The Poor Man's Friend

Dorning Rasbotham, a magistrate from near Bolton, Lancashire wrote a pamphlet in response to those 1779 riots, Thoughts on the Use of Machines in the Cotton Manufacture, that was to leave a lasting impression on polemical political economy. The pamphlet was signed "a Friend to the Poor." Although there has been some confusion the authorship of the pamphlet, a memorial plaque in the church where Rasbotham was buried described him as having "the characters of the poor man's friend." Squire Rasbotham strove to leave no doubt about where his sympathies laid:

I am, from the bottom of my heart, a Friend to the Poor. I wish to plead their cause, and to speak in their favour. I feel tenderly for the poor man and his family. And, if my heart does not deceive me, I would do, I would suffer any thing for their welfare. Led by no other principle, but regard to the Poor, I now wish to enter into free and friendly conversation with you, my poor but esteemed friends, on the subject of our machines.

Rasbotham's free and friendly conversation consisted of a series of assertions, many of which may strike the reader as condescending and several of which express notions that are repeated perennially as commonplaces in economic thought:

1. The interests of the poor should have the highest priority (after all, what would become of the rich if there were no poor people to till their grounds, and pay their rent?);
2. There is not so great a difference between the real interests of the rich and of the poor;
3. Trade is a large and difficult subject that requires deep thought, long study, extensive reading and large experience to form a true judgment;
4. Machines distinguish men in society from men in a savage state. There are many examples showing how machines invariably benefit people;
5. All improvements at first produce some difficulty but many receive the benefit while only a few suffer (probably not much and hopefully not for too long), Those who are inconvenienced should be grateful for the opportunity to make a sacrifice for their fellow man;
6. Trade will find its own level. Those thrown out of their old employments will find or learn new ones. Those who get a disproportionate gain will soon find many rivals and lose their temporary advantage;
7. There is a disposition among people to be unduly alarmed by new discoveries;
8. Even if machines are evils they are necessary evils. We might as well make the best of them;
9. This would be a prosperous time for the poor, if only they would show some initiative and weren't so inclined to carry their money to the alehouse;
10. Anyone who disagrees with the above truths is an irreligious, conscienceless scoundrel and nincompoop; and, last but not least,
11. The belief that "there is only a certain quantity of labour to be performed" is a false principle.

John Ramsey McCulloch, one of the more prolific, second-rank political economists of the early 19th century was effusive in his praise for the sensibility and soundness of Mr. Rasbotham's opinion, emphasizing the observation that "There is, in fact, no idea so groundless and absurd, as that which supposes that an increased facility of production can under any circumstances be injurious to the labourers." Rasbotham's own indictment of that "groundless and absurd" idea merits quotation in full if only because future economists echoed it incessantly for two centuries hence -- presumably without the faintest clue as to its origin:

There is, say they, a certain quantity of labour to be performed. This used to be performed by hands, without machines, or with very little help from them. But if now machines perform a larger share than before, suppose one fourth part, so many hands as are necessary to work that fourth part, will be thrown out of work, or suffer in their wages. The principle itself is false. There is not a precise limited quantity of labour, beyond which there is no demand. Trade is not hemmed in by great walls, beyond which it cannot go. By bringing our goods cheaper and better to market, we open new markets, we get new customers, we encrease the quantity of labour necessary to supply these, and thus we are encouraged to push on, in hope of still new advantages. A cheap market will always be full of customers. [emphasis in original]

Budget

Where Should We Put Economic Empiricism on the Hubris-Humility Spectrum?

A bit of a kerfuffle has broken out over the claim that, as economics gets more empirical, it also gets more reliable.  Russ Roberts says that, in the name of empiricism, economists are trotting out contested results to adjudicate questions that are vastly more complicated than their methods can allow for, and that they should acquire a bit more humility instead.  Balderdash, says Noah Smith: whatever lack of humility is evinced by researchers who jump the gun in empirical work is swept away by the tsunami of hubris issuing from those who have only vague, unsubstantiated assumptions about how the world “really” works.  Cowen rebuts, arguing that motivated, hubristic reasoning can seize on empiricism just as readily as any other academic raw material.  Smith retorts, going halfway to meet Cowen, but expressing optimism that empirical methods carry their own antibody against motivated bs and will pull knowledge in a more realistic direction over time.

