"Trump himself has not (yet) plagiarized anything." Karen Topham wrote at Huffington Post.
Let's reconsider. Plagiarism is misrepresenting someone else's writing as your own. If a student in one of my classes hired a "ghost writer" to write their term paper, it's plagiarism. But it is O.K. if some celebrity does it. I get it.
Wednesday, July 20, 2016
Tuesday, July 19, 2016
Plagiarizing Platitudes
It should come as no surprise that the objects of plagiarism are typically banal, trite and intellectually worthless themselves. Shallow minds seek out shallow expressions. If there is one double plus good side to Melania Trump's wholesale plagiarizing of Michelle Obama's 2008 convention speech, it is that it reveals the utter vacuity of the original:
America, you were already dead.
...you work hard for what you want in life, that your word is your bond and you do what you say you’re going to do. That you treat people with dignity and respect... the only limit to the height of your achievements is the reach of your dreams and your willingness to work for them.A little Rocky theme music, please? Blech! What vacuous tripe. And this is what Ms. Botox-Robot's ghosts thought worthy of driveling from her tiny, perfect lips?
America, you were already dead.
#FamousMelaniaTrumpQuotes
“It was a little cocker spaniel dog… and our little girl—Tricia, the 6-year-old—named it Checkers.”
Friday, July 15, 2016
Can John Cochrane and Jennifer Rubin handle the truth about the lump-of-labor fallacy?
An open letter to John Cochrane and Jennifer Rubin
Dear John Cochrane and Jennifer Rubin,
I read with interest your column, Jennifer, which led me to your chapter, John, in Blueprint for America on trade and immigration. I have studied the history of the lump-of-labor fallacy claim for nearly 20 years and have have published several articles dealing with that history. I have to wonder if there is any other assertion that has endured for so long, produced so little evidence, ignored all refutation and enjoyed so much authoritative consensus as the lump-of-labor fallacy claim.
Let me repeat, so as not to be misunderstood: I am talking about the bogus fallacy claim and not the fallacy itself. The claim consists of two parts, one of which is self-evidently true and the other of which is not proven. The self-evident part is that there is not a fixed amount of work to be done. The unproven part is that belief to the contrary -- that there is only so much work to be done -- is the driving force or the "idea behind" opposition to some policies and support for others.
Not proven is an understatement. In my research of 236 years of the fallacy claim, I have come across very few examples of claimants offering any evidence whatsoever for the existence of the belief. In a virtuoso display of circular reasoning, support for or opposition to particular policies is offered as prima facie evidence for the fallacious belief, which is then posited as the motive for support or opposition to those particular policies.
The claim has been refuted definitively by several economists, including A. C. Pigou and Maurice Dobb, but claimants have never addressed or even acknowledged those counter-arguments. Last month, Omar al-Ubaydli of George Mason University and the Mercatus Center attributed advocacy for shorter hours of work to belief in the lump-of-labor fallacy. I subsequently invited Omar to an ethical debate on the substance of the fallacy claim. I would like to extend the same invitation to John Cochrane. Here is an overview of my exchange with Omar.
A few days ago, in an interview in Foreign Affairs, Kwasi Kwarteng, a Conservative member of parliament in U.K. made some very perceptive remarks about whether people's perceptions were driven by belief in a lump-of-labor or by other perceptions, regardless of whether those perceptions are accurate:
Cheers,
Tom Walker [Sandwichman]
Dear John Cochrane and Jennifer Rubin,
I read with interest your column, Jennifer, which led me to your chapter, John, in Blueprint for America on trade and immigration. I have studied the history of the lump-of-labor fallacy claim for nearly 20 years and have have published several articles dealing with that history. I have to wonder if there is any other assertion that has endured for so long, produced so little evidence, ignored all refutation and enjoyed so much authoritative consensus as the lump-of-labor fallacy claim.
Let me repeat, so as not to be misunderstood: I am talking about the bogus fallacy claim and not the fallacy itself. The claim consists of two parts, one of which is self-evidently true and the other of which is not proven. The self-evident part is that there is not a fixed amount of work to be done. The unproven part is that belief to the contrary -- that there is only so much work to be done -- is the driving force or the "idea behind" opposition to some policies and support for others.
Not proven is an understatement. In my research of 236 years of the fallacy claim, I have come across very few examples of claimants offering any evidence whatsoever for the existence of the belief. In a virtuoso display of circular reasoning, support for or opposition to particular policies is offered as prima facie evidence for the fallacious belief, which is then posited as the motive for support or opposition to those particular policies.
The claim has been refuted definitively by several economists, including A. C. Pigou and Maurice Dobb, but claimants have never addressed or even acknowledged those counter-arguments. Last month, Omar al-Ubaydli of George Mason University and the Mercatus Center attributed advocacy for shorter hours of work to belief in the lump-of-labor fallacy. I subsequently invited Omar to an ethical debate on the substance of the fallacy claim. I would like to extend the same invitation to John Cochrane. Here is an overview of my exchange with Omar.
A few days ago, in an interview in Foreign Affairs, Kwasi Kwarteng, a Conservative member of parliament in U.K. made some very perceptive remarks about whether people's perceptions were driven by belief in a lump-of-labor or by other perceptions, regardless of whether those perceptions are accurate:
A lot of clever people talk about the “lump of labor fallacy” and all the rest of it, but there are lots of different economic theories involved. But the perception was what drove the politics, not the economic theory. In large parts of rural England—a town like Boston, which your own town of Boston is named after—the perception was that things were changing, life wasn't getting better for quote-unquote indigenous people, and they voted against that.The perception that "life is not getting better" is subjective and is in comparison to some retrospective expectation -- life has not improved "as much as I thought it would." Economists are saying a rather astonishing thing when they "view with contempt" the presumably rational economic actors' satisfaction and expectations. They are claiming that subjective utility is wrong. Think about that.
Cheers,
Tom Walker [Sandwichman]
Thursday, July 14, 2016
Has Elizabeth Warren Called For "Jail Time" For Global Warming Deniers?
