"Too Tall to Bow Down"

There are "white supremacists" and then there are White Supremacists.

In an interview with This Week in Blackness podcasters Elon James White and Imani Gandi, Black Lives Matters activist Marissa Janae Johnson defended her #BowDownBernie action as "super important" because it confronted the "hordes and hordes of white liberals and white progressives" whose political effect "is often very harmful and is upholding the white supremacist society that we live in."

The "bow down" command apparently is a reference a Beyonce song. It's inappropriateness has been noted by several commentators but in researching the Waveland Memo archives, I came across an ominous historical document that highlights the hideous stupidity of indulging in false equivalence between ineffectual leftists and avowed white supremacist.

The Freedom Fighter announced the "awakening" of the Klu Klux Klan "from a thirty five year sleep." It, too, relied on a facile rhetoric of false equivalence, explaining the reasons for the return of the KKK in the following terms:

It has now been proven that the negro that is trying to take over in America is communist led. If you are senile enough to think this is wrong, you are a complete fool and a very useful tool in the hands of both the negro and communist.

As for politeness and all that respectability jazz, the KKK proclaimed itself "too tall to bow down" because it "is made of men."

The KLU KLUX KLAN is made of men. Real tall American men who love America very much. They are not going to give up to the Kennedys, Johnsons, communist and negros. These men are bound together in a Holy and Fraternal order, depending upon God and each other, answering to God and each other. Tall strong men, men of great courage, coming out of fields, stores, factories, service stations, men that are doctors, builders, lawyers, writers, barbers, mechanics and laborers. These men are too tall to bow down. They are men who have had enough. Enough of the Kennedys, communist, negros, high taxes, foreign aid, cheap politicians, governmental crime and graft, the united nations, cash for bastard negro babies, cotton acreage, Walter Ruether, social security and half made this and that. They have had enough of ruin, and will now restore sensible rule in our land. They see all, hear all, know all. They live among you. These men are TENS OF THOUSANDS STRONG, TOO TALL TO BOW DOWN, AND THEY HAVE HAD ENOUGH!!!!!!!!

To an interviewer's question about the people who say the Seattle action was hurting the cause of Black Lives Matters, Ms. Johnson replied, "I don’t give a fuck about the white gaze, I don’t. I literally don’t."

Some folks don't give a fuck. They just don't.

Does World Peace Depend On Steny Hoyer and Ben Cardin of Maryland?

That would be Steny Hoyer (D-MD), minority whip in the House of Representatives, reportedly still undecided about the Iran nuclear deal, as well as Benjamin Cardin, also (D-MD) of the US Senate.  The minority whip in the Senate, the person who is supposed to line up party members to vote on bills, Chuck Schumer of New York, has come out against the Iran nuclear deal.  While it does not appear that he is working hard to convince other Dem senators to join him, his decision makes it much easier for fence-sitting Dem senators to join him in opposing the deal (there might actually be one Republican senator for the deal, Jeff Flake of  AZ).

Watching the Washington Post and certain blogs (especially Juan Cole) closely, it is clear to me that in neither house of Congress is there yet a third of members who support the deal.  This is what is needed to sustain the veto that Obama will do of the bill that will almost surely pass both houses to cancel the deal.  Many are complacent and simply assume the veto will be sustained, but this is far from certain, far from clear.

Public opinion has turned sharply against the deal.  It has not been just a matter of members of Congress telling Secretary Kerry that he is some kind of fool who was "bamboozled," but a heavy round of ads criticizing the deal, with all but zero ads countering the misrepresentations in these skillfully produced ads.  Heck, they are so well done, I am almost convinced the deal is bad after watching one.  Congress is on recess at home listening to the home folks, and what is going on is a major barrage under the radar of criticisms of the deal, with a story about alleged violations at the Parchin military base in Iran in yesterday's WaPo feeding the frenzy (this has to do with them sanitizing the place about past nuclear research, which we know they did but which everybody agrees they stopped over a decade ago, but somehow some think it is very important that we have every shred of information about that).

