J. Bradford DeLong's Blog, page 81

Looking forward to the next recession, and to the unwilli...

Looking forward to the next recession, and to the unwillingness of politicians to reserve fiscal space for fighting it, makes Keynes message more urgent than ever: Paul Krugman: Introduction to Keynes's General Theory https://delong.typepad.com/sdj/2006/03/krugmans_intro_.html: 'In the spring of 2005 a panel of ���conservative scholars and policy leaders��� was asked to identify the most dangerous books of the 19th and 20th centuries.... Charles Darwin and Betty Friedan ranked high on the list. But The General Theory of Employment, Interest, and Money did very well, too. In fact, John Maynard Keynes beat out V.I. Lenin and Frantz Fanon. Keynes, who declared in the book���s oft-quoted conclusion that ���soon or late, it is ideas, not vested interests, which are dangerous for good or evil,��� would probably have been pleased.... It���s probably safe to assume that the ���conservative scholars and policy leaders��� who pronounced The General Theory one of the most dangerous books of the past two centuries haven���t read it. But they���re sure it���s a leftist tract, a call for big government and high taxes.... The arrival of Keynesian economics in American classrooms was delayed by a nasty case of academic McCarthyism. The first introductory textbook to present Keynesian thinking, written by the Canadian economist Lorie Tarshis, was targeted by a right-wing pressure campaign aimed at university trustees. As a result of this campaign, many universities that had planned to adopt the book for their courses cancelled their orders, and sales of the book, which was initially very successful, collapsed. Professors at Yale University, to their credit, continued to assign the book; their reward was to be attacked by the young William F. Buckley for propounding ���evil ideas.��� But Keynes was no socialist���he came to save capitalism, not to bury it. And there���s a sense in which The General Theory was... a conservative book.... Keynes wrote during a time of mass unemployment, of waste and suffering on an incredible scale. A reasonable man might well have concluded that capitalism had failed, and that only... nationalization... could restore economic sanity.... Keynes argued that these failures had surprisingly narrow, technical causes... because Keynes saw the causes of mass unemployment as narrow and technical, he argued that the problem���s solution could also be narrow and technical: the system needed a new alternator, but there was no need to replace the whole car...

#noted #2019-12-20

"There Speaks the Nineteenth Century!": For the Weekend

For the weekend: One powerful and very common presumption among the thinkers of the nineteenth century was that if the problems of overpopulation could be solved, and if that coupled with better technology solved the problem of inadequate resources to provide necessities, then the distribution of conveniences and luxuries would take care of itself, and the distribution of necessities would be unproblematic as an immediate consequence of common humanity in an age of abundance. They were wrong:

Edward Bellamy: Looking Backward 2000-1887 https://delong.typepad.com/files/bellamy-backward.pdf: '���Who is capable of self-support?��� he demanded. ���There is no such thing in a civilized society as self-support. In a state of society so barbarous as not even to know family coo��peration, each individual may possibly support himself, though even then for a part of his life only; but from the moment that men begin to live together, and constitute even the rudest sort of society, self-support becomes impossible. As men grow more civilized, and the subdivision of occupations and services is carried out, a complex mutual dependence becomes the universal rule. Every man, however solitary may seem his occupation, is a member of a vast industrial partnership, as large as the nation, as large as humanity. The necessity of mutual dependence should imply the duty and guarantee of mutual support; and that it did not in your day constituted the essential cruelty and unreason of your system���...

...���That may all be so,��� I replied, ���but it does not touch the case of those who are unable to contribute anything to the product of industry.���

���Surely I told you this morning, at least I thought I did,��� replied Dr. Leete, ���that the right of a man to maintenance at the nation���s table depends on the fact that he is a man, and not on the amount of health and strength he may have, so long as he does his best.���

���You said so,��� I answered, ���but I supposed the rule applied only to the workers of different ability. Does it also hold of those who can do nothing at all?���

���Are they not also men?���

���I am to understand, then, that the lame, the blind, the sick, and the impotent, are as well off as the most efficient, and have the same income?���

���Certainly,��� was the reply.