On July 11 Senator Elizabeth Warren (D-MA) gave a speech in the US Senate denouncing funding of global warming denying scientists and publicists and related think tanks by fossil fuel companies and related interests. I am not going to comment on that for the simple reason that some of these people and their political allies claim that those arguing there is global warming are also receiving funding from biased sources in a public choice sort of manner. Rather I think that people's arguments should be judged on their own grounds, not on who is or is not funding the research.
As it is, Warren's speech has triggered some very bizarre and extreme discussion in various quarters of the internet, especially by libertarians unhappy with her. Among the claims floating around on Facebook and elsewhere of demanding that the people she criticized should serve jail time. This claim is simply false, she said nothing along such lines. Probably the source of these claims is that she was speaking in favor of a bill (that will not pass) to investigate funding by entities such as Exxon Mobil of research that questions global warming when their own internal data agrees that there is global warming and likely due to human actions. But this is against these companies, not the scientists and individuals involved. As it is I want to look at what she did say and how it relates to the latest developments in the ongoing arguments over global warming.
(BTW, I prefer this older terminology, which indeed highlights the central issue, with "climate change" being a misleading and frankly stupid label, given that climate is always changing. The question is how and why and in what direction is it changing, apologies to all who have gotten all into saying "climate change" when what they really mean is "global warming." (and, yes, I know that overall global warming coincides with cooling in certain specific locations, tough))
Sen.Warren spent quite a lot of time on the general issue of funding by fossil fuel companies, but in the end her specific comments focused on two individuals and one think tank, the Science and Public Policy Institute (which called the "Institute for Science and Public Policy"). In fact she did not talk about its funding (which is obscure, although it is thought that Exxon Mobil has provided some), but in fact focused more on the two individuals, both of whom have served as Science Adviser of the institute. Both are prominent global warming deniers, but differ substantially from each other despite agreeing broadly on the climate issue.
The first is Willie Soon, an aeronautical engineer who has published articles in seriously respectable climatology journals, even if very controversial articles. In recent years he has received over a million US $ in funding from fossil fuel companies and related sources, and Warren highlighted this. But I think the real question is why he has been unable to get funding from more conventional sources, a point that his supporters would say is due to prejudice and bias against his views by those sources, a reason why I do not want to focus just on these sources. So, what is Soon's argument?
He is probably the leading advocate of the idea that most changes in average global temperature are driven by changes in solar radiance, which is thought to be strongly correlated with sunspots, ironically, that more sunspots indicate more radiance and hence higher average global temperatures. He made this argument in a major paper published in Climate Research in 2003. This paper triggered a lot of controversy, including at the journal, where members of the editorial board resigned over its publication. However, this is not a simple matter. For one thing, it is widely accepted that there probably is a relation between more sunspots and higher global temperatures, with the low sunspot activity and the global cooling during the "Maunder Minimum" period in the late 1600s and early 1700s and example, with Soon writing a book about this. The problem has been with his claim (along with several coauthors) that this is little input from human activities, with the solar flux being the major driving force, including right now.
This is where Soon has gotten into trouble with serious scientists who accept that there probably is this relation between solar radiance/sunspots and global temperature. What has happened since 2003? Well in fact we have been seeing a noticeably lower level of sunspots, which according to Soon's view should lead to global cooling. Now indeed it may have had such an effect, with this possibly explaining the slowdown in the rate of average global temperature increase that occurred during 2003-2009 or so. Of course some global warming deniers made much of this slowdown and even said it might turn into outright cooling.
But here is the rub, to the extent this slowdown in sunspots was leading to more cooling, it did not fully offset the global temperature trend. Something else kept it going up, even if more slowly for a few years. The obvious main factor is human activity, especially further accumulations of greenhouse gases. Then we have what has happened in more recent years: global average temperature increase has re-accelerated to a dramatic level. Soon's sunspot effect has simply been completely swamped. This has led to a complete collapse in any support for his broader argument among most climate scientists. It is no wonder that he is unable to get any funding from conventional sources.
Then we come to the other individual, and on this one I think Warren has him dead to rights, although with him funding sources are not the main issue. We are talking about Christopher Monckton, Third Viscount of Brenchley, former Director of Research for the UK Independence Party, and Soon's successor as Science Adviser at the Science Institute for Public Policy. Lord Monckton has testified three times before US congressional committees on global climate issues, usually following the arguments of Soon, with at least one congressman (according to Warren) declaring him to be the "world's leading expert" on these issues. Oh, serious gag.
For starters, unlike Soon, he has zero scientific credentials to discuss any of this in any serious way other than as a gasbag publicist and PR propagandist. His academic degrees are in classics and journalism. He has been around and has had quite a history on many things, most of which are irrelevant to this point. But something that may not be irrelevant is that he is a major fraud and charlatan. He has repeatedly claimed to be a "member of the House of Lords" in Britain. Well, he is not. He is a peer due to inheritance from his late father, but since 1999 peers by inheritance are not automatically members of the House of Lords, and indeed the vast majority are not,although some are. He is among those who are not.
Regarding his discussions of climate issues, he has engaged in extreme rhetoric regarding scientists who disagree with them. He is a conspiracy theorist charging them with seeking a "totalitarian world government" and also being akin to "Hitler Youth." This sort of stuff is standard for hysterical Fox News commentators and radio hacks, but is completely unacceptable in scientific discourse. Apparently he accepts that humans do generate gases that tigger a greenhouse effect, but like Soon he argues that this is unimportant, and that "global warming is a myth."
Let me note that not all "climate contrarians" are in the same pile of poop that Soon and Monckton are. Thus we have Patrick Michaels who directs climate research at the libertarian Cato Institute. Michaels, whom I have known for more than 40 years, has published in journals such as Nature and Science and has made serious criticisms of details of widely used climate models. Despite that he has long accepted that global warming is happening and that human activity is substantially contributing to it. However, he has long argued that the rate of temperature increase will probably not be as great as the mean forecasts of the main international groups, and he has also gone further to argue based on his libertarian position that the costs of actions are likely to outweigh the benefits. Evidence from the last few years suggest that he may be wrong about the temperature projections, although anything can happen and he might yet be proved right. As for the bottom line policy issue, I have long pointed out to him that he is a climatologist and not an economist and should probably stick to that (I recognize that there are serious and ongoing debates over exactly what should be done).
