Amid the blooming flowers of May, each year sees the arrival of the Papers and Proceedings volume of the American Economic Review, containing short and sometimes punchy gleanings from the previous ASSA meetings. Here are two abstracts of interest. I haven’t gone through the papers themselves, so I can’t vouch for their methodologies, but the results they claim to have found are politically important.
Title: Student Debt and Labor Market Outcomes
Authors: Gerald Eric Daniels Jr. and Andria Smythe
We study the impact of student debt on various labor market outcomes, namely, income, hourly wages, and hours worked. Using the NLSY97 and a difference-in-difference approach, we find statistically significant differences in labor market outcomes for individuals who received a student loan versus those who received no student loan. We find that the difference in post- versus pre-college income is 8-9 percent higher for individuals that received a student loan relative to individuals who received no student loan. Further, we find evidence that this higher income is due to higher work hours.
Title: The Child Left Behind: Parental Incarceration and Adult Human Capital in the United States
Author: Laura E. Henkhaus
Exposure to parental incarceration is particularly prevalent in the United States, where about 7 percent of children have lived with a parent who was incarcerated. In this paper, I use nationally representative US data and apply partial identification methods to bound the likely effects of parental incarceration on education and labor market outcomes. Findings suggest that parental incarceration leads to substantially higher rates of high school dropout. Results provide some support for negative effects on likelihood of college degree attainment and employment in young adulthood. This work has important implications for criminal justice policy and social policies toward children.
Monday, May 13, 2019
Sunday, May 12, 2019
Why I’m Not Going to Properly Review “The People’s Republic of Wal-Mart”
I’ve been thinking about alternatives to capitalism for a long time now. I’ve taught several courses on the topic and plan eventually to write up what I think I’ve learned, so naturally I was intrigued by the new book, The People's Republic of Wal-Mart: How the World's Biggest Corporations Are Laying the Foundation for Socialism (PRW) by Leigh Phillips and Michal Rozworski. I picked up a copy and started reading it, intending to write a review for this blog.
Well, I stopped about a quarter of the way through. It’s not worth my time or yours, and I briefly want to tell you why.
For over a hundred years, socialists have looked to the organization of capitalist businesses for a vision of what a post-capitalist society might look like. The conception of socialism as a single, all-encompassing public enterprise was widely recognized by advocates and opponents alike. Marxists in particular looked to each new management strategy as a building block for the socialist future, since Marx’s idea was that the new society will be the product of the old, when the forces of production are liberated from the old, confining relations of production. Remember Lenin’s encomium to the “scientific management” of F. W. Taylor?
And so there has been much left wing debate over the years about what is progressive and valuable about management, and what needs to be discarded. You would think someone writing a book on this topic today would review that literature to see what might be learned from it. Not this one.
Meanwhile, mainstream economists as well as those on the leftward and rightward fringes have also debated the viability of a planned economy, particularly in the so-called socialist calculation debate of the 1920s and ‘30s, about which more in a moment. Anyone with a serious interest in the economics of socialism needs to study this debate closely.
And there is much more: the mainstream economic theories of the firm, the various competing management theories, and related ideas about aspects of economic theory relevant to organizing coordinated action.
Alas, Phillips and Rozworski have apparently studied little of this. As I read along, the evidence kept mounting:
Their snippets on the socialist calculation debate begin with Otto Neurath (an interesting but minor participant) and then go on to brief mentions of Ludwig von Mises, Oskar Lange and Friedrich Hayek. Nothing about Enrico Barone, who started the whole thing as part of a larger project on general equilibrium theory and its relationship to what we now call welfare economics. Mises in 1920 was actually disputing Barone, and it’s worth looking at what the disagreement was about. Contrary to the claims in PRW, neither this stage of the debate nor the subsequent ones were about avoiding surpluses and shortages of goods; they were about “rational”—efficient, well-being-enhancing—allocations. Of course, that depends on how those properties are defined, which any survey of this literature should make explicit, and which Phillips and Rzworski don’t. Their brief, vague references suggest, rather, that they know little about either general equilibrium theory or welfarism. (How can you cover the socialist calculation debate without even mentioning the equimarginal criterion?) It is interesting that the more orthodox Marxist position of one of the debaters, Maurice Dobb, is completely ignored in PRW. Finally, Phillips and Rozworski show no signs of having absorbed the argument of Don Lavoie in Rivalry and Central Planning, which has completely upended traditional interpretations. (Lavoie has been criticized, rightfully in my opinion, for a certain amount of anachronism, attributing to people like Mises the arguments they should have made in light of modern Austrian theory, but if one cares mainly about the implications of the debate and not its precise historical course, that is a minor fault.)
Early on, PRW offers the predicted litany of faults with capitalism, but ironically they are not faults with the system, only its regulation. For instance, they make much of the failure of actually existing capitalist economies to internalize critical environmental externalities, but this is not intrinsic to the system as such, since governments have the ability to reverse this. It’s like saying that our current epidemic of unprovoked police violence shows that we must do away with police altogether. (Some of you may desire an unpoliced society, but if you do you need a better reason for it.) What is troubling is that it’s impossible to discuss the why and how of socialism without a clear statement of the faults it is supposed to address. No serious thought is given to this in PRW.
The possible exception to this last criticism is the brief discussion of worker unfreedom under capitalism, although its casuistry indicates it is no exception at all. Phillips and Rozworski note that defenders of capitalism argue that workers are not tyrannized because any particular employment is voluntary: workers can leave their job and take a different one. This is an illusion, we are told, because workers will starve if they don’t allow themselves to be bossed by one capitalist or another; hence it is tyranny after all. But this is embarrassingly sophomoric, treating freedom as a simple binary: either you’re free or you’re enslaved. Of course, worker unfreedom in capitalism is a matter of degree, more severe under some circumstances than others. (Some fortunate workers in high demand are not unfree at all.) How reformable is capitalism in this respect? And how much unfreedom will persist in socialism? These are important questions that deserve careful thought, but what I read was sloppy and superficial.
Now let’s talk for a moment about what the first three chapters reveal about P&R’s knowledge of economics. They have a brief mention of Joseph Stiglitz and “information theory”, but their interpretation is simply that information is costly and people may not have enough of it. Clearly they haven’t read either Stiglitz or Akerlof (who is indirectly referenced), since their issue is asymmetric information and the effect of prices on perceptions of invisible quality. Their discussion of the economic theory of the firm has a brief precis of Coase, and that’s it. There’s nothing on principal-agent theory, incomplete contracts or anything else that modern economics has to say about the matter. This is not to say that these theories should be swallowed unthinkingly, just that, if you’re writing in this area, you shouldn’t simply ignore them. Finally, there is no mention at all of the rise of game theory, the encounter between economics and organizational behavior, or similar departures. Milgrom and Roberts, Tirole, the rest—they don’t exist. The literature on lead firms and the structure of supply chains or relational contracting—not there. These guys are completely out of their league.
Finally, on a partially related note, the book is written in a cutesy style: aren’t we crazy now, two radical Marxists writing a book on business management? It’s full of winks and righteous asides to demonstrate that the authors haven’t gone native. If this means the book’s left wing readership really does assume there is nothing to be learned from the last century of developments in organizational theory and practice that might suggest the contours of a future society, and that they have to be cajoled into reading a book on the topic with such flourishes, we really are in a bad way. I’ve pulled out one example:
Well, I stopped about a quarter of the way through. It’s not worth my time or yours, and I briefly want to tell you why.
For over a hundred years, socialists have looked to the organization of capitalist businesses for a vision of what a post-capitalist society might look like. The conception of socialism as a single, all-encompassing public enterprise was widely recognized by advocates and opponents alike. Marxists in particular looked to each new management strategy as a building block for the socialist future, since Marx’s idea was that the new society will be the product of the old, when the forces of production are liberated from the old, confining relations of production. Remember Lenin’s encomium to the “scientific management” of F. W. Taylor?
