everything else is about how to make that happen. Companies that own or whose market value depends on those reserves aren’t going to abandon them unilaterally. It’s inconceivable. It will take forcible government action to keep most of that stuff out of reach.
So what can a public-spirited oil company do? One thing: they can publicly pledge not to lobby on carbon policy or to finance politicians based on their promises to go easy on taxes or carbon permits. That’s actually conceivable, albeit at the borderline of political imagination, almost more like an exercise in logically possible worlds than a believable stance. Still, if they’re listening, that’s what I’d ask them to do.
So what can a public-spirited oil company do? One thing: they can publicly pledge not to lobby on carbon policy or to finance politicians based on their promises to go easy on taxes or carbon permits. That’s actually conceivable, albeit at the borderline of political imagination, almost more like an exercise in logically possible worlds than a believable stance. Still, if they’re listening, that’s what I’d ask them to do.
The Neo-McCarthyite Meme That Bernie Sanders And His Wife "Honeymooned" In The Former Soviet Union
Yes, folks, you heard Anderson Cooper hand it out, and Bernie Sanders did not deny it: he and his wife "honeymooned in the Soviet Union."! He did not deny it, and unlike Bernie coming to defend Hillary against all the email charges, she did not rush forward to defend him against this ridiculous garbage. She carefully avoided supporting it, but after Bernie praised Denmark she chose to suggest that Denmark did not support small business like the US, even though data exists showing that Denmark may actually be better at that than the US. But Bernie missed properly responding to any of this, which is probably why he will probably not be POTUS.
OK, so maybe this is a dead duck issue, but I am really offended that obvious right wing jerks who should know better are pushing this garbage meme about Bernie. I am speaking in particular about Charles Krauthammer, who in today's (well, yesterday's) WaPo said, "Amid the playacting between today and Clinton's coronation next summer, we can joyfully savor the most delightful moment of the debate, when we were reminded by Anderson Cooper that Sanders had honeymooned in the Soviet Union."
The facts are that indeed in 1988 when perestroika was in full play Sanders was Mayor of Burlington, VT, which city had become a sister city of Yaroslavl, USSR, some distance northwest of Moscow. It came to pass that the formal trip to establish this city-to-city relationship happened in 1988, which he had to participate in along with various with leading civic figures in Burlington, which he did with Jane. It also happened to be that they got married just before this trip, and they later joked about how this official government trip along with all these other people was their "honeymoon." I note that at this time they would have been politically sympathetic to the reformist anti-traditional-Soviet political forces in the old USSR, although he would have been focusing on all this local government sister city sort of stuff.
Needless to say neither Anderson Cooper nor Charles Krauthammer has remotely noted this or how ridiculous and McCarthyite their lines are. They must be called out for the disgusting scum they are, McCarthyites of the worst order. If and or when this crap resurfaces it must be shot down and those who push these garbage lines should be unequivocally denounced in the clearest and most fervent terms.
Barkley Rosser
OK, so maybe this is a dead duck issue, but I am really offended that obvious right wing jerks who should know better are pushing this garbage meme about Bernie. I am speaking in particular about Charles Krauthammer, who in today's (well, yesterday's) WaPo said, "Amid the playacting between today and Clinton's coronation next summer, we can joyfully savor the most delightful moment of the debate, when we were reminded by Anderson Cooper that Sanders had honeymooned in the Soviet Union."
The facts are that indeed in 1988 when perestroika was in full play Sanders was Mayor of Burlington, VT, which city had become a sister city of Yaroslavl, USSR, some distance northwest of Moscow. It came to pass that the formal trip to establish this city-to-city relationship happened in 1988, which he had to participate in along with various with leading civic figures in Burlington, which he did with Jane. It also happened to be that they got married just before this trip, and they later joked about how this official government trip along with all these other people was their "honeymoon." I note that at this time they would have been politically sympathetic to the reformist anti-traditional-Soviet political forces in the old USSR, although he would have been focusing on all this local government sister city sort of stuff.
Needless to say neither Anderson Cooper nor Charles Krauthammer has remotely noted this or how ridiculous and McCarthyite their lines are. They must be called out for the disgusting scum they are, McCarthyites of the worst order. If and or when this crap resurfaces it must be shot down and those who push these garbage lines should be unequivocally denounced in the clearest and most fervent terms.