As for all these weird and paranoid charges that Warren (or others) are seeking to put Soon and Monckton (and others?) in jail, this appears to come from Sheldon Whitehouse calling for lawsuits against the major companies involved in funding global warming denying research. But lawsuits do not imply jail time. I suspect that the source of this is from the behavior of their own allies, in particular, Senator James Inhofe. In 2010, when emails by Michael Mann and James Hanson were hacked leading to the "Climategate" rhumba that supposedly showed plots and conspiracies to bias scientific research, Innhofe called for the US Department of Justice investigate bringing criminal charges against them. That could have meant jail time for them, but nothing came of that. I also note that following all this former Virginia Attorney General Cuccinelli, who ran for governor, brought a suit against the University of Virginia for emails that Michael Mann had sent when he was on its faculty, supposedly to expose all this awful plotting. His suit failed in court.
So my bottom line is that the libertarians all freaked out that Warren is out to put them or their friends in jail are simply projecting the behavior of their own allies, especially Sen. Inhofe, who really did make efforts to jail their opponents, even when the only crime that seems to have happened in that case was the hacking of their emails, not that anybody was ever caught or charged in that matter.
Barkley Rosser
As it is, Warren's speech has triggered some very bizarre and extreme discussion in various quarters of the internet, especially by libertarians unhappy with her. Among the claims floating around on Facebook and elsewhere of demanding that the people she criticized should serve jail time. This claim is simply false, she said nothing along such lines. Probably the source of these claims is that she was speaking in favor of a bill (that will not pass) to investigate funding by entities such as Exxon Mobil of research that questions global warming when their own internal data agrees that there is global warming and likely due to human actions. But this is against these companies, not the scientists and individuals involved. As it is I want to look at what she did say and how it relates to the latest developments in the ongoing arguments over global warming.
(BTW, I prefer this older terminology, which indeed highlights the central issue, with "climate change" being a misleading and frankly stupid label, given that climate is always changing. The question is how and why and in what direction is it changing, apologies to all who have gotten all into saying "climate change" when what they really mean is "global warming." (and, yes, I know that overall global warming coincides with cooling in certain specific locations, tough))
Sen.Warren spent quite a lot of time on the general issue of funding by fossil fuel companies, but in the end her specific comments focused on two individuals and one think tank, the Science and Public Policy Institute (which called the "Institute for Science and Public Policy"). In fact she did not talk about its funding (which is obscure, although it is thought that Exxon Mobil has provided some), but in fact focused more on the two individuals, both of whom have served as Science Adviser of the institute. Both are prominent global warming deniers, but differ substantially from each other despite agreeing broadly on the climate issue.
The first is Willie Soon, an aeronautical engineer who has published articles in seriously respectable climatology journals, even if very controversial articles. In recent years he has received over a million US $ in funding from fossil fuel companies and related sources, and Warren highlighted this. But I think the real question is why he has been unable to get funding from more conventional sources, a point that his supporters would say is due to prejudice and bias against his views by those sources, a reason why I do not want to focus just on these sources. So, what is Soon's argument?
He is probably the leading advocate of the idea that most changes in average global temperature are driven by changes in solar radiance, which is thought to be strongly correlated with sunspots, ironically, that more sunspots indicate more radiance and hence higher average global temperatures. He made this argument in a major paper published in Climate Research in 2003. This paper triggered a lot of controversy, including at the journal, where members of the editorial board resigned over its publication. However, this is not a simple matter. For one thing, it is widely accepted that there probably is a relation between more sunspots and higher global temperatures, with the low sunspot activity and the global cooling during the "Maunder Minimum" period in the late 1600s and early 1700s and example, with Soon writing a book about this. The problem has been with his claim (along with several coauthors) that this is little input from human activities, with the solar flux being the major driving force, including right now.
This is where Soon has gotten into trouble with serious scientists who accept that there probably is this relation between solar radiance/sunspots and global temperature. What has happened since 2003? Well in fact we have been seeing a noticeably lower level of sunspots, which according to Soon's view should lead to global cooling. Now indeed it may have had such an effect, with this possibly explaining the slowdown in the rate of average global temperature increase that occurred during 2003-2009 or so. Of course some global warming deniers made much of this slowdown and even said it might turn into outright cooling.
But here is the rub, to the extent this slowdown in sunspots was leading to more cooling, it did not fully offset the global temperature trend. Something else kept it going up, even if more slowly for a few years. The obvious main factor is human activity, especially further accumulations of greenhouse gases. Then we have what has happened in more recent years: global average temperature increase has re-accelerated to a dramatic level. Soon's sunspot effect has simply been completely swamped. This has led to a complete collapse in any support for his broader argument among most climate scientists. It is no wonder that he is unable to get any funding from conventional sources.
Then we come to the other individual, and on this one I think Warren has him dead to rights, although with him funding sources are not the main issue. We are talking about Christopher Monckton, Third Viscount of Brenchley, former Director of Research for the UK Independence Party, and Soon's successor as Science Adviser at the Science Institute for Public Policy. Lord Monckton has testified three times before US congressional committees on global climate issues, usually following the arguments of Soon, with at least one congressman (according to Warren) declaring him to be the "world's leading expert" on these issues. Oh, serious gag.
For starters, unlike Soon, he has zero scientific credentials to discuss any of this in any serious way other than as a gasbag publicist and PR propagandist. His academic degrees are in classics and journalism. He has been around and has had quite a history on many things, most of which are irrelevant to this point. But something that may not be irrelevant is that he is a major fraud and charlatan. He has repeatedly claimed to be a "member of the House of Lords" in Britain. Well, he is not. He is a peer due to inheritance from his late father, but since 1999 peers by inheritance are not automatically members of the House of Lords, and indeed the vast majority are not,although some are. He is among those who are not.