And so there has been much left wing debate over the years about what is progressive and valuable about management, and what needs to be discarded. You would think someone writing a book on this topic today would review that literature to see what might be learned from it. Not this one.
Meanwhile, mainstream economists as well as those on the leftward and rightward fringes have also debated the viability of a planned economy, particularly in the so-called socialist calculation debate of the 1920s and ‘30s, about which more in a moment. Anyone with a serious interest in the economics of socialism needs to study this debate closely.
And there is much more: the mainstream economic theories of the firm, the various competing management theories, and related ideas about aspects of economic theory relevant to organizing coordinated action.
Alas, Phillips and Rozworski have apparently studied little of this. As I read along, the evidence kept mounting:
Their snippets on the socialist calculation debate begin with Otto Neurath (an interesting but minor participant) and then go on to brief mentions of Ludwig von Mises, Oskar Lange and Friedrich Hayek. Nothing about Enrico Barone, who started the whole thing as part of a larger project on general equilibrium theory and its relationship to what we now call welfare economics. Mises in 1920 was actually disputing Barone, and it’s worth looking at what the disagreement was about. Contrary to the claims in PRW, neither this stage of the debate nor the subsequent ones were about avoiding surpluses and shortages of goods; they were about “rational”—efficient, well-being-enhancing—allocations. Of course, that depends on how those properties are defined, which any survey of this literature should make explicit, and which Phillips and Rzworski don’t. Their brief, vague references suggest, rather, that they know little about either general equilibrium theory or welfarism. (How can you cover the socialist calculation debate without even mentioning the equimarginal criterion?) It is interesting that the more orthodox Marxist position of one of the debaters, Maurice Dobb, is completely ignored in PRW. Finally, Phillips and Rozworski show no signs of having absorbed the argument of Don Lavoie in Rivalry and Central Planning, which has completely upended traditional interpretations. (Lavoie has been criticized, rightfully in my opinion, for a certain amount of anachronism, attributing to people like Mises the arguments they should have made in light of modern Austrian theory, but if one cares mainly about the implications of the debate and not its precise historical course, that is a minor fault.)
Early on, PRW offers the predicted litany of faults with capitalism, but ironically they are not faults with the system, only its regulation. For instance, they make much of the failure of actually existing capitalist economies to internalize critical environmental externalities, but this is not intrinsic to the system as such, since governments have the ability to reverse this. It’s like saying that our current epidemic of unprovoked police violence shows that we must do away with police altogether. (Some of you may desire an unpoliced society, but if you do you need a better reason for it.) What is troubling is that it’s impossible to discuss the why and how of socialism without a clear statement of the faults it is supposed to address. No serious thought is given to this in PRW.
The possible exception to this last criticism is the brief discussion of worker unfreedom under capitalism, although its casuistry indicates it is no exception at all. Phillips and Rozworski note that defenders of capitalism argue that workers are not tyrannized because any particular employment is voluntary: workers can leave their job and take a different one. This is an illusion, we are told, because workers will starve if they don’t allow themselves to be bossed by one capitalist or another; hence it is tyranny after all. But this is embarrassingly sophomoric, treating freedom as a simple binary: either you’re free or you’re enslaved. Of course, worker unfreedom in capitalism is a matter of degree, more severe under some circumstances than others. (Some fortunate workers in high demand are not unfree at all.) How reformable is capitalism in this respect? And how much unfreedom will persist in socialism? These are important questions that deserve careful thought, but what I read was sloppy and superficial.
Now let’s talk for a moment about what the first three chapters reveal about P&R’s knowledge of economics. They have a brief mention of Joseph Stiglitz and “information theory”, but their interpretation is simply that information is costly and people may not have enough of it. Clearly they haven’t read either Stiglitz or Akerlof (who is indirectly referenced), since their issue is asymmetric information and the effect of prices on perceptions of invisible quality. Their discussion of the economic theory of the firm has a brief precis of Coase, and that’s it. There’s nothing on principal-agent theory, incomplete contracts or anything else that modern economics has to say about the matter. This is not to say that these theories should be swallowed unthinkingly, just that, if you’re writing in this area, you shouldn’t simply ignore them. Finally, there is no mention at all of the rise of game theory, the encounter between economics and organizational behavior, or similar departures. Milgrom and Roberts, Tirole, the rest—they don’t exist. The literature on lead firms and the structure of supply chains or relational contracting—not there. These guys are completely out of their league.
Finally, on a partially related note, the book is written in a cutesy style: aren’t we crazy now, two radical Marxists writing a book on business management? It’s full of winks and righteous asides to demonstrate that the authors haven’t gone native. If this means the book’s left wing readership really does assume there is nothing to be learned from the last century of developments in organizational theory and practice that might suggest the contours of a future society, and that they have to be cajoled into reading a book on the topic with such flourishes, we really are in a bad way. I’ve pulled out one example:
(You might also be asking: Why does it now seem like I’m reading a god-awful, capitalism-fellating airport business book? Suck it up. Socialism is all about logistics, comrade.) (Parentheses in the original.)You get the idea. But socialism is actually not all about logistics. Keeping track of stuff and moving it around efficiently is essentially the same problem in capitalism and socialism. It can be done better or worse, but it has nothing to do with how socialism might be organized and whether it would be an improvement. If you don’t understand the difference between organizing an enterprise whose goal is to compete in a market environment with other enterprises from the problem of devising a socialist framework that offers other (or additional) channels for meeting the needs of different groups in society, you shouldn’t write a book about it. Or if you do, I don’t need to read it.
Saturday, May 11, 2019
The Psilocybin Referendum In Denver
This is one of the last things I was expecting to see happen; that a referendum in Denver would effectively decriminalize magic mushrooms or more specifically the main constituent component of them, the psychedelic drug, psilocybin. But this has happened in the Mile High City, if by a narrow margin. I largely welcome this. After all, it has always been sort of ridiculous to arrest someone for owning a naturally growing mushroom, especially one known to grow especially in cowpies.
This gets personal. I had my first psychedelic experience 55 years ago from ingesting a completely legal, and still legal, substance, morning glory seeds, certain brands of which (Heavenly Blue and Pearly Gates) containing LSD-6, a weaker form of LSD-25, the usual form of "acid" that people take, which is a Schedule 1 drug along with marijuana, illegal for half a century here in the US, asi is psilocybin also. As it is, psilocybin has long been known to be much milder than other psychedelics, especially LSD. That long-ago experience massively changed me and my view of the world, I think mostly for the better.
Now the advocates of this semi-legalization have touted with good reason that many people using psilocybin in carefully controlled circumstances have had amazingly positive outcomes in terms of mental health and life satisfaction. But I am also aware that widespread general use out of such environments of psilocybin may lead to problems, with driving being high on the list for concern. It may be that simply enforcing driving behavior in general will cover this and my expectation is that drinking alcohol will continue to be a much bigger problem than wacked-out psilocybin users on roads in Denver.
Nevertheless, I have concerns. It really would be great if all those consuming psilocybin in whatever form would do so in the kinds of environments its advocates have publicized, which are admirable. But we know that this referendum will result in an increase in use that will not fit these nice conditions. All I can say is that I hope for the best, and at the bottom line, I am pleased this referendum passed.
Barkley Rosser
This gets personal. I had my first psychedelic experience 55 years ago from ingesting a completely legal, and still legal, substance, morning glory seeds, certain brands of which (Heavenly Blue and Pearly Gates) containing LSD-6, a weaker form of LSD-25, the usual form of "acid" that people take, which is a Schedule 1 drug along with marijuana, illegal for half a century here in the US, asi is psilocybin also. As it is, psilocybin has long been known to be much milder than other psychedelics, especially LSD. That long-ago experience massively changed me and my view of the world, I think mostly for the better.
Now the advocates of this semi-legalization have touted with good reason that many people using psilocybin in carefully controlled circumstances have had amazingly positive outcomes in terms of mental health and life satisfaction. But I am also aware that widespread general use out of such environments of psilocybin may lead to problems, with driving being high on the list for concern. It may be that simply enforcing driving behavior in general will cover this and my expectation is that drinking alcohol will continue to be a much bigger problem than wacked-out psilocybin users on roads in Denver.