Barkley Rosser
Friday, October 16, 2015
More on Interest Rates, Ideology and Caring About the Future
In a previous post I referred to the economic principle that low interest and discount rates translate into greater concern for the future relative to the present. At low interest and discount rates you would cut fewer trees, burn less carbon and make more investments in physical and human capital that will pay off in years to come. If you’re the sort of person who looks ahead and wants to build for the future, you should be for lower interest rates.
It’s interesting that this point, which as far as I know is incontrovertible, is directly contradicted by the presumption of the Very Important crowd that a low interest rate regime is decadent and reflects a live-it-up-now attitude on the part of pandering policy-makers. How can we understand this?
I suggest that it has to do with the difference between individual and social perspectives on planning for the future. At the individual level a person can save. This reduces current consumption but builds up a stock of financial claims that can later be traded in for goods and services: it shifts your consumption into the future. High interest rates are an inducement to or reward for saving, so being a hard money, high interest rate kind of person shows that you’re a grown up, thinking about the future and not just the passing moment.
But an entire society can’t save for the future. In a closed system, financial claims have to net out: having a vault stuffed with paper money or paper assets doesn’t make a society any wealthier if they just reflect payments from some people in that society to others. On the contrary, the future will be better off if we make investments today, and investment is a type of spending, not saving. Finance 101 tells us that more investment projects will pass our hurdle rate of return or be financed by commercial lenders if interest rates are lower, all other things being equal.
True, in an open system, one with international trade, a country can accumulate financial claims against foreigners and therefore become more wealthy through saving, but this is a small component of wealth compared to the capital stock created by investment, and accumulating an external surplus typically requires a weak currency—which is fostered by, among other things, low interest rates.
So the perspective of the individual saver is a terrible guide to planning for the future, even though it tends to dominate politics. From a social theory standpoint, this is a nice example of the conception of ideology based on salience. People with sufficient income to save have to solve the problem of self-control, and the effect of interest as a reward for this virtuous behavior is what stands out to them. People whose future income depends on making investments today, like students borrowing to finance their education, see interest as the cost of borrowing. Each view of interest is ideological, in the sense that it generalizes the particular interpretation of a social phenomenon (like interest rates) from personal experience. It happens in this case that the borrower’s perspective aligns with reality at an economy-wide level, and the saver’s perspective is misleading.
It’s interesting that this point, which as far as I know is incontrovertible, is directly contradicted by the presumption of the Very Important crowd that a low interest rate regime is decadent and reflects a live-it-up-now attitude on the part of pandering policy-makers. How can we understand this?
I suggest that it has to do with the difference between individual and social perspectives on planning for the future. At the individual level a person can save. This reduces current consumption but builds up a stock of financial claims that can later be traded in for goods and services: it shifts your consumption into the future. High interest rates are an inducement to or reward for saving, so being a hard money, high interest rate kind of person shows that you’re a grown up, thinking about the future and not just the passing moment.
But an entire society can’t save for the future. In a closed system, financial claims have to net out: having a vault stuffed with paper money or paper assets doesn’t make a society any wealthier if they just reflect payments from some people in that society to others. On the contrary, the future will be better off if we make investments today, and investment is a type of spending, not saving. Finance 101 tells us that more investment projects will pass our hurdle rate of return or be financed by commercial lenders if interest rates are lower, all other things being equal.
True, in an open system, one with international trade, a country can accumulate financial claims against foreigners and therefore become more wealthy through saving, but this is a small component of wealth compared to the capital stock created by investment, and accumulating an external surplus typically requires a weak currency—which is fostered by, among other things, low interest rates.
So the perspective of the individual saver is a terrible guide to planning for the future, even though it tends to dominate politics. From a social theory standpoint, this is a nice example of the conception of ideology based on salience. People with sufficient income to save have to solve the problem of self-control, and the effect of interest as a reward for this virtuous behavior is what stands out to them. People whose future income depends on making investments today, like students borrowing to finance their education, see interest as the cost of borrowing. Each view of interest is ideological, in the sense that it generalizes the particular interpretation of a social phenomenon (like interest rates) from personal experience. It happens in this case that the borrower’s perspective aligns with reality at an economy-wide level, and the saver’s perspective is misleading.