So what do I say?  (I thought you’d never ask.)  First, Roberts is simply recycling, for a forgetful age, the now-ancient claim of Hayek regarding the Fatal Conceit.  I agree that it is desirable to not be Fatally Conceited, although it is widely recognized, I think, that, as he drew it,  Hayek’s circle of unknowability is both too wide (not respecting degrees of evidence) and too narrow (sweeping assumptions about market process).  Roberts can challenge me on this if he wants, but I see Fatal Conceit-ism in just about every paragraph of his post.

Meanwhile, I think really empirical economics would place intrinsic barriers to hubris and ideological cherry-picking, since its methods would be inherently self-critical.  For instance, cataloging all plausible explanations for a possible relationship between X and Y and identifying potential markers for them in the evidence, as I suggest here, would be a prophylactic against overconfident “empirical” claims about a researcher’s favored theory.  Similarly, serious attention to issues of proxy measurement would give pause to those eager to read in a sweeping interpretation of what is often just indirect evidence.  I have also expressed concern over methods that are based on the assumptions that impose a priori uniformities on the economic relationships one tries to estimate.

So my position is that Roberts and Cowen are more right, and Smith less, than I would like, mainly because what passes for empiricism in economics at present is often deficient in an empiricist, self-critical spirit and methodology.  At the same time, the debates over topics like the minimum wage, the effects of charter schools on educational outcomes and the like are on a vastly higher plane when they are about data sets and analytical assumptions than the certitude of my unquestioned beliefs against the certitude of yours.  It’s also a cheap and not altogether forthcoming dodge to respond to econometric disputes with a flip “There is never a clean empirical test that ultimately settles these issues.”  (Roberts)  That's a Merchants of Doubt epistemology.

Have Fascists Done Anything Right Regularly?

Build lots of infrastructure.   This is especially the case if we include the proto-fascist Bonapartes on the list, who really built a lot of it and did a pretty good job of it, sewers and good streets in Paris especially.  Mussolini built lots of railway stations and also railroads. After all, he was famous for supposedly making the trains run on time.  And Hitler invented the freeway with his autobahn system that inspired Eisenhower to build the interstate highway system. 

Why have so many of them done this?  A major reason, certainly relevant for both Napoleon I and Mussolini, was a fascination with Ancient Rome and Julius Caesar, and building lots of quality infrastructure was one of the things the Romans did well in their republic and early empire heyday, roads, aqueducts, and sewers.  The cloaca maxima sewer line in central Rome is still functioning more than 2000 years after it was built.

Now sometimes fascists have not done such a good job of it and some of it has been overdone and monumental, with Mussolini in particular guilty of this with his brutalist massive buildings.  And some have simply not done much of it all, such as the milder fascists of the Franco variety in Spain and parts of Latin America.  And there was also the absurd proto-fascist Cola di Rienzo in Rome in the mid-1300s, who one would think would have imitated the ancient Romans, he claimed to be reviving their republic, but spent too much time fighting dumb wars, having massive parades, and triggering famines to get around to building any updated aqueducts or sewer lines.

Now we have a president in the US who has talked a lot  about building infrastrure, throwing around some large numbers of spending that might happen.  However, the only specific plan he has put forward has been a plan to cut taxes for  private companies that build infrastructure, with the likely outcome of this effectively a privatization of the infrastructure with the companies collecting tolls, although this is likely not to lead to infrastructure improvements the US needs such as fixing potholes. But then, he has yet to make an actual proposal along these lines, much less along more conventional just up the highway budget and fix the darned potholes sort of thing.  So, it looks like he might not even be any good at the one maybe good thing that many fascists have actually done.

Barkley Rosser

Trumpcare Saves Social Security By Killing People!

Yes, there it is in black and white in footnote f on p. 33 of the Congressional Budget Office (CBO) official report on the proposed American Health Care Act, aka Trumpcare.  Between now and 2026 spending by the Social Security Administration is projected to decline by $3 billion if Trumpcare passes.  This is due to a projected 1 out of 830  people dying who would not under the status quo, this based on a study of what happened to death rates in Massachusetts after Romneycare came in. The projected deaths are about 17,000 in 2018 and up to about 29,000 in 2026.

Another great thing?  There will be a reduction in accumulated deficits of about $300 billion, with a reduction of revenues of about $0.9 trillion and a reduction of outlays of about $1.2 trillion.  The former will be due to cuts in taxes on high income people while the latter will be due to eliminating subsidies to help poorer people pay for health insurance on the exchanges as well as cutbacks in Medicaid spending for even poorer people.  How fortunate can we get?