Nevertheless, I have concerns. It really would be great if all those consuming psilocybin in whatever form would do so in the kinds of environments its advocates have publicized, which are admirable. But we know that this referendum will result in an increase in use that will not fit these nice conditions. All I can say is that I hope for the best, and at the bottom line, I am pleased this referendum passed.
Barkley Rosser
In the top 100 again
So for the fourth year in a row, we along with our closely associated blog, Angry Bear, have been listed as among the top 100 economics blogs. We continue to be put into the category of "financial economics," as we were last year, with little change in our description.
But, hey, I am not going to complain. Quite a few blogs formerly on the list are off, replaced by the up and coming. If there is a part of the description of us I am uncomfortable with it is the claim, made in the past as well, that we are "complicated" and that people not well-informed about economics should avoid our blog. I do not think this is generally the case, although I can appreciate that some threads have gotten off into some obscure points.
But, I suspect that we shall not change much in response to any of that. In any case, I would prefer to be on this list than off, even if I have some disagreements with some of how we are described and categorized.
Barkley Rosser
But, hey, I am not going to complain. Quite a few blogs formerly on the list are off, replaced by the up and coming. If there is a part of the description of us I am uncomfortable with it is the claim, made in the past as well, that we are "complicated" and that people not well-informed about economics should avoid our blog. I do not think this is generally the case, although I can appreciate that some threads have gotten off into some obscure points.
But, I suspect that we shall not change much in response to any of that. In any case, I would prefer to be on this list than off, even if I have some disagreements with some of how we are described and categorized.
Barkley Rosser
Wednesday, May 8, 2019
Iran: An Unfortunate Anniversary And Getting Worse
It was a year ago today that President Trump removed the United States from the JCPOA nuclear agreement with Iran as well as Russia, China, UK, France, Germany, and the EU, under the auuspices of the UN Security Council. Accoerding to IAEA inspectors, Iran was fulfilling its part of the agreement, and it has continued to do so up until now as well, despite thi s unwarranted action by the US, although that may be about to change. The other signatories have strongly opposed the US action, although it has been supported by Israel, Saudi Arabia, UAE, Bahrain, and Egypt somewhat less enthusiastically. Nevertheless, the nations opposing this US action have been ineffectual in blocking US actions following up on this.
These actions have involved reintroducing economic sanctions on Iran. Oil exports from Iran have fallen by half since then and are likely to fall further as the US ended waivers on May 2 for a set of nations from the oil sanctions, although reportedly at least China and maybe Turkey will ignore these sanctions. The decision to end these waivers has been followed by increased volatility in world oil prices. The sanctions have also been imposed on any businesses operating in Iran, with many large European companies such as Total in France withdrawing from Iran, even as their governments oppose the US actions. Efforts have been made to establish alternative payment systems, but so far the US effort has had a large effect on reducing foreign economic activity in Iran. The upshot has been to increase economic problems in Iran, with GDP down by at least 6 percent in the last year as well as the inflation rate rising.
Furthermore, quite recently the US has imposed sanctions directly on the Iranian Revolutionary Guards as a terrorist group. While indeed this group has engaged in some such activities, this is the first time the US has declared a government entity of another nation to be terrorist group. Finally, just within the last few days, National Security Adviser John Bolton has announced that the aircrafft carrier, Abraham Lincoln, will arrive in the Persian Gulf supposedly to deter Iran from attacking US troops or those of US allies, although no specific reports of Iranian threats to do anything of the sort have been reported, just general claims. Apparently last year Bolton tried to do this but was blocked by then SecDef Mattis, but this year, his successor, Shanahan, has approved this provocative move.
None of this is.good, although the Israelis claim that Iranian aid for Hezbollah in Lebanon has been reduced, which I suspect has been Israel's main goal in supporting this as I do not think they have viewed the supposed nuclear threat from Iran seriously, but they are afraid of Hezbollah, which they were unable to defeat easily the last time they invaded Lebanon. The israelis regularly claim Hezbollah is a terrorist group, although it is many years since they have engaged in such activities, and these days are too busy being the dominant party in the current Lebanese government.
The final shoe to drop on this anniversary is that it is being reported that apparently Iran is losing its patience with the other signatories of the JCPOA in their inability to counter all these largely illegal actions by the US. They are going to stop fully adhering to the JCPOA, although without fully abrogating it. Apparently as a result of the sanctions they do not have enough enriched uranium to fuel their medical nuclear reactor. So in technical violation of the accord they will begin enriching a small amount of uranium up to 20 percent (still way below weapons grade level) for use in this civilian reactor. This is unfortunate, although I fear understandable. Of course, this amounts to an escalation that will simply fuel further aggressive actions by the Trump administration.
The Trump people claim that their goal is to induce Iran to return to the negotiating table to get a "better deal," although the JCPOA was very difficult to negotiate. SecState Pompeo has issued 12 demands of Iran for removing the sanctions, which, while a few of these may be not too unreasonable, the entire package is clearly unacceptable to the current government. Indeed, various figures led by Bolton have made it clear that what they really want is regime change, an end to the Islamic Republic and its replacement by somebody else. Of course in the near term these US actions have strengthened the hands of hardliners, with this latest move to step back partially from the JCPOA a sign of that.
Indeed, these US figures are pretty deluded in what might succeed the current regime from an internal upheaval. The "Green" opposition in 2009 that the US supported (if too quietly according to some) supported retaining a civilian nuclear program, which is widely popular in Iran. Indeed, current president Rouhani was elected on making an agreement with the outside world to restrict possible military nuclear development while maintaining its civilian program, and he was reelected to continue this.
As it is, it seems that Bolton and others are really itching to have a war with Iran to replace its current government. Perhaps if the US militarily imposes a flunky regime, it will stop the civilian reactor program, although we know this would be very unpopular. However, such a war would without doubt be far more devastating than the botch of one George W. Bush started in Iraq, andd it would h ave far less external support than the one Bush started in Iraq. After all, although in the end there were none there, Bush made claims that many believed at the time that Saddam Hussein possessed WMDs. But nobody believes that of Iran now, and up until now it has fulfilled its obligations under the JCPOA to have no military nuclear program, and even what appears to be its likely coming violation of that will not amount to such a military program. There simply will be no credible ground for such a war, which would draw only the support of the handful of nations currently supporting the current US policy.
All of this is very unfortunate and dangerous. This is a sad and disturbing anniversary, even though much of the US media praises Trump for having "fulfilled a campaign promise" without providing any serious awareness of both how dangerous this policy is and how isolated the US has become in pursuing it. I think that of the many unwise things Trump has done in his foreign policy, this is by far the worst and least defensible.
Addendum, 9 PM, 4/8/19: DOD has released a supposed basis for fearing possible Iranian attacks on US forces or allies. Apparently a dhow, a small Iranian boat, was spotted having on its deck some containers that might have fully assembled ballistic missiles. Supposedly these boats have normally had disassembled such missiles on their decks, with these reportedly usually going to Yemen to supply the Houthis there. So, wow, this is the big threat, some missiles on a small boat assembled rather than disassembled, probably heading to Yemen! This clearly justifies a massive escalation by the US for sure.
Barkley Rosser
These actions have involved reintroducing economic sanctions on Iran. Oil exports from Iran have fallen by half since then and are likely to fall further as the US ended waivers on May 2 for a set of nations from the oil sanctions, although reportedly at least China and maybe Turkey will ignore these sanctions. The decision to end these waivers has been followed by increased volatility in world oil prices. The sanctions have also been imposed on any businesses operating in Iran, with many large European companies such as Total in France withdrawing from Iran, even as their governments oppose the US actions. Efforts have been made to establish alternative payment systems, but so far the US effort has had a large effect on reducing foreign economic activity in Iran. The upshot has been to increase economic problems in Iran, with GDP down by at least 6 percent in the last year as well as the inflation rate rising.