���The idea of charity on such a scale,��� I answered, ���would have made our most enthusiastic philanthropists gasp.���

���If you had a sick brother at home,��� replied Dr. Leete, ���unable to work, would you feed him on less dainty food, and lodge and clothe him more poorly, than yourself? More likely far, you would give him the preference; nor would you think of calling it charity. Would not the word, in that connection, fill you with indignation?���

���Of course,��� I replied; ���but the cases are not parallel. There is a sense, no doubt, in which all men are brothers; but this general sort of brotherhood is not to be compared, except for rhetorical purposes, to the brotherhood of blood, either as to its sentiment or its obligations.���

���There speaks the nineteenth century!��� exclaimed Dr. Leete. ���Ah, Mr. West, there is no doubt as to the length of time that you slept. If I were to give you, in one sentence, a key to what may seem the mysteries of our civilization as compared with that of your age, I should say that it is the fact that the solidarity of the race and the brotherhood of man, which to you were but fine phrases, are, to our thinking and feeling, ties as real and as vital as physical fraternity...

#economicgrowth #economichistory #moralphilosophy #politicaleconomy #weekendreading #2019-12-20

Worthy Reads for December 20, 2018

Worthy Reads at Equitable Growth:

Equitable Growth Steering Committee member Karen Dynan in a conversation what about whether the US government is properly prepared to fight the next recession. The answer is no: Karen Dynan, Jay Shambaugh, and Eduardo Porter: What Tools Does the U.S. Have to Combat the Next Recession?: "Today's lower equilibrium interest rates make it more likely that monetary policy would need to make use of unconventional tools to spur the economy. On the fiscal front, we have a much larger level of government debt relative to GDP than we did prior to the financial crisis. However, viewing this level of debt to GDP as a reason to restrain stimulus spending in case of a crisis could make the problem worse. Whether the government uses fiscal policy to stimulate the economy will depend more on political willingness, than on the actual limits on fiscal policy...

Patent publication turns out to be a very valuable societal institution indeed, viewed as a way of diseminating knowledge: Deepak Hegde, Kyle Herkenhoff, and Chenqi Zhu: Patent Publication and Technology Spillovers: "Invention disclosure through patents (i) increases technology spillovers at the extensive and intensive margins (ii) increases overlap between distant but related patents and decreases overlap between similar patents (iii) lowers average inventive step, originality, and scope of new patents (iv) decreases patent abandonments and (v) increases patenting...

Workers, but only high-paid workers, capture about $0.30 of every extra dollar in revenue generated by the monopoly power conferred by a patent. This is another piece of evidence that workers, but only high-paid workers, are to a substantial but not overwhelming extent effective equity holders in America is business is: Patrick Kline, Neviana Petkova, Heidi Williams, and Owen Zidar: Who Profits from Patents? Rent-Sharing at Innovative Firms: "Comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected... patent allowances lead firms to increase employment, but entry wages and workforce composition are insensitive to patent decisions.... Workers capture roughly 30 cents of every dollar of patent-induced surplus in higher earnings.... These earnings effects are concentrated among men and workers in the top half of the earnings distribution, and are paired with corresponding improvements in worker retention among these groups...

An excellent interview with Equitable Growth's Lisa Cooke: Lisa Cook: On invention gaps, hate-related violence, discrimination, and more: "One of the first things I do is to buy a Bic pen.... Each one was 10 dollars! Ten dollars! This completely stunned me. I knew how poor most people were. I knew students had to have these pens to write in their blue books. It just started this whole train of thought...

Scale economies are not growing in the American economy. But monopoly power is: Jonathan Baker: Market Power or Just Scale Economies?: "Growing market power provides a better explanation for higher price-cost margins and rising concentration in many industries, declining economic dynamism, and other contemporary US trends, than the most plausible benign alternative: increased scale economies and temporary returns to the first firms to adopt new information technologies (IT) in competitive markets. The benign alternative has an initial plausibility.... Yet six of the nine reasons I gave for thinking market power is substantial and widening in the US in my testimony cannot be reconciled with the benign alternative.... None of the reasons is individually decisive: there are ways to question or push back against each. But their weaknesses are different, so, taken collectively, they paint a compelling picture of substantial and widening market power over the late 20th century and early 21st century...