Barkley Rosser

Health Care: Jonathan Gruber v. Sean Spicer

Trump’s press secretary is fielding questions from the press on health care and is basically lying through his teeth as he bashes ObamaCare and sings the glory of TrumpCare. OK – that is what he is paid to do. A reporter asks him about the latest from Jonathan Gruber:

MIT economics professor and Obamacare architect Jonathan Gruber said that any healthcare replacement law the GOP has in store is a scam. “Any replace[ment] that they would pass would result in millions of Americans losing health insurance, would result in higher premiums, and would result in a huge redistribution from the poor to the rich," Gruber said on Boston Herald Radio's "Herald Drive" show with John Sapochetti and Rick Shaffer. "Now if they are happy with that and they are willing to do that, I wouldn’t call that a replacement, I would call that a scam”.

Gruber used to be the Republican guru on health care economics – until of course President Obama adopted RomneyCare. I guess their new guru is Sean Spicer.

Should The Complacent Class Be Called The Fearful Class?

Tyler Cowen has published his most successful book yet, The Complacent Class, now on the Washington Post nonfiction bestseller list and getting reviewed by everybody from The Economist to the New York Times and on.  It is the Book de Jour that all are commenting on one way or another.  Is America declining because so many of its people have become complacent?  (Shame on them.)

The book has much to offer.  It is chock  full of many interesting facts, although many of them Tyler has publicized at one point or another on his blog, Marginal  Revolution.  He even pushes some newly fashionable ideas that have been in the dark for too long, such as a sort of cyclical theory of history.  And he certainly makes the case that there are lots of trends that seem to show the American people not being as energetic or adventurous as they used to be, with headline data including reduced interstate migration, reduced changing of jobs, reduced patenting, and reduced entrepreneurial startups, among other things.  He does note some external matters that may be adding to some of this, with building codes and land use restriction in economically dynamic urban areas a big culprit as it makes it harder for many to take advantage of the high paying jobs in those areas.  He has also noted that we may be running out of new scientific knowledge to learn or discover, which makes it harder to find dramatic things to patent, and indeed he wrote a previous book about this, blaming this as a major reason for secular stagnation.

But the big question is whether the title is an accurate representation of what is in the book, which has come up in a series of inconclusive blogposts about "Who is the Complacent Class?"  Frankly, it is not clear  that there is one, or if there is one, they are not the people who are responsible for the data he puts forth as supposedly claiming there is one.  If there is a complacent class in the US, it is the top 1 or 2 percent of the wealth and income distribution, who get lots of attention, but who are not the people who are not moving across state lines or changing jobs.  That is going on in the other 98 percent mostly.

That great mass of the population is not complacent at all, as the election of Donald Trump shows.  They are fearful.  The are the Fearful Class.  Real wages have been stagnant for a good 40 years, basically since the time that the distribution of income began to become more unequal again.  This has been offset partly by the rise of double income households, but this phenomenon can be seen as the main reason why interstate migration has fallen.  When there is only one breadwinner in the household, then the family will move when that person gets offered a better job out of state. But when there are two, a possible promotion/raise for one may mean the loss of income from the other losing their job without necessarily being able to find a comparable one in the new location.  And such a move with such a failure can lead to the breakup of the family as well.

This flatness of wages also is obviously behind the decline of job changing. That has long been the path for raising one's income, but as wages do not grow, the availability of such better opportunities declines.  Another aspect of this is the worsening situation regarding pensions.  We have seen a long term shift from defined benefit pensions to defined contribution pensions, which shifts costs to workers from employers.  Given that the benefits then depend on the future stock market and other such noncertain matters, this reduces security and complacency and has many people approaching retirement more fearful.  It is fear, not  complacency, that holds people in their jobs and in their states.

One area where Tyler might have a point is the decline of startups.  However, a close examination of  this data shows that the main decline of startups has been since the advent of the Great Recession, with this decline looking like it has bottomed out and may be reversing.  Of course one can argue about whether this is a chicken or egg situation.  Was the decline of startups due to the Great Recession or did it aggravate it and add to the tendency of secular stagnation?  Probably both are true, but this again cannot be blamed on some outbreak or even long term increase in complacency by whomever (although maybe this is that top group getting complacent).  Rather this looks more like rational fear: when the economy is tanking the prospects for successfully starting a new business look worse.  Again, it looks like we are dealing with fear far more than we are dealing with complacency.

