Friday, June 3, 2016
Tuesday, May 31, 2016
Fuel Oil, Whale Oil and Snake Oil
Not that I’m obsessed with Ms Klein, but consider this passage from her Said Lecture as published in the London Review of Books:
Coal mining has also been a miserable business, but so has every other form of mining, in every part of the world and for all of human history. Unfortunately, no bronze or iron age without bronze or iron. And the use of wood as the principal fuel source for heating and industry was unsustainable as populations rose, and it consigned a whole class of people to extreme poverty. There’s a reason the most pitiable characters in traditional stories are woodcutters.
Climate change is real. The advantages of fossil fuels are real. That’s why we have a problem. You have to rewrite a lot of history to claim otherwise.
....the thing about fossil fuels is that they are so inherently dirty and toxic that they require sacrificial people and places: people whose lungs and bodies can be sacrificed to work in the coal mines, people whose lands and water can be sacrificed to open-pit mining and oil spills.Yes, oil spills are very bad, but before we had a world-spanning petroleum industry we had whale oil. Commercial whaling, on which whole economies were built, was a very nasty business to whale and whaler alike. Its replacement with petroleum was a big improvement in almost every respect. If it were not for climate change we could delete the “almost”.
Coal mining has also been a miserable business, but so has every other form of mining, in every part of the world and for all of human history. Unfortunately, no bronze or iron age without bronze or iron. And the use of wood as the principal fuel source for heating and industry was unsustainable as populations rose, and it consigned a whole class of people to extreme poverty. There’s a reason the most pitiable characters in traditional stories are woodcutters.
Climate change is real. The advantages of fossil fuels are real. That’s why we have a problem. You have to rewrite a lot of history to claim otherwise.
Modernity and Capitalism
Well, that’s a heavy title. I’m not going to say the last word about it in a blog post, but I would like to make a fairly simple observation: for at least a century, defenders of capitalism have argued that the two are inextricably connected. If you like modernity you have to like capitalism, and if you get rid of capitalism you will lose modernity with it. By modernity I mean a way of life that is science-based, rational and skeptical, technologically innovative, liberal, cosmopolitan and adapted to markets.
The traditional response of the left was to argue that modernity under capitalism is flawed and that a better, socialist modernity is possible. In other words, it rejected the identity and saw modernity as bigger than any particular version of it.
That position has been complicated by the collapse of traditional models of socialism that do seem to fail the modernization test: they were clunky and inefficient, closed to the outside instead of open, stultifying instead of dynamic. Now, I can already hear the cries of paleo-socialists in my ear: No! Socialism didn’t fail in Russia/China/Cuba/wherever; it was encircled by the forces of capital and betrayed from within. I don’t agree, but I won’t debate it here; my only point is that most of the left is not paleo-socialist, so they’ve had to figure out what it means to be left wing and anti-capitalist in a world in which capitalism and modernity (in their eyes) largely coincide.
The result that seems to be unfolding is a widespread rejection of modernity on the activist/committed left. This is obvious in a book like Naomi Klein’s This Changes Everything: Capitalism versus the Climate. She denounces “western science” and the industrial revolution. She is against globalization and wants each of us to stay put and cultivate our relationship to the soil—to native plants and local, stable communities. She has rediscovered spirituality and finds it answers life’s questions better than rational skepticism. She thinks traditional societies lived better and possessed more wisdom than those swept up in modernity. And of course, any use of markets (other than carbon taxes) is to be denounced as the sin of greed.
What Klein writes wouldn’t matter so much if they were only her personal thoughts (just like mine don’t matter very much), but the reception her book has received shows she has distilled a worldview shared by much if not most of the left. Her anti-modernist stance is not even mentioned; it is taken for granted. Or more precisely, it is how we understand her to be radical and left-wing: that’s what it means to oppose capitalism in the Anthropocene. (My spell-checker doesn’t recognize Anthropocene yet. Give it time.)
So that’s how we’ve come full circle. The identity between modernity and capitalism is no longer offered in defense of the existing order but (or also) as the basis for its rejection. My prediction is that the benefits of modernity are so obvious and compelling for the vast majority of humanity that anti-modernist leftism will be an evanescent cult, something future generations will look back upon with curiosity.
And I still think we need to consider what form a non- or post-capitalist modernity might take.
(Postscript: If you want to think about how this conceptual turn of events began, you might look at the emergence of postmodernism, which transferred the critique of capitalism to the critique of modernity and arose at about the same time classical socialism/communism lost its intellectual luster.)
(Postscript ^2: This is not about anarchism vs Marxism. Anarchists used to be modernists. Read Kropotkin's Fields, Factories and Workshops or, for cultural modernism, Emma Goldman's Living My Life.)
The traditional response of the left was to argue that modernity under capitalism is flawed and that a better, socialist modernity is possible. In other words, it rejected the identity and saw modernity as bigger than any particular version of it.
That position has been complicated by the collapse of traditional models of socialism that do seem to fail the modernization test: they were clunky and inefficient, closed to the outside instead of open, stultifying instead of dynamic. Now, I can already hear the cries of paleo-socialists in my ear: No! Socialism didn’t fail in Russia/China/Cuba/wherever; it was encircled by the forces of capital and betrayed from within. I don’t agree, but I won’t debate it here; my only point is that most of the left is not paleo-socialist, so they’ve had to figure out what it means to be left wing and anti-capitalist in a world in which capitalism and modernity (in their eyes) largely coincide.
The result that seems to be unfolding is a widespread rejection of modernity on the activist/committed left. This is obvious in a book like Naomi Klein’s This Changes Everything: Capitalism versus the Climate. She denounces “western science” and the industrial revolution. She is against globalization and wants each of us to stay put and cultivate our relationship to the soil—to native plants and local, stable communities. She has rediscovered spirituality and finds it answers life’s questions better than rational skepticism. She thinks traditional societies lived better and possessed more wisdom than those swept up in modernity. And of course, any use of markets (other than carbon taxes) is to be denounced as the sin of greed.
