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Neoliberalism as a New, More Dangerous, Form of Corporatism

Neoliberalism = Casino Capitalism = "Transnational elites, Unite!"
(It is a neoTrotskyism with the word "proletarians" substituted by the word "elites"
 in famous "Proletarians of all countries, Unite!" slogan
and "Color revolutions" instead of Communist  "Permanent revolution"  )

Version 6.1

Skepticism and Pseudoscience  > Who Rules America > Neoliberal Brainwashing

News An introduction to Neoliberalism Recommended books Recommended Links Neoliberalism war on organized labor Neoliberalism as Trotskyism for the rich Globalization of Financial Flows
Brexit as the start of the reversal of neoliberal globalization Neoliberal rationality Neoliberal "New Class" as variant of Soviet Nomenklatura Neoliberalism and Christianity Key Myths of Neoliberalism Ayn Rand and her Objectivism Cult Anti-globalization movement
Zombie state of neoliberalism and coming collapse of neoliberalism Pope Francis on danger of neoliberalism  Over-consumption of Luxury Goods as Market Failure Definitions of neoliberalism Neoliberal Brainwashing Neoclassical Pseudo Theories  US Presidential Elections of 2016 as a referendum on neoliberal globalization
Media-Military-Industrial Complex Neocons New American Militarism Casino Capitalism Neocolonialism as Financial Imperialism War is Racket Inverted Totalitarism
Financial Crisis of 2008 as the Crisis of Neoliberalism and shift to neo-fascism Neoliberal corruption Financial Sector Induced Systemic Instability of Economy Corruption of Regulators "Fight with Corruption" as a smoke screen for neoliberal penetration into host countries   Deconstructing neoliberalism's definition of 'freedom' Resurgence of neofascism as reaction on crisis of neoliberalism and neoliberal globalization
Alternatives to Neo-liberalism Elite Theory Compradors Fifth column Color revolutions  Key Myths of Neoliberalism Audacious Oligarchy and "Democracy for Winners"
If Corporations Are People, They Are Psychopaths IMF as the key institution for neoliberal debt enslavement Gangster Capitalism Neoliberalism as a Cause of Structural Unemployment in the USA Neoliberalism and inequality Blaming poor and neoliberalism laziness dogma Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime
Peak Cheap Energy and Oil Price Slump The Deep State Predator state Disaster capitalism Harvard Mafia Small government smoke screen Super Capitalism as Imperialism
The Great Transformation Monetarism fiasco Neoliberalism and Christianity Republican Economic Policy  In Goldman Sachs we trust: classic example of regulatory capture by financial system hackers Ronald Reagan: modern prophet of profligacy Milton Friedman -- the hired gun for Deification of Market
Libertarian Philosophy Media domination strategy Neoliberal Brainwashing -- Journalism in the Service of the Powerful Few YouTube on neoliberalism History of neoliberalism Humor Etc


Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare. “There’s class warfare, all right, "Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning."

- New York Times

Make no mistake, the neo-Liberal fuckers are just as bad as the Stalinists

May '68 and its Afterlives [Review]

GB: once a great cultured nation, now a poorly-educated gangster mafia state, ruled by oligarchs and inhabited by soccer hooligans

The Kremlin Stooge

Neoliberalism is a very interesting social system which by-and-large defeated and replaced both New Deal capitalism and socialism (and facilitated the dissolution of the USSR). It is the only social system in which the name of the system is somehow is prohibited by MSM to mention.  It is also unstable social system which led to impoverishment of lower 80% of the society and the rise of far right nationalism. After approximately 40 years of global dominance is shows cracks. Backlash against neoliberal globalization became really strong and demonstrated itself in Brexis, election of Trump is defeat of Italian referendum.

It can be defined as "socialism for the rich, feudalism for the poor" or, more correctly "Trotskyism for the rich"("Elites of all countries unite !"  instead of “Proletarians of all countries, Unite! ...). Due to the size the introduction was moved to a separate page --  Neoliberalism: an Introduction


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(Research materials to the paper Neoliberalism: an Introduction)

Neoliberalism Bulletin, 2017 Neoliberalism Bulletin, 2016 Neoliberalism Bulletin, 2015 Neoliberalism Bulletin, 2014 Neoliberalism Bulletin, 2013 Neoliberalism Bulletin, 2011 Neoliberalism Bulletin 2009 Neoliberalism Bulletin 2008

[Mar 26, 2017] In addition to the public option and age 55+ Medicare buy-in, one thing that might work is abollishing the mandate and penalty and replaciing them with automatic enrollment. Call it Youre employed, youre covered!

Mar 26, 2017 | economistsview.typepad.com
New Deal democrat -> Lee A. Arnold ...

One issue going forward is whether the Dems should offer their own plan. I think they should.

As a few others have pointed out, Trump is not wedded to the GOP establishment. If he thinks he can "WIN bigly!" by allying with Dems, he will do so. I happen to think that he is mainly against "Obamacare" because Obama humiliated him at the White House Correspondents' Dinner once upon a time, and he is nothing if not vengeful. He wants to obliterate Obama's legacy.

So Dems need to make a big stink any time Trump administrativley undercuts Obamacare provisions to try to make it fail. But also they should give him the chance to do something he can call Trumpcare that actually works.

Obamacare does have some major problems (the individual mandate is hated, and the penalty isn't big enough. More young people need to buy in. Some of the Exchanges and health care provider networks are too narrow.

In addition to the "public option" and age 55+ Medicare buy-in, one thing that might work is abollishing the mandate and penalty and replaciing them with automatic enrollment. Call it "You're employed, you're covered!"

Just like SS, Medicare, unemployment and disability deductions to paychecks, establish a Health Care automatic deductible. If your employer offers healthcare, the deductible is reduced by the amount of the premium, all the way to zero if applicable.
If your employer doesn't offer healthcare, if you are under age 40, you are automatically enrolled in the least expensive Bronze plan in your state. If you are 40 or older, you are automatically enrolled in the least expensive Silver plan in your state.

The deductible would also include a small contribution towards Medicaid. Then, if you are unemployed, you are automatically enrolled in Medicaid, but can continue with the silver or bronze plan as above if you choose.

Dems could turmpet such a plan to "Reform and Improve" Obamacare, and campaign on pushing for it if they get a Congressional majority. Call it Trumpcare and President Caligula might sign on.

Reply Saturday, March 25, 2017 at 07:35 AM Lee A. Arnold , March 25, 2017 at 04:48 AM
"Medicare for all" may be the best battle cry. 65-70% of the U.S. people want a single-payer. Bernie Sanders has effectively destroyed the old Democratic Party and sits in a commanding position as spokesman, he gets 6 TV cameras with an hour's notice and he is probably the most popular politician in the U.S. The Democrats don't have to push it for now, they can wait for news to develop. This is all on the Republicans. Let the managerial disaster of Trump and the utter immorality of the "Freedom Caucus" sink in a little more, this story has "legs" as they say in show biz.
mulp -> Lee A. Arnold ... , March 25, 2017 at 04:48 AM
Name the Senators, representatives, and governors Bernie Bros have delivered?

Where are the Bernie Bros Newts, Cruz, Marcos, ...?

I'm in my 70th year. Conservatives attacked liberals in the 60s, my youth, as promising free lunches to gain power. But what they really hated was liberals convinced voters to tax all voters to pay for the things most voters wanted everyone to have, BASED ON SOUND ECONOMICS TO MAXIMIZE EFFICIENCY AND WELFARE.

Friedman led the effort to distort theory to eliminate the broad meaning of general welfare in economics. He did it by eliminating the hard connection between labor cost and gdp. He argued that labor costs and consumption can be cut to increase profits, and that contrary to theory, higher profits is more efficient.

Laffer applied operations theory to taxes, as if government was taxing to maximize profits.

Thus supply side theory of profit maximization. The result delivered was the imperative to cut taxes. To cut labor costs. Thus they argued that every economic measure improves if taxes and wages are cut.

Reaganomics would deliver more stuff at lower cost, higher profut, and that makes everyone better off, especially those in poverty. Friedman saw consumption as a bad thing. He wanted higher gdp, less consumption. In other words, he rewrote Adam Smith attack on mercantile economics into a justification of returning to mercantile economic policy.

So, who do Bernie Bros offer as the Milton Friedman and Laffer to create an intellectual foundation to refute Adam Smith, FDR, Keynes, Galbraith, are return to hunter gatherer economics? Who is the economist who can convince us that Marxist economic theory will work, as long as it's not captured by right wing capitalists like Fidel Castro, Chavez, Stalin, Lenin, the founders of Israel, ....

Bernie certainly must be influenced by the same economic theory that created Israel. It grew from the same Marxist roots in Germany that powered Stalin and Lenin. Bernie is a pre-WWII Zionist as best I can tell.

Why wouldn't Bernie deliver Israel governance to the US? How would he prevent the greedy from joining the Movement?

And Israel has the social welfare state system Bernie wants. Hundreds of thousands of men do not work so they can study supported by welfare. Universal health care. Women are very equal in status.

I grew up heating the Zionist Dream, theory, much like Bernie did, but from conservative Indiana. Seemed very idealist virtue becoming reality in the 50s and 60s. I have often used Israel as the example of a good universal health care system, of education, of welfare. Never heard Bernie say, "I want the US to be like Israel." Why not? Why Sweden?

jonny bakho , March 25, 2017 at 04:54 AM
Frank is wrong. What the GOP establishment dislikes most about Obamacare is the taxes on the wealthy. Medicare for all would have to be paid for by taxes on the wealthy or substantial payroll tax increases on the working class.
This does not meet GOP or Trump objectives for tax cuts on the wealthy.
The TV and radio talk uses Obamacare bashing to sell ads. They can easily change the subject to some other click bait.
Medicare for all? NaGonnaHappN
RC AKA Darryl, Ron -> jonny bakho... , March 25, 2017 at 05:14 AM
Frank was not suggesting that the GOP establishment would support Medicare for all. Frank was suggesting that Trump would essentially change parties to become a Democrat. As dubious as that notion is, more importantly it is premature. If Democrats win back both chambers of Congress, then it would at least be mechanically possible if still extraordinarily dubious. Mostly though Frank was just reaching for something worth saying. Now is a tuff time for commentary on the political economy.
Lee A. Arnold -> jonny bakho... , March 25, 2017 at 06:10 AM
Jonny Bakho: "Medicare for all would have to be paid for by taxes"

Theoretically you don't have to raises taxes if you get private insurers out of the game. They are a big expense, and give no value-added.

Doesn't mean that is politically possible, with Trump and a GOP Congress. But Trump and a Democratic Congress? I couldn't predict. Keep in mind that this man is almost an ideological vacuum, no managerial skills, has no constant concerns for anything except keeping himself in the spotlights, to be loved. And he just learned that the Freedom Caucus is implacably nuts.

RC AKA Darryl, Ron -> Lee A. Arnold ... , March 25, 2017 at 07:30 AM
"They are a big expense, and give no value-added."

[Someone has to do claims processing. The resistance against growing the federal payroll is an unnecessary hurdle for Medicare for all (MFA) to jump. Better administer it more like Medicaid. Let insurance companies handle the operations for a fee. Federal claim payments are handled on a pass thru. Then let the operational administration default to the MFA supplemental plan carrier if the insured has one, else the lowest cost carrier in the insured's state. For MFA clients then there could be a single claims process for providers even for patients with both MFA and MFA supplemental policies. That lowers the hurdle for MFA to leap over the insurance company lobby as well.]

RC AKA Darryl, Ron -> Lee A. Arnold ... , March 25, 2017 at 11:29 AM
Most of health insurance claims processing has been automated for a long time. Still it takes a lot of worker-hours to reconcile the errors.

Imagine how many worker hours it will take to reconcile liabilities for the first multi-car multi-fatality pile up of robot cars on the LA freeway. It will not matter that in total there have been less collisions and less fatalities when the big one hits. Computers are incapable of intuitive judgement which leads to blunders of potentially a colossal scale occurring that could have easily been foreseen by a human. To err is human but it takes a computer to really screw things up beyond all recognition. It is just a matter of time and time is always on Murphy's (that which can go wrong will go wrong) side. I know that myths about computers that never make mistakes and never need to be programmed again abound and I am sure that they will still be with us 20,000 years from now, when we are not even in any memory banks. I spent my entire career about to be replaced by software, but I was finally laid off because of administrative concerns with regards to legacy managed employees in context of the re-compete of the NG/VITA outsourcing contract (which is far less catchy). Computers have the potential to speed transit and reduce fatalities, but that potential will not be permanently realized as long as people are intent upon removing all human control and intervention. Computers can be capable copilots under almost all circumstances, but their owners cannot weather the fallout from their inability to conceive a response on their own when confronted with conditions that they were not programmed for. Such dramatic consequences will eventually raise a great furor, horror, deep sorrow, and extensive liability concerns. Even if you could sue a computer it is unlikely that they could demonstrate the means to pay. Incarceration of a computer for criminal negligence seems a bit ludicrous as well. The owner of the offending property better have their insurance premiums all paid up, but what then? Who will insure the next owner? Advocates of computer driven cars are planning on no fault insurance being mandated in each and every state. Good luck with that.

My wife works for Anthem although not in claims processing. She used to work in membership which is also automated. Software developers for health insurance mostly use Agile methods. One facet of that is that they only expect automation to handle roughly 90% (ideally more) of the workload because they have learned that there will never be a no defects computer system and they are saving expensive labor time in development by allowing lower paid workers to pick up a lot of the more complicated cases manually. That reduces time spent in the iterative process of testing and correcting defects. I am sure that you remember the problems with the ACA's automated insurance membership market. Stuff happens all the time in IT.

It is not that I had to work in IT for 47 years to understand the limitations. Merely my childhood education on the mathematical system of logic that underlies their circuitry and programming would have been sufficient, but a bit of empirical confirmation never hurts. Understanding reality is unfortunately a pre-requisite, but once that is accomplished then there are great opportunities to achieve improved results. Computers are not the problem, but can often be an essential part of the solution rather than a faceless soulless panacea. Does not compute can happen anywhere, but worse though when it happens at 75 MPH.

Lee A. Arnold -> mulp... , March 25, 2017 at 11:27 AM
Every serious study that looks at current costs in the multipayer healthcare insurance concludes that moving to single-payer will save 15-20% of total spending. Here is yet another one:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4283267/
RC AKA Darryl, Ron -> Lee A. Arnold ... , March 25, 2017 at 11:40 AM
There is nothing about that paper that would not hold true or even truer of a two tiered system of Medicare for all with administrative processing collocated with the supplemental insurer whenever there is one. Just do a work flow model and note how many steps are cut out at each the provider and insurer if primary and secondary coverage administrative processing for membership, claims, and policy holder services are collocated.
RGC -> jonny bakho... , March 25, 2017 at 11:40 AM
Government Funds 60% of U.S. Healthcare Costs - Far Higher than Previously Believed

"We Pay for National Health Insurance but Don't Get It"

"Universal coverage is affordable - without a big tax increase," continued Dr. Himmelstein. "Because taxes already fund 60% of health care costs, a shift about the size of the recent tax cut ($130 billion a year) from private funding to public funding would allow us to cover all the uninsured and improve benefits for everyone else. Insurers/HMOs and drug companies buy-off our politicians with huge campaign contributions and hordes of lobbyists."


http://www.pnhp.org/news/2002/july/government_funds_60.php

RGC -> Chris G ... , March 25, 2017 at 08:04 AM
Beyond the Affordable Care Act: A Physicians' Proposal for Single-Payer Health Care Reform

During a transition period, all public funds currently spent on health care – including Medicare, Medicaid, and state and local health care programs – would be redirected to the unified NHP budget. Such public spending – together with tax subsidies for employer-paid insurance and government expenditures for public workers' health benefits – already accounts for 60% of total U.S. health expenditures.28 Additional funds would be raised through taxes, though importantly these would be fully offset by a decrease in out-of-pocket spending and premiums.

http://www.pnhp.org/nhi

RGC -> RC AKA Darryl, Ron... , March 25, 2017 at 08:04 AM
Is Donald Trump still 'for single-payer' health care?


"Perry said Trump is "for single-payer health care."


Fifteen years ago, Trump was decidedly for a universal healthcare system that resembled Canada's system, in which the government pays for care for all citizens.

Recently, he's said he admires Scotland's single-payer system and disses the Affordable Care Act as incompetently implemented.

However, a Trump spokesman denied that the candidate supported "socialized medicine" and suggested Trump prefers a "free-market" solution. Other than that, though, the Trump campaign has been silent about what his specific health care policies are; perhaps Trump will be pressed on this point during the Aug. 6 debate.

Given the current evidence, Perry's attack is partially accurate, but leaves out details. We rate the statement Half True.

http://www.politifact.com/truth-o-meter/statements/2015/aug/02/rick-perry/donald-trump-still-single-payer-health-care/

[Mar 26, 2017] The good news is they now own health care. They now own Obamacare said Trump

Mar 26, 2017 | economistsview.typepad.com
Fred C. Dobbs , March 25, 2017 at 07:35 AM
In a Call to The Times, Trump Blames Democrats for the
Failure of the Health Bill https://nyti.ms/2nNPHD9
NYT - MAGGIE HABERMAN - MARCH 24, 2017

WASHINGTON - Just moments after the Republican plan to repeal and replace the Affordable Care Act was declared dead, President Trump sought to paint the defeat of his first legislative effort as an early-term blip.

The House speaker, Paul D. Ryan, was preparing to tell the public that the health care bill was being withdrawn - a byproduct, Mr. Trump said, of Democratic partisanship. The president predicted that Democrats would return to him to make a deal in roughly a year.

"Look, we got no Democratic votes. We got none, zero," Mr. Trump said in a telephone interview he initiated with The New York Times.

"The good news is they now own health care. They now own Obamacare."

Mr. Trump insisted that the Affordable Care Act would collapse in the next year, which would then force Democrats to come to the bargaining table for a new bill.

"The best thing that can happen is that we let the Democrats, that we let Obamacare continue, they'll have increases from 50 to 100 percent," he said. "And when it explodes, they'll come to me to make a deal. And I'm open to that."

Although enrollment in the Affordable Care Act declined slightly in the past year, there is no sign that it is collapsing. Its expansion of Medicaid continues to grow.

In a later phone interview with The Times, the Senate minority leader, Chuck Schumer, ridiculed Mr. Trump's remarks about Democrats being at fault.

"Whenever the president gets in trouble, he points fingers of blame," Mr. Schumer said. "It's about time he stopped doing that and started to lead. The Republicans were totally committed to repeal from the get-go, never talked to us once. But now that they realize that repeal can't work, if they back off repeal, of course we'll work with them to make it even better."

Mr. Trump said that "when they come to make a deal," he would be open and receptive. He singled out the Tuesday Group moderates for praise, calling them "terrific," an implicit jab at the House Freedom Caucus, which his aides had expressed frustration with during negotiations. ...

Fred C. Dobbs -> Fred C. Dobbs... , March 25, 2017 at 08:02 AM
On health-care, as on so much else,
President Trump passes the buck, reports
https://www.theatlantic.com/politics/archive/2017/03/the-buck-doesnt-stop-here-anymore/520839/
The Atlantic - David A. Graham - March 24, 2017

Speaking in the Oval Office Friday afternoon, President Trump surveyed the wreckage of the Obamacare repeal effort and issued a crisp, definitive verdict: I didn't do it.

The president said he didn't blame Speaker Paul Ryan, though he had plenty of implied criticism for the speaker. "I like Speaker Ryan. He worked very hard," Trump said, but he added: "I'm not going to speak badly about anybody within the Republican Party. Certainly there's a big history. I really think Paul worked hard." He added ruefully that the GOP could have taken up tax-reform first, instead of Obamacare-the reverse of Ryan's desired sequence. "Now we're going to go for tax reform, which I've always liked," he said.

As for the House Freedom Caucus, the bloc of conservatives from which many of the apparent "no" votes on the Republican plan were to come, Trump said, "I'm not betrayed. They're friends of mine. I'm disappointed because we could've had it. So I'm disappointed. I'm a little surprised, I could tell you."

The greatest blame for the bill's failure fell on Democrats, Trump said.

"This really would've worked out better if we could've had Democrat support. Remember we had no Democrat support," Trump said. Later, he added, "But when you get no votes from the other side, meaning the Democrats, it's really a difficult situation."

He said Democrats should come up with their own bill. "I think the losers are Nancy Pelosi and Chuck Schumer, because they own Obamacare," he said, referring to the House and Senate Democratic leaders. "They 100 percent own it."

Trump was very clear about who was not to blame: himself. "I worked as a team player," the president of the United States said, demoting himself to bit-player status. He wanted to do tax reform first, after all, and it was still early. "I've been in office, what, 64 days? I've never said repeal and replace Obamacare within 64 days. I have a long time. I want to have a great health-care bill and plan and we will."

Strictly speaking, it is true that Trump didn't promise to repeal Obamacare on day 64 of his administration. What he told voters, over and over during the campaign, was that he'd do it immediately. On some occasions he or top allies even promised to do it on day 1. Now he and his allies are planning to drop the bill for the foreseeable future.

It is surely not wrong that there is lots of blame to go around. Congressional Republicans had years to devise a plan, and couldn't come up with one that would win a majority in the House, despite a 44-seat advantage. The House bill was an unpopular one, disliked by conservatives and moderates in that chamber; almost certainly dead on arrival in the Senate; and deeply unpopular with voters. Even before the vote was canceled, unnamed White House officials were telling reporters that the plan was to pin the blame on Ryan. ...

The Republicans fold and
withdraw their health-care bill https://www.theatlantic.com/politics/archive/2017/03/trump-republicans-failure-obamacare/520788/
The Atlantic - Russell Berman - March 24, 2017

... Defeat on the floor dealt Trump a major blow early in his presidency, but its implications were far more serious for the Republican Party as a whole. Handed unified control of the federal government for only the third time since World War II, the modern GOP was unable to overcome its internecine fights to enact a key part of its policy agenda. The president now wants to move on to a comprehensive overhaul of the tax code, but insiders on Capitol Hill have long believed that project will be an even heavier lift than health care.

As the prospect of a loss became more real on Friday, the frustrations of GOP lawmakers loyal to the leadership began to boil over. "I've been in this job eight years, and I'm wracking my brain to think of one thing our party has done that's been something positive, that's been something other than stopping something else from happening," Representative Tom Rooney of Florida said in an interview. "We need to start having victories as a party. And if we can't, then it's hard to justify why we should be back here."

Nothing has exemplified the party's governing challenge quite like health care. For years, Republican leaders resisted pressure from Democrats and rank-and-file lawmakers to coalesce around a detailed legislative alternative to Obamacare. That failure didn't prevent them from attaining power, but it forced them to start nearly from scratch after Trump's surprising victory in November. At Ryan's urging, the party had compiled a plan as part of the speaker's "A Better Way" campaign agenda. Translating that into legislation, however, proved a much stiffer challenge; committee leaders needed to navigate a razor's edge to satisfy conservatives demanding a full repeal of Obamacare and satisfy moderates who preferred to keep in place its more popular consumer protections and Medicaid expansion. They were further limited by the procedural rules of the Senate, which circumscribed how far Republicans could go while still avoiding a Democratic filibuster. ...

[Mar 26, 2017] Our constitutional dollar democracy with its gerrymandering, limitless congressional revolving doors, SCOTUS unanswerable to the electorate, and first past the post voting provides loads of punch lines, not the least of which is the de facto two party system itself. Two competitors is merely duopoly

Mar 26, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron -> ilsm... , March 25, 2017 at 07:09 AM
There is more than one joke. Our constitutional dollar democracy with its gerrymandering, limitless congressional revolving doors, SCOTUS unanswerable to the electorate, and first past the post voting provides loads of punch lines, not the least of which is the de facto two party system itself. Two competitors is merely duopoly. It takes a minimum of three viable choices to have any returns from competition that are significant to the consumers' preferences. Two competitors merely play off each other in predictable and increasingly ossified patterns.
New Deal democrat -> RC AKA Darryl, Ron... , March 25, 2017 at 07:17 AM
One very big quibble: >>SCOTUS unanswerable to the electorate<<

As bad as the SCOTUS can be, it would be unimaginably worse if it were subject to elections.

The big problem is that the Founders did not imagine life expectancies into the 80s. Throughout the 19th Century, the median time on the bench was about 14 years, and about 1/3 of all Justices served less than 10 years -- they got sick or died. Now the median time on the bench is 25 years, which is totally unacceptable.

If SCOTUS terms were set at 18 years, with a new Justice appointed every 2 years, independence would be preserved without the imposition of the "dead hands." Emeritus Justices could continue to serve on the appellate courts, and provisions would have to be made for deaths or retirements during the 18 year terms, but you get the idea.

RC AKA Darryl, Ron -> New Deal democrat... , March 25, 2017 at 07:36 AM
I did not mean elections. One of my favorite planks of the 1912 Bull Moose Party was the right for popular petition and referendum to overturn an unpopular SCOTUS decision. Roe V. Wade could not be overturned by referendum (which some fear but votes are measured by heat count rather than audible volume). Citizen United would be overturned by referendum. I trust democracy more than most, but still I don't get silly about it.

OTOH, SCOTUS term limits are also a good idea.

RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , March 25, 2017 at 07:38 AM
"...heat count..."

[No, HEAD count. If votes were measured by heat count then Bernie Sanders would be POTUS now.]

[Mar 26, 2017] They are an American Taliban: I have never read such a vitriolic comments section. Lots of Americans a seething mad.

Notable quotes:
"... The GOP and this administration are overwhelmingly self-avowed Christians yet they try to deny the poor to benefit the rich. This is not Christian but evil pure and simple. ..."
"... They are an American Taliban, just going about their subversion in a less overtly violent way. ..."
Mar 26, 2017 | economistsview.typepad.com
reason , March 25, 2017 at 03:01 PM
I just read this:

https://www.washingtonpost.com/news/wonk/wp/2017/03/25/why-republicans-were-in-such-a-hurry-on-health-care/?utm_term=.590e103e2761

I have never read such a vitriolic comments section. Lots of Americans a seething mad.

reason -> reason... , March 25, 2017 at 03:03 PM
By mad - I mean angry. And at the Republican party more than Trump.
libezkova -> reason... , March 25, 2017 at 05:10 PM
I like the following comment:

Farang Chiang Mai, 7:39 PM EDT

The GOP and this administration are overwhelmingly self-avowed Christians yet they try to deny the poor to benefit the rich. This is not Christian but evil pure and simple.

I would love to see this lying, cheating, selfish, crazy devil (yeah, I know I sound a bit OTT but the description is fact based) of a president and his enablers challenged on their Christian values.

They are an American Taliban, just going about their subversion in a less overtly violent way.

libezkova -> libezkova... , March 25, 2017 at 05:31 PM
An interesting question arise:

Are the people who consider our current rulers to be "American Taliban" inclined to become "leakers" of government activities against the citizens, because they definitely stop to consider the country as their own and view it as occupied by dangerous and violent religious cult?

Much like Russian people viewed the country under Bolshevism, outside of brief WWII period.

That's probably why we have Anti-Russian witch hunt now. To stem this trend.

But it is the US neoliberal elite, not Russians, who drive the country to this state of affairs.

By spending God knows how many trillions of dollar of wars of neoliberal empire expansion and by drastic redistribution of wealth up.

And now the majority of citizens is facing substandard medical care, sliding standard of living and uncertain job prospects.

[Mar 26, 2017] Democrats are a joke for refusing to sack a sclerotic, corrupt, and inept congressional leadership that had lost three straight elections

Mar 26, 2017 | economistsview.typepad.com
ilsm -> RC AKA Darryl, Ron... , March 25, 2017 at 09:06 AM
cnn resembles deep red tea party fox news..... and the run of the mill dems should fit their tri-corn hats
RC AKA Darryl, Ron -> ilsm... , March 25, 2017 at 09:37 AM
I will take your word for it. We don't watch either CNN nor Fox News at my house. Mostly we watch local (same news and weather crew here appears on each the WWBT/WRLH local NBC/Fox affiliates) news with some sampling of MSNBC and Sunday morning ABC and CBS shows along with the daily half hour of NBC network following the evening local. Cable news is sort of an oxymoron given the prevailing editorial slants. The now retired local TV news anchor Gene Cox laid the groundwork for the best news team in central VA by setting a high bar at his station. Gene laid it all out southern fried with satirical humor and honesty unusual in TV news.
RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , March 25, 2017 at 09:38 AM
Maybe more sarcasm than satire, but the point is the same - wit and honesty.
JohnH -> Chris G ... , March 25, 2017 at 07:52 AM
Apparently we have two jokes alternating to lead America: the Republican jokes vs. the Democratic jokes.

But Democrats are right to expect that, when two jokes vie for power, their turn as joke in power will eventually come.

JohnH -> mulp... , March 25, 2017 at 07:52 AM
Maybe a post mortem would simply reveal that Democrats should have had a coherent economic message and pursued a strategy of standing up for working America for the past 8 years. For example, having Pelosi demand votes on increasing the minimum wage as often as Ryan demanded votes on killing Obamacare...

Any honest post mortem would have revealed that standing with billionaires and the Wall Street banking cartel--and not prosecuting a single Wall Street banker--is not a winning strategy...

Chris G -> JohnH... , March 25, 2017 at 12:33 PM
That Pelosi did not resign immediately following the 2016 election or, not having offered her resignation, that Congressional Democrats did not demand it is an indication that the party still has deep-rooted problems. (Pelosi may not be the cause of those problems but given how badly they've fared since 2010 she's clearly not the solution. She has no business remaining as minority leader.) I'm fine with Perez as DNC chair but Ellison should be minority leader.