 

Worthy Reads Elsewhere:

Educating people who tend to think right wing about the IQ nature-nurture debate is probably impossible, but Cosma Shalizi tries: Cosma Shalizi (2007): .In Different Voices: "Q: How would you react to the idea that a psychological trait, one intimately linked to the higher mental functions, is highly heritable? A: With suspicion and unease, naturally. Q: It's strongly correlated with educational achievement, class and race. A: Worse and worse. Q: Basically nothing that happens after early adolescence makes an impact on it; before that it's also correlated with diet. A: Do you work at the Heritage Foundation? Such things cannot be. Q: What if I told you the trait was accent? A: I'm sorry? Q (in a transparently fake California accent): When you, like, say words differently than other people? who speak, like, the same language? because that's how you, you know, learned to say them from people around you?...

I keep saying that Equitable Growth should cozy up to these people: they are our mirror image���and not in an evil-Mr.-Spock-with-a-beard way: Brink Lindsey, Will Wilkinson, Steven Teles, and Samuel Hammond: The Center Can Hold: Public Policy for an Age of Extremes: "We need both greater reliance on market competition and expanded, more robust, and better-crafted social insurance... government activism to enhance opportunity... less corrupt and more law-like governance... a new ideological lens: one that sees government and market not as either-or antagonists, but as necessary complements...

But there is a lot in China's success that simply cannot be called "mainstream economics": Dani Rodrik: China���s Boldest Experiment: "China���s leadership did not follow any guidebook and resolutely marched to the beat of its own drummer.... China has not violated the tenets of mainstream economics so much as it has offered a master class in applying them creatively in complicated political and economic terrain...

A very strange reversal of direction here. Marco Rubio could have done something about this a year ago, but did not: Laura Davison: [Rubio Tweets Tax Bill He Voted For Helps Companies Over Workers(https://www.bloomberg.com/news/articl...): "Florida Republican aligns himself with Democrats on tax law Stock buybacks have jumped as wages show modest increase...

Carlos Lozada: Anti-Trump Conservatives Want to Reverse the GOP���s Destruction. But They Helped Light the Fuse: "What kind of conservatism can survive, let alone thrive, in American politics today? The question hangs over the Never Trump volumes.... Flake... keeps the faith. 'With hard work... and maybe a little luck, we will right this ship'...

Tony Yates is profoundly unhappy with Mervyn King's embrace of Brexit. I do not understand why Prime Minister Teresa May doesn't call for a revote, on the grounds that the initial "Leave" campaign was poisoned by its misrepresentations: Tony Yates: Why Mervyn King���s Defence of Brexit ���Isn���t Worthy of a Bank of England Governor���: "Mervyn King, Mark Carney���s predecessor as the governor of the Bank of England, has burnished his Brexit credentials in an opinion piece for Bloomberg.��King has made his pro-Brexit views known already.��The trigger for reprising them was the publication of the Bank of England���s assessment of different trajectories either through or without Brexit...

I think that the very sharp Jacob Levy may well be wrong here. The "Culture War" was never about "culture". It was about women, or atheists and Jews, or Negroes who did not know their place. Placing a high priority on demanding upright behavior from powerful men was never how they rolled. Carter was a churchgoing Christian. Reagan not so much: Jacob Levy: Populism's Dangerous Companions: "It���s an interesting and illuminating exercise to single out a shift from debates about cultural moralism to those about nationalism as the important destabilizing influence. It���s certainly true that the culture war fights of the 1960s, 70s, and 80s have lost a great deal of their political force.... Jerry Falwell Jr.���s sycophancy toward a serial adulterer, multiple divorc��, and seeker of sexual favors from nude models and porn actresses is a nice synecdoche for the apparent surrender of the old religious right, even in the United States, on everything except abortion...

Wise words from Yale's Jason Stanley. I do think that he gets it wrong in one respect. Neo-fascism (or fascism) is not a mode of government, but a mode of organization and distraction. What policies the government follows are largely independent of this mode. Mussolini was expansionist. Franco was not. Huey Long was genuinely populist. Augusto Pinochet was not: Sean Illing: What Is Fascism? Yale Philosopher Jason Stanley Explains How It Works: "This is probably a good time to pivot to the glittering elephant in the room: Donald Trump. Is he a fascist?" Jason Stanley: "I make the case in my book that he practices fascist politics. Now, that doesn���t mean his government is a fascist government. For one thing, I think it���s very difficult to say what a fascist government is...

