This is a followup of my recent post here, econospeak.blogspot.com/2016//08/the-man-who-saved-world-from-nuclear.html . That discussed Thomas Schelling's role in developing the "no first use of nuclear weapons" policy over several decades in the late 20th century related to his Nobel-Prize winning idea of focal points. Now I shall be more precise about who and what and how this norm he played such an important role in establishing is breaking down.
Staying within the game theory framework that Schelling operated within, the problem we face now is "cheap talk." This term entered formal game theory discussions in a paper in 1982 in Econometrica by Vince Crawford and P. Sobel, "Strategic Information Transmission." They characterized this as involving 1) being costless,2) non-binding, and 3) unverifiable. The large literature on this since their paper has made it clear that details matter, and that there are many special cases and variations regarding cheap talk and how it can affect real outcomes, which, it is certainly clear it can. Cheap talk can undermine an established game theoretic equilibrium in a world where there are multiple such equilibria, and an agreement such as Schelling's old "meet under the clock at Grand Central Station" focal point can be undermined by cheap talk about, "well, maybe we should meet under the clock at Penn Station instead." Yeah, maybe instead of the norm of no first use of nuclear weapons, we should entertain the possibility of doing so almost randomly if other nations annoy the heck out of us.
So indeed, as I noted in the earlier post, the origin of cheap talk undermining Schelling's hard to establish norm of no first use of nuclear weapons came from Russians surrounding Vladimir Putin in March 2014 at the time of the imposition of economic sanctions by the US and EU over his annexation of Krim in violation of Russia's signing on to the 1994 Budapest Accords that guaranteed the territorial integrity of Ukraine in response to Urkaine giving Russia its pretty numerous nuclear weapons, with the US and UK signing on also, neither of which did anything military when Russia under Putin violated this accord by its annexation of Krim (Crimea).
The first to engage in such cheap talk was Dmitry Kiselev, appointed by Putin to run Russia Today (now RT) and some other media. In March 2014 during the annexation fuss, he reminded the world that Russia could turn the US into "radioactive ash." Not too long after a young military leader, Aleksey Gudovshnikov on Govorit Moskva made fun or worrying about nuclear war, "Why are we so afraid of nuclear war?" noting that both Hiroshima and Nagasaki involved fewer deaths than the fire bombing of Dresden, which is true, but all this was before the invention of the to-this-day-never- deployed and far more destructive H-bomb. This sort of talk has become quite common on various Russian media outlets in the last two years, very cheap talk indeed. ("Russian media learn to love the bomb" 2/23/15, www.bbc.com/news/world-europe-31557254 ). Putin has never uttered a single word suggesting that these individuals, all of them his appointees, have overdone their public remarks.
So here we are now, with many on both the right and left in the US saying that Putin is a good guy who must be taken very very seriously, not to mention his pal in the US adding to the cheap talk in various ways, both questioning repeatedly why we cannot just use those nukes we have whenever we feel like it, as well as approving nuclear proliferation to such nations as Japan and South Korea (Um would either China or Russia be too keen on either of those proliferations? But, oh, this was probaby just "sarcasm," not recognized as such by the evil MSM).
I note another point some have raised in this debate:which nations have actually publicly supported the Schelling focal point of no first use of nuclear weapons. The list is short, including India and North Korea, whose leader was recently talking about nuking New York City.
What is clear is that on the official list the big nuclear powers: US, Russia, China; list themselves as possibly using nukes for defensive purposes, no public adherence to the Schelling no-first-use norm. But this has been for decades a discrete matter, with the signal given that nobody talks about it, no talk cheap or expensive to enforce the norm. It has been a good 40 years since anybody serious in the US (Air Force General Curtis E.LeMay the last) has spoken in such terms. But if one returns to the 1950s one finds very serious people using the Prisoner's Dilemma model of game theory to argue for a first strike, most famously the late John von Neumann, who declared "If it is wise to strike tomorrow [the former Soviet Union], then why not today at 5 o'clock, and if not at 5, then why not at 1 PM?" As it was, von Neumann's great rival in those debates, Tom Schelling, won the day then.
Barkley Rosser
Barkley Rosser
Friday, August 12, 2016
Wednesday, August 10, 2016
The Man Who Saved The World From Nuclear Holocaust During The Cold War
That would be Thomas C. Schelling, now age 95, whom the late Paul Samuelson once stated that Tom was the most intelligent person he ever met, presumably beating out John von Neumann, whom Samuelson argued with about cigars and general equilibrium theory, and his relative by marriage, Kenneth Arrow, a few months younger than Schelling, who is generally viewed as by far the most respected living economist, and who was a coauthor of the most famous and influential paper on the conditions for the existence of general equilibrium. But Samuelson thought Schelling was ultimately smarter than either of them. After all, he got his Nobel in game theory in 2005 with Robert Aumann for his 1960 book, The Strategy of Conflict, which was by all accounts on the bedside table of JFK during the Cuban missile crisis, and Schelling, a technical adviser on the 1964 film, "Dr. Strangelove," was reportedly the main driving force behind establishing a secure "hot line" between the US president and the Soviet leader.
But indeed there is more to this, including exactly why Schelling was given the Nobel Prize, which does come from arguments made in his 1960 book. So not long after Nash provided his game theoretic equilibrium, arguably more general than the strictly competitive Arrow-Debreu-McKenzie solution, and providing the Kakutani fixed point trick beyond Brouwer's that Arrow-Debreu used after him, it became known that for many games there are many Nash equilibria, probably more often than there are for ADM equilibria, for which one can find conditions that guarantee both uniqueness and stability, even if there is good reason to believe that these do not hold in economic reality.