[Mar 26, 2017] Staggering cost of Finance Sector under neoliberalism

Notable quotes:
"... Originally published at the Tax Justice Network ..."
"... US finance sector is a net drag on their economy ..."
"... It is a cleverly worked out system for wealth transfer. Complex laws, political backing and protection even if you break the law. At least in the old days when you got robbed you had the signal of having a pistol pointed at you. The modern version, with all the insider media psyops, leaves those who are preyed upon feeling that they are the ones to blame. ..."
"... The business model is straight out of the Cosa Nostra playbook – except there is media, political and legal backing. ..."
"... As an Italian friend of mine (who rarely goes north of 14th Street) once remarked, "The difference between the Mafia and bankers is that the Mafia always leaves a few crumbs on the table." ..."
"... Did I hear that right – the private finance sector will have cost us (in the US) 23Tr$ by 2020. And from 1990 to 2005 big finance cost us (already) 14Tr in fees, pay, fraud, misallocation and lost productivity. Yet we continue to deregulate even though all governments know how destructive deregulated finance is. ..."
"... yes, the EU does seem to be hungry to grab up all that finance for itself I keep thinking about Schaeuble coming to NYC c2012 and holding an impromptu news conference wherein he said it was fine with him if some banks went down because "we are overbanked." But we do have to admit that "overbanked" is an understatement since there are no productive investments and it's just self-defeating. I mean, how long can this go on? ..."
"... I don't know, how much money do you have left? ..."
"... It pays to remember that prior to 2008, hot (sovereign state backed) money flowed unimpeded like water across all EU borders, regardless of regulation, in search of quick handsome and easy returns, and much of it from subsequently bailed out by the ECB backdoor major lenders in France and Germany lending recklessly to poorer EZ members. ..."
"... The lasting results of this and its hasty, damaging retreat and the inequitable socialisation of the debt across the EZ are, of course, still being felt today. ..."
"... One of the major causes of the financial crisis was lax global regulation period. So let's not kid ourselves that by removing the UK from the European Union equation it is suddenly going to render it a bastion of sound prudential banking practice, particularly given various members recent comments that they intend to do anything in their power to tempt a post Brexit UK's financial services at the earliest opportunity. ..."
"... I do subscribe to the belief that the UK financial services sector has been and still is toxic to its economy and long-term future, and without a doubt this informed the Brexit vote, albeit in some cases on a subconscious level. ..."
Mar 26, 2017 | www.nakedcapitalism.com
Posted on March 25, 2017 by Yves Smith Originally published at the Tax Justice Network

In our March 2017 Taxcast: the high price we're paying for our finance sectors – we look at staggering statistics showing how the US finance sector is a net drag on their economy .

Also, as the British government initiates Brexit divorce negotiations to leave the EU, we discuss something they ought to know, but obviously don't – they're actually in a very weak position. Could it mean the beginning of the end of the finance curse gripping the UK economy?

Featuring: John Christensen and Alex Cobham of the Tax Justice Network, and Professor of Economics Gerald Epstein of the University of Masachusetts Amhurst , author of Overcharged: The High Cost of High Finance . Produced and presented by Naomi Fowler for the Tax Justice Network.

Professor Gerald Epstein:

If you look at particular finance centres, say London and New York, the problem is that the net cost of this system is quite significant, it imposes a cost not only on people who use finance but for the whole economy. So, what we need to think about is what are the more productive activities that ought to be substituted for these excessive aspects of finance?

John Christensen, Tax Justice Network on Britain's weak position in Brexit negotiations:

We might be seeing the start of the end of Britain's grip by the Finance Curse

https://www.youtube.com/embed/E7oOiJl1n1I

Download the mp3 to listen offline anytime on your computer, mobile/cell phone or handheld device by right clicking here and selecting 'save link as'.

Want more Taxcasts? The full playlist is here .

Want to subscribe? Subscribe via email by contacting the Taxcast producer on naomi [at] taxjustice.net OR subscribe to the Taxcast RSS feed here OR subscribe to our youtube channel, Tax Justice TV OR find us on iTunes

skippy , March 25, 2017 at 3:01 am

Drag = Rentier = bottle neck economics which in the end becomes a death spiral due to lack of demand and jobs quality .

Si , March 25, 2017 at 3:45 am

It is a cleverly worked out system for wealth transfer. Complex laws, political backing and protection even if you break the law. At least in the old days when you got robbed you had the signal of having a pistol pointed at you. The modern version, with all the insider media psyops, leaves those who are preyed upon feeling that they are the ones to blame.

The business model is straight out of the Cosa Nostra playbook – except there is media, political and legal backing.

Genius.

Hayek's Heelbiter , March 25, 2017 at 6:14 am

As an Italian friend of mine (who rarely goes north of 14th Street) once remarked, "The difference between the Mafia and bankers is that the Mafia always leaves a few crumbs on the table."

Watt4Bob , March 25, 2017 at 11:00 am

"Wouldn't you rather give me my money, that you have in your pocket, rather than force me to take the pistol out of my pocket, and point it at you, and rob you, and become a criminal?"

As you can clearly see, the logic is flawless, we are all much better off acquiescing to the reasonable demands of the FIRE sector, the only alternative being an admission that we're in the clutches of a deeply organized criminal element.

susan the other , March 25, 2017 at 11:44 am

thanks for this Taxcast, very to the point.

Did I hear that right – the private finance sector will have cost us (in the US) 23Tr$ by 2020. And from 1990 to 2005 big finance cost us (already) 14Tr in fees, pay, fraud, misallocation and lost productivity. Yet we continue to deregulate even though all governments know how destructive deregulated finance is.

And we know that the US is the biggest and most secret tax haven of them all

The first part of Taxcast speculated that Brexit will actually free the UK from the stranglehold of big finance and the country will be able to move on to more productive economic activity. So let us hope the US comes to its senses – just as the EU has finally isolated the rot of UK finance, maybe the rest of the world will isolate us.

Regulation seems to be hand-in-glove with national sovereignty. Whereas globalized finance might have escaped national regulation bec. there was always a safe haven for banksters, now with a backlash of indignant people all over the world there will be re-regulation at national levels. Since there is no global authority that can do that yet. Anyway, now that economies are trashed, there is way too much hot money to find good investments. It has already become absurd.

Colonel Smithers , March 25, 2017 at 11:51 am

Thank you, Susan.

I would not be so hasty thinking that the EU(27) has finally isolated the rot of UK finance. Much of that finance was not UK, but using the UK. The EU(27) is no less corrupt than the UK and as susceptible to big finance's charms.

I worked as a lobbyist in Brussels (and Basel and DC) for years.

susan the other , March 25, 2017 at 12:31 pm

yes, the EU does seem to be hungry to grab up all that finance for itself I keep thinking about Schaeuble coming to NYC c2012 and holding an impromptu news conference wherein he said it was fine with him if some banks went down because "we are overbanked." But we do have to admit that "overbanked" is an understatement since there are no productive investments and it's just self-defeating. I mean, how long can this go on?

Watt4Bob , March 25, 2017 at 3:21 pm

I mean, how long can this go on?

I don't know, how much money do you have left?

Gman , March 25, 2017 at 6:25 pm

Great piece. Thank you.

I'm not sure I get the 'rules on financial services are different than other goods and services' line being peddled here though. Maybe in theory, but it's pretty much a moot point.

It pays to remember that prior to 2008, hot (sovereign state backed) money flowed unimpeded like water across all EU borders, regardless of regulation, in search of quick handsome and easy returns, and much of it from subsequently bailed out by the ECB backdoor major lenders in France and Germany lending recklessly to poorer EZ members.

The lasting results of this and its hasty, damaging retreat and the inequitable socialisation of the debt across the EZ are, of course, still being felt today.

One of the major causes of the financial crisis was lax global regulation period. So let's not kid ourselves that by removing the UK from the European Union equation it is suddenly going to render it a bastion of sound prudential banking practice, particularly given various members recent comments that they intend to do anything in their power to tempt a post Brexit UK's financial services at the earliest opportunity.

I do subscribe to the belief that the UK financial services sector has been and still is toxic to its economy and long-term future, and without a doubt this informed the Brexit vote, albeit in some cases on a subconscious level.

[Mar 26, 2017] Plant-Closing Threats, Union Organizing and the North American Free Trade Agreement

Notable quotes:
"... These overall percentages actually underestimate the extent employers use plant-closing threats, since they include industries and sectors of the economy where threats to shut down and move facilities are much less likely and carry less weight because the industry or product is less mobile. In mobile industries such as manufacturing, transportation and warehouse/distribution, the percentage of campaigns with plant-closing threats is 62 percent, compared to only 36 percent in relatively immobile industries such as construction, health care, education, retail and other services. Where employers can credibly threaten to shut down or move their operations in response to union activity, they do so in large numbers. ..."
economistsview.typepad.com

anne -> anne... March 24, 2017 at 05:22 AM

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1018&context=cbpubs

March, 1997

We 'll Close! Plant Closings, Plant-Closing Threats, Union Organizing and the North American Free Trade Agreement
By Kate Bronfenbrenner

Abstract

This article is based on "Final Report: The Effects of Plant Closing or Threat of Plant Closing on the Right of Workers to Organize." The report was commissioned by the tri-national Labor Secretariat of the Commission for Labor Cooperation (the North American Free Trade Agreement labor commission) "on the effects of the sudden closing of the plant on the principle of freedom of association and the right of workers to organize in the three countries."

Plant-closing threats and actual plant closings are extremely pervasive and effective components of U.S. employer anti-union strategies. From 1993 to 1995, employers threatened to close the plant in 50 percent of all union certification elections and in 52 percent of all instances where the union withdrew from its organizing drive ("withdrawals"). In another 18 percent of the campaigns, the employer threatened to close the plant during the first-contract campaign after the election was won.

Nearly 12 percent of employers followed through on threats made during the organizing campaign and shut down all or part of the plant before the first contract was negotiated. Almost 4 percent of employers closed down the plant before a second contract was reached.

This 15 percent shutdown rate within two years of the certification election victory is triple the rate found by researchers who examined post-election plant-closing rates in the late 1980s, before the North American Free Trade Agreement (NAFTA) went into effect.

These overall percentages actually underestimate the extent employers use plant-closing threats, since they include industries and sectors of the economy where threats to shut down and move facilities are much less likely and carry less weight because the industry or product is less mobile. In mobile industries such as manufacturing, transportation and warehouse/distribution, the percentage of campaigns with plant-closing threats is 62 percent, compared to only 36 percent in relatively immobile industries such as construction, health care, education, retail and other services. Where employers can credibly threaten to shut down or move their operations in response to union activity, they do so in large numbers.

[Mar 25, 2017] stock, bond and commodities historical returns

Mar 25, 2017 | economistsview.typepad.com
im1dc :, March 25, 2017 at 10:40 AM
FYI

For those who may be interested in quality data at your fingertips for free

Some you know, some you may not

http://www.marketwatch.com/story/ben-carlson-my-12-favorite-and-free-websites-for-investing-information-and-tools-2017-03-24

"Ben Carlson: My 12 favorite (and free) websites for investing information and tools"

By Ben Carlson...Mar 25, 2017...9:39 a.m. ET

..."I get a lot of questions from readers asking what data sources or models I use. I've been building my own Excel models and formulas for a while and have access to a handful of professional subscription-based offerings. But you don't have to spend tens of thousands of dollars on historical data providers to access useful financial data in the internet age. There are plenty of useful free websites that have historical market data, back-testing tools, risk statistics and scenario analysis capabilities.

Here are some that I have found helpful over the years:

NYU's stock, bond and cash historical returns

NYU professor Aswath Damodaran uses this site to update the performance numbers for stocks (S&P 500 SPX, -0.08% ), bonds (10-year Treasuries) and cash (three-month T-bills) once a year. It shows the annual returns for these three asset classes going back to 1928. You can download an Excel file that contains historical interest rates, bond yields and dividend yields. I use these numbers frequently.

Portfolio Visualizer

This site has one of the best free asset allocation back-testing programs I've come across. There are probably 20-30 different asset classes and sub-asset classes you can back-test to the 1970s with historical returns, drawdowns, real (after-inflation) returns, and growth of your initial investment. This site enables you to perform Monte Carlo simulations on withdrawal strategies, correlation matrixes between different assets, risk factor analysis and back-test real world portfolios using actual mutual funds and ETFs. That this website is free is pretty remarkable.

Robert Shiller's online data

Shiller has one of the longest-running data sets I've seen. His famous CAPE spreadsheet has the monthly stock price, interest rate, earnings and dividend data from 1871. This site has his comprehensive real estate data on home prices from 100 years ago.

Twitter

People on social media love to complain about social media, but I find a ton of value in the information I receive from Twitter TWTR, +1.41% I'm constantly finding helpful research, graphs, data and analysis that I wouldn't be exposed to otherwise. Twitter is my go-to source for what's going on in the world of finance and the markets, along with under-the-radar research.

Fama-French

Ken French updates this site using much of the research he's done over the years with Eugene Fama. This one is a factor investing nerd's dream, although the site does take some time to figure out how to use efficiently (at least in my experience). French updates his data regularly with historical returns on factors such as small-cap stocks, value stocks, quality stocks and momentum stocks dating to the 1920s. This site has great data on sector and industry historical returns. All of the data are easily exportable to Excel.

Credit Suisse Global Investment Returns Yearbook

Researchers Elroy Dimson, Paul March and Mike Staunton update this report once a year with numbers on stocks, bonds and inflation going back to 1900 for a number of countries. It's worth going through the entire report at least once.

MSCI

MSCI provides the most comprehensive free source of historical market data on foreign stock markets. It has performance numbers dating to 1970 for different countries, regions and markets, both developed and emerging.

Abnormal Returns

The best curated content each and every day on investing, personal finance, research and anything else in the world of finance. If you miss anything worth reading, you can be sure it will be here.

Federal Reserve Economic Data (FRED)

Econ geeks love this site because the Federal Reserve has data on almost anything related to economics you can think of. There's also plenty of good market data on stocks, bonds and interest rates as well. And the site enables you to personalize the graphs and data sets.

Morningstar

I find that Morningstar MORN, -0.36% has the best data on mutual funds and ETFs for performance purposes. You can see annual returns going back 10 years, and monthly and quarterly returns going back five years. The company provides after-tax returns and fund behavior gaps, which I find really useful for seeing what investors are actually earning in these funds. You can find breakdowns of fund holdings, investment styles, geographic allocations and more.

Yahoo Finance

I like Yahoo YHOO, -0.43% Finance for daily historical data on stocks, interest rates and indexes. It has annual and quarterly performance numbers for mutual funds from inception, many of which give you decades of returns.

Portfolio Charts

This is another great asset allocation back-testing tool that enables you to see how a number of well-known portfolios have performed over the years. This site has the best visuals of any I've played around with. You can also stress-test a large number of asset classes and strategies.

And here are a few more I've used over the years:

[Mar 25, 2017] Is productivity metric as problematic as GDP?

Mar 24, 2017 | cepr.net

anne: March 24, 2017 at 05:21 AM

Marketplace Radio Has Not Heard About the Productivity Slowdown

Marketplace radio had a peculiar piece * asking what the world would have looked like if the North American Free Trade Agreement never had been signed. The piece is odd because it dismisses job concerns associated with NAFTA by telling readers that automation (i.e. productivity growth) has been far more important in costing jobs.

"As in, ATMs replacing bankers, robots displacing welders. Automation is a very old story that goes back 250 years, but it has really picked up in the last couple decades.

"'We economic developers have an old joke,' said Charles Hayes of the Research Triangle Regional Partnership in an interview with Marketplace in 2010. 'The manufacturing facility of the future will employ two people: one will be a man, and one will be a dog. And the man will be there to feed the dog. And the dog will be there to make sure the man doesn't touch the equipment.'

"Ouch. But it turns out technology replaced workers in the course of reporting this very story."

Actually, the Bureau of Labor Statistics tells us the opposite. Productivity growth did pick up from 1995 to 2005, rising back to its 1947 to 1973 Golden Age pace (a period of low unemployment and rapidly rising wages), but has slowed sharply in the last dozen years.

[Graph]

While more rapid productivity growth would allow for faster wage and overall economic growth, no one has a very clear path for raising the rate of productivity growth. It is strange that Marketplace thinks our problem is a too rapid pace of productivity growth.

The piece is right in saying that the jobs impact of NAFTA was relatively limited. Certainly trade with China displaced many more workers. NAFTA may nonetheless have had a negative impact on the wages of many manufacturing workers. It made the threat to move operations to Mexico far more credible and many employers took advantage of this opportunity ** to discourage workers from joining unions and to make wage concessions. It's surprising that the piece did not discuss this effect of NAFTA.

* https://www.marketplace.org/2017/03/23/economy/what-if-nafta-were-never-born

** http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1018&context=cbpubs

-- Dean Baker

anne said in reply to anne...

https://fred.stlouisfed.org/graph/?g=d6jh

November 1, 2014

Total Factor Productivity for United States, 1952-2014

(Percent Change)


https://fred.stlouisfed.org/graph/?g=d7LU

November 1, 2014

Total Factor Productivity for United States, 1952-2014

(Indexed to 1952)

pgl said in reply to anne... March 24, 2017 at 06:01 AM

Thanks for the data. It confirms what Dean wrote here:

"the Bureau of Labor Statistics tells us the opposite. Productivity growth did pick up from 1995 to 2005, rising back to its 1947 to 1973 Golden Age pace (a period of low unemployment and rapidly rising wages), but has slowed sharply in the last dozen years.

anne said in reply to pgl... March 24, 2017 at 06:10 AM

Looking internationally, I consider the evidence conclusive that productivity growth has slowed significantly since 2005 in countries that have had limited infrastructure development, regardless of the emphasis in those countries on information technology advance and application.

libezkova -> anne... March 25, 2017 at 09:33 AM

And what is productivity ?

== quote ==

The OECD defines it as "the ratio of a volume measure of output to a volume measure of input".] Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e. adjusted for inflation.

== end of quote ==

If you use GDP the result is suspect for the reasons GDP is suspect. If not, then it is sector/industry based metric.

In this sense growth of GDP in 1990th is not only the result of technological changes (Internet, PCs, cell phones) but also looting of the xUSSR economies

And as looting slowed down after 2000 growth of productivity also allowed down.

libezkova -> libezkova... March 25, 2017 at 10:32 AM

Steve Keen pointed out that all production is driven by energy (mostly oil and electricity). And the energy comes ultimately from the sun.

Either it is turned into production via feeding workers, or by fueling machinery (by burning hydrocarbons or indirectly via electricity supply).

That means that growth of productivity is inversely correlated with the price of oil. As the period of cheap hydrocarbons ended (remember $.99 per gallon of gas in 90th) the period of rapid productivity growth ended as well.

One of the aspects od the idea of "secular stagnation" is that high oil prices hit neoliberal economies like a hammer and the period of high oil prices started to undermine neoliberal globalization by making shipping more expensive.

That also means that without continuation of low oil prices the next debt crisis (aka Minsky moment) is eminent for the USA economy.

BTW none of US shale companies is profitable. They are all up to the neck in debt, and their method of extracting oil includes generating a flow of junk bonds. If financing stops most of them will be bankrupt in one year period.

Obama clever game with Iran helped to produce "Obama recovery" due to the period of "normal" oil prices which started in mid 2015.

It probably can be extended for another year or two. What happens next is completely unknown territory. It is clear that the US shale is a card that was already played. It can't be played again as output probably can be substantially raised (say 2 Mbd/day) only with high or very high oil prices (as in above $70 or higher).

After "Obama recovery" (which depends on continuing low oil prices created by clever political maneuvering in Arab world -- Hail Mary pass that worked) we might well face the period of "elevated oil prices" and increased stagnation of the US economy with noticeably higher level of unemployment.

Much depends on Trump playing his trump card of "détente" with Russia which theoretically could extend this period (Russia has the same level of oil production as Saudis and more reserves), but there were to much sand thrown by neocons and DemoRats for this scenario to work. I thing Russia now is no longer interested in partnership with the USA on the basis of maintaining low oil prices -- like KSA today, and might cut output further to get higher oil prices which are vital for their economy. Of course Russia has strong neoliberal fifth column (including pro-western directors of oil companies and oligarchs who have their wealth transferred to Western banks) but even they are pissed off by the USA now.

DemoRats wiped up Anti-Russian hysteria to the level when even contact with Russian official can be a "career limiting move" in the USA.

This hysteria now has its own self-propagating dynamics and is difficult to stop. It might last for the same period of time as McCarthyism hysteria (roughly from 1947 to 1956).

"... "The principal problem for Democrats is that so many media figures and online charlatans are personally benefiting from feeding the base increasingly unhinged, fact-free conspiracies - just as right-wing media polemicists did after both Bill Clinton and Obama were elected - that there are now millions of partisan soldiers absolutely convinced of a Trump/Russia conspiracy for which, at least as of now, there is no evidence. ..."

It put the Democrats and Republicans in sync as two equally warmongering parties, but what good that would bring for the American people and the world is hard to fathom.

The USA lost the possibility of switching personal car fleet to more economical hybrid models by adopting some drastic measures and now is less prepared for a new period of high oil prices. People are still buying SUV which became the most popular type of personal transportation in the USA, and small tracks.

On the electricity front there are some problems too. The looting of Russia and the flow of cheap uranium stopped. Building of high voltage East -West line necessary for substantial wind and solar production is still on the drawing board.

[Mar 25, 2017] Like most integral metrics (and, especially, like GDP) productivity growth is very suspect. Its importance was artificially amplified under neoliberalism to the sacred cow status

Notable quotes:
"... The long term absence of convergence in productivity growth between developed and developing countries should be of considerable concern, but seems overlooked even in settings such as trade negotiations in which such concerns especially need to be addressed. ..."
"... You need to understand that like most "integral" metrics (and, especially, like GDP) productivity growth is very suspect. Its importance was artificially amplified under neoliberalism to the "sacred cow" status. ..."
"... While the strong earnings growth of US-based corporations might, at least partially, be real and not all accounting tricks, the question arise what part of those gains are coming from improvements in domestic productivity and what part from offshoring. ..."
"... Productivity growth is an important part of the system of neoliberal myths (along with "cult of GDP" ) and this mythology is directed at deceiving the public that it is indirectly benefitting from the neoliberal transformation of the society, while in reality we observe impoverishment of the majority of population. As in " The USA is the country with fastest productivity grown." Rejoice. ..."
Mar 25, 2017 | economistsview.typepad.com

anne -> anne... March 25, 2017 at 10:31 AM

The long term absence of convergence in productivity growth between developed and developing countries should be of considerable concern, but seems overlooked even in settings such as trade negotiations in which such concerns especially need to be addressed.

libezkova -> anne..., March 25, 2017 at 04:42 PM

Anne,

You need to understand that like most "integral" metrics (and, especially, like GDP) productivity growth is very suspect. Its importance was artificially amplified under neoliberalism to the "sacred cow" status.

Government bureaucrats also are afraid to tell the truth. Richard Benson , a well-known critic of government labor statistics, who wrote several insightful papers on the subject, noted "The BLS is mindful of how politically sensitive any reported job data is to the White House, so there is a strong bias for the government bureaucrats to publish a favorable jobs report."

One hidden fact is that it is offshoring that is the driver of corporate profits and it distorts "productivity" statistics.

While the strong earnings growth of US-based corporations might, at least partially, be real and not all accounting tricks, the question arise what part of those gains are coming from improvements in domestic productivity and what part from offshoring.

Rising stratification of the society also affects this metric (via the ratio of "have more" vs "have not")

Productivity growth is an important part of the system of neoliberal myths (along with "cult of GDP" ) and this mythology is directed at deceiving the public that it is indirectly benefitting from the neoliberal transformation of the society, while in reality we observe impoverishment of the majority of population. As in " The USA is the country with fastest productivity grown." Rejoice.

It is also simplifies the adoption of pro financial oligarchy policies masked with technocratic jargon -- policies that destroyed New Deal and hurt the majority of the population ("rising labor costs" is one such usage).

Adopting technocratic posture (economics like Boeing there by using certain controls you can change flight course) serves like anesthetic. Rephrasing Marx we can say "neoliberal economics is the opium for the people". And it is by design. which confirms the iron law of oligarchy in a very interesting, unexpected way.

That's why jargon use by priests of neo-classical economics is almost in-penetrable for an ordinary person. The well known neoliberal stooge Greenspan was a real master of it.

So the importance assigned to such measures as GDP and productivity is, to a certain extent, politically motivated.

For example, in the denominator we have all those hedge funds managers and other members of financial oligarchy bonuses, and top managers exorbitant remuneration within all kinds of firms (which definitely drives productivity growth down ;-)

In the numerator are military expenses and income of financial sector (and now another somewhat parasitic sector close to banking -- medical insurance industry).

Both are essentially money stolen from people and, to a certain extent, from "real" economy.

Of cause, not all money are wasted as military spending in addition to war for neoliberal empire expansion (and related loot) also employs a lot of people and fund fundamental research; the myth about innovation of Silicon Valley is partially a myth; in reality in many cases this is a direct transfer of technology from the military sector.

Among the examples are integrated circuits, laser, wireless, Internet, multiprocessing, etc; even some algorithmic languages :-).

So when you have such fuzzy numerator and denominator, the result is also fuzzy and all conclusions based on them might be not worth electrons with which they are depicted on our screens.

As I mentioned before, productivity should be somewhat inversely correlated with the oil price, as "amount of energy per worker" is what defines at the end worker's productivity (via the level of automation, mechanization of his work). That's were the USA strong (or week, if you wish) point is -- it has the largest consumption of energy per capita in the world. If we normalize productivity via per capita energy consumption we will get a more interesting picture.

[Mar 25, 2017] Is productivity metric as problemtic as GDP?

Notable quotes:
"... The OECD defines it as "the ratio of a volume measure of output to a volume measure of input".] Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e. adjusted for inflation. ..."
"... If you use GDP the result is suspect for the reasons GDP is suspect. If not, then it is sector/industry based metric. ..."
"... In this sense growth of GDP in 1990th is not only the result of technological changes (Internet, PCs, cell phones) but also looting of the xUSSR economies ..."
"... And as looting slowed down after 2000 growth of productivity also allowed down. ..."
"... One of the aspects of the idea of "secular stagnation" is that high oil prices hit neoliberal economies like a hammer and the period of high oil prices started to undermine neoliberal globalization by making shipping more expensive. ..."
"... BTW none of US shale companies is profitable. They are all up to the neck in debt, and their method of extracting oil includes generating a flow of junk bonds. If financing stops most of them will be bankrupt in one year period. ..."
Mar 24, 2017 | cepr.net

anne: March 24, 2017 at 05:21 AM

Marketplace Radio Has Not Heard About the Productivity Slowdown

Marketplace radio had a peculiar piece * asking what the world would have looked like if the North American Free Trade Agreement never had been signed. The piece is odd because it dismisses job concerns associated with NAFTA by telling readers that automation (i.e. productivity growth) has been far more important in costing jobs.

"As in, ATMs replacing bankers, robots displacing welders. Automation is a very old story that goes back 250 years, but it has really picked up in the last couple decades.

"'We economic developers have an old joke,' said Charles Hayes of the Research Triangle Regional Partnership in an interview with Marketplace in 2010. 'The manufacturing facility of the future will employ two people: one will be a man, and one will be a dog. And the man will be there to feed the dog. And the dog will be there to make sure the man doesn't touch the equipment.'

"Ouch. But it turns out technology replaced workers in the course of reporting this very story."

Actually, the Bureau of Labor Statistics tells us the opposite. Productivity growth did pick up from 1995 to 2005, rising back to its 1947 to 1973 Golden Age pace (a period of low unemployment and rapidly rising wages), but has slowed sharply in the last dozen years.

[Graph]

While more rapid productivity growth would allow for faster wage and overall economic growth, no one has a very clear path for raising the rate of productivity growth. It is strange that Marketplace thinks our problem is a too rapid pace of productivity growth.

The piece is right in saying that the jobs impact of NAFTA was relatively limited. Certainly trade with China displaced many more workers. NAFTA may nonetheless have had a negative impact on the wages of many manufacturing workers. It made the threat to move operations to Mexico far more credible and many employers took advantage of this opportunity ** to discourage workers from joining unions and to make wage concessions. It's surprising that the piece did not discuss this effect of NAFTA.

* https://www.marketplace.org/2017/03/23/economy/what-if-nafta-were-never-born

** http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1018&context=cbpubs

-- Dean Baker

anne said in reply to anne...

https://fred.stlouisfed.org/graph/?g=d6jh

November 1, 2014

Total Factor Productivity for United States, 1952-2014

(Percent Change)


https://fred.stlouisfed.org/graph/?g=d7LU

November 1, 2014

Total Factor Productivity for United States, 1952-2014

(Indexed to 1952)

pgl said in reply to anne... March 24, 2017 at 06:01 AM

Thanks for the data. It confirms what Dean wrote here:

"the Bureau of Labor Statistics tells us the opposite. Productivity growth did pick up from 1995 to 2005, rising back to its 1947 to 1973 Golden Age pace (a period of low unemployment and rapidly rising wages), but has slowed sharply in the last dozen years.

anne said in reply to pgl... March 24, 2017 at 06:10 AM

Looking internationally, I consider the evidence conclusive that productivity growth has slowed significantly since 2005 in countries that have had limited infrastructure development, regardless of the emphasis in those countries on information technology advance and application.

libezkova -> anne... March 25, 2017 at 09:33 AM

And what is productivity ?

== quote ==

The OECD defines it as "the ratio of a volume measure of output to a volume measure of input".] Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e. adjusted for inflation.

== end of quote ==

If you use GDP the result is suspect for the reasons GDP is suspect. If not, then it is sector/industry based metric.

In this sense growth of GDP in 1990th is not only the result of technological changes (Internet, PCs, cell phones) but also looting of the xUSSR economies

And as looting slowed down after 2000 growth of productivity also allowed down.

libezkova -> libezkova... March 25, 2017 at 10:32 AM

Steve Keen pointed out that all production is driven by energy (mostly oil and electricity). And the energy comes ultimately from the sun.

Either it is turned into production via feeding workers, or by fueling machinery (by burning hydrocarbons or indirectly via electricity supply).

That means that growth of productivity is inversely correlated with the price of oil. As the period of cheap hydrocarbons ended (remember $.99 per gallon of gas in 90th) the period of rapid productivity growth ended as well.

One of the aspects of the idea of "secular stagnation" is that high oil prices hit neoliberal economies like a hammer and the period of high oil prices started to undermine neoliberal globalization by making shipping more expensive.

That also means that without continuation of low oil prices the next debt crisis (aka Minsky moment) is eminent for the USA economy.

BTW none of US shale companies is profitable. They are all up to the neck in debt, and their method of extracting oil includes generating a flow of junk bonds. If financing stops most of them will be bankrupt in one year period.

Obama clever game with Iran helped to produce "Obama recovery" due to the period of "normal" oil prices which started in mid 2015.

It probably can be extended for another year or two. What happens next is completely unknown territory. It is clear that the US shale is a card that was already played. It can't be played again as output probably can be substantially raised (say 2 Mbd/day) only with high or very high oil prices (as in above $70 or higher).