Wednesday, October 14, 2015
The Real Lesson of Leap (and VW and maybe Uber): Libertarian Tech Hubris
I think Farhad Manjoo draws the wrong lesson from the Leap debacle. Leap, you’ll recall, was the private, for-profit and very posh bus service launched in the Bay Area a few years back. It was pilloried for the way it catered to well-heeled techies at a time when ordinary people were finding it impossible to live in SF and many of the surrounding communities. Well, yes, but what killed Leap was not its bad image but the fact that they tried to operate—twice!—without municipal and state permits. The regulators shut them down.
And this isn’t an isolated case. Uber has been facing increasing resistance from local governments around the world for trying to run a taxi service without adhering to taxi regulations. One of the factors behind the VW diesel exhaust scandal is the disdain that the company’s engineers had for environmental regulations, or any regulations that would diminish the performance of their sleek machines.
In other words, there’s a libertarian, antiregulatory mood that has become the default culture of the techie class. We are on the cutting edge, inventing all kinds of cool stuff; they are the dinosaurs trying to enforce brain-dead rules to hem us in.
Of course, a lot of regulation is garbage, designed to protect the interests that had a hand in writing them, and there are bureaucrats who will trot out any dumb rule they can find to maintain their power to interfere. But most regulations, to a greater or lesser extent, exist because there were problems that people needed regulations to solve. Transportation services have to be safe, and they can’t discriminate between people who are willing to pay to get from point A to point B. Their service area decisions have large impacts on land values and community sustainability, and there needs to be a public process for talking these things out. And of course the diesel exhaust standards exist because of the public health consequences.
What we’re finding out—and this is the main lesson of Leap—is that techie libertarianism is not only shallow politics, it can be lethal for business in a justifiably regulated world. Grow up.
And this isn’t an isolated case. Uber has been facing increasing resistance from local governments around the world for trying to run a taxi service without adhering to taxi regulations. One of the factors behind the VW diesel exhaust scandal is the disdain that the company’s engineers had for environmental regulations, or any regulations that would diminish the performance of their sleek machines.
In other words, there’s a libertarian, antiregulatory mood that has become the default culture of the techie class. We are on the cutting edge, inventing all kinds of cool stuff; they are the dinosaurs trying to enforce brain-dead rules to hem us in.
Of course, a lot of regulation is garbage, designed to protect the interests that had a hand in writing them, and there are bureaucrats who will trot out any dumb rule they can find to maintain their power to interfere. But most regulations, to a greater or lesser extent, exist because there were problems that people needed regulations to solve. Transportation services have to be safe, and they can’t discriminate between people who are willing to pay to get from point A to point B. Their service area decisions have large impacts on land values and community sustainability, and there needs to be a public process for talking these things out. And of course the diesel exhaust standards exist because of the public health consequences.
What we’re finding out—and this is the main lesson of Leap—is that techie libertarianism is not only shallow politics, it can be lethal for business in a justifiably regulated world. Grow up.
Homo Socialis By Gintis and Helbing In ROBE
Folks,
I ususally do not do this sort of advertising, but it is picking up commentary here and there, so I problably should. The journal I edit, Review of Behavioral Economics, has recently published a major target article by Herbert Gintis and Dirk Helbing, "Homo Socialis: An Analytical Core for Sociological Theory," a long paper that presents several provocative arguments, with this issue being 1 and 2 of our second volume. It is accompanied by 14 lively commentaries by people from several disciplines along with rejoinders by each of the coauthors. The comments are by Catherine Eckel and Jane Sell, Mauro Gallegati, Robert L. Goldstone, Michael Hechter, Geoffrey M. Hodgson, Alan G. Isaac, Paul Lewis, Siegwart Lindenberg, Michael W. Macy, Andrzej Nowak and Jorgen Andersen and Wojciech Borkowski, Paul Ormerod, Vernon L. Smith, Ulrich Witt, and David H. Wolpert.
Addendum: Journal link now works, and issue is there.