I still do not understand why this "kooky legal theory" is any kookier than any of the other anti-ObamaCare legal theories: Matthew Yglesias: Ruling Obamacare Unconstitutional: A Pattern of Undemocratic GOP Conduct: "Misha Tseytlin... had just been working as an attorney in the West Virginia Attorney General���s office... suing the Obama administration and he thought the Wisconsin gig would be... fun.... He cooked up this lawsuit, persuaded his bosses in state government to sign on, and eventually got 20 state governments to pursue his argument. Friday night he scored his triumph���his kooky legal theory is the law of the land, according to at least one federal judge...

This by the very sharp Henry Farrell seems to me to be largely wrong. Farrell thinks that parties, plural, became "unwilling to compete for voters across tricky political issues". I see it as right-wing party, singular, taking the neo-fascist turn to which the system was always vulnerable���winning mass support for policies of plutocracy and kleptocracy by mobilizing fear and hatred of a distinct and sinister internal and external other. Four times in the past hundred yeras have we seen this in the United States. Teddy Rooevelt vs. the Malefactors of Great Wealth, Ike Eisenhower vs. the McCarthyites, and Richard Nixon's Flaws vs. Richard Nixon and Pat Buchanan were three earlier episodes. In the past we were lucky. We won through because of conservative elitss that valued liberty and an open society. We may win through again: Henry Farrell: The Hollowing Out of Democracy: "There are strong similarities between what is happening in the United States, Hungary, the United Kingdom, and France... where democracy is backpedaling rapidly, such as the Philippines. This is the product both of common shocks... and of cross-national reinforcement... the family resemblances are��undeniable. What Davies arguably gets wrong though is the significance of these changes...

Michael Boskin wrote this two years ago. To my knowledge,...

Michael Boskin wrote this two years ago. To my knowledge, not once in the past two years has he acknowledged that his "professional judgment" about the effects of the Trump-McConnell-Ryan tax bill were wrong. There has been no jump in the equipment investment share of national income. And those of us whose judgment is better than Michael Boskin's were damned certain back in late 20127 that there would not be: Michael Boskin: Another Look at Tax Reform and Economic Growth: 'With the Republican tax package now finalized and coming to a vote in both houses of Congress, a debate has been raging over the bill's possible growth effects. In that debate, those who oppose the package seem to be underestimating the outsize impact of equipment investments.... I agree that the current tax bill could, in principle, have been better.... Barro and I have clearly come to a different conclusion than Summers and Furman have about the bill, based on our own judgments about the links between corporate-tax reform and economic growth. While I certainly respect Summers and Furman���s right to their views, I am not about to cede my professional judgment to others, in or out of government...

#noted

What Is the Political-Economic Agenda After Piketty?

Introduction: Let me write, overwhelmingly, about inequality understood as inequality between people who regard themselves as members of a common culture, economy, nation. There is the separate issue of inequality between the different cultures, economies, nations that make up the world, but let me leave that for the very end, and then deal with it only briefly.

History of Inequality: For most of human history since the invention of agriculture, typical settled human societies have been about 80% as unequal as they could possibly be: were anything to stretch out the distribution of income and wealth by more than an additional 20%, and working-class women would have become too skinny to ovulate regularity and working-class children would have had compromised immune systems, and so the population would have failed to reproduce itself. The typical economy's Gini index was about 45 or so (the same Gini value as if 72% of wealth and income were evenly divided among the top 28%, and the rest evenly among the rest)���with New Spain in the eighteenth century estimated up at above 60 (the same Gini value as if 4/5 were evenly divided among the top 1/5, and the rest evenly among the rest) and the Kingdom of Naples and China estimated down below 30 (the same Gini value as if 65% were evenly divided among the top 35%, and the rest of income evenly among the rest).

Then came two revolutions: The Democratic Revolution brought the transfer���at least in theory���of power from military and scholarly-religious elites to the people, so that gross inequality was no longer necessarily the outcome of politics. The Industrial Revolution brought the possibility of mass prosperity: technologies, especially materials science and non-human power sources, organization, and education give middle-class people in the global north today standards of living that even the richest and sometimes the gods of past eras would envy.

Indeed, today some three-quarters of humanity are vastly richer than our preindustrial ancestors. Indeed, today one-third of humanity are democratic enough to rule themselves in more than a meaningless shadow-puppet manner. By the same token, however, our richer societies could be even more unequal than those in the past: when even the poor have enough to eat, Malthusian forces no longer limit how much inequality an economy can generate.