It has gotten to the point that the usual VSPs in Washington are at their old tricks of tilting to a hardline warhawk policy, even when they actually know better.  So, in recent days we have seen that old reliable and former fan of the Iraq war, Fred Hiatt, denouncing Obama for daring to suggest that opponents of the Iran deal were supporters of the Iraq war, noting he supports the deal, although he then proceeded to go on at length about a list of supposed flaws it has.  Today we had Ruth Marcus, admitting that it will simply be a disaster if the deal is not approved, but tut tutting at Obama for speaking too  strongly at American University for it and his supposedly disrespectful remarks about intelligent critics who are raising serious points supposedly.  Even the usually perspicacious David Ignatius, who is better informed and generally much wiser than the awful Hiatt, was while saying that the deal must go through was suggesting that somehow Obama "needs to throw Congress a bone."  Well, David Ignatius, just what kind of bone would that be that would not upset Iran, not to mention the unanimous UN Security Council?  Certainly there is no bone the GOP in Congress will take, and I am unclear what bone can be thrown to these Dem fence sitters, who are apparently getting all offended and upset over Obama's strong language and vigorous advocacy of the deal, poor things.

So, not only has Schumer defected from Obama in the Senate, but his boss, Harry Reid is simply not putting any pressure that anybody can see on wavering Dems to support the deal.  Maybe he will in the end, but the current count has supporters in the teens with likely supporters only in the 20s, whereas supporters of the deal need 34.  There is a serious distance to go, and without a "bone," it is very unclear that the distance will be filled there, especially without any push coming from the leadership (maybe Reid will do something by the time it gets down to it).  But, the hard fact is that the probability of a failure in the Senate to sustain Obama's veto is much higher than most are thinking is the case.  Complacency on this is completely out of place.

Which brings us to the House of Representatives and Representative Cardin.  Again, those who have pubicly stated their support for the bill remain far below the number needed to sustain the veto, despite some prestigious Jewish members having done so, including Sander  Levin of Michigan, the most senior of Jewish members of Congress, and Adam Schiff of California, the ranking Dem on the House Intelligence Committee, whose support one would think might be taken seriously.  Furthermore, in contrast to Reid, Nancy Pelosi, the minority leader, has come out strongly for the deal and is reportedly pushing members to save it.  That may be sufficient, but Cardin, her whip, looks like the real key. If he not only signs on but joins Pelosi in urging other Dems to do so, this would probably be enough to  bring that total supporting the veto to the necessary one third number.

So, it may well come down to the US House of Representatives, not  the supposedly more deliberative US Senate, to save the world from a major war in the Middle East by sustaining President Obama's veto of the bill to reject the deal, and having Ben Cardin support this effort may just be the key to making sure that this happens.

Note on Changes made day later:  I goofed.  This post previously had Benjamin Cardin as the crucial undecided House Minority Whip.  In fact, it is Steny Hoyer, who is also from Maryland and is currently in Israel on this trip with 21 other Congresspeople and has just told CNN that he remains undecided on the Iran deal.  Cardin is the junior senator from Maryland and is important for the outcome in the Senate, probably the most important undecided there.  His status comes from long international experience, including service on the Board and as Vice President of the Organization for Cooperation and Security in Europe.  He is crucial for what happens in the Senate.  I apologize for this snafu, but the bottom line of this post remains that the Senate is quite likely not to support the deal, especially if Cardin does not do so, which will put it on the House, where Minority Whip Hoyer will be crucial in helping Nancy Pelosi whip enough Dems together to sustain the veto.

Barkley Rosser

Jobs Guarantee vs. Work Time Reduction

Max Sawicky says Matt Bruenig is wrong about the Job Guarantee idea. Sandwichman wrote about this back in 2009, so I'm reposting a condensed and edited version of it here and will add further reflections on Max's and Matt's points.

2009:

Would a Minsky-inspired "job guarantee program" be an economically feasible response to that jobs crisis? Randal Wray is probably the best-known current advocate of such a program. In August 2009, Wray posted a brief description of the idea along with some references for further reading. 

The Sandwichman's familiarity with the debate around the job guarantee idea comes largely from a discussion in Robert LaJeunesse's book, Work Time Regulation as Sustainable Full Employment Strategy, in which LaJeunesse sought to show why work time regulation would be superior to a jobs guarantee.

LaJeunesse's main objection to the job guarantee idea is that it expands work and consumption instead of questioning the compulsion for and ecological sustainability of perpetual, artificially-induced economic growth. Peter Victor's book, Managing without Growth, and the Sustainable Development Commission's report, Prosperity without Growth?, give persuasive evidence in support of such criticism.