Barkley Rosser
I ususally do not do this sort of advertising, but it is picking up commentary here and there, so I problably should. The journal I edit, Review of Behavioral Economics, has recently published a major target article by Herbert Gintis and Dirk Helbing, "Homo Socialis: An Analytical Core for Sociological Theory," a long paper that presents several provocative arguments, with this issue being 1 and 2 of our second volume. It is accompanied by 14 lively commentaries by people from several disciplines along with rejoinders by each of the coauthors. The comments are by Catherine Eckel and Jane Sell, Mauro Gallegati, Robert L. Goldstone, Michael Hechter, Geoffrey M. Hodgson, Alan G. Isaac, Paul Lewis, Siegwart Lindenberg, Michael W. Macy, Andrzej Nowak and Jorgen Andersen and Wojciech Borkowski, Paul Ormerod, Vernon L. Smith, Ulrich Witt, and David H. Wolpert.
Addendum: Journal link now works, and issue is there.
Barkley Rosser
Monday, October 12, 2015
Interest Rates and the Shadow of the Future
There’s an interesting quote from Axel Weber, one of Germany’s most influential economists, transmitted by Dean Baker this morning:
The funny thing is that I am just preparing a lecture on natural resource policy where the central variable, of course, is the discount rate. Low rates put more emphasis on the future, high rates on the here and now. And that’s true for all investment, whether in nature, produced capital or human capital. It’s what r is fundamentally about. Low r stimulates economies by encouraging more spending on investment.
People who’ve already amassed a lot of money and want to earn a return on it—creditors—like high interest rates. The rest of us, who either borrow money to invest or depend on a robust economy for jobs and higher wages, see things the other way around. But in the end, a lower r gives more weight to the future. It’s about as basic an economic truth as you’ll ever find.
“When I travel around the world, I find hardly anyone supporting the Fed’s policy on interest rates,” said a senior European official, who did not want to be publicly identified criticizing the I.M.F. “The fund has become very short-term-oriented."I hear this a lot. Stimulative monetary policy, in the spirit of the dissolute John Maynard Keynes, is all about living it up in the present and hardly giving a thought to what follows. Remember Niall Ferguson and the “quip” about Keynes not caring about the next generation because he was gay and wouldn’t have any?
The funny thing is that I am just preparing a lecture on natural resource policy where the central variable, of course, is the discount rate. Low rates put more emphasis on the future, high rates on the here and now. And that’s true for all investment, whether in nature, produced capital or human capital. It’s what r is fundamentally about. Low r stimulates economies by encouraging more spending on investment.
People who’ve already amassed a lot of money and want to earn a return on it—creditors—like high interest rates. The rest of us, who either borrow money to invest or depend on a robust economy for jobs and higher wages, see things the other way around. But in the end, a lower r gives more weight to the future. It’s about as basic an economic truth as you’ll ever find.
Sunday, October 11, 2015
Disclosure of What?
A comment to my last post, on the Litan affair and the importance of disclosure, has got me thinking. As was point out, Litan had disclosed his funding; what he hadn’t disclosed was that his funder had commissioned the work. This raises the larger question of what sorts of disclosure ought to be required. A researcher’s relationship to external interests is not a binary, yes-no matter; there are multiple levels.
The obvious answer, how much money changed hands, is not very informative, in my opinion. A lot of funding can be earmarked for expenses, and even the meaning of an “expense” is open. If a professor has a course bought out, is this an expense or a benefit?
I think the question that tripped up Litan, whether the funder commissioned the work in question, is germane, although there are large ambiguities here as well. Sometimes a researcher will go to an agency or foundation with a proposal and request that a particular piece of work be commissioned; I’ve done this myself. But is that the same as having someone come to you, ask for a specific product and then pay you enough to convince you to do it?
For me the most important question is whether the researcher has an obligation to share results or manuscript drafts prior to public dissemination. Whether there is a further understanding that the funder’s explicit approval is necessary to go forward may be relevant, but not necessarily. The critical line, in my opinion, divides research with strings, like the obligation to submit drafts, from research without. I believe it should always be specified whether a report or article was reviewed by an interested party before it was released to the public.
These are preliminary thoughts on my part, and readers may have insights I haven’t considered.
The obvious answer, how much money changed hands, is not very informative, in my opinion. A lot of funding can be earmarked for expenses, and even the meaning of an “expense” is open. If a professor has a course bought out, is this an expense or a benefit?
I think the question that tripped up Litan, whether the funder commissioned the work in question, is germane, although there are large ambiguities here as well. Sometimes a researcher will go to an agency or foundation with a proposal and request that a particular piece of work be commissioned; I’ve done this myself. But is that the same as having someone come to you, ask for a specific product and then pay you enough to convince you to do it?
