Category: History
My interview with Ralph Nader
I interviewed him. You will find the full version here, the edited version here. Not surprisingly, I prefer the full version. Here is one excerpt:
TC: If I look back at your career, I see you’ve been fighting various kinds of wars or struggles against a lot of different injustices. If you look back on all those decades, during which time you’ve been right about many things, what do you think is the main thing you’ve been wrong about?
RN: Oh, a lot of things. Nobody goes through these kinds of controversies without making bad predictions. I underestimated the power of corporations to crumble the countervailing force we call government. We always knew corporations like to have their adherents to become elected officials; that has been going on for a long time. But I never foresaw the insinuation of corporatism as a policy in one agency after another in government. Franklin Delano Roosevelt foresaw some of this when he sent a message to Congress when he started the temporary national economic commission to investigate consecrated corporate power. That was in 1938. In his message he said that whenever the government is controlled by private economic power, that’s facism. Now, there isn’t a department or agency in Washington where anyone has more power—over it and in it, through their appointees, and on Congress, through lobbyists and political action committees. Nobody comes close. There’s no organized force that comes close to the daily power to twist government in the favor of Wall Street and corporatism, and to disable government from adequately defending the health, safety and economic well-being of the American people.
TC: Let’s say we look at the U.S. corporate income tax. The rate on paper is 35 percent, which is quite high. When you look at how much they actually pay after various forms of maneuvering or evasion, maybe they pay 17–18 percent, which is more or less in the middle of the pack of OECD nations. So if corporations have so much political power in the United States, why is our corporate income tax still so high?
…Sweden, a country you cited favorably, taxes capital income much more lightly than the United States does—not just on paper but in terms of what’s actually paid.
I also ask him about the Flynn effect, whether America needs a new kind of sports participation, and how much American churches have resisted corruption through corporatization, among a variety of other topics. I tried to avoid the predictable questions.
By the way, you can buy Nader’s new book, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State. I very much enjoyed my preparation for this interview, which involved reading or rereading a bunch of his books and also a few biographies of him.
Peter Lindert on Piketty
He has an NBER review essay on the book. Here is one bit:
Piketty’s “r > g” device, for all its amazing rhetorical power, does not take us very far. Our task of explaining and predicting inequality movements is not made any easier by the requirement that we must first predict both a “rate of return” and the growth rate of the economy. The formula r – g takes us no further than we were transported fifty years ago by the concept of total factor productivity as a “source” of growth. It will be another “measure of our ignorance.”
Here is more:
Oddly, however, for the twentieth century trends that he and his collaborators have documented so well, the relevance of the wealth/income and capital/income ratios for the income distribution is less compelling. Across countries, the levels and movements of this ratio do not correlate well with those in income inequality. Over time, there is more correlation, within Britain, or France, or Germany, or the United States. Yet, as we shall see later, the same overall movements will show up when we look at the inequality movements in incomes that have little to do with wealth, such as wage rates or in middle/lower income ratios.
The essay is interesting throughout and you will see at the end that Lindert is no friend of inequality and no enemy of highly progressive taxation. By the way, here is a Lindert essay on three centuries of inequality in Britain and America (pdf). Here is Lindert, with Williamson, on whether globalization makes the world more unequal. He knows this area very well.
Are land mines a thing of the past?
It seems so:
Despite the conflicts in Syria, Iraq and Afghanistan, the armed uprising in Ukraine and turmoil in other hot spots in the Middle East and Africa, one of war’s most insidious weapons — antipersonnel land mines — have been largely outlawed and drastically reduced, a monitoring group said in a report released Monday.
In the 15 years since a global treaty prohibiting these weapons took effect, the use and production of the mines has nearly stopped, new casualties have plummeted, and more than two dozen countries once contaminated by land mines buried since old wars have removed them, said the report by the group, the International Campaign to Ban Landmines.
“The Mine Ban Treaty remains an ongoing success in stigmatizing the use of land mines and mitigating the suffering they cause,” said Jeff Abramson, the project manager of Landmine Monitor, the group’s research unit.
There is more here. The United States, however, still has not signed the treaty.
Alan Macfarlane’s *Invention of the Modern World*
An excellent new book drawn from some 2011 lectures he gave in China. Macfarlane of course is a highly esteemed historian who has made critical breakthroughs in understanding the medieval roots of later English success, but he also has written extensively on Nepal, Japan, and China, including from anthropological perspectives. His status is high, and his works are generally quite readable, but somehow he has missed out on the recent interest in popular yet serious non-fiction books.