Furthermore, quite recently the US has imposed sanctions directly on the Iranian Revolutionary Guards as a terrorist group. While indeed this group has engaged in some such activities, this is the first time the US has declared a government entity of another nation to be terrorist group. Finally, just within the last few days, National Security Adviser John Bolton has announced that the aircrafft carrier, Abraham Lincoln, will arrive in the Persian Gulf supposedly to deter Iran from attacking US troops or those of US allies, although no specific reports of Iranian threats to do anything of the sort have been reported, just general claims. Apparently last year Bolton tried to do this but was blocked by then SecDef Mattis, but this year, his successor, Shanahan, has approved this provocative move.
None of this is.good, although the Israelis claim that Iranian aid for Hezbollah in Lebanon has been reduced, which I suspect has been Israel's main goal in supporting this as I do not think they have viewed the supposed nuclear threat from Iran seriously, but they are afraid of Hezbollah, which they were unable to defeat easily the last time they invaded Lebanon. The israelis regularly claim Hezbollah is a terrorist group, although it is many years since they have engaged in such activities, and these days are too busy being the dominant party in the current Lebanese government.
The final shoe to drop on this anniversary is that it is being reported that apparently Iran is losing its patience with the other signatories of the JCPOA in their inability to counter all these largely illegal actions by the US. They are going to stop fully adhering to the JCPOA, although without fully abrogating it. Apparently as a result of the sanctions they do not have enough enriched uranium to fuel their medical nuclear reactor. So in technical violation of the accord they will begin enriching a small amount of uranium up to 20 percent (still way below weapons grade level) for use in this civilian reactor. This is unfortunate, although I fear understandable. Of course, this amounts to an escalation that will simply fuel further aggressive actions by the Trump administration.
The Trump people claim that their goal is to induce Iran to return to the negotiating table to get a "better deal," although the JCPOA was very difficult to negotiate. SecState Pompeo has issued 12 demands of Iran for removing the sanctions, which, while a few of these may be not too unreasonable, the entire package is clearly unacceptable to the current government. Indeed, various figures led by Bolton have made it clear that what they really want is regime change, an end to the Islamic Republic and its replacement by somebody else. Of course in the near term these US actions have strengthened the hands of hardliners, with this latest move to step back partially from the JCPOA a sign of that.
Indeed, these US figures are pretty deluded in what might succeed the current regime from an internal upheaval. The "Green" opposition in 2009 that the US supported (if too quietly according to some) supported retaining a civilian nuclear program, which is widely popular in Iran. Indeed, current president Rouhani was elected on making an agreement with the outside world to restrict possible military nuclear development while maintaining its civilian program, and he was reelected to continue this.
As it is, it seems that Bolton and others are really itching to have a war with Iran to replace its current government. Perhaps if the US militarily imposes a flunky regime, it will stop the civilian reactor program, although we know this would be very unpopular. However, such a war would without doubt be far more devastating than the botch of one George W. Bush started in Iraq, andd it would h ave far less external support than the one Bush started in Iraq. After all, although in the end there were none there, Bush made claims that many believed at the time that Saddam Hussein possessed WMDs. But nobody believes that of Iran now, and up until now it has fulfilled its obligations under the JCPOA to have no military nuclear program, and even what appears to be its likely coming violation of that will not amount to such a military program. There simply will be no credible ground for such a war, which would draw only the support of the handful of nations currently supporting the current US policy.
All of this is very unfortunate and dangerous. This is a sad and disturbing anniversary, even though much of the US media praises Trump for having "fulfilled a campaign promise" without providing any serious awareness of both how dangerous this policy is and how isolated the US has become in pursuing it. I think that of the many unwise things Trump has done in his foreign policy, this is by far the worst and least defensible.
Addendum, 9 PM, 4/8/19: DOD has released a supposed basis for fearing possible Iranian attacks on US forces or allies. Apparently a dhow, a small Iranian boat, was spotted having on its deck some containers that might have fully assembled ballistic missiles. Supposedly these boats have normally had disassembled such missiles on their decks, with these reportedly usually going to Yemen to supply the Houthis there. So, wow, this is the big threat, some missiles on a small boat assembled rather than disassembled, probably heading to Yemen! This clearly justifies a massive escalation by the US for sure.
Barkley Rosser
Wednesday, May 1, 2019
The John Bates Clark Award And Me Getting Old
Yes, this is going to all be about me! :-)
So, before getting to me, me, me, let me congratulate Emi Nakamura of the UC-Berkeley economics dept for receiving the John Bates Clark Award. It seems to be well deserved for her innovative and influential work on looking at high frequency detailed micro data sets to get more accurate estimates of macro variables, including both inflation rates and fiscal multipliers. At 38 she is young enough (one must be under 40). She is also now a coeditor of the American Economic Review. I have seen some grumbling that her frequent coauthor and husband, Jon Steinnson, did not share in it or get it himself. He is now too old at 42, and while her three most cited papers are coauthored with him, many others of hers are not, and several important papers of hers are sole authored.
As for how this relates to me, the really important part of this post, :-), I have never met her. However, I know her mother, Alice Orcutt Nakamura, an economist at the University of Alberta, who just happens to be the first woman ever to publish in the American Economic Review back in 1979. She was also the first woman president of the Canadian Economics Association in 1994-95. She has done lots of work on econmetrics, labor markets, and, interestingly, in the sort of micro studies of price changes that have since become a major focus of her daughter's highly influential research.
But it does not stop there, this matter of me being so old I know the parents of currently prominent people (I have never met prez candidate Kamala Harris, but I know her dad, Don Harris, very well, a retired Post Keynesian economist out of Stanford). I also knew Emi's maternal grandfather, Alice's dad, the late Guy Orcutt, who was at the University of Wisconsin-Madison when I was. He founded the Social Science Research Institute there and was a well-known econometrician, model for his daughter, most famous for his work on Cochrane-Orcutt estimators that can be used to correct for certain time-series correlations one finds out about using Durbin-Watson statistics. Guy died in 2006, but I am sure he would have been proud of this achievement by his granddaughter.
Addendum: Alice Orcutt Nakamura's husband, Masao, is also an economist, located at the University of British Columbia, and he and Alice have also coauthored many papers.
Barkley Rosser
So, before getting to me, me, me, let me congratulate Emi Nakamura of the UC-Berkeley economics dept for receiving the John Bates Clark Award. It seems to be well deserved for her innovative and influential work on looking at high frequency detailed micro data sets to get more accurate estimates of macro variables, including both inflation rates and fiscal multipliers. At 38 she is young enough (one must be under 40). She is also now a coeditor of the American Economic Review. I have seen some grumbling that her frequent coauthor and husband, Jon Steinnson, did not share in it or get it himself. He is now too old at 42, and while her three most cited papers are coauthored with him, many others of hers are not, and several important papers of hers are sole authored.
As for how this relates to me, the really important part of this post, :-), I have never met her. However, I know her mother, Alice Orcutt Nakamura, an economist at the University of Alberta, who just happens to be the first woman ever to publish in the American Economic Review back in 1979. She was also the first woman president of the Canadian Economics Association in 1994-95. She has done lots of work on econmetrics, labor markets, and, interestingly, in the sort of micro studies of price changes that have since become a major focus of her daughter's highly influential research.
But it does not stop there, this matter of me being so old I know the parents of currently prominent people (I have never met prez candidate Kamala Harris, but I know her dad, Don Harris, very well, a retired Post Keynesian economist out of Stanford). I also knew Emi's maternal grandfather, Alice's dad, the late Guy Orcutt, who was at the University of Wisconsin-Madison when I was. He founded the Social Science Research Institute there and was a well-known econometrician, model for his daughter, most famous for his work on Cochrane-Orcutt estimators that can be used to correct for certain time-series correlations one finds out about using Durbin-Watson statistics. Guy died in 2006, but I am sure he would have been proud of this achievement by his granddaughter.
Addendum: Alice Orcutt Nakamura's husband, Masao, is also an economist, located at the University of British Columbia, and he and Alice have also coauthored many papers.