So what Schelling was given the Nobel Prize for, and the idea he pushed that contributed to the ending of the threat of nuclear war that most now take for granted when many experts now say we are in more danger of a global thermonuclear war than we were in at least the later years of the Cold War, was that of focal points. His original example was a group of friends living near NYC who want to meet for dinner but do not agree on where to meet. So, they look for a focal point they can all agree on, and back in 1960 he said that might be under the clock in Grand Central Station.
The focal point that Schelling pushed tirelessly in numerous channels, most of them private but highly placed, was that there should be an internationally agreed upon focal point that there should be no first use of nuclear weapons by any nuclear weapons holder, which, if all agree to it guarantees no nuclear war aside from accidents. There was resistance to this, within the US most notably in the air force, especially from the late Gen. Curtis E. LeMay, who not only advocated the use of nukes in the Cuban missile crisis (when we came much closer to nuclear war than most realize), but also during the Vietnam War. His retirement certainly ended the last serious public opposition to Schelling's focal point, which somewhere during the 1970s quietly came into force without anybody publicly saying so. And as a result "many [very well informed] people" say he was more responsible than anybody else for why there was no nuclear war during the Cold War.
Unfortunately it would seem that a lot of recent loose talk has begun to undermine Schelling's long accepted and established focal point that has restrained a possible global nuclear holocaust for decades. It started with associates of Vladimir Putin during when Russia was annexing Crimea loosely noting that Russia could still nuke New York City. Spacibo, guys. Since then people friendly with Putin in other nations have been making even looser remarks as the nuclear cat is out of the bag. I mean, according to some of them, just why cannot we use nuclear weapons anyway whenever and wherever we want?
For those interested, Tom is scheduled to speak at James Madison University at 4 PM on Wednesday, September 14 in Zane Showker 105, but if you are interested you should check with us about details. I certainly hope that he will be able to give this important lecture.h
Barkley Rosser
But indeed there is more to this, including exactly why Schelling was given the Nobel Prize, which does come from arguments made in his 1960 book. So not long after Nash provided his game theoretic equilibrium, arguably more general than the strictly competitive Arrow-Debreu-McKenzie solution, and providing the Kakutani fixed point trick beyond Brouwer's that Arrow-Debreu used after him, it became known that for many games there are many Nash equilibria, probably more often than there are for ADM equilibria, for which one can find conditions that guarantee both uniqueness and stability, even if there is good reason to believe that these do not hold in economic reality.
So what Schelling was given the Nobel Prize for, and the idea he pushed that contributed to the ending of the threat of nuclear war that most now take for granted when many experts now say we are in more danger of a global thermonuclear war than we were in at least the later years of the Cold War, was that of focal points. His original example was a group of friends living near NYC who want to meet for dinner but do not agree on where to meet. So, they look for a focal point they can all agree on, and back in 1960 he said that might be under the clock in Grand Central Station.
The focal point that Schelling pushed tirelessly in numerous channels, most of them private but highly placed, was that there should be an internationally agreed upon focal point that there should be no first use of nuclear weapons by any nuclear weapons holder, which, if all agree to it guarantees no nuclear war aside from accidents. There was resistance to this, within the US most notably in the air force, especially from the late Gen. Curtis E. LeMay, who not only advocated the use of nukes in the Cuban missile crisis (when we came much closer to nuclear war than most realize), but also during the Vietnam War. His retirement certainly ended the last serious public opposition to Schelling's focal point, which somewhere during the 1970s quietly came into force without anybody publicly saying so. And as a result "many [very well informed] people" say he was more responsible than anybody else for why there was no nuclear war during the Cold War.
Unfortunately it would seem that a lot of recent loose talk has begun to undermine Schelling's long accepted and established focal point that has restrained a possible global nuclear holocaust for decades. It started with associates of Vladimir Putin during when Russia was annexing Crimea loosely noting that Russia could still nuke New York City. Spacibo, guys. Since then people friendly with Putin in other nations have been making even looser remarks as the nuclear cat is out of the bag. I mean, according to some of them, just why cannot we use nuclear weapons anyway whenever and wherever we want?
For those interested, Tom is scheduled to speak at James Madison University at 4 PM on Wednesday, September 14 in Zane Showker 105, but if you are interested you should check with us about details. I certainly hope that he will be able to give this important lecture.h
Barkley Rosser
A Marxist Moment
The best thing about Marxism is that it provides a language for talking about comprehensive, fundamental aspects of society. The worst is that it also imposes a template for this discussion that often doesn’t fit very well.
I just read Daniel Zamora’s When Exclusion Replaces Exploitation: The Condition of the Surplus-Population under Neoliberalism in nonsite. The first half is really excellent. His insight is that the shift from the old left to the new and the rise of modern neoliberalism are in some sense reflections of one another, and both are rooted in the emergence of a relatively distinct “surplus” stratum of the population in developed capitalist countries. (I also associate this view with Loïc Wacquant, whose notion that racial division in the US has shifted from being a means of exploitation to one of exclusion was a basis for Michelle Alexander’s New Jim Crow.) According to this argument, in the bad old days the visible line drawn through society was between the wealthy and the rest of society whose work made this wealth possible. Now, in the bad new days the line has been redrawn between those who have steady work and a modicum of economic security on the one side, and the poor, the unemployed, and the victims of discrimination on the other. Left and right agree on this, and only disagree about which side they valorize. Interesting.