Barkley Rosser

No Centennial Celebration Of Either Revolution In Russia

There will be no celebration in Russsia of the centennial of either the February Revolution (March in Gregorian calendar) or the Great October Socialist Revolution (November in Gregorian calendar).  During the Soviet period there never were celebrations of the February revolution, per se, as it was superseded by the October one,  although it was de facto celebrated in that the anniversary of its begining, March 8 in Gregorian calendar, was and is International Womens' Day, and I have posted on that previously here.  The irony is that this link is a major reason why that day is not generally celebrated in the US, indeed, is not widely known thanks to anti-communist hysteria in the 1950s.

One might have thought that perhaps Vladimir Putin might have been interested in uplifting the February Revolution as overcoming weak tsardom.  But apparently he likes to glorify the tsarist regime from the period of its strong tsars, not the weak and pathetic Nicholas II who could not avoid having his government fall, pathetic loser wimp.  And pretty much the same goes for Alexander Kerensky, whose form of government partly resembled what is in place now, a more or less democratically elected Duma, but no president with strong powers.  But Kerensky was another pathetic wimp loser who could not maintain power and got overthrown, nothing to celebrate there!

Then we have the big one, which was always celebrated as the biggest holiday of the year (followed by May Day and Victory Day, May 9, which does get celebrated now), November 7.  But no, the problem being that while Lenin was strong, he was down on the Russian Orthodox Church, and that entity is now a major supporter of Putin's and a major component of his power base, also a supporter of his various shenanigans abroad, all of this part of making Russia great again like in the days of teal tsars like Peter the Great and Catherine the Great.  So, Lenin is not to be remembered either .  The bottom line is that there is nobody from 1917 that Putin can view as a heroic leader with whom he can identify and praise.  Better to forget the whole thing, although apparently in December he appointed a committee to organize some academic seminars about all of it.

Of course there is the odd matter of Stalin, whom Putin has been quietly rehabilitating even to the point of allowing statues of him to be built in certain locations, if not in Moscow.  There remain obvious problems with putting Old Joe up too much, but Putin has definitely glommed onto World War II big time as the great and glorious event, the Great Patriotic War that was the glory of Russia (and the former Soviet Union), and so Stalin must be given credit as the great leader of that.  He even gets a bit of a pass from the Church in a way that Lenin does not.  Although mostly Stalin suppressed the Church, at the lowest depths of the war when the Nazis were at the gates of Moscow, Stalin brought Church leaders in and drew on them to encourage Russian people to support the war effort as a nationalist enterprise.  So, Stalin gets more acceptance from them than does Lenin who never did anything for the Russian Orthodox Church beyond making it become heroic through persecution.

Barkley Rosser

Health Care and Market Based “Solutions”

The opening of a critique of TrumpDoesn’tCare by John Osborne has this canard:

The excerpts are interesting, not because there were stunning disclosures or revolutionary ideas, but to the contrary they reveal what many have been saying for some time: there is no plan that will enable the Republican Congress to effectively replace Obamacare by relying solely on conservative, market-based solutions...at least not without risking great disruption to an already skittish insurance market.

The canard is that conservatives have some “market based solution”. This begs solution to what? I wonder if these conservatives have read the 1983 paper by John Moskop ?:

This paper considers whether Rawls' theory of justice as fairness may be used to justify a human right to health care. Though Rawls himself does not discuss health care, other writers have applied Rawls' theory to the provision of health care. Ronald Green argues that contractors in the original position would establish a basic right to health care.

While Moskop does not entirely agree with Ronald Green, many of us see the health care debate as one of basic fairness – not just efficiency. But let’s get real – the reasons that we pay twice per capita for health care than many other nations do include several forms of market power that Republicans heart. For example, we could end the Big Pharma monopolies if we found some other means to encourage R&D other than patent protection. We could end the doctor’s cartel as Milton Friedman advocated back in 1992. And of course Brad and Michael DeLong noted:

The United States’ Affordable Care Act (ACA), President Barack Obama’s signature 2010 health-care reform, has significantly increased the need for effective antitrust enforcement in health-insurance markets. Despite recent good news on this front, the odds remain stacked against consumers…It is not surprising, then, that in 2015 some of the largest private American health-insurance companies – Anthem, Cigna, Aetna, and Humana – began exploring the possibility of merging. If they could reduce the number of national insurers from five to three, they could then increase their market power and squeeze more profits from consumers.