For me the most important question is whether the researcher has an obligation to share results or manuscript drafts prior to public dissemination. Whether there is a further understanding that the funder’s explicit approval is necessary to go forward may be relevant, but not necessarily. The critical line, in my opinion, divides research with strings, like the obligation to submit drafts, from research without. I believe it should always be specified whether a report or article was reviewed by an interested party before it was released to the public.
These are preliminary thoughts on my part, and readers may have insights I haven’t considered.
Saturday, October 10, 2015
Litany of Tainted Research
Most of what Luigi Zingales has to say about the Litan affair is right on target: reputation effects are not sufficient to prevent researchers from shading their conclusions to satisfy funders. Litan himself was guilty of failure to disclose his sponsors, the Capital Group, for testimony he presented to Congress, irrespective of the merits or otherwise of his work: who is paying for research is relevant to forming a judgment on it, and not only whether this or that variable was properly identified. And Senator Warren was right to call him out.
Still, there are problems of omission and commission with Zingales’ piece. Commission #1: I strongly disagree that public funding of research raises the same issues as private. Says Z: “Eliminating private funding will leave research completely in public funding’s hands. It will not eliminate the bias; it will simply tilt it in the direction of the government.” Really, Zingales has been hanging out in Chicago too long. As a sometimes recipient of public funding (disclosure), I think it’s ludicrous to say that the interest of the “government” bears on how us grantees do our work. Seriously, what government interest does NSF represent? In any case, there is a legal basis for exposing bias and malfeasance in public research support that does not exist in the private sector.
Commission #2: “....reputational incentives work relatively well only for academic papers that circulate widely in the relevant academic community and are independently scrutinized in peer review.” I wish. The reality is that peer scrutiny is not a process that separates the worthy from the unworthy in an objective, reliable manner. Just look at any journal: quite a bit of shady stuff survives peer review and gets published, even if their results are not replicable. In addition, as any author knows, there are a myriad of detailed matters in research that can be resolved in a variety of ways. You can push the boundaries of a category a little bit this way or that, make or not make a restrictive assumption, and so on. Your peers are not going to write you off just because your choices lean a little in a particular direction as long as you are technically sound. The moral of the story: disclosure of funding sources is essential for all published research, no matter how and to whom it is disseminated.
Omission: Zingales provides two suggestions for reform, advance posting of expert testimony at least two weeks before a Congressional hearing and public disclosure of the identities of expert witnesses. But the most important reform is missing: we need a single, consolidated source of information on all publishing economists disclosing all their sources of funding. This could be a website where any journalist, congressional staffer or interested member of the public could find out if a given author had taken money that might influence his or her work. Beginning with the AEA, professional associations and journals could make accurate listing in this database a condition for participation or submission. Who’s paying you should not be treated as a trade secret, not if you claim to be contributing to the store of human knowledge.
Still, there are problems of omission and commission with Zingales’ piece. Commission #1: I strongly disagree that public funding of research raises the same issues as private. Says Z: “Eliminating private funding will leave research completely in public funding’s hands. It will not eliminate the bias; it will simply tilt it in the direction of the government.” Really, Zingales has been hanging out in Chicago too long. As a sometimes recipient of public funding (disclosure), I think it’s ludicrous to say that the interest of the “government” bears on how us grantees do our work. Seriously, what government interest does NSF represent? In any case, there is a legal basis for exposing bias and malfeasance in public research support that does not exist in the private sector.
Commission #2: “....reputational incentives work relatively well only for academic papers that circulate widely in the relevant academic community and are independently scrutinized in peer review.” I wish. The reality is that peer scrutiny is not a process that separates the worthy from the unworthy in an objective, reliable manner. Just look at any journal: quite a bit of shady stuff survives peer review and gets published, even if their results are not replicable. In addition, as any author knows, there are a myriad of detailed matters in research that can be resolved in a variety of ways. You can push the boundaries of a category a little bit this way or that, make or not make a restrictive assumption, and so on. Your peers are not going to write you off just because your choices lean a little in a particular direction as long as you are technically sound. The moral of the story: disclosure of funding sources is essential for all published research, no matter how and to whom it is disseminated.
