Wednesday, March 23, 2016

Karl Marx didn't feel the Bern in 1875

The democratic socialist Bernie Sanders says that higher education should be provided without tuition. What did socialist Karl Marx think of that ?
"Universal compulsory school attendance. Free instruction." The former exists even in Germany, the second in Switzerland and in the United States in the case of elementary schools. If in some states of the latter country higher education institutions are also "free", that only means in fact defraying the cost of education of the upper classes from the general tax receipts. Incidentally, the same holds good for "free administration of justice" demanded under A, 5. The administration of criminal justice is to be had free everywhere; that of civil justice is concerned almost exclusively with conflicts over property and hence affects almost exclusively the possessing classes. Are they to carry on their litigation at the expense of the national coffers?
Yep he said that free higher education was a total scam. Karl Marx against Bernie Sanders. Also note that back in the day (1875) there were 0 tuition universities in the USA. With progress like this the USA will have a god-Pharoah by 2075. And how about that tort reform ? The GOP wouldn't dream of making plaintiffs pay judges for their time, but Karl Marx went there (OK he was there it was the way things were back then).

Thursday, March 10, 2016

On Delong at Huffington

This is my comment on Brad DeLong's article in the Huffington Post.

I think the Huffington post editor might have cut out a key paragraph. In the article as edited there is no description of an overhang until remedies are discussed

"What we need now is 1) debt relief to unwind the overhang and 2) much tighter financial regulation to prevent the growth of new fragilities. And if those prove inconsistent with full recovery, then we need massive government spending on infrastructure and other investments financed by money printing until full employment is reattained."

http://www.huffingtonpost.com/brad-delong/global-economic-depression_b_8924596.html?1452263364

It isn't clear exactly which overhang you had in mind. I assume it is household debt as you wrote somewhere that you have been convinced by Mian and Sufi.

I don't know if this is due to the ruthless Huffingediting, but I have 3 problems with your proposals.

1) I strongly object to the word "then". As written it implies that fiscal stimulus should be used only after debt relief is tried and fails. Ignoring the political impossibility of fiscal stimulus (on the grounds that debt relief is also politically impossible) I'd argue for fiscal stimulus now. Even if debt relief works, it will take time. I am ignoring politics so I assume Congress acts tomorrow, but even then (tomorrow) it will be slow and messy. Unlike bankers, ordinary people don't promptly find out about available subsidies and grab them. Relief for the banks took time. Under the most optimistic forecast there should still be slack demand (at a Federal funds rate of zero) for over a year -- time for fiscal stimulus to help.

2) We need massive government investment. It doesn't have to be financed with money printing. I think it makes almost exactly difference if it is financed with money or T-bills -- money and T-bills are still essentially perfect substitutes. I think it makes very very little difference if it is financed with money or 7 year treasury notes. I note the lack of evidece for a correctly signed effect of QE-II. Finally, I think it makes almost no difference whether it is financed with debt or taxes on capital income or high labor incomes. I note that monetized deficits are taboo and deficit spending is unpopular while higher taxes on the rich are popular (supported even by a substatial minority of self declared Republicans).

3) I am not sure what the effect of debt overhang is supposed to be. You often print your NIPA graph of components of aggregate demand and note that the shortfall is in housing investment and public consumption and investment. The abnormally low public investment tends to suggest to anyone who doesn't think it was way to high in the past, that it should be increased even if the social cost were ordinary (that is aside from your macroeconomic consideration). For public investment, the relevant debt overhang is state and local government debt. Bond markets tell us that Federal debt is a political not an economic problem.

So I guess you think that housing investment is lower than it should be due to excessive household debt. Yes that is a value judgment (your proposals must be intended to change things from the way they are to the way they should be). Your value judgment is based on the assumption that US housing invesment was the way it should be back in 2000 before the bubble. I remain unconvinced that 2000 was before the bubble. I think demand for houses back in 2000 was based on irrational beliefs about house price appreciation which couldn't last forever -- that is I think there was a housing buble back then too. I think it started in the 1970s. What if Shiller is right and there isn't a long term trend in (house prices)/(consumer price index, people have incorrectly believed for decades that there is, and people now believe there isn't ? Then it is possible that curent levels of housing investment are the new normal and other sources of aggregate demand must be found. I think it is entirely possible that housing investment in the 80s and 90s was due to a bubble which couldn't last forever, but did last an extraodrinarily long time, because the people extrapolated a trend in a relative price which they didn't observe.