While the Sandwichman agrees wholeheartedly with LaJeunesse's ecological critique, he also has microeconomic concerns about job guarantees. There are three aspects that particularly trouble me.

First is the historical precedent that explicitly "make work" jobs have always carried a stigma. This was true of the 19th century workhouse in Britain and of WPA jobs during the Great Depression.

Second, the necessity for some kind of administrative overhead -- managers, planners and staff -- must necessarily lead to the creation of a bureaucratic empire whose denizens will have a stake in the continuation and expansion of their institutional niche.

Finally, a job is not simply about the exchange of a certain amount of time and effort for a paycheck. Some kind of learning and social interaction goes on in the workplace. Not all of it is directly tied to the work. What kind of informal culture of "lifers" and "transients" is likely to emerge in the "buffer world" of guaranteed jobs? What's to prevent the lifers (as well as the administrators) from devising schemes to divert the efforts of enrollees to their private interests?

2015:

Matt argues that Guarantee Jobs are inclined to be "low-capital, short-term jobs that are not that important to do." He suggests it would be preferable to establish targeted public works programs, "which can be ramped up and down cyclically as needed," which, of course, was precisely the idea behind the Public Works Administration established during the Roosevelt New Deal.

Max argues that an Employment of Last Resort (ELR) program could be designed that complies with Matt's targeted public works program. He thinks that "Matt’s notion of how an ELR system could work is too narrow."

Sandwichman thinks the discussion could be better informed by attention to 1. what happened, in the long run, to the New Deal public works program and 2. what are the alternatives to a job creation program -- especially a a work-sharing program and permanent reductions in the hours work, what John Maynard Keynes called the "ultimate solution" for unemployment.

"...the full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result just as well by consuming more or working less. Personally I regard the investment policy as first aid. In U.S. it almost certainly will not do the trick. Less work is the ultimate solution (a 35 hour week in U.S. would do the trick now)."

Essentially Inarticulate: slouching "towards a radical democratic politics"

It is precisely this polysemic character of every antagonism which makes its meaning dependent upon a hegemonic articulation to the extent that, as we have seen, the terrain of hegemonic practices is constituted out of the fundamental ambiguity of the social, the impossibility of establishing in a definitive manner the meaning of any struggle, whether considered in isolation or through its fixing in a relational system. -- Ernesto Laclau and Chantal Mouffe, Hegemony and Socialist Strategy: Towards a Radical Democratic Politics

Clearly I'm not… that’s not where I am, because, you know, people... like... leave high school and go to college and they like… [inaudible, interviewer talks over] -- Marissa Johnson on Sarah Palin

For reasons unknown (but time will tell) Sandwichman's ear instinctively hears Laclau and Mouffe's monologue being spoken by the character Lucky from Waiting for Godot.

"Articulation" plays a privileged role in Laclau & Mouffe's analysis, in opposition to -- or, one might say, as the antithesis of -- "essentialism." Essentialism was reductivist (bad); its "last redoubt" was the economy. By elevating class struggle as the presumed locomotive of history, so the story goes, Marx and Engels had sidelined other differences such as gender, race or nationality.

Essentialism and articulation remain key terms within the burgeoning academic-activist intersectionality complex. Instead of presiding as the determining difference (even if only in the "last instance"), class -- often relabeled as poverty -- has been demoted to the status of a residual effect of the other, formerly subordinate, differences, which are, of course, legion.

The logic of Black Lives Matter co-founder Alicia Garza's complaint about "some weirdo populist economic determinism" follows from the critique that an economic class analysis inherently subordinates other forms of oppression to the presumably primary difference of class. The characterization tends toward the hyperbole that class analysis is inherently reductivist and thus must be eschewed in favour of some other analysis of (more essential?) categories of difference. This game of identity musical chairs is not debatable as any and all objection can be disallowed as "condescending weirdness."

There was a Polish joke about how under capitalism man exploits man but under communism it is the other way around. One might paraphrase that to say that under orthodox Marxism, class struggle subordinates all other differences but identity politics does just the reverse. Another variety of essentialism enters through the back door because the framing concept of "articulation" has proven to be incoherent -- it is essentially inarticulate.