Omission: Zingales provides two suggestions for reform, advance posting of expert testimony at least two weeks before a Congressional hearing and public disclosure of the identities of expert witnesses. But the most important reform is missing: we need a single, consolidated source of information on all publishing economists disclosing all their sources of funding. This could be a website where any journalist, congressional staffer or interested member of the public could find out if a given author had taken money that might influence his or her work. Beginning with the AEA, professional associations and journals could make accurate listing in this database a condition for participation or submission. Who’s paying you should not be treated as a trade secret, not if you claim to be contributing to the store of human knowledge.
Friday, October 9, 2015
Picasso: A “Lost” Treasure
I don’t know how this Spanish case over who has custody over a Picasso portrait, the Spanish government or the billionaire owner, is going to turn out, but I heard a nice story that I’d like to pass along.
It took place at an outdoor café, I believe along the Riviera. Picasso was at a table chatting with a family. The family wanted show the Great Man their daughter’s artwork, so, with the little girl at the table, they pulled out one of her creations. Picasso examined it and said, “Yes, but let’s see another way of doing it. We could begin like this,” and he began drawing on a napkin. He made a few lines, said a bit more, then drew more. Soon an elegant sketch was taking form. Meanwhile, all eyeballs from the surrounding tables had turned toward Picasso and especially this napkin. What would it be worth?
Picasso discussed his drawing with the girl, pointing out how a few strokes of a pencil could stand in for a lot more detail. But then, looking around to his expanded audience, he added, “But enough about me! What about you? Let’s see you draw something else!” And with that, he shredded his napkin into little pieces.
I heard this second-hand from someone who claimed they knew someone who was there. The specifics may be wrong, or maybe the whole story is apocryphal. If any readers can pin it down, I’d appreciate it.
It took place at an outdoor café, I believe along the Riviera. Picasso was at a table chatting with a family. The family wanted show the Great Man their daughter’s artwork, so, with the little girl at the table, they pulled out one of her creations. Picasso examined it and said, “Yes, but let’s see another way of doing it. We could begin like this,” and he began drawing on a napkin. He made a few lines, said a bit more, then drew more. Soon an elegant sketch was taking form. Meanwhile, all eyeballs from the surrounding tables had turned toward Picasso and especially this napkin. What would it be worth?
Picasso discussed his drawing with the girl, pointing out how a few strokes of a pencil could stand in for a lot more detail. But then, looking around to his expanded audience, he added, “But enough about me! What about you? Let’s see you draw something else!” And with that, he shredded his napkin into little pieces.
I heard this second-hand from someone who claimed they knew someone who was there. The specifics may be wrong, or maybe the whole story is apocryphal. If any readers can pin it down, I’d appreciate it.
Where Does the Minimum Wage Max Out?
Alan Krueger says we should set a nationwide wage floor no higher than $12/hr, since that’s as far as our research knowledge extends. We know that a statutory minimum at that level will have little or no employment impact, but anything above that is beyond empirical familiarity—we just don’t know. He is open to cities, where wages and living costs are higher, to experiment with higher wage floors, but not the Feds.
Far be it from me to dispute Krueger, who, with David Card, launched the revolution in empirical minimum wage studies a generation ago, finding in the process that he has become a poster boy for quasi-experimental methods. Good for him! But I don’t think his inference from the existing research is warranted, for three reasons.
1. From a policy perspective, the minimum wage could be set either too low or too high. It would be too low if large gains in equity, poverty reduction and economic dynamism could be achieved at little cost in employment. (Dynamism could take the form of innovation to offset higher labor costs.) It would be too high if employment at the low end of the labor market were crippled. What Krueger seems to be aiming at is a zero risk of overshooting the ideal minimum, as if there were no cost to undershooting it. But surely, if we know that $12 is unlikely to bite back, then a proper balancing of risks should take us somewhere above $12.
2. A high percentage of low-wage jobs are intermittent. People work for a while, get laid off or quit, then go back to another crapola job, and so on. This means that a lot of the employment loss of a “too high” minimum wage simply means that workers will earn more money per hour but work fewer hours per year. What that means for their bottom line depends on the elasticity of labor demand with respect to the wage mandate. Even the economists on the payroll of the restaurant industry who have done battle with Card & Krueger find low elasticities, meaning that most intermittent workers would come out ahead despite longer spells of unemployment. This doesn’t mean that we shouldn’t worry about unemployment at all, but that it isn’t quite the problem it’s made out to be.