After "Obama recovery" (which depends on continuing low oil prices created by clever political maneuvering in Arab world -- Hail Mary pass that worked) we might well face the period of "elevated oil prices" and increased stagnation of the US economy with noticeably higher level of unemployment.

Much depends on Trump playing his trump card of "détente" with Russia which theoretically could extend this period (Russia has the same level of oil production as Saudis and more reserves), but there were to much sand thrown by neocons and DemoRats for this scenario to work. I thing Russia now is no longer interested in partnership with the USA on the basis of maintaining low oil prices -- like KSA today, and might cut output further to get higher oil prices which are vital for their economy. Of course Russia has strong neoliberal fifth column (including pro-western directors of oil companies and oligarchs who have their wealth transferred to Western banks) but even they are pissed off by the USA now.

DemoRats wiped up Anti-Russian hysteria to the level when even contact with Russian official can be a "career limiting move" in the USA.

This hysteria now has its own self-propagating dynamics and is difficult to stop. It might last for the same period of time as McCarthyism hysteria (roughly from 1947 to 1956).

"... "The principal problem for Democrats is that so many media figures and online charlatans are personally benefiting from feeding the base increasingly unhinged, fact-free conspiracies - just as right-wing media polemicists did after both Bill Clinton and Obama were elected - that there are now millions of partisan soldiers absolutely convinced of a Trump/Russia conspiracy for which, at least as of now, there is no evidence. ..."

It put the Democrats and Republicans in sync as two equally warmongering parties, but what good that would bring for the American people and the world is hard to fathom.

The USA lost the possibility of switching personal car fleet to more economical hybrid models by adopting some drastic measures and now is less prepared for a new period of high oil prices. People are still buying SUV which became the most popular type of personal transportation in the USA, and small tracks.

On the electricity front there are some problems too. The looting of Russia and the flow of cheap uranium stopped. Building of high voltage East -West line necessary for substantial wind and solar production is still on the drawing board.

[Mar 25, 2017] Its Not Just Unfair: Inequality Is a Threat to Our Governance

Notable quotes:
"... As recognized since ancient times, the coexistence of very rich and very poor leads to two possibilities, neither a happy one. The rich can rule alone, disenfranchising or even enslaving the poor, or the poor can rise up and confiscate the wealth of the rich. The rich tend to see themselves as better than the poor, a proclivity that is enhanced and even socially sanctioned in modern meritocracies. The poor, with little prospect of economic improvement and no access to political power, "might turn to a demagogue who would overthrow the government - only to become a tyrant. Oligarchy or tyranny, economic inequality meant the end of the republic." ..."
"... Some constitutions were written to contain inequalities. In Rome, the patricians ruled, but could be overruled by plebeian tribunes whose role was to protect the poor. There are constitutions with lords and commoners in separate chambers, each with well-defined powers. Sitaraman calls these "class warfare constitutions," and argues that the founding fathers of the United States found another way, a republic of equals. The middle classes, who according to David Hume were obsessed neither with pleasure-seeking, as were the rich, nor with meeting basic necessities, as were the poor, and were thus amenable to reason, could be a firm basis for a republic run in the public interest. There is some sketchy evidence that income and wealth inequality was indeed low in the 18th century, but the crucial point is that early America was an agrarian society of cultivators with an open frontier. No one needed to be poor when land was available in the West. ..."
"... Jefferson was proud of his achievement in abolishing the entail and primogeniture in Virginia, writing the laws that "laid the ax to the root of Pseudoaristocracy." He called for progressive taxation and, like the other founders, feared that the inheritance of wealth would lead to the establishment of an aristocracy. ..."
"... Madison tried to calculate how long the frontier would last, and understood the threat to the Constitution that industrialization would bring; many of the founders thought of wage labor as little better than slavery and hoped that America could remain an agrarian society. ..."
"... In perhaps the most original part of his book, Sitaraman, an associate professor of law at Vanderbilt Law School, highlights the achievements of the Progressive movement, one of whose aims was taming inequality, and which successfully modified the Constitution. There were four constitutional amendments in seven years - the direct election of senators, the franchise for women, the prohibition of alcohol and the income tax. To which I would add another reform, the establishment of the Federal Reserve, which provided a mechanism for handling financial crises without the need for the government to be bailed out by rich bankers, as well as the reduction in the tariff, which favored ordinary people by bringing down the cost of manufactures. Politics can respond to inequality, and the Constitution is not set in stone. ..."
"... It's interesting that the language of inequality is the language of technocrats, however worthy. It's a way to talk about the politics without referring to Marxist or populist/labor traditions which often involve social movements. ..."
Mar 25, 2017 | economistsview.typepad.com
anne : March 25, 2017 at 11:26 AM
https://www.nytimes.com/2017/03/20/books/review/crisis-of-the-middle-class-constitution-ganesh-sitaraman-.html

March 20, 2017

It's Not Just Unfair: Inequality Is a Threat to Our Governance
By ANGUS DEATON

THE CRISIS OF THE MIDDLE-CLASS CONSTITUTION
Why Economic Inequality Threatens Our Republic
By Ganesh Sitaraman

President Obama labeled income inequality "the defining challenge of our time." But why exactly? And why "our time" especially? In part because we now know just how much goes to the very top of the income distribution, and beyond that, we know that recent economic growth, which has been anemic in any case, has accrued mostly to those who were already well-heeled, leaving stagnation or worse for many Americans. But why is this a problem?

Why am I hurt if Mark Zuckerberg develops Facebook, and gets rich on the proceeds? Some care about the unfairness of income inequality itself, some care about the loss of upward mobility and declining opportunities for our kids and some care about how people get rich - hard work and innovation are O.K., but theft, legal or otherwise, is not. Yet there is one threat of inequality that is widely feared, and that has been debated for thousands of years, which is that inequality can undermine governance. In his fine book, both history and call to arms, Ganesh Sitaraman argues that the contemporary explosion of inequality will destroy the American Constitution, which is and was premised on the existence of a large and thriving middle class. He has done us all a great service, taking an issue of overwhelming public importance, delving into its history, helping understand how our forebears handled it and building a platform to think about it today.

As recognized since ancient times, the coexistence of very rich and very poor leads to two possibilities, neither a happy one. The rich can rule alone, disenfranchising or even enslaving the poor, or the poor can rise up and confiscate the wealth of the rich. The rich tend to see themselves as better than the poor, a proclivity that is enhanced and even socially sanctioned in modern meritocracies. The poor, with little prospect of economic improvement and no access to political power, "might turn to a demagogue who would overthrow the government - only to become a tyrant. Oligarchy or tyranny, economic inequality meant the end of the republic."

Some constitutions were written to contain inequalities. In Rome, the patricians ruled, but could be overruled by plebeian tribunes whose role was to protect the poor. There are constitutions with lords and commoners in separate chambers, each with well-defined powers. Sitaraman calls these "class warfare constitutions," and argues that the founding fathers of the United States found another way, a republic of equals. The middle classes, who according to David Hume were obsessed neither with pleasure-seeking, as were the rich, nor with meeting basic necessities, as were the poor, and were thus amenable to reason, could be a firm basis for a republic run in the public interest. There is some sketchy evidence that income and wealth inequality was indeed low in the 18th century, but the crucial point is that early America was an agrarian society of cultivators with an open frontier. No one needed to be poor when land was available in the West.

The founders worried a good deal about people getting too rich. Jefferson was proud of his achievement in abolishing the entail and primogeniture in Virginia, writing the laws that "laid the ax to the root of Pseudoaristocracy." He called for progressive taxation and, like the other founders, feared that the inheritance of wealth would lead to the establishment of an aristocracy. (Contrast this with those today who simultaneously advocate both equality of opportunity and the abolition of estate taxes.) Madison tried to calculate how long the frontier would last, and understood the threat to the Constitution that industrialization would bring; many of the founders thought of wage labor as little better than slavery and hoped that America could remain an agrarian society.

Of course, the fears about industrialization were realized, and by the late 19th century, in the Gilded Age, income inequality had reached levels comparable to those we see today. In perhaps the most original part of his book, Sitaraman, an associate professor of law at Vanderbilt Law School, highlights the achievements of the Progressive movement, one of whose aims was taming inequality, and which successfully modified the Constitution. There were four constitutional amendments in seven years - the direct election of senators, the franchise for women, the prohibition of alcohol and the income tax. To which I would add another reform, the establishment of the Federal Reserve, which provided a mechanism for handling financial crises without the need for the government to be bailed out by rich bankers, as well as the reduction in the tariff, which favored ordinary people by bringing down the cost of manufactures. Politics can respond to inequality, and the Constitution is not set in stone.

What of today, when inequality is back in full force? ...

Angus Deaton, a professor emeritus at Princeton, was awarded the Nobel in economic science in 2015.

anne -> anne... , March 25, 2017 at 11:26 AM
https://www.brookings.edu/wp-content/uploads/2017/03/6_casedeaton.pdf

March 17, 2017

Mortality and morbidity in the 21st century
By Anne Case and Angus Deaton

Summary

We build on and extend the findings in Case and Deaton (2015 * ) on increases in mortality and morbidity among white non-Hispanic Americans in midlife since the turn of the century. Increases in all-cause mortality continued unabated to 2015, with additional increases in drug overdoses, suicides, and alcoholic-related liver mortality, particularly among those with a high-school degree or less. The decline in mortality from heart disease has slowed and, most recently, stopped, and this combined with the three other causes is responsible for the increase in all-cause mortality. Not only are educational differences in mortality among whites increasing, but mortality is rising for those without, and falling for those with, a college degree. This is true for non-Hispanic white men and women in all age groups from 25-29 through 60-64. Mortality rates among blacks and Hispanics continue to fall; in 1999, the mortality rate of white non-Hispanics aged 50-54 with only a high-school degree was 30 percent lower than the mortality rate of blacks in the same age group; by 2015, it was 30 percent higher. There are similar crossovers between white and black mortality in all age groups from 25-29 to 60-64.

Mortality rates in comparable rich countries have continued their pre-millennial fall at the rates that used to characterize the US. In contrast to the US, mortality rates in Europe are falling for those with low levels of educational attainment, and are doing so more rapidly than mortality rates for those with higher levels of education.

Many commentators have suggested that the poor mortality outcomes can be attributed to slowly growing, stagnant, and even declining incomes; we evaluate this possibility, but find that it cannot provide a comprehensive explanation. In particular, the income profiles for blacks and Hispanics, whose mortality has fallen, are no better than those for whites. Nor is there any evidence in the European data that mortality trends match income trends, in spite of sharply different patterns of median income across countries after the Great Recession.

We propose a preliminary but plausible story in which cumulative disadvantage over life, in the labor market, in marriage and child outcomes, and in health, is triggered by progressively worsening labor market opportunities at the time of entry for whites with low levels of education. This account, which fits much of the data, has the profoundly negative implication that policies, even ones that successfully improve earnings and jobs, or redistribute income, will take many years to reverse the mortality and morbidity increase, and that those in midlife now are likely to do much worse in old age than those currently older than 65. This is in contrast to an account in which resources affect health contemporaneously, so that those in midlife now can expect to do better in old age as they receive Social Security and Medicare. None of this implies that there are no policy levers to be pulled; preventing the over-prescription of opioids is an obvious target that would clearly be helpful.

* http://www.pnas.org/content/early/2015/10/29/1518393112

Peter K. -> anne... , March 25, 2017 at 01:18 PM
"Of course, the fears about industrialization were realized, and by the late 19th century, in the Gilded Age, income inequality had reached levels comparable to those we see today. In perhaps the most original part of his book, Sitaraman, an associate professor of law at Vanderbilt Law School, highlights the achievements of the Progressive movement, one of whose aims was taming inequality, and which successfully modified the Constitution. There were four constitutional amendments in seven years - the direct election of senators, the franchise for women, the prohibition of alcohol and the income tax. To which I would add another reform, the establishment of the Federal Reserve, which provided a mechanism for handling financial crises without the need for the government to be bailed out by rich bankers, as well as the reduction in the tariff, which favored ordinary people by bringing down the cost of manufactures. "

It's interesting that the language of inequality is the language of technocrats, however worthy. It's a way to talk about the politics without referring to Marxist or populist/labor traditions which often involve social movements.

[Mar 25, 2017] Its interesting that the language of inequality is the language of technocrats, however worthy. Its a way to talk about the politics without referring to Marxist or populist/labor traditions which often involve social movements

Mar 25, 2017 | economistsview.typepad.com
anne -> anne... , March 25, 2017 at 11:26 AM
https://www.brookings.edu/wp-content/uploads/2017/03/6_casedeaton.pdf

March 17, 2017

Mortality and morbidity in the 21st century
By Anne Case and Angus Deaton

Summary

We build on and extend the findings in Case and Deaton (2015 * ) on increases in mortality and morbidity among white non-Hispanic Americans in midlife since the turn of the century. Increases in all-cause mortality continued unabated to 2015, with additional increases in drug overdoses, suicides, and alcoholic-related liver mortality, particularly among those with a high-school degree or less. The decline in mortality from heart disease has slowed and, most recently, stopped, and this combined with the three other causes is responsible for the increase in all-cause mortality. Not only are educational differences in mortality among whites increasing, but mortality is rising for those without, and falling for those with, a college degree. This is true for non-Hispanic white men and women in all age groups from 25-29 through 60-64. Mortality rates among blacks and Hispanics continue to fall; in 1999, the mortality rate of white non-Hispanics aged 50-54 with only a high-school degree was 30 percent lower than the mortality rate of blacks in the same age group; by 2015, it was 30 percent higher. There are similar crossovers between white and black mortality in all age groups from 25-29 to 60-64.

Mortality rates in comparable rich countries have continued their pre-millennial fall at the rates that used to characterize the US. In contrast to the US, mortality rates in Europe are falling for those with low levels of educational attainment, and are doing so more rapidly than mortality rates for those with higher levels of education.

Many commentators have suggested that the poor mortality outcomes can be attributed to slowly growing, stagnant, and even declining incomes; we evaluate this possibility, but find that it cannot provide a comprehensive explanation. In particular, the income profiles for blacks and Hispanics, whose mortality has fallen, are no better than those for whites. Nor is there any evidence in the European data that mortality trends match income trends, in spite of sharply different patterns of median income across countries after the Great Recession.

We propose a preliminary but plausible story in which cumulative disadvantage over life, in the labor market, in marriage and child outcomes, and in health, is triggered by progressively worsening labor market opportunities at the time of entry for whites with low levels of education. This account, which fits much of the data, has the profoundly negative implication that policies, even ones that successfully improve earnings and jobs, or redistribute income, will take many years to reverse the mortality and morbidity increase, and that those in midlife now are likely to do much worse in old age than those currently older than 65. This is in contrast to an account in which resources affect health contemporaneously, so that those in midlife now can expect to do better in old age as they receive Social Security and Medicare. None of this implies that there are no policy levers to be pulled; preventing the over-prescription of opioids is an obvious target that would clearly be helpful.

* http://www.pnas.org/content/early/2015/10/29/1518393112

Peter K. -> anne... , March 25, 2017 at 01:18 PM
"Of course, the fears about industrialization were realized, and by the late 19th century, in the Gilded Age, income inequality had reached levels comparable to those we see today. In perhaps the most original part of his book, Sitaraman, an associate professor of law at Vanderbilt Law School, highlights the achievements of the Progressive movement, one of whose aims was taming inequality, and which successfully modified the Constitution. There were four constitutional amendments in seven years - the direct election of senators, the franchise for women, the prohibition of alcohol and the income tax. To which I would add another reform, the establishment of the Federal Reserve, which provided a mechanism for handling financial crises without the need for the government to be bailed out by rich bankers, as well as the reduction in the tariff, which favored ordinary people by bringing down the cost of manufactures. "

It's interesting that the language of inequality is the language of technocrats, however worthy. It's a way to talk about the politics without referring to Marxist or populist/labor traditions which often involve social movements.

[Mar 25, 2017] Theyre Like The Praetorian Guard - Whistleblower Confirms NSA Targeted Congress, The Supreme Court, Trump Zero Hedge

Notable quotes:
"... "They're taking in fundamentally the entire fiber network inside the United States and collecting all that data and storing it, in a program they call Stellar Wind," Binney said. ..."
"... "That's the domestic collection of data on US citizens, US citizens to other US citizens," he said. "Everything we're doing, phone calls, emails and then financial transactions, credit cards, things like that, all of it." ..."
"... "I mean, that's just East German," Tucker responded. ..."
"... Rather than help prevent terrorist attacks, Binney said collecting so much information actually makes stopping attacks more difficult. ..."
"... "This bulk acquisition is inhibiting their ability to detect terrorist threats in advance so they can't stop them so people get killed as a result," he said. ..."
"... "Which means, you know, they pick up the pieces and blood after the attack. That's what's been going on. I mean they've consistently failed. When Alexander said they'd stop 54 attacks and he was challenged to produce the evidence to prove that he failed on every count." ..."
"... Binney concludes ominously indicating the origin of the deep state... "They are like the praetorian guard, they determine what the emperor does and who the emperor is..." ..."
Mar 25, 2017 | www.zerohedge.com
Authored by Chris Menahan via InformationLiberation.com,

NSA whistleblower William Binney told Tucker Carlson on Friday that the NSA is spying on "all the members of the Supreme Court, the Joint Chiefs of Staff, Congress, both House and Senate, as well as the White House."

Binney, who served the NSA for 30 years before blowing the whistle on domestic spying in 2001, told Tucker he firmly believes that Trump was spied on.

"They're taking in fundamentally the entire fiber network inside the United States and collecting all that data and storing it, in a program they call Stellar Wind," Binney said.

"That's the domestic collection of data on US citizens, US citizens to other US citizens," he said. "Everything we're doing, phone calls, emails and then financial transactions, credit cards, things like that, all of it."

https://www.youtube.com/embed/lkChOSdOgcc

"Inside NSA there are a set of people who are -- and we got this from another NSA whistleblower who witnessed some of this -- they're inside there, they are targeting and looking at all the members of the Supreme Court, the Joint Chiefs of Staff, Congress, both House and Senate, as well as the White House," Binney said.

"And all this data is inside the NSA in a small group where they're looking at it. The idea is to see what people in power over you are going to -- what they think, what they think you should be doing or planning to do to you, your budget, or whatever so you can try to counteract before it actually happens," he said.

"I mean, that's just East German," Tucker responded.

Rather than help prevent terrorist attacks, Binney said collecting so much information actually makes stopping attacks more difficult.

"This bulk acquisition is inhibiting their ability to detect terrorist threats in advance so they can't stop them so people get killed as a result," he said.

"Which means, you know, they pick up the pieces and blood after the attack. That's what's been going on. I mean they've consistently failed. When Alexander said they'd stop 54 attacks and he was challenged to produce the evidence to prove that he failed on every count."

Binney concludes ominously indicating the origin of the deep state... "They are like the praetorian guard, they determine what the emperor does and who the emperor is..."

Who's going to stop them?

toady -> Bank_sters Mar 25, 2017 9:22 PM
I'm continually amazed that anyone thinks they are not being "wiretapped".

One more time;

Everyone, from the queen to the homeless guy on the corner, is being tracked, recorded, and data mined to the hilt.

I hope people start to REALLY understand this....

NAV GUS100CORRINA Mar 25, 2017 7:19 PM

Bringing history more up to date, this is Stalinism, i.e., fascism. As John T. Flynn states, "Fascism is Fabian socialism plus the inevitable dictator." Neo-fascism of course is Stalinism-blame Hitler.

So, is it fascism?

Yes, says Major Todd Pierce (retired) in an interview with Philip Weiss of Mondoweiss - who says NSA whistle blower Bill Binney has "got to be one of the smartest people in the world, I don't think that's an exaggeration. He was one of the smartest people at the NSA.

Says Weiss: "And he agrees with me fully. Because he's seen the NSA. We're a more sophisticated form of what I think has to be called fascism. The term fascism was applied to the way the communists and Stalin got on as well. You bring the term fascist to what it really means, and that ultimately is, ultramilitarism and authoritarianism combined with an expansionist foreign policy. And that's us-what you can see us becoming."

http://mondoweiss.net/2016/09/innocence-worldview-retired/#sthash.XjFDU6km.dpuf

Rubicon727 -> GUS100CORRINA •Mar 25, 2017 7:38 PM

The Roman Empire's death was far more complicated than "moral rot" and its "currency devaluation." Read some history books.

Chris Hedges makes the observation that ALL empires that are scourges of the earth, eventually turn inwards. As the empire begins its fatal decline, the terror they inflicted on outsiders, is then turned against its own citizens.

We now see that happening in America. Banks, corporations, intel/military, etc. are turning inward: destroying meaningful employment, humane health care, and pilfering billions of $s reserved for the 1%.

Just Another Vi... -> FriendlyAquaponics •Mar 25, 2017 8:05 PM

A video worth revisiting......

Reuters ..........

... Obama criticizes Donald Trump endlessly....over Trumps assertions that the election is rigged..,

telling the candidate to "stop whining and go try to make his case to get votes."

http://www.reuters.com/article/us-usa-election-idUSKCN12I27L

HRClinton -> JLee2027 •Mar 25, 2017 8:15 PM

Who does the NSA work for on the Org Chart?

That's right, the DOD. They can't go completely rogue, without the explicit or implicit approval of the Secretary of Defense and his Deputies.

It is rather phoney and hypocritical of any POTUS - including Pres. Thump - to moan about the NSA, without loping off heads at the DOD and NSA. By that, I include all the Deputies, who do the real work and know the real secrets.

It's time that Thump had a "Come to Jesus" meeting with all these guys. Else he's part of the problem, and no amount of sugar coating can stop a turd being a turd.

TheReplacement -> HRClinton •Mar 25, 2017 9:42 PM

In an honest world, sure.

In reality, no. Like Binney said, they don't have to do anything they don't like because NOBODY can prove they haven't complied with orders. There is nobody who can watch the watchers. They can blackmail anyone.

'Gosh, I have no idea how that child porn got on my computer.'

CIA or NSA knows exactly how it got there. They put it there.

[Mar 25, 2017] New Health Care Plan: Open Source Drugs, Immigrant Doctors, and a Public Option

Mar 25, 2017 | economistsview.typepad.com
anne : March 25, 2017 at 07:54 AM , 2017 at 07:54 AM
http://cepr.net/blogs/beat-the-press/new-health-care-plan-open-source-drugs-immigrant-doctors-and-a-public-option

March 25, 2017

New Health Care Plan: Open Source Drugs, Immigrant Doctors, and a Public Option

Now that the Republican health care plan has been sent to the dust bin of history, it's worth thinking about how Obamacare can be improved. While the Affordable Care Act was a huge step forward in extending insurance coverage, many of the complaints against the program are justified. The co-pays and deductibles can mean the plans are of little use to middle income people with relatively low bills.

This is a great time to put forward ideas for reducing these costs and making other changes in the health care system. Obviously this congress and president are not interested in reforms that help low and middle income families, but the rest of us can start pushing these ideas now, with the expectation that the politicians will eventually come around.

There are two obvious directions to go to get costs down for low and middle income families. One is to increase taxes on the wealthy. The other is to reduce the cost of health care. The latter is likely the more promising option, especially since we have such a vast amount of waste in our system. The three obvious routes are lower prices for prescription drugs and medical equipment, reducing the pay of doctors, and savings on administrative costs from having Medicare offer an insurance plan in the exchanges.

Taking these in turn, the largest single source of savings would be reducing what we pay for prescription drugs. We will spend over $440 billion this year for drugs that would likely sell for less than $80 billion in a free market without patent monopolies and other forms of protection. If we paid as much as people in other wealthy countries for our drugs, we would save close to $200 billion a year. We spend another $50 billion a year on medical equipment which would likely cost around $15 billion in a free market.

If the government negotiated prices for drugs and medical equipment its savings could easily exceed $100 billion a year (see "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer" * ). It could use some of these savings to finance open-source research for new drugs and medical equipment.

We already fund a huge amount of research, so this is not some radical departure from current practice. The government spends more than $32 billion on research conducted by the National Institutes of Health. It also picks up 50 percent of the industry's research costs on orphan drugs through the Orphan Drug Tax Credit. Orphan drugs are a rapidly growing share of all drug approvals, as the industry increasingly takes advantage of this tax credit.

The big change would not be that the government was funding research, but rather the research results and patents would be in the public domain, rather than be used by Pfizer and other drug companies to get patent monopolies. As a result, the next great breakthrough drug will sell as a generic for a few hundred dollars rather than hundreds of thousands of dollars. And MRI scans would cost little more than X-rays.

The second big potential source of savings would come from reducing the protectionist barriers which largely exclude foreign-trained physicians. Under current law, a foreign doctor is prohibited from practicing in the United States unless they complete a U.S. residency program. This keeps hundreds of thousands of well-qualified from physicians from practicing in the United States. As a result, our doctors earn on average more than $250,000 a year, roughly twice the average pay in other wealthy countries. (There are similar protectionist restrictions which inflate the pay of dentists.)

If we removed this barrier and allowed qualified foreign doctors to practice in the United States, we would likely get their pay down to levels comparable to that of doctors in countries like Canada and Germany. This could save us close to $100 billion a year on our health care bill, at least half of which would be savings to the government.

There is a concern that we would attract more doctors from developing countries. We could easily offset this brain drain by paying these countries enough so that they can train two or three doctors for every one that comes to the United States, thereby ensuring they gain from this arrangement as well. It is worth noting that these countries receive zero compensation now for the doctors they pay to train, but who then practice in the United States.

The third big source of saving would be having Medicare offer an insurance plan in the exchanges. This would ensure both that everyone had at least one good option regardless of where they lived and also that the private insurers in the system would face real competition. In 2010, the Congressional Budget Office projected that a public option would save the government $23 billion a year by 2020 and $29 billion by 2023.

The total savings to the government from these three changes easily exceed $150 billion a year, in addition to large savings that individuals outside the exchanges would see in their health care expenses. This is far more than enough to make the deductibles zero for each of the roughly 10 million people now in the exchanges. That would make Obamacare considerably more attractive.

Of course if the plans in the exchanges became more generous more people would opt to take advantage of them and we would see people leaving employer-provided plans. That is a problem that we can deal with at the time it happens. (We would need to have a portion of workers' current payments for employer provided plans go to the government to cover the cost of additional enrollees in the exchanges.) But the way forward in improving Obamacare is to use the market to make our health care system more efficient and reduce the ridiculous rents that now go to the wealthy as a result of waste in the system.

* http://deanbaker.net/images/stories/documents/Rigged.pdf

-- Dean Baker

anne -> anne... , March 25, 2017 at 07:56 AM
http://deanbaker.net/images/stories/documents/Rigged.pdf

October, 2016

Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
By Dean Baker

The Old Technology and Inequality Scam: The Story of Patents and Copyrights

One of the amazing lines often repeated by people in policy debates is that, as a result of technology, we are seeing income redistributed from people who work for a living to the people who own the technology. While the redistribution part of the story may be mostly true, the problem is that the technology does not determine who "owns" the technology. The people who write the laws determine who owns the technology.

Specifically, patents and copyrights give their holders monopolies on technology or creative work for their duration. If we are concerned that money is going from ordinary workers to people who hold patents and copyrights, then one policy we may want to consider is shortening and weakening these monopolies. But policy has gone sharply in the opposite direction over the last four decades, as a wide variety of measures have been put into law that make these protections longer and stronger. Thus, the redistribution from people who work to people who own the technology should not be surprising - that was the purpose of the policy.

If stronger rules on patents and copyrights produced economic dividends in the form of more innovation and more creative output, then this upward redistribution might be justified. But the evidence doesn't indicate there has been any noticeable growth dividend associated with this upward redistribution. In fact, stronger patent protection seems to be associated with slower growth.

Before directly considering the case, it is worth thinking for a minute about what the world might look like if we had alternative mechanisms to patents and copyrights, so that the items now subject to these monopolies could be sold in a free market just like paper cups and shovels.

The biggest impact would be in prescription drugs. The breakthrough drugs for cancer, hepatitis C, and other diseases, which now sell for tens or hundreds of thousands of dollars annually, would instead sell for a few hundred dollars. No one would have to struggle to get their insurer to pay for drugs or scrape together the money from friends and family. Almost every drug would be well within an affordable price range for a middle-class family, and covering the cost for poorer families could be easily managed by governments and aid agencies.

The same would be the case with various medical tests and treatments. Doctors would not have to struggle with a decision about whether to prescribe an expensive scan, which might be the best way to detect a cancerous growth or other health issue, or to rely on cheaper but less reliable technology. In the absence of patent protection even the most cutting edge scans would be reasonably priced.

Health care is not the only area that would be transformed by a free market in technology and creative work. Imagine that all the textbooks needed by college students could be downloaded at no cost over the web and printed out for the price of the paper. Suppose that a vast amount of new books, recorded music, and movies was freely available on the web.

People or companies who create and innovate deserve to be compensated, but there is little reason to believe that the current system of patent and copyright monopolies is the best way to support their work. It's not surprising that the people who benefit from the current system are reluctant to have the efficiency of patents and copyrights become a topic for public debate, but those who are serious about inequality have no choice. These forms of property claims have been important drivers of inequality in the last four decades.

The explicit assumption behind the steps over the last four decades to increase the strength and duration of patent and copyright protection is that the higher prices resulting from increased protection will be more than offset by an increased incentive for innovation and creative work. Patent and copyright protection should be understood as being like very large tariffs. These protections can often the raise the price of protected items by several multiples of the free market price, making them comparable to tariffs of several hundred or even several thousand percent. The resulting economic distortions are comparable to what they would be if we imposed tariffs of this magnitude.