Bow Down, Weirdo Populist Economic Determinism

"What choice was there for the workers between the fascist costume drama and a socialism that urged them to regard their own working clothes as a costume?" -- Harold Rosenberg, "Pathos of the Proletariat"

It shocked and confused many of my American friends when Black Lives Matter activists confronted Bernie Sanders, first at Netroots, and then again in Seattle. Didn't they realize Sanders was the candidate with the best anti-racism record? Was this some kind of agent provocateur action? Hillary? Soros? Cointelpro?

The only thing that should come as a surprise is that the actions and their motives would be surprising. The pattern and the analysis has been out there for years... decades. In a 2009 essay, "The limits of anti-racism," Adolph Reed noted the "visceral and vitriolic anti-Marxism" that prevails among many activists who make identity the cornerstone of their political strategy.

Reed characterized anti-racism as consistent with a "left" neoliberal ideology which "looks suspiciously like only another version of the evasive 'we’ll come back for you' (after we do all the business-friendly stuff) politics that the Democrats have so successfully employed to avoid addressing economic injustice."

It would not be useful to absolve political Marxism of all responsibility for this state of affairs, however. Identity politics is only the latest iteration of what Harold Rosenberg termed "destiny politics" way back in 1949:

"Primarily, destiny-politics consists of a demonic displacement of the ego of the historical collectivity (class, nation, race) by the party of action, so that the party motivates the community and lays claim to identity with its fate and to its privileges as a creature of history."

For party, substitute movement... for movement substitute hashtag... and, finally, for hashtag substitute activists, founders, executive directors or scholars. But whereas political Marxism proceeded from the imperialistically homogeneous image of the Proletariat as universal subject, identity politics culminates in the fragmentation of multiple -- or multiplicative -- sites of oppression: class, race, gender, disability, sexuality. Through this "intersectional lens," the notion of a heroic, revolutionary subject of history is translated into that of an abject, anti-heroic victim of oppression:

"Thus, if one is poor, black, elderly, disabled, and lesbian, must these differences be organized into a hierarchy such that some differences gain prominence over others? What if some differences coalesce to create a more abject form of oppression (e.g.. being poor. black, and disabled), or if some differences support both privilege/invisibility within the same oppressed community (e.g., being black, homosexual, and male)?" -- Nirmala Erevelles, Disability and Difference in Global Contexts

The "pathos" in the title of Rosenberg's essay refers to one of the three modes of persuasion analyzed by Aristotle, the other two modes being "ethos" and "logos." Ethos seeks to persuade through the character of the author, logos through the use of reasoning and pathos by appealing to the readers' emotions. The irony that Rosenberg highlighted is that what was argued to be a historical process of development and "awakening" has been transformed into a rhetorical process of persuasion. The erstwhile revolutionary subject of history had already been demoted within political Marxism to a mere personification.

"As a liberating program Marxism founders on the subjectivity of the proletariat. So soon as it declares itself, rather than their common situation, to be the inspiration of men's revolutionary unity and ardor -- how else can it offer itself simultaneously to the French working class and to non-industrial French colonials? -- Marxism becomes an ideology competing with others. When fascism asserted the revolutionary working class to be an invention of Marxism, it was but echoing the Marxist parties themselves." -- Rosenberg

Of course identity politics and intersectionality cannot and do not inspire "revolutionary unity and ardor" to both "the French working class" and "the colonials." What they can do, though, is offer a moral (or moralizing) surrogate for the absent class struggle. Understandably, in this ideological frame, inherited from political Marxism, the foundering of the class struggle offers to those "not fooled by the illusion" an occasion for hubris. Bow down, weirdo populist economic determinism!

Ideology and Economic Facts

Letter from Friedrich Engels to Franz Mehring, July 14, 1893, excerpt:

Ideology is a process accomplished by the so-called thinker consciously, it is true, but with a false consciousness. The real motive forces impelling him remain unknown to him; otherwise it simply would not be an ideological process. Hence he imagines false or seeming motive forces. Because it is a process of thought he derives its form as well as its content from pure thought, either his own or that of his predecessors. He works with mere thought material, which he accepts without examination as the product of thought, and does not investigate further for a more remote source independent of thought; indeed this is a matter of course to him, because, as all action is mediated by thought, it appears to him to be ultimately based upon thought. 