This work is not written as a book (thank goodness), it is more as if he is simply sitting down and telling you what you want to know. He runs through all of the different factors that helped motivate the Industrial Revolution and the British breakthrough. Here is one excerpt:
England was part of one of the most war-like civilizations in history. The constant warfare in Europe was different from the long periods of peace in Japan or China. The constant recurrent strife led to rapid technological and scientific evolution through a process of Darwinian selectionary pressures — the survival of the “fittest.” Guns, boats, navigation, knowledge of physics and chemistry, all rapidly improved. The ships which crushed the Chinese in the Opium Wars in the nineteenth century were enormously different from the primitive medieval boats which would have been no match for a Chinese armada in the fourteenth century. So England benefited from the positive effects — but others paid the cost. Thus, at the battle of Omdurman, the British had six Maxim guns. The result was 28 British dead, and eleven thousand of their enemies were slaughtered.
…So we need to understand that central imperial phase — the worst of all Empires, except perhaps the rest which were even worse. The cost in terms of lives destroyed in slavery, opium and conquest is unbearable. Yet it was also the context which allowed the most massive material and economic transformation in human history since the discovery of agriculture to occur, namely the Industrial Revolution.
His discussion of the importance of the legal system is also very good. You can buy the book here.
Before Hitler came along, who was cited as the embodiment of evil?
One good answer is from Tim O’Neill:
People were generally very familiar with the Bible pre-1900, so the figures usually cited as the epitome of evil tended to be Judas Iscariot, Herod the Great or, most commonly, the Pharaoh of the story of Moses in Exodus. In Common Sense, Thomas Paine wrote: “No man was a warmer wisher for reconciliation than myself, before the fatal nineteenth of April, 1775 [the date of the Lexington massacre], but the moment the event of that day was made known, I rejected the hardened, sullen Pharaoh of England forever.” The Confederates referred to Abraham Lincoln as “the northern Pharaoh” and abolitionists in turn called slaveowners “modern Pharaohs”. Americans also referred to all tyrants by comparing them to King George III and Napoleon was often cited as the ultimate bogeyman in Britain. But generally it was Pharaoh who was used the way we use Hitler.
Did they have something akin to Godwin’s Law back then: “if you have to mention the Pharaoh, you’ve lost the argument!” Somehow I don’t think so. A link to the Quora forum is here.
Update: It seems Brian Palmer deserves credit for the information behind that answer.
Cities at or near their all-time peaks of excellence
I would cite a few:
1. Berlin
2. Kuala Lumpur
3. Mexico City
4. San Francisco
5. Seoul
6. Toronto
7. Stockholm
8. Lagos
Higher living standards count toward this designation, but they are not enough. Vienna’s general excellence was higher in the 20s, even though the city was much poorer back then, and so Vienna cannot make the list.
Los Angeles probably peaked in the 80s and New York arguably peaked in the postwar period through the 1970s or 80s. Chicago might have a claim. Can you think of others? Does Shanghai have a chance, or did it peak around 2000 or so, before it got so polluted and crowded?
Is the lack of war hurting economic growth?
I have a new piece for The Upshot on that topic, here is one excerpt:
Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely. This view does not claim that fighting wars improves economies, as of course the actual conflict brings death and destruction. The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work. Rather, the very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.
It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth.
I also discuss new books by Ian Morris, Kwasi Kwarteng, and some research by my colleague Mark Koyama, as well as Azar Gat. I did not have room in the piece to point out there is an interior solution concerning this issue. That is, if the chance of war is too high, and property rights are too insecure, that isn’t good for economic growth either.
More Matt Rognlie on Piketty — the most important point
Matt has what is probably the single best, focused technical critique of Piketty. Here are his concluding remarks:
Compared to the grand scope of Piketty (2014), the objective of this note has been quite narrow: to systematically explore the relevant evidence on diminishing returns to capital. Technical and uninspiring as this question may be, it is an essential step in knowing whether the prediction of rising capital income and inequality through accumulation—a prediction that gives Capital in the Twenty-First Century its title—will really come to pass. And given the evidence here that Piketty (2014) understates the role of diminishing returns, some skepticism is certainly in order.
But rejection of this specific mechanism does not constitute rejection of all Piketty (2014)’s themes. Inequality of labor income, for instance, is a very different issue—one that remains valid and important. Capital itself remains an important topic of study. Among large developed economies, the remarkably consistent trend toward rising capital values and income is undeniable. As Sections 3.3 and 3.4 establish, this trend is a story of rising capital prices and the ever greater cost of housing—not the secular accumulation emphasized in Capital — but it has distributional consequences all the same. Policymakers would do well to keep this in mind.
The full piece is here (pdf), excellent and on target throughout.
To be perfectly frank on this one, Matt here is completely correct and Piketty has not produced any effective response to this point, either within the book or without. The internal response “I still think we need to worry about inequality therefore I side with Piketty” simply represents a misunderstanding of Matt’s argument. Piketty’s mechanism of accumulation, as laid out in his book, is simply the wrong mechanism for understanding growing inequality, both theoretically and empirically. And it is a shame that the Giles critique from the FT has attracted so much attention because it has distracted everyone from the more serious problems with the argument of the book.