Regarding his discussions of climate issues, he has engaged in extreme rhetoric regarding scientists who disagree with them. He is a conspiracy theorist charging them with seeking a "totalitarian world government" and also being akin to "Hitler Youth." This sort of stuff is standard for hysterical Fox News commentators and radio hacks, but is completely unacceptable in scientific discourse. Apparently he accepts that humans do generate gases that tigger a greenhouse effect, but like Soon he argues that this is unimportant, and that "global warming is a myth."
Let me note that not all "climate contrarians" are in the same pile of poop that Soon and Monckton are. Thus we have Patrick Michaels who directs climate research at the libertarian Cato Institute. Michaels, whom I have known for more than 40 years, has published in journals such as Nature and Science and has made serious criticisms of details of widely used climate models. Despite that he has long accepted that global warming is happening and that human activity is substantially contributing to it. However, he has long argued that the rate of temperature increase will probably not be as great as the mean forecasts of the main international groups, and he has also gone further to argue based on his libertarian position that the costs of actions are likely to outweigh the benefits. Evidence from the last few years suggest that he may be wrong about the temperature projections, although anything can happen and he might yet be proved right. As for the bottom line policy issue, I have long pointed out to him that he is a climatologist and not an economist and should probably stick to that (I recognize that there are serious and ongoing debates over exactly what should be done).
As for all these weird and paranoid charges that Warren (or others) are seeking to put Soon and Monckton (and others?) in jail, this appears to come from Sheldon Whitehouse calling for lawsuits against the major companies involved in funding global warming denying research. But lawsuits do not imply jail time. I suspect that the source of this is from the behavior of their own allies, in particular, Senator James Inhofe. In 2010, when emails by Michael Mann and James Hanson were hacked leading to the "Climategate" rhumba that supposedly showed plots and conspiracies to bias scientific research, Innhofe called for the US Department of Justice investigate bringing criminal charges against them. That could have meant jail time for them, but nothing came of that. I also note that following all this former Virginia Attorney General Cuccinelli, who ran for governor, brought a suit against the University of Virginia for emails that Michael Mann had sent when he was on its faculty, supposedly to expose all this awful plotting. His suit failed in court.
So my bottom line is that the libertarians all freaked out that Warren is out to put them or their friends in jail are simply projecting the behavior of their own allies, especially Sen. Inhofe, who really did make efforts to jail their opponents, even when the only crime that seems to have happened in that case was the hacking of their emails, not that anybody was ever caught or charged in that matter.
Barkley Rosser
Peter Thiel’s Ignorance of Macroeconomic History
Brad DeLong introduces us to libertarian Peter Thiel:
Thiel is speaking at the Republican National Convention… Peter Thiel has many screws loose. He says that the last time you could be optimistic about American politics and regard it as healthy was 1920--before the granting of the vote to women and "welfare beneficiaries" put American politics permanently on the wrong trackBrad provides this from 2009. I want to pick up the following from Mr. Thiel:
the last economic depression in the United States that did not result in massive government intervention was the collapse of 1920–21. It was sharp but short, and entailed the sort of Schumpeterian “creative destruction” that could lead to a real boom. The decade that followed — the roaring 1920s — was so strong that historians have forgotten the depression that started it.I guess Mr. Thiel does not read Econospeak as we have had several posts discussing this episode in our macroeconomic history. One on Christmas Eve 2014 by Barkley notes:
My post argued that there was monetary stimulus in 1921 and noted that even though there was downward stickiness of wages in 1945-46 and also in 1982, there were rapid bouncebacks with monetary policy in particular being stimulative during those episodes (and fiscal policy also being so in the 1982 one under Reagan).The 1920 recession was a deliberate attempt by the FED to lower the price level via tight monetary policy similar to the deliberate attempt by the Volcker FED to dramatically lower inflation. Once the task was done – the FED reversed course which is why these two recoveries occurred. Is Mr. Thiel really telling us that the Reagan era resulted in massive government intervention? Will he make this claim before the Republican National Convention?
Wednesday, July 13, 2016
The Bully Victim Meme
Crying "bully!" is the new red-baiting. Now that Bernie Sanders has finally stopped bullying Hillary Clinton -- by endorsing her -- the nefarious BernieBro mob has crossed the Atlantic to harass and intimidate neo-liberal, corporatist war-mongering Blairites.
The latest outrage against civility was vile left-wing fiend Jeremy Corbyn having the temerity to VOTE in a Labour Party National Executive Committee decision on whether to have a secret ballot. According to NEC member Johanna Baxter, Corbyn's vote was an endorsement of bullying. Say what?
The leader of the Labour party voted against the proposal that we conduct our vote in private in order to protect NEC members who were receiving threats, bullying and intimidation. He voted against it. He endorsed bullying, threats and intimidation, by the fact of that vote.
The only reason to vote against that is so the intimidation can continue. It’s the most shameful act I have ever seen. He showed his true colours in that vote.The most shameful act Johanna Baxter has ever seen and this a mere week after publication of the Chilcot Report! Voting! The logic is impeccable. If you don't vote the way Johanna Baxter wants you to vote you are a bully because the only reason for voting some other way is to endorse bullying. Well that's obvious. It couldn't be about accountability.
Of course, the "you're a bully" troll card can only be played effectively by those who have the media megaphone. Red baiting.
Tuesday, July 12, 2016
Even Kwasi Kwarteng Agrees with the Sandwichman!
The Conservative Member of Parliament for Spelthorne, Kwasi Kwarteng -- who just happens to also be an economic historian -- spoke with Stuart Reid of Foreign Affairs about the EU referendum result and said a very good thing (meaning, of course, something the Sandwichman agrees with):
A lot of clever people talk about the “lump of labor fallacy” and all the rest of it, but there are lots of different economic theories involved. But the perception was what drove the politics, not the economic theory. In large parts of rural England—a town like Boston, which your own town of Boston is named after—the perception was that things were changing, life wasn't getting better for quote-unquote indigenous people, and they voted against that.