The historical ideologist (historical is here simply meant to comprise the political, juridical, philosophical, theological – in short, all the spheres belonging to society and not only to nature) thus possesses in every sphere of science material which has formed itself independently out of the thought of previous generations and has gone through its own independent course of development in the brains of these successive generations. True, external facts belonging to one or another sphere may have exercised a co-determining influence on this development, but the tacit presupposition is that these facts themselves are also only the fruits of a process of thought, and so we still remain within that realm of mere thought, which apparently has successfully digested even the hardest facts. 

It is above all this semblance of an independent history of state constitutions, of systems of law, of ideological conceptions in every separate domain that dazzles most people. If Luther and Calvin “overcome” the official Catholic religion or Hegel “overcomes” Fichte and Kant or Rousseau with his republican Contrat social indirectly “overcomes” the constitutional Montesquieu, this is a process which remains within theology, philosophy or political science, represents a stage in the history of these particular spheres of thought and never passes beyond the sphere of thought. And since the bourgeois illusion of the eternity and finality of capitalist production has been added as well, even the overcoming of the mercantilists by the physiocrats and Adam Smith is accounted as a sheer victory of thought; not as the reflection in thought of changed economic facts but as the finally achieved correct understanding of actual conditions subsisting always and everywhere – in fact, if Richard Coeur-de-Lion and Philip Augustus had introduced free trade instead of getting mixed up in the crusades we should have been spared five hundred years of misery and stupidity.

Circular Reference Warning: The Productivity Quotient

Peter Frase has a post about the perennial "robots will take all our jobs" debate in which he makes, almost in passing, the crucial point that productivity growth is not only connected to technology but also to wages and control over working conditions. Employers are discouraged from replacing workers with robots as long as workers are cheaper and more obedient than the machines.

The point I would like to add and emphasize is that we are not just talking about cause and effect (let alone mere correlation) in the relationship between productivity and employment terms. This is instead a matter of reference from one thing to the other in the construction of the indexes. Productivity is a ratio between the monetary value of output and hours worked. Productivity increases if the same value of output is produced in fewer hours, regardless of whether that change was produced by technological improvements, increased work effort or by layoffs of redundant workers. Productivity growth declines if GDP growth is constrained, again regardless of what specifically is limiting GDP.

Productivity is the quotient. So when Dean Baker says "productivity growth has slowed sharply in the last decade," there are many ways to parse that number. Productivity growth has slowed because the numerator, GDP, hasn't been growing as fast as before. Or, productivity growth has slowed because the denominator, hours of work, is not declining. Or some combination, again regardless of the reasons for the changes in the components.

It's not just about the machines. It's also about the cost of replacing workers with machines compared to the level of wages. It's also about the performance of GDP relative to its potential. High levels of unemployment and underemployment can thus impose a constraint on "productivity growth" such that the resulting slow growth doesn't appear to present a threat to employment. But that is like the parricide throwing himself on the mercy of the court because he is an orphan. Or as Excel's circular reference warning explains:

One or more formulas contain a circular reference and may not calculate correctly. Circular references are any references within a formula that depend on the results of that same formula. For example, a cell that refers to its own value or a cell that refers to another cell which depends on the original cell's value both contain circular references.

Professor Richard J. Jensen Strikes (Out) Again

The Teen Who Exposed a Professor’s Myth

Miller opened up Rebecca’s thesis. He quickly realized all of the academics too busy to take on Jensen couldn't have done it better than a 14-year-old.

Before he was denying the existence of "no Irish need apply" advertising, Professor Jensen claimed that core, long-term unemployment during the Great Depression resulted from workers' shirking and stinting and the adoption by employers of "efficiency wage" policies to counter the willingness of "most workers (most of the time)... to coast a little."

The problem with that hypothesis, as Sandwichman pointed out a while ago, is that so-called shirking and stinting are treated variously as efficiency gains or efficiency losses depending on whether they are being performed by workers or by "entrepreneurs and investors." I know it's a subtle distinction. Ask a 14-year-old.

Homo Socialis, A Big Special Issue Of ROBE

I do not do this much, folks, but I am going to flagrantly advertise the special target issue of the Review of Behavioral Economics (ROBE) that has just come out on the web.  It is much longer than usual, and is in fact two issues in one, the first and second issues of our second volume.  Much effort has gone into it, and it has a major target article, followed by 14 commentaries by a distinguished multi-disciplinary group, with rejoinders by each of the coauthors of the original article, which had been 8 years in the writing, so I have been told.