We should remember, however, that Speaker Ryan is bought and paid for by the health insurance oligopolists. I earlier highlighted the Safeway Amendment. It turns out that Safeway is part of a Southern California oligopsony market:

Grocery workers across Southern California voted to authorize a strike against Ralphs and Albertsons, which includes Vons, Pavilions and Safeway stores, union officials reported. The vote by 47,000 United Food and Commercial Workers members gives union officials the power to call for a strike if the supermarkets don’t back down on their demands. The grocery companies and union have 10 meetings scheduled through the end of July. The supermarkets have offered one 10-cent per hour wage increase through 2018, as well as two bonuses of 10 cents an hour and 15 cents an hour during that time, according to Rick Icaza, the president of United Food and Commercial Workers Local 770. He said the stores also would not fund healthcare beyond current levels, forcing employees to contribute more or sacrifice coverage; reducing their future contributions to pensions; and forcing employees to retire at 65 rather than 60.

Safeway and the other stores have been cutting fringe benefits by more than nominal wages have been increasing. Back in 2004 the United Food and Commercial Workers were particularly concerned about how Safeway was cutting health care benefits:

From Southern California to Canada and across the United States, United Food and Commercial Workers (UFCW) activists and their allies are planning actions and asking shoppers to stay away from Safeway grocery stores. Safeway’s chief executive officer Steve Burd is leading a coalition of grocers demanding deep cuts in workers’ health coverage as well as lower wages for new hires. The success of the union movement-wide “Hold the Line for Health Care” campaign is important to all workers, whether or not they are represented by a union, said Jenifer Riddagh, a UFCW Local 1036 member and 29-year veteran of Safeway-owned Vons stores in Southern California. “What happens to us will affect everyone’s ability to purchase not just affordable but adequate health care,” she said.

But Safeway is the role model for the Ryan Republicans. I guess Paul Ryan sees this as the market based solution to making sure companies get higher profit margins. Republicans neither care about basic fairness nor efficiency as the only goal is more income for rich people.

When The People Publicly Hanged "Populists" From Their Feet

This has happened at least twice in Italy's history.  The first time was in October, 1354 in Rome to Cola di Rienzo, the second time was in April, 1945 in Milan  to Benito Mussolini.  There is another similarity to both of these events

Cola di Rienzo (aka Rienzi) was in the Campodiglio, the ruling building of Rome where he lived on the Capitoline Hill, when a mob attacked it and began burning it in anger at his misrule of the city.  After a failed effort to calm the crowd from the balcony, he decided to escape by fooling people.  He dressed up as a peasant and left through a back stairway, joining the crowd in calling for people to attack the palace and going on about how much there was to steal in it. He might have gotten away with it, but this "Man of the People"regularly wore not  only fine robes but fancy jewelry, especially elaborate rings, which he had forgotten to take off when dressing up as a peasant.  These were spotted, and the mob set on him attacking him and killing him, then dragging his body some distance to hang it from the feet for two days, where people spat on the body before it was burned on the mausoleum of Augustus.

Likewise when his Fascist Republic of Northern Italy was finally collapsing, self-proclaimed "Man of the People" Mussolini attempted to escape to Switzerland by dressing up as a peasant, but was recognized and captured by partisans who killed him.  His body was then taken to Milan and hung by the feet.

An irony of this latter event is that shortly before World War II started, an old comrade of Mussolini's from his youthful socialist period came to visit him, requesting financial  help for some mutual former friends who were out of work and being harassed by the police.  Mussolini agreed while trying to convince this old friend to join the Fascist Party, which the friend refused to do.  The friend then warned him that "This regime of yours of yours, I am afraid, will end badly.  Such things always do, Benito, you'll end like Cola di Rienzo." Mussolini reacted with anger initially to this but then spread his short and thick hands towards this old friend and denied it saying,"I wear not rings, you see.  It will not happen to me."

Barkley Rosser

The Safeway Amendment Scam

L.V. Anderson has a must read on corporate wellness programs:

In 2009, Safeway CEO Steven A. Burd launched a public relations and political campaign claiming that his company had seen a stunning drop in health care costs after implementing a wellness program. In an opinion piece for the Wall Street Journal, Burd said that Safeway had begun testing employees’ tobacco usage, weight, blood pressure, and cholesterol levels in 2005 and tying financial incentives to their results. Burd called this program “completely voluntary” in the same paragraph that he explained individuals who didn’t pass these tests had to pay $780 more in annual premiums, or $1,560 more for family plans. This kind of doublespeak is par for the course in the world of corporate wellness, where avoiding a financial penalty is often framed as getting a discount. Simply by instituting wellness programs, Burd wrote, “we have kept our per capita health-care costs flat (that includes both the employee and the employer portion), while most American companies’ costs have increased 38% over the same four years.” As it turns out, almost none of Burd’s story was true. As the Washington Post’s David Hilzenrath discovered, Safeway implemented its wellness program in 2009, not 2005, and only about 14 percent of its workforce was even eligible to participate in it. Safeway did manage to keep its health care costs down—by raising deductibles in 2006, shifting more of the cost of health care onto employees.