What Klein writes wouldn’t matter so much if they were only her personal thoughts (just like mine don’t matter very much), but the reception her book has received shows she has distilled a worldview shared by much if not most of the left. Her anti-modernist stance is not even mentioned; it is taken for granted. Or more precisely, it is how we understand her to be radical and left-wing: that’s what it means to oppose capitalism in the Anthropocene. (My spell-checker doesn’t recognize Anthropocene yet. Give it time.)
So that’s how we’ve come full circle. The identity between modernity and capitalism is no longer offered in defense of the existing order but (or also) as the basis for its rejection. My prediction is that the benefits of modernity are so obvious and compelling for the vast majority of humanity that anti-modernist leftism will be an evanescent cult, something future generations will look back upon with curiosity.
And I still think we need to consider what form a non- or post-capitalist modernity might take.
(Postscript: If you want to think about how this conceptual turn of events began, you might look at the emergence of postmodernism, which transferred the critique of capitalism to the critique of modernity and arose at about the same time classical socialism/communism lost its intellectual luster.)
(Postscript ^2: This is not about anarchism vs Marxism. Anarchists used to be modernists. Read Kropotkin's Fields, Factories and Workshops or, for cultural modernism, Emma Goldman's Living My Life.)
Monday, May 30, 2016
Work-houses the best Charity?
John Graunt's observation, "if there be but a certain proportion of work to be done," was directly challenged by Thomas Cooke in Work-houses the best Charity: "A SERMON, Preacht at the Cathedral Church of Worcester, February 2d 1702."
Cooke's argument was that "another advantage to every community, where all Hands are provided with an Employ, is this, That it enlarges Trade according to the number of the Hands imployed." This is an ambiguous claim and much weaker than Josiah Tucker's "infallible maxim" that "one Man's Labour creates Employment for another." Cooke summarized Graunt's argument and then presented his objection:
In fairness to Cooke, his economic case for workhouses was only a secondary consideration. His main argument was a religious one, resting on selected Biblical citations and furious exhortations against the depravity of sloth. His published sermon was crowned with a big shout-out to 2 Thessalonians 3: 10:
A commandment from which, according to Cooke, lazy rich folks were exempt by virtue of their inheritance. But I'm no more interested in Cooke's mean-spirited theology than his stilted economic analysis. Why, then, exhume his archaic sermon? Cooke's sermon offers direct evidence that Graunt's commentary on employing beggars was known in the early 18th century, at a time of agitation for the establishment of workhouses.
A passage in Boswell's Life of Samuel Johnson suggests that Graunt's commentary on employing beggars had become somewhat of a commonplace by the late 18th century. Johnson's Dictionary of the English Language (1755) made frequent reference to Graunt's Bills of Mortality for examples of usage of words. The following quote is attributed to Johnson in 1780:
Cooke's argument was that "another advantage to every community, where all Hands are provided with an Employ, is this, That it enlarges Trade according to the number of the Hands imployed." This is an ambiguous claim and much weaker than Josiah Tucker's "infallible maxim" that "one Man's Labour creates Employment for another." Cooke summarized Graunt's argument and then presented his objection:
The Ingenious Observator of the Bills of Mortality, tho he hath furnished us with many excellent and useful Observations, hath yet one that extreamly Labours, and he seems at once to be mistaken in his Charity, and his Politicks. He tells us that it were better for the State to keep the multitude of Beggars at a publick Stock, tho they earn’d nothing, then let them be maintain’d as they are, by the voluntary Contributions of charitable and pious Persons; and having made this assertion, he explains himself, having begg’d the question, that if there be but a certain proportion of work to be done, which be already done by the not Beggars, as he stiles them, then the imploying the Beggars in this work were but transferring the want from one hand to another, in which the latter by spoiling it, would do more hurt than good.
But this is limiting Men's Labour to one particular imploy, of which indeed he gives an instance, which the curious may have recourse to, which is all the strength of that argument: But our Modern States Men look much further than this Gentleman's Observations. ‘Tis true as to our exported Trade of Manufactures there must be some Limitation and restraint; for we must make no more, then we have demand for, and the Dutch as he very well observes and since them the French, having run away with a considerable part of the Antient English Trade, we will easily allow him, that should all Hands be employed that way only, they would be too many. But when we confider the vast quantities of Forreign Manufactures imported, which are consumed by our own Inhabitants, and the many thousand Families that might be plentifully maintained by the Manufactures of those very Commodities, Should they be brought over unwrought, methinks the Avarice of our Merchants, and the Pride of our Inhabitants Should not be able to prevail against that common good, which the limiting of those Manufactures to our own People would produce…Unless I am mistaken in reading Cooke's proposal, he was advocating import substitution, relying on the establishment of compulsory workhouses for the poor to manufacture the substituted goods. I'm not inclined to argument the merits of Cooke's scheme but simply want to point out that it is hardly what one would consider a laissez faire, free-market, free-trade proposition.
In fairness to Cooke, his economic case for workhouses was only a secondary consideration. His main argument was a religious one, resting on selected Biblical citations and furious exhortations against the depravity of sloth. His published sermon was crowned with a big shout-out to 2 Thessalonians 3: 10:
A passage in Boswell's Life of Samuel Johnson suggests that Graunt's commentary on employing beggars had become somewhat of a commonplace by the late 18th century. Johnson's Dictionary of the English Language (1755) made frequent reference to Graunt's Bills of Mortality for examples of usage of words. The following quote is attributed to Johnson in 1780:
It may be questioned, whether there is not some mistake as to the methods of employing the poor, seemingly on a supposition that there is a certain portion of work left undone for want of persons to do it; but if that is otherwise, and all the materials we have are actually worked up, or all the manufactures we can use or dispose of are already executed, then what is given to the poor, who are to be set at work, must be taken from some who now have it, as time must be taken for learning, (according to Sir William Petty's observation,) a certain part of those materials that, as it is, are properly worked up, must be spoiled by the unskillfulness of novices.