The justification for granting these monopoly protections is that the increased innovation and creative work that is produced as a result of these incentives exceeds the economic costs from patent and copyright monopolies. However, there is remarkably little evidence to support this assumption. While the cost of patent and copyright protection in higher prices is apparent, even if not well-measured, there is little evidence of a substantial payoff in the form of a more rapid pace of innovation or more and better creative work....

geoff -> anne... , March 25, 2017 at 08:43 AM
Medicare for all is a great idea but still well out of political reach for a while. On the other hand, cheaper drugs is a goal even trumpers could support with the right sales pitch.

the pushers are unusually profitable:

https://www.statista.com/statistics/272720/top-global-biotech-and-pharmaceutical-companies-based-on-net-income/

and they make for a pretty scummy pond in the swamp:

https://www.opensecrets.org/lobby/indusclient.php?id=h04

hey, it could happen here:

https://www.law360.com/articles/903111/canada-prevails-in-383m-eli-lilly-case

Peter K. -> geoff ... , March 25, 2017 at 08:59 AM
Trump met with the heads of the drug companies and decided the solutions was more deregulation.
DeDude -> anne... , March 25, 2017 at 10:23 AM
I generally love most of what Dean Baker does. But his weaknesses are on display in this piece. Just enough insights to sound convincing, but not enough to be the real McCoy. Yes we pay our medical doctors a lot more than France. However, ours first come out of undergraduate training having paid over $200K for that, then add another $300K for medical school. So that is a cool $500K in debt that their French counterparts don't have to deal with. Next (and before they can se any patients are internships (3 years) where they are not paid enough to begin paying down the student debt, followed by another 2-5 years of specialty training again with a compensation that cover living but not paying down the debt. Finally after becoming specialists (and those who don't are not paid $250K per year), they can begin paying down that student debt which in the meantime has grown substantially (with its private market interest rates).

If you were to put all those foreigners with their free education in direct competition with the domestic crop there would be no US born doctors. But that would be the least of the problems. American medical schools are for the most part outstanding and even the least of those graduating are quite good. That cannot be said for many of the other places in the world where we get most of our foreign trained doctors. There is a very good reason we demand that foreigners go through a US residency program before they can practice medicine. Regardless of what their (real or fake) papers say about their education, they have to perform up to US standards to pass the US residency programs and be licensed – and that is a good thing.

anne : , March 25, 2017 at 08:10 AM
https://www.nytimes.com/2017/03/24/upshot/health-insurance-medicare-obamacare-american-health-care-act.html?ref=business

March 24, 2017

What Comes Next for Obamacare? The Case for Medicare for All
By ROBERT H. FRANK

Republicans are in a bind. They've been promising to repeal Obamacare for seven years, and having won control of the White House and Congress, they had to try to deliver. But while their bitter denunciations of the Affordable Care Act may have depressed its approval numbers, they didn't make replacing it any easier.

On the contrary, the repeal-and-replace bill designed by House Speaker Paul D. Ryan drew withering criticism from the left and the right. Liberals condemned its use of reductions in health coverage for the poor to pay for large tax cuts for the wealthy, while conservatives bemoaned its retention of many subsidies adopted under Obamacare.

In the end, the repeal effort's biggest hurdle may have been loss aversion, one of the most robust findings in behavioral science. As numerous studies have shown, the pain of losing something you already have is much greater than the pleasure of having gained it in the first place. And the nonpartisan Congressional Budget Office estimated that Mr. Ryan's American Health Care Act (A.H.C.A.) would have caused more than 14 million people to lose coverage in the first year alone, with total losses rising to 24 million over the next decade. Many Republicans in Congress were nervous about the political firestorm already provoked by the mere prospect of such losses.

Loss aversion actually threatened the repeal effort on two fronts: voters' fear of losing their coverage, and lawmakers' fear of losing their seats. Like the first fear, the second appeared well grounded. Republican voters wouldn't have been the only ones losing coverage, of course, but early studies suggested that losses would have been concentrated among people who voted for President Trump. The Congressional Budget Office estimated, for example, that the A.H.C.A. would have caused premiums to rise more than sevenfold in 2026 for 64-year-olds making $26,500.

Now that Republicans have withdrawn Mr. Ryan's bill from consideration, attention shifts to what comes next. In an earlier column, I suggested that Mr. Trump has the political leverage, which President Obama did not, to jettison the traditional Republican approach in favor of a form of the single-payer health care that most other countries use. According to Physicians for a National Health Program, an advocacy group, "Single-payer national health insurance, also known as 'Medicare for all,' is a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands." Christopher Ruddy, a friend and adviser of the president, recently urged him to consider this option.

Many Republicans who want to diminish government's role in health care view the single-payer approach with disdain. But Mr. Trump often seems to take pleasure in being unpredictable, and since he will offend people no matter which way he turns, he may want to consider why liberals and conservatives in many other countries have embraced the single-payer approach.

Part of the appeal of Medicare for all is that single-payer systems reduce financial incentives that generate waste and abuse. Mr. Ryan insisted that by relegating health care to private insurers, competition would lead to lower prices and higher quality. Economic theory tells us that this is a reasonable expectation when certain conditions are met. A crucial one is that buyers must be able to compare the quality of offerings of different sellers. In practice, however, people have little knowledge of the treatment options for the various maladies they might suffer, and policy language describing insurance coverage is notoriously complex and technical. Consumers simply cannot make informed quality comparisons in this industry.

In contrast, they can easily compare the prices charged by competing insurance companies. This asymmetry induces companies to compete by highlighting the lower prices they're able to offer if they cut costs by degrading the quality of their offerings. For example, it's common for insurance companies to deny payment for procedures that their policies seem to cover. If policy holders complain loudly enough, they may eventually get reimbursed, but the money companies save by not paying others confers a decisive competitive advantage over rivals that don't employ this tactic. Such haggling is uncommon under single-payer systems like Medicare (though it is sometimes employed by private insurers that supplement Medicare).

Consider, too, the mutually offsetting expenditures on competitive advertising and other promotional efforts of private insurers, which can exceed 15 percent of total revenue. Single-payer plans like Medicare spend nothing on competitive advertising (although here, also, we see such expenditures by supplemental insurers).

According to the Kaiser Family Foundation, administrative costs in Medicare are only about 2 percent of total operating expenditures, less than one-sixth of the rate estimated for the private insurance industry. This difference does not mean that private insurers are evil. It's a simple consequence of a difference in the relevant economic incentives.

American health care outlays per capita in 2015 were more than twice the average of those in the 35 advanced countries that make up the Organization for Economic Cooperation and Development. Yet despite that spending difference, the system in the United States delivers significantly less favorable outcomes on measures like longevity and the incidence of chronic illness....

anne -> anne... , March 25, 2017 at 08:15 AM
http://www.oecd.org/health/health-systems/oecd-health-statistics-2014-frequently-requested-data.htm

November, 2016

Organisation for Economic Co-operation and Development Health Data

Total health care spending per person, 2015 *

United States ( 9451)
OCED average ( 3814)

France ( 4407)

Total health care spending as a share of GDP, 2015

United States ( 16.9)
OCED average ( 9.0)

France ( 11.0)

Pharmaceutical expenditure per person, 2014 *

United States ( 1112)
OECD average ( 538)

France ( 656)

Practising physicians per 1,000 population, 2014

United States ( 2.6)
OECD average ( 3.3)

France ( 3.3)

Practising nurses per 1,000 population, 2014

United States ( 11.2)
OECD average ( 8.9)

France ( 9.6)

Physician consultations per person, 2014

United States ( 4.0)
OECD average ( 6.8)

France ( 6.3)

Medical graduates per 100,000 population, 2014

United States ( 7.3)
OECD average ( 11.4)

France ( 10.0)

* Data are expressed in US dollars adjusted for purchasing power parities (PPPs), which provide a means of comparing spending between countries on a common base. PPPs are the rates of currency conversion that equalise the cost of a given "basket" of goods and services in different countries.

[Mar 25, 2017] The good news is they now own health care. They now own Obamacare saidTrump

Mar 25, 2017 | economistsview.typepad.com
Fred C. Dobbs : , March 25, 2017 at 07:35 AM
In a Call to The Times, Trump Blames Democrats for the
Failure of the Health Bill https://nyti.ms/2nNPHD9
NYT - MAGGIE HABERMAN - MARCH 24, 2017

WASHINGTON - Just moments after the Republican plan to repeal and replace the Affordable Care Act was declared dead, President Trump sought to paint the defeat of his first legislative effort as an early-term blip.

The House speaker, Paul D. Ryan, was preparing to tell the public that the health care bill was being withdrawn - a byproduct, Mr. Trump said, of Democratic partisanship. The president predicted that Democrats would return to him to make a deal in roughly a year.

"Look, we got no Democratic votes. We got none, zero," Mr. Trump said in a telephone interview he initiated with The New York Times.

"The good news is they now own health care. They now own Obamacare."

Mr. Trump insisted that the Affordable Care Act would collapse in the next year, which would then force Democrats to come to the bargaining table for a new bill.

"The best thing that can happen is that we let the Democrats, that we let Obamacare continue, they'll have increases from 50 to 100 percent," he said. "And when it explodes, they'll come to me to make a deal. And I'm open to that."

Although enrollment in the Affordable Care Act declined slightly in the past year, there is no sign that it is collapsing. Its expansion of Medicaid continues to grow.

In a later phone interview with The Times, the Senate minority leader, Chuck Schumer, ridiculed Mr. Trump's remarks about Democrats being at fault.

"Whenever the president gets in trouble, he points fingers of blame," Mr. Schumer said. "It's about time he stopped doing that and started to lead. The Republicans were totally committed to repeal from the get-go, never talked to us once. But now that they realize that repeal can't work, if they back off repeal, of course we'll work with them to make it even better."

Mr. Trump said that "when they come to make a deal," he would be open and receptive. He singled out the Tuesday Group moderates for praise, calling them "terrific," an implicit jab at the House Freedom Caucus, which his aides had expressed frustration with during negotiations. ...

Fred C. Dobbs -> Fred C. Dobbs... , March 25, 2017 at 08:02 AM
On health-care, as on so much else,
President Trump passes the buck, reports
https://www.theatlantic.com/politics/archive/2017/03/the-buck-doesnt-stop-here-anymore/520839/
The Atlantic - David A. Graham - March 24, 2017

Speaking in the Oval Office Friday afternoon, President Trump surveyed the wreckage of the Obamacare repeal effort and issued a crisp, definitive verdict: I didn't do it.

The president said he didn't blame Speaker Paul Ryan, though he had plenty of implied criticism for the speaker. "I like Speaker Ryan. He worked very hard," Trump said, but he added: "I'm not going to speak badly about anybody within the Republican Party. Certainly there's a big history. I really think Paul worked hard." He added ruefully that the GOP could have taken up tax-reform first, instead of Obamacare-the reverse of Ryan's desired sequence. "Now we're going to go for tax reform, which I've always liked," he said.

As for the House Freedom Caucus, the bloc of conservatives from which many of the apparent "no" votes on the Republican plan were to come, Trump said, "I'm not betrayed. They're friends of mine. I'm disappointed because we could've had it. So I'm disappointed. I'm a little surprised, I could tell you."

The greatest blame for the bill's failure fell on Democrats, Trump said.

"This really would've worked out better if we could've had Democrat support. Remember we had no Democrat support," Trump said. Later, he added, "But when you get no votes from the other side, meaning the Democrats, it's really a difficult situation."

He said Democrats should come up with their own bill. "I think the losers are Nancy Pelosi and Chuck Schumer, because they own Obamacare," he said, referring to the House and Senate Democratic leaders. "They 100 percent own it."

Trump was very clear about who was not to blame: himself. "I worked as a team player," the president of the United States said, demoting himself to bit-player status. He wanted to do tax reform first, after all, and it was still early. "I've been in office, what, 64 days? I've never said repeal and replace Obamacare within 64 days. I have a long time. I want to have a great health-care bill and plan and we will."

Strictly speaking, it is true that Trump didn't promise to repeal Obamacare on day 64 of his administration. What he told voters, over and over during the campaign, was that he'd do it immediately. On some occasions he or top allies even promised to do it on day 1. Now he and his allies are planning to drop the bill for the foreseeable future.

It is surely not wrong that there is lots of blame to go around. Congressional Republicans had years to devise a plan, and couldn't come up with one that would win a majority in the House, despite a 44-seat advantage. The House bill was an unpopular one, disliked by conservatives and moderates in that chamber; almost certainly dead on arrival in the Senate; and deeply unpopular with voters. Even before the vote was canceled, unnamed White House officials were telling reporters that the plan was to pin the blame on Ryan. ...

The Republicans fold and
withdraw their health-care bill https://www.theatlantic.com/politics/archive/2017/03/trump-republicans-failure-obamacare/520788/
The Atlantic - Russell Berman - March 24, 2017

... Defeat on the floor dealt Trump a major blow early in his presidency, but its implications were far more serious for the Republican Party as a whole. Handed unified control of the federal government for only the third time since World War II, the modern GOP was unable to overcome its internecine fights to enact a key part of its policy agenda. The president now wants to move on to a comprehensive overhaul of the tax code, but insiders on Capitol Hill have long believed that project will be an even heavier lift than health care.

As the prospect of a loss became more real on Friday, the frustrations of GOP lawmakers loyal to the leadership began to boil over. "I've been in this job eight years, and I'm wracking my brain to think of one thing our party has done that's been something positive, that's been something other than stopping something else from happening," Representative Tom Rooney of Florida said in an interview. "We need to start having victories as a party. And if we can't, then it's hard to justify why we should be back here."

Nothing has exemplified the party's governing challenge quite like health care. For years, Republican leaders resisted pressure from Democrats and rank-and-file lawmakers to coalesce around a detailed legislative alternative to Obamacare. That failure didn't prevent them from attaining power, but it forced them to start nearly from scratch after Trump's surprising victory in November. At Ryan's urging, the party had compiled a plan as part of the speaker's "A Better Way" campaign agenda. Translating that into legislation, however, proved a much stiffer challenge; committee leaders needed to navigate a razor's edge to satisfy conservatives demanding a full repeal of Obamacare and satisfy moderates who preferred to keep in place its more popular consumer protections and Medicaid expansion. They were further limited by the procedural rules of the Senate, which circumscribed how far Republicans could go while still avoiding a Democratic filibuster. ...

[Mar 25, 2017] In addition to the public option and age 55+ Medicare buy-in, one thing that might work is abollishing the mandate and penalty and replaciing them with automatic enrollment. Call it Youre employed, youre covered!

Mar 25, 2017 | economistsview.typepad.com
New Deal democrat -> Lee A. Arnold ...

One issue going forward is whether the Dems should offer their own plan. I think they should.

As a few others have pointed out, Trump is not wedded to the GOP establishment. If he thinks he can "WIN bigly!" by allying with Dems, he will do so. I happen to think that he is mainly against "Obamacare" because Obama humiliated him at the White House Correspondents' Dinner once upon a time, and he is nothing if not vengeful. He wants to obliterate Obama's legacy.

So Dems need to make a big stink any time Trump administrativley undercuts Obamacare provisions to try to make it fail. But also they should give him the chance to do something he can call Trumpcare that actually works.

Obamacare does have some major problems (the individual mandate is hated, and the penalty isn't big enough. More young people need to buy in. Some of the Exchanges and health care provider networks are too narrow.

In addition to the "public option" and age 55+ Medicare buy-in, one thing that might work is abollishing the mandate and penalty and replaciing them with automatic enrollment. Call it "You're employed, you're covered!"

Just like SS, Medicare, unemployment and disability deductions to paychecks, establish a Health Care automatic deductible. If your employer offers healthcare, the deductible is reduced by the amount of the premium, all the way to zero if applicable.
If your employer doesn't offer healthcare, if you are under age 40, you are automatically enrolled in the least expensive Bronze plan in your state. If you are 40 or older, you are automatically enrolled in the least expensive Silver plan in your state.

The deductible would also include a small contribution towards Medicaid. Then, if you are unemployed, you are automatically enrolled in Medicaid, but can continue with the silver or bronze plan as above if you choose.

Dems could turmpet such a plan to "Reform and Improve" Obamacare, and campaign on pushing for it if they get a Congressional majority. Call it Trumpcare and President Caligula might sign on.

Reply Saturday, March 25, 2017 at 07:35 AM Lee A. Arnold : , March 25, 2017 at 04:48 AM
"Medicare for all" may be the best battle cry. 65-70% of the U.S. people want a single-payer. Bernie Sanders has effectively destroyed the old Democratic Party and sits in a commanding position as spokesman, he gets 6 TV cameras with an hour's notice and he is probably the most popular politician in the U.S. The Democrats don't have to push it for now, they can wait for news to develop. This is all on the Republicans. Let the managerial disaster of Trump and the utter immorality of the "Freedom Caucus" sink in a little more, this story has "legs" as they say in show biz.
mulp -> Lee A. Arnold ... , -1
Name the Senators, representatives, and governors Bernie Bros have delivered?

Where are the Bernie Bros Newts, Cruz, Marcos, ...?

I'm in my 70th year. Conservatives attacked liberals in the 60s, my youth, as promising free lunches to gain power. But what they really hated was liberals convinced voters to tax all voters to pay for the things most voters wanted everyone to have, BASED ON SOUND ECONOMICS TO MAXIMIZE EFFICIENCY AND WELFARE.

Friedman led the effort to distort theory to eliminate the broad meaning of general welfare in economics. He did it by eliminating the hard connection between labor cost and gdp. He argued that labor costs and consumption can be cut to increase profits, and that contrary to theory, higher profits is more efficient.

Laffer applied operations theory to taxes, as if government was taxing to maximize profits.

Thus supply side theory of profit maximization. The result delivered was the imperative to cut taxes. To cut labor costs. Thus they argued that every economic measure improves if taxes and wages are cut.

Reaganomics would deliver more stuff at lower cost, higher profut, and that makes everyone better off, especially those in poverty. Friedman saw consumption as a bad thing. He wanted higher gdp, less consumption. In other words, he rewrote Adam Smith attack on mercantile economics into a justification of returning to mercantile economic policy.

So, who do Bernie Bros offer as the Milton Friedman and Laffer to create an intellectual foundation to refute Adam Smith, FDR, Keynes, Galbraith, are return to hunter gatherer economics? Who is the economist who can convince us that Marxist economic theory will work, as long as it's not captured by right wing capitalists like Fidel Castro, Chavez, Stalin, Lenin, the founders of Israel, ....

Bernie certainly must be influenced by the same economic theory that created Israel. It grew from the same Marxist roots in Germany that powered Stalin and Lenin. Bernie is a pre-WWII Zionist as best I can tell.

Why wouldn't Bernie deliver Israel governance to the US? How would he prevent the greedy from joining the Movement?

And Israel has the social welfare state system Bernie wants. Hundreds of thousands of men do not work so they can study supported by welfare. Universal health care. Women are very equal in status.

I grew up heating the Zionist Dream, theory, much like Bernie did, but from conservative Indiana. Seemed very idealist virtue becoming reality in the 50s and 60s. I have often used Israel as the example of a good universal health care system, of education, of welfare. Never heard Bernie say, "I want the US to be like Israel." Why not? Why Sweden?

[Mar 25, 2017] The President had come to regret going along with Ryan's idea of making health care his first legislative priority

Notable quotes:
"... The larger lesson here is that conservatism failed and social democracy won. ..."
"... After seven years of fulminating against the Affordable Care Act and promising to replace it with a more free-market-oriented alternative, the House Republicans-who are in the vanguard of the modern conservative movement-failed to come up with a workable and politically viable proposal. Obamacare survived, and that shouldn't be so surprising. When it comes to health-care policy, there is no workable or politically viable conservative alternative. ..."
"... in cutting federal support for Medicaid, they dismantle the element of Obamacare that has been the most successful at insuring more people at a reasonable cost. ..."
"... The evil Obama created Obamacare that was so conservative that conservatives can't find an alternative that benefits the majority of conservatives. ..."
"... Many Republicans who want to diminish government's role in health care view the single-payer approach with disdain. But Mr. Trump often seems to take pleasure in being unpredictable, and since he will offend people no matter which way he turns, he may want to consider why liberals and conservatives in many other countries have embraced the single-payer approach. ..."
Mar 25, 2017 | economistsview.typepad.com

Peter K. : March 25, 2017 at 10:24 AM

http://www.newyorker.com/news/john-cassidy/the-health-care-debacle-was-a-failure-of-conservatism

THE HEALTH-CARE DEBACLE WAS A FAILURE OF CONSERVATISM

By John Cassidy March 24, 2017

Let the recriminations begin! Actually, the health-care-failure finger-pointing got under way well before Friday, when Donald Trump and Paul Ryan cancelled a House vote on the American Health Care Act. A day earlier, aides to the President let it be known that he had come to regret going along with Ryan's idea of making health care his first legislative priority.

In the coming days and weeks, there will be more of this blame shifting, and, in truth, there is plenty of blame to go around. Ryan failed to unify the House Republican caucus. Trump's staff allowed him to endorse a bill that made a mockery of his campaign pledge to provide health insurance for everybody. And Trump himself blundered into a political fiasco, apparently believing he could win over recalcitrant Republican members of Congress simply by popping over to Capitol Hill.

But this is just politics. The larger lesson here is that conservatism failed and social democracy won.

After seven years of fulminating against the Affordable Care Act and promising to replace it with a more free-market-oriented alternative, the House Republicans-who are in the vanguard of the modern conservative movement-failed to come up with a workable and politically viable proposal. Obamacare survived, and that shouldn't be so surprising. When it comes to health-care policy, there is no workable or politically viable conservative alternative.

Of course, that isn't how conservative lawmakers, pundits, and policy wonks will spin this. They will argue that Trump and Ryan betrayed free-market principles: if only they had proposed the outright repeal of Obamacare, and put forward a bill that genuinely liberated the health-care industry from federal intervention, everything would have worked out well. That will be the story-and it is a fairy tale.

The fact is that the health-care industry, which makes up about a sixth of the American economy, isn't like the market for apples or iPhones. For a number of reasons (which economists understand pretty well), it is riven with problems. Serious illnesses can be enormously costly to treat; people don't know when they will get ill; the buyers of health insurance know more about their health than the sellers; and insurers have a strong incentive to avoid providing their product to the sick people who need it the most.

Since the days of Otto von Bismarck, most developed countries have dealt with these problems by setting up a system in which the state provides medical insurance directly, or else mandates and subsidizes the purchase of private insurance, setting strict rules for what sorts of policies can be sold. Obamacare amounts to a hybrid model. It supplements employer-provided insurance, the traditional American way of obtaining health care, with a heavily regulated (and subsidized) individual insurance market and an expanded Medicaid system.

It is far from perfect. But, in combining mandates with subsidies, regulation, and access to a state-administered system for the poverty-stricken and low-paid, it is intellectually coherent. (Many of the problems it has encountered arose because the mandate to purchase insurance hasn't been effectively enforced, and not enough young and healthy individuals have signed up.) Since it leaves in place the basic structure of private insurance and private provision, Obamacare is also conservative. As is well known, parts of it resemble a proposal that the Heritage Foundation put forward in 1992.

Today's conservatives act as if they can simply wish away some of the problems that Obamacare was created to deal with. The original version of the American Health Care Act left in place many of the A.C.A.'s regulations but cut back the subsidies and gutted its Medicaid expansion. Had it been enacted, it would have led to higher premiums, at least in the short term, and a huge drop in coverage-twenty-four million people over ten years, according to the Congressional Budget Office. As these implications of the G.O.P. proposal became known to the public, the plan's approval rating fell and fell. In the end, according to a Quinnipiac poll, only nineteen per cent of Americans supported it.

The Freedom Caucus, a group of right-wing conservatives in the House, wanted a bill that stripped away more regulations, which they claimed would enable insurers to offer cheaper and more flexible plans. On the eve of the vote, Ryan agreed to change a clause defining the "essential health benefits" that insurers are required to provide if they sell policies on the Obamacare exchanges-benefits including maternity and mental-health services. But this change would have created two insurmountable problems.

Once insurers were able to craft individual policies without adhering to any list of required benefits, buyers would self-select. Young, healthy people would choose cheap, crappy policies, and older, sicker people would choose more comprehensive policies. Insurers, knowing this, would raise the prices of the good policies. "Worthless policies would get really cheap, but comprehensive policies would get astronomically expensive," Mother Jones's Kevin Drum pointed out. "Virtually no one would be able to afford them."

The other problem was political. Americans need maternity coverage, mental-health benefits, prescription drugs, pediatric services, lab tests, and the other things included on the list of essential health benefits. When moderate Republicans in places like New York, New Jersey, and Pennsylvania heard that these services might be eliminated under the amended legislation, they abandoned it in significant numbers. It was their desertion that ultimately killed the bill.

O.K., you might say: The American Health Care Act was a disaster, but what about all the other Republican health-care proposals that are out there? Maybe one of them provides a workable alternative to Obamacare. Let's briefly look at a few of them.

When he was in Congress, Tom Price, the Secretary of Health and Human Services, who supported the A.H.C.A., put forward a bill of his own. But it was basically a less generous version of the bill that just died: in gutting Medicaid and strictly limiting federal funding for high-risk pools to insure sick people, it would surely lead to a big rise in the number of uninsured. Something similar applies to a bill put forward by Senator Orrin Hatch, who chairs the Senate Finance Committee.

There are a few other plans kicking around conservative think tanks, some of which, like Obamacare, tie the level of subsidies to income. But all of these plans have other serious problems. In eschewing purchasing mandates, they run into the issue of younger people being unlikely to sign up for coverage. In giving insurers more freedom to offer different plans and different pricing structures, they encourage self-selection and undermine the risk-pooling that is at the heart of successful insurance schemes. And in cutting federal support for Medicaid, they dismantle the element of Obamacare that has been the most successful at insuring more people at a reasonable cost.

Another Republican plan that may now attract some attention is the proposal put forward by Senators Bill Cassidy, of Louisiana, and Susan Collins, of Maine. But, far from dismantling Obamacare, the Cassidy-Collins plan would allow big, populous states like New York and California to keep the current system in place, including the Medicaid expansion and the surtaxes on high earners. Red states that don't like Obamacare would be able to take federal money and design their own systems to provide basic, catastrophic coverage plans to everybody.

Because it retains so much of Obamacare, this proposal seems unlikely to receive majority support inside the G.O.P. In the coming weeks, Republicans in the Senate and the House will be trying anew to come up with an alternative that they can unite around, portray as a big break from the A.C.A., and sell to the American public. The lesson of the past few weeks is that they are likely to fail. As a novice to the subject noted recently, health care is complicated. Too complicated for ad-hoc policymaking and simplistic conservative nostrums.

mulp -> Peter K.... , March 25, 2017 at 10:44 AM
The evil Obama created Obamacare that was so conservative that conservatives can't find an alternative that benefits the majority of conservatives.

A few conservatives have prided themselves on commuting suicide by not treating their cancer in principled opposition to Obamacare, but most simply bitch about the high premiums which requires they get huge Obamacare tax credits while still paying a lot out of pocket because they bought the high deductible policy that makes the patient have skin in the game.

They want patients to pay out off a savings account to have skin in the game without needing to actually "save" to fill the HSA and have low premiums for insurance you buy with cancer treatment only when you have cancer. After all, if you buy insurance without cancer coverage, you qualify to buy insurance with cancer treatment because you have continuously bought insurance for five years.

... ... ...

Peter K. : , March 25, 2017 at 10:32 AM
https://www.nytimes.com/2017/03/24/upshot/health-insurance-medicare-obamacare-american-health-care-act.html?partner=rss&emc=rss&_r=1

"...

Now that Republicans have withdrawn Mr. Ryan's bill from consideration, attention shifts to what comes next. In an earlier column, I suggested that Mr. Trump has the political leverage, which President Obama did not, to jettison the traditional Republican approach in favor of a form of the single-payer health care that most other countries use. According to Physicians for a National Health Program, an advocacy group, "Single-payer national health insurance, also known as 'Medicare for all,' is a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands." Christopher Ruddy, a friend and adviser of the president, recently urged him to consider this option.

Many Republicans who want to diminish government's role in health care view the single-payer approach with disdain. But Mr. Trump often seems to take pleasure in being unpredictable, and since he will offend people no matter which way he turns, he may want to consider why liberals and conservatives in many other countries have embraced the single-payer approach.

..."


[Mar 25, 2017] The issue isn't about loyalty . The issue is about establishing reasonable and affordable healthcare for at least the majority of American citizens that have gross earnings under a hundred thousands annually

Mar 25, 2017 | economistsview.typepad.com
llisa2u2, March 25, 2017 at 08:30 AM
President Donald Trump said on Friday that he was disappointed that a conservative faction in the House of Representatives blocked his healthcare legislation and said "we learned a lot about loyalty" from the effort. OMG. Who's playing political games? Who is NOT focused on not draining anything, except draining the pockets of the "relatively poor" majority for the profits of a "relatively wealthy" majority?

The issue isn't about "loyalty". The issue is about establishing reasonable and affordable healthcare for at least the majority of American citizens that have gross earnings under $250,000 annually.

Peter K. , March 25, 2017 at 08:36 AM
Neoliberal DeLong is good on the Insane Clown Posse of the Republican Party.

http://www.bradford-delong.com/2017/03/should-read-it-was-always-just-dingbat-kabuki-all-the-way-down-joe-barton-_representative-r-tx_-asked-by.html#more

Should-Read: It was always just dingbat kabuki all the way down:

Joe Barton: Representative, R-TX: "[Asked by] reporters... why, after Republicans had held dozens of nearly-unanimous votes to repeal ObamaCare...

"... under President Obama, they were getting cold feet now that they control the levers of power. "Sometimes you're playing Fantasy Football and sometimes you're in the real world", [Rep. Joe Barton R-TX] admitted. "We knew the president, if we could get a repeat bill to his desk, it would almost certainly be vetoed. This time we knew if it got to the president's desk it would be signed.""

t has, as far as the Republican congressional caucus is concerned, always been dingbat kabuki--at least, ever since Gingrich's revolt against George H.W. Bush at the start of the 1990s, if not ever since the passage of the Reagan "none of us really understands what's going on with all these numbers" tax cut in 1981.

David Brooks: "Any large vision...

...was beyond the drafters of this legislation.... They were more concerned with what this internal faction.... In 24 hours of ugly machinations, the Trump administration was willing to rip out big elements of the bill and insert big new ones, without regard to substance or ramification. House members were rushed to commit to legislation even while major pieces of it were still in flux... when the Congressional Budget Office had no time to score it, when the effect on health outcomes of actual Americans was an absolute mystery....

This House Republican plan would increase suffering, morbidity and death among the middle class and poor in order to provide tax cuts to the rich. It would cut Medicaid benefits by $880 billion between now and 2026. It would boost the after-tax income for those making more than $1 million a year by 14 percent.... This bill takes the most vicious progressive stereotypes about conservatives and validates them.... This bill has just a 17 percent approval rating....