She noted the history of how the Federal government addressed this issue over time:

Throughout the 1990s, federal regulations kept workplace wellness programs in check. Companies were allowed to offer modest financial incentives, but the rewards could be tied only to participation, not to outcomes. In other words, companies could offer workers cash or a discount on their insurance premiums for completing an HRA or a biometric screening, but they had to give all participants the same reward regardless of their health status. That changed during the George W. Bush administration. In December 2006, Bush’s regulators in the departments of Labor, Treasury, and Health and Human Services—the three agencies that regulate group health plans and enforce HIPAA—finalized a new ruleestablishing that companies could tie financial rewards to health outcomes. Not only that, they could increase the size of the financial rewards up to 20 percent of the total cost of the health plan. Put another way, this meant that companies could shift up to 20 percent of the total cost of premiums onto unhealthy employees. Business leaders had told administrators that they’d have “a greater opportunity to encourage healthy behaviors through programs of health promotion and disease prevention if they are allowed flexibility in designing such programs,” as Bush’s staff wrote in the rule.

She continues by noting how this Safeway scam conned the Obama Administration into putting the “Safeway Amendment” into ACA. But why bring this up now as aren’t we doing “Repeal and Replacement” whatever that means? Eric Levitz explains:

Now that it’s public knowledge that the story behind the Safeway Amendment was a lie — and that there is little science to support that lie’s broader premise — you might think that Congress would scrap the provision. If so, you don’t know Congress. Rather than roll back the Safeway Amendment, the House GOP is working to expand its reach ... It’s almost as though entities that define their own wellness by the size of their profit margins can’t be trusted to promote the “wellness” of the human beings that they view as labor costs.

Using disinformation to promote an agenda of shifting more costs onto workers to enhance profit margins. Isn’t this what Paul Ryan means by “A Better Way”?

Mussolini's Method Of Oratory

Does this sound familiar?

"He [Mussolini] paid little attention to the logic and truth of what he said as long as it was energetic and stirring. His gestures had rhythm and vigour.  He used short, staccato sentences, with no clear connection between them, often with long and dramatic pauses, sometimes changing voice and expression in a crescendo of violence and ending in a tornado of vituperations.  When his audience was carried away by his oratory he would sometimes stop and put to them a rhetorical question. They roared their answer.  This established a sort of heated dialogue, through which the spectators became involved in decisions they had no time to meditate on. Through incendiary eloquence, he rose..."

Luigi Barzini, The Italians, 1964, pp.135-136

Barkley Rosser

Searching For The Origins Of Fascism

Not too long ago I argued that Bonapartism in the nineteenth century was the predecessor of Mussolini fascism in the twentieth, the emphasis on a militaristic dictator emphasizing strong nationalism that smothers all groups into following the national leader.  However, it turns out that Napoleon Bonaparte had his own model.  When he invaded Russia he carried a book with him written in 1733 called Conjurat de Nicholas, dit de Rienzi, about Cola di Rienzo.

Cola di Rienzo seized power in Rome in 1347, declaring a revived Roman republic and attempted to conquer Italy and declared that he wished to conquer the whole world.  His rule did not last long and he fell from power after trying, but he took power under the first use of a red flag in political history, and he had a grandiose notion of himself, to put it mildly, giving himself the title "Nicholas, Severe and Merciful, Deliverer of Rome, Defender of Italy, Friend of Mankind, and of Liberty, Peace, and Justice, Tribune August.."  He was also the first person in history to write with a silver pen, with which signed official decrees.

The astute Luigi Barzini in The Italians (p. 117) claims that he was the pure Italian hero and describes him as having the following characteristics (one sentence):

"These are: literary, artistic, vague and contradictory ideas, practically unrelated to the contemporary world, the vast ambition to dominate all Italy, to re-establish the Empire, and, in the end the rest of Europ; the dream of building a 'new State,' inspired  by ancient history, in which peace, law and virtue would prevail; a genuine love for his people,his country, and their glorious past, a love so  intense it could be confused with self-love, as if he identified himself with Italy and the Italians; and the desire to  avenge his peoples' ruin and humiliation, which he attributed solely to the wickedness of others."