Sunday, May 29, 2016
Pass the Pumpernickel?
Cradles were rock'd in every field,
and food was all their cry,
Till the King's bowels bread did yield
and sent them a supply...
Fascism: The View from Within
The core problem with the discussion of Trump and fascism in today’s New York Times is that it defines fascism solely in terms of what scares liberals. If the goal of fascists were to be scary, then you might judge how fascist a movement is by how much it scares you. But that’s not why people support fascism.
What’s necessary is to see fascism from the inside. Why might people support an authoritarian, chauvinist ruler who attacks minorities and foreigners?
Suppose you have a bedrock belief that people get what they deserve. The poor are poor because they are inferior, and the rich are rich because they are smart and work hard. Lots of people feel this way, not as an analytical proposition to be assessed against the evidence but as a preconscious commitment. This view can work at multiple scales: it enables those who have it to accept the reality of individual, group and national inequality without the discomfort of cognitive dissonance.
But suppose the pattern of winners and losers becomes such that the “natural justice” assumption implies that it is you and your people who are the inadequate ones. The community (class, racial, religious) you identify with is struggling while other communities seem to get ahead. Your country is defeated in war or seems to be declining relative to other countries in wealth and power. How can you reconcile the facts of the world around you with your core beliefs about just desserts?
Fascism’s political appeal is that it solves this conflict. It tells you that foreign or alien groups—less virtuous than yours but ambitious and sneaky—have undermined you. They’ve taken your jobs, tied you up in pointless rules that benefit them by preventing your people from getting what they deserve under the false banner of equality, eroded your values and traditions. Your group has allowed this to happen because it was disunited, even weakened from within by traitors. The solution is to root out these treacherous elements, throw off the artificial laws and constraints (like political correctness) that prevent true merit from getting its rewards, and get rid of the foreigners and parasites. The fundamental political question, from the perspective of fascism, is not how to adjudicate disagreements but how to eliminate the dissent and defeatism that stands in the way of your people’s unity and rightful place in the world.
How such a movement foments repression, violence and war depends on the context—the barriers fascists need to overcome to implement their program. For instance, if there really were a move to expel millions of undocumented residents of the US, this would entail an alarming level of surveillance and force, much greater than anything we’ve seen in this country in decades. This is not because Trump and his followers want a reign of terror in itself, but because that’s what it would take. Do I know whether the expulsion theme is a real prospect or just rhetoric? Do I want to find out?
The proper way to determine the fascist threat from a right wing nationalist movement in the US or elsewhere is to ask (1) do they seek to impose the unity and rule of “the people” (their national or ethnic group) through suppression of minorities, dissent and foreigners? and if so (2) what repressive or violent actions will they need to take to carry out such a program?
What’s necessary is to see fascism from the inside. Why might people support an authoritarian, chauvinist ruler who attacks minorities and foreigners?
Suppose you have a bedrock belief that people get what they deserve. The poor are poor because they are inferior, and the rich are rich because they are smart and work hard. Lots of people feel this way, not as an analytical proposition to be assessed against the evidence but as a preconscious commitment. This view can work at multiple scales: it enables those who have it to accept the reality of individual, group and national inequality without the discomfort of cognitive dissonance.
But suppose the pattern of winners and losers becomes such that the “natural justice” assumption implies that it is you and your people who are the inadequate ones. The community (class, racial, religious) you identify with is struggling while other communities seem to get ahead. Your country is defeated in war or seems to be declining relative to other countries in wealth and power. How can you reconcile the facts of the world around you with your core beliefs about just desserts?
Fascism’s political appeal is that it solves this conflict. It tells you that foreign or alien groups—less virtuous than yours but ambitious and sneaky—have undermined you. They’ve taken your jobs, tied you up in pointless rules that benefit them by preventing your people from getting what they deserve under the false banner of equality, eroded your values and traditions. Your group has allowed this to happen because it was disunited, even weakened from within by traitors. The solution is to root out these treacherous elements, throw off the artificial laws and constraints (like political correctness) that prevent true merit from getting its rewards, and get rid of the foreigners and parasites. The fundamental political question, from the perspective of fascism, is not how to adjudicate disagreements but how to eliminate the dissent and defeatism that stands in the way of your people’s unity and rightful place in the world.
How such a movement foments repression, violence and war depends on the context—the barriers fascists need to overcome to implement their program. For instance, if there really were a move to expel millions of undocumented residents of the US, this would entail an alarming level of surveillance and force, much greater than anything we’ve seen in this country in decades. This is not because Trump and his followers want a reign of terror in itself, but because that’s what it would take. Do I know whether the expulsion theme is a real prospect or just rhetoric? Do I want to find out?
The proper way to determine the fascist threat from a right wing nationalist movement in the US or elsewhere is to ask (1) do they seek to impose the unity and rule of “the people” (their national or ethnic group) through suppression of minorities, dissent and foreigners? and if so (2) what repressive or violent actions will they need to take to carry out such a program?
Saturday, May 28, 2016
The Great P Value Controversy
This quarter I have been part of the teaching team for Research Design and Quantitative Methods, a core class in Evergreen's Masters of Environmental Studies. Naturally, I had to include a discussion of the debate that has been swirling around the use of P values as a "significance" filter and the role of null hypothesis statistical testing in general. Because the students have very limited backgrounds in statistics and the course ventures only a little bit beyond the introductory level, I have to simplify the material as much as possible, but this might be useful for those of you reading this who aren't very statsy, or who have to teach others who aren't.