The second half of the essay, alas, is a big letdown. It retreats into pure dogmatism: we read that Marx showed the exploitation of the working class is the motor that powers the whole system and only a united working class movement can end exploitation and usher in a society without all the invidious distinctions. Zamora actually describes his intellectual retreat precisely, juxtaposing the concrete and contingent analysis of current social conditions that foregrounds various group oppressions and the abstract (his word, used over and over) revelation of Marxism that is true without any need for empirical validation. If, like me, you’re not a believer, nothing he says about this will turn you around. What I was hoping for was an analysis of the structures of inequality that exist today, with a grounded explanation for why the identitarian movements don’t add up to a systemic force (which I suspect but may be wrong about), and instead all I got was the same old, same old.
I just read Daniel Zamora’s When Exclusion Replaces Exploitation: The Condition of the Surplus-Population under Neoliberalism in nonsite. The first half is really excellent. His insight is that the shift from the old left to the new and the rise of modern neoliberalism are in some sense reflections of one another, and both are rooted in the emergence of a relatively distinct “surplus” stratum of the population in developed capitalist countries. (I also associate this view with Loïc Wacquant, whose notion that racial division in the US has shifted from being a means of exploitation to one of exclusion was a basis for Michelle Alexander’s New Jim Crow.) According to this argument, in the bad old days the visible line drawn through society was between the wealthy and the rest of society whose work made this wealth possible. Now, in the bad new days the line has been redrawn between those who have steady work and a modicum of economic security on the one side, and the poor, the unemployed, and the victims of discrimination on the other. Left and right agree on this, and only disagree about which side they valorize. Interesting.
The second half of the essay, alas, is a big letdown. It retreats into pure dogmatism: we read that Marx showed the exploitation of the working class is the motor that powers the whole system and only a united working class movement can end exploitation and usher in a society without all the invidious distinctions. Zamora actually describes his intellectual retreat precisely, juxtaposing the concrete and contingent analysis of current social conditions that foregrounds various group oppressions and the abstract (his word, used over and over) revelation of Marxism that is true without any need for empirical validation. If, like me, you’re not a believer, nothing he says about this will turn you around. What I was hoping for was an analysis of the structures of inequality that exist today, with a grounded explanation for why the identitarian movements don’t add up to a systemic force (which I suspect but may be wrong about), and instead all I got was the same old, same old.
Tuesday, August 9, 2016
Diamond Transfer Pricing and the Tax Rate in Dubai
A follow-up to my previous post courtesy of Amnesty International:
Within the diamond supply chain, however, smuggling is not the only means by which actors such as traders and companies can unjustly enrich themselves at the expense of diamond-producing countries. A central issue is the way diamonds are valued and the phenomenon of transfer pricing. This is particularly evident in diamond trading centres operating in low tax or no tax jurisdictions….Dubai has come in for particular criticism because of the significant difference in the value of its rough diamond imports and exports (as shown in the table on page 59) and the fact that it does not tax diamond traders.243 Diamond traders in Dubai benefit from various free trade zones, including the DMCC and the Dubai Airport Free Zone Area (or DAFZA). As such, a company could export a diamond at a low value from a developing country; the diamond could then enter Dubai where the importing company marks-up the price and exports it to a related company in another trading or cutting / polishing centre. No tax is payable in the free trade zones in Dubai, so the company in Dubai makes a substantial non-taxable profit.I sort of stumbled onto this when trying to understand the last from the European Union on their State Aid inquiries:
Under the new Diamond Regime, a trader's gross profit margin is fixed at 2.1% of its turnover.The Belgian trader affiliate likely incurs operating expenses near 1.5% of sales (turnover) so its operating profits are a mere 0.6% of sales. The intercompany flows are likely as follows. A gold mine in Africa sells its rough diamonds to an affiliate in the UAE which converts these into polished diamonds. The UAE affiliate then sells the polished diamonds to the Belgian trader affiliate. Amnesty International is suggesting very little profit stays in Africa with most of the profits accruing to the UAE affiliate. Now if the UAE affiliate had a 55% tax rate – this would be awful tax planning. But the reality is that the UAE is a tax haven for the diamond sector.
The Man Who Refused To Drink Champagne At Alamoagordo On July 16, 1945
That would be Robert Wilson at the first successful explosion of a nuclear bomb, a plutonium one, at the Trinity test on the date in the title, about 120 miles south of Albuquerque, quite far from the Los Alamos site that Wilson oversaw the construction of, reportedly riding around on a horse to see that the sewer and electrical lines were properly installed, he being a native of Wyoming, unlike the majority of the Manhattan Project crowd, many of them Jewish refugees from large cities in Europe totally unable to deal with the American Southwest.
No, this is not the co-composer of the minimalist opera, "Einstein on the Beach," or the microeconomic theorist that some think should receive a Nobel Prize (forecast, no). This one built the Fermilab near Chicago as well as Los Alamos, and after the war attracted the largest group of Manhattan Project physicists to be with him at Cornell University, including Nobelist Hans Bethe as well as Richard Feynman, and many others. They respected him that much.
So indeed, he was the man who when the bomb went off did not join in with the others to drink champagne and celebrate their great achievement. It is true that his boss Oppenheimer expressed a complicated view, suggesting that what they had done was in honor of Shiva, the Hindu god of destruction and creation (how Schumpeterian), but he drank the champagne, even as he would later be deposed by McCarthyites for his leftist connections when it came to the matter of the H-bomb.