I'm not convinced there is anything abnormal in US aggregate demand except for low government consumption plus investment.

This is too long already, but I note that I agree with mwilbert and dilbert dogbert (in comments here ) that there seems to be a trend in prime age labor force participation which is not just due to low aggregate demand and discouragement. I the issue is that some people who are classified as prime age don't feel that they are in their prime (increasing numbers claim to be disabled). Now this is horrible for those of us who left prime age in the past year but it's in the data. Prime aged adults are aging and labor force participation has always declined some well before people had any business thinking about retiring (stop Robert you have to actually work in, like, a real job before you can retire). There is no need to look only at such a simple statistic as the prime age employment ratio. It is possible to regress labor force participation on year dummies and a flexible function of age and look at the coefficients on the year dummies. This has been done and it makes a difference.

Also I think Krugman (as usual) shares some of the credit for getting things right. He argued that this is not our father's recession and contrasted inflation fighting and bubble bursting recessions. Your (brilliant) look at every 4th year univariate analysis of GDP didn't take into account the fact that the Fed was slamming on the brakes then on the gas in your sample. A normal recovery included a dramatic decline in the Federal Funds rate. Stiglitz wasn't the only one who noted that wasn't going to happen in 2009.

Sunday, March 06, 2016

E-mail is the work of the Devil

Ross Douthat's Sunday Column

I blame Josh Barro who tweeted a link to this column. So I started to read it. Note to self -- don't Do that.

So I fisk.

"MAYBE Donald Trump is doing us a favor.

The United States has long been spared a truly authoritarian element in our politics. Since Southern apartheid was crushed and far-left terrorism died away , we’ve had very little organized political violence, and few homegrown movements that manifest the authoritarian temptation."

Far right terrorism with no explicit link to Southern apartheid has long (I think always) been stronger than far left terrorism. The "far-left terrorism" is a mixture of Ballance and determination to keep the affirmative action for Republicans advantage.

"Yes, our political institutions are creaking, and our presidency is increasingly imperial. But there are still basic norms that both parties and every major politician claim to honor and respect."

The presidency is much less imperial than it wsa 8 years ago, when the administration explicitly asserted that the president was above the law ("when acting as commander in Chief") when the president claimed the authority to have US citizens arrested in the US and held indefinitely without trial or access to counsel, & when the president claimed the authority to establish special tribunals by executive order without even the pretense that the order was executing a law. Here Douthat wrote something absurd and plainly false, because he has to write it to claim he is a Republican and has a right to be a token Republican on the NY Times opinion pages.

"What Trump is doing, then, is showing us something different, something that less fortunate countries know all too well: how authoritarianism works, how it seduces, and ultimately how it wins.

But — God willing — he’s doing it in a way that’s sufficiently chaotic, ridiculous and ultimately unpopular that he will pass from the scene without actually taking power, leaving us to absorb the lessons of his rise."

I note the logical inconsistency between saying Trump shows how authoritarianism wins and the hope that he is incompetent so his authoritarian effort will lose. It can only mean that the way authoritarianism wins is by being "chaotic, ridiculous and ... unpopular". I think this is the most charitable possible interpretation of Douthat's reasoning.

"That rise has four building blocks. First, his strongest supporters have entirely legitimate grievances. The core of that support is a white working class that the Democratic Party has half-abandoned and the Republican Party has poorly served — a cohort facing social breakdown and economic stagnation, and stuck with a liberal party offering condescension and open borders and a conservative party offering foreign quagmires and capital gains tax cuts. Trump’s support is broader than just these voters, but they’re the reason he’s a phenomenon, a force."

The Democratss offer closed borders with a very high rate of deportations (record level ?) and negative net migration from Mexico. Douhat must know this, but I think he considers noting inconvenient facts to be "condescension". Of course he can effortlessly make the case that Republican policies are bad for the working class (white and non-white) but he can only make a plainly utterly false assertion on a matter of fact and link to a necessarily subjective assessment of tone to make the case against the Democrats. He knows this and it doesn't matter. He is trying to participate in the debate within the GOP. False assertions on the increawsingly imperial presidency and open borders are part of the admission fee.