If we're going to have the rough edges of a populist revolt, you'd think that at least somebody would be interested in listening to the people. But with this bill the Republican leadership sets an all-time new land speed record for forgetting where you came from.... The Republicans can't run policy-making from the White House because they have a marketing guy in charge of the factory. But they can't run policy from Capitol Hill because it's visionless and internally divided.... The politics driving the substance, not the other way around. The new elite is worse than the old elite-and certainly more vapid.

Peter K. -> Peter K.... , March 25, 2017 at 08:37 AM
The irony is that the failure of the neoliberal centrism of Brooks and DeLong to deliver shared prosperity is churning up a populist revolt against the establishment.

[Mar 25, 2017] It's Not Just Unfair: Inequality Is a Threat to Our Governance

Mar 25, 2017 | economistsview.typepad.com
anne : March 25, 2017 at 11:26 AM

, March 25, 2017 at 11:26 AM
https://www.nytimes.com/2017/03/20/books/review/crisis-of-the-middle-class-constitution-ganesh-sitaraman-.html

March 20, 2017

It's Not Just Unfair: Inequality Is a Threat to Our Governance
By ANGUS DEATON

THE CRISIS OF THE MIDDLE-CLASS CONSTITUTION
Why Economic Inequality Threatens Our Republic
By Ganesh Sitaraman

President Obama labeled income inequality "the defining challenge of our time." But why exactly? And why "our time" especially? In part because we now know just how much goes to the very top of the income distribution, and beyond that, we know that recent economic growth, which has been anemic in any case, has accrued mostly to those who were already well-heeled, leaving stagnation or worse for many Americans. But why is this a problem?

Why am I hurt if Mark Zuckerberg develops Facebook, and gets rich on the proceeds? Some care about the unfairness of income inequality itself, some care about the loss of upward mobility and declining opportunities for our kids and some care about how people get rich - hard work and innovation are O.K., but theft, legal or otherwise, is not. Yet there is one threat of inequality that is widely feared, and that has been debated for thousands of years, which is that inequality can undermine governance. In his fine book, both history and call to arms, Ganesh Sitaraman argues that the contemporary explosion of inequality will destroy the American Constitution, which is and was premised on the existence of a large and thriving middle class. He has done us all a great service, taking an issue of overwhelming public importance, delving into its history, helping understand how our forebears handled it and building a platform to think about it today.

As recognized since ancient times, the coexistence of very rich and very poor leads to two possibilities, neither a happy one. The rich can rule alone, disenfranchising or even enslaving the poor, or the poor can rise up and confiscate the wealth of the rich. The rich tend to see themselves as better than the poor, a proclivity that is enhanced and even socially sanctioned in modern meritocracies. The poor, with little prospect of economic improvement and no access to political power, "might turn to a demagogue who would overthrow the government - only to become a tyrant. Oligarchy or tyranny, economic inequality meant the end of the republic."

Some constitutions were written to contain inequalities. In Rome, the patricians ruled, but could be overruled by plebeian tribunes whose role was to protect the poor. There are constitutions with lords and commoners in separate chambers, each with well-defined powers. Sitaraman calls these "class warfare constitutions," and argues that the founding fathers of the United States found another way, a republic of equals. The middle classes, who according to David Hume were obsessed neither with pleasure-seeking, as were the rich, nor with meeting basic necessities, as were the poor, and were thus amenable to reason, could be a firm basis for a republic run in the public interest. There is some sketchy evidence that income and wealth inequality was indeed low in the 18th century, but the crucial point is that early America was an agrarian society of cultivators with an open frontier. No one needed to be poor when land was available in the West.

The founders worried a good deal about people getting too rich. Jefferson was proud of his achievement in abolishing the entail and primogeniture in Virginia, writing the laws that "laid the ax to the root of Pseudoaristocracy." He called for progressive taxation and, like the other founders, feared that the inheritance of wealth would lead to the establishment of an aristocracy. (Contrast this with those today who simultaneously advocate both equality of opportunity and the abolition of estate taxes.) Madison tried to calculate how long the frontier would last, and understood the threat to the Constitution that industrialization would bring; many of the founders thought of wage labor as little better than slavery and hoped that America could remain an agrarian society.

Of course, the fears about industrialization were realized, and by the late 19th century, in the Gilded Age, income inequality had reached levels comparable to those we see today. In perhaps the most original part of his book, Sitaraman, an associate professor of law at Vanderbilt Law School, highlights the achievements of the Progressive movement, one of whose aims was taming inequality, and which successfully modified the Constitution. There were four constitutional amendments in seven years - the direct election of senators, the franchise for women, the prohibition of alcohol and the income tax. To which I would add another reform, the establishment of the Federal Reserve, which provided a mechanism for handling financial crises without the need for the government to be bailed out by rich bankers, as well as the reduction in the tariff, which favored ordinary people by bringing down the cost of manufactures. Politics can respond to inequality, and the Constitution is not set in stone.

What of today, when inequality is back in full force? ...


Angus Deaton, a professor emeritus at Princeton, was awarded the Nobel in economic science in 2015.

anne -> anne... , March 25, 2017 at 11:26 AM
https://www.brookings.edu/wp-content/uploads/2017/03/6_casedeaton.pdf

March 17, 2017

Mortality and morbidity in the 21st century
By Anne Case and Angus Deaton

Summary

We build on and extend the findings in Case and Deaton (2015 * ) on increases in mortality and morbidity among white non-Hispanic Americans in midlife since the turn of the century. Increases in all-cause mortality continued unabated to 2015, with additional increases in drug overdoses, suicides, and alcoholic-related liver mortality, particularly among those with a high-school degree or less. The decline in mortality from heart disease has slowed and, most recently, stopped, and this combined with the three other causes is responsible for the increase in all-cause mortality. Not only are educational differences in mortality among whites increasing, but mortality is rising for those without, and falling for those with, a college degree. This is true for non-Hispanic white men and women in all age groups from 25-29 through 60-64. Mortality rates among blacks and Hispanics continue to fall; in 1999, the mortality rate of white non-Hispanics aged 50-54 with only a high-school degree was 30 percent lower than the mortality rate of blacks in the same age group; by 2015, it was 30 percent higher. There are similar crossovers between white and black mortality in all age groups from 25-29 to 60-64.

Mortality rates in comparable rich countries have continued their pre-millennial fall at the rates that used to characterize the US. In contrast to the US, mortality rates in Europe are falling for those with low levels of educational attainment, and are doing so more rapidly than mortality rates for those with higher levels of education.

Many commentators have suggested that the poor mortality outcomes can be attributed to slowly growing, stagnant, and even declining incomes; we evaluate this possibility, but find that it cannot provide a comprehensive explanation. In particular, the income profiles for blacks and Hispanics, whose mortality has fallen, are no better than those for whites. Nor is there any evidence in the European data that mortality trends match income trends, in spite of sharply different patterns of median income across countries after the Great Recession.

We propose a preliminary but plausible story in which cumulative disadvantage over life, in the labor market, in marriage and child outcomes, and in health, is triggered by progressively worsening labor market opportunities at the time of entry for whites with low levels of education. This account, which fits much of the data, has the profoundly negative implication that policies, even ones that successfully improve earnings and jobs, or redistribute income, will take many years to reverse the mortality and morbidity increase, and that those in midlife now are likely to do much worse in old age than those currently older than 65. This is in contrast to an account in which resources affect health contemporaneously, so that those in midlife now can expect to do better in old age as they receive Social Security and Medicare. None of this implies that there are no policy levers to be pulled; preventing the over-prescription of opioids is an obvious target that would clearly be helpful.

* http://www.pnas.org/content/early/2015/10/29/1518393112

Peter K. -> anne... , March 25, 2017 at 01:18 PM
"Of course, the fears about industrialization were realized, and by the late 19th century, in the Gilded Age, income inequality had reached levels comparable to those we see today. In perhaps the most original part of his book, Sitaraman, an associate professor of law at Vanderbilt Law School, highlights the achievements of the Progressive movement, one of whose aims was taming inequality, and which successfully modified the Constitution. There were four constitutional amendments in seven years - the direct election of senators, the franchise for women, the prohibition of alcohol and the income tax. To which I would add another reform, the establishment of the Federal Reserve, which provided a mechanism for handling financial crises without the need for the government to be bailed out by rich bankers, as well as the reduction in the tariff, which favored ordinary people by bringing down the cost of manufactures. "

It's interesting that the language of inequality is the language of technocrats, however worthy.

It's a way to talk about the politics without referring to Marxist or populist/labor traditions which often involve social movements.

[Mar 25, 2017] Our constitutional dollar democracy with its gerrymandering, limitless congressional revolving doors, SCOTUS unanswerable to the electorate, and first past the post voting provides loads of punch lines, not the least of which is the de facto two party system itself. Two competitors is merely duopoly

Mar 25, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron -> ilsm... , March 25, 2017 at 07:09 AM
There is more than one joke. Our constitutional dollar democracy with its gerrymandering, limitless congressional revolving doors, SCOTUS unanswerable to the electorate, and first past the post voting provides loads of punch lines, not the least of which is the de facto two party system itself. Two competitors is merely duopoly. It takes a minimum of three viable choices to have any returns from competition that are significant to the consumers' preferences. Two competitors merely play off each other in predictable and increasingly ossified patterns.
New Deal democrat -> RC AKA Darryl, Ron... , March 25, 2017 at 07:17 AM
One very big quibble: >>SCOTUS unanswerable to the electorate<<

As bad as the SCOTUS can be, it would be unimaginably worse if it were subject to elections.

The big problem is that the Founders did not imagine life expectancies into the 80s. Throughout the 19th Century, the median time on the bench was about 14 years, and about 1/3 of all Justices served less than 10 years -- they got sick or died. Now the median time on the bench is 25 years, which is totally unacceptable.

If SCOTUS terms were set at 18 years, with a new Justice appointed every 2 years, independence would be preserved without the imposition of the "dead hands." Emeritus Justices could continue to serve on the appellate courts, and provisions would have to be made for deaths or retirements during the 18 year terms, but you get the idea.

RC AKA Darryl, Ron -> New Deal democrat... , March 25, 2017 at 07:36 AM
I did not mean elections. One of my favorite planks of the 1912 Bull Moose Party was the right for popular petition and referendum to overturn an unpopular SCOTUS decision. Roe V. Wade could not be overturned by referendum (which some fear but votes are measured by heat count rather than audible volume). Citizen United would be overturned by referendum. I trust democracy more than most, but still I don't get silly about it.

OTOH, SCOTUS term limits are also a good idea.

RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , March 25, 2017 at 07:38 AM
"...heat count..."

[No, HEAD count. If votes were measured by heat count then Bernie Sanders would be POTUS now.]

Paine -> New Deal democrat... , March 25, 2017 at 07:58 AM
New deal (D)emocrat

Is not a democrat

Or at least it would seem
NdD is no small d democrat

The court system we inherited is like many institutions
Ormed in our ante bellum era
an artifact of slave power

Paine -> Paine... , March 25, 2017 at 08:01 AM
Post bellum
The emerging big corporate power
found this arrangement congenial to its interests

The one challenge time ?


The new deal


The very era our sincere progressive liberal
NdD likes to impersonate at lawn parties

Paine -> Paine... , March 25, 2017 at 08:02 AM
The FED as drafted and redrafted
Is the supreme wanna be
mulp -> New Deal democrat... , March 25, 2017 at 08:18 AM
Yeah, Republicans should have appointed more of the judges.
New Deal democrat -> mulp... , March 25, 2017 at 09:56 AM
Democrats have held power for 10 of the last 18 years which would mean 5 of the current Justices would have been appointed by DSL.

[Insert snide remark about math abilities here.]

New Deal democrat -> New Deal democrat... , March 25, 2017 at 09:59 AM
Further, since 1968 (that's almost a half century ago, Dems have appointed exactly 5 Justices in total.

Under my system they would have appointed 10.

ilsm -> RC AKA Darryl, Ron... , March 25, 2017 at 09:06 AM
cnn resembles deep red tea party fox news.....

and the run of the mill dems should fit their tri-corn hats

RC AKA Darryl, Ron -> ilsm... , March 25, 2017 at 09:37 AM
I will take your word for it. We don't watch either CNN nor Fox News at my house. Mostly we watch local (same news and weather crew here appears on each the WWBT/WRLH local NBC/Fox affiliates) news with some sampling of MSNBC and Sunday morning ABC and CBS shows along with the daily half hour of NBC network following the evening local. Cable news is sort of an oxymoron given the prevailing editorial slants. The now retired local TV news anchor Gene Cox laid the groundwork for the best news team in central VA by setting a high bar at his station. Gene laid it all out southern fried with satirical humor and honesty unusual in TV news.
RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , March 25, 2017 at 09:38 AM
Maybe more sarcasm than satire, but the point is the same - wit and honesty.
JohnH -> Chris G ... , March 25, 2017 at 07:52 AM
Apparently we have two jokes alternating to lead America: the Republican jokes vs. the Democratic jokes.

Democrats are a joke for rallying their elite around a candidate who had huge negatives and for trying to block more popular candidates from running.

Democrats are a joke for having to rig the primaries in favor of a candidate who had already lost in 2008.

Democrats are a joke for refusing to sack a sclerotic, corrupt, and inept congressional leadership that had lost three straight elections.

Democrats are a joke for refusing to seize the issue that had propelled two Democrats into office--it's the economy, stupid!

Democrats are a joke for pigheadedly refusing to do a post mortem of their failure and insisting on blaming Putin instead!

But Democrats are right to expect that, when two jokes vie for power, their turn as joke in power will eventually come.

mulp -> JohnH... , March 25, 2017 at 08:29 AM
Ok, so, who do you want a post mortum to produce as the Democratic Trump?

Who would be the Democratic Freedom caucus obstructing all change unless all private property is confiscated?

You are merely saying Democrats must be more like Republicans. More extreme.

Democrats are centrists and moderates and thus unable to promise silver bullet solutions, free lunches, ...

Democrats just can't lie like Republicans have increasingly done since Reagan promised free lunches and failed to deliver, causing increasing anger among those Reagan betrayed.

JohnH -> mulp... , March 25, 2017 at 09:01 AM
Maybe a post mortem would simply reveal that Democrats should have had a coherent economic message and pursued a strategy of standing up for working America for the past 8 years. For example, having Pelosi demand votes on increasing the minimum wage as often as Ryan demanded votes on killing Obamacare...

Any honest post mortem would have revealed that standing with billionaires and the Wall Street banking cartel--and not prosecuting a single Wall Street banker--is not a winning strategy...

jonny bakho -> JohnH... , March 25, 2017 at 10:53 AM
Do you understand how Congress Works?
Pelosi has not had power to demand any votes since 2010.
As soon as the Dems came to power in 2007, they raised the MinWage and Bush signed.
There were several yearly increases.
You are repeating GOP nonsense
JohnH -> jonny bakho... , March 25, 2017 at 11:26 AM
Do you understand how Congress works? Pelosi could have proposed legislation in 2009-2010 to increase the minimum wage and index it to inflation. With a filibuster proof majority in the Senate it could have passed.

The Senate could have repeatedly proposed increasing the minimum wage any time until 2015...and Democrats could have attempted to attach minimum wage legislation as a budget rider any time they wanted. They didn't.

Chris G -> JohnH... , March 25, 2017 at 12:33 PM
That Pelosi did not resign immediately following the 2016 election or, not having offered her resignation, that Congressional Democrats did not demand it is an indication that the party still has deep-rooted problems. (Pelosi may not be the cause of those problems but given how badly they've fared since 2010 she's clearly not the solution. She has no business remaining as minority leader.) I'm fine with Perez as DNC chair but Ellison should be minority leader.

Lee A. Arnold : , March 25, 2017 at 04:48 AM
"Medicare for all" may be the best battle cry. 65-70% of the U.S. people want a single-payer. Bernie Sanders has effectively destroyed the old Democratic Party and sits in a commanding position as spokesman, he gets 6 TV cameras with an hour's notice and he is probably the most popular politician in the U.S. The Democrats don't have to push it for now, they can wait for news to develop. This is all on the Republicans. Let the managerial disaster of Trump and the utter immorality of the "Freedom Caucus" sink in a little more, this story has "legs" as they say in show biz.
jonny bakho -> Lee A. Arnold ... , March 25, 2017 at 05:04 AM
David Frum, the excommunicated conservative wrote in 2010:
""The real leaders are on TV and radio"

Bernie Sanders is the Dems TV leader.
Simple ideas repeated endlessly, easy to memorize slogans
Knows how to manipulate emotions
In the Twitter Age, this is how all successful politicians must message

Chris G -> jonny bakho... , March 25, 2017 at 06:29 AM
It doesn't hurt that his ideas are good ones;-)

Simple slogans repeated often isn't a new approach to politics. It goes back well over a century. "Keep it simple and take credit." Liberals haven't been very good at that in recent decades. (In contrast, FDR was.) Most people aren't wonks nor do they desire to become one. Messaging which presumes that they are or do is not a recipe for success.

Chris G -> Chris G ... , March 25, 2017 at 06:31 AM
Jack Meserve, Keep It Simple and Take Credit - http://democracyjournal.org/arguments/keep-it-simple-and-take-credit/
jonny bakho -> Lee A. Arnold ... , March 25, 2017 at 05:09 AM
Sanders has not "destroyed" the old Democratic Party.
He is a better TV messenger and ambassador to the public
He plays the Paternalistic Grandfather who does not trigger culture shock among white voters on TV
Lee A. Arnold -> jonny bakho... , March 25, 2017 at 05:59 AM
More like the cranky uncle, whom you had better listen to. Bernie Sanders is currently the most popular politician in the United States, by a long shot:

http://thehill.com/blogs/pundits-blog/the-administration/325647-stunning-polls-show-sanders-soaring-while-trumpcare

Peter K. -> jonny bakho... , March 25, 2017 at 08:24 AM
you minimize how well he did in the primary as do all of you dishonest center-left types
Peter K. -> Peter K.... , March 25, 2017 at 08:31 AM
Sanders won New Hampshire, Colorado, Minnesota, Oklahoma, Vermont, Kansas, Nebraska, Maine, Michigan, Idaho, Utah, Alaska, Hawaii, Washington, Wisconsin, Wyoming, Rhode Island, Indiana, West Virginia, Oregon, Montana, North Dakota.

*and he was close in many states like losing Massachusetts 606k to 589k. And the entire second half of the primary the DNC was repeating how Hillary had won mathematically over and over even though people hadn't voted.

DeDude -> jonny bakho... , March 25, 2017 at 08:38 AM
"Sanders has not "destroyed" the old Democratic Party"

No he is not stupid. What he has done is moving the Overton window - something that was long overdue. There is definitely an opening to make ObamaCare the first step towards MediCare for all (as it always was intended by by all but the bluedogs). But as good as Sanders is at message and getting the crowds going, he is going to need help with the politicking to actually get it done.

ilsm -> Lee A. Arnold ... , March 25, 2017 at 05:35 AM
too hard....

two party system

both obey FIRE

why no indeps

go for 'serious'

dems

Russians

cannot mess

this up

New Deal democrat -> Lee A. Arnold ... , March 25, 2017 at 07:35 AM
One issue going forward is whether the Dems should offer their own plan. I think they should.

As a few others have pointed out, Trump is not wedded to the GOP establishment. If he thinks he can "WIN bigly!" by allying with Dems, he will do so. I happen to think that he is mainly against "Obamacare" because Obama humiliated him at the White House Correspondents' Dinner once upon a time, and he is nothing if not vengeful. He wants to obliterate Obama's legacy.

So Dems need to make a big stink any time Trump administrativley undercuts Obamacare provisions to try to make it fail. But also they should give him the chance to do something he can call Trumpcare that actually works.

Obamacare does have some major problems (the individual mandate is hated, and the penalty isn't big enough. More young people need to buy in. Some of the Exchanges and health care provider networks are too narrow.

In addition to the "public option" and age 55+ Medicare buy-in, one thing that might work is abollishing the mandate and penalty and replaciing them with automatic enrollment. Call it "You're employed, you're covered!"

Just like SS, Medicare, unemployment and disability deductions to paychecks, establish a Health Care automatic deductible. If your employer offers healthcare, the deductible is reduced by the amount of the premium, all the way to zero if applicable.
If your employer doesn't offer healthcare, if you are under age 40, you are automatically enrolled in the least expensive Bronze plan in your state. If you are 40 or older, you are automatically enrolled in the least expensive Silver plan in your state.

The deductible would also include a small contribution towards Medicaid. Then, if you are unemployed, you are automatically enrolled in Medicaid, but can continue with the silver or bronze plan as above if you choose.

Dems could turmpet such a plan to "Reform and Improve" Obamacare, and campaign on pushing for it if they get a Congressional majority. Call it Trumpcare and President Caligula might sign on.

Peter K. -> New Deal democrat... , March 25, 2017 at 08:22 AM
Yes, good succinct comment by Arnold.
DeDude -> New Deal democrat... , March 25, 2017 at 08:52 AM
I agree that there might be an opening for that after the midterms. If Trump pushes on the weak spots of ObamaCare rather than fixing them, he will have backed himself into a corner that only the democrats can help him get out of. Right now democrats just need to do a lot of nice talk about being willing to sit down with the President and negotiate a common sense bipartisan solution.
mulp -> DeDude... , March 25, 2017 at 09:46 AM
No. Republicans must be driven by fear to sit down with Democrats to get their help. Republicans must own whatever they get Democrats to support so Republicans can't turn around and attack the result like they attacked the Republican defined Obamacare.

Medicaid is Republican defined - Medicare for the poor gave too much to the inferior poor and disabled. The old were superior because they are the fit who survived, thus they are rewarded with Medicare.

The Obamacare public option is Medicaid. Government health care for losers. Anyone can qualify by choosing to be losers. Obamacare does have the public option progressives demanded, but it's not the public option for winners.

Paine -> Lee A. Arnold ... , March 25, 2017 at 08:04 AM
Excellent commentary Lee A A
Peter K. -> Lee A. Arnold ... , March 25, 2017 at 08:22 AM
Yes, good succinct comment by Arnold.
mulp -> Lee A. Arnold ... , March 25, 2017 at 09:37 AM
Name the Senators, representatives, and governors Bernie Bros have delivered?

Where are the Bernie Bros Newts, Cruz, Marcos, ...?

I'm in my 70th year. Conservatives attacked liberals in the 60s, my youth, as promising free lunches to gain power. But what they really hated was liberals convinced voters to tax all voters to pay for the things most voters wanted everyone to have, BASED ON SOUND ECONOMICS TO MAXIMIZE EFFICIENCY AND WELFARE.

Friedman led the effort to distort theory to eliminate the broad meaning of general welfare in economics. He did it by eliminating the hard connection between labor cost and gdp. He argued that labor costs and consumption can be cut to increase profits, and that contrary to theory, higher profits is more efficient.

Laffer applied operations theory to taxes, as if government was taxing to maximize profits.

Thus supply side theory of profit maximization.

The result delivered was the imperative to cut taxes. To cut labor costs.

Thus they argued that every economic measure improves if taxes and wages are cut.

Reaganomics would deliver more stuff at lower cost, higher profut, and that makes everyone better off, especially those in poverty.

Friedman saw consumption as a bad thing. He wanted higher gdp, less consumption.

In other words, he rewrote Adam Smith attack on mercantile economics into a justification of returning to mercantile economic policy.

So, who do Bernie Bros offer as the Milton Friedman and Laffer to create an intellectual foundation to refute Adam Smith, FDR, Keynes, Galbraith, are return to hunter gatherer economics? Who is the economist who can convince us that Marxist economic theory will work, as long as it's not captured by right wing capitalists like Fidel Castro, Chavez, Stalin, Lenin, the founders of Israel, ....

Bernie certainly must be influenced by the same economic theory that created Israel. It grew from the same Marxist roots in Germany that powered Stalin and Lenin. Bernie is a pre-WWII Zionist as best I can tell.

Why wouldn't Bernie deliver Israel governance to the US? How would he prevent the greedy from joining the Movement?

And Israel has the social welfare state system Bernie wants. Hundreds of thousands of men do not work so they can study supported by welfare. Universal health care. Women are very equal in status.

I grew up heating the Zionist Dream, theory, much like Bernie did, but from conservative Indiana. Seemed very idealist virtue becoming reality in the 50s and 60s.

I have often used Israel as the example of a good universal health care system, of education, of welfare.

Never heard Bernie say, "I want the US to be like Israel." Why not? Why Sweden?

jonny bakho : , March 25, 2017 at 04:54 AM
Frank is wrong. What the GOP establishment dislikes most about Obamacare is the taxes on the wealthy. Medicare for all would have to be paid for by taxes on the wealthy or substantial payroll tax increases on the working class.
This does not meet GOP or Trump objectives for tax cuts on the wealthy.
The TV and radio talk uses Obamacare bashing to sell ads. They can easily change the subject to some other click bait.
Medicare for all? NaGonnaHappN
RC AKA Darryl, Ron -> jonny bakho... , March 25, 2017 at 05:14 AM
Frank was not suggesting that the GOP establishment would support Medicare for all. Frank was suggesting that Trump would essentially change parties to become a Democrat. As dubious as that notion is, more importantly it is premature. If Democrats win back both chambers of Congress, then it would at least be mechanically possible if still extraordinarily dubious. Mostly though Frank was just reaching for something worth saying. Now is a tuff time for commentary on the political economy.
jonny bakho -> RC AKA Darryl, Ron... , March 25, 2017 at 05:47 AM
Trump is not going to raise the taxes required to fund Medicare For All.
Frank is delusional
Lee A. Arnold -> jonny bakho... , March 25, 2017 at 06:10 AM
Jonny Bakho: "Medicare for all would have to be paid for by taxes"

Theoretically you don't have to raises taxes if you get private insurers out of the game. They are a big expense, and give no value-added.

Doesn't mean that is politically possible, with Trump and a GOP Congress. But Trump and a Democratic Congress? I couldn't predict. Keep in mind that this man is almost an ideological vacuum, no managerial skills, has no constant concerns for anything except keeping himself in the spotlights, to be loved. And he just learned that the Freedom Caucus is implacably nuts.

New Deal democrat -> Lee A. Arnold ... , March 25, 2017 at 07:21 AM
"the Freedom Caucus is impacably nuts."

Thank the Great Flying Spaghetti Monster for that!!!!

Everytime the centrist dems - or mainly GOPers - try to sell out social insurance programs, the Freedom Caucus stands in their way. As a progressive, I am deeply and profoundly grateful!

/ snark

New Deal democrat -> New Deal democrat... , March 25, 2017 at 07:22 AM
"every time" and "main line"

G*d I hate autocorrect.

ilsm -> New Deal democrat... , March 25, 2017 at 09:10 AM
socialists should all be glad

trump is running the wreckage

more 'social progress' for big FIRE

RC AKA Darryl, Ron -> Lee A. Arnold ... , March 25, 2017 at 07:30 AM
"They are a big expense, and give no value-added."

[Someone has to do claims processing. The resistance against growing the federal payroll is an unnecessary hurdle for Medicare for all (MFA) to jump. Better administer it more like Medicaid. Let insurance companies handle the operations for a fee. Federal claim payments are handled on a pass thru. Then let the operational administration default to the MFA supplemental plan carrier if the insured has one, else the lowest cost carrier in the insured's state. For MFA clients then there could be a single claims process for providers even for patients with both MFA and MFA supplemental policies. That lowers the hurdle for MFA to leap over the insurance company lobby as well.]

RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , March 25, 2017 at 07:31 AM
Hell, that would even lower the provider and patient hurdles.
Lee A. Arnold -> RC AKA Darryl, Ron... , March 25, 2017 at 10:08 AM
Claims processing by humans is going to become a thing of the past.
RC AKA Darryl, Ron -> Lee A. Arnold ... , March 25, 2017 at 11:29 AM
Most of health insurance claims processing has been automated for a long time. Still it takes a lot of worker-hours to reconcile the errors.

Imagine how many worker hours it will take to reconcile liabilities for the first multi-car multi-fatality pile up of robot cars on the LA freeway. It will not matter that in total there have been less collisions and less fatalities when the big one hits. Computers are incapable of intuitive judgement which leads to blunders of potentially a colossal scale occurring that could have easily been foreseen by a human. To err is human but it takes a computer to really screw things up beyond all recognition. It is just a matter of time and time is always on Murphy's (that which can go wrong will go wrong) side. I know that myths about computers that never make mistakes and never need to be programmed again abound and I am sure that they will still be with us 20,000 years from now, when we are not even in any memory banks. I spent my entire career about to be replaced by software, but I was finally laid off because of administrative concerns with regards to legacy managed employees in context of the re-compete of the NG/VITA outsourcing contract (which is far less catchy). Computers have the potential to speed transit and reduce fatalities, but that potential will not be permanently realized as long as people are intent upon removing all human control and intervention. Computers can be capable copilots under almost all circumstances, but their owners cannot weather the fallout from their inability to conceive a response on their own when confronted with conditions that they were not programmed for. Such dramatic consequences will eventually raise a great furor, horror, deep sorrow, and extensive liability concerns. Even if you could sue a computer it is unlikely that they could demonstrate the means to pay. Incarceration of a computer for criminal negligence seems a bit ludicrous as well. The owner of the offending property better have their insurance premiums all paid up, but what then? Who will insure the next owner? Advocates of computer driven cars are planning on no fault insurance being mandated in each and every state. Good luck with that.

My wife works for Anthem although not in claims processing. She used to work in membership which is also automated. Software developers for health insurance mostly use Agile methods. One facet of that is that they only expect automation to handle roughly 90% (ideally more) of the workload because they have learned that there will never be a no defects computer system and they are saving expensive labor time in development by allowing lower paid workers to pick up a lot of the more complicated cases manually. That reduces time spent in the iterative process of testing and correcting defects. I am sure that you remember the problems with the ACA's automated insurance membership market. Stuff happens all the time in IT.

It is not that I had to work in IT for 47 years to understand the limitations. Merely my childhood education on the mathematical system of logic that underlies their circuitry and programming would have been sufficient, but a bit of empirical confirmation never hurts. Understanding reality is unfortunately a pre-requisite, but once that is accomplished then there are great opportunities to achieve improved results. Computers are not the problem, but can often be an essential part of the solution rather than a faceless soulless panacea. Does not compute can happen anywhere, but worse though when it happens at 75 MPH.

mulp -> Lee A. Arnold ... , March 25, 2017 at 09:57 AM
So, your answer is higher unemployment?

"They are a big expense, and give no value-added."

You clearly buy in too free lunch economics!