As background reading for this topic, students were assigned the recent statement by the American Statistical Association, along with "P Values and Statistical Practice" by Andrew Gelman, whose blog ought to be on your regular itinerary if you care about these questions. Here are the slides that accompanied my lecture.
UPDATE: I've had a couple of late-breaking thoughts that I've incorporated into the slides. One is that the metaphor of bioaccumulation works nicely for the tendency for chance results to concentrate in peer-reviewed journals under p-value filtration (slide 22). The other is a more precise statement of why p-values for different results shouldn't be compared (slide 25).
As background reading for this topic, students were assigned the recent statement by the American Statistical Association, along with "P Values and Statistical Practice" by Andrew Gelman, whose blog ought to be on your regular itinerary if you care about these questions. Here are the slides that accompanied my lecture.
UPDATE: I've had a couple of late-breaking thoughts that I've incorporated into the slides. One is that the metaphor of bioaccumulation works nicely for the tendency for chance results to concentrate in peer-reviewed journals under p-value filtration (slide 22). The other is a more precise statement of why p-values for different results shouldn't be compared (slide 25).
Wednesday, May 25, 2016
Processed Trade, Hong Kong’s National Income Accounts, and Transfer Pricing Abuse
William Thorbecke recently discussed the statistics on China’s process trade balance:
Figure 1 plots China’s processing imports and exports and Figure 2 its ordinary imports and exports. These are China’s principle customs regimes. Processing imports can only be used to produce goods for re-export (processed exports). This regime reflects the operation of global value chains in East Asia. Ordinary imports are destined primarily for the domestic market and ordinary exports are produced primarily using domestic inputs….Figure 1 indicates that the gap between processed exports and imports for processing keeps growing. This implies that more and more of the value-added of processed exports such as smartphones, tablet computers, and consumer electronics goods comes from China.His figure shows processed exports reaching $900 billion in 2014 with imports for processing reaching $500 billion suggesting value-added (wages and profits) being $400 million. If you are checking your iPhone, remember this is assembled by Foxconn Technology Group (aka Hon Hai Precision Industry). Most accounts of this suggest a model where Foxconn pays $200 per phone for components and then adds $10 per phone in value-added paying $5 in wages and reaping $5 in profits. If you multiply that by 625 phone and then convert US$ to NT$ by an exchange rate of 32, you get something close to their 2014 Financials. You also might get a hot transfer pricing issue in China as noted by Windson Li:
Toll manufacturing is also a popular business model for MNCs that provide products 'made-in-China'. The China toll manufacturer imports most materials and components from an overseas affiliate on consignment basis, completes the manufacturing process, and then exports the finished products to the same overseas affiliate. As the material and product title remain with the overseas affiliate, there would be no (or very limited) Cost of Goods Sold in the P&L of the China toll manufacturer. The China toll manufacturer normally would charge a service fee to the overseas affiliates based on … the total processing cost and expenses on book, plus a mark-up.What should be the new markup now that the cost based has been lowered from $205 per phone? Multinationals are telling the Chinese government that the new markup should be the old cost plus 2.5 percent markup, which is absurd as the ratio of operating profits to labor costs used to be 100 percent (which is what the Chinese government wants). The difference between these two positions is yuuuge. Who is pushing toll manufacturing structures and why? The Big Four accounting firms are the culprits and the game is to shift income to tax havens like Hong Kong. I was thinking about this as I looked at the 2015 GDP accounts for Hong Kong. Converting these accounts to US$ by an exchange rate of 7.8, we see GDP at $308 billion while total exports were $619 billion and total imports were $612 billion. That is a lot of processed trade and a big potential for transfer pricing manipulation.
A Strategy for Trump
Suppose, as now appears likely, it’s going to be Trump against Clinton. Let’s think this through from Trump’s side.
Trump’s big disadvantage is that he scares people. He is crude, aggressive and over the top. His advantage is that many people find him authentic and authoritative. It would be a mistake for him to respond to his vulnerability by becoming more scripted and “nicer”, since that would undermine the aspect of his appeal that has played the largest role in getting him to this point. Rather, he should try to maintain the personal aura he has established while diminishing the fear factor.
Given this, here is what I’d recommend: go after Clinton as a hawk. She is a hawk. Her history of support for military interventions and attachment to neocon advisors is there for all to see. Trump has the opportunity to present himself as the less threatening, more reasonable candidate on the one aspect of presidential power where fear—fear of war and foreign threats—drives public opinion.
At the same time, Trump should, from a political strategy perspective, continue to be Trump. (He may not be able to change this.) He should say outrageous things off the top of his head, act macho, and cement his image as an anti-politician. Combining this with striking a moderate pose on military adventurism would maximize the advantages of his style while minimizing the disadvantages. He should be grateful that his prospective opponent in the general election gives him this opportunity.
Campaign ad, sometime this summer, Trump in front of a large, cheering crowd: “Let me tell you straight: I’m honest and I’m tough. I like to set clear goals and make sure they’re met. But I’m not dangerous. The other candidate, the one who smiles a lot and whose every word is written by someone else—she’s dangerous. She’s always looking for new places to bomb, new wars to get into. That’s not me. Tough, yes. Dangerous? Not for the American people.”
Trump’s big disadvantage is that he scares people. He is crude, aggressive and over the top. His advantage is that many people find him authentic and authoritative. It would be a mistake for him to respond to his vulnerability by becoming more scripted and “nicer”, since that would undermine the aspect of his appeal that has played the largest role in getting him to this point. Rather, he should try to maintain the personal aura he has established while diminishing the fear factor.
Given this, here is what I’d recommend: go after Clinton as a hawk. She is a hawk. Her history of support for military interventions and attachment to neocon advisors is there for all to see. Trump has the opportunity to present himself as the less threatening, more reasonable candidate on the one aspect of presidential power where fear—fear of war and foreign threats—drives public opinion.