Addendum:  Wagner's obscure early opera, "Rienzi," is about this figure.  Wagner was Hitler's favorite composer.

 Further Addendum:  Two further points.  One is this matter of classical fascism tending to draw on both Left and Right politically, at least to obtain power, although then generally going Right.  Rienzo (or Rienzi) also had this, often labeled a "populiat," he opposed the aristocracy and the Church, much like the French Revolution and then Napoleon,  who drew off the FR.  Of course, Napoleon later declared himself Emperor, made peace with the Church, and handed out his own aristocratic titles.  Rienzi wanted to be emperor, but did not get that far.

The other is the matter of appealing ot ancient (or past) glory of the nation.  Like Rienzi, for Mussolini this was Ancient Rome,  and indeed the word "fascism" comes from the Latin "fasces," for a bundle of sticks held together by a rope, symbolizing the unity of the nation's people.

So, Rienzo/Rienzi tried to make Rome (and Italy) great again, as did Mussolini, and so with Napoleon and France, and others since elsewhere...

Barkley Rosser

International Womens' Day And The Russian February Revolution Centennial

It is now March 8, 2017, here in Italy where I currently am, so Happy International Womens' Day everybody!  I note that today is the centennial  of the beginning of the Russian February Revolution, so called because Russia was still on the Julian calendar back then, and the date was February 23, 1917, even though it was March 8 in the rest of the world on the Gregorian calendar, which they switched to a few years later.  This is not entirely a coincidence, and is deeply connected with why while the first "National Woman's Day" ever happened in the New York on February 28, 1909, it is not only not a holiday in the US, but is widely unknown even to many American women, even while  it is a national holiday in 26 nations around the world and has been internationally recognized since the mid-1970s by the United Nations (either 1975 or 1977, sources seem to disagree).

There are many conflicting stories and myths surrounding the origin of International Womens' Day, but it does seem that the first celebration was organized by the American Socialist Party and held in New York on Feb. 28, 1909, emphasizing both working womens' rights and the suffragette movement's  demand for women gaining the right to vote.  The most famous line from that first celebration was probably due to author Charlotte Gilman Perkins, speaking in Brooklyn, who declared that "...a woman's duty is to her home and...home includes the whole country."  The following year the idea was picked up and endorsed by the Socialist International meeting in Copenhagen under the name "Working Woman's Day," and then spread gradually throughout most of the world, initially in Europe. No specific date was set for it, and it would not be until 1945 that it became the plural form of "Womens' Day." In Germany in 1912, the slogan "Bread and Roses" was adopted.  In Russia the date for celebrating it was selected in 1913 to be the last Sunday in February, Julian calendar.

So it came to pass that the last Sunday in February in 1917 was on February 23, or March 8 in the Gregorian calendar. At that time a new food rationing system had been announced by the tsarist government as Russia's participation in World War I was going very badly, and the economy was in ruins.  On that Working Woman's Day, women protestors took to the streets banging pots and pans in protest of this new system and calling for "Bread and Peace," demanding an end to the food rationing, distribution of land, and an end to tsarism.  They went to factories where many male workers joined  them in the streets.  The protests grew and increased, and four days later troops ordered to fire on them refused to do so, always the sign that a revolution is at hand. Three days after that Tsar Nicholas II abdicated, and the Provisional Government took over led by Prince Georgi Lvov, backed by the Constitutional Democrats (CaDets) party.  His government would be replaced not long afterwards by one led by Socialist Revolutionary (SR) Aleksandr Kerensky.  This government made the mistake of continuing to fight the war, despite its growing unpopularity. John Quiggen pointed out in a column in yesterday's New York Times that Kerensky may have missed a chance to make a peace offer in July to Germany, when he was at the height of his power, but he continued the war effort.  This paved the way for Lenin and the Bolsheviks to stage their coup on Julian October 25 (the Great October Socialist Revolution as it was called during the Soviet period), or November 7, Gregorian calendar, overthrowing the Kerensky government.  The Bolsheviks held a Duma election in December, but when the SRs won it, they threw the result out and simply assumed power, not giving it up until the Soviet Union ceased to exist on Christmas Day, 1991.

As Quiggen notes, this sets up a great counterfactual "what if"? What if Kerensky had successfully made that peace offer and remained in power?  Aside from possibly preventing the rise of Stalin and Hitler and the occurrence of World War II and all its horrors and much else awful that happened.  Russia might have turned into a Nordic style social democracy.  Then again, maybe this was impossible due to its tangled history of authoritarian rule.  In any case, it did not happen, Russia became the USSR, and we got the twentieth century that we got.