3. Even if the minimum wage is set at a level that eats into employment, this can be offset by other policies. Macropolicy, especially on the fiscal side, should push for lower overall unemployment rates. We should finally begin to treat all young people, especially from low income backgrounds, as the repositories of incredible potential they are, by investing in their education, skill and practical experience—there are lots of models for this. A ramping up of skill would, over time, lead to productivity gains that would support a higher wage structure. The point is that the minimum wage is one piece of a much larger mosaic of economic policy, and its effects differ depending on what else is being done.
So is $15 the magic number? I don’t know. Like Krueger would probably say, we need more research. But what I do know is that, if $12 is very safe, the right number is higher than that.
Far be it from me to dispute Krueger, who, with David Card, launched the revolution in empirical minimum wage studies a generation ago, finding in the process that he has become a poster boy for quasi-experimental methods. Good for him! But I don’t think his inference from the existing research is warranted, for three reasons.
1. From a policy perspective, the minimum wage could be set either too low or too high. It would be too low if large gains in equity, poverty reduction and economic dynamism could be achieved at little cost in employment. (Dynamism could take the form of innovation to offset higher labor costs.) It would be too high if employment at the low end of the labor market were crippled. What Krueger seems to be aiming at is a zero risk of overshooting the ideal minimum, as if there were no cost to undershooting it. But surely, if we know that $12 is unlikely to bite back, then a proper balancing of risks should take us somewhere above $12.
2. A high percentage of low-wage jobs are intermittent. People work for a while, get laid off or quit, then go back to another crapola job, and so on. This means that a lot of the employment loss of a “too high” minimum wage simply means that workers will earn more money per hour but work fewer hours per year. What that means for their bottom line depends on the elasticity of labor demand with respect to the wage mandate. Even the economists on the payroll of the restaurant industry who have done battle with Card & Krueger find low elasticities, meaning that most intermittent workers would come out ahead despite longer spells of unemployment. This doesn’t mean that we shouldn’t worry about unemployment at all, but that it isn’t quite the problem it’s made out to be.
3. Even if the minimum wage is set at a level that eats into employment, this can be offset by other policies. Macropolicy, especially on the fiscal side, should push for lower overall unemployment rates. We should finally begin to treat all young people, especially from low income backgrounds, as the repositories of incredible potential they are, by investing in their education, skill and practical experience—there are lots of models for this. A ramping up of skill would, over time, lead to productivity gains that would support a higher wage structure. The point is that the minimum wage is one piece of a much larger mosaic of economic policy, and its effects differ depending on what else is being done.
So is $15 the magic number? I don’t know. Like Krueger would probably say, we need more research. But what I do know is that, if $12 is very safe, the right number is higher than that.
Wednesday, October 7, 2015
Dean Baker Sends Mixed Message On Bailing Out Banks
Unfortunately I seem to be unable to provide functionng links to Dean Baker's Beat the Press, and I am overwhelmingly most of the time on board with him as beats the press for its many errors and sins. However, today he seems to have gotten himself confused in a post aimed not at the press but at Ben Bernanke and statements in his memor, entitled "Of course Ben Bernanke could have saved Lehman," which very accurately argues that indeed Bernanke and the Fed could have saved Lehman in September, 2008 but did not do so. I have not read Bernanke's memoir, but I shall take it as true that Bernanke indeed makes this false claim. So, so far so good for our usually intrepid Dean.
But there is a problem here, which several commenters on his blog have pointed out. For years he has beaten a drum that there should have been no bank bailouts, especially not TARP. His favored outcome was to let whatever big banks were in deep doo doo to go down, to fail, with their depositers being paid off. Now to pay off those depositers would have certainly made the FDIC go bankrupt, but indeed probably Congress would have come through, if perhaps with some lag, and paid off all those depositers. This would have indeed probably at a minimum led to the careless and venal managements of those big banks being removed, if not necessarily being sent to jail as both Dean and Ben Bernanke also say they wished had happened (as have many of the rest of us as well). Dean has also regularly dismissed the concerns of Bernanke that failing to bail out the big banks would lead to any further failures of banks or other problems in the financial system that might have led to a 1931 style outcome, which Bernanke feared, an outcome that did give us Adolf Hitler and all that followed (uh oh, have I broken Godwin's Rule, or whatever that is? note official self hand slap).