"Second, you have the opportunists — the politicians and media figures who have seen some advantage from elevating Trump. The first wave of these boosters, including Ted Cruz and various talk radio hosts, clearly imagined that Trump would flare and die, and by being in his corner early they could win his voters later, or gain his fans as listeners. But the next wave, upon us now, thinks that Trump is here to stay, and their hope is to join his inner circle (if they’re politicians), shape his policy proposals (if they’re idea peddlers), or be the voice of the Trump era (if they’re Sean Hannity).

There is no real ideological consistency to this group: Trump’s expanding circle of apologists includes Sarah Palin and Steve Forbes, Mike Huckabee and Chris Christie; he has anti-immigration populists and Wall Street supply-siders, True Conservatives and self-conscious moderates, evangelical preachers and avowed white nationalists. The only common threads are cynicism, ambition and a sense of Trump as a ticket to influence they couldn’t get any other way.

Then third, you have the institutionalists — less cynical, not at all enamored of Trump, but unwilling to do all that much to stop him. These are people who mostly just want Republican politics to go back to normal, who fear risk and breakage and schism too much to go all in against him.

The institutionalists include the party apparatchiks who imagine they can manage and constrain Trump if he gets the nomination. They include the donors who’ve been reluctant to fund the kind of scorched-earth assault that the Democrats surely have waiting. They include the rivals who denounce Trump as a con artist but promise to vote for him in the fall. They include Republicans who keep telling themselves stories about how Trump will appoint conservative justices or Trump is expanding the party to pretend that Trump versus Hillary would be a normal sort of vote. And they even include the occasional liberal convinced that Trump-the-dealmaker is someone the Democrats can eventually do business with.

" I actually agree with these 4 paragraphs.

"Then, finally, you have the inevitabilists — not Trump supporters, but Trump enablers, who encourage the institutionalists in their paralysis by acting and talking as if the support of 35 percent of the primary electorate means Trump Cannot Be Stopped."

Actually 43%. Also I read only that he will be unstoppable if nothing changes before the ides of March are passed. Douthat doesn't quote an inevitabilist. He can't, because although there are preople who are confident that Trump won't be stopped all know he could be (if the voters unanimously decide to stop him he will be stopped). Douthat set up a straw man who made an absurd claim.

Some inevitabilists are intoxicated with celebrity and star power. Cable news is riddled with such voices, who daily manifest Orwell’s dictum, “Power worship blurs political judgment,” so that, “Whoever is winning at the moment will always seem to be invincible.”

Does the NY Times have copy editors ? Douthat used quotation marks without quoting anyone in particular. He asserted that someone said those words in that order (and no others note no ellipses). The quoted words are a claim of fact, whihc should be checked. Douthat should be forced to retract his claim if he can't proves someone said each of those things. Also note how the (falsely alleged) claim that someone "seems invincible" is used to support the (unsupported) claim that someone thinks Trump is invincible. It seems that Douthat does not understand the difference between to be and to seem to be.

"Others, especially in the intelligentsia, have a kind of highbrow nihilism about our politics, a sense that American democracy’s decadence — or the Republican Party’s decadence, in particular — is so advanced that a cleansing Trumpian fire might be just the thing we need.

I have a little bit of the last vice, which is why I spent a long time being anti-anti-Trump: not rooting for him to win, but appreciating his truth-telling on certain issues, his capacity to upset the stagnant status quo.

Which is the way it so often works with authoritarians. They promise a purgation that many people at some level already desire, and only too late do you realize that the purge will extend too far, and burn away too much."

OK Ross Douthat has finally named one of the fools tempted by authoritarianism. He is named Ross Douthat. I can't contradict Douthat's claim that he is a fool who plays with fire. He would know.

"Fortunately Trump’s fire should still be contained, by the wider electorate if not by his hapless party. Fortunately he’s still more a comic-opera demagogue than a clear and present danger. Fortunately this is just history giving us a lesson in what could happen, how the republic could slide into a strongman’s hands.

" Fortunately."

A bit weak on "should" and "shall" isn't he. I suppose that given this column, Douthat has decided to vote for Clinton or Sanders rather than Trump. But he didn't write that did he ?