Even though the Bolsheviks overthrew the government arising out of that first February Revolution, they did not repudiate that revolution, indeed honored it as the first step to their revolution, and as part of that made Woman's Working Day one of celebration, with it becoming an official national holiday in 1965, and today it is a national holiday in 26 nations, 12 of them former Soviet republics.  As it is, it largely became depoliticized, with it in Russia now functioning as a sort of substitute for Valentine's Day in western nations, with Russian men traditionally giving women flowers, preferably mimosas, and taking them out to dinner and giving them chocolates, and so on.  In other nations such as Italy, where it is widely celebrated (women will get into museums free today) but is not a full national holiday, women go out together to have a good time while the men stay home and take care of the kids or whatever, but also giving women mimosas (I do have not managed to get a definite explanation where the mimosa thing came in).  Different nations do different things on this day.

But in the US, its original home, it never really caught on.  Not only that, but due to its connection with socialism and then Soviet communism, it was actively suppressed during the 1950s Cold War period, which is why many people, including many women, are simply unaware of it in the US, even as it is celebrated in various ways in well over 100 nations around the world.

However, this may be changing, and it may be at least partly due to a partial re-politicizing of the day, with the womens' March in Washington after the Trump inauguration triggering a call for a womens' general strike today in the US.  I do not know how many will respond to that, but there has been more publicity about the day than in the past, so things are changing.  There has also been some return to focusing on poltiical issues elsewhere as well, with some marches in Italy protesting violence against women around the world.  The day is going back to its roots, even as those roots are part of why it was suppressed in the US for so long.

In any case, it is worth remembering indeed that the day is associated with the beginning of one of the world's most dramatic historical events one hundred years ago, when those women in Petrograd went out to call for bread and peace while pounding on their pots and pans.  They shook the world, and women can still shake the world.

Barkley Rosser

PS: Among the myths that I have heard is the claim that the original Woman's Day event in New York was organized by Clara Zetkin.  This is false. She was a German socialist and later communist who never set foot in the US.  Her connection with the day is that at the 1910 Socialist International meeting that endorsed it, she seconded the motion to do so, and later argued for its celebration prominently, being a friend of Rosa Luxemburg, and eventually became a famous figure in the communist world, fleeing to Moscow after Hitler came to power, with many streets in the former East  Germany named after her.

Tax Reform Japanese Style

Alan Auerbach and Michael Devereux are pushing their Destination Based Cash Flow Tax (DBCFT):

This reform should appeal broadly, to Democrats and Republicans alike. The border adjustments would strongly discourage the shifting of profits and activities offshore and eliminate incentives for corporate inversions.

As I noted over at Mark Thoma’s blog earlier this morning:

(1) it would make the US a tax haven as it effectively eliminates the corporate profits tax replacing it with a sales tax - a long time Republican goal. Shifting of profits would still occur but the transfer pricing manipulation games would be at the expense of Canada, Mexico, China, Japan, and Europe. (2) corporate inversions is a gigantic canard. The easy way to do this is to eliminate the repatriation tax (another GOP goal) and to beef up transfer pricing enforcement.

The proponents conceded my first point earlier this year:

the distinction between universal and unilateral adoption is important. With adoption by only a subset of countries, those not adopting are likely to find their profit shifting problems to be intensified: companies operating in high tax countries, for instance, which may seek to artificially over-price their imports, will face no countervailing tax when sourcing them by exporting from related companies in DBCFT countries.

The problem with DBCFT is that it would make us the tax haven while most of our trading partners continue to tax both corporate profits and have a VAT. This source compares corporate profit taxes internationally while this source shows that VAT rate for our European partners. Many European nations have VAT rates near 20% even as their profit tax rates are 20% or more. Japan is an interesting case as they went to a territorial system (ending the repatriation tax) a few years ago but they also are very diligent in enforcing transfer pricing. They also lowered their profits tax from just over 40% to just over 30% as they have been raising their VAT rate, which is scheduled to be 10% in a couple of years. The Senate Republicans seem confused if not nervous about Paul Ryan’s DBCFT ideas. Their preference is to simply lower the 35% U.S. tax rate to something akin to what we see in Europe and switch to a territorial system. If we decided to also vigorously enforce transfer pricing and also passed say a 10% VAT, then maybe all this controversy go away. In other words – let’s be Japanese.