Category: Political Science
From the comments
From Ezra's comments, this is ctown_woody:
Ezra,
To what extent is the Fed worried about making a visible commitment and failing? If Tyler Cowen and others are right that this slump is the end of family-deficit spending, it is quite conceivable that the Fed will fail to deliver that which it promises to deliver. At that point, the institutional players in the Fed will have lost credibility, which would lead to a lose of independence from politics.
So, to what extent is the Fed acting like Peter LaFleur from Dodgeball, "If you never try anything, you'll never fail"?
Who are the interesting collaborators?
Pensans, an MR reader of uncertain loyalty, requests:
How about a really systematic exploration of other contemporary collaborators with totalitarian regimes whose propaganda you would like to tout to unsettle readers? Or, would that disturb the shocking effect of your bold free thought on your readership?
The following names come to mind as "collaborators" worth reading or otherwise imbibing:
Martin Heidegger, Pablo Neruda, Jean-Paul Sartre, Jean-Luc Godard, Susan Sontag, Ezra Pound, Eric Foner, Eric Hobsbawm, and I have lost track of who exactly apologized for Castro but it is many smart people.
H. Bruce Franklin, editor of "The Essential Stalin," was a splendid teacher and he had a notable influence on me.
There's a long list of Western intellectuals and Founding Fathers who apologized for slavery and violent imperialism. Although that does not fit the word "totalitarianism" exactly, it was often a form of totalitarianism — or worse – for those who suffered under it.
*City on the Edge*
The author is Mark Goldman and the subtitle is Buffalo, New York. I loved this book. It is a splendid portrait of twentieth century America, the connection of industrialism and the arts, the decline of manufacturing and the resulting urban casualties, an applied study of the wisdom of Jane Jacobs, and on top of all that it is the best book I've read on how excess parking helped destroy an American downtown. I recommend this book to all readers of serious non-fiction.
Strange North Korean headlines
"Talks about Talks Yield No Talks"
Yet somehow it all makes sense. For the pointer I thank Peter Komarek.
*Seeds of Destruction*
That's the new tract by Glenn Hubbard and Peter Navarro; the subtitle is Why the Path to Economic Ruin Runs through Washington, And How to Reclaim American Prosperity.
Beyond the usual market-oriented prescriptions, the book defends a price floor for oil imports, price indexing of social security benefits, it is anti-fiscal stimulus, anti-easy money, for job training programs, and for health care it advocates eliminating the tax deduction, removing state-level barriers to competition, and malpractice reform. The authors also devote special attention to criticizing Chinese protectionism as a reason why American job growth hasn't been better.
I take Hubbard to be a (the?) future "kingmaker" for economic policy within the Republican party, with possible competition from Douglas Holtz-Eakin. If you wish to know where those debates and proposals are headed, this is the book to pick up.
How economists (and how many) advise the President
Keith Hennessey serves up a first-rate post; to excerpt it would diminish the impact. Read the whole thing.
*Winston’s War: Churchill 1940-1945*
The author of this book is Max Hastings. Although this topic may seem like well-trodden ground, this is so far one of my favorite non-fiction books of the year. Excerpt:
It was remarkable how much the mood in Washington had shifted since January. This time, there was no adulation for Churchill the visitor. "Anti-British feeling is still strong," the British embassy reported to London, "stronger than it was before Pearl Harbor…This state of affairs is partly due to the fact that whereas it was difficult to criticize Britain while the UK was being bombed, such criticism no longer carries the stigma of isolationist or pro-Nazi sympathies." Senator Allen Ellender of Louisiana declared sourly there "there was little point in supplying the British with war material since they invariably lost it all."
Among other things, it is an excellent book for communicating how military alliances actually work and how much humiliation a nation feels if it keeps on losing military battles or is unable to fight in response. I also had not realized what a folly British policy toward Singapore was. Definitely recommended. Here is one review of the book. Here is an excerpt.
Not everyone in Australia likes Max Hastings.
View of Jimmy Carter and his Presidency
That was a reader request. Matt Yglesias offers some background, as does Kevin Drum. On the plus side there was airline deregulation, support for Volcker and disinflation (later), willingness to lose the Presidency to see disinflation through, and he didn't push for a large number of Democratic ideas that I would disagree with, though he did create the Department of Education. Recall that he came from a party of McGovern and Kennedy and you can think of him as a precursor of the better side of the Clinton administration. Price controls on energy were a big mistake and that idea is hard to justify.
I'll call his support for the Afghan rebels a plus, because it helped down the Soviet Union, but I can see how you could argue that one either way. His conservation efforts could be called mamby-pamby but still they were a step in the right direction. He gave amnesty to Vietnam draft dodgers, a plus in my book, as was giving away the Panama Canal and bribing Egypt into better behavior.
At the time I thought Carter was a reasonably good President and it was far from obvious to me that the election of Reagan would in net terms boost liberty or prosperity.
I do understand that he was a public relations disaster and he shouldn't have fired his entire Cabinet and that he botched the Iran invasion.
Still, I think of Carter as a President with some major pluses and overall I view his term as a step in the right direction. He also seems to have been non-corrupt — important so soon after Watergate — and since leaving office he has behaved honorably and intelligently, for the most part.
Bruce Cumings and what he deserves
Many of you are objecting to my post on his book, either in the form of comments or emails. You are objecting to his ideology and objecting that he does not denounce the North Korean regime with sufficient fervor and with sufficient recognition of its true awfulness, though he does denounce it, using the word "reprehensible."
On these points I (mostly) agree with you, the critics. Yet it is still a good book and it should open many people's eyes to the history of the Korean War and the not always pretty American role in that war. I haven't seen good comments or reviews finding fault with the book itself (but if I do I will pass them on). The book, by the way, does not allege that South Korea started the war.
Keep in mind how many history or foreign policy books or essays are written by people who are essentially toadies to power or apologists for the U.S. government, or for some other foreign regime. It is expected that we accept those problematic inclinations and affiliations without comment or condemnation. In contrast to many of the works by establishment historians, Cumings is a breath of fresh air.
Overall I seek to narrow rather than widen the following category: "cannot be praised without accompanying symbolic denunciation." If it turns out that, in the process, Cumings reaps more relative status than he deserves (and I am not very influential in shaping the reputations of historians), I'm not especially troubled by that.
In fact maybe I'm happy to see you squirm a bit.
One of my major purposes in writing this blog is to nudge people away from judging political issues, or for that matter books, by asking which groups or individuals rise or fall in relative status.
Wyclef Jean for President of Haiti?
Here is one response:
A sad day for Haiti. No experience. No plan. No education. Can’t speak the language let alone proper English plus a history of not being able manage his own personal affairs based on foreclosures, IRS tax liens and his nonprofit scandal.
Here is another:
Wyclef Jean owes the IRS 2.1 million dollars, had his house sold at auction and stole money from his own Haiti ‘charity’.
Those points would appear to be well-taken, but as an economist so often does, I would rephrase the question in terms of "how much" rather than "whether." What is the probability that the "added media scrutiny and international attention" effect will create benefits which outweigh his other deficiencies for the job? I say about ten percent.
Is there a genetic component to varying degrees of cooperativeness?
I have thought about this question and now I see a new paper (ungated here) on the topic:
Genes and culture are often thought of as opposite ends of the nature–nurture spectrum, but here we examine possible interactions. Genetic association studies suggest that variation within the genes of central neurotransmitter systems, particularly the serotonin (5-HTTLPR, MAOA-uVNTR) and opioid (OPRM1 A118G), are associated with individual differences in social sensitivity, which reflects the degree of emotional responsivity to social events and experiences. Here, we review recent work that has demonstrated a robust cross-national correlation between the relative frequency of variants in these genes and the relative degree of individualism–collectivism in each population, suggesting that collectivism may have developed and persisted in populations with a high proportion of putative social sensitivity alleles because it was more compatible with such groups. Consistent with this notion, there was a correlation between the relative proportion of these alleles and lifetime prevalence of major depression across nations. The relationship between allele frequency and depression was partially mediated by individualism–collectivism, suggesting that reduced levels of depression in populations with a high proportion of social sensitivity alleles is due to greater collectivism. These results indicate that genetic variation may interact with ecological and social factors to influence psychocultural differences.
Still, I can't see the evidence. I don't see the case for causation. Let's say something about a group's serotonin level made it more susceptible to social stress: couldn't that lead to either greater individualism or greater collectivism? Is collectivism so calming and are social institutions so functional so as to respond to how stressed we feel from social interactions? If I were a very stressed out person (I'm not), wouldn't I prefer to live in or construct the social institutions of Sweden, which in this context counts as individualistic?
You might respond that the evolving alleles should be linked to earlier Swedish society and not Sweden today. But then one needs to measure collectivism vs. individualism at that earlier point in time. I wouldn't be surprised if China in the tenth century were "more individualistic" than Sweden in the age of the Vikings, and so on.
(By the way, Is "individualism vs. collectivism" the right spectrum? We individualistic Americans seem especially apt at being trained to kill people and fire when ordered. We also seem especially patriotic.)
If you pull out the strangely-placed Colombia from Figure 1 in the paper, it's basically a Europeans vs. Asians effect driving both the genetic contrasts and the collectivism vs. individualism contrasts. We're left with two quite general contrasts and no theory connecting the two or much of a good reason to think they should be connected.
Don't we just have two data points here — "Asia" and "Europe" — and the split of the data into countries is a phony way to boost apparent statistical significance?
It's a broader question what effects higher serotonin levels have. I've tried to read a few papers on this topic and I've seen high serotonin levels correlated with both anxiety and calm. To be sure, this may reflect the inability of this non-specialist to see through to the best and best understood results, but still the relevance of serotonin to human behavior hardly seems like an open and shut question. I'd sooner suggest that right now we don't understand serotonin very well, at least not as it shapes broader social interactions.
I thank RR for the relevant pointer.
*The Korean War*
That's the new book by Bruce Cumings and it is as good as the reviews indicate (criticisms here). Here are a few choice excerpts:
For decades the South Korean intelligence agencies put out the line that Kim Il Sung was an impostor, a Soviet stooge who stole the name of a famous Korean patriot. The real reason for this smoke screen was the pathetic truth that so many of its own leaders served the Japanese…
And:
…Two Koreas began to emerge in the early 1930s, one born of an unremittingly violent struggle in which neither side gave quarter; truths experienced in Manchukuo burned the souls of the North Korean leadership. The other truth is the palpable beginning of an urban middle class, as peole marched not to the bugle of anti-Japanese resistance but into the friendly confines of the Hwashin department store, movie theaters, and ubiquitous bars and tearooms.
And:
…Most Americans seem unaware that the United States occupied Korea just after the war with Japan ended, and set up a full military government that lasted for three years and deeply shaped postwar Korean history.
And:
What hardly any Americans know or remember, however, is that we carpet-bombed the North for three years with next to no concern for civilian casualties…The air assaults ranged from the widespread and continual use of firebombing (mainly with napalm), to threats to use nuclear and chemical weapons, finally to the destruction of huge North Korean dams in the last stages of the war.
And, from the entire war:
Perhaps as many as 3 million Koreans died, at least half of them civilians (Japan lost 2.3 million people in the Pacific War).
You can buy the book here.
Sentences to ponder
A report from Harvard's Kennedy Center last year found that the world could cut global CO2 emissions by about 6 percent simply by scrapping price supports for fossil energy.
Hat tips go to Sullivan and Plumer.
Health care and revenue competition in Britain
Elite NHS foundation trusts are gearing up to lure private patients from home and abroad as health budgets are squeezed – a decision made possible after health secretary Andrew Lansley said he would abolish the cap limiting the proportion of total income hospitals can earn from the paying sick…
With a £20bn black hole opening up in NHS budgets, a group of top performing trusts are seeking to profit from paying patients and use the money to fund public healthcare in Britain.
Previously,
Labour's cap had meant most hospitals were unable to generate more than 2% from private income.
Here is more, although full details are not yet clear, it seems doctors will be much more in charge, in a decentralized manner. Here's one opinion:
"What's to stop US healthcare companies coming over here to poach patients. Or GPs sending patients to India for cheap operations? Or English hospitals raiding Scotland for sick people?" said Alan Maynard, professor of health economics at the University of York. "It could be a real mess."
How long will it be before the entire NHS, as it was known, goes down as a collapsed model? What exactly caused the collapse? (I was surprised to read that Labour had tripled the budget since 1997.) Will "the line" be that evil ideologues are dismantling a working system? How will greater competition for patients alter our assessments of various national health care systems? Is empowering doctors going to cut costs? How much loyalty will patients, and voters, show to the old NHS model?
Blunt opinions, supported elsewhere but not here
I'd like to get a few opinions on record or simply recap some previous points.
The current downturn is a mix of AD and real shocks, in uncertain proportions, and in a manner which is hard to separate empirically. It is now obvious there is a lot of structural unemployment and there is a quick and probably unjustified rush to define it all as AD-influenced unemployment turned sour. The structural theories have their problems, but they can better explain why corporate profits are high and can better explain the distribution of unemployment across income and educational classes. The regional distribution of unemployment is persisting because of labor immobility, which involves both AD and structural issues. The sectoral shift view is more about shifting out of optimism-linked activities, within any particular sector, rather than about shifting out of construction and finance per se.
The mix of structural and AD factors does not, in any case, support liquidationist policies. It supports AD-stabilizing policies, though it suggests that in absolute terms those policies will do less well than expected. The failure of the fiscal stimulus is consistent with a number of different views, not just the claim that it should have been bigger. We've yet to see a good theory of how stimulus scales up to produce a bigger and better multiplier at higher levels.
I don't trust stimulus analyses which fail to assign a central role to confidence and confidence is hard to model.
Current experience is also consistent with (but not unambiguously favoring) an Austrian-like view that the stimulus boosts some activity and then shortly thereafter pulls away the rug, leaving us more or less back where we started, albeit with some smoothing gains in the short run and some adjustment costs in the longer run. The persistence and scale-up from the initial fiscal boost is hardly guaranteed. The empirical papers on multipliers are not to be trusted and the results are in any case hard to generalize from one period to another.
Harald Uhlig's paper is one statement of the case against stimulus. There is nothing measured by the Alan Blinder study which rules out the central result of this paper, namely transitory gains in the short run and high costs in the longer run.
Macroeconomics is rarely simple.
Elizabeth Warren is unlikely to prove an effective agency head, and the two sides to this debate ought to switch positions. Yet…politics very often isn't about policy.
On the AD front, Scott Sumner has been vindicated more than any other writer. His best critic is Arnold Kling, especially with regard to whether there are only two kinds of inflation regimes, low or high and variable. A related question is what a looser monetary policy would have done to financing the long-run debt burden and the use of the interest rate spread to recapitalize banks.
We still don't know what we are doing.