And there was a strong belief in the global north in the years after World War II that inequality, or at least gross inequality, had been largely solved as a problem. Social insurance made the lives of those whom the market had dealt bad cards. High progressive tax cuts made those who had been lucky enough to have been dealt good cards by the market pay their fare share of the burden of maintaining the society and economy that had made them rich. Keynesian macroeconomic policies had kept employment full.

But then things changed. Today we stand at the end of a forty-year period during which inequality within the overwhelming majority of the world's economies has been increasing. In the United States���where the rise has been among the most extreme���the top 1% have gone from 9% to 22% of income, and the top 0.01% from 1% to 5% of income. Our societies today are, on balance, neither clearly more nor clearly less relatively unequal than our predecessors' were. This is not to say that there are no important differences: we have Belgium, the Netherlands, and Denmark with Gini coefficients of 28, Japan with a Gini of 32, the United States with a Gini of 42, Brazil with a Gini of 53, and South Africa with a Gini of 63. But substantial inequality has���with the exception, perhaps, of the global north in the post-World War II generation, been a feature of human societies since before the days when Gilgamesh���the Man Who Had Seen All Things���ruled Uruk by virtue of his status as "perfect form... two-thirds god and one-third man", and made "his men stand at attention, longing for his orders.... Gilgamesh does not leave a daughter to her mother, nor the maiden to the warrior, nor the wife to her husband..." Something like Vilfredo Pareto's Iron Law, that societies tend toward the top 20% having 80% of the wealth and income���a Gini of 60���seems the way to bet.

&&Thomas Piketty���s New Book, Capital and Ideology**: On September 12, 2019, Thomas Piketty published Capital et Ideologie, the follow-up to his 2013 Le Capital au XXIe Si��cle (with the second published in English as Capital in the Twenty-First Century, and the first to be published next year in English as Capital and Ideology).��

Capital in the Twenty-Fist Century made a very powerful argument that the era of low inequality after World War II had been a historical anomaly, and that those who had interpreted advanced capitalism plus political democracy as leading to a stable political-economic income of successful social democracy had been wrong. The argument of the book was, at bottom, a voter-inattention rent-seeking argument. The rich have a great interest in taking steps to make sure that the government regulates the economy in order to keep the average rate of profit around 5% per year. The voters have no great understanding of what policies would be effective at pushing the average rate of profit up or down. Over time, therefore, there is pressure pushing toward a policy equilibrium maintaining this 5% per year rate of profit. If, therefore, the economy's real growth rate is less than 5% per year, and if the combination of taxes, philanthropy, and conspicuous consumption are not enough to make up the gap, then the wealth of the rich will grow relative to the income of society. And as their relative wealth grows, their ability to use their income and wealth as social power to further entrench their desire for a high rate of profit in society's political economy will grow as well.

Capital and Ideology is making a different argument. In some ways, it retreats from the rent-seeking society implicit model of Capital in the Twenty-First Century. In that first book, it was the ability of the rich to deploy their social power to gain a form of ideological hegemony over society that led to the confusion of voters and to the absence of organized counter pressure against policies to boost and then maintain a high rate of profit. In Piketty's new book, there are political organizations that understands how to make social democracy work for pretty much everybody: to provide enough space for markets, enough in the way of incentives, and enough in the way of public support for economic growth to produce rapidly increasing prosperity, but also enough in the way of redistribution to sharply moderate inequality. But then, starting around 1980 in Piketty's telling, these political organizations lose their way. What had been the center-right becomes a "merchant right", devoted to advancing the interests of plutocrats by seeking a mass base by the neofascist strategy of triggering the base's resentment of those to whom relatively equal social democracy was giving "more than they deserve". What had been the center-left becomes a "Brahmin left", focusing on policies that please and advance not the working class and the upwardly mobile but rather those who have taken advantage of social insurance and social-democratic institutions by becoming upwardly mobile via a high level of education. One political party advances the interest of those rich via inheritance and managerial entrepreneurship. The other advances the interest of those rich via education and professional status. And the broader public interest in a broadly middle-class society���and, indeed, in preventing the closing-down of the roads for upward mobility���is left by the wayside.