Barkley Rosser
Saturday, April 27, 2019
Panetta and Trump: Who are You Calling Chumps?
Leon Panetta:
Trump treats Americans like we’re chumpsCheck out the entire interview as it was excellent. But I had to look up this old fashion word:
a person who is easily tricked : a stupid or foolish personOK – Trump supporters are easily tricked. But Trump wants to pretend he is a young vigorous man! Chris Matthews did talk about young people who are more likely to check out Urban Dictionary than the old fashion Merriam-Webster dictionary:
Someone who does not understand the basics of life on earth. Confused easily.Actually this is the perfect description for Trump supporters. There are more definitions at Urban Dictionary that I would submit also apply!
Friday, April 26, 2019
Prisoners of Overwork: A Dilemma
The New York Times has an illuminating article today summarizing recent research on the gender effects of mandatory overwork in professional jobs. Lawyers, people in finance and other client-centered occupations are increasingly required to be available round-the-clock, with 50-60 or more hours of work per week the norm. Among other costs, the impact on wage inequality between men and women is severe. Since women are largely saddled with primary responsibility for child care, even when couples ostensibly embrace equality on a theoretical level, the workaholic jobs are allocated to men. This shows up in dramatic differences between typical male and female career paths. The article doesn’t discuss comparable issues in working class employment, but availability for last-minute changes in work schedules and similar demands are likely to impact men and women differentially as well.
What the article doesn’t point out is that the situation it describes is a classic prisoners dilemma.* Consider law firms. They compete for clients, and clients prefer attorneys who are available on call, always prepared and willing to adjust to whatever schedule the client throws at them. Assume that most lawyers want sane, predictable work hours if they are offered without a severe penalty in pay. If law firms care about the well-being of their employees but also about profits, we have all the ingredients to construct a standard PD payoff matrix:
There is a penalty to unilateral cooperation, cutting work hours back to a work-life balance level. If your firm does it and the others don’t, you lose clients to them.
There is a benefit to unilateral defection. If everyone else is cutting hours but you don’t, you scoop up the lion’s share of the clients.
Mutual cooperation is preferred to mutual defection. Law firms, we are assuming, would prefer a world in which overwork was removed from the contest for competitive advantage. They would compete for clients as before, but none would require their staff to put in soul-crushing hours. The alternative equilibrium, in which competition is still on the basis of the quality of work but everyone is on call 24/7 is inferior.
If the game is played once, mutual defection dominates. If it is played repeatedly there is a possibility for mutual cooperation to establish itself, but only under favorable conditions (which apparently don’t exist in the world of NY law firms). The logical solution is some form of binding regulation.
The reason for bringing this up is that it strengthens the case for collective action rather than placing all the responsibility on individuals caught in the system, including for that matter individual law firms. Or, the responsibility is political, to demand constraints on the entire industry. One place to start would be something like France’s right-to-disconnect law.
*I haven’t read the studies by economists and sociologists cited in the article, but I suspect many of them make the same point I’m making here.
What the article doesn’t point out is that the situation it describes is a classic prisoners dilemma.* Consider law firms. They compete for clients, and clients prefer attorneys who are available on call, always prepared and willing to adjust to whatever schedule the client throws at them. Assume that most lawyers want sane, predictable work hours if they are offered without a severe penalty in pay. If law firms care about the well-being of their employees but also about profits, we have all the ingredients to construct a standard PD payoff matrix:
There is a penalty to unilateral cooperation, cutting work hours back to a work-life balance level. If your firm does it and the others don’t, you lose clients to them.
There is a benefit to unilateral defection. If everyone else is cutting hours but you don’t, you scoop up the lion’s share of the clients.
Mutual cooperation is preferred to mutual defection. Law firms, we are assuming, would prefer a world in which overwork was removed from the contest for competitive advantage. They would compete for clients as before, but none would require their staff to put in soul-crushing hours. The alternative equilibrium, in which competition is still on the basis of the quality of work but everyone is on call 24/7 is inferior.
If the game is played once, mutual defection dominates. If it is played repeatedly there is a possibility for mutual cooperation to establish itself, but only under favorable conditions (which apparently don’t exist in the world of NY law firms). The logical solution is some form of binding regulation.
The reason for bringing this up is that it strengthens the case for collective action rather than placing all the responsibility on individuals caught in the system, including for that matter individual law firms. Or, the responsibility is political, to demand constraints on the entire industry. One place to start would be something like France’s right-to-disconnect law.
*I haven’t read the studies by economists and sociologists cited in the article, but I suspect many of them make the same point I’m making here.
Tuesday, April 23, 2019
Media Continues VSP Story On Social Security
Here we go again. We have arrived at the time for the release of the annual Social Security Administration (SSA) report. It got the usual headlines across the media, that the SSA will "run out of money" in 2034. Most of the stories played it all scary, although noting that after the system will still pay 3/4 of what it was. But, of course, Congress can act now to fix the system the stories say, leaving it vague what that would amount to. Two points on this.
The first is that basically this is a repeat of the deadlines reported last year, 2034 still the year estimated for the trust fund comes to an end, the moment when the baby boomers arguably stop paying for their own retirement, as was put in place back in 1983, the year of the last major change in the system. So, no new news on those fronts, although most of the media did not note this. This was supposed to be dramatic new revelation.
The second is that there actually is a piece of new news, and it happens to be good. It is that the Disability System seems to have become financially stabilized. This was probably the part of the system that had been recently in the worst financial shape, but now it is doing much better. However, this good news was downplayed, to the extent it was reported at all. This would have distracted from the bad news stories, which the VSPs like to push so as to suggest cuts in benefits so those tax cuts for the rich can be preserved.
Barkley Rosser
The first is that basically this is a repeat of the deadlines reported last year, 2034 still the year estimated for the trust fund comes to an end, the moment when the baby boomers arguably stop paying for their own retirement, as was put in place back in 1983, the year of the last major change in the system. So, no new news on those fronts, although most of the media did not note this. This was supposed to be dramatic new revelation.
The second is that there actually is a piece of new news, and it happens to be good. It is that the Disability System seems to have become financially stabilized. This was probably the part of the system that had been recently in the worst financial shape, but now it is doing much better. However, this good news was downplayed, to the extent it was reported at all. This would have distracted from the bad news stories, which the VSPs like to push so as to suggest cuts in benefits so those tax cuts for the rich can be preserved.
Barkley Rosser
Free Speech, Safety and the Triumph of Neoliberalism
I’m reading another article about debates over free speech on campus, this time at Williams College, an elite school in the northwestern corner of Massachusetts. A faculty petition asks to formalize and tighten the college’s policy on free speech by adopting the Chicago Principles, which state that “concerns about civility and mutual respect can never be used as a justification for closing off discussion of ideas, however offensive or disagreeable those ideas may be to some members of our community.” Over three hundred students, however, have signed a counterpetition arguing that speech which harms minorities should not be allowed. These disputes are interesting to me, partly because my own school, Evergreen State College, went through a conflict along these lines.
Consider for a moment the idea that speech activities can be evaluated by the emotional effects they engender. One person’s speech makes me feel good: fine. Another’s makes me feel terrible and should be disallowed. What this amounts to is assessing political acts according to the utility or disutility experienced by those affected by them. The “do no harm” criterion is a bit problematic, however, since people can also be subjected to disutility by restrictions on their speech as well as by hearing the speech of others. If one person feels unsafe because of being silenced, but if they talk, another will feel unsafe because of the speech content, a purely rights-based framework becomes inconsistent.
I can see two ways out. One is to put forward a hierarchy of rights-bearing, a ranking that resolves rights disputes between any two such individuals. This seems to be implicit in the way disputes like this actually play out, but if you subscribe to the principle of intersectionality (or more subversively, the principle that individuals are not reducible to their “identities”) the ranking is indeterminate.
The other would be to allow for bargaining and side payments. Yes, your speech makes me feel unsafe, but I will consent to it if you simultaneously agree to adopt a program I favor, give me additional personal guarantees or something else I value. Then we are in MarketWorld, where different parties buy and sell pieces of their political agency.