Now one clear reason why it might not have been as bad as 1931 was indeed that we now have the FDIC, which was not put in place until 1935. The wave of bank failures after Fall 1931 (and before as well) wiped out the savings of many people who were not at all insured. Probably the scale of wipeouts would not have been nearly as bad. OTOH, the degree of interbank connectedness now around the world is much greater and more opaque when the shadow banking system is taken into account than was the case in 1931. That global financial collapse took many months, having started in May with the failure of the Creditanstalt in Vienna, then spreading across Germany and France over the summer to UK by end of summer and finally to the US by Septermber (and on to Japan later). It remains not widely reported, although I think Dean knows it (in fact I think he and I have personally discussed this), that the really serious thing that was going on that September was the Fed bailing out the ECB, which was having trouble propping up top German and Franch banks that were threatening to go under due to their exploding AIG problem. This was truly an enormous mess, and the threat to the full global financial system appears to have been extreme, with all this brought on by the fall of Lehman, which Dean now says should indeed have been propped up. I guess maybe if it had been propped up, we would not have had to prop up the rest, but who knows?
One final trivial note. TARP ended up making money for the US Treasury. A massive bailout of depositers in failed banks after an FDIC bankruptcy would have certainly cost the Treasry and taxpayers money, as was the csse with the S&L bailouts of an earlier decade. But this is trivial compared to the possible losses that might have occurred if there were no bailouts of the big banks. In any case, I think Dean has a bit of an inconsistent story going on here, whether or not Ben Bernanke did well or ill.
Barkley Rosser
But there is a problem here, which several commenters on his blog have pointed out. For years he has beaten a drum that there should have been no bank bailouts, especially not TARP. His favored outcome was to let whatever big banks were in deep doo doo to go down, to fail, with their depositers being paid off. Now to pay off those depositers would have certainly made the FDIC go bankrupt, but indeed probably Congress would have come through, if perhaps with some lag, and paid off all those depositers. This would have indeed probably at a minimum led to the careless and venal managements of those big banks being removed, if not necessarily being sent to jail as both Dean and Ben Bernanke also say they wished had happened (as have many of the rest of us as well). Dean has also regularly dismissed the concerns of Bernanke that failing to bail out the big banks would lead to any further failures of banks or other problems in the financial system that might have led to a 1931 style outcome, which Bernanke feared, an outcome that did give us Adolf Hitler and all that followed (uh oh, have I broken Godwin's Rule, or whatever that is? note official self hand slap).
Now one clear reason why it might not have been as bad as 1931 was indeed that we now have the FDIC, which was not put in place until 1935. The wave of bank failures after Fall 1931 (and before as well) wiped out the savings of many people who were not at all insured. Probably the scale of wipeouts would not have been nearly as bad. OTOH, the degree of interbank connectedness now around the world is much greater and more opaque when the shadow banking system is taken into account than was the case in 1931. That global financial collapse took many months, having started in May with the failure of the Creditanstalt in Vienna, then spreading across Germany and France over the summer to UK by end of summer and finally to the US by Septermber (and on to Japan later). It remains not widely reported, although I think Dean knows it (in fact I think he and I have personally discussed this), that the really serious thing that was going on that September was the Fed bailing out the ECB, which was having trouble propping up top German and Franch banks that were threatening to go under due to their exploding AIG problem. This was truly an enormous mess, and the threat to the full global financial system appears to have been extreme, with all this brought on by the fall of Lehman, which Dean now says should indeed have been propped up. I guess maybe if it had been propped up, we would not have had to prop up the rest, but who knows?
One final trivial note. TARP ended up making money for the US Treasury. A massive bailout of depositers in failed banks after an FDIC bankruptcy would have certainly cost the Treasry and taxpayers money, as was the csse with the S&L bailouts of an earlier decade. But this is trivial compared to the possible losses that might have occurred if there were no bailouts of the big banks. In any case, I think Dean has a bit of an inconsistent story going on here, whether or not Ben Bernanke did well or ill.
Barkley Rosser
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