So, his oldest son and wife has been a serious conservative, voting GOP and quite critical of the political views of his left/progressive parents. However, last night I spoke with him and his wife, and this person acutely aware of nuclear weapons issues, the oldest son of the man who said that "We have done an evil thing" when the others were celebrating and drinking champagne, has, like many other serious Republicans, decided that Trump is completely unacceptable and irresponsible on the grounds of his completely ignorant and ridiculous remarks regarding nuclear weapons policy, which themselves have already degraded the peace of the world.
Barkley Rosser
No, this is not the co-composer of the minimalist opera, "Einstein on the Beach," or the microeconomic theorist that some think should receive a Nobel Prize (forecast, no). This one built the Fermilab near Chicago as well as Los Alamos, and after the war attracted the largest group of Manhattan Project physicists to be with him at Cornell University, including Nobelist Hans Bethe as well as Richard Feynman, and many others. They respected him that much.
So indeed, he was the man who when the bomb went off did not join in with the others to drink champagne and celebrate their great achievement. It is true that his boss Oppenheimer expressed a complicated view, suggesting that what they had done was in honor of Shiva, the Hindu god of destruction and creation (how Schumpeterian), but he drank the champagne, even as he would later be deposed by McCarthyites for his leftist connections when it came to the matter of the H-bomb.
So, his oldest son and wife has been a serious conservative, voting GOP and quite critical of the political views of his left/progressive parents. However, last night I spoke with him and his wife, and this person acutely aware of nuclear weapons issues, the oldest son of the man who said that "We have done an evil thing" when the others were celebrating and drinking champagne, has, like many other serious Republicans, decided that Trump is completely unacceptable and irresponsible on the grounds of his completely ignorant and ridiculous remarks regarding nuclear weapons policy, which themselves have already degraded the peace of the world.
Barkley Rosser
Monday, August 8, 2016
Trump Claims US Has the Highest Corporate Tax Rate
Katherine Krueger covered the Trump economic address noting his lack of honesty. I should say nice job but there was one item that troubled me:
According to Trump, the U.S. has the highest business tax rate among the major industrialized nations of the world at 35 percent, which under his plan would be slashed to no more than 15 percent. Although the country has the third-highest top marginal corporate income tax rate in the world (and the highest among the industrialized nations), the reality is that the money collected is cut significantly by things like tax credits and offshore tax havens. In 2010, the average effective federal tax rate paid by large, profitable corporations was just 12.6 percent, according to the Government Accountability Office.She is right about how the statutory tax rate in the US overstates the effective rate for many US based multinationals but let’s check her source that alleges two other nations have higher tax rates:
The United States has the third highest general top marginal corporate income tax rate in the world at 39 percent, which is the same as Puerto Rico and is exceeded only by Chad and the United Arab Emirates…the U.S.’s corporate tax rate of 39 percent is the third highest in the world, tied with Puerto Rico and lower only than the United Arab Emirates and Chad, which have rates of 55 and 40 percent, respectively.The alleged 39 percent rate for U.S. companies again is a statutory rate that many companies do not really face as she has noted. The tax rate in the United Arab Emirates is often zero for companies that are not in the business of extracting oil out of the ground. This 55% rate is actually a surcharge on oil profits. Other nations with lower tax rates than we have also have high surcharges on oil profits. So OK – the statutory rate for profits in Chad is higher than this alleged 39%. Of course the effective tax rate for US based multinationals is often nowhere near 40%. Trump could advocate enforcing transfer pricing if he were serious about raising taxes from the rich but I guess his small government economic advisers have convinced him of the “wisdom” of that Laugher Curve.
Friday, August 5, 2016
How Much Did We Own Iran?
The Wall Street Journal got the right wing all excited with some phony suggestion that we sent $400 million in hostage money to Iran. Of course the real story is clear:
Ryan, Trump, and other critics have the facts wrong. The Wall Street Journal story is actually describing a payment that President Obama announced back in January. What’s more, the payment was the result of a 35-year case in international court — and had nothing to do with any "hostage" payments.Iran was actually seeking $10 billion to settle this matter. Let’s do a little mini-analysis. Suppose you borrowed $400 million in 1979 and did not settle matters until 37 years later. Over the course of this period of time, the general price index has increased by a factor of 3.5. So $400 million back in 1979 would be $1.4 billion today. And of course this calculation assumes you pay zero real interest. While that may be near the real interest rate today – real interest rates back in the early 1980’s were very high. So what should we assume is the appropriate real interest rate for our exercise? If we assume 2 percent, then in real terms the principle should be about 2.1 times higher. So we likely should be paying Iran $2.9 billion. Of course the Republicans likely have a different view as they don’t mind cutting those Social Security benefits we were promised during the 1983 Reagan reforms in order to give tax cuts for rich people. So why not default on our international obligations. Call this Trump Financing.
Washington Post Leaves Out a Detail
The Washington Post story on the Melania Trump visa mystery presents the following narrative:
Q: But the nude photographs were taken in New York City in 1995?
A: Correct. The photographs originally appeared in the French magazine Max and were published again in the New York Post last weekend. Marc Dolisi, chief editor of Max at the time, told The Washington Post that the pictures appeared in the February 1996 edition of the magazine and had been shot in November or December of 1995. Jarl Ale de Basseville, the photographer, said the shoot was conducted in New York.
Q: How can the discrepancy be explained?