The target article is "Homo Socialis: An Analytical Core for Sociological Theory" by Herbert Gintis and Dirk Helbing, and it is very provocative with a lot in it.  I shall not give the titles of the commentaries, but will list their authors in alphabetical order, which is how their commentaries appear in the issue: Catherine Eckel and Jane Sell; Mauro  Gallegati; Robert L. Goldstone; Michael Hechter; Geoffrey M. Hodgson; Alan G. Isaac; Paul Lewis; Siegwart Lindenberg; Michael W. Macy; Andrzej Nowak, Jorgen Anderson, and Wojciech Borkowski; Paul Ormerod; Vernon L. Smith; Ulrich Witt; David H. Wolpert.

Much effort has gone into this, and I  must thank publisher Zac Rolnik for tolerating such a long issue.  However, I think that this is a very special achievement that deserves proper attention.

One can access the issue at www.nowpublishers.com/rbe .

Barkley Rosser
Editor-in-Chief, Review of Behavioral Economics

Dean Baker: "Don't Blame the Robots"

"An important fact often left out of discussions on productivity and jobs is that the length of the workweek and work year is not fixed."

The Future of Work: Don't Blame the Robots

Dean nails it.

US Public Opinon From 59-31% to 32-58% On Iran Nuclear Deal

That is what has happened to public support versus opposition to the recently negotiated Iran nuclear deal between May 30 when the deal was announced until today, according to the Washington Post.  Every nation on the planet, including somewhat critical Saudi Arabia, except for Israel, has publicly supported this deal, and the UN Security Council has voted 15-0 for it.  The alternative is not a continuation of, much less a tightening of, the economic sanctions that the Israelis point to as most endangering them due to Hiabullah probably getting more military support from Iran.  But, who cares?  GOP congresspeople have called John Kerry names and said that he was "bamboozled" and other much less complimentary things.  The usually scholarly Thomas Sowell has declared the deal to the "worst foreign policy action in world history," with the 1443 Ming dynasty decision not to send out long ocean expeditions being second.

On top of that, we have had relentless ads on TV that have wildly misrepresented the deal to the point of outright lying.  About the only good thing I can see in this complete breakdown of intelligence and knowledge on the part of Americans is that it looks like enough Dems in Congress will back it to make Obama's veto stick, although the legislation to annul it will strongly pass both houses.  All Obama needs is one branch, and with Adam Schiff, the ranking Dem on the House Intelligence Committee supporting it, it might be the House, even if Chuck Schumer goes against and takes enough Dems in the Senate with him to override the veto.

Of course, no GOPsters will support it, even though various senior GOP foreign policy figures have come out in favor of it, such as Brent Scowcroft. But then, he was not enthusiastic about invading Iraq, so what kind of Republican foreign policy adviser is he?  And, I suppose it is not even worth bothering noting that most of these Congresspeople did not even read the agreement before they came out four square against it.

My only concern is this new poll, with an August recess now between us and the voting.  My only hope is that there are enough Adam Schiffs, and that also these views by the public are not all that strongly held, which the large switch between late May and now suggests, that the Adam Schiffs will hold in sufficient numbers. 

I do happen to think that this vote is one of the singlel most important things that will happen during the entire presidency of Obama.  If this fails, it will indeed be a major disaster, with horrific results that could lead to war, one that could easily make Iraq look like a cakewalk.  Let us hope that good sense will prevail among enough of those voting to make it stick.

I am reminded of an earlier hysteria, now almost completely forgotten.  I am talking about the 1979 move by Jimmy Carter to give the Panama Canal to Panama.  At the time this was very vigorously denounced over huge parts of the political spectrum, and public opinion opposed it.  As Teddy Roosevelt had put it, it was ours because we stole it fair and square!  But, the Panamanians were unhappy and riots and such were going on.  The opponents, however, were sure that Communist China and Cuba would somehow seize control of it by turning Panama commie, or whatever.  Doom was at hand, and our economy would get strangled as these nefarious powers would block the canal to traffic, or at least to traffic involving the US.