Perhaps this new book has struck a nerve just like the old one did. The uncredited author of Bloomberg's email newsletter is a little too eager to dismiss Capital in the Twenty-First Century as "a massive tome... rarely read to completion", and then call Capital and Ideology "even longer!... not exactly a worthy follow-up... impractical." It certainly does suggest that economic research on inequality and political economy action to reduce it or at least moderate its deleterious effects should pursue additional directions to those suggested by Piketty in his first book.

The Economic Research Agenda Suggested by Piketty���s First Book: The first book, Capital in the Twenty-First Century, suggested an economic research agenda.��

Its first question is: is Piketty right in supposing that the post-World War II social-democratic equitable-growth era was a fragile and unstable piece of good luck that will be hard to rebuilt? Here the answer still has to be "perhaps"���and further investigation of this question was, remains, and long will be the highest priority of those questions pursued by those stimulated by or reacting to Piketty.��

Its second question was and remains: do we care? Inequality per se is of little importance if inequality brings with it faster growth. Here, too, economists have much work to do. But by now the overwhelming presumption is that there is no such thing as a durable tradeoff between equality and efficiency in the sense of Arthur Okun's famous "leaky bucket". Adam Smith 250 years ago could look benignly on the inequality of Georgian Britain: ��the inequality that the market created was largely based on luck, but enough was based on enterprise that your average working-class Briton lived in greater material comfort than an African king, and the consumption of the rich was limited by the size of their stomachs, and thus most of what they spent even on themselves was in fact a contribution to the leisure and the comfort of their underlings.

We cannot be so complacent. We see that plutocrats are those whose wealth is most likely to be "creatively destroyed" by a dynamic, growing economy, and hence inequality as in the long run the enemy rather than the friend of greater prosperity. We see the status consequences of inequality as very damaging to the human organism, and thus to human well-being, in a way that simply counting up real income measures cannot see. And, of course, anyone who has looked at the distribution of medical care in the United States and our abysmal health outcome statistics relative to other rich countries cannot help but see that inequality is a factor that leads enormous investments of resources to deliver little of ultimate value in the sense of human well-being and human satisfaction. The point generalizes beyond the health sector: an unequal economy is one that is lousy at turning productive potential into societal well-being. We could be doing better���and with a more equal income and wealth distribution would be. We do care. We must care.

And there is a third question, one that cries out most for more research. Suppose Piketty is right, and mixed-economy social democracy is unstable, tends to collapse back into the absorbing state of the high inequality of Vilfredo Pareto's Iron Law, from which it can be knocked out of only by social-historical catastrophes that redeal society's deck of cards. As Branko Milanovic has pointed out, mixed-economy social democracy is only one of the possible institutional setups. There are others. Forms of property that yield rights to shares of society's total product are themselves under the control of society. Economist Michael Spence has recently noted that America's Business Roundtable has abandoned its long-standing commitment to so-called "shareholder primacy". A straw in the wind? As more and more of society's wealth creation is bound up in the form of corporations and of the associations of corporations that are global value chains, more and more of the economy's true institutional setup becomes a product of technical legal rules and bureaucratic procedures. Piketty sees distribution as driven by labor on the one hand and capital���all forms of wealth that command rights to income���on the other. But that is so only because history has made it so.��

More than one and two-thirds centuries ago Karl Marx dismissed Branko���s observations as reflecting an irrational and unattainable longing for a ���petty-bourgeois socialism���: something that could never be attained, and that if it did by some miracle develop by accident, could never be maintained. But that casual dismissal does not mean that Milanovic is wrong here.

Piketty���s Second Book���s Suggestion About a Political-Economy Research Agenda: This second book, Capital and Ideology, suggests a political-economy research agenda���two political-economy research agendas in fact.

The first political-economy research agenda is to understand what happened to the center-right. The center-right was, around 1980, transformed from a center-right that sought to make social democracy more productive into the "merchant right" described by Piketty. In the process, it transformed itself in country after country from a political movement aimed at representing those who expected to gain from a growing market or mixed economy to a movement that aims at representing those who think they have something to lose from economic or structural change, or simply from the passage of time or the widening of opportunity. To some degree this transformation reflected deceasing optimism among targeted potential voters: the end of western European and Pacific rim catch-up "supergrowth" and the coming of high unemployment in Europe starting in the 1980s and stagnation to Japan starting in the 1990s made many people no longer expect to gain from the market. The original hope was that a pruning-back of the less efficient pieces of social democracy and a small widening of inequality to improve incentives for entrepreneurship and enterprise would reinvigorate growth, and restore the confidence of those who had hoped to be winners but found out that it was not so. But the diagnosis was faulty. The rise in inequality did not restore growth. And hence the focus shifted to one of seeking to punish those whom social democracy had unjustly enriched, and allowed to think that they were above their proper station.