Charlie Stross unintentionally explains why Scottish independence is a bad idea
Here is one of the end paragraphs of his “interesting throughout” but unsettling piece in favor of independence:
Which brings me to the punch-line: I’ll be voting “yes” for an independence Scotland in September. Not with great enthusiasm (as I noted earlier, if Devo Max was on the ballot I’d be voting for that) but because everything I see around me suggests that there is some very bad craziness in the near future of England, and I don’t want the little country I live in to be dragged down the rabbit hole by the same dark forces of reaction that are cropping up across Europe, from Hungary to Greece. The failure modes of democracy, it seems to me, are less damaging the smaller the democracy.
Stross is a smart guy and I am an admirer of his writing. But my view remains pretty straightforward: when dislike of the policy choices of the electorate leads to a serious movement for secession, something has gone deeply wrong with the preconditions for democratic attachment. The UK is hardly the Third Reich, it has a long tradition of honest elections, and for left-leaning individuals the share of British government in gdp is likely to stay well over 40% in all plausible futures and furthermore most of the conservatives are relatively liberal on social questions. For those who favor independence for the Scots, what kind of general principle might you lay out for when other peoples also should seek secession? Do they think that the strongly red states in America also should consider secession? How about Vermont? I understand the libertarian case for such secessions, but most supporters of Scottish independence are not arguing from libertarian premises. How much secession do they think should be happening? Or do they hold particularist views which do not admit of any generalization at all? Either way, I consider this a true crisis of governance.
Addendum: Scottish wealth seems to be lower than they have been claiming: “More than 70% of Scotland’s total economic output – excluding banking and finance and the public sector – is controlled by non-Scottish-owned firms, according to Scottish government data.”
Growth mindsets
Scott Young writes:
In logarithmic domains, two mindsets are important. In the beginning, high-growth phase, the emphasis needs to be on maintaining long-term habits. Since growth is fast initially, care needs to be taken so that it won’t slide back down once effort is removed.
In the later, low-growth phase, the emphasis needs to be on habit breaking. Since low-growth is often caused by calcifying routines, deliberate effort needs to be taken to break out of that comfort zone.
In exponential domains, the mindset of resilience and endurance are critical. Since feedback is sparse and generally negative during the initial part of the curve, it takes dedication to persist. Part of the reason, entrepreneurs are often consumed by their own vision is that it helps block out the negative feedback until they can reach the exponential part of their growth.
There is more here, and for the pointer I thank R.
New MRU course on the economics of the Soviet Union
It is taught by Guinevere Liberty Nell, and you will find it here. Here is Guinevere’s biography:
Guinevere Liberty Nell earned an MA from the University of Warwick in Soviet economic history after studying the subject independently for several years, as well as studying and publishing in the field of Austrian economics. She is the author of Rediscovering Fire: Basic Economic Lessons from the Soviet Experiment (Algora, 2010) and Spontaneous Order and the Utopian Collective, which focuses on Lenin’s utopian ideas and the early years of the Soviet experiment (Palgrave-Macmillan, 2014).
We will have a class (mostly by me) on International Finance , coming soon, other offerings too.
Donald N. Michael on our future cybernation
He wrote:
[When] computers acquire the necessary capabilities…speeded-up data processing and interpretation will be necessary if professional services are to be rendered with any adequacy. Once the computers are in operation, the need for additional professional people may be only moderate…
There will be a small, almost separate, society of people in rapport with the advanced computers. These cyberneticians will have established a relationship with their machines that cannot be shared with the average man any more than the average man today can understand the problems of molecular biology, nuclear physics, or neuropsychiatry. Indeed, many scholars will not have the capacity to share their knowledge or feeling about this new man-machine relationship. Those with the talent for the work probably will have to develop it from childhood and will be trained as intensively as the classical ballerina.
Michael then discusses what will happen to those people who cannot work productively with the machines. Some will still work in person-to-person interactions, but the others will end up in government-designed public tasks and work short hours and subsist on the public dole. He also considers the possibility of sending some of these individuals to poorer countries where automation is not so far advanced.
Michael wrote all of that and more in his book Cybernation: The Silent Conquest in…1962.
Very good Larry Summers FT review of Mian and Sufi
It is here, he mostly really likes the book but thinks they are not sophisticated enough in their policy prescriptions. Here is one good excerpt on whether the federal government should have worked harder to institute mortgage cramdowns:
First, there was the risk of bringing down the system in an effort to save it. Banks had substantial mortgage holdings and especially large quantities of subordinated second mortgages and home equity lines of credit, which would have been wiped out if mortgage principal had been reduced in a way that respected the seniority of first mortgages. We recognised that large-scale principal reduction would draw in a large number of mortgages that were not delinquent and would otherwise be paid in full. As a consequence, there was the risk of sucking hundreds of billions of dollars out of the banking system. Given that government funds for capital infusions were scarce and that each dollar of bank capital supports $12 of lending, we worried that the spending gains from reducing mortgage debt might well be exceeded by the spending losses from reducing the flow of capital. This fear may have been exaggerated. If they think so, Mian and Sufi owe an explanation as to why.