A: Only Melania Trump can explain the discrepancy, which was first reported by Politico. The campaign has not responded to questions asking how those photos could be shot in 1995 if Melania Trump arrived in 1996.
Q: So does that mean Melania Trump was in the United States illegally in 1995?
A: It’s not clear. Dolisi and de Basseville both told The Washington Post that Melania Trump was not compensated for the Max magazine photo shoot. She was a relatively unknown model at the time. Taking part in magazine photo spreads for free is common for models at that level because the exposure can help them secure commercial work.
Q: Why is it important that Trump was not paid?
A: Without pay, she could have been here legally on a visitor’s visa. Foreigners coming to the United States for brief stays can obtain B1 or B2 visitor’s visas allowing them to stay in the United States as either a tourist or a business visitor attending a meeting or other work event. It is, however, illegal to work in the United States on a visitor’s visa; that kind of illegal work has tripped up many other people who wish to legally immigrate to the United States. People applying for or holding a visitor’s visa are asked both at an embassy or consulate abroad and at the port of entry upon arrival whether they intend to work. If they come to the United States planning to work and claim otherwise, that’s immigration fraud.
It is unclear, however, if she got any other kind of compensation during her 1995 stay, such as airfare and lodging.This seems to be a fairly comprehensive account except for one detail. Count Jarl Ale de Basseville or Alexandre de Basseville pleaded guilty in 2007 to conspiracy to commit money laundering and conspiracy to distribute MDMA ("Ecstasy") and was sentenced to 240 months in prison and ordered to forfeit $528,500. Not exactly what one would consider a credible reference regarding the legitimacy of one's visa status.
"Taking part in magazine photo spreads for free is common for models at that level because the exposure can help them secure commercial work." Can we get a second opinion on that?
Coincidentally, one of the prosecutors for the drug and money laundering case was named Trump -- James L. Trump:
Coincidentally, one of the prosecutors for the drug and money laundering case was named Trump -- James L. Trump:
DEA to Drug Ring with Hollywood Ties: "That's a Wrap"
Swiss and L.A.-based companies involved in drug and weapons trafficking
(WASHINGTON, D.C.) - The Drug Enforcement Administration (DEA) today announced the successful results of Operation Director's Cut, a two-year investigation involving an international ecstasy and weapons trafficking organization with Hollywood connections.
Seven arrests took place in the case, including those of Limelight Films, Inc. Chief Executive Officer Bruno D'Esclavelles of Los Angeles, Chief Financial Officer David Liberman, and three other associates. Also arrested was Alexandre De Basseville of Switzerland and Los Angeles. De Basseville is an executive board member of ADB Swiss S.A., a Swiss-based financial, business, and consulting service that owns the L.A.- based Limelight Films, Inc. Various media outlets have reported that De Basseville is engaged to Kiera Chaplin, granddaughter of the legendary film actor Charlie Chaplin. According to the Limelight Films, Inc. website Kiera Chaplin serves as an executive. De Basseville and D'Esclavelles were arrested in Arlington, Virginia and charged with conspiracy to distribute MDMA (ecstasy). Liberman was charged with conspiring to launder money.
"The men we arrested have laundered hundreds of thousands of dollars -- money used to further their drug and weapons trade to endanger our neighborhoods and bleed our communities," said DEA Administrator Karen P. Tandy. "This operation demonstrates once again the poisoning influence of drug money, and the greed that causes some people to hurt the lives of the many."
According to criminal complaints filed in federal court, Alexandre De Basseville met repeatedly with undercover agents over the past two years, posing as international drug traffickers. De Basseville offered to launder drug proceeds, supply weapons and broker ecstacy deals for the undercover agents. The agents met with De Basseville and several of his associates, including the other six individuals charged, in various locations, including Arlington, Virginia; Miami, Florida; Los Angeles, California; Amsterdam; the Netherlands; and Geneva, Switzerland. On two occasions, De Basseville and D'Esclavelles took cash, totaling $300,000, which they believed to be drug proceeds, and laundered it for the undercover agents using their Los Angeles business, Limelight Films, Inc.
In February 2006, de Basseville and d'Esclavelles arranged for the sale of ecstasy from the Netherlands by Thomas Frischknecht to an undercover agent. Frischknecht sent the agent a package containing 10,000 pills, which the agent received in Arlington, Virginia. Thereafter, de Basseville, d'Esclavelles and Frischknecht agreed to sell the agent 500,000 pills in the Netherlands. Frischknecht was arrested in the Netherlands as the undercover agent negotiated for the delivery of 500,000 ecstasy pills.
Thomas Frischknecht, age 26, of Switzerland, was arrested in Amsterdam, the Netherlands, and charged with conspiracy to import ecstasy. Authorities also arrested Fabian Pruvot, age 37, Andre Prikazhikov, age 31, and Brian Delansky, age 33, all of Los Angeles, California. Pruvot and Liberman were charged with conspiracy to launder money. Prikazhikov and Delansky were charged with conspiracy to possess firearms in furtherance of drug trafficking.
This case was investigated by the Drug Enforcement Administration; the Federal Bureau of Investigation; the Internal Revenue Service; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; Customs Border Patrol; Arlington County Police Department, Metropolitan (D.C.) Police Department. The United States Attorney's Office also received considerable assistance from law enforcement authorities in the Netherlands and Switzerland. The case is an OCDETF (Organized Crime Drug Enforcement Task Force) investigation. The prosecution of the case is being handled by Assistant United States Attorneys James L. Trump and Steven D. Mellin and Special Assistant United States Attorney Daniel Grooms.