Needless to say, nothing of the sort has happened.  The canal is even being expanded, and the Chinese might build another one through Nicaragua. And Panama has had one of the highest GDP growth rates in Latin America, doing very well thank you, and having friendly relations with the US for quite some time.  Carter was completely right, and this was a very wise move, alhtough I have never ever heard a single one of those people forecasting imminent doom ever admit that they were totally wrong and sould apologize to him and congratulate him.

Somehow, assuming that the deal goes through and is successful in keeping Iran from obtaining nuclear weapons (and maybe even getting more cooperative about some other matters in the MENA areas), I also doubt that any of those engaging in their wild denunciations now will apologize or even admit that they were wrong.  Something bad will happen in the future if we do not bomb, bomb, bomb Iran ASAP, just you wait and see, maybe when the hyperinflation also appears...

Barkley Rosser

Brent Crude Price Below $50 Per Barrel First Time In Six Months

This is according to the Wall Street Journal as of 9:59 PM BST, which I think was just before 4 PM this afternoon in the eastern US, just over an hour ago.  Brent is the main international price, which has been several dollars above the main US price, West Texas Intermediate (WTI) for a long time, with WTI having fallen below the $50 per barrel price some weeks ago.

The article pinpoints two signal items in this sharp price decline today.  The first is that US oil production is at record levels.  The other is on the demand side, with slowdowns in demand from Brazil and India noted, but the really big item a piece of information released today by the Chinese government, and I quote:

"Chinese manufacturing fell to a two year-low, according to data released Monday [today]."

To those, such as anne over on Economists View, who think that all is just hunky dory in China and that the 7% growth rate reported for the second quarter is credible, well, it is not.

My own private sources say that the Russians think Chinese growth is now more in the 4-5% range, and I note that not only are the Russians currently making lots of deals with, and friendly with, China, but they are also very experienced in the arts of data manipulation that it appears the Chinese are engaging in again.

OTOH, on Econbrowser is a guest post by Jeffrey Frenkel who argues that what burst the Chinese stock bubble in June was a tightening of margin requirements by Chinese regulatory authorities. So, they goosed the bubble up, and since it has fallen they have engaged in extraordinary actions to slow its slide.  But they may well have been the parties who triggered the peak and the subsequent decline by their own actions.

Barkley Rosser

Workers Were Doing Fine Until We Took Over

The Team Republican economist response to rising inequality appears to be denial. First up was Martin Feldstein:

Any adult who was alive in the US during these three decades realizes that this number grossly understates the gains of the typical household. One indication that something is wrong with this figure is that the government also estimates that real hourly compensation of employees in the non-farm business sector rose 39% from 1985 to 2015.

Feldstein is talking about the mean whereas most of this debate is over the median but let’s read on:

With the traditional definition of money income, the CBO found that real median household income rose by just 15% from 1980 to 2010, similar to the Census Bureau’s estimate. But when they expanded the definition of income to include benefits and subtracted taxes, they found that the median household’s real income rose by 45%.

Let’s see – if we cut taxes a lot while increasing transfer payments, then we can get a boost to disposable income. So much for fiscal responsibility. But let me turn this over to Laura Tyson:

Over the last 35 years, real wages in the United States failed to keep pace with productivity gains; for the typical non-farm worker, the latter grew twice as fast as the former. Instead, an increasing share of the gains went to a tiny fraction of workers at the very top – typically high-level managers and CEOs – and to shareholders and other capital owners. In fact, while real wages fell by about 6% for the bottom 10% of the income distribution and grew by a paltry 5-6% for the median worker, they soared by more than 150% for the top 1%.

The chart provided by David Dayen bears out Dr. Tyson’s first sentence:

Perhaps for this reason, the wage/productivity chart has been under attack, with economists and pundits trying to explain away the gap as something not fundamental to our economic story. But Mishel, the originator of the chart, is pushing back, arguing that critics “are denying reality through technical arguments and sleight of hand.”... Harvard economist Robert Lawrence makes the gap disappear in several ways.

Dayen discusses each of Lawrence’s tricks here but let’s note that Greg Mankiw hearts what Lawrence even as it includes this:

when the numbers are measured more comprehensively—when wages are broadly defined as compensation to include benefits, comparable price indexes are used to calculate differences in wage and output growth in constant dollars, and the output is measured net of depreciation—the puzzle of lagging wages disappears, at least for 1970–2000. While prior to 2000 blue-collar workers fared especially poorly, constant dollar labor compensation for all workers actually kept pace with output.