...
We have a democracy. Every democracy in the history of the world will have had people losing elections saying, "The people were misinformed, the people were ignorant, the people didn't know about A, B, or C." That always happens. That's what losing an election feels like. No one who ever lost an election said, "The people were totally informed and totally accurate and made a rational choice and didn't vote for me." We have a democratic system. Now, if we didn't like that, we could have teams of experts and economists and smart people with a Ph.D., but we don't.
Thursday, July 7, 2016
Wednesday, July 6, 2016
Bernie Flips California!: 52% to 48%
This is what was reported on June 8 as the "final result" of the California primary, with "100.0%" of precincts reporting:
With no outstanding uncounted ballots, the vote totals are 2,745,293 for Clinton (53.1%) and 2,381,714 for Sanders (46%). Bernie Sanders received a little over 52% of the 1,684,384
ballots that were either for Sanders or Clinton that remained uncounted on June 8 when the "final result" was reported. The percentage spread between the two stands at 7.1% -- down from a reported "final" margin of 12.6% on June 8.
In other election news-- just to be clear -- the Federal Bureau of Investigation will not be recommending criminal charges against Secretary Clinton, announced FBI Director James B. Comey today in Washington, following an impromptu meeting last week between Attorney General Loretta Lynch and former President William Clinton. Director Comey stressed that the exoneration of Secretary Clinton should not be viewed as a precedent of leniency that might apply to anyone else:
To be clear, this is not to suggest that in similar circumstances, a person who engaged in this activity would face no consequences. To the contrary, those individuals are often subject to security or administrative sanctions. But that is not what we are deciding now.
Monday, July 4, 2016
Trade and Jobs and Fallacies of Composition
Paul Krugman (partly) takes on David Autor and his coauthors (co-Autors?), who found large impacts of net imports from China on manufacturing jobs in the US during the period leading up to the 2008 financial crisis. Krugman takes the position that, in theory, any loss of employment through the trade channel can be offset by more expansionary monetary and fiscal policy, so that trade deficits per se are not consequential (in this respect). He notes that policy was not expansive enough during the heyday of the China deficit, so there was an employment impact, but smaller than the one estimated by Autor et al., who don’t take into account policy spillovers.
Dean Baker takes Krugman to task for relying on unemployment rather than employment data. If you look at the number of jobs in the economy rather than the number of jobless workers looking for work, he says, the China effect is much larger. He also points in passing to the potential impact of trade on wages, an argument made powerfully by Dani Rodrik almost twenty years ago and not, as far as I know, rebutted.
Here I want to make a different point, that Krugman’s analysis suffers from a serious fallacy of composition of its own. The key point has to do with the national income accounting framework used to measure trade and capital flows, the one that’s in the back of every economist’s mind (or should be) when thinking about issues like this.
Trade is the main component of the current account and measured as net exports or imports. It’s a component of GDP, which is linked to employment through an Okun’s Law mechanism, but, as Krugman points out, policy makers have the ability, at least in part, to offset fluctuations in NX with policies to alter government spending, taxes (and therefore consumption) and investment (via interest rates). So far, so good. But here’s the thing: assuming no changes in the holdings of currency, the balances on the current and capital account are identically the same. (The capital account measures net inflow or outflow of capital—financial assets.) All else being equal, the US trade deficit with China corresponds to an equal and opposite capital inflow, i.e. borrowing.
Economists are used to thinking of the national accounts as separate boxes. You can analyze trade with China today, sleep on it, and then tomorrow you can analyze capital flows. Much economic writing treats these items as things that require some process out there in Marketland to make them equal. Not so, however: the accounting boxes are for mental and measurement convenience, but the two items are identical: they’re the same thing, the way a purchase and a sale are the same thing, not two different things.
When the US runs a trade deficit with China it is borrowing in some fashion to finance its net purchases. (I realize, of course, that the trade-and-finance system works multilaterally, and that China could exchange a portion of its dollar-denominated assets for assets in other countries, with subsequent rounds of displacement effects, but I’m keeping things simple here.) This is the same logic that we are familiar with at the individual level. If you spend more than your income, to buy a house or car for example, you are simultaneously borrowing money to cover the difference. You may be using an auto dealer’s trade credit, a bank’s mortgage facility, credit cards or some other device, but the financing in some form is identically what the purchase-in-excess-of-income means. It would make no sense to analyze the purchase and treat the financing as a separate, unrelated topic.
So back to China. How did the US finance its humongous trade deficit with that country during the glory years of the early to mid 00's? To a large extent, this was achieved by selling mortgage-backed securities to the Chinese. At the peak, a quarter of Fannie Mae and Freddie Mac loans were Chinese-held, and there is no reason to believe their share of non-GSE mortgages was much different. In other words, to purchase Chinese imports in excess of their international income (earned through exports), US consumers were building up debt, especially through mortgage finance, as a vehicle for borrowing from China.
Bottom line: the immense trade deficit during this period took the form of a housing credit bubble. If you want to analyze the impact of unbalanced trade with China you have to look at the whole thing. It’s reasonable to ask, what would have been the economic effect of these deficits if they had been financed differently—through larger fiscal deficits, for instance, or more corporate debt or some other channel? It’s not clear how policy choices could have made this happen, but hypothetical counterfactuals, as Krugman noted in his blog post, are the right way to go.
The big picture, from my point of view, is that the US is a chronic deficit country and has been since the 1970s. It has not developed an export capacity capable of generating income at a level comparable to its somewhat-full-employment import demand, but it has been very successful at generating financial assets that foreign wealth holders wish to accumulate. (During the final phase of the housing credit bubble this foreign demand was nearly all official.) To repeat, these are not separate events; it’s one event seen from two perspectives. China is an important part of this story, but we can’t understand how it connects to US economic development, including employment effects, by looking only at the spending side and not the financing.