At the same time, Trump should, from a political strategy perspective, continue to be Trump. (He may not be able to change this.) He should say outrageous things off the top of his head, act macho, and cement his image as an anti-politician. Combining this with striking a moderate pose on military adventurism would maximize the advantages of his style while minimizing the disadvantages. He should be grateful that his prospective opponent in the general election gives him this opportunity.
Campaign ad, sometime this summer, Trump in front of a large, cheering crowd: “Let me tell you straight: I’m honest and I’m tough. I like to set clear goals and make sure they’re met. But I’m not dangerous. The other candidate, the one who smiles a lot and whose every word is written by someone else—she’s dangerous. She’s always looking for new places to bomb, new wars to get into. That’s not me. Tough, yes. Dangerous? Not for the American people.”
Tuesday, May 24, 2016
I Confess, Graunt Didn't Invent Economics...
Aristotle did. As Philip Kreager reminded me:
Historians of economics have for some time treated his [Aristotle's] writings as formative, even though relevant passages in the Politics and Ethics amount to only a few pages.Wait. There's more:
In the Politics, however, population is a recurring topic, extensively discussed and integral to the overall argument. "The first part of a state's equipment," Aristotle says, "is a body of men, and we must consider both how many they ought to be and with what natural qualities,"The almost obsessive focus on proportionality I noted in Graunt and Locke is no proof of Graunt's influence on Locke. The proportional view was central to Aristotle's Politics and everybody in early modern humanism "up to and including Adam Smith" was doing Aristotle. You didn't have to read Aristotle. The commentaries on Aristotle were ubiquitous. For Aristotle,
The logic of proportional versus numerical relationships also describes the economy of the household in relation to its size, and this in turn shapes the wider demography of constituent groups. Oikos, the household, is the root of oikonomia, the art of household management, from which we derive the modern term "economics."What Graunt did contribute was a brilliant synthesis of humanist Aristotelianism with the techniques of merchant bookkeeping.
Graunt's work brilliantly synthesized humanist methods of natural history and rhetorical communication that were basic to Aristotelianism with techniques of merchant bookkeeping in which population totals are treated as open or relative accounting balances, rather than closed aggregates; his method arose as a direct response to the need to calculate balances in the body politic.So no, Graunt didn't invent economics. He did invent the science of population statistics, though, and thus laid the foundation for modern social sciences. As for Graunt's contribution relative to Petty's, Walter Wilcox aptly summed up my own impression, "To the trained reader Graunt writes statistical music; Petty is like a child playing with a new musical toy which occasionally yields a bit of harmony."
Monday, May 23, 2016
"A certain proportion of work to be done": How John Graunt invented economics
John Graunt’s Natural and Political Observations on the Bills of Mortality (1662) is acknowledged as the inaugural text of "political arithmetick." Graunt is ranked along with William Petty, Charles Davenant and Gregory King as a major pioneer of "the art of reasoning by figures, upon things relating to government."
In their Outline of the History of Economic Thought, Screpanti and Zamagni, however, describe Graunt as a "follower" of Petty. In books and articles on history of economic thought, Petty is mentioned ten times as often as Graunt (JSTOR, Google Scholar). Graunt is more frequently thought of as a pioneer of population studies and vital statistics. Regarding that latter capacity, Philip Kreager has written extensively and wonderfully on Graunt's truly innovative methodology.
It is convenient at this point to recall that to produce, to consume and to trade are actions first, as are supply, demand, value and price – before they can be treated as things and aggregated. People perform those actions and they do them in proportion to their numbers, abilities and appetites.
Proportion, by the way, is central to Graunt's methodology. Did I mention the word appears no fewer than 68 times in Graunt's Observations? Kreager's article, "New Light on Graunt" contains 48 occurrences of the word. The methodological significance of this word for Graunt cannot be overstated. I am therefore quoting in full Kreager's explanation of the analytical role of proportional checks in bookkeeping and Graunt's Observations:
It is difficult to think of a economically-significant fact that doesn't involve "a certain proportion" of something to something else. GDP per capita gauges a certain proportion between economic output and population. Productivity measures a certain proportion between economic output and hours of work. Economic growth reflects a certain proportion between one year's output and the next's. The unemployment rate considers a certain proportion between the labor force and the number of people who are looking for work. It is certain proportions all the way down.
Compare, though, Dorning Rasbotham's lament, 118 years after Graunt, about people who say there is a "certain quantity" of labor to be performed:
In their Outline of the History of Economic Thought, Screpanti and Zamagni, however, describe Graunt as a "follower" of Petty. In books and articles on history of economic thought, Petty is mentioned ten times as often as Graunt (JSTOR, Google Scholar). Graunt is more frequently thought of as a pioneer of population studies and vital statistics. Regarding that latter capacity, Philip Kreager has written extensively and wonderfully on Graunt's truly innovative methodology.
It is convenient at this point to recall that to produce, to consume and to trade are actions first, as are supply, demand, value and price – before they can be treated as things and aggregated. People perform those actions and they do them in proportion to their numbers, abilities and appetites.