You can probably sense where I’m going. The neoliberal worldview holds that as many actions in as many spheres as possible should be evaluated according to the effect they have on individual preferences, as revealed by market choices. Take the example of restoring salmon habitat by taking down a dam. This is an action with economic consequences, but it is also a matter of social values—how much a community values having an environment in which wild fish, among others, can prosper. The neoliberal approach is to interpret that value as a consumption good: what affect does salmon restoration have on your sense of preference satisfaction, on your utility or disutility? There are various techniques that can be used to estimate this, such as a contingent valuation survey. Instead of having to deliberate politically on the values which we want our community to uphold, giving reasons for them to try to persuade one another, we should take our preferences as given and simply record the overall effect of a proposed choice on well-being.
My reading is that the core psychological principle of neoliberalism, that life is an accumulation of moments of utility and disutility, is alive and well within certain sectors of the “left”. A speech (or email or comment at a meeting) should be evaluated by how it makes us feel, and no one should have the right to make us feel bad.
I realize I will be accused of trivializing, that I’m not appreciating how bad speech can make some of us feel. And I agree that the degree of disutility in relation to the political context matters. Some speech has as its primary purpose making others suffer, through insult or instigating fear, and has little or no persuasive intent. That’s hate speech, and I don’t see a problem with curtailing it. Arguably, much of the “provocative” right-wing babble, whose goal is to demean and threaten rather than change minds, falls under this stipulation. But what distinguishes hate speech is not simply the degree of anguish it evokes but also its lack of any other motive. Giving an antiwar speech may well cause similar anguish among family members who have lost loved ones in battle, but if the purpose is political, to persuade and enlist, it should be evaluated on political grounds, not its impact on utility.
It’s the greatest power of an ideology that it can seep into the worldview of those who claim to oppose it.
Consider for a moment the idea that speech activities can be evaluated by the emotional effects they engender. One person’s speech makes me feel good: fine. Another’s makes me feel terrible and should be disallowed. What this amounts to is assessing political acts according to the utility or disutility experienced by those affected by them. The “do no harm” criterion is a bit problematic, however, since people can also be subjected to disutility by restrictions on their speech as well as by hearing the speech of others. If one person feels unsafe because of being silenced, but if they talk, another will feel unsafe because of the speech content, a purely rights-based framework becomes inconsistent.
I can see two ways out. One is to put forward a hierarchy of rights-bearing, a ranking that resolves rights disputes between any two such individuals. This seems to be implicit in the way disputes like this actually play out, but if you subscribe to the principle of intersectionality (or more subversively, the principle that individuals are not reducible to their “identities”) the ranking is indeterminate.
The other would be to allow for bargaining and side payments. Yes, your speech makes me feel unsafe, but I will consent to it if you simultaneously agree to adopt a program I favor, give me additional personal guarantees or something else I value. Then we are in MarketWorld, where different parties buy and sell pieces of their political agency.
You can probably sense where I’m going. The neoliberal worldview holds that as many actions in as many spheres as possible should be evaluated according to the effect they have on individual preferences, as revealed by market choices. Take the example of restoring salmon habitat by taking down a dam. This is an action with economic consequences, but it is also a matter of social values—how much a community values having an environment in which wild fish, among others, can prosper. The neoliberal approach is to interpret that value as a consumption good: what affect does salmon restoration have on your sense of preference satisfaction, on your utility or disutility? There are various techniques that can be used to estimate this, such as a contingent valuation survey. Instead of having to deliberate politically on the values which we want our community to uphold, giving reasons for them to try to persuade one another, we should take our preferences as given and simply record the overall effect of a proposed choice on well-being.
My reading is that the core psychological principle of neoliberalism, that life is an accumulation of moments of utility and disutility, is alive and well within certain sectors of the “left”. A speech (or email or comment at a meeting) should be evaluated by how it makes us feel, and no one should have the right to make us feel bad.
I realize I will be accused of trivializing, that I’m not appreciating how bad speech can make some of us feel. And I agree that the degree of disutility in relation to the political context matters. Some speech has as its primary purpose making others suffer, through insult or instigating fear, and has little or no persuasive intent. That’s hate speech, and I don’t see a problem with curtailing it. Arguably, much of the “provocative” right-wing babble, whose goal is to demean and threaten rather than change minds, falls under this stipulation. But what distinguishes hate speech is not simply the degree of anguish it evokes but also its lack of any other motive. Giving an antiwar speech may well cause similar anguish among family members who have lost loved ones in battle, but if the purpose is political, to persuade and enlist, it should be evaluated on political grounds, not its impact on utility.
It’s the greatest power of an ideology that it can seep into the worldview of those who claim to oppose it.
Monday, April 22, 2019
Statistical Significance and the Sweet Siren of Self-Confirmation: A Reply to Taylor
Just as Ulysses had himself chained to the mast of his ship so he wouldn’t succumb to the lure of the Sirens, John Ionnidis and others have argued we must bind ourselves to the discipline of statistical significance lest we fall victim to confirmation bias. Some researchers will want to proclaim they have found earth-shaking results even if they are enveloped in noise, and others will try to dismiss genuine findings of no effect, even if that is where the data point. The only way through the choppy seas of statistical investigation (sorry!) is to adhere unstintingly to the decision rule that everything else first depends on whether p is less than or greater than .05.
So says Timothy Taylor, citing Ionnidis:
The case for not treating statistical significance as the primary goal of an analysis seems to me ironclad. The case is strong for putting less emphasis on statistical significance and correspondingly more emphasis on issues like what data is used, the accuracy of data measurement, how the measurement corresponds to theory, the potential importance of a result, what factors may be confounding the analysis, and others. But the case for eliminating statistical significance from the language of research altogether, with the possibility that it will be replaced by an even squishier and more subjective decision process, is a harder one to make.I don’t think Taylor understands what the issue is. The question raised by the critique of null hypothesis statistical testing and its centerpiece, the asterisk-earning designation of statistical significance, is not whether we should compute p-values—we should certainly continue to do this or something very similar—but whether a particular cutoff like .05 should be used as a lexicographic decision rule. As it stands, that’s the role significance plays. If a finding holds with p < .05 it can then be examined for its provenance (data, model selection) and magnitude; if not it is considered an error or at best a sign of dubious attachment to continue to regard it as evidence. First check a result’s significance, then look at the rest of the story.
The attack against significance testing is about this decision rule. I won’t repeat all the arguments for why the rule is misguided; read the Nature comment. The only point I want to make here is that the practical effect of first categorizing all results according to how many asterisks they receive is to make every other consideration secondary. Really, is a result of a well-designed study with a highly plausible statistical model that comes in at p = .06 less constitutive of evidence than a result from a questionable study that comes in at .04?
p-values are important! The first thing I look at is the ratio of effect size to standard deviation, but there’s so much more. What about the sampling strategy? What about the measurements of key variables—are they really proxies for the true variable of interest (they often are), and if so how good are they? How much confidence should I have in the statistical model? Is this subjective, as Taylor claims? Yes and no. The evaluation I make is a matter of judgment, but it can be defended or challenged on the basis of objective aspects of the study, provided the research is sufficiently documented.
There might still be a case for significance as a sorting device if there were a requirement that each piece of research produce a determinate, yes-no verdict on the question of interest. This is the classic argument, in fact. It is up to this particular study to make a determination on whether a hypothesized effect exists, and any significant doubt is sufficient to require a “no”. So we set up the no-effect null, and only if we get a low enough p for a deviation from it (a low enough proportion of times we would expect to get an effect at least this large on repeated samples from a population with this dispersion if the true effect were zero) will our finding have survived the first possible “no”. The ritual around pre-selection of the null and the cutoff criterion (critical threshold) is about protecting this all-important first test from any contamination emanating from our self-interest. That’s what Ionnidis and Taylor are appealing to.