Cut costs (of paying workers) to give everyone more stuff and create more higher paying jobs!!!

By the way, Medicare employs as many people as insurers to administer the benefits and provider payments. After all, it's all outsourced to insurers who already do that work for employers.

Do not assume that the 10% of insured individuals and small groups with high sales and marketing cost represent the costs of the 80% with very low sales and marketing costs, handled by insurer backroom operations.

Your argument is like saying that nationalizing Apple would cut food costs by 50% because Apple sales, marketing, profits are 50% of Apple revenue and thus 50% of everything is sales, marketing, profit.

Lee A. Arnold -> mulp... , March 25, 2017 at 11:27 AM
Every serious study that looks at current costs in the multipayer healthcare insurance concludes that moving to single-payer will save 15-20% of total spending. Here is yet another one:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4283267/
RC AKA Darryl, Ron -> Lee A. Arnold ... , March 25, 2017 at 11:40 AM
There is nothing about that paper that would not hold true or even truer of a two tiered system of Medicare for all with administrative processing collocated with the supplemental insurer whenever there is one. Just do a work flow model and note how many steps are cut out at each the provider and insurer if primary and secondary coverage administrative processing for membership, claims, and policy holder services are collocated.
Chris G -> jonny bakho... , March 25, 2017 at 06:46 AM
Ah, but Trump is both delusional and vengeful. He might wake up one morning and decide that Republicans are enemies to be destroyed. He has no interest in let alone understanding of policy. He could take a position just out of spite. And if he thought it would make people who weren't his enemies love him then who knows. (Odds of him being struck by lightning are probably comparable - low but not zero.)
RGC -> jonny bakho... , March 25, 2017 at 06:50 AM
Government Funds 60% of U.S. Healthcare Costs - Far Higher than Previously Believed

"We Pay for National Health Insurance but Don't Get It"

"Universal coverage is affordable - without a big tax increase," continued Dr. Himmelstein. "Because taxes already fund 60% of health care costs, a shift about the size of the recent tax cut ($130 billion a year) from private funding to public funding would allow us to cover all the uninsured and improve benefits for everyone else. Insurers/HMOs and drug companies buy-off our politicians with huge campaign contributions and hordes of lobbyists."


http://www.pnhp.org/news/2002/july/government_funds_60.php

Chris G -> RGC... , March 25, 2017 at 07:20 AM
Reference is from 2002. Current numbers?
RGC -> Chris G ... , March 25, 2017 at 08:04 AM
Beyond the Affordable Care Act: A Physicians' Proposal for Single-Payer Health Care Reform

During a transition period, all public funds currently spent on health care – including Medicare, Medicaid, and state and local health care programs – would be redirected to the unified NHP budget. Such public spending – together with tax subsidies for employer-paid insurance and government expenditures for public workers' health benefits – already accounts for 60% of total U.S. health expenditures.28 Additional funds would be raised through taxes, though importantly these would be fully offset by a decrease in out-of-pocket spending and premiums.

http://www.pnhp.org/nhi

RGC -> RGC... , March 25, 2017 at 07:36 AM
Many employers now pay for employees' health insurance and that employee compensation is tax-exempt.

If employers health insurance comp were replaced by medicare for all, employers could replace it with wages.

Employees could get health insurance from medicare instead of from private plans. Thus instead of private health insurance paid by employers (and partially by the government via tax exemptions), medicare could pay it from the taxes the government didn't use to collect.

RGC -> RGC... , March 25, 2017 at 10:13 AM
Which would you rather do - pay taxes for Medicare or pay a larger amount than the taxes to private insurers?
ilsm -> RGC... , March 25, 2017 at 09:12 AM
when a "kid" of 50 needs

quad bi-pass they must

thank medicare those

cardio ICU's would be

gone without the

75 years olds' "demand"

as if FIRE would finance

$2M units

that don't

have positive ROI

RGC -> RC AKA Darryl, Ron... , March 25, 2017 at 07:08 AM
Is Donald Trump still 'for single-payer' health care?


"Perry said Trump is "for single-payer health care."


Fifteen years ago, Trump was decidedly for a universal healthcare system that resembled Canada's system, in which the government pays for care for all citizens.

Recently, he's said he admires Scotland's single-payer system and disses the Affordable Care Act as incompetently implemented.

However, a Trump spokesman denied that the candidate supported "socialized medicine" and suggested Trump prefers a "free-market" solution. Other than that, though, the Trump campaign has been silent about what his specific health care policies are; perhaps Trump will be pressed on this point during the Aug. 6 debate.

Given the current evidence, Perry's attack is partially accurate, but leaves out details. We rate the statement Half True.

http://www.politifact.com/truth-o-meter/statements/2015/aug/02/rick-perry/donald-trump-still-single-payer-health-care/

RC AKA Darryl, Ron -> RGC... , March 25, 2017 at 07:40 AM
Trump will need to leave the Republican Party to get that done and first he will need the Republican Party majority to leave Congress.
RGC -> RC AKA Darryl, Ron... , March 25, 2017 at 07:51 AM
You mean like in 2018?
ilsm -> RGC... , March 25, 2017 at 09:15 AM
Trump single payer

need the dems off

wall st as well

what Trump said

US not ready

bi partisan thugs

must plunder more

to make US

ready

RC AKA Darryl, Ron -> RGC... , March 25, 2017 at 09:40 AM
Well, 2018 would be about time for it, but the Democratic Party has proven an unreliable source before.
DeDude -> RC AKA Darryl, Ron... , March 25, 2017 at 09:05 AM
Trump is actually apolitical - the only reason he right now is Trumpeting hard right wing and neocon ideas is that he is being feed them, and he got snookered into thinking they would work for him. When he realize that crap is pulling his reputation and popularity down the drain, he will be ready for someone to offer him a lifeline.
RC AKA Darryl, Ron -> DeDude... , March 25, 2017 at 09:42 AM
Well, that would certainly be my hope. There is evidence that he has been all over the map politically which confirms what you say.
ilsm -> jonny bakho... , March 25, 2017 at 05:36 AM
gop and dem

establish

the same

Peter K. -> ilsm... , March 25, 2017 at 08:20 AM
New Deal democrat -> Lee A. Arnold...

"the Freedom Caucus is impacably nuts."

Thank the Great Flying Spaghetti Monster for that!!!!

Everytime the centrist dems - or mainly GOPers - try to sell out social insurance programs, the Freedom Caucus stands in their way. As a progressive, I am deeply and profoundly grateful!

/ snark

Reply Saturday, March 25, 2017 at 07:21 AM

My thoughts exactly. EMichael and PGL said it was the Wall Street Democrats we had to worry about? What?

Tax reform will also crash and burn now. PGL has been all worried whining for months without telling his readers that there is a large business and conservative opposition to Paul Ryan's reform.

ilsm -> Peter K.... , March 25, 2017 at 09:17 AM
the DLC/Clinton cabal

implacably corrupt!

RC AKA Darryl, Ron -> ilsm... , March 25, 2017 at 09:45 AM
The nature of dollar duopoly is implacably corrupt. Until we change that system then we will have to make do with what we got. It has largely been that way since the ink dried on the US Constitution.
Gerald : , March 25, 2017 at 05:30 AM
"The president...may consider changing course and working across party lines to develop support for universal access to Medicare." Would that this were possible; Trump doesn't care nearly enough about the millions who would benefit to make the slightest move in this direction.
ilsm -> Gerald ... , March 25, 2017 at 05:38 AM
aside from

early tax returns

trump has

early view

of EU style

health system

look it up

Fred C. Dobbs -> ilsm... , March 25, 2017 at 07:26 AM
So, most here will agree,
let it be Bernie, going forward?

I could accept & work with that.

ilsm -> Fred C. Dobbs... , March 25, 2017 at 09:18 AM
yup!
DeDude -> Gerald ... , March 25, 2017 at 09:10 AM
The thing he cares about is his approval ratings and popularity. He will soon enough recognize that supporting issues that has support from 2/3 or more of the population is the way to improve his popularity. If the democrats play it right they can get a lot of their own priorities through with his help. Remember how Bush II got a $ trillion MediCare prescription drug benefit through a conservative congress (and it is funded through the regular progressive tax system). That was a democratic policy that could not have been passed by a democratic President.
marcus nunes : , March 25, 2017 at 06:09 AM
"The EU will celebrate on March 25th the 60th anniversary of its founding (Treaty of Rome, 1957), while its future is in doubt. What went wrong?"
https://thefaintofheart.wordpress.com/2012/05/27/meade-swann-and-how-two-simple-lines-perfectly-illustrate-the-eurozone-conundrum/
point : , March 25, 2017 at 06:43 AM
https://growthecon.com/blog/Profit-Accounting/

"If your house is worth 500,000, a 3% return would mean charging 15,000 in rent per year, or 1,250 per month. Now, if you look out at the market and find out that you could actually rent your house out for 2,000 per month, you are making 750 in economic profit. The price you can charge for your house, 2,000, is higher than the marginal cost to you, 1,250. Profits!"

The idea that the difference in market value and PV rents represents economic profits does not sit well with me, but I can't exactly explain why. It seems more like speculative profit. And the idea that the difference should systematically persist, as seems to be the case in the discussion, also does not sit well. The discussion implies, after all, that rents, representing non-production, are becoming increasingly large in aggregate. I know that we subsidize the pyramid accumulation of rent streams, for no good reason in my opinion, but if this is true it seems to say there is another kind of hollowing out underway where rents displace real return on investment. All this in the context where renters, in general, cannot fund the sum of housing, education, medical care and retirement

DeDude -> point... , March 25, 2017 at 09:18 AM
That calculation doesn't take into account the depreciation of the property or the taxes and maintenance. A lot of people who buy houses to rent them out use the rule of 100. If you want to make good money on a rental property you have to be able to get a rent of no less than 1% of your purchase price. So a $100K property should rent out for $1000 per month.
point -> DeDude... , March 25, 2017 at 10:30 AM
So the guy's 3% may be in error.
DeDude -> point... , March 25, 2017 at 11:07 AM
Yes big time. He is considering the house an investment asset with no cost (like a bond or stock). However, houses have all kinds of cost and they also lose value for every year they get older. An investment return of 3% is only "reasonable" for basically risk free investments (government or government guaranteed bonds) that have absolutely no cost associated with owning them.
Fred C. Dobbs : , March 25, 2017 at 07:35 AM
In a Call to The Times, Trump Blames Democrats for the
Failure of the Health Bill https://nyti.ms/2nNPHD9
NYT - MAGGIE HABERMAN - MARCH 24, 2017

WASHINGTON - Just moments after the Republican plan to repeal and replace the Affordable Care Act was declared dead, President Trump sought to paint the defeat of his first legislative effort as an early-term blip.

The House speaker, Paul D. Ryan, was preparing to tell the public that the health care bill was being withdrawn - a byproduct, Mr. Trump said, of Democratic partisanship. The president predicted that Democrats would return to him to make a deal in roughly a year.

"Look, we got no Democratic votes. We got none, zero," Mr. Trump said in a telephone interview he initiated with The New York Times.

"The good news is they now own health care. They now own Obamacare."

Mr. Trump insisted that the Affordable Care Act would collapse in the next year, which would then force Democrats to come to the bargaining table for a new bill.

"The best thing that can happen is that we let the Democrats, that we let Obamacare continue, they'll have increases from 50 to 100 percent," he said. "And when it explodes, they'll come to me to make a deal. And I'm open to that."

Although enrollment in the Affordable Care Act declined slightly in the past year, there is no sign that it is collapsing. Its expansion of Medicaid continues to grow.

In a later phone interview with The Times, the Senate minority leader, Chuck Schumer, ridiculed Mr. Trump's remarks about Democrats being at fault.

"Whenever the president gets in trouble, he points fingers of blame," Mr. Schumer said. "It's about time he stopped doing that and started to lead. The Republicans were totally committed to repeal from the get-go, never talked to us once. But now that they realize that repeal can't work, if they back off repeal, of course we'll work with them to make it even better."

Mr. Trump said that "when they come to make a deal," he would be open and receptive. He singled out the Tuesday Group moderates for praise, calling them "terrific," an implicit jab at the House Freedom Caucus, which his aides had expressed frustration with during negotiations. ...

Fred C. Dobbs -> Fred C. Dobbs... , March 25, 2017 at 07:41 AM
Failure of health care bill is a huge setback for Trump
http://www.bostonglobe.com/news/politics/2017/03/24/trump-massive-loss-endangers-his-young-presidency/Czat7MDmwHa7us43qJeEbM/story.html?event=event25
via @BostonGlobe - Annie Linskey - March 25, 2017

WASHINGTON - Donald Trump famously said that if he became president he would win so much, Americans would get tired of winning. But so far he's mostly losing, bigly.

Even with a wide Republican majority in the House, the president failed to deliver on the centerpiece of his legislative agenda - repealing the Affordable Care Act - raising loud questions about the effectiveness of his young presidency and whether Republicans are capable of making the transition from an opposition party to one that governs.

"It's a catastrophic legislative failure," said Rick Tyler, a Republican strategist who didn't support Trump during the election. "It's the equivalent of having a cardiac arrest. You can recover from it, but it will take a lot of rehab."

He added: "Political experience is a hard teacher. You get the test first and learn the lesson next."

Even former House speaker Newt Gingrich, a close Trump ally, delivered a harsh verdict Friday. "Why would you schedule a vote on a bill that is at 17 percent approval?" he asked on his Twitter feed, referring to a Quinnipiac University poll.

The tweet went viral, and in an interview Gingrich added: "When I saw the numbers - that is everything I have opposed in my entire career. That's how the Republicans lost the majority."

Still, the defeat of Trump's first request of Congress represents a further deterioration of his already shaky credibility in Washington and among the American people.

He has cast himself as a master salesman and the "closer" who can win over allies in the most difficult of circumstances through some combination of his winning personality and take-no-prisoners approach to negotiations.

But that picture of Trump is becoming about as questionable as his unsubstantiated claims that he had huge crowd sizes at his inauguration, his unproven accusations that bus loads of Massachusetts voters cast illegal ballots in New Hampshire, and his much rejected insistence that then-President Obama put a wiretap on his phone.

The pattern, in the eyes of his harshest critics, is that there's little evidence to back up his boasts.

He could not close this deal. Republican members of the House of Representatives, who have voted to repeal the Obama health law more than 50 times in the past seven years, refused Trump's entreaties to support the Republican replacement for the law.

The setback comes as other storm clouds are gathering over the Trump presidency. There's the FBI investigation into whether his campaign staff coordinated e-mail leaks designed to influence the election, along with the Russians.

FBI director James Comey was spotted going in and out of the West Wing on Friday, which was a reminder of the investigation, even if the White House claimed Comey was there for a routine meeting. ...

Tom aka Rusty -> Fred C. Dobbs... , March 25, 2017 at 07:47 AM
This was bound to happen.
Fred C. Dobbs -> Tom aka Rusty ... , March 25, 2017 at 08:08 AM
Hillary Clinton ✔ ‎@HillaryClinton

Today was a victory for all Americans.

5:21 PM - 24 Mar 2017

(statement at https://twitter.com/HillaryClinton/status/845385004389666816 )

Fred C. Dobbs -> Tom aka Rusty ... , March 25, 2017 at 08:19 AM
Elizabeth Warren ✔ ‎@SenWarren

But I'm not doing a touchdown dance today. Not
when the GOP is still hell-bent on rigging the
system for the rich & powerful.

5:56 PM - 24 Mar 2017

https://twitter.com/SenWarren/status/845393852219478022

ilsm -> Fred C. Dobbs... , March 25, 2017 at 09:24 AM
Comey going in

to talk jail

not gop targets

story is not only

uncovering DLC corruption

it is leaking

surveillance of Russian

diplomats' conversation with

US citizens that have no

intelligence to leak

'colluding' to put the truth

out is only crime

to DLC Leninists

Obama Leninism

crushing the

Bill of Rights

is the story

Fred C. Dobbs -> Fred C. Dobbs... , March 25, 2017 at 08:02 AM
On health-care, as on so much else,
President Trump passes the buck, reports
https://www.theatlantic.com/politics/archive/2017/03/the-buck-doesnt-stop-here-anymore/520839/
The Atlantic - David A. Graham - March 24, 2017

Speaking in the Oval Office Friday afternoon, President Trump surveyed the wreckage of the Obamacare repeal effort and issued a crisp, definitive verdict: I didn't do it.

The president said he didn't blame Speaker Paul Ryan, though he had plenty of implied criticism for the speaker. "I like Speaker Ryan. He worked very hard," Trump said, but he added: "I'm not going to speak badly about anybody within the Republican Party. Certainly there's a big history. I really think Paul worked hard." He added ruefully that the GOP could have taken up tax-reform first, instead of Obamacare-the reverse of Ryan's desired sequence. "Now we're going to go for tax reform, which I've always liked," he said.

As for the House Freedom Caucus, the bloc of conservatives from which many of the apparent "no" votes on the Republican plan were to come, Trump said, "I'm not betrayed. They're friends of mine. I'm disappointed because we could've had it. So I'm disappointed. I'm a little surprised, I could tell you."

The greatest blame for the bill's failure fell on Democrats, Trump said.

"This really would've worked out better if we could've had Democrat support. Remember we had no Democrat support," Trump said. Later, he added, "But when you get no votes from the other side, meaning the Democrats, it's really a difficult situation."

He said Democrats should come up with their own bill. "I think the losers are Nancy Pelosi and Chuck Schumer, because they own Obamacare," he said, referring to the House and Senate Democratic leaders. "They 100 percent own it."

Trump was very clear about who was not to blame: himself. "I worked as a team player," the president of the United States said, demoting himself to bit-player status. He wanted to do tax reform first, after all, and it was still early. "I've been in office, what, 64 days? I've never said repeal and replace Obamacare within 64 days. I have a long time. I want to have a great health-care bill and plan and we will."

Strictly speaking, it is true that Trump didn't promise to repeal Obamacare on day 64 of his administration. What he told voters, over and over during the campaign, was that he'd do it immediately. On some occasions he or top allies even promised to do it on day 1. Now he and his allies are planning to drop the bill for the foreseeable future.

It is surely not wrong that there is lots of blame to go around. Congressional Republicans had years to devise a plan, and couldn't come up with one that would win a majority in the House, despite a 44-seat advantage. The House bill was an unpopular one, disliked by conservatives and moderates in that chamber; almost certainly dead on arrival in the Senate; and deeply unpopular with voters. Even before the vote was canceled, unnamed White House officials were telling reporters that the plan was to pin the blame on Ryan. ...

The Republicans fold and
withdraw their health-care bill https://www.theatlantic.com/politics/archive/2017/03/trump-republicans-failure-obamacare/520788/
The Atlantic - Russell Berman - March 24, 2017

... Defeat on the floor dealt Trump a major blow early in his presidency, but its implications were far more serious for the Republican Party as a whole. Handed unified control of the federal government for only the third time since World War II, the modern GOP was unable to overcome its internecine fights to enact a key part of its policy agenda. The president now wants to move on to a comprehensive overhaul of the tax code, but insiders on Capitol Hill have long believed that project will be an even heavier lift than health care.

As the prospect of a loss became more real on Friday, the frustrations of GOP lawmakers loyal to the leadership began to boil over. "I've been in this job eight years, and I'm wracking my brain to think of one thing our party has done that's been something positive, that's been something other than stopping something else from happening," Representative Tom Rooney of Florida said in an interview. "We need to start having victories as a party. And if we can't, then it's hard to justify why we should be back here."

Nothing has exemplified the party's governing challenge quite like health care. For years, Republican leaders resisted pressure from Democrats and rank-and-file lawmakers to coalesce around a detailed legislative alternative to Obamacare. That failure didn't prevent them from attaining power, but it forced them to start nearly from scratch after Trump's surprising victory in November. At Ryan's urging, the party had compiled a plan as part of the speaker's "A Better Way" campaign agenda. Translating that into legislation, however, proved a much stiffer challenge; committee leaders needed to navigate a razor's edge to satisfy conservatives demanding a full repeal of Obamacare and satisfy moderates who preferred to keep in place its more popular consumer protections and Medicaid expansion. They were further limited by the procedural rules of the Senate, which circumscribed how far Republicans could go while still avoiding a Democratic filibuster. ...

Fred C. Dobbs -> Fred C. Dobbs... , March 25, 2017 at 08:27 AM
It would appear that the 'Freedom Caucus', of
about 30 GOPsters in the House, was barely
enough to stop the AHCA because it 'wasn't
conservative enough', but the moderate
Tuesday Group of about 50 surely was,
because it was too 'conservative'.
ilsm -> Fred C. Dobbs... , March 25, 2017 at 09:28 AM
even with super majority

Obama got a severely flawed

pro FIRE ACA

not Affordable

only replace is

medicare for all

mulp -> ilsm... , March 25, 2017 at 10:16 AM
But you need better free lunch economics to beat the free lunch economics of conservatives, Republicans, Tea Party, Freedom caucus, and Trump.

You need free lunch economics that work and deliver something for nothing. The failure Friday was free lunch economics hitting reality. Getting government and insurance companies out of the lives of Trump and Republican voters did not make these voters richer, healthier, and freer.

Bernie has his own free lunch economics which will likewise turn out to be ashes in the mouths of voters who might get him into the White House, he wants to cut spending based on "not paying workers will not make those workers worse off". Exactly the same theory Reagan to Trump use. Gutting costly regulations that require paying workers to comply will not result in workers being worse off. Or property owners.

Bernie campaigned on eliminating fossil fuels in a way that his voters will be able to keep burning fossil fuels to drive to his rallies and to heat their homes.

anne : , March 25, 2017 at 07:54 AM
http://cepr.net/blogs/beat-the-press/new-health-care-plan-open-source-drugs-immigrant-doctors-and-a-public-option

March 25, 2017

New Health Care Plan: Open Source Drugs, Immigrant Doctors, and a Public Option

Now that the Republican health care plan has been sent to the dust bin of history, it's worth thinking about how Obamacare can be improved. While the Affordable Care Act was a huge step forward in extending insurance coverage, many of the complaints against the program are justified. The co-pays and deductibles can mean the plans are of little use to middle income people with relatively low bills.

This is a great time to put forward ideas for reducing these costs and making other changes in the health care system. Obviously this congress and president are not interested in reforms that help low and middle income families, but the rest of us can start pushing these ideas now, with the expectation that the politicians will eventually come around.

There are two obvious directions to go to get costs down for low and middle income families. One is to increase taxes on the wealthy. The other is to reduce the cost of health care. The latter is likely the more promising option, especially since we have such a vast amount of waste in our system. The three obvious routes are lower prices for prescription drugs and medical equipment, reducing the pay of doctors, and savings on administrative costs from having Medicare offer an insurance plan in the exchanges.

Taking these in turn, the largest single source of savings would be reducing what we pay for prescription drugs. We will spend over $440 billion this year for drugs that would likely sell for less than $80 billion in a free market without patent monopolies and other forms of protection. If we paid as much as people in other wealthy countries for our drugs, we would save close to $200 billion a year. We spend another $50 billion a year on medical equipment which would likely cost around $15 billion in a free market.

If the government negotiated prices for drugs and medical equipment its savings could easily exceed $100 billion a year (see "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer" * ). It could use some of these savings to finance open-source research for new drugs and medical equipment.

We already fund a huge amount of research, so this is not some radical departure from current practice. The government spends more than $32 billion on research conducted by the National Institutes of Health. It also picks up 50 percent of the industry's research costs on orphan drugs through the Orphan Drug Tax Credit. Orphan drugs are a rapidly growing share of all drug approvals, as the industry increasingly takes advantage of this tax credit.

The big change would not be that the government was funding research, but rather the research results and patents would be in the public domain, rather than be used by Pfizer and other drug companies to get patent monopolies. As a result, the next great breakthrough drug will sell as a generic for a few hundred dollars rather than hundreds of thousands of dollars. And MRI scans would cost little more than X-rays.

The second big potential source of savings would come from reducing the protectionist barriers which largely exclude foreign-trained physicians. Under current law, a foreign doctor is prohibited from practicing in the United States unless they complete a U.S. residency program. This keeps hundreds of thousands of well-qualified from physicians from practicing in the United States. As a result, our doctors earn on average more than $250,000 a year, roughly twice the average pay in other wealthy countries. (There are similar protectionist restrictions which inflate the pay of dentists.)

If we removed this barrier and allowed qualified foreign doctors to practice in the United States, we would likely get their pay down to levels comparable to that of doctors in countries like Canada and Germany. This could save us close to $100 billion a year on our health care bill, at least half of which would be savings to the government.

There is a concern that we would attract more doctors from developing countries. We could easily offset this brain drain by paying these countries enough so that they can train two or three doctors for every one that comes to the United States, thereby ensuring they gain from this arrangement as well. It is worth noting that these countries receive zero compensation now for the doctors they pay to train, but who then practice in the United States.

The third big source of saving would be having Medicare offer an insurance plan in the exchanges. This would ensure both that everyone had at least one good option regardless of where they lived and also that the private insurers in the system would face real competition. In 2010, the Congressional Budget Office projected that a public option would save the government $23 billion a year by 2020 and $29 billion by 2023.

The total savings to the government from these three changes easily exceed $150 billion a year, in addition to large savings that individuals outside the exchanges would see in their health care expenses. This is far more than enough to make the deductibles zero for each of the roughly 10 million people now in the exchanges. That would make Obamacare considerably more attractive.

Of course if the plans in the exchanges became more generous more people would opt to take advantage of them and we would see people leaving employer-provided plans. That is a problem that we can deal with at the time it happens. (We would need to have a portion of workers' current payments for employer provided plans go to the government to cover the cost of additional enrollees in the exchanges.) But the way forward in improving Obamacare is to use the market to make our health care system more efficient and reduce the ridiculous rents that now go to the wealthy as a result of waste in the system.

* http://deanbaker.net/images/stories/documents/Rigged.pdf

-- Dean Baker

anne -> anne... , March 25, 2017 at 07:56 AM
http://deanbaker.net/images/stories/documents/Rigged.pdf

October, 2016

Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
By Dean Baker

The Old Technology and Inequality Scam: The Story of Patents and Copyrights

One of the amazing lines often repeated by people in policy debates is that, as a result of technology, we are seeing income redistributed from people who work for a living to the people who own the technology. While the redistribution part of the story may be mostly true, the problem is that the technology does not determine who "owns" the technology. The people who write the laws determine who owns the technology.

Specifically, patents and copyrights give their holders monopolies on technology or creative work for their duration. If we are concerned that money is going from ordinary workers to people who hold patents and copyrights, then one policy we may want to consider is shortening and weakening these monopolies. But policy has gone sharply in the opposite direction over the last four decades, as a wide variety of measures have been put into law that make these protections longer and stronger. Thus, the redistribution from people who work to people who own the technology should not be surprising - that was the purpose of the policy.

If stronger rules on patents and copyrights produced economic dividends in the form of more innovation and more creative output, then this upward redistribution might be justified. But the evidence doesn't indicate there has been any noticeable growth dividend associated with this upward redistribution. In fact, stronger patent protection seems to be associated with slower growth.

Before directly considering the case, it is worth thinking for a minute about what the world might look like if we had alternative mechanisms to patents and copyrights, so that the items now subject to these monopolies could be sold in a free market just like paper cups and shovels.

The biggest impact would be in prescription drugs. The breakthrough drugs for cancer, hepatitis C, and other diseases, which now sell for tens or hundreds of thousands of dollars annually, would instead sell for a few hundred dollars. No one would have to struggle to get their insurer to pay for drugs or scrape together the money from friends and family. Almost every drug would be well within an affordable price range for a middle-class family, and covering the cost for poorer families could be easily managed by governments and aid agencies.

The same would be the case with various medical tests and treatments. Doctors would not have to struggle with a decision about whether to prescribe an expensive scan, which might be the best way to detect a cancerous growth or other health issue, or to rely on cheaper but less reliable technology. In the absence of patent protection even the most cutting edge scans would be reasonably priced.

Health care is not the only area that would be transformed by a free market in technology and creative work. Imagine that all the textbooks needed by college students could be downloaded at no cost over the web and printed out for the price of the paper. Suppose that a vast amount of new books, recorded music, and movies was freely available on the web.

People or companies who create and innovate deserve to be compensated, but there is little reason to believe that the current system of patent and copyright monopolies is the best way to support their work. It's not surprising that the people who benefit from the current system are reluctant to have the efficiency of patents and copyrights become a topic for public debate, but those who are serious about inequality have no choice. These forms of property claims have been important drivers of inequality in the last four decades.

The explicit assumption behind the steps over the last four decades to increase the strength and duration of patent and copyright protection is that the higher prices resulting from increased protection will be more than offset by an increased incentive for innovation and creative work. Patent and copyright protection should be understood as being like very large tariffs. These protections can often the raise the price of protected items by several multiples of the free market price, making them comparable to tariffs of several hundred or even several thousand percent. The resulting economic distortions are comparable to what they would be if we imposed tariffs of this magnitude.

The justification for granting these monopoly protections is that the increased innovation and creative work that is produced as a result of these incentives exceeds the economic costs from patent and copyright monopolies. However, there is remarkably little evidence to support this assumption. While the cost of patent and copyright protection in higher prices is apparent, even if not well-measured, there is little evidence of a substantial payoff in the form of a more rapid pace of innovation or more and better creative work....

geoff -> anne... , March 25, 2017 at 08:43 AM
Medicare for all is a great idea but still well out of political reach for a while. On the other hand, cheaper drugs is a goal even trumpers could support with the right sales pitch.

the pushers are unusually profitable:

https://www.statista.com/statistics/272720/top-global-biotech-and-pharmaceutical-companies-based-on-net-income/

and they make for a pretty scummy pond in the swamp:

https://www.opensecrets.org/lobby/indusclient.php?id=h04

hey, it could happen here:

https://www.law360.com/articles/903111/canada-prevails-in-383m-eli-lilly-case

Peter K. -> geoff ... , March 25, 2017 at 08:59 AM
Trump met with the heads of the drug companies and decided the solutions was more deregulation.
ilsm -> anne... , March 25, 2017 at 09:29 AM
the operating side is more

needy than the whittling

the finance side

DeDude -> anne... , March 25, 2017 at 10:23 AM
I generally love most of what Dean Baker does. But his weaknesses are on display in this piece. Just enough insights to sound convincing, but not enough to be the real McCoy. Yes we pay our medical doctors a lot more than France. However, ours first come out of undergraduate training having paid over $200K for that, then add another $300K for medical school. So that is a cool $500K in debt that their French counterparts don't have to deal with. Next (and before they can se any patients are internships (3 years) where they are not paid enough to begin paying down the student debt, followed by another 2-5 years of specialty training again with a compensation that cover living but not paying down the debt. Finally after becoming specialists (and those who don't are not paid $250K per year), they can begin paying down that student debt which in the meantime has grown substantially (with its private market interest rates).