Proportion, by the way, is central to Graunt's methodology. Did I mention the word appears no fewer than 68 times in Graunt's Observations? Kreager's article, "New Light on Graunt" contains 48 occurrences of the word. The methodological significance of this word for Graunt cannot be overstated. I am therefore quoting in full Kreager's explanation of the analytical role of proportional checks in bookkeeping and Graunt's Observations:
A population, like a commercial enterprise, must achieve at least an equilibrium of income and expenditure over time, if it is to survive. Graunt noticed that the bills, like a merchant's day-book, provided a continuous record of additions and subtractions in a constantly changing numerical whole. The diversity of transactions in people and trade, however, make such a simple running account difficult to interpret. The 'method of double-entry' bookkeeping, widely promoted in Graunt's time, claimed to provide a solution to this problem by revealing the inherent order and regularity of trade. The procedure may be summarized as follows. On the basis of his daily journal of transactions, a merchant was supposed to classify and tabulate every entry according to a few major types of account. Successive transactions pertaining to an account were then entered twice in a ledger, in parallel columns, one entry showing the changing balance of debt, and the other of credit. The comparison or proportion of the two columns relative to starting and subsequent balances provided the merchant with an immediate evaluation of the current and past status of the account, relative to others. This made it possible to spot accounting errors, to isolate losses, and to distinguish real profits from diverse fluctuations in income.Therefore, when Graunt wrote, "…if there be but a certain proportion of work to be done; and that the same be already done by the not-Beggars; then to employ the Beggars about it, will but transfer the want from one hand to another…" it is virtually certain that he was not referring to a "fixed amount" of work. Instead he was referring to a regularity. Change happens but disproportionate change may be cause for concern.
It is difficult to think of a economically-significant fact that doesn't involve "a certain proportion" of something to something else. GDP per capita gauges a certain proportion between economic output and population. Productivity measures a certain proportion between economic output and hours of work. Economic growth reflects a certain proportion between one year's output and the next's. The unemployment rate considers a certain proportion between the labor force and the number of people who are looking for work. It is certain proportions all the way down.
Compare, though, Dorning Rasbotham's lament, 118 years after Graunt, about people who say there is a "certain quantity" of labor to be performed:
Stolper-Samuelson Weighs in on the Protectionist Debate
Nelson Schwartz goes after Donald Trump, which in general is fine. But this passage is based on “faulty logic”:
The problem for Mr. Trump — or any president who wants to get tough on trade violators — is that, in the global economy, imposing tariffs on competitors abroad could have serious economic consequences at home by sharply raising prices on imported goods. Cheaper flat-screen televisions, computers, clothes, furniture and other products from Walmart, Amazon and elsewhere have been a rare bright spot for struggling working- and middle-class AmericansDean Baker explains:
Suppose our trade deals had gone the route of free trade in professional services. Then Donald Trump promised to restrict the number of foreign doctors who could enter the country. The NYT would say that U.S. doctors would be hurt by this restriction since they would be paying more for health care. Of course they would pay more for health care, just like everyone else. However their increase in pay would almost certainly dwarf the higher cost of health care. The same would almost certainly be the case for manufacturing workers and likely a large segment of non-manufacturing workers whose wages have been depressed by competition by displaced manufacturing workers.Peter Neary wrote nice explanation of the Stolper-Samuelson theorem over 12 years ago. Might we ask our economics reporters to read it?
Econospeak Ranked 68th Among Economics Blogs
I received a message from Prateek Agarwal of The Intelligent Economist that had a link listing the top 100 economics blogs of 2016. It has been awhile since I have seen any of these rankings, and when last saw them, supposedly based on numbers of people linking to or looking at or whatever, we tended to range between 40th and 70th. So I guess we are still in that range, although Agarwal and his blog did not provide how they came about determining their ranking, which somehow did not have Noapinion on its list. Krugman's Conscience of a Liberal was Number One.
I also note that I was identified as "the founder" of this blog. I have sent Agarwal a message correcting him on that and pointing out that Max Sawicky was the real founder of this blog as it replaced the former MaxSpeaks, which sometimes made it into the top ten on those economics blog ranking lists. It is true that I am one of the two contributors who moved from MaxSpeak to Econospeak, the other being Sandwichman. However, I am not "the founder" of Econospeak.In any case, I do enjoy being a part of Econospeak and glad that at least we have some ranking.
Addendudm-Correction: I have just received a message from Prateek Agarwal informing me that the the numbers in the list do not imply a ranking. So, all we know is that Econospeak is in the top 100, but where exactly, not known.
Barkley Rosser
I also note that I was identified as "the founder" of this blog. I have sent Agarwal a message correcting him on that and pointing out that Max Sawicky was the real founder of this blog as it replaced the former MaxSpeaks, which sometimes made it into the top ten on those economics blog ranking lists. It is true that I am one of the two contributors who moved from MaxSpeak to Econospeak, the other being Sandwichman. However, I am not "the founder" of Econospeak.In any case, I do enjoy being a part of Econospeak and glad that at least we have some ranking.
Addendudm-Correction: I have just received a message from Prateek Agarwal informing me that the the numbers in the list do not imply a ranking. So, all we know is that Econospeak is in the top 100, but where exactly, not known.
Barkley Rosser
Sunday, May 22, 2016
BridgeGate: Is John Doe Chris Christie?
Tim Darragh reports on a twist in the BridgeGate scandal:
"John Doe," the unnamed alleged uninidicted Bridgegate co-conspirator, missed his chance to argue his case to keep his name anonymous, a consortium of news media organizations said in a federal court filing Monday. The news media group, including NJ Advance Media, argued that an appellate court should deny the request by John Doe to halt a ruling ordering the unveiling of the names of unindicted co-conspirators by noon Tuesday. John Doe had "an opportunity to be heard" the latest filing says, and the court "thoroughly considered his privacy interests" in deciding that the names of the unindicted co-conspirators should be made public...John Doe, represented by Jenny Kramer of Chadbourne & Parke in New York, appealed Wigenton's order hours before the court's Friday deadline, claiming his due process rights would be violated and that his reputation would be harmed, among other things.Are we being too cynical to think John Doe is Chris Christie? The bio of John Doe’s attorney states:
Jenny Kramer is an experienced trial lawyer in the firm’s New York office whose practice focuses on white collar criminal defense, internal investigations, complex commercial litigation, and regulatory enforcement. Prior to joining Chadbourne, Ms. Kramer served as an Assistant United States Attorney in the District of New Jersey.Chris Christie was the U.S. Attorney for New Jersey from 2002 to 2008, which means Ms. Kramer worked for him. Is she once again working for him?