Dean Baker takes Krugman to task for relying on unemployment rather than employment data. If you look at the number of jobs in the economy rather than the number of jobless workers looking for work, he says, the China effect is much larger. He also points in passing to the potential impact of trade on wages, an argument made powerfully by Dani Rodrik almost twenty years ago and not, as far as I know, rebutted.
Here I want to make a different point, that Krugman’s analysis suffers from a serious fallacy of composition of its own. The key point has to do with the national income accounting framework used to measure trade and capital flows, the one that’s in the back of every economist’s mind (or should be) when thinking about issues like this.
Trade is the main component of the current account and measured as net exports or imports. It’s a component of GDP, which is linked to employment through an Okun’s Law mechanism, but, as Krugman points out, policy makers have the ability, at least in part, to offset fluctuations in NX with policies to alter government spending, taxes (and therefore consumption) and investment (via interest rates). So far, so good. But here’s the thing: assuming no changes in the holdings of currency, the balances on the current and capital account are identically the same. (The capital account measures net inflow or outflow of capital—financial assets.) All else being equal, the US trade deficit with China corresponds to an equal and opposite capital inflow, i.e. borrowing.
Economists are used to thinking of the national accounts as separate boxes. You can analyze trade with China today, sleep on it, and then tomorrow you can analyze capital flows. Much economic writing treats these items as things that require some process out there in Marketland to make them equal. Not so, however: the accounting boxes are for mental and measurement convenience, but the two items are identical: they’re the same thing, the way a purchase and a sale are the same thing, not two different things.
When the US runs a trade deficit with China it is borrowing in some fashion to finance its net purchases. (I realize, of course, that the trade-and-finance system works multilaterally, and that China could exchange a portion of its dollar-denominated assets for assets in other countries, with subsequent rounds of displacement effects, but I’m keeping things simple here.) This is the same logic that we are familiar with at the individual level. If you spend more than your income, to buy a house or car for example, you are simultaneously borrowing money to cover the difference. You may be using an auto dealer’s trade credit, a bank’s mortgage facility, credit cards or some other device, but the financing in some form is identically what the purchase-in-excess-of-income means. It would make no sense to analyze the purchase and treat the financing as a separate, unrelated topic.
So back to China. How did the US finance its humongous trade deficit with that country during the glory years of the early to mid 00's? To a large extent, this was achieved by selling mortgage-backed securities to the Chinese. At the peak, a quarter of Fannie Mae and Freddie Mac loans were Chinese-held, and there is no reason to believe their share of non-GSE mortgages was much different. In other words, to purchase Chinese imports in excess of their international income (earned through exports), US consumers were building up debt, especially through mortgage finance, as a vehicle for borrowing from China.
Bottom line: the immense trade deficit during this period took the form of a housing credit bubble. If you want to analyze the impact of unbalanced trade with China you have to look at the whole thing. It’s reasonable to ask, what would have been the economic effect of these deficits if they had been financed differently—through larger fiscal deficits, for instance, or more corporate debt or some other channel? It’s not clear how policy choices could have made this happen, but hypothetical counterfactuals, as Krugman noted in his blog post, are the right way to go.
The big picture, from my point of view, is that the US is a chronic deficit country and has been since the 1970s. It has not developed an export capacity capable of generating income at a level comparable to its somewhat-full-employment import demand, but it has been very successful at generating financial assets that foreign wealth holders wish to accumulate. (During the final phase of the housing credit bubble this foreign demand was nearly all official.) To repeat, these are not separate events; it’s one event seen from two perspectives. China is an important part of this story, but we can’t understand how it connects to US economic development, including employment effects, by looking only at the spending side and not the financing.
Sunday, July 3, 2016
Why Are Experts Ignoring Voters?
There. I've fixed the question to make it more pertinent.
The irony is that the expert/voter division of responsibility is supposed to occur along the lines of the distinction between facts and values. According to this mystical fact/value scenario, the voters determine the ends and the experts then advise the government on the means to achieve those ends.
No, seriously. Stop laughing! Assuming that experts were correct in their assessments of the economic consequences of Brexit, who is to say that instead of ignoring the experts, the voters simply gave a lower priority to those facts than to other values?
I'm not suggesting that is what happened. No, the experts have disgraced themselves with self-serving "absolute" distinctions between fact and value that they transgress with impunity but that insulate them from ethical critique. The experts make a habit not only of ignoring non-experts but of ridiculing them -- and bragging about their condescension:
Do you hear that, voters? The experts view your ideas with contempt. They brag about viewing your ideas with contempt. They plagiarize each other bragging about how much contempt they have for your ideas. Now what are going to do about it? Just ignore them?
On the other hand, there are also some experts' ideas that other experts have critiqued and refuted. Rather than view those refutations with contempt, the former set of experts simply ignore the latter's critique. Here are my candidates for experts' ideas -- old and new -- that voters ought not only to ignore but to positively view with contempt because their promulgators have demonstrated contempt for basic standards of scholarship:
The irony is that the expert/voter division of responsibility is supposed to occur along the lines of the distinction between facts and values. According to this mystical fact/value scenario, the voters determine the ends and the experts then advise the government on the means to achieve those ends.
No, seriously. Stop laughing! Assuming that experts were correct in their assessments of the economic consequences of Brexit, who is to say that instead of ignoring the experts, the voters simply gave a lower priority to those facts than to other values?