Tuesday, August 2, 2016
"This struggle about the legal restriction of the hours of labor...
...raged the more fiercely since, apart from frightened avarice, it told indeed upon the great contest between the blind rule of the supply and demand laws which form the political economy of the middle class, and social production controlled by social foresight, which forms the political economy of the working class." --Karl Marx, Inaugural Address of the International Working Men’s Association
Monday, August 1, 2016
Wealth And Power: Does One Necessarily Lead To The Other?: The Curious Case Of Flanders
While wealth and power are usually highly correlated, with each feeding into the other positively most of the time, it is not always the case. Curious are cases where there has been substantial economic wealth, but no great power. One example of this is Flanders, the northwestern part of Belgium, currently the most densely populated part of Europe, as it has been for many centuries, although the data becomes weak and unreliable as one goes further back in time. Furthermore, it has often been an economic leader in Europe, and when not an outright leader such as in the High Middle Ages, it has always been near the top in per capita real income, not a Malthusian disaster. Yet it has never been the center of a great political power, essentially always ultimately ruled by outsiders, even though nearly always those outsiders were poorer than the Flemish.
The historian Fernand Braudel was a great student of Johan Heinrich von Thunen, author in 1826 of The 1State, in which land use patterns appeared as rings around a central place, the main market location for all that is produced on the homogeneous plane of his estate and his broader speculations. Braudel ties these economic rings to population density, and saw Flanders at the center for centuries of the Europe-wide pattern of such rings, with income falling with population density as one moved out from that central place in Flanders.
Much economic theory says that if an area can avoid a Malthusian disaster or drag, density of population can be a positive for economic growth for multiple reasons, including such things as endogenous technological change and reduced transportation costs leading to agglomeration economies. Flanders may have been one of the first parts of the Roman Empire to replace slavery with serfdom, and then it was one of the first places to move beyond serfdom. The first industrial strike in the world happened in a textile mill in Douai in 1245. Canals were being built as early as a thousand years ago around Bruges/Brugge, with the flat and wet land seeing many built since then. Bruges was one of the largest cities in Europe in the 1200s, limited at its river silted up, with textile manufacturing Ghent the third largest after Constantinople and Paris in the 1300s. World-powerful Hapsburg Holy Roman emperor, Charles V, was born in Ghent in the late1400s, but he chose to rule from other cities. While he spoke Flemish/Dutch to his mother, he is reported to have said, " I speak Spanish to God, French to men, Italian to women, and German to my horse." The latter may reflect his battling with the Protestant Reformation among Germans, which started during his reign.
Flanders and Tuscany co-led the mercantile capitalist revolution in the 1300s, and traded intensely with each other, even as they also saw a major development of art. However, neither dominated other territories, despite their high real per capita income and cultural activities, with the Renaissance coming out of Tuscany thereafter.
Then Ghent and other parts of Belgium would be the first places on the European continent to follow Britain and introduce the industrial revolutions. Per capita income in Flanders remains high today, if not at the very highest levels in Europe.
I really do not have an explanation why such a region that was for centuries a leading economic powerhouse in Europe never dominated or ruled others. One issue, which one can see in some other places such as Lower Egypt, is that its wealth attracted outsiders to conquer it to obtain its income and riches, starting with the Romans and then the Franks, who may have made the best shot at making it a conquering territory, even as they moved their capital to Paris (the Flemish language as spoken in Bruges is probably the closest thing to Old Frankish spoken anywhere now, and is viewed by linguists as the oldest form of Dutch). While there was always a Count in Flanders, he was almost always subject to somebody else, the Romans or Holy Romans and later the Burgundians with more outside Holy Romans, even when the Holy Roman came from there as in the case of Charles V.
Later on one can attribute their inability to rule themselves due to Catholic-Protestant religious conflicts and wars, with this split the key to the split between Catholic Belgium and Protestant Holland. In any case, the Spanish and then the Austrians got in to running Flanders. They have now achieved regional autonomy within modern Belgium, but they are very far from ruling anybody else, even as they remain the most densely populated part of Europe with a very high per capita income.
Barkley Rosser
The historian Fernand Braudel was a great student of Johan Heinrich von Thunen, author in 1826 of The 1State, in which land use patterns appeared as rings around a central place, the main market location for all that is produced on the homogeneous plane of his estate and his broader speculations. Braudel ties these economic rings to population density, and saw Flanders at the center for centuries of the Europe-wide pattern of such rings, with income falling with population density as one moved out from that central place in Flanders.
Much economic theory says that if an area can avoid a Malthusian disaster or drag, density of population can be a positive for economic growth for multiple reasons, including such things as endogenous technological change and reduced transportation costs leading to agglomeration economies. Flanders may have been one of the first parts of the Roman Empire to replace slavery with serfdom, and then it was one of the first places to move beyond serfdom. The first industrial strike in the world happened in a textile mill in Douai in 1245. Canals were being built as early as a thousand years ago around Bruges/Brugge, with the flat and wet land seeing many built since then. Bruges was one of the largest cities in Europe in the 1200s, limited at its river silted up, with textile manufacturing Ghent the third largest after Constantinople and Paris in the 1300s. World-powerful Hapsburg Holy Roman emperor, Charles V, was born in Ghent in the late1400s, but he chose to rule from other cities. While he spoke Flemish/Dutch to his mother, he is reported to have said, " I speak Spanish to God, French to men, Italian to women, and German to my horse." The latter may reflect his battling with the Protestant Reformation among Germans, which started during his reign.