But the researcher does not have to make a determinate decision about the research question on the basis of a single study, or even a single variant of the same study. The evidence for a potential effect of interest, to be convincing, should not only come from well-designed, well-analyzed work; it should also, as far as possible, come from a diversity of methods and sources. We should have simulations, large-N observation studies, lab-style or natural experiments, utilizing a variety of samples and analytical methods. Even in the limiting case of a single study, every attempt should be made to generate diversity within it: partitioning into sub-samples, trying out multiple estimation models. In that case there is no need for a binary decision rule for a single finding; what matters is the constellation of evidence over the range of findings. Of course, the individual researcher or research team does not have to be the locus of this judgment. But even if they are, once we have dropped the requirement for a binary decision based on a single finding, lexicographic rules that require us to ignore whole swaths of our results can only weaken the evidentiary base we rely on.
In practice, the demand that a study generate magic asterisks in order to see the light of publication has led to lower quality, less credible and less reproducible research in economics as in many other fields. It has led to exaggerated, unwarranted confidence in dubious claims and steered the profession away from questions of high importance that are difficult to resolve using available data, which is what the significance filter means when it is yoked to peer review. There is an alternative: consider the evidence substantively, its quality and diversity. If we don’t know how to do that as a research community, we aren’t going to be rescued by an arbitrary dichotomy of p > or < .05.
Trump Drops The Other Iran Oil Shoe
US SecState Pompeo announced early today that the waivers granted to 8 nations allowing them to continue to import oil from Iran will not bee renewed when they expire in early May. I am not sure of the identity of three of those nations, but the big five are China, India, Japan, South Korea, and Turkey. None of them have made any public statement so far, nor has Iran. It has been announced that Saudi Arabia and the UAE and maybe also Iraq will increase oil production to offset this, nevertheless the price of Brent crude rose about 3 percent today, with WTI close behind.
Supposedly some of Trump's advisers warned him against this action, presumably putting themselves in danger of being part of the next round of underlings to get fired for being insufficiently subservient. The situation is potentially aggravated by Trump calling up General Hiftar in Libya and offering support for his drive to take over the whole country. Based in Benghazi, he has moved on Tripoli, reportedly with the encouragement and financial support of the Saudis. The drive has apparently stalled out, which could lead to production cuts in Libya, although I think the admin people may be betting that Hiftar will win, which might lead to a stabilization of production there.
My guess is that why Trump is doing this now is to provide some distraction from the ongoing discussions of the Mueller Report, with his followers loud proclamations of "no collusion! no obstruction!" appearing not to be convincing anybody not already hooked onto Fox News. Trump has had considerable success at imposing his will on the world regarding economic sanctions aginst Iran, even as all but a handful of nations strongly disapprove of his removing the US from the Iran nuclear accord, which Iran has continued to follow. It is a bit absurd that in bragging about the supposed success of their policies, the Trump people have pointed to that as a success, even though supposedly this deal was simply awful. As it is, their claims this will lead to a new and better deal completely lack credibility.
Indeed, this looks like a potentially much more dangerous situation. If these major nations obey Trump (I suspect some will not), Iran might be tempted to take more aggressive action, with blocking the Straits of Hormuz among the more serious. This would really spike the price of oil, and quite possibly trigger a war. This may be what the Trump people want, with their real policy apparently being "regime change." However, so far the only regime change seems to be rising influence of hardliners, with a new hardline commander for the now sanctioned Revolutionary Guards being appointed. He has been talking about missiles getting fired on Israel from Lebanon by Hezbollah. Is this what Netanyahu really wants?
I think those who think the Iranian regime will easily be overthrown are more deluded than those who advocated invading Iraq (and some of them are the same people, see John Bolton especially). This has the potential of really seriously distracting people from the Mueller Report, but not at all in a good way.
Addendum: I have just seen it pointed out that the key player in how this turns out is the largest customer for Iranian oil, China. Nobody knows, but some are predicting they will reduce purchases from Iran, but not end them.
Another odd tidbit is that there are rumors on the oil price sites that this might kill the existing OPEC deal, which could end up tanking the oil price from its $60s-70s levels down to $40. Probably not, but this move certainly destabilizes the markets leaving nobody knowing what is going to happen.
Another Addendum: In WaPo this morning they report that the othet three nations are Greece, Italy, and Taiwan, and that they have already stopped buying Iranian oil under US pressure. Also, apparently Japan has been stockpiling oil from there ans has stopped further purchases already in anticipation of just this move by the US. OTOH, both China and Turkey are talking about not obeying the US order. No word out of either India or South Korea so far.
Bolton says that this is all designed to make Iran be a "normal country," as if Saudi Arabia were such. As it is, indeed the hawkish new leader of the Iranian Revolutionary Guards has spoken publicly of possibly blocking the Straits of Hormuz, as I suggested they may well be contemplating.
Barkley Rosser
Supposedly some of Trump's advisers warned him against this action, presumably putting themselves in danger of being part of the next round of underlings to get fired for being insufficiently subservient. The situation is potentially aggravated by Trump calling up General Hiftar in Libya and offering support for his drive to take over the whole country. Based in Benghazi, he has moved on Tripoli, reportedly with the encouragement and financial support of the Saudis. The drive has apparently stalled out, which could lead to production cuts in Libya, although I think the admin people may be betting that Hiftar will win, which might lead to a stabilization of production there.
My guess is that why Trump is doing this now is to provide some distraction from the ongoing discussions of the Mueller Report, with his followers loud proclamations of "no collusion! no obstruction!" appearing not to be convincing anybody not already hooked onto Fox News. Trump has had considerable success at imposing his will on the world regarding economic sanctions aginst Iran, even as all but a handful of nations strongly disapprove of his removing the US from the Iran nuclear accord, which Iran has continued to follow. It is a bit absurd that in bragging about the supposed success of their policies, the Trump people have pointed to that as a success, even though supposedly this deal was simply awful. As it is, their claims this will lead to a new and better deal completely lack credibility.
Indeed, this looks like a potentially much more dangerous situation. If these major nations obey Trump (I suspect some will not), Iran might be tempted to take more aggressive action, with blocking the Straits of Hormuz among the more serious. This would really spike the price of oil, and quite possibly trigger a war. This may be what the Trump people want, with their real policy apparently being "regime change." However, so far the only regime change seems to be rising influence of hardliners, with a new hardline commander for the now sanctioned Revolutionary Guards being appointed. He has been talking about missiles getting fired on Israel from Lebanon by Hezbollah. Is this what Netanyahu really wants?
I think those who think the Iranian regime will easily be overthrown are more deluded than those who advocated invading Iraq (and some of them are the same people, see John Bolton especially). This has the potential of really seriously distracting people from the Mueller Report, but not at all in a good way.
Addendum: I have just seen it pointed out that the key player in how this turns out is the largest customer for Iranian oil, China. Nobody knows, but some are predicting they will reduce purchases from Iran, but not end them.
Another odd tidbit is that there are rumors on the oil price sites that this might kill the existing OPEC deal, which could end up tanking the oil price from its $60s-70s levels down to $40. Probably not, but this move certainly destabilizes the markets leaving nobody knowing what is going to happen.
Another Addendum: In WaPo this morning they report that the othet three nations are Greece, Italy, and Taiwan, and that they have already stopped buying Iranian oil under US pressure. Also, apparently Japan has been stockpiling oil from there ans has stopped further purchases already in anticipation of just this move by the US. OTOH, both China and Turkey are talking about not obeying the US order. No word out of either India or South Korea so far.
Bolton says that this is all designed to make Iran be a "normal country," as if Saudi Arabia were such. As it is, indeed the hawkish new leader of the Iranian Revolutionary Guards has spoken publicly of possibly blocking the Straits of Hormuz, as I suggested they may well be contemplating.
Barkley Rosser
Happy Birthday, Vladimir!