If you were to put all those foreigners with their free education in direct competition with the domestic crop there would be no US born doctors. But that would be the least of the problems. American medical schools are for the most part outstanding and even the least of those graduating are quite good. That cannot be said for many of the other places in the world where we get most of our foreign trained doctors. There is a very good reason we demand that foreigners go through a US residency program before they can practice medicine. Regardless of what their (real or fake) papers say about their education, they have to perform up to US standards to pass the US residency programs and be licensed – and that is a good thing.

anne : , March 25, 2017 at 08:10 AM
https://www.nytimes.com/2017/03/24/upshot/health-insurance-medicare-obamacare-american-health-care-act.html?ref=business

March 24, 2017

What Comes Next for Obamacare? The Case for Medicare for All
By ROBERT H. FRANK

Republicans are in a bind. They've been promising to repeal Obamacare for seven years, and having won control of the White House and Congress, they had to try to deliver. But while their bitter denunciations of the Affordable Care Act may have depressed its approval numbers, they didn't make replacing it any easier.

On the contrary, the repeal-and-replace bill designed by House Speaker Paul D. Ryan drew withering criticism from the left and the right. Liberals condemned its use of reductions in health coverage for the poor to pay for large tax cuts for the wealthy, while conservatives bemoaned its retention of many subsidies adopted under Obamacare.

In the end, the repeal effort's biggest hurdle may have been loss aversion, one of the most robust findings in behavioral science. As numerous studies have shown, the pain of losing something you already have is much greater than the pleasure of having gained it in the first place. And the nonpartisan Congressional Budget Office estimated that Mr. Ryan's American Health Care Act (A.H.C.A.) would have caused more than 14 million people to lose coverage in the first year alone, with total losses rising to 24 million over the next decade. Many Republicans in Congress were nervous about the political firestorm already provoked by the mere prospect of such losses.

Loss aversion actually threatened the repeal effort on two fronts: voters' fear of losing their coverage, and lawmakers' fear of losing their seats. Like the first fear, the second appeared well grounded. Republican voters wouldn't have been the only ones losing coverage, of course, but early studies suggested that losses would have been concentrated among people who voted for President Trump. The Congressional Budget Office estimated, for example, that the A.H.C.A. would have caused premiums to rise more than sevenfold in 2026 for 64-year-olds making $26,500.

Now that Republicans have withdrawn Mr. Ryan's bill from consideration, attention shifts to what comes next. In an earlier column, I suggested that Mr. Trump has the political leverage, which President Obama did not, to jettison the traditional Republican approach in favor of a form of the single-payer health care that most other countries use. According to Physicians for a National Health Program, an advocacy group, "Single-payer national health insurance, also known as 'Medicare for all,' is a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands." Christopher Ruddy, a friend and adviser of the president, recently urged him to consider this option.

Many Republicans who want to diminish government's role in health care view the single-payer approach with disdain. But Mr. Trump often seems to take pleasure in being unpredictable, and since he will offend people no matter which way he turns, he may want to consider why liberals and conservatives in many other countries have embraced the single-payer approach.

Part of the appeal of Medicare for all is that single-payer systems reduce financial incentives that generate waste and abuse. Mr. Ryan insisted that by relegating health care to private insurers, competition would lead to lower prices and higher quality. Economic theory tells us that this is a reasonable expectation when certain conditions are met. A crucial one is that buyers must be able to compare the quality of offerings of different sellers. In practice, however, people have little knowledge of the treatment options for the various maladies they might suffer, and policy language describing insurance coverage is notoriously complex and technical. Consumers simply cannot make informed quality comparisons in this industry.

In contrast, they can easily compare the prices charged by competing insurance companies. This asymmetry induces companies to compete by highlighting the lower prices they're able to offer if they cut costs by degrading the quality of their offerings. For example, it's common for insurance companies to deny payment for procedures that their policies seem to cover. If policy holders complain loudly enough, they may eventually get reimbursed, but the money companies save by not paying others confers a decisive competitive advantage over rivals that don't employ this tactic. Such haggling is uncommon under single-payer systems like Medicare (though it is sometimes employed by private insurers that supplement Medicare).

Consider, too, the mutually offsetting expenditures on competitive advertising and other promotional efforts of private insurers, which can exceed 15 percent of total revenue. Single-payer plans like Medicare spend nothing on competitive advertising (although here, also, we see such expenditures by supplemental insurers).

According to the Kaiser Family Foundation, administrative costs in Medicare are only about 2 percent of total operating expenditures, less than one-sixth of the rate estimated for the private insurance industry. This difference does not mean that private insurers are evil. It's a simple consequence of a difference in the relevant economic incentives.

American health care outlays per capita in 2015 were more than twice the average of those in the 35 advanced countries that make up the Organization for Economic Cooperation and Development. Yet despite that spending difference, the system in the United States delivers significantly less favorable outcomes on measures like longevity and the incidence of chronic illness....

anne -> anne... , March 25, 2017 at 08:15 AM
http://www.oecd.org/health/health-systems/oecd-health-statistics-2014-frequently-requested-data.htm

November, 2016

Organisation for Economic Co-operation and Development Health Data

Total health care spending per person, 2015 *

United States ( 9451)
OCED average ( 3814)

France ( 4407)

Total health care spending as a share of GDP, 2015

United States ( 16.9)
OCED average ( 9.0)

France ( 11.0)

Pharmaceutical expenditure per person, 2014 *

United States ( 1112)
OECD average ( 538)

France ( 656)

Practising physicians per 1,000 population, 2014

United States ( 2.6)
OECD average ( 3.3)

France ( 3.3)

Practising nurses per 1,000 population, 2014

United States ( 11.2)
OECD average ( 8.9)

France ( 9.6)

Physician consultations per person, 2014

United States ( 4.0)
OECD average ( 6.8)

France ( 6.3)

Medical graduates per 100,000 population, 2014

United States ( 7.3)
OECD average ( 11.4)

France ( 10.0)

* Data are expressed in US dollars adjusted for purchasing power parities (PPPs), which provide a means of comparing spending between countries on a common base. PPPs are the rates of currency conversion that equalise the cost of a given "basket" of goods and services in different countries.

Peter K. -> anne... , -1
As Bernie Sanders says play offense, not just defense. Then the voters will respect you.

It would be funny if Trump goes for round two health care reform and wins bigly with Democrats' help.

Partisans like PGL and Krugman would be in shock.

[Mar 25, 2017] Bernie Sanders is currently the most popular politician in the United States, by a long shot

Mar 25, 2017 | economistsview.typepad.com
jonny bakho -> Lee A. Arnold ... , March 25, 2017 at 05:04 AM
David Frum, the excommunicated conservative wrote in 2010:
""The real leaders are on TV and radio"

Bernie Sanders is the Dems TV leader.
Simple ideas repeated endlessly, easy to memorize slogans
Knows how to manipulate emotions
In the Twitter Age, this is how all successful politicians must message

Chris G -> jonny bakho... , March 25, 2017 at 06:29 AM
It doesn't hurt that his ideas are good ones;-)

Simple slogans repeated often isn't a new approach to politics. It goes back well over a century. "Keep it simple and take credit." Liberals haven't been very good at that in recent decades. (In contrast, FDR was.) Most people aren't wonks nor do they desire to become one. Messaging which presumes that they are or do is not a recipe for success.

Chris G -> Chris G ... , March 25, 2017 at 06:31 AM
Jack Meserve, Keep It Simple and Take Credit - http://democracyjournal.org/arguments/keep-it-simple-and-take-credit/
jonny bakho -> Lee A. Arnold ... , March 25, 2017 at 05:09 AM
Sanders has not "destroyed" the old Democratic Party.
He is a better TV messenger and ambassador to the public
He plays the Paternalistic Grandfather who does not trigger culture shock among white voters on TV
Lee A. Arnold -> jonny bakho... , March 25, 2017 at 05:59 AM
More like the cranky uncle, whom you had better listen to. Bernie Sanders is currently the most popular politician in the United States, by a long shot:

http://thehill.com/blogs/pundits-blog/the-administration/325647-stunning-polls-show-sanders-soaring-while-trumpcare

Peter K. -> jonny bakho... , March 25, 2017 at 08:24 AM
you minimize how well he did in the primary as do all of you dishonest center-left types
Peter K. -> Peter K.... , March 25, 2017 at 08:31 AM
Sanders won New Hampshire, Colorado, Minnesota, Oklahoma, Vermont, Kansas, Nebraska, Maine, Michigan, Idaho, Utah, Alaska, Hawaii, Washington, Wisconsin, Wyoming, Rhode Island, Indiana, West Virginia, Oregon, Montana, North Dakota.

*and he was close in many states like losing Massachusetts 606k to 589k. And the entire second half of the primary the DNC was repeating how Hillary had won mathematically over and over even though people hadn't voted.

DeDude -> jonny bakho... , March 25, 2017 at 08:38 AM
"Sanders has not "destroyed" the old Democratic Party"

No he is not stupid. What he has done is moving the Overton window - something that was long overdue. There is definitely an opening to make ObamaCare the first step towards MediCare for all (as it always was intended by by all but the bluedogs). But as good as Sanders is at message and getting the crowds going, he is going to need help with the politicking to actually get it done.

ilsm -> Lee A. Arnold ... , March 25, 2017 at 05:35 AM
too hard....

two party system

both obey FIRE

why no indeps

go for 'serious'

dems

Russians

cannot mess

this up

[Mar 25, 2017] Democrats are a joke for refusing to sack a sclerotic, corrupt, and inept congressional leadership that had lost three straight elections

Mar 25, 2017 | economistsview.typepad.com
ilsm -> RC AKA Darryl, Ron... , March 25, 2017 at 09:06 AM
cnn resembles deep red tea party fox news..... and the run of the mill dems should fit their tri-corn hats
RC AKA Darryl, Ron -> ilsm... , March 25, 2017 at 09:37 AM
I will take your word for it. We don't watch either CNN nor Fox News at my house. Mostly we watch local (same news and weather crew here appears on each the WWBT/WRLH local NBC/Fox affiliates) news with some sampling of MSNBC and Sunday morning ABC and CBS shows along with the daily half hour of NBC network following the evening local. Cable news is sort of an oxymoron given the prevailing editorial slants. The now retired local TV news anchor Gene Cox laid the groundwork for the best news team in central VA by setting a high bar at his station. Gene laid it all out southern fried with satirical humor and honesty unusual in TV news.
RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , March 25, 2017 at 09:38 AM
Maybe more sarcasm than satire, but the point is the same - wit and honesty.
JohnH -> Chris G ... , March 25, 2017 at 07:52 AM
Apparently we have two jokes alternating to lead America: the Republican jokes vs. the Democratic jokes.

But Democrats are right to expect that, when two jokes vie for power, their turn as joke in power will eventually come.

JohnH -> mulp... , -1
Maybe a post mortem would simply reveal that Democrats should have had a coherent economic message and pursued a strategy of standing up for working America for the past 8 years. For example, having Pelosi demand votes on increasing the minimum wage as often as Ryan demanded votes on killing Obamacare...

Any honest post mortem would have revealed that standing with billionaires and the Wall Street banking cartel--and not prosecuting a single Wall Street banker--is not a winning strategy...

[Mar 25, 2017] The popular press acts as if governments should act like a family. And just as families have to balance the budgets, governments have to. But this is a false analogy

Notable quotes:
"... The result was the economy had to depend on banks to create the money to expand. If the government doesn't create it, who will create the spending power? The answer was the banks. ..."
"... Clinton did what he was told to do by the Secretary of the Treasury, Robert Rubin. In effect, his policy was: "Let the banks create all the money and charge interest instead of the government creating money by spending it like the greenbacks were spent." ..."
"... The advantage of governments creating money is you they don't have to pay interest, because the spending is self-financing. Bank lobbyists cry about how large the government debt is, but this is debt that is not expected to be repaid. Adam Smith wrote that no government has ever paid its debt. ..."
"... The bank strategy continues: "If we can privatize the economy, we can turn the whole public sector into a monopoly. We can treat what used to be the government sector as a financial monopoly. Instead of providing free or subsidized schooling, we can make people pay $50,000 to get a college education, or $50,000 just to get a grade school education if families choose to if you go to New York private schools. We can turn the roads into toll roads. We can charge people for water, and we can charge for what used to be given for free under the old style of Roosevelt capitalism and social democracy." ..."
"... The guiding idea of a well-run economy is to keep natural monopolies out of private hands. This was not done in Russia after 1991. Its disaster under the neoliberals is a classic example. It led to huge immigration rates, shortening life spans, rising disease rates and drug use. You can see how to demoralize a country if you can stop the government from spending money into the economy. That will cause austerity, lower living standards and really put the class war in business. So what Trump is suggesting is to put the class war in business, financially, with an exclamation point. ..."
"... You used the word "stability" and this is often a slogan to prevent thought. George Orwell didn't use the term "junk economics," but he defined what doublethink is. The function is to prevent thought. "Stability" is akin to the "Great Moderation." Remember how economists running up to the 2008 crisis said, "This is a Great Moderation." ..."
"... By dismantling government spending on the Consumer Financial Protection Agency, the public news agencies, the National Endowment for the Arts, you're stripping the economy away and making the American economy like what Margaret Thatcher did in England. You make it less dynamic, a less lively place, and above all a poorer economy. That is the aim of these "reforms," which mean undoing what reforms used to mean for the last century. ..."
Mar 24, 2017 | economistsview.typepad.com

RGC said in reply to RGC...

MICHAEL HUDSON: The popular press acts as if governments should act like a family. And just as families have to balance the budgets, governments have to. But this is a false analogy, because if you personally spend more than you earn, you can't just write an I.O.U., which everybody else can spend as if it's real money. You have to pay the I.O.U. at some point, usually with interest, to the bank. But that's not the case with sovereign governments. When a government runs a budget deficit, it can do so in the way that Abraham Lincoln funded the Civil War: You print the money.

You print it into the economy by spending it.

Almost every year until the 1990s, the United States, like every other country in the world, increased its debt by running a budget deficit, by spending money into the economy for infrastructure, schooling, and roads. This is what enables economies to grow. That stopped during the Clinton administration in the 1990s. At the end of the administration he fell for neoliberal theory that you should balance the budget, and he actually ran a budget surplus. So the government stopped spending money into the economy.

The result was the economy had to depend on banks to create the money to expand. If the government doesn't create it, who will create the spending power? The answer was the banks.

Clinton did what he was told to do by the Secretary of the Treasury, Robert Rubin. In effect, his policy was: "Let the banks create all the money and charge interest instead of the government creating money by spending it like the greenbacks were spent."

The advantage of governments creating money is you they don't have to pay interest, because the spending is self-financing. Bank lobbyists cry about how large the government debt is, but this is debt that is not expected to be repaid. Adam Smith wrote that no government has ever paid its debt.

I think it's easiest for most Americans to understand this by looking at Europe. Under the Eurozone's rules, central banks are not allowed to create much money. As a result the economies of Europe are shrinking into austerity. Greece is the most notorious example. Here you have unemployment among youth up to 50% as the economy for the last five years is suffering from the worst depression since the 1930s. Yet the government is not able to spend the money needed to rebuild the economy. The banks won't let them do it. The aim of neoliberals is to prevent governments from spending money to revive growth by running deficits. Their argument is: "If a government can't run a deficit, then it can't spend money on roads, schools and other infrastructure. They'll have to privatize these assets – and banks can create their own credit to let investors buy these assets and run them as rent-extracting monopolies."

The bank strategy continues: "If we can privatize the economy, we can turn the whole public sector into a monopoly. We can treat what used to be the government sector as a financial monopoly. Instead of providing free or subsidized schooling, we can make people pay $50,000 to get a college education, or $50,000 just to get a grade school education if families choose to if you go to New York private schools. We can turn the roads into toll roads. We can charge people for water, and we can charge for what used to be given for free under the old style of Roosevelt capitalism and social democracy."

This idea that governments should not create money implies that they shouldn't act like governments. Instead, the de facto government should be Wall Street. Instead of governments allocating resources to help the economy grow, Wall Street should be the allocator of resources – and should starve the government to "save taxpayers" (or at least the wealthy). Tea Party promoters want to starve the government to a point where it can be "drowned in the bathtub."

But if you don't have a government that can fund itself, then who is going to govern, and on whose terms? The obvious answer is, the class with the money: Wall Street and the corporate sector. They clamor for a balanced budget, saying, "We don't want the government to fund public infrastructure. We want it to be privatized in a way that will generate profits for the new owners, along with interest for the bondholders and the banks that fund it; and also, management fees. Most of all, the privatized enterprises should generate capital gains for the stockholders as they jack up prices for hitherto public services."

The reason why the European countries, the United States and other countries ran budget deficits for so many years is because they want to keep this infrastructure in the public domain, not privatized. The things that government spends money on – roads, railroads, schools, water and other basic needs – are the kind of things that people absolutely must obtain. So they're the last things you want to privatize. If they're privatized instead of being publicly funded, they can be monopolized. Most public spending programs are for such natural monopolies.

The guiding idea of a well-run economy is to keep natural monopolies out of private hands. This was not done in Russia after 1991. Its disaster under the neoliberals is a classic example. It led to huge immigration rates, shortening life spans, rising disease rates and drug use. You can see how to demoralize a country if you can stop the government from spending money into the economy. That will cause austerity, lower living standards and really put the class war in business. So what Trump is suggesting is to put the class war in business, financially, with an exclamation point.


SHARMINI PERIES: You talked about the implications of cutting government spending and, in fact, your myth number 18 deals with this. You describe this myth as saying that cutbacks in public spending will bring the government budget into balance, restoring stability. And you just demonstrated through the Russian example that this is quite misleading and in fact has the opposite effect and destabilizes the population. So this policy Trump seems to endorse – the cutback in public spending – give us some examples of how this could affect society.


MICHAEL HUDSON: You used the word "stability" and this is often a slogan to prevent thought. George Orwell didn't use the term "junk economics," but he defined what doublethink is. The function is to prevent thought. "Stability" is akin to the "Great Moderation." Remember how economists running up to the 2008 crisis said, "This is a Great Moderation."

We now know that it was the most unstable decade in a century. It was a decade of financial fraud, it was a decade where economic inequality between wealth and the rest of the economy widened. So what made it moderate? Alan Greenspan went before the Senate Committee and gave a long talk on what was so "stable"? He said that what's stable is that workers haven't gone on strike. They are so deeply in debt, they owe so much money that they're one paycheck away from missing an electric utility payment. So they're afraid to strike. They're afraid even to protest against working conditions. They're afraid to ask that their wages be increased to reflect their productivity. What's stable is the wealthy people, Greenspan's constituency, the five percent or the one percent get all of the income and the people get nothing. That is stability according to Alan Greenspan.

Words like "stability" or similar euphemisms are used to make people think that somehow the economy is stable and normal. The reality is that it is being slowly squeezed. That's basically what happened in the Great Moderation. The government was cutting back spending on social programs, dismantling the New Deal array of consumer protection agencies, which Trump also wants to get rid of. The first thing he wanted to get rid of, he said, is Elizabeth Warren's Consumer Financial Protection Agency. The problem for Republicans serving their bank lobbyists is that it's trying to prevent fraud – and that limits consumer choice. Just like we let people go to MacDonald's and buy junk food and junk sodas to get obese, we have to let them have the free choice to put their pension funds in Wall Street companies that are going to cheat them.

These are the Wall Street firms that have paid tens of billions of dollars for the financial fraud they've committed. The Republicans want to dismantle all of the penalties against financial fraud, against cheating consumers. That would reduce the amount of money that sector can extract, and these people are what's driving the economy. But they're driving the economy largely by debt leveraging bordering on fraud. That's the kicker in all this.

By dismantling government spending on the Consumer Financial Protection Agency, the public news agencies, the National Endowment for the Arts, you're stripping the economy away and making the American economy like what Margaret Thatcher did in England. You make it less dynamic, a less lively place, and above all a poorer economy. That is the aim of these "reforms," which mean undoing what reforms used to mean for the last century.

These words and the vocabulary used in the press dovetail into each other to paint a picture of a fictitious economy. The aim is to make people think that they're living in a parallel universe, unable to use a vocabulary and economic concepts to explain just why life is so unfair and why they're being squeezed so badly.

Above all, the aim is to dissuade them from thinking about how it doesn't have to be this way. There is no natural law that says that they should be squeezed by debt, monopolies and fraud. But that kind of thinking requires an alternative program – and an alternative program requires recapturing the language to explain what it is that you're trying to create as an alternative.

[Mar 25, 2017] What is Economism and why it is so damaging

Notable quotes:
"... Ugh what an awful display of pop economism. Globalization and technology are "impersonal forces." No mention of the rise of inequality or the SecStags. No mention of monetary policy fail in Europe. The biggest lies of economism are the lies of omission. ..."
"... Looks like this concept of "Economism" introduced by James Kwak in his book Economism is very important conceptual tool for understanding the tremendous effectiveness of neoliberal propaganda. ..."
"... When competitive free markets and rational well-informed actors are the baseline assumption, the burden of proof shifts unfairly onto anyone proposing a government policy. ..."
"... For example, the basic Econ 101 theory of supply and demand is fine for some products, but it doesn't work very well for labor markets. It is incapable of simultaneously explaining both the small effect of minimum wage increases and the small impact of low-skilled immigration. Some more complicated, advanced theory is called for. ..."
"... But no matter how much evidence piles up, people keep talking about "the labor supply curve" and "the labor demand curve" as if these are real objects, and to analyze policies -- for example, overtime rules -- using the same old framework. ..."
"... An idea that we believe in despite all evidence to the contrary isn't a scientific theory -- it's an infectious meme. ..."
"... Academic economists are unsure about how to respond to the abuse of simplistic econ theories for political ends. On one hand, it gives them enormous prestige. The popularity of simplistic econ ideas has made economists the toast of America's intellectual classes. ..."
"... It has sustained enormous demand for the undergraduate econ major, which serves, in the words of writer Michael Lewis, as a "standardized test of general intelligence" for future businesspeople. But as Kwak points out, the simple theories promulgated by politicians and on the Wall Street Journal editorial page often bear little resemblance to the sophisticated theories used by real economists. ..."
"... And when things go wrong -- when the financial system crashes, or millions of workers displaced by Chinese imports fail to find new careers -- it's academic economists who often get blamed, not the blasé and misleading popularizers. ..."
Jan 20, 2017 | economistsview.typepad.com

Peter K. : January 20, 2017 at 04:35 AM

Noah Smith: The Ways That Pop Economics Hurt America - Noah Smith

"So I wonder if economism was really as unrealistic and useless as Kwak seems to imply. Did countries that resisted economism -- Japan, for example, or France [Germany?] -- do better for their poor and middle classes than the U.S.? Wages have stagnated in those countries, and inequality has increased, even as those countries remain poorer than the U.S. Did the U.S.'s problems really all come from economism, or did forces such as globalization and technological change play a part? Cross-country comparisons suggest that the deregulation and tax cuts of the 1980s and 1990s, although ultimately excessive, probably increased economic output somewhat."

Ugh what an awful display of pop economism. Globalization and technology are "impersonal forces." No mention of the rise of inequality or the SecStags. No mention of monetary policy fail in Europe. The biggest lies of economism are the lies of omission.

libezkova -> Peter K.... , -1
Thank you !

Looks like this concept of "Economism" introduced by James Kwak in his book Economism is very important conceptual tool for understanding the tremendous effectiveness of neoliberal propaganda.

I think it is proper to view Economism as a flavor of Lysenkoism. As such it is not very effective in acquiring the dominant position and suppressing of dissent, but it also can be very damaging.

https://www.bloomberg.com/view/articles/2017-01-19/the-ways-that-pop-economics-hurt-america

== quote ==

...When competitive free markets and rational well-informed actors are the baseline assumption, the burden of proof shifts unfairly onto anyone proposing a government policy. For far too many years, free-marketers have gotten away with winning debates by just sitting back and saying "Oh yeah? Show me the market failure!" That deck-stacking has long forced public intellectuals on the left have to work twice as hard as those safely ensconced in think tanks on the free-market right, and given the latter a louder voice in public life than their ideas warrant.

It's also true that simple theories, especially those we learn in our formative years, can maintain an almost unshakeable grip on our thinking.

For example, the basic Econ 101 theory of supply and demand is fine for some products, but it doesn't work very well for labor markets. It is incapable of simultaneously explaining both the small effect of minimum wage increases and the small impact of low-skilled immigration. Some more complicated, advanced theory is called for.

But no matter how much evidence piles up, people keep talking about "the labor supply curve" and "the labor demand curve" as if these are real objects, and to analyze policies -- for example, overtime rules -- using the same old framework.

An idea that we believe in despite all evidence to the contrary isn't a scientific theory -- it's an infectious meme.

Academic economists are unsure about how to respond to the abuse of simplistic econ theories for political ends. On one hand, it gives them enormous prestige. The popularity of simplistic econ ideas has made economists the toast of America's intellectual classes.

It has sustained enormous demand for the undergraduate econ major, which serves, in the words of writer Michael Lewis, as a "standardized test of general intelligence" for future businesspeople. But as Kwak points out, the simple theories promulgated by politicians and on the Wall Street Journal editorial page often bear little resemblance to the sophisticated theories used by real economists.

And when things go wrong -- when the financial system crashes, or millions of workers displaced by Chinese imports fail to find new careers -- it's academic economists who often get blamed, not the blasé and misleading popularizers.

... ... ...

Russia and China have given up communism not because they stopped having working classes, but because it became obvious that their communist systems were keeping them in poverty. And Americans are now starting to question economism because of declining median income, spiraling inequality and a huge financial and economic crisis.

[Mar 25, 2017] Review of Economism: Bad Economics and the Rise of Inequality by James Kwak

Notable quotes:
"... Neoliberalism, which is essentially simplified pseudo-economics in action, is finally beginning to break down, but rather than yielding to a more rational politics it is giving us Brexit, Trump and similar delusionary movements. Required to choose between the stale cant of economism and authoritarian fairytales of denial, the public is opting for the second door. Unless economism is disposed of quickly, there won't be an opening for a more enlightened third option. ..."
"... The critical deconstructive move follows, in which Kwak surveys the empirical literature, showing that, in real economics, the conventional assumptions are either flat out wrong or at least seriously qualified. He then concludes by explaining the policy implications of a more informed approach. It gets to be a bit formulaic, but it is effective and easy to follow. ..."
"... I can imagine using a book like this in an introductory microeconomics class. (Except for a bit of macro here and there, the book's focus is micro.) It's exactly the right antidote for the tendency of introductory textbooks to oversell markets and undersupply critical thinking. I hope lots of faculty teaching Econ 101 adopt it. ..."
"... He would do well to distinguish between the normative and positive aspects of economism. In a policy context, both are usually entailed: the positive view that this is how the world works is given political salience by the normative view that demand curves represent "benefits" to society and the supply curve "costs". It's important to recognize that economism can fail on either account: either empirical work can show that this is not how the world works, or the assumptions about how markets represent social interests can be challenged, or both. ..."
"... the full-dress neoclassical trade model (Heckscher-Ohlin-Samuelson, although he doesn't identify it as such) recognizes losers as well as winners from trade liberalization and makes this the conceptual linchpin of his critique of economism in this area. ..."
"... the impacts of trade liberalization on employment may be worse than this, since the proposition that the trade balance is unaffected by changes in the degree of openness requires adjustments in exchange rates that, at the very least, are empirically unreliable. ..."
"... In practice it's entirely possible, likely even, that a major liberalization event like the US opening to trade with China at the time of its WTO accession has an effect on the aggregate trade balance and not just the composition of industries on each side of the ledger. I shouldn't make a big deal of this, because Kwak is no doubt eager to avoid criticism that he is unknowledgeable about economics, and most economists would regard my criticism as falling under that shadow-but I don't think I'm wrong about this. ..."
"... Economism is wrong about how labor markets work, how health care works, how international trade works and so on, not because money doesn't buy you love, but because its analysis is wrong . If we're looking for a common message that applies to all these topics and pokes a hole in the economistic world view, wouldn't we look for common elements in the arguments we've already made? ..."
"... At its best, Economism is feisty. It challenges sloppy thinking about how the economic system works and makes the case for progressive policies that would result in greater income equality and access to economic goods. Excellent! ..."
"... The unifying progressive message is not that economics doesn't matter so much; it's that the economics of knee-jerk libertarianism is doctrinaire, false and self-serving. Our message is that we reject the ideology of universal unlimited acquisitiveness as a reasonable way of organizing human affairs, and that the evidence is on our side. I'd love to see a hard-hitting conclusion replace the flabby one that's currently there. ..."
Mar 25, 2017 | econospeak.blogspot.com
There's economics, a field that has been renewing itself, shaking off theoretical rigidities through more attention to behavior and institutions and shifting its center of gravity toward empirical observation and testing. And then there's economics as it exists in standard political discourse, seeing the whole world as refracted through supply and demand diagrams where markets are always efficient and outcomes always socially optimal. This second, dumbed down, knee-jerk libertarian creed is the object of James Kwak's new book, Economism .

If ever a book arrived to fill a need, this one has. Neoliberalism, which is essentially simplified pseudo-economics in action, is finally beginning to break down, but rather than yielding to a more rational politics it is giving us Brexit, Trump and similar delusionary movements. Required to choose between the stale cant of economism and authoritarian fairytales of denial, the public is opting for the second door. Unless economism is disposed of quickly, there won't be an opening for a more enlightened third option.

In many ways, Kwak is an ideal person to take on the job. He's very, very smart. He generally knows his economics, but he's not in thrall to the profession. (He's actually a law professor.) He writes clearly and explains economic concepts with a minimum of lecture-itis. His book is short and to the point.