Saturday, May 21, 2016
Child Labor Defended by the Left
Well, some of the left, but they probably represent the main currents of progressive thought among intellectuals. Those who are not part of the charmed circle of researchers, activists and policy-makers in the realm of child labor may not know that a storm has been whipped up over regulation of children’s work. A number of academics and heads of NGOs have stepped forward to say that lots of child labor is OK, and the blanket condemnation of it is oppressive. They want to scrap international agreements that set restrictions on the employment of children, and they support efforts at the national level to repeal child labor regulations.
The flashpoint is Bolivia, where the laws were rewritten to allow children as young as 10 to work alongside their parents and to enter formal employment at 12. "To eliminate work for boys and girls would be like eliminating people's social conscience," says Bolivia’s president, Evo Morales. This was the culmination of a campaign led by UNATsBO, an organization representing Bolivian working children, led by children with advice from adults. One of their adult advisors is Manfred Liebel, a German political scientist. His writings combine familiar radical tropes with passionate belief in the virtue of child labor.
Here are a couple of representative snippets from one of his articles dating from 2003, the year that UNATSBO was founded:
Liebel is one of a number of child labor researchers who have banded together under the banner of “child labor protagonism”. They’ve made it their mission to dismantle regulations that interfere with the choice many children want to make, to earn some money by working. In January of this year 59 of them sent an open letter to the UN commission that administers the Convention on the Rights of the Child, urging them to disconnect the CRC from other international agreements that set minimum ages for certain types of work. This provoked a response from Human Rights Watch and a rebuttal from the Group of 59.
You can read the documents and decide for yourself. I have rather strong feelings about this topic, having spent years myself studying child labor. I recognize that it raises many difficult questions, and reasonable people can disagree. I believe, however, that most of the arguments of the protagonistas are straw men (straw kids?), although the HRW statement is rather weak as well—legally defensive rather than substantively engaged.
To really dig into the issues would take more time and space than my life or EconoSpeak permits. Here are a few bald statements, however:
Whether children want to work or not is not a decisive issue for policy on child labor. Sorry. Minimum wage laws prevent people from accepting jobs that pay less than the minimum, and occupational safety laws often interfere with the freedom of workers to take jobs that regulators have decided are dangerous. Food safety laws tell you what substances you're not allowed to eat in your food, even if you want to. Regulations interfere with free individual choice, for adults as well as children. That doesn’t mean that all regulations are good or that we should ignore what people whose freedom will be impinged have to say about them, but the “statism” of regulation is not a general argument for deregulation either.
Yes, child labor has played a central role in every traditional culture. Of course. Until very recently average lifespans were short. If the average lifespan of those who make it out of infancy is, say, 40, it makes no sense to delay work until the age of 15. And with much lower productivity, every pair of hands was needed. But the new reality is that people can expect to live a lot longer, even in the poorest parts of the world, and childhood as a time of investment and development is inescapable. I’m not for cultural imperialism, but I’m not for consigning whole generations of kids growing up in traditional cultures to lifelong poverty.
Which leads to the main point. Of course, no general rule regarding child labor fits the situation of every child. No matter what limits you impose—whether you make 14 or 12 or 3 the age of consent for employment—some children will be harmed. Every regulation does this. But not regulating can also cause harm, and the sensible thing to do is strike a balance, to minimize the sum of harms. Take the case of domestic child labor, a flashpoint of the current debate. An International Labor Organization Convention categorizes this as a “worst form of child labor”, and indeed there are horror stories galore of young children, especially girls, exploited economically, socially and sexually as underage servants. But many children work at domestic service without any serious harm, some of them even bonding with the families they live with. So what’s the call? The ideal would be to have an army of investigators checking into each domestic situation, separating the noble from the evil, but that’s not going to happen. (First reports out of Bolivia say that the government there doesn’t have the resources to monitor newly legalized child labor for the treatment of children. Surprise.) So in the end some sort of regulation is necessary, with the expectation that those enforcing it will act flexibly in situations where the regulation is clearly inappropriate.
Finally, I think the eminent researchers are wrong about two important points. First, quite generally, substantial time devoted to child labor tends to have harmful effects on education, especially as measured by cognitive test scores and grade advancement; you can read about it here. Second, as the only researcher who has studied the question in a disciplined way, I can say that greater exploitation of children compared to adults, while by no means universal, is characteristic of many work situations. These potential negative spillovers to adult labor markets were the reason why labor movements were in the forefront of opposition to child labor. We now have at least some evidence that their fears were not imaginary.
I should stop: this has already gone on too long. But I don’t want to check out before saying that I agree with one of the main arguments of the Grupo 59: simple prohibition is generally not a good way to combat child labor. Much better is the strategy of providing income support for poor families, and, although the evidence is less clear, I suspect that substantially improving schools in the poorest regions will increase the time and commitment that children devote to them. The way forward is through support and opportunity, not prohibition and punishment. But the child labor crusaders at the UN say this too.
UPDATE: Hoisted from my own comment: "After sleeping on this, I now think I should have emphasized the fundamental point, that massive poverty and underinvestment in children is the core problem, which shows up in a variety of symptoms. You can certainly debate how much emphasis should be given to regulations versus transfer programs versus school enhancement. The problem I have with protagonistas like Liebel is that they seem to deny there is a problem in the first place, or they define it down to just specific instances of exploitive work."
The flashpoint is Bolivia, where the laws were rewritten to allow children as young as 10 to work alongside their parents and to enter formal employment at 12. "To eliminate work for boys and girls would be like eliminating people's social conscience," says Bolivia’s president, Evo Morales. This was the culmination of a campaign led by UNATsBO, an organization representing Bolivian working children, led by children with advice from adults. One of their adult advisors is Manfred Liebel, a German political scientist. His writings combine familiar radical tropes with passionate belief in the virtue of child labor.