No, not Vladimir V. Putin. He was born on October 7, 1952, although I can understand how any reader might assume it was him, given that he has just had a great victory with the Mueller Report "exonerating" his fan boy in the White House from engaging in criminal conspiracy with him, much less getting on fan boy's case too seriously over his repeated lies and attempts to obstruct justice, allowing VVP to return to overtly lying by denying that Russia had anything to do with the 2016 election, even though the Mueller Report details extensive such efforts and Mueller even indicted several Russians (conveniently sitting in Russia and not getting prosecuted) for those efforts. Heck, Rudy Giuliani and most of Fox News will not disagree with his lies, or at least they will say the efforts were just fine and necessary to save us from the awful Hillary whose private phone and emails could get hacked by dangerous foreign powers such as, well, Russia.
The birthday Vladimir is Ulyanove, aa, Lenin, whose corpse continues to lie in the Mausoleum on Red Square, despite a few efforts by VVP to remove it. However, every time VVP has made such efforts he has been stymied by loud opposition from the still there if not very strong Communist Party, as well as longstanding disagreements over where the corpse should go. Lenin is not a figure like Gorbachev whom VVP openly reviles for weakening the Soviet/Russian state, nor is he one that VVP is actively trying to rehaabilitate, such as Joseph Stalin, whom he admires as the Great National Leader during the Great Patriotic War. No, he mostly ignores today's birthday boy, regarding whom I think he has mixed feelings and does not know quite how to deal with. Best just to leave his corpse be in the Mausoleum with minimal comment.
As it was, Vladimir Ulyanov/Lenin was born 149 years ago today, 1870, exactly 100 years before the first Earth Day in the US, which, yes, today is the 49th anniversary of that event, organized by the late senator from Wisconsin (whom I met), Gaylord Nelson. I have posted on this in the past, but at the time, harder line Marxists at radical UW-Madison jeered at that first Earth Day, both because it distracted people from remembering Lenin on his centennial (clearly a capitalist plot) and also because it was distracting people from opposing US imperialism in the Vietnam War. Heck, reduced auto emissions? I remember well certain people sneering at that as something to spend any time worrying about, especially as concern about overpopulation was clearly a Malthusian, anti-Marxist, racist, reactionary, colonialist plot, and so on and on. Really. That was what was said, including by some people I still know, but do not remind them of that. But, hey, the whole thing was a plot by Richard Nixon and his capitalist cronies to distract everybody from the Vietnam War. Yeah.
Needless to say as of today this all looks ironic, if not absurd, even if it did not do so at the time, although it must be admitted that a lot more people are thinking and talking about Earth Day today than the fact that it is Lenin's birthday. Those old Marxist-Leninists were right about worrying about that one. And not having the leader of Russia making mention or fuss about it just really sticks it in.
But the real irony is that today being strongly for the environment as expressed in the Green New Deal is the hallmark of being a "democratic socialist," something that remains very poorly defined. That old "Brown Marxism" that worried about coal miners getting laid off because of those darned auto emissions are gone or moved over to support Donald Trump, although his fan boying VVP in Russia might look familiar to some of those folks from 1970, especially those in groups that also cuddled up to the then Soviet Union. Life is funny.
Anyway, folks, happy birthday to old Vladdie Ulyanov, and also, have a Happy Earth Day, you all!
Barkley Rosser
The birthday Vladimir is Ulyanove, aa, Lenin, whose corpse continues to lie in the Mausoleum on Red Square, despite a few efforts by VVP to remove it. However, every time VVP has made such efforts he has been stymied by loud opposition from the still there if not very strong Communist Party, as well as longstanding disagreements over where the corpse should go. Lenin is not a figure like Gorbachev whom VVP openly reviles for weakening the Soviet/Russian state, nor is he one that VVP is actively trying to rehaabilitate, such as Joseph Stalin, whom he admires as the Great National Leader during the Great Patriotic War. No, he mostly ignores today's birthday boy, regarding whom I think he has mixed feelings and does not know quite how to deal with. Best just to leave his corpse be in the Mausoleum with minimal comment.
As it was, Vladimir Ulyanov/Lenin was born 149 years ago today, 1870, exactly 100 years before the first Earth Day in the US, which, yes, today is the 49th anniversary of that event, organized by the late senator from Wisconsin (whom I met), Gaylord Nelson. I have posted on this in the past, but at the time, harder line Marxists at radical UW-Madison jeered at that first Earth Day, both because it distracted people from remembering Lenin on his centennial (clearly a capitalist plot) and also because it was distracting people from opposing US imperialism in the Vietnam War. Heck, reduced auto emissions? I remember well certain people sneering at that as something to spend any time worrying about, especially as concern about overpopulation was clearly a Malthusian, anti-Marxist, racist, reactionary, colonialist plot, and so on and on. Really. That was what was said, including by some people I still know, but do not remind them of that. But, hey, the whole thing was a plot by Richard Nixon and his capitalist cronies to distract everybody from the Vietnam War. Yeah.
Needless to say as of today this all looks ironic, if not absurd, even if it did not do so at the time, although it must be admitted that a lot more people are thinking and talking about Earth Day today than the fact that it is Lenin's birthday. Those old Marxist-Leninists were right about worrying about that one. And not having the leader of Russia making mention or fuss about it just really sticks it in.
But the real irony is that today being strongly for the environment as expressed in the Green New Deal is the hallmark of being a "democratic socialist," something that remains very poorly defined. That old "Brown Marxism" that worried about coal miners getting laid off because of those darned auto emissions are gone or moved over to support Donald Trump, although his fan boying VVP in Russia might look familiar to some of those folks from 1970, especially those in groups that also cuddled up to the then Soviet Union. Life is funny.
Anyway, folks, happy birthday to old Vladdie Ulyanov, and also, have a Happy Earth Day, you all!
Barkley Rosser
Sunday, April 21, 2019
USMCA, the International Trade Commission, and Kevin Hassett
Tracey Samuelson of Market Place writes:
USMCA would slightly boost U.S. economy, says ITC report - On Thursday, the International Trade Commission released its assessment of the projected economic impact of USMCA, President Trump's proposed replacement for NAFTA. The report shows the new deal is projected to boost the U.S. economy by .35% when fully implemented.I will to read this report after I get over laughing at the latest from Menzie Chinn who quotes Kevin Hassett:
Two-thirds of U.S. CFO’s expect a recession by summer of next year, but White House Council of Economic Advisers Chair Kevin Hassett believes the economy shows no signs of slowing down. “There’s so much momentum right now,” he told FOX Business Stuart Varney on Friday. “It just seems almost impossible that there would be a recession by the summer of next year.”You should watch what turned out to be a really stupid interview on Fox Business covering not only on the alleged impossibility of a recession and how Hassett fluffed off Trump pressuring the FED to lower interest rates. Hey Kevin – if it is impossible for there to be a recession, why lower interest rates? Never mind that for now and listen to how Hassett declared USMCA to be the best trade deal and how it would increase GDP by $100 billion in the first year. Did the ITC really say that? Update: The report can be found here. It does say on page 37:
The results of the industry- and provision-specific analyses were then jointly integrated into an economy-wide model that provided estimates on the combined impact of the agreement on the U.S. economy, including key economic indicators such as GDP, trade, and employment. The economy-wide model estimates that USMCA would likely increase GDP by about 0.35 percent ($68.2 billion), employment by about 0.12 percent (176,000 full-time equivalent jobs), and exports to Canada and Mexico by about 5.9 and 6.7 percent ($19.1 billion and $14.2 billion), respectively.But let’s turn to page 43:
The economy-wide model estimates the U.S. economy’s complete adjustment to the full implementation of USMCA, which is assumed to be year 6 after USMCA enters into force. Therefore, the estimates show the impact of the modeled provisions after the economy has responded to the changes in USMCA. The estimates show the incremental effects of USMCA relative to a baseline that reflects the U.S. economy in 2017 and assumes that no other changes to the economy unfold. The model is long term and does not estimate effects during a transition.It would have been nice had Hassett’s noted the gains were long-term and came to a mere 0.35% of GDP. No – he suggested to Stuart Varney that yuuuge benefits would occur in the first year. Yes – even the chair of Trump’s CEA lies about everything!
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