I'm not suggesting that is what happened. No, the experts have disgraced themselves with self-serving "absolute" distinctions between fact and value that they transgress with impunity but that insulate them from ethical critique. The experts make a habit not only of ignoring non-experts but of ridiculing them -- and bragging about their condescension:
As the derisive name suggests, it's an idea economists view with contempt... -- Paul KrugmanAnd even plagiarizing each other bragging about their condescension:
 |
(Pekka Ilinakunnas,
Jan van Ours, Vegard Skirbekk, and Matthias Weiss)
|
On the other hand, there are also some experts' ideas that other experts have critiqued and refuted. Rather than view those refutations with contempt, the former set of experts simply ignore the latter's critique. Here are my candidates for experts' ideas -- old and new -- that voters ought not only to ignore but to positively view with contempt because their promulgators have demonstrated contempt for basic standards of scholarship:
- Non-accelerating inflation rate of unemployment
- IS-LM "Keynesianism"
- System of natural liberty
- Growth imperative
- Net present value discounting
- Kaldor-Hicks compensation
- Efficiency/equity trade-off
- Labor/leisure trade-off
- Ceteris paribus
- Equilibrium
- Say's Law of Markets
- Wages-fund doctrine
- Sticky wages
- Self-adjusting economic systems
- Built-in mechanisms
- Supply and demand
- Pareto improvement
- Microfoundations
- Rational choice
- Coase theorem
- Efficient market hypothesis
- Spontaneous generation
- Phlogiston
- Phrenology
Saturday, July 2, 2016
Which Way Is Up? How Much Schmexit After The Brexit
Well, all those experts forecasting general global economic collapse after a Brexit vote look kind of silly. Ha ha ha! So stocks around the world crashed hard the days right after the vote (Italy's market down more than 15% on the day after), but this past week they have pretty much gone up everywhere quite vigorously, in many countries now higher than before the vote. Even in Britain, the most closely watched index, the FTSE-100, has seen its largest five day rise since 2011 and is now more than 3% higher than it was the day before the vote. Yeah, the pound has gone back down to around $1.32 from $1,50 on the day of the vote, after bouncing back up to nearly $1.40 from an initial low after the vote of $1.31. But, hey, that lower pound should help prevent recession by expanding exports and keeping out imports. And with Mark Carney, the Bank of England governor, promising looser monetary policy on Thursday, and Chancellor of the Exchequer, George Osborne, abandoning his heightened austerity to stave off deficts, we can expect more stimulus from a still lower pound, not to mention no fiscal austerity. Why things are just peachy keen! Brexit-Schmexit it is!
Ah, but then we have things going every which way to the point that it is hard to see which way is up. The positives seem to be driven by the negatives. So, the British pound falls in anticipation of a decline in exports in the future to the EU, with this supposedly leading also to a decline in foreign direct investment by companies wanting access to those EU markets. But then this decline looks to increase exports and maybe even foreign direct investment to take advantage of this export-led growth. Which is it or will be? Indeed, the picture is pretty muddied. While the FTSE-100 has increased, it is noted that it consists mostly of large firms involved in exporting. In contrast, according to the Financial Times Weekend, the much less watched FTSE-250, with more firms focused on the domestic market, while rising in recent days from a low around 15,000 is only at about 16,000 compared with about 17,400 on the day of the Brexit vote. Furthermore, the FTSE bank stock index is going nowhere around 350 after rising from a low of 340, compared with about 420 on the day of the vote. But, hey, the more it looks like the British economy is going down, the more it looks like it is going up!
More of this confusion is the optimism arising from Carney's negative assessment on Thursday as well as Osborne's fiscal policy cave on Friday. Wow! There will be monetary stimulus and an even lower pound! But in fact Carney is forecasting if not outright recession then much slower growth, with some of that already happening. So, according again to the FT Weekend, Carney cites among items declining right now to be auto sales, property deals, and business investment. Hmm. And all the FT commentators are calling for UK not to start the actual exit process by holding off invoking Article 50 of the Lisbon Treaty, even as all their European counterparts are requesting that they get on with it to reduce general uncertainty. But this view in UK involves those who think the Brexit should be completely undone by a new referendum, such as Gideon Rachman, those who think that probably won't happen but wish it would and are fearful of all the negative consequences they see, such as Martin Wolf, and even those who support the Brexit, such as Chris Grayling, who is all keen on "the City" getting out from EU regulations, but thinks that "the divorce" must be approached "calmly and methodically," presumably with lots of preliminary negotiations prior to any invocation of Article 50, again with all these commentators simply choosing to ignore that the other EU nations are not at all in a mood for this shilly-shallying.
Then we have the problem that in fact that nobody in the pro-Leave group has put forward any sort of plan, much less one that other EU nations would agree with. With David Cameron resigning and his successor yet to be selected (although that will probably happen soon), and Labour Party leader, Jeremy Corbyn facing strong demands that he resign, one FT writer notes that Britain "has no Plan, no Leader, and no Opposition," a fine howdy-doo indeed. Which way is up is even less clear.
Let me finally note that almost nobody in Britain is talking about the coming loss of EU regional development aid to Britain. While Britain almost assuredly pays more to the EU than the EU pays back (the amounts involved a matter of debate, although it is clear that the net difference claimed by the pro-Brexit group has been much exaggerated), what Britain receives has been heavily directed at its poorer regions, with in some of them very little capital investment occurring that has not been supported in recent years by such aid. It is hard to get exact numbers on this, although regional development aid has been about a third of the EU budget, about the same as its support for CAP. However, for Wales alone, an area that voted for Brexit with 52%, it is slated to receive about 1.5 billion pounds in aid from the EU during 2016. What is striking to me is how little this fact has been publicized. I think that those in these poorer areas of the UK who have voted for Brexit have no idea what they are about to lose. But,hey, Brexit-Schmexit! What goes down must go up!
Barkley Rosser
Ah, but then we have things going every which way to the point that it is hard to see which way is up. The positives seem to be driven by the negatives. So, the British pound falls in anticipation of a decline in exports in the future to the EU, with this supposedly leading also to a decline in foreign direct investment by companies wanting access to those EU markets. But then this decline looks to increase exports and maybe even foreign direct investment to take advantage of this export-led growth. Which is it or will be? Indeed, the picture is pretty muddied. While the FTSE-100 has increased, it is noted that it consists mostly of large firms involved in exporting. In contrast, according to the Financial Times Weekend, the much less watched FTSE-250, with more firms focused on the domestic market, while rising in recent days from a low around 15,000 is only at about 16,000 compared with about 17,400 on the day of the Brexit vote. Furthermore, the FTSE bank stock index is going nowhere around 350 after rising from a low of 340, compared with about 420 on the day of the vote. But, hey, the more it looks like the British economy is going down, the more it looks like it is going up!