Second, there was the issue of chilling future lending… This was not a small concern, as the automobile industry was in freefall and consumer confidence was deteriorating very rapidly.
Third, there was the danger of prolonging the housing market’s problems. Even the relatively limited programmes in place have spent as much as a third of their money delaying, rather than avoiding, foreclosures. All that we heard at the time suggested that a significant part of the reason why the housing market was dead was that no one wanted to buy because of a fear that it had further to fall. Delaying inevitable foreclosures with relief risked exacerbating this problem and risked larger foreclosure discounts when houses were ultimately sold.
Why am I reminded of The Clean Air Act of 1963?
Here is one very brief history:
Each state was given primary responsibility for assuring that emissions sources from within their borders are consistent with the levels designated by the NAAQS. In order to achieve these goals, each state is required to submit a State Implementation Plan (SIP) to the EPA to ensure the implementation of primary and secondary air quality standards…Since many states failed to meet mandated air quality standards first set by the Clean Air Act, Congress created the 1977 amendments to aid states in achieving their original goals.
That is just one bit of course. More broadly, people focus on The Clean Air Act of 1970, but of course the original legislation was from 1963 and it was extremely ineffective because it had inadequate popular support and the issue was not yet a major concern. It had to be revised/amended in 1965 and 1967 and 1970 and then also 1977 and 1990. Yet the 1963 act did set definite standards for stationary (but not mobile) pollution sources and mandated a timetable for adoption, albeit with a lot of state flexibility for meeting the new standards. All of that went nowhere. And that was an act passed directly by Congress, not just an Executive Order. Even in those days, a lot of actual progress in the fight against air pollution came through the replacement of dirty coal by natural gas, a process which had started in the 1920s and spread through America in successive waves.
Here is a typical paragraph about early policy ineffectiveness, from a useful essay:
By 1970, it was “abundantly clear” to Congress that federal legislative efforts to fight air pollution were inadequate. State planning and implementation under the 1967 Act had made little progress.Congress attributed this “regrettably slow” progress to a number of other factors including the “cumbersome and time-consuming procedures” in the 1967 Act, inadequate funding at the federal, state, and local levels, and the lack of skilled personnel to enforce pollution requirements. Commentators have also suggested that federal legislation prior to 1970 failed because of both an inability and an unwillingness on the part of the states to deal with air pollution.
When I read about the new Obama plan, I am reminded of 1963, and also 1965 and 1967. For all of the hullaballoo you are hearing — whether positive or negative — keep this in mind.
Addendum: Most of the best sources on the 1963 Act are off-line. But here is an interesting essay about some of the federalistic issues behind the enforcement of the various Clean Air Acts, mostly post-1963. Here is the text of the 1963 law, for one thing it is amazing how short it is.
The new Godzilla movie, *Godzilla* (minor spoilers in post)
I know I am late on this one, but I thought it was pretty damned good, well above expectations. I feel comfortable placing it in the top five Godzilla movies of all time. The visuals are spectacular but not overdone, and it pays appropriate homage to its sources, including the Japanese original but also Hitchcock’s The Birds. The movie also treats nuclear weapons use with the moral seriousness it deserves, which is rare these days.
And is there a Straussian reading? Well, yes (did you have to ask?). The film is really a plea for an extended and revitalized Japanese-American alliance. The real threat to the world are the Mutos, not Godzilla, who ends up defending America, after the lead Japanese character in the movie promises the American military Godzilla will be there as our friend (don’t kill me, that is not a major spoiler as it is telegraphed way in advance).
The Mutos, by the way, are basically Chinese mythological dragons, and an image of two kissing Muto-like beings is shown over the gate of San Francisco’s Chinatown three different times in the movie, each time with greater conspicuousness. The Mutos base themselves in Chinatown in fact. Note that the Mutos can beat up on Godzilla because of their greater numbers, but as for one-on-one there is no doubt Godzilla is more fierce. And the name of the being — Muto — what does that mean? I believe loyal MR readers already know, and apologies for reminding you. General Akira Muto led the worst excesses committed by Japanese troops during the Rape of Nanjing, perhaps the single biggest Chinese grievance against The Land of the Rising Sun, and thus the beings are a sign of the Chinese desire for redress and revenge. Unless of course the right military alliance comes along to contain them and save the world…
The references to Pearl Harbor and the Philippines are not accidents either.