Most chapters follow the same general template. Kwak begins by laying out an area of policy and briefly explaining why it's important; topics include income distribution, taxes, health care, finance and trade. He then goes into a thorough exposition of the standard economistic analysis, usually based on casual assumptions concerning rational choice, competition, and the market as a cost-benefit device. His next step is to show this conceptual framework in action, as mouthed by politicians and journalists. The critical deconstructive move follows, in which Kwak surveys the empirical literature, showing that, in real economics, the conventional assumptions are either flat out wrong or at least seriously qualified. He then concludes by explaining the policy implications of a more informed approach. It gets to be a bit formulaic, but it is effective and easy to follow.

I can imagine using a book like this in an introductory microeconomics class. (Except for a bit of macro here and there, the book's focus is micro.) It's exactly the right antidote for the tendency of introductory textbooks to oversell markets and undersupply critical thinking. I hope lots of faculty teaching Econ 101 adopt it.

That said, I think it could have been even better than it is. In a future second edition-and I expect there will be one-Kwak should consider these improvements:

1. His adoption of the voice of economism is very extended. He will go on for several pages presenting the economistic worldview as if it were his. Yes, I know, academics like Kwak, myself and perhaps you are trained to cope with this. It's nothing for us to read a book in which the author takes on the personna of someone with a differnt point of view for many pages at a time. Most general readers are not familiar with this, however. I can say from personal experience that something like half my students would come away thinking that Kwak himself espouses economism and is contradicting himself when he criticizes it. What to do about this? Of course, it's important for Kwak to present economism in a neutral, even sympathetic voice, and to do so at the length it requires. Perhaps he considered adding, every paragraph or so, a qualifier like "from this point of view", but decided it was too clunky. In that case, an altered typeface, like italics, could have been used to set off his temporarily assumed voice as expositor of economism. One way or the other, markers are needed for readers unused to academic protocols.

2. He would do well to distinguish between the normative and positive aspects of economism. In a policy context, both are usually entailed: the positive view that this is how the world works is given political salience by the normative view that demand curves represent "benefits" to society and the supply curve "costs". It's important to recognize that economism can fail on either account: either empirical work can show that this is not how the world works, or the assumptions about how markets represent social interests can be challenged, or both. In practice, Kwak relies more on the first critique, and the book usefully draws together key empirical findings on topics like minimum wages, health costs, etc. But the market failure framework could have been given more of a workout than it received; in practice these arguments are effective.

3. The chapter on international trade is timid. Kwak points out that the full-dress neoclassical trade model (Heckscher-Ohlin-Samuelson, although he doesn't identify it as such) recognizes losers as well as winners from trade liberalization and makes this the conceptual linchpin of his critique of economism in this area. In this he has a lot of company; H-O-S with lots of friction has become the standard progressive position. However, the impacts of trade liberalization on employment may be worse than this, since the proposition that the trade balance is unaffected by changes in the degree of openness requires adjustments in exchange rates that, at the very least, are empirically unreliable. ( All exchange rate adjustments in response to anything are empirically unreliable.) In practice it's entirely possible, likely even, that a major liberalization event like the US opening to trade with China at the time of its WTO accession has an effect on the aggregate trade balance and not just the composition of industries on each side of the ledger. I shouldn't make a big deal of this, because Kwak is no doubt eager to avoid criticism that he is unknowledgeable about economics, and most economists would regard my criticism as falling under that shadow-but I don't think I'm wrong about this.

4. The very end of the book-the final four pages-are simply weak. To wrap up, Kwak points out that, whatever its faults, economism delivers by having a simple, all-purpose, easy-to-grasp message and then asks, "What's our message?" His answer is that wealthy economies don't need economic growth or even economic efficiency as they used to, and we should all turn away from economic concerns and embrace happiness instead. Huh? Now, before I launch into a critique of this view, I should make it clear that I agree with a lot of it on matters of substance: economic values, like income, are not the same as human values. One can live well on less money, and the pursuit of wealth should not be the primary goal either for individuals or societies. Yes, of course. But that doesn't mean that "downplay money" is the logical message to set against economism.

One obvious reason is that the difference between wealth and happiness played no role whatsoever in the chapters that led up to his conclusion. Economism is wrong about how labor markets work, how health care works, how international trade works and so on, not because money doesn't buy you love, but because its analysis is wrong . If we're looking for a common message that applies to all these topics and pokes a hole in the economistic world view, wouldn't we look for common elements in the arguments we've already made? It's always a mistake in a piece of writing to go off in a new direction at the point where we should be summing up; this should have occurred to Kwak or been pointed out to him by his reviewers.

The other reason is that downplaying economics-saying that income and other economic measures don't mean so much-violates the spirit of the book. At its best, Economism is feisty. It challenges sloppy thinking about how the economic system works and makes the case for progressive policies that would result in greater income equality and access to economic goods. Excellent! Why at the end turn around and say, in effect, OK, we'll give the conservatives economics, and we'll take happiness instead? No! Don't give them that! They don't deserve it! The unifying progressive message is not that economics doesn't matter so much; it's that the economics of knee-jerk libertarianism is doctrinaire, false and self-serving. Our message is that we reject the ideology of universal unlimited acquisitiveness as a reasonable way of organizing human affairs, and that the evidence is on our side. I'd love to see a hard-hitting conclusion replace the flabby one that's currently there.

It's in the nature of a review like this to dwell on the negative, but I don't want you to be dissuaded from buying and reading this book. Economism is an important work of popular education that needed to be written. Kwak has the skills to do it well-even better than he has this time out.

Posted by Peter Dorman at 5 comments: Links to this post

Bruce Wilder said...
I have not read Kwak's book, though I have read the chapter on minimum wage policy republished in the Atlantic in January. My comment reflects on your review and that Atlantic article.

Kwak is trying to do a very difficult thing in attacking "economism", the glib libertarian ideology derived from neoclassical economics, and he does not seem to grasp just how difficult or why it is so difficult. The Amazon page explains, " Economism: an ideology that distorts the valid principles and tools of introductory college economics, propagated by self-styled experts, zealous lobbyists, clueless politicians, and ignorant pundits." This is the basic rhetorical stance of the book: that the economics of Econ 101 has validity and economism is some distorted, illegitimate simplification. This rhetorical template will get reiterated as the notion that the actual economy is messy and complicated and economism is wrong because it is oversimplified (to serve interests).

On the minimum wage, Kwak concedes "The supply-and-demand diagram is a good conceptual starting point for thinking about the minimum wage. But on its own, it has limited predictive value in the much more complex real world." and then presents sophisticated economics as "it's complicated". "In short, whether the minimum wage should be increased (or eliminated) is a complicated question. The economic research is difficult to parse, and arguments often turn on sophisticated econometric details. Any change in the minimum wage would have different effects on different groups of people, and should also be compared with other policies . . . "

This is a hopelessly weak rhetorical position, because it depends on conceding -- indeed, confirming -- the validity of neoclassical economics, which still outlines introductory college economics textbooks. Economism is a fair distillation of neoclassical economics and, like it or not, mainstream economics nurtures neoclassical economics and demands commitment to the neoclassical framework. Even if the mainstream permits many other ideas to float around academia, neoclassical economics is the framework of indoctrination.

I do not think it is possible to win the argument against economism, if you are not willing to reject neoclassical economics wholesale. Neoclassical economics is the father and mother of economism, and neoclassical economics is wrong, fundamentally wrong, in a scientific (aka epistemological) sense. The world is not essentially or fundamentally as neoclassical economics says, which is provable logically and empirically; you can only sustain neoclassical economics as an academic doctrine by suppressing critical thinking (which economics pedagogy insists upon). We do not live in an economic system organized primarily by markets tending toward general equilibrium; the actual economy is organized primarily by bureaucracy and driven by disequilibrium dynamics. Most prices are not formed by competitive bidding; prices are administratively determined and managed. And so on.

March 18, 2017 at 4:42 PM
Bruce Wilder said...
The supply-and-demand diagram is NOT a good conceptual starting point for thinking about the minimum wage, and Kwak should never have conceded as much. There's no labor market. Most employers offer low-wage workers take-it-leave-it terms, constrained only by the rules and bureaucracy of state and Federal labor regulations, one of which, of course, is the statutory minimum wage. (Millions work for less than the minimum wage by the way -- as the Bureau of Labor Statistics regularly attests.) And, when people go to work, they are managed and supervised in systems that determine how productive they are; if they are paid their "marginal product" in some abstract sense, it is because their managers make it so. They work in bureaucracies controlling production and distribution processes by administrative and technological means, and the terms of their employment reflects this role as controller and controlled: they are paid a more or less fixed wage, subject to being fired. The threat of being fired is key to the willingness of employees to follow managerial direction.

Neoclassical economics does not admit economic hierarchy as central to the organization of the economy. But, when you reject neoclassical economics, you do not exclude all that might be relevant from mainstream economics. Indeed, economists have had many useful insights into "efficiency wages" and the relation of principals to their agents.

Useful and sophisticated ideas are still available after rejecting neoclassical economics, but I am not sure reputable economists are. I do not think Kwak would find his book jacket blurbed by quite such luminary figures, if he had rejected neoclassical economics as one big lie (which it is). He would have been in a stronger logical and rhetorical position to reject economism, but he might have lacked reputable allies. That's what makes the rejection of economism so difficult.

Economism is the ideology of right neoliberalism, but the neoliberal right is locked into a symbiotic relationship with left neoliberalism. Paul Krugman, Brad DeLong, John Quiggin, Noah Smith, Jared Bernstein -- these people seem to be opposed to economism, but they depend upon the legitimacy of neoclassical economics and the mainstream economics establishment too much to allow a winning argument premised on a rejection of the mother lode of economism, neoclassical economics.

It is an old story of "with friends like these who needs enemies". Economics is a thoroughly corrupt profession and all neoclassical economists are some mix of fraud and fool. We might like the fools better, but they are not that much help against the frauds. As Peter Dorman says, "Kwak is no doubt eager to avoid criticism that he is unknowledgeable about economics", but I suspect his eagerness to avoid such criticism is focused more on the sociological factor that mainstream economics nurtures neoclassical economics than on actual knowledge of economics qua knowledge of the economy. And, that's the core problem.

March 18, 2017 at 4:51 PM
Sandwichman said...
"the neoliberal right is locked into a symbiotic relationship with left neoliberalism"

I would have phrased it the other way round. It seems to me the neoliberal right would be content without the left but the neoliberal left desperately needs the neoliberal right for legitimization in its relentless crusade against the heterodox infidels -- the right is what makes Krugman, DeLong et al. "the lefter of two neoliberalisms."

March 18, 2017 at 7:41 PM
George H. Blackford said...
With regard to:

"In practice it's entirely possible, likely even, that a major liberalization event like the US opening to trade with China at the time of its WTO accession has an effect on the aggregate trade balance and not just the composition of industries on each side of the ledger. I shouldn't make a big deal of this, because Kwak is no doubt eager to avoid criticism that he is unknowledgeable about economics, and most economists would regard my criticism as falling under that shadow-but I don't think I'm wrong about this."

Hobson made a very big deal about this when it comes to China more than 100 years ago:

"It is here enough to repeat that Free Trade can nowise guarantee the maintenance of industry, or of an industrial population upon any particular country, and there is no consideration, theoretic or practical, to prevent British capital from transferring itself to China, provided it can find there a cheaper or more efficient supply of labour, or even to prevent Chinese capital with Chinese labour from ousting British produce in neutral markets of the world. What applies to Great Britain applies equally to the other industrial nations which have driven their economic suckers into China. It is at least conceivable that China might so turn the tables upon the Western industrial nations, and, either by adopting their capital and organisers or, as is more probable, by substituting her own, might flood their markets with her cheaper manufactures, and refusing their imports in exchange might TAKE HER PAYMENTS IN LIENS UPON THEIR CAPITAL, REVERSING THE EARLIER PROCESS OF INVESTMENT UNTIL SHE GRADUALLY OBTAINED FINANCIAL CONTROL OVER HER QUONDAM PATRONS AND CIVILISERS. This is no idle speculation. If China in very truth possesses those industrial and business capacities with which she is commonly accredited, and the Western Powers are able to have their will in developing her upon Western lines, it seems extremely likely that this reaction will result." John Atkinson Hobson, Imperialism, A Study, 1902."

March 19, 2017 at 12:19 PM
AXEC / E.K-H said...
Bad economics, futile critique, and illusive new thinking
Comment on Peter Dorman on 'Review of Economism: Bad Economics and the Rise of Inequality by James Kwak'

Economics claims since Adam Smith/Karl Marx to be a science. Yet, everybody who looks closer into the matter comes to the conclusion that economics is a failed science. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the pivotal concept of the subject matter, i.e. profit, wrong.

In this hopeless situation, critique is futile: "There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean." (Ingrao et al., 1990)

James Kwak, too, has not the slightest idea what a paradigm shift means: "To wrap up, Kwak points out that, whatever its faults, economism delivers by having a simple, all-purpose, easy-to-grasp message and then asks, 'What's our message?' His answer is that wealthy economies don't need economic growth or even economic efficiency as they used to, and we should all turn away from economic concerns and embrace happiness instead."*

Instead of coming up with a 'completely new research program and conceptual approach' as replacement for the standard approach, which is known to be false on all methodological counts, Kwak dishes out cheap advice from the self-help workshop: don't worry, be happy. To top it all, this abortive pseudo-critical exercise is advertised as new economic thinking.

Egmont Kakarot-Handtke

* See also 'The economist's pick: liar, moron or what?'
http://axecorg.blogspot.de/2016/12/the-economists-pick-liar-moron-or-what.html

March 20, 2017 at 4:27 PM

[Mar 25, 2017] Hillary and her faction were puppets of deep state. Their liberal interventionist hawk was the same idea as neocons, in many cases it was the same people.

Notable quotes:
"... I suspect that Bill and Hillary Clinton were recruited in the sixties under COINTELPRO (Hillary) and the CIA to do spywork for them. Having been a college student in the late sixties, if you went to a peace rally there was an undercover FBI agent to your left, a CIA asset to your right, a military intelligence officer sitting behind you and a cop from the local red squad in front of you. ..."
"... I understand that Bill's friends in England just presumed he was CIA. ..."
"... Hillary's morphing from Goldwater Girl to neoliberal Democrat occurred while she was hovering around Black Panther legal problems. She observed the Panther trials in New Haven and then spent a summer interning for the law firm in Berkeley that at the time was representing the Black Panthers on the West Coast. The Panthers were the FBI's number one target back then. ..."
"... having "moderate" Dems connected to the Deep State is always helpful. It appears that the role of the Clintons in our unwritten history was to move the Democratic Party to the corporate right. ..."
"... Hillary, when serving on the legal staff for the Democratic Watergate Committee, certainly sat in a place where she could report Democratic progress and how various intelligence leaks were viewed by the other Democrats. ..."
"... The current "Russia hack/Trump traitor" false flag (I describe it more fully below) was originally to give a self-righteous President Clinton the moral high ground to march into Ukraine, the one thing that Trump wouldn't give the Deep State. ..."
Mar 25, 2017 | consortiumnews.com

Mark Thomason , March 23, 2017 at 1:08 pm

This should be no real surprise. Hillary and her faction were neo-Republicans. Their liberal interventionist hawk was the same idea as neocons, in many cases it was the same people.

They kept control of the party. It is not Democratic in the sense of opposing war or McCarthyism or corporate abuses or Wall Street or trade agreements. It is bought and paid for by the people who were the Republicans all along.

This is the end state of triangulating courtesy of Bill Clinton. We have two Republican parties, one even crazier than the other.

Bob In Portland , March 23, 2017 at 4:00 pm

I suspect that Bill and Hillary Clinton were recruited in the sixties under COINTELPRO (Hillary) and the CIA to do spywork for them. Having been a college student in the late sixties, if you went to a peace rally there was an undercover FBI agent to your left, a CIA asset to your right, a military intelligence officer sitting behind you and a cop from the local red squad in front of you.

I understand that Bill's friends in England just presumed he was CIA.

Hillary's morphing from Goldwater Girl to neoliberal Democrat occurred while she was hovering around Black Panther legal problems. She observed the Panther trials in New Haven and then spent a summer interning for the law firm in Berkeley that at the time was representing the Black Panthers on the West Coast. The Panthers were the FBI's number one target back then.

After JFK's removal, the Deep State wanted better control of both parties. Nixon wasn't supposed to be the problem he was for them, so Watergate. But having "moderate" Dems connected to the Deep State is always helpful. It appears that the role of the Clintons in our unwritten history was to move the Democratic Party to the corporate right.

Perhaps Bill earned his bones with Asa Hutchinson in the 80s by ignoring Mena. Hillary, when serving on the legal staff for the Democratic Watergate Committee, certainly sat in a place where she could report Democratic progress and how various intelligence leaks were viewed by the other Democrats.

The current "Russia hack/Trump traitor" false flag (I describe it more fully below) was originally to give a self-righteous President Clinton the moral high ground to march into Ukraine, the one thing that Trump wouldn't give the Deep State.

JWalters , March 23, 2017 at 9:14 pm

Interesting speculations. For new readers just getting acquainted with the Deep State, consider the scholarly work by professor Peter Dale Scott. Here are three interviews about his books.

In the Conversations With History series from UC Berkeley.
https://www.youtube.com/watch?v=CBGgxU27kJA

Deep Politics on the 50th anniversary of JFK's murder.
https://www.youtube.com/watch?v=L0CFpMej3mA

The American Deep State: Wall Street, Big Oil, and the Attack on U.S. Democracy
https://www.youtube.com/watch?v=-QH9yOzhkio

[Mar 24, 2017] There is no such thing as an automated factory. Manufacturing is done by people, *assisted* by automation. Or only part of the production pipeline is automated, but people are still needed to fill in the not-automated pieces

Notable quotes:
"... And it is not only automation vs. in-house labor. There is environmental/compliance cost (or lack thereof) and the fully loaded business services and administration overhead, taxes, etc. ..."
"... When automation increased productivity in agriculture, the government guaranteed free high school education as a right. ..."
"... Now Democrats like you would say it's too expensive. So what's your solution? You have none. You say "sucks to be them." ..."
"... And then they give you the finger and elect Trump. ..."
"... It wasn't only "low-skilled" workers but "anybody whose job could be offshored" workers. Not quite the same thing. ..."
"... It also happened in "knowledge work" occupations - for those functions that could be separated and outsourced without impacting the workflow at more expense than the "savings". And even if so, if enough of the competition did the same ... ..."
"... And not all outsourcing was offshore - also to "lowest bidders" domestically, or replacing "full time" "permanent" staff with contingent workers or outsourced "consultants" hired on a project basis. ..."
"... "People sure do like to attribute the cause to trade policy." Because it coincided with people watching their well-paying jobs being shipped overseas. The Democrats have denied this ever since Clinton and the Republicans passed NAFTA, but finally with Trump the voters had had enough. ..."
"... Why do you think Clinton lost Wisconsin, Michigan, Pennysylvania and Ohio? ..."
Feb 20, 2017 | economistsview.typepad.com
Sanjait -> Peter K.... February 20, 2017 at 01:55 PM

People sure do like to attribute the cause to trade policy.

Do you honestly believe that fact makes it true? If not, what even is your point? Can you even articulate one?

Tom aka Rusty -> Sanjait... , February 20, 2017 at 01:18 PM

If it was technology why do US companies buy from low labor producers at the end of supply chains 2000 - 10000 miles away? Why the transportation cost. Automated factories could be built close by.

ken melvin said in reply to Tom aka Rusty... , February 20, 2017 at 02:24 PM
Send for an accountant.
cm -> Tom aka Rusty... , February 20, 2017 at 03:14 PM
There is no such thing as an automated factory. Manufacturing is done by people, *assisted* by automation. Or only part of the production pipeline is automated, but people are still needed to fill in the not-automated pieces.

And it is not only automation vs. in-house labor. There is environmental/compliance cost (or lack thereof) and the fully loaded business services and administration overhead, taxes, etc.

You should know this, and I believe you do.

Peter K. said in reply to Sanjait... , February 20, 2017 at 03:14 PM
Trade policy put "low-skilled" workers in the U.S. in competition with workers in poorer countries. What did you think was going to happen? The Democrat leadership made excuses. David Autor's TED talk stuck with me. When automation increased productivity in agriculture, the government guaranteed free high school education as a right.

Now Democrats like you would say it's too expensive. So what's your solution? You have none. You say "sucks to be them."

And then they give you the finger and elect Trump.

cm -> Peter K.... , February 20, 2017 at 03:19 PM
It wasn't only "low-skilled" workers but "anybody whose job could be offshored" workers. Not quite the same thing.

It also happened in "knowledge work" occupations - for those functions that could be separated and outsourced without impacting the workflow at more expense than the "savings". And even if so, if enough of the competition did the same ...

And not all outsourcing was offshore - also to "lowest bidders" domestically, or replacing "full time" "permanent" staff with contingent workers or outsourced "consultants" hired on a project basis.

Peter K. said in reply to cm... , February 20, 2017 at 03:33 PM
True.
Peter K. said in reply to Sanjait... , February 20, 2017 at 03:35 PM
"People sure do like to attribute the cause to trade policy." Because it coincided with people watching their well-paying jobs being shipped overseas. The Democrats have denied this ever since Clinton and the Republicans passed NAFTA, but finally with Trump the voters had had enough.

Why do you think Clinton lost Wisconsin, Michigan, Pennysylvania and Ohio?

[Mar 24, 2017] Paltering as a new way to not tell the truth

Notable quotes:
"... The palter was to skip the fact that it had broken down twice in the last year, instead saying, "This car drives very smoothly and is very responsive. Just last week it started up with no problems when the temperature was 5 degrees Fahrenheit." The outright lie would have been: "This car has never had problems." Researchers learned that car sellers perceived paltering as more ethical than lying, and thus used it more. ..."
"... Paltering allows people who consider themselves honest to deceive others while getting the same results that lying would. In a third experiment, participants in a pretend real estate negotiation performed just as well when they paltered as they did when they lied. Their successes didn't come without costs, however. When the deception was discovered, negotiation partners deemed palterers as untrustworthy as liars. ..."
"... One occasional advantage of paltering over lying is plausible deniability: You can blame any misunderstanding on the listener. ..."
"... So how can you avoid falling victim? "If you ask a specific question, that specific question should be answered, not a variant of it," Rogers says, even though insistence on clarification "often makes you look like a jerk." ..."
"... Paltering relies on our tendency to trust others and not cause a scene. ..."
Mar 19, 2017 | economistsview.typepad.com
Fred C. Dobbs : March 18, 2017 at 08:39 PM , 2017 at 08:39 PM 'Paltering,' a new way to not tell the truth
http://www.bostonglobe.com/ideas/2017/03/17/paltering-new-way-not-tell-truth/TRB2ap22NK5Ya8KjF4x0GI/story.html?event=event25 via @BostonGlobe
Matthew Hutson - March 17, 2017

... ... ..

Although paltering occurs in all realms of life, researchers at Harvard's Kennedy School of Government focused on its use in negotiation. In one of eight studies to be published in the Journal of Personality and Social Psychology, study participants pretended to sell a used car on eBay. They answered the buyer's question "Has this car ever had problems?" with a response selected from a list supplied by the researchers.

The palter was to skip the fact that it had broken down twice in the last year, instead saying, "This car drives very smoothly and is very responsive. Just last week it started up with no problems when the temperature was 5 degrees Fahrenheit." The outright lie would have been: "This car has never had problems." Researchers learned that car sellers perceived paltering as more ethical than lying, and thus used it more.

In another study, half of surveyed executives said they paltered in more than "a few" of their negotiations, versus a fifth who said they actively lied more than a few times. Consistent with this discrepancy, executives viewed the behavior as more honest than lying.

Paltering allows people who consider themselves honest to deceive others while getting the same results that lying would. In a third experiment, participants in a pretend real estate negotiation performed just as well when they paltered as they did when they lied. Their successes didn't come without costs, however. When the deception was discovered, negotiation partners deemed palterers as untrustworthy as liars.

Another study found that victims saw palterers as less ethical than palterers saw themselves. We have a "broken mental model" of paltering, the researchers have concluded, seeing this behavior as honest when others do not.

One occasional advantage of paltering over lying is plausible deniability: You can blame any misunderstanding on the listener. Without knowing the speaker's intentions, it's difficult to diagnose paltering with certainty says Todd Rogers, a behavioral scientist at the Kennedy School and the paper's lead author. Few examples are as clear as Bill Clinton's response when asked if he'd had a sexual relationship with Monica Lewinsky: "There is not a sexual relationship - that is accurate." (Note the slick use of present tense.)

So how can you avoid falling victim? "If you ask a specific question, that specific question should be answered, not a variant of it," Rogers says, even though insistence on clarification "often makes you look like a jerk."

Paltering relies on our tendency to trust others and not cause a scene. "It's pretty amazing how much you can get away with because of people's truth bias," says David Clementson, a researcher at Ohio State University's School of Communication, who was not involved in the study. "Paltering totally takes advantage of that, diabolically and deceptively."

Artful Paltering: The Risks and Rewards
of Using Truthful Statements to Mislead Others
Rogers, Todd; Zeckhauser, Richard; et al.
Journal of Personality and Social Psychology,
Vol 112(3), Mar 2017,
https://www.apa.org/pubs/journals/releases/psp-pspi0000081.pdf

There's a Word for Using
Truthful Facts to Deceive: Paltering
HBR - Francesca Gino - October 05, 2016
https://hbr.org/2016/10/theres-a-word-for-using-truthful-facts-to-deceive-paltering

[Mar 24, 2017] Neoliberal policies aided the far right.

Notable quotes:
"... During the inflationary crisis of the 1970s, elite policymakers in Western Europe came to the conclusion that it was no longer possible for the welfare state to operate as it had since 1945. Their project thereafter has been twofold: to convince the public that their diagnosis is right, and to enact (what they consider) necessary neoliberal reforms by any means necessary. ..."
"... The first task proved difficult with certain reforms (notably liberalizing labor markets) and easier with others (implementing a fixed exchange rate regime, effectively blocking full employment macroeconomic policy, though not explicitly described as such by its proponents). ..."
"... Gradually, elites shifted their emphasis toward the second strategy. Their primary means of forcing through reform has been the non-democratic policymaking machinery that the European Union put in place in the 1980s and '90s to straitjacket national political actors. (A policymaking machinery that national actors have largely gone along with, since they too are convinced that their domestic policies need a heavy dose of neoliberal reform.) ..."
"... The European far right has existed continuously since World War II, with outbreaks in different countries at different times, each of which is an interesting political phenomenon in its own right. ..."
"... Le Pen's first appearance on the French political scene: the 1956 general election, when Le Pen was elected as part of a wave of followers of the lower-middle-class, xenophobic, populist tax-revolter Pierre Poujade. ..."
"... The center-left establishment is disdained because it tried to bypass national politics and become the high priest-caste of a regressive European order. ..."
"... The reason this political moment feels different - the threat of the far right more threatening, the wan protection offered by the political establishment least reassuring - has nothing to do with the far right itself, nor with the failure of traditional social-democratic policies. Indeed, since Beauchamp assumes that social democracy has been static since 1945, it cannot possibly have caused a political phenomenon that only thrust itself upon us in the last few years. ..."
"... The difference - the critical break - lies in the behavior of the establishment near-right in the aftermath of the financial crisis. It perceived, far sooner than the hapless social democrats of the European mainstream, that the consensus economic policies of the post-1970s era were doomed in the public mind. Having no other acceptable economic program to fall back on, they moved to assimilate xenophobia and use it as both an offensive and defensive weapon for the coming populist onslaught. That is what Cameron did when he acceded to a Brexit referendum, and that is what the Republican Party did when it nominated Donald Trump for the presidency. ..."
"... In short, Trump cannot simply have been caused by white supremacy, because we have always had white supremacy. What we haven't always had is the breakdown of elite consensus and the center-left's veneration of procedural norms and reliance on "non-partisan" third-party validators to fight what is in fact an ideological power struggle. ..."
Mar 19, 2017 | economistsview.typepad.com
Peter K. : March 17, 2017 at 01:07 PM
Again it's interesting that Sanjait and PGL usually agree with Krugman, Bible and verse but they didn't agree with his most recent blog post which was about populism and leftwing/Sanders-type economic policy.

Titled "Populism and the Politics of Health"

And yet they didn't want to talk about! Very odd...

Here's a good rejoiner to Vox and Krugman about a subject Sanjait and PGL don't want to talk about:

https://www.jacobinmag.com/2017/03/beauchamp-vox-le-pen-corbyn-trump-populism/

No Easy Answers, Just Bad History

A Vox writer sets out to prove social-democratic policies aided the far right. He fails.

by Marshall Steinbaum

Several weeks before Hillary Clinton's bitter defeat at the hands of Donald Trump, Vox's Zack Beauchamp waded into the simplistic debate about whether "economic anxiety" or racism was to blame for Trump's political success with a salvo on behalf of the racism explanation. Although that effort made some worthwhile points, it ultimately failed to explain why long-existing latent racism manifested in the sudden increase in xenophobia in formal politics.

This week Beauchamp returned to the breach, which has only grown wider since Trump's victory. Now the battle is about whether economic populism offers a way to stop Trump and the international march of the far right, rather than whether economic dislocation caused that march in the first place.

Beauchamp doesn't think Bernie Sanders–style economic populism can foil the far right. But his argument is much more ambitious: he sets out to prove that economically populist policies stoke, rather than ameliorate, far-right political tendencies. To do that, he deploys the following claims:

*European countries that adopted more generous redistributive policies in the post–World War II era were more vulnerable to far-right politics than those that adopted less generous ones.

*The far right's rise occurred over the past several decades and continues despite the Left's efforts to buy its supporters off with socialism. The reason why is that continuous immigration has run up against an electorate that is irredeemably racist and only becomes more so as it perceives immigrants to be the beneficiaries of the welfare state.

*Recent cases in which once-center-left parties swung decisively to the left - notably, the UK Labour Party - have proved politically disastrous and only further exacerbated the loss of political ground to the far right.

*American history is replete with white supremacy, and that fact is probably the major reason why politics in the US has consistently been several notches to the right of our European counterparts.

Of these claims, only the last one resembles reality. All the others are blatant misreadings of recent and not-so-recent history.

According to Beauchamp's stylized view of European politics, social democracy exists along a one-dimensional continuum, with variation in the degree to which it was enacted into policy in different countries after 1945. Combining the rising tide of immigration since the 1970s with the ex-ante degree of social generosity, Beauchamp concludes that redistribution is perceived as a giveaway to outsiders, and hence motivates backlash politