J. Bradford DeLong's Blog, page 435

Must-Read: Julius Martov (1920): The state and the social...

Must-Read: Julius Martov (1920): The state and the socialist revolution": "Reality has cruelly shattered all these illusions...

...The "Soviet State" has not established in any instance electoral recall of public officials and the commanding staff. It has not suppressed the professional police. It has not assimilated the courts in direct jurisdiction by the masses. It has not done away with social hierarchy in production. It has not lessened the total subjection of the local community to the power of the State.

On the contrary, in proportion to its evolution, the Soviet State shows a tendency in the opposite direction. It shows a tendency toward intensified centralism of the State, a tendency toward the utmost possible strengthening of the principles of hierarchy and compulsion. It shows a tendency toward the development of a more specialized apparatus of repression than before. It shows a tendency toward the greater independence of the usually elective functions and the annihilation of the control of these functions by the electoral masses. It shows a tendency toward the total freedom of the executive organisms from the tutelage of the electors.

In the crucible of reality, the "power of the Soviets" has become the "soviet power���power that originally issued from the Soviets but has steadily become independent from the Soviets.

We must believe that the Russian ideologists of the soviet system have not renounced entirely their notion of a non-Statal social order, the aim of the revolution. But as they see matters now, the road to this non-Statal social order no longer lies in the progressive atrophy of the functions and institutions that have been forged by the bourgeois State, as they said they saw things in 1917. Now it appears that their way to a social order that would be free from the State lies in the hypertrophy���the excessive development���of these functions and in the resurrection, under an altered aspect, of most State institutions typical of the bourgeois era.

The shrewd people continue to repudiate democratic parliamentarism. But they no longer repudiate, at the same time, those instruments of State power to which parliamentarism was a counterweight within bourgeois society: bureaucracy, police, a permanent army with commanding cadres that are independent of the soldiers, courts that are above control by the community, etc.

In contrast to the bourgeois State, the State of the transitional revolutionary period ought to be an apparatus for the "repression of the minority by the majority."... In reality, the Soviet State continues to be... a government apparatus resting in the hands of a minority.... The "power of the Soviets" is being replaced with the power of a certain party... [that] becomes the essential State institution, the framework and axis of the entire system of "soviet republics."!...

The "soviet regime" becomes the means of bringing into power and maintaining in power a revolutionary minority which claims to defend the interests of a majority, though the latter has not recognized these interests as its own, though this majority has not attached itelf sufficiently to these interests to defend them with all its energy and deter-
mination...

Hundredth Anniversary of the Bolshevik Revolution: Hoisted

Edmund Wilson: To the Finland Station: "There has been... no other first-rate Marxist for whom the Marxist conception of History, derived from the Hegelian Idea, plays so frankly teleological a role as it does in the work of Trotsky...

...Here are some references.... "If the prince was not succeeding in peacefully regenerating the country, he was accomplishing with emarkable effectiveness the task of a more general order for which history had placed him at the head of the government: the destruction of the political illusions and the prejudices of the middle class." "History used the fantastic plan of Gapon for the purpose of arriving at its ends."...

History, then, with its dialectical Trinity, had chosen Prince Svyatopolk-Mirsky to disillusion the middle class, had propounded revolutionary conclusions which it had compelled Father Gapon to bless.... These statements make no sense whatever unless one substitutes for the words history and dialectic of history the words Providence and God....

What it may mean in moments of action to feel History towering at one's elbow with her avenging sword in her hand is shown in the remarkable scene at the first congress of the Soviet dictatorship after the success of the October insurrection of 1917, when Trotsky, with the contempt and indignation of a prophet, read [the socialist] Martov and his followers out of the meeting. "You are pitiful isolated individuals," [Trotsky] cried at this height of the Bolshevik triumph. "You are bankrupt; your role is played out. Go now to where you really belong���the garbage-pile of history!"

These words are worth pondering for the light they throw on the course of Marxist policy and thought. Observe that the merging of yourself with the onrush of the current of history is to save you from the ignoble fate of being a "pitiful isolated individual"; and that the failure to so merge yourself will relegate you to the garbage-pile of history, where you can presumably be of no more use.

Today [writing, as Wilson was, at the end of the 1930s], though we may agree with the Bolsheviks that Martov was no man of action, his croakings over the course that they had adopted seem to us full of far-sighted intelligence. He pointed out that proclaiming a socialist regime in conditions different from those [of advanced industrialization, high technology, and material abundance] contemplated by Marx would not realize the results that Marx expected; that Marx and Engels had usually described the "dictatorship of the proletariat" as having the form, for the new dominant class, of a democratic republic, with universal suffrage [for the working class] and the popular recall of officials; that the [Bolshevik] slogan "All power to the Soviets [workers' councils]" had never really meant what it said and that it had soon been exchanged by Lenin for "All power to the Bolshevik Party."

There sometimes turn out to be valuable objects cast away in the garbage-pile of history���things that have to be retrieved later on. From the point of view of the Stalinist Soviet Union, that is where [Leon] Trotsky himself is today [in the late 1930s]. He might well discard his earlier assumption that an isolated individual must needs be "pitiful" for the conviction of Dr. Stockman in Ibsen's [play] An Enemy of the People that "the strongest man is he who stands most alone"...

Should-Read: Ta-Nehisi Coates: Ta-Nehisi Coates has an in...

Should-Read: Ta-Nehisi Coates: Ta-Nehisi Coates has an incredibly clear explanation for why white people shouldn���t use the n-word - Vox: "When you���re white in this country, you���re taught that everything belongs to you...

...You think you have a right to everything.��� You���re conditioned this way. It���s not because your hair is a texture or your skin is light. It���s the fact that the laws and the culture tell you this. You have a right to go where you want to go, do what you want to do, be however���and people just got to accommodate themselves to you.

So here comes this word that you feel like you invented, and now somebody will tell you how to use the word that you invented. ���Why can���t I use it? Everyone else gets to use it. You know what? That���s racism that I don���t get to use it. You know, that���s racist against me. You know, I have to inconvenience myself and hear this song and I can���t sing along. How come I can���t sing along?���... The experience of being a hip-hop fan and not being able to use the word ���ni--er��� is actually very, very insightful. It will give you just a little peek into the world of what it means to be black. Because to be black is to walk through the world and watch people doing things that you cannot do, that you can���t join in and do. So I think there���s actually a lot to be learned from refraining...

Must-Read: Barry Eichengreen: Trade Policy and Growth: "N...

Must-Read: Barry Eichengreen: Trade Policy and Growth: "Nothing one can say in this area is uncontroversial...

...Prior to 1913... O���Rourke (2000)... estimated unconditional convergence equations, conditional convergence equations, and factor-accumulation models for a panel of ten countries and eight periods between 1874 and 1914, and concluded from all three approaches that tariffs were positively associated with growth. The result is robust to including country fixed effects... controlling for initial income... including changes in capital/labor and land/labor ratios; it is not all about a correlation between tariffs and the presence of a frontier....

The problem is that none of the standard explanations for this positive tariff-growth correlation hold water. Generalizing from their reading of U.S. history, Collins and Williamson (2001) argue that... tariffs... lowered the relative price of capital and through this channel boosted investment and growth. This... is consistent with... Abramovitz and David (1973)... resonates with... DeLong and Summers (1991).... Another possible explanation is the infant-industry argument, specifically the version which assumes that learning by doing is concentrated in the industrial sector.... Unfortunately, this interpretation does not withstand scrutiny. To start with, the relative price of investment goods depended on other things besides just tariffs... like resource endowments and the direction of technical change.... A detailed analysis of the U.S. tariff code by DeLong (the same DeLong of DeLong and Summers fame) does not support the idea that the tariff favored imported investment goods over consumer goods. To the contrary, DeLong verifies the existence of tariffs on imports of capital goods as high as 50 per cent, and concludes that ���the tariff made a wide range of investment goods ��� from British machine tools and steam engines to steel rails to precision instruments ��� more expensive��� (DeLong 1998, p.369)....