2000? Jeb’s other brother became President right after that hiring Team Republican as his economic adviser. So the Team Republican reply is that we can massage the data in such a way that it appears that workers were doing fine until we took office. Oh yea – Jeb should definitely run his campaign on this message.

Feynman Has Something to Say About “Is Consistent With”

Time to go on the warpath again (see here, here and here) against the standard line in econometrics: this study “supports” my theory because the results “are consistent with” it.  Specifically, it goes like this:

1. Set up a model.
2. Derive an implication from your model.
3. Select/create a data set.
3a. Modify/transform the data set according to assumptions from your model.  (optional)
4. Apply causal inference tests.
5. If the result is consistent with the implication from Step 2, claim support for your model.
5a. If the result is not consistent, keep it secret and then go back and tweak the model or the data set.  Rinse and repeat until the result is consistent.

For the vast majority of the economics profession, this is regarded as a scientific procedure.  Richard Feynman would beg to differ.

I found this choice RF quote from Paul Romer’s post about Feynman Integrity:

It’s a kind of scientific integrity, a principle of scientific thought that corresponds to a kind of utter honesty–a kind of leaning over backwards. For example, if you’re doing an experiment, you should report everything that you think might make it invalid–not only what you think is right about it: other causes that could possibly explain your results; and things you thought of that you’ve eliminated by some other experiment, and how they worked–to make sure the other fellow can tell they have been eliminated. 

Details that could throw doubt on your interpretation must be given, if you know them. You must do the best you can–if you know anything at all wrong, or possibly wrong–to explain it. If you make a theory, for example, and advertise it, or put it out, then you must also put down all the facts that disagree with it, as well as those that agree with it. There is also a more subtle problem. When you have put a lot of ideas together to make an elaborate theory, you want to make sure, when explaining what it fits, that those things it fits are not just the things that gave you the idea for the theory; but that the finished theory makes something else come out right, in addition.

You don’t have to look hard to see that Feynman’s view of science is rather far removed from usual econometric practice.  Note in particular the obligation of the research to report “other causes that could possibly explain your results”.  If there are plausible theories other than yours that “are consistent with” those little significance asterisks you’re so proud of, you need to specify them.  The more of them there are, and the more plausible they are, the less claim your particular model has on our acceptance.  Of course, there’s also a responsibility to report all the empirical strategies you tried that didn’t give you the results you were looking for.  These are not “blind alleys”; they are possible disconfirmations, and you owe it to yourself and your readers to report them and explain why you think their negative verdicts should be set aside—if in fact they should.

Finally, Feynman’s subtle problem is familiar to anyone who reads widely in the econometric literature.  The researcher encounters a problem, creates a theory to explain the problem and then tests the theory (or tries to produce results “consistent with” it), and when it works claim a sort of victory.  But at a deep level this is a type of overfitting that impedes the ultimate purpose of scientific investigation, to develop an understanding of the world we can rely on in new situations.

Not all econometric work is guilty of the sins Feynman describes.  There’s lots of good stuff out there!  But there’s also a lot of deceptive stuff and no filter that tries to uphold scientific standards.

Izvestia Publishes Front Page Threat Against The Life Of Sergei Guriev

Yes, you read that right.  This has just come out.  Front page story.  Not only has his life been threatened, but the story also has threatened the lives of his wife, economist Yekaterina Zhuravskaya, and their two children.

For those who do not know who he is, Guriev was the Rector of the New  Economic School in Moscow until over a years ago when he was pressured to resign and left Moscow for Paris, where his wife and family have been.  Zhuravskaya and Guriev have  been visting at Sciences Po.

The immediate cause of this outburst was a speech Guriev gave recently in London denouncing the invasion and annexation of Crimea by Russia.  The article stated that this speech "put him and his family in danger."  Really.  This is what things have descended to.

Oh yes, the article says more.  It contains a more  general denunciation of him, claiming that his PhD was written by ghosts and that everything he did was  funded by US  agencies.  It is a full court press.

I  shall further note that I know Sergei personally, and that I published a paper by him when I was editing JEBO.  He has a long and impressive vita, and these accusations are like the worst of the old Soviet Union, completely unacceptable.

I wish him and his family all the best in this very dangerous situation.

Barkley Rosser