Flanders and Tuscany co-led the mercantile capitalist revolution in the 1300s, and traded intensely with each other, even as they also saw a major development of art. However, neither dominated other territories, despite their high real per capita income and cultural activities, with the Renaissance coming out of Tuscany thereafter.
Then Ghent and other parts of Belgium would be the first places on the European continent to follow Britain and introduce the industrial revolutions. Per capita income in Flanders remains high today, if not at the very highest levels in Europe.
I really do not have an explanation why such a region that was for centuries a leading economic powerhouse in Europe never dominated or ruled others. One issue, which one can see in some other places such as Lower Egypt, is that its wealth attracted outsiders to conquer it to obtain its income and riches, starting with the Romans and then the Franks, who may have made the best shot at making it a conquering territory, even as they moved their capital to Paris (the Flemish language as spoken in Bruges is probably the closest thing to Old Frankish spoken anywhere now, and is viewed by linguists as the oldest form of Dutch). While there was always a Count in Flanders, he was almost always subject to somebody else, the Romans or Holy Romans and later the Burgundians with more outside Holy Romans, even when the Holy Roman came from there as in the case of Charles V.
Later on one can attribute their inability to rule themselves due to Catholic-Protestant religious conflicts and wars, with this split the key to the split between Catholic Belgium and Protestant Holland. In any case, the Spanish and then the Austrians got in to running Flanders. They have now achieved regional autonomy within modern Belgium, but they are very far from ruling anybody else, even as they remain the most densely populated part of Europe with a very high per capita income.
Barkley Rosser
Friday, July 29, 2016
The Meredith McIver Scam -- Why it matters
"Meredith McIver" is allegedly a public speaker who apparently is too timid to speak to the public. Whether she existed or not was briefly the subject of speculation a week ago when a letter was produced by the Trump campaign in which she took the blame for plagiarism in Melania Trump's convention speech.
Once it was established that there actually, apparently is (or was) a Meredith McIver, the whole plagiarism flap -- with its denials and fabrications -- was sent to the memory hole for shredding and incineration.
"It was all a joke." or some minion in the bowels of The Trump Organization "took responsibility" [without, of course, having to, you know, take any responsibility]
One of the mainstays of the Trump campaign -- and of the right-wing propaganda wurlitzer in general -- is the devaluation of truth. This is not simply a matter of saying things that aren't true for political advantage. It is an enduring strategy of demonstrating the futility of standards of truth, rightness and truthfulness because they realize that communicative rationality is not their friend.
It is not enough for them to "get away" with a falsehood. The point is to show that the truth does not matter. This is not mere dishonesty. It is an assault on the idea that there is any criteria for distinguishing between truth and falsehood.
Once it was established that there actually, apparently is (or was) a Meredith McIver, the whole plagiarism flap -- with its denials and fabrications -- was sent to the memory hole for shredding and incineration.
"It was all a joke." or some minion in the bowels of The Trump Organization "took responsibility" [without, of course, having to, you know, take any responsibility]
One of the mainstays of the Trump campaign -- and of the right-wing propaganda wurlitzer in general -- is the devaluation of truth. This is not simply a matter of saying things that aren't true for political advantage. It is an enduring strategy of demonstrating the futility of standards of truth, rightness and truthfulness because they realize that communicative rationality is not their friend.
It is not enough for them to "get away" with a falsehood. The point is to show that the truth does not matter. This is not mere dishonesty. It is an assault on the idea that there is any criteria for distinguishing between truth and falsehood.
Wednesday, July 27, 2016
Outsourcing Watergate
Today’s Big News:
Donald J. Trump said Wednesday that he hoped Russia had hacked Hillary Clinton’s email, essentially encouraging an adversarial foreign power to cyberspy on a secretary of state’s correspondence.People are comparing this to Watergate:
There were 5 burglars arrested on June 17, 1972 at the Watergate offices of the Democratic National Committee.James McCord plus 4 men from Miami. I guess one could say Nixon had the dignity of hiring domestic workers. But a lot of Republicans favor free trade and outsourcing when foreigners have a comparative advantage. So maybe when they stop claim Trump was only clowning around, they will give him credit for moving away from his protectionist stance.
Tuesday, July 26, 2016
Goering And Schauble In Berlin
Germany today is a parliamentary democracy. However, within the Eurozone some find that Germany exercises power over macroeconomic policy by other nations also in it that reminds them of an earlier more authoritarian Germany that dominated their policies, with such views especially strongly held in Greece since that nation's last crisis. German Finance Minister, Wolfgang Schauble, has been accused particularly accused of exercising such power in budgetary policymaking and enforcing an austerity policy on the nations in the Eurozone that has exacerbated recessionary tendencies within the Eurozone, especially for nations with heavy debt burdens such as Greece.
There is a curious irony in the accusations made against Schauble in particular. He sits in the same office and even at the same desk in an ugly grey building in Berlin that Nazi Air Marshall Hermann
Goering used after 1936 when the construction of this ugly structure was completed by the Nazis. Somehow this structure survived allied bombing in World War II, after which it was located in the Soviet zone adjacent to where the Berlin Wall would later be located. It was where in 1949 the former East German Democratic Republic was declared and from where it was ruled.
There is neither a swastika nor a hammer and sickle hanging today behind where Schauble sits in Goering's old office, but it is widely claimed that the desk there is still the one used by Goering.