Here are a couple of representative snippets from one of his articles dating from 2003, the year that UNATSBO was founded:
[Working children’s organizations are] questioning traditional age hierarchies and establishing new, more egalitarian relationships between the generations. But they also personify a massive criticism of different aspects of the western bourgeois way of thinking and behaviour and pave the way for an understanding of the subject until now unknown or unaccepted in the western world.
In accordance with other social movements of repressed and excluded population groups in the South, the working children’s organizations reclaim and practise a subject-understanding and a subject-existence based on human dignity and the respect for human life. (p. 273)
The subject-understanding and the subject-praxis of the working children’s organizations also go beyond the modern western understanding of childhood. According to this understanding, the children are indeed granted a certain autonomy and given protection from risks, but these concessions happen at the cost of an active and responsible role for the children in society. The children are practically excluded from adult life and assigned to special reservations in which they are ‘raised’, ‘educated’ and prepared for the future. Their possible influence on this future is confined to the individual ‘qualification’ of each person, yet not to decisions about the arrangement of social relationships. These remain reserved for the adults or the power elite. (p. 274)Well, you get the idea. The attempt to eliminate child labor denies the essential humanity of children. It wants to impose a capitalist conception of their role in society which prioritizes their future productivity at the expense of what they can do in the present. It is hierarchical and expresses a colonial, eurocentric mindset.
Liebel is one of a number of child labor researchers who have banded together under the banner of “child labor protagonism”. They’ve made it their mission to dismantle regulations that interfere with the choice many children want to make, to earn some money by working. In January of this year 59 of them sent an open letter to the UN commission that administers the Convention on the Rights of the Child, urging them to disconnect the CRC from other international agreements that set minimum ages for certain types of work. This provoked a response from Human Rights Watch and a rebuttal from the Group of 59.
You can read the documents and decide for yourself. I have rather strong feelings about this topic, having spent years myself studying child labor. I recognize that it raises many difficult questions, and reasonable people can disagree. I believe, however, that most of the arguments of the protagonistas are straw men (straw kids?), although the HRW statement is rather weak as well—legally defensive rather than substantively engaged.
To really dig into the issues would take more time and space than my life or EconoSpeak permits. Here are a few bald statements, however:
Whether children want to work or not is not a decisive issue for policy on child labor. Sorry. Minimum wage laws prevent people from accepting jobs that pay less than the minimum, and occupational safety laws often interfere with the freedom of workers to take jobs that regulators have decided are dangerous. Food safety laws tell you what substances you're not allowed to eat in your food, even if you want to. Regulations interfere with free individual choice, for adults as well as children. That doesn’t mean that all regulations are good or that we should ignore what people whose freedom will be impinged have to say about them, but the “statism” of regulation is not a general argument for deregulation either.
Yes, child labor has played a central role in every traditional culture. Of course. Until very recently average lifespans were short. If the average lifespan of those who make it out of infancy is, say, 40, it makes no sense to delay work until the age of 15. And with much lower productivity, every pair of hands was needed. But the new reality is that people can expect to live a lot longer, even in the poorest parts of the world, and childhood as a time of investment and development is inescapable. I’m not for cultural imperialism, but I’m not for consigning whole generations of kids growing up in traditional cultures to lifelong poverty.
Which leads to the main point. Of course, no general rule regarding child labor fits the situation of every child. No matter what limits you impose—whether you make 14 or 12 or 3 the age of consent for employment—some children will be harmed. Every regulation does this. But not regulating can also cause harm, and the sensible thing to do is strike a balance, to minimize the sum of harms. Take the case of domestic child labor, a flashpoint of the current debate. An International Labor Organization Convention categorizes this as a “worst form of child labor”, and indeed there are horror stories galore of young children, especially girls, exploited economically, socially and sexually as underage servants. But many children work at domestic service without any serious harm, some of them even bonding with the families they live with. So what’s the call? The ideal would be to have an army of investigators checking into each domestic situation, separating the noble from the evil, but that’s not going to happen. (First reports out of Bolivia say that the government there doesn’t have the resources to monitor newly legalized child labor for the treatment of children. Surprise.) So in the end some sort of regulation is necessary, with the expectation that those enforcing it will act flexibly in situations where the regulation is clearly inappropriate.
Finally, I think the eminent researchers are wrong about two important points. First, quite generally, substantial time devoted to child labor tends to have harmful effects on education, especially as measured by cognitive test scores and grade advancement; you can read about it here. Second, as the only researcher who has studied the question in a disciplined way, I can say that greater exploitation of children compared to adults, while by no means universal, is characteristic of many work situations. These potential negative spillovers to adult labor markets were the reason why labor movements were in the forefront of opposition to child labor. We now have at least some evidence that their fears were not imaginary.
I should stop: this has already gone on too long. But I don’t want to check out before saying that I agree with one of the main arguments of the Grupo 59: simple prohibition is generally not a good way to combat child labor. Much better is the strategy of providing income support for poor families, and, although the evidence is less clear, I suspect that substantially improving schools in the poorest regions will increase the time and commitment that children devote to them. The way forward is through support and opportunity, not prohibition and punishment. But the child labor crusaders at the UN say this too.
UPDATE: Hoisted from my own comment: "After sleeping on this, I now think I should have emphasized the fundamental point, that massive poverty and underinvestment in children is the core problem, which shows up in a variety of symptoms. You can certainly debate how much emphasis should be given to regulations versus transfer programs versus school enhancement. The problem I have with protagonistas like Liebel is that they seem to deny there is a problem in the first place, or they define it down to just specific instances of exploitive work."
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