Certainly, the historical literature is consistent with the idea that temporary protection can have long-lived, even permanent, effects in shifting comparative advantage. Juhasz (2014) shows that French cities that enjoyed temporary protection from British textile exports during the Napoleonic Wars were quick to enter the cotton spinning industry and remained internationally competitive long after trade with Britain was restored.Other examples of this natural-experiment-type evidence could be cited. But none of these studies really documents the existence of localized learning���of intra-firm knowledge spillovers from production. Where scholars, for example Doug Irwin (1998) in the case of tinplate production, looked for them, they found that knowledge spillovers are as much international as domestic....

Borrowing constraints, recall, are a standard argument for protecting infant industries on second-best grounds (Dasgupta and Stiglitz 1988). But this emphasis on capital market constraints sits uneasily with the extent of international borrowing and lending in this earlier period.... Schularick and Steger (2010) analyze the relationship between the growth of real GDP per capita and financial integration in the decades before 1913, controlling for initial income, other policies and endogeneity, and measuring financial integration in a variety of different ways. Financial integration, they find, was positively, significantly and robustly associated with economic growth....

By process of elimination, we are left with the simplest hypothesis: that tariffs, which in this earlier period typically protected manufacturing more generously than agriculture, were associated with higher incomes and faster growth because the productivity of labor, and perhaps also the productivity of other factors of production, was significantly higher in manufacturing than agriculture. The 19th century was a period of unprecedented technological progress, in industry in particular. (It wasn���t called the Industrial Revolution for nothing.) As a result, disequilibrium wage and productivity gaps between workers in agriculture and industry were substantial in the period���s late-developing countries....

The obvious challenge... is that productivity gaps between agriculture and industry are even larger in developing countries today.... The explanation, I submit, is that the reasons for the productivity gap were different. In the 19th century, its source was a succession of positive shocks to manufacturing productivity, in conjunction with information and migration costs that prevented labor from being reallocated at a rate sufficient to close the gap. Nowadays, every farmer in Western China knows how much higher wages are in manufacturing enterprises on the coast, and only the internal passport (hukou) system prevents more of them from moving in response. Channels for disseminating this information, while not absent in the 19th century, were less well developed....

This, in conjunction with positive shocks to technology in manufacturing, kept labor productivity in the two sectors in a state of persistent disequilibrium. Hence tariffs protecting manufacturing, with the intent of making the sector larger, offset domestic distortions making the sector too small.... In the absence of... first-best interventions, which were resisted on grounds of ideology, self-interest and because in some cases government lacked the relevant capacity, tariffs were second best....

The problem in poor countries today is different. It is the existence of domestic distortions that depress agricultural productivity and at the same time make it hard for manufacturing to expand, tariff protection or not.... The inability of manufacturing to expand productively may reflect the absence of labor with the requisite skills, inadequate infrastructure, or an unstable and unpredictable policy environment. Again, these are distortions to which tariff protection is irrelevant. This resolution is consistent with... the tariff-growth correlation... positive then, but negative or zero today... [and] a caution to... advocates of protection for manufacturing in high-income countries...

Must-Read: David Kamin: Fixing the Loophole in the House ...

Must-Read: David Kamin: Fixing the Loophole in the House Limit on Deductibility of State and Local Income Taxes: "First, under the legislation...

...is there a loophole in the proposed limit on deductibility of state and local income taxes allowing investors and pass-through business owners (partners in law firms or private equity firms or Donald Trump himself) to take an itemized deduction for the state and local income taxes they pay on their profits, even as employees cannot? Our assessment: Based on the current legislative text and the descriptions of the legislation so far offered by Ways and Means staff and some JCT written materials, we believe the answer to this is ���yes������the best reading is that there is such a loophole.