Barkley Rosser
There is a curious irony in the accusations made against Schauble in particular. He sits in the same office and even at the same desk in an ugly grey building in Berlin that Nazi Air Marshall Hermann
Goering used after 1936 when the construction of this ugly structure was completed by the Nazis. Somehow this structure survived allied bombing in World War II, after which it was located in the Soviet zone adjacent to where the Berlin Wall would later be located. It was where in 1949 the former East German Democratic Republic was declared and from where it was ruled.
There is neither a swastika nor a hammer and sickle hanging today behind where Schauble sits in Goering's old office, but it is widely claimed that the desk there is still the one used by Goering.
Barkley Rosser
The Road to Trumpdom
I always Google my headline ideas to try to avoid the appearance of plagiarism. I was thinking of the title for this post as I was looking at a cartoon adaptation of Hayek's The Road to Serfdom, originally published by Look magazine in 1945 and subsequently distributed in the 1950s as a pamphlet by the General Motors Corporation. As Ned O'Gorman explained,
Meyer's essay concludes with the decline in trust but doesn't elaborate on the reasons for it. Of course, this has been a well-worn topic, with contributions ranging from Jurgen Habermas's thesis of Legitimation Crisis to Michel Crozier. Samuel P Huntington and Joji Watanuki's diagnosis of an "excess of democracy."
My own view hearkens back to the nominal success of the O,E,C,D, growth target and its substantive failure. Under pressure from the U.S., the newly fledged institution adopted a target of 50% during the 1960s. Inadvertently, they exceeded this target by around 5%. I say "inadvertently" because when they adopted the target in 1961 they really had no idea what it meant. It just seemed like a good idea at the time.
In the meanwhile, all sorts of social, environmental, political and financial difficulties emerged that GNP growth was obviously not solving -- some of them growth was exacerbating. And then the decade of the 1970s failed to repeat the economic growth "success" of the 1960s. Economic growth, it turned out, was not the promised panacea. On the other hand, lack of economic growth just made things worse.
Here is were the cartoon version of The Road to Serfdom comes into its own. "The 'Planners' promise Utopia..." is the title of panel 3 "...but they can't agree on ONE Utopia" concludes panel 4.
In the comic book Hayek, this lack of consensus immediately leads to an impasse that can only be resolved by a strongman. In real life, the lack of consensus about concrete Utopias was resolved by targeting economic growth. A rising tide would lift ALL boats. "Everybody will be happier that way," as Henry Wallich later reaffirmed, because:
The latter view is understandable in that the "planners" have taken over the environment with much the same rhetoric that they invested in economic growth. "Green Growth" is predicated on exactly the same growth paradigm. Immigration enlarges the size of the pie -- there is not a fixed amount of work to be done, don't you know -- without doing much for the slice that goes to those who aren't at the top.
Which brings us to the nomination of Donald J. Trump.
"The Look version departed far enough from Hayek's original text that it hardly merited the same title. Nevertheless it did present the outlines of a popularized version of the neoliberal account of legitimation crisis that Hayek articulated."Dick Meyer's very fine essay The road to Trumpdom: The backstory of the biggest character in politics takes its cue from a Hayek quotation, "As is so often true, the nature of our civilization has been seen more clearly by its enemies than by most of its friends." Meyer traces the Republican dysfunction to the elevation of the primaries in American presidential politics, the reality TV show vulgarity and celebrity-adulation of American popular culture and ultimately to the long-term decline, since the 1960s, of Americans' trust in government.
Meyer's essay concludes with the decline in trust but doesn't elaborate on the reasons for it. Of course, this has been a well-worn topic, with contributions ranging from Jurgen Habermas's thesis of Legitimation Crisis to Michel Crozier. Samuel P Huntington and Joji Watanuki's diagnosis of an "excess of democracy."
My own view hearkens back to the nominal success of the O,E,C,D, growth target and its substantive failure. Under pressure from the U.S., the newly fledged institution adopted a target of 50% during the 1960s. Inadvertently, they exceeded this target by around 5%. I say "inadvertently" because when they adopted the target in 1961 they really had no idea what it meant. It just seemed like a good idea at the time.
In the meanwhile, all sorts of social, environmental, political and financial difficulties emerged that GNP growth was obviously not solving -- some of them growth was exacerbating. And then the decade of the 1970s failed to repeat the economic growth "success" of the 1960s. Economic growth, it turned out, was not the promised panacea. On the other hand, lack of economic growth just made things worse.
Here is were the cartoon version of The Road to Serfdom comes into its own. "The 'Planners' promise Utopia..." is the title of panel 3 "...but they can't agree on ONE Utopia" concludes panel 4.
Growth is a substitute for equality of income. So long as there is growth, there is hope, and that makes large income differentials tolerable. The environment will also be better taken care of if the economy grows. Nothing could cut more dangerously into the resources that must be devoted to the Great Cleanup than an attempt to limit resources available for consumption.Well, growth has turned out not to be a "substitute for equality of income." Most growth for three or four decades has gone to those at the top and large income differentials have just gotten larger and larger and larger -- not more tolerable. The expanded resources have not been devoted to "the Great Cleanup" -- a not insignificant amount has been devoted to denying the necessity for any cleanup whatsoever. The environment is a hoax.
The latter view is understandable in that the "planners" have taken over the environment with much the same rhetoric that they invested in economic growth. "Green Growth" is predicated on exactly the same growth paradigm. Immigration enlarges the size of the pie -- there is not a fixed amount of work to be done, don't you know -- without doing much for the slice that goes to those who aren't at the top.
Which brings us to the nomination of Donald J. Trump.
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