More of this confusion is the optimism arising from Carney's negative assessment on Thursday as well as Osborne's fiscal policy cave on Friday. Wow! There will be monetary stimulus and an even lower pound! But in fact Carney is forecasting if not outright recession then much slower growth, with some of that already happening. So, according again to the FT Weekend, Carney cites among items declining right now to be auto sales, property deals, and business investment. Hmm. And all the FT commentators are calling for UK not to start the actual exit process by holding off invoking Article 50 of the Lisbon Treaty, even as all their European counterparts are requesting that they get on with it to reduce general uncertainty. But this view in UK involves those who think the Brexit should be completely undone by a new referendum, such as Gideon Rachman, those who think that probably won't happen but wish it would and are fearful of all the negative consequences they see, such as Martin Wolf, and even those who support the Brexit, such as Chris Grayling, who is all keen on "the City" getting out from EU regulations, but thinks that "the divorce" must be approached "calmly and methodically," presumably with lots of preliminary negotiations prior to any invocation of Article 50, again with all these commentators simply choosing to ignore that the other EU nations are not at all in a mood for this shilly-shallying.
Then we have the problem that in fact that nobody in the pro-Leave group has put forward any sort of plan, much less one that other EU nations would agree with. With David Cameron resigning and his successor yet to be selected (although that will probably happen soon), and Labour Party leader, Jeremy Corbyn facing strong demands that he resign, one FT writer notes that Britain "has no Plan, no Leader, and no Opposition," a fine howdy-doo indeed. Which way is up is even less clear.
Let me finally note that almost nobody in Britain is talking about the coming loss of EU regional development aid to Britain. While Britain almost assuredly pays more to the EU than the EU pays back (the amounts involved a matter of debate, although it is clear that the net difference claimed by the pro-Brexit group has been much exaggerated), what Britain receives has been heavily directed at its poorer regions, with in some of them very little capital investment occurring that has not been supported in recent years by such aid. It is hard to get exact numbers on this, although regional development aid has been about a third of the EU budget, about the same as its support for CAP. However, for Wales alone, an area that voted for Brexit with 52%, it is slated to receive about 1.5 billion pounds in aid from the EU during 2016. What is striking to me is how little this fact has been publicized. I think that those in these poorer areas of the UK who have voted for Brexit have no idea what they are about to lose. But,hey, Brexit-Schmexit! What goes down must go up!
Barkley Rosser
Utter Breakdown of Editorial Standards at the New York Times
How else to describe the publication of this bit of drivel on the political self-identification of college professors? The author, a political scientist at Sarah Lawrence (and Hoover fellow) who used data from the Higher Education Research Institute, claims that the biggest driver of the leftward shift of the professorate is the cataclysmic transformation of New England, where the ratio of liberals to conservatives exploded from 5:1 in 1989 to 28:1 in 2014. Twenty-eight to one! This is across all disciplines and all types of institutions. Pretty astonishing, huh? And nothing like it shows up in any other region of the country.
Now, if I found myself getting numbers like that, the first thing I’d do would be to check under the hood. What’s the overall sample size, and how much of it is from New England? And then I’d get more detailed: what’s the sample frame—how exactly did the surveyors identify the individual professors who got surveyed? Response rates? And are there any indicators that might point to data errors? (Data errors are not unheard of. I worked a couple of years ago with data from one of the most internationally respected survey outfits, and after some email back-and-forths it became clear that there were significant errors for one of the countries in one of its samples.)
But there was no checking the Times story. The author provided no link to a longer technical paper or to the original data set. And the text itself supplied exactly zero information on sampling, not even the N. You’re supposed to take it all on faith.
To return to the heading of this post, the real fault lies with the editors at the Times. Careless or disingenuous authors, some with academic credentials, are a dime a dozen. Work at perhaps the world’s most influential newspapers and you’ll get a flood of these half-baked manuscripts. It all comes down to editorial judgment, and there was a big-time failure in that department.
Now, if I found myself getting numbers like that, the first thing I’d do would be to check under the hood. What’s the overall sample size, and how much of it is from New England? And then I’d get more detailed: what’s the sample frame—how exactly did the surveyors identify the individual professors who got surveyed? Response rates? And are there any indicators that might point to data errors? (Data errors are not unheard of. I worked a couple of years ago with data from one of the most internationally respected survey outfits, and after some email back-and-forths it became clear that there were significant errors for one of the countries in one of its samples.)
But there was no checking the Times story. The author provided no link to a longer technical paper or to the original data set. And the text itself supplied exactly zero information on sampling, not even the N. You’re supposed to take it all on faith.
To return to the heading of this post, the real fault lies with the editors at the Times. Careless or disingenuous authors, some with academic credentials, are a dime a dozen. Work at perhaps the world’s most influential newspapers and you’ll get a flood of these half-baked manuscripts. It all comes down to editorial judgment, and there was a big-time failure in that department.
Friday, July 1, 2016
Why Are Voters Ignoring Experts?
...asks Jean Pisani-Ferry at Project Syndicate. "Why this angry attitude toward the bearers of knowledge and expertise?" he implores. He then speculates on a number of reasons. I would like to suggest a reason that Professor Pisani-Ferry overlooks.
The "experts" systematically ignore the experts. For example, Pisani-Ferry recommends that economists take a more granular approach and:
The "experts" systematically ignore the experts. For example, Pisani-Ferry recommends that economists take a more granular approach and:
...economists should move beyond the (generally correct) observation that such distributional effects can be addressed through taxation and transfers, and work out how exactly that should happen. Yes, if a policy decision leads to aggregate gains, losers can in principle be compensated. But this is easier said than done.Except that this observation is not "generally correct" -- it is unacceptable nonsense. The so-called compensation principle has been studied to death and found to be utterly invalid. Never mind, though, it would be convenient for the experts if it was "generally correct" and if the losers could "in principle be compensated" and that's all that really matters.
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