Second, do the current revenue and distributional estimates from JCT take this ���pass-through��� loophole into account? Our assessment: Based on what we have seen so far and comparing the JCT revenue estimate to others, we believe the answer is likely ���no��� and that JCT, contrary to what the bill seems to do, has assumed that no state and local income taxes are deductible as an itemized deduction���whether paid by a business owner, investor, or employee.

Third, do the revenue and distributional estimates take into account how states and localities could restructure their income taxes to preserve deductibility for trade and business owners (but not employees), even if the itemized deduction really is barred? We explain later in this post exactly how this restructuring would work to essentially preserve deductibility of state and local income taxes for pass-through business owners. Our assessment: Again, our best guess is that the answer is ���no��� and that the JCT estimates are much too optimistic for this reason alone...

Must-Read: The shared omerta among former The Old New Rep...

Must-Read: The shared omerta among former The Old New Republic editors���those who had the title and were supposed to be running the office���Michael Kinsley, Hendrick Hertzberg, Andrew Sullivan, Chick Lane, Peter Beinart, Franklin Foer, and Richard Just���is quite something. For people who have made their professional lives out of bing willing to say strident and contrarian things about pretty much anything on the drop of their hat, their collective and individual silence is quite remarkable:

Sarah Wildman: I was harassed at the [Old] New Republic. I spoke up. Nothing happened: "Last week, I reached out to [Peter] Beinart, who now teaches journalism at the City University of New York and is a contributing editor at the Atlantic and a columnist for the Forward...

...He quickly confirmed that I'd come to him at the time.

"Fifteen years ago,��� he texted me in a formal statement:

Sarah Wildman brought a deeply troubling incident regarding Leon Wieseltier to my attention. I was not Leon���s boss. We both served under Marty Peretz, the owner and editor in chief. Feeling I had a legal obligation to report the incident, I informed Marty and insisted that he come to Washington to tell Leon that such behavior was unacceptable. The three of us met but Marty did not take meaningful action. I am not saying this to exonerate myself. I should have done far more. I was complicit in an institutional culture that lacked professional procedures regarding sexual harassment, and which victimized women, including women I considered friends. I will always be ashamed of that, and will ensure that I am never similarly complicit again.

Peretz, reached by phone, insisted to a Vox editor, ���Peter never, ever, ever reported this to me.��� The former owner, who sold the last of his shares in the magazine in 2012, declined to speculate on the wave of allegations against Wieseltier. ���I don���t know what���s true and what���s not,��� Peretz said. He added, ���I don���t remember Sarah Wildman.���

Vox reached out to Wieseltier by email and text. He did not respond to repeated requests for comment...

When I told Beinart my story, his response, it seemed to me, was perplexed at best, panicked at worst. He told me he felt compelled, legally, to launch some sort of investigation. But it all felt ad hoc. At some point, someone���I believe it was Peter, though he no longer recalls this���advised me that I should tell Wieseltier I had said something, lest he be caught unaware. So I stopped by his office. It proved an awful idea. Wieseltier was cold. He wanted to know why. As in: Why would I have said anything? In my recollection, he told me that I was acting like a child....

Soon after that miserable conversation, a meeting was held in Wieseltier���s office���I was there, with him and Beinart. (Beinart also described to me a different, earlier, meeting, between him, Peretz, and Wieseltier held explicitly to discuss this incident. Peretz, however, denies he was ever informed at all.) In my presence, Wieseltier told the higher-ups that his marriage was a happy one, that he had no reason to be untoward. Of that night, he said we had merely ���shared��� a kiss. I remember that word. It was so breezy. It was so easy. It was so nothing. It was practically a lark...

Should-Read: Ezra Klein: Donald Trump: America���s pathet...

Should-Read: Ezra Klein: Donald Trump: America���s pathetic autocrat: "Is this, then, the case for optimism? That we have installed a would-be autocrat in the White House...