But this is only the case to some degree. This is not a full explanation by any means of the rise of politicians like Viktor Orban or Boris Johnson or Donald Trump or Marine Le Pen, or of their inability to find a set of coherent and growth-boosting policies to substitute for���or even complement���their focus on the internal and external enemies of those who are fully and properly Magyar, English, American, and French.

The second political-economic research agenda is to understand what happened to the center-left. It was, around 1980, transformed from a center-left that sought more upward mobility, more social insurance, and a strong labor movement to one whose core is those rich via education and professional status, and which focuses on issues more of cultural liberalism than of political-economic social democracy. Piketty sees the center-left as, to a great degree a prisoner of its own success. The big winners from post-World War II social democracy were those from modest backgrounds for whom full employment and low-cost education opened up opportunities. education and high-income possibilities to the people who in the 1950s and 1960s came from modest backgrounds. These winners continued to support and vote for the center-left. But their interests and visions were different: the transformation of the Labour Party from Clement Attlee to Tony Blair in Britain, for example. Once again, there is considerable truth in this story that Piketty tells. Once again, it is very far indeed from being a complete or a satisfactory explanation.

It is very much worth noting that the policy recommendations found at the end of Capital and Ideology seem less attuned to the argument of the core of the book and more attuned to the argument of Capital in the Twenty-First Century. Near-confiscatory taxes on plutocrats to finance the distribution of substantial financial nest eggs to working-class young adults seems tailor-made to unwind some of the social power of plutocrats and set in motion a virtuous cycle by which their ability to maintain the 5% per year rate of profit that supports their wealth is undermined by a loss of that wealth and leads to a future decline in their ability to work the levers of the rent-seeking society in their own interest. But in Capital and Ideology the central political-economic problem is not that plutocratic wealth exercises a form of hegemony and undermines the ability of the public sphere to engage in practical reason. In Capital and Ideology the central political-economic problem is that the center-left and the centre-right have become unmoored from the economic interests of those whom they represent or ought to represent: declining into a form of neofascism on the right, and to a focus on cultural issues rather than economic mobility and equitable growth on the left. The democratic people still have the power to command policies in their economic interest. But the transmission belts by which that power is transmitted through political parties and into government policy are broken. Fixing that would seem to call for political, ideological, and organizational reform, not for high tax rates and a universal basic income that could, in any event, never be implemented until after successful political, ideological, and organizational reform.

In Addition: And we should not miss sight of the very important facts with respect to inequality between economies and societies. Today we stand at the end of a forty-year period in which global inequality has been decreasing not because countries' economies have been drawing closer together in relative wealth but because the two overwhelmingly most populous countries of China and India hav been successful in moving from poor to middle-income status: on a logarithmic scale, Chins and India were only one-seventh of the way from Ethiopia to the United States in the late 1970s, and they are three-fifths and two-fifths of the way today.

#books #equitablegrowth #highlighted #inequality #politicaleconomy #2019-12-18

Reading Notes: Robert Allen: "Global Economic History: A Very Short Introduction"

https://www.icloud.com/pages/0jK0cjqqw-D4wRayNOo87pLYw

#books #economicgrowth #economichistory #highlighted #2019-12-18

Amanda Borschel-Dan: Factory for Romans' Favorite Funky F...