...but luckily he is too limited to achieve his goals, too distractible to pursue his ends? If so, it is a damning kind of comfort.... The president of the United States is openly musing about his desire to use the power of the state to punish his enemies and we react with a shrug; we comfort ourselves with his incompetence. What if Trump were focused, disciplined, capable? What if his ends were the same but his means were changed? What if he worked assiduously to build relationships with the intelligence agencies, the military, and congressional leaders? What if he let illiberalism drive his actions even as he carefully chose his words? What if he was able to build a well-staffed executive branch where talented loyalists worked daily to achieve his goals?

Remember that Trump, for all his flaws and failures, has nevertheless marshaled a powerful machine behind his worst instincts. Much of the American right has eagerly followed him into the breach and is even now pushing him to go further. The conservative media has responded to the Russia investigation by trying to persuade itself, and its followers, that it is Trump���s enemies who should be investigated, that the special prosecutor must step down. Congressional Republicans are trying to build Trump���s case, or at least be seen trying to build Trump���s case, even as they block efforts to peer into Trump���s finances or protect Robert Mueller���s investigation. And amid all this, 31 percent of Americans continue to say that Trump has both the temperament and the personality required by the presidency.

It is worth considering the possibility that there are ways in which we got lucky with Trump���illiberalism comes in many forms, and some are much more compelling, effective, and persistent than he is. And we are vulnerable to them. If nothing else, we have proven that...

Should-Read: Kung Fu Monkey (2006): Farm Fetish: "For chr...

Should-Read: Kung Fu Monkey (2006): Farm Fetish: "For chrissake... only 2 million... people work on farms or ranches...

...This is only half-rant. The honest question is, what in the American character keeps us returning to this completely false self-image?... When one of these "What does America think about culture" pieces comes on, do I ever see a mid-30's software engineer onscreen bitching about having to download BitTorrents of "The IT Crowd"? Fuck and no. Four million people in the US play World of Warcraft. And yet, do I ever hear: ANDERSON: "We stopped by the gates of Ogrimmar in Durotar, on the east coast of Kalimdor, where one local told us Hollywood just can't relate to the level-grinding life." UNIDENTIFIED ORC: "They've never been back here, questing Razormane or Drygulch Ravine, y'know... or farming for Peacebloom and Silverleaf. They're out of touch." No. No I do not...

Must-Watch: Paul Krugman: Discredited ideas:

Must-Watch: Paul Krugman: Discredited ideas:

Must-Read: Ezra Klein: For elites, politics is driven by ...

Must-Read: Ezra Klein: For elites, politics is driven by ideology. For voters, it���s not: "Party trumps ideology. Republicanism... for most voters... is based more on group attachments and resentments than it is on ideology...

...These were the voters Trump understood and political elites didn���t, and he understood them because he is one of them: His group allegiances were tribal even as his ideology was flexible. Trump was far better than Florida Man (1) or Florida Man (2) or Ted Cruz at expressing his distaste for Democrats, for immigrants, for Black Lives Matter protesters, for condescending cosmopolitans, for President Obama. That Rubio and Bush and Cruz were better at expressing their fealty to conservative ideology didn���t much matter. Henry Adams once wrote that ���politics, as a practice, whatever its professions, had always been the systematic organization of hatreds,��� and Trump was masterful at organizing those hatreds.

Trump was easy for political professionals to underestimate because they are ideologues who are surrounded by ideologues, and so they naturally came to see a coherent ideology as a prerequisite for a successful politician. And there was, and is, truth to that: Most politicians really are highly ideological, and they use their power over the party���s machinery to beat back or convert those who would seek to lead their party without joining in their ideological crusade. But Trump, because of his celebrity, his money, and his media savvy, was able to campaign without party support. And that let him show that you don���t need to be a consistent conservative to appeal to Republican voters, because most of them aren���t consistent conservatives either���there���s much more to politics than ideology, even if political professionals likes to pretend otherwise...