Amanda Borschel-Dan: Factory for Romans' Favorite Funky Fish Sauce Discovered Near Ashkelonl https://www.timesofisrael.com/factory-for-romans-favorite-funky-fish-sauce-discovered-near-ashkelon/: 'Northwest of... Ashkelon, Erickson-Gini���s team uncovered... a rare Holy Land garum production center, or cetaria.... In addition to evidence of fish pools, the team uncovered giant plastered vats, jars used for storing liquid, and what appears to be a large receptacle to hold the strained goopy substance.... The paucity of production sites had always surprised and puzzled the archaeologist, she said. Throughout the Empire, the sauce graced the tables of the Roman world���s rich and famous, as well as the troughs of commoners.... Pliny the Elder mentions the sauce throughout his ���Natural History,��� both as a foodstuff and as medicine.... Even in the storerooms of 1st century BCE King Herod���s isolated Masada palace, a rare labeled amphorae of garum was found that was possibly imported from Andalusia.... To accomplish its pungent putrefaction, the craftsman would place whole small fish such as sardines or anchovies, or chopped up larger fish such as tuna or mackerel, at the base of a jar and pour on top of it spices and salt, followed by another fish layer, etc. According to Erickson-Gini, the recipe���s ratio called for five parts fish to one part salt. A lively video, ���Garum, Rome���s Favorite Condiment (Ancient Cooking),��� on the Invicta History YouTube channel, said the concoction inside a closed jar would bake in the hot Mediterranean sun for a week as the fish deteriorated, but was saved from rot by the salt. It was then opened and stirred for another 20 days or more (Erickson-Gini suggested up to three months). The resultant ���puree of fish goop��� was strained through a basket, and the strained liquid is the garum. Other, more solid leftovers could be made into a different sauce or lesser-regarded fish paste called allec.... The height of the garum fad was circa the 2nd century CE, but its use is recorded even much later...

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Note to Self: Progress in Pottery:#economicgrowth ...

Note to Self: Progress in Pottery:

#economicgrowth #economichistory #notetoself #2019-12-18

Adolf Hitler: To Hermann Rauschning http://aynrandlexicon...

Adolf Hitler: To Hermann Rauschning http://aynrandlexicon.com/lexicon/fascism_and_communism-socialism.html: 'Each activity and each need of the individual will thereby be regulated by the party as the representative of the general good. There will be no license, no free space, in which the individual belongs to himself. This is Socialism���not such trifles as the private possession of the means of production. Of what importance is that if I range men firmly within a discipline they cannot escape? Let them then own land or factories as much as they please. The decisive factor is that the State, through the party, is supreme over them, regardless whether they are owners or workers. All that, you see, is unessential. Our Socialism goes far deeper...

...The people about us are unaware of what is really happening to them. They gaze fascinated at one or two familiar superficialities, such as possessions and income and rank and other outworn conceptions. As long as these are kept intact, they are quite satisfied. But in the meantime they have entered a new relation; a powerful social force has caught them up. They themselves are changed. What are ownership and income to that? Why need we trouble to socialize banks and factories? We socialize human beings!

#noted #2019-12-18

Christopher Pissarides: Why Worry About Automation? https...

Christopher Pissarides: Why Worry About Automation? https://www.project-syndicate.org/commentary/digital-automation-impact-on-jobs-poverty-inequality-by-christopher-pissarides-2019-11: 'The impact of today���s digital technologies on the labor market raises three questions. Will there be enough jobs for workers to do? Where will these jobs be? And will the compensation be high enough to avoid an increase in poverty and inequality?... Fear of technological unemployment persists because it is rooted in uncertainty about new job creation. New machines��� capabilities enable us to identify the jobs at risk, but not the jobs yet to emerge.... The challenge that all new technologies pose is not that they create too few jobs, but rather that too few workers have the skills to fill them.... The jobs threatened in the early stages of robotics and artificial intelligence were routine or relied on processing data. Moving big boxes in warehouses, or loading agricultural produce onto trucks, was easily mechanized. Data-processing jobs could be carried out by AI software; a search engine and a few key words could easily replace a paralegal who searches court records for relevant precedents. These properties led to the polarization of employment, challenging workers to shift to jobs that were either complementary to the new technologies, such as computer programming or robotics, or to jobs that could not be programmed, such as management consultancy or nursing care.... The sectoral employment transition is easier where the educational system teaches a broad range of skills, rather than encouraging specialization from an early age, and where flexible labor markets have good retraining facilities. Access to finance also is essential in facilitating the transition.... The third question, about inequality, is more difficult to address. Economics is good at providing unambiguous answers to questions about the efficiency of labor markets. The question of inequality, by contrast, is partly about political choices.... The key question, however, should not be whether some people become very rich, but whether the wages of lower-skill people are sufficiently high to avoid poverty.... Companies in the digital era have a choice: They can use technology to substitute capital for labor and keep wages low, or use technology for the good of their workers with a view to longer-term profits...

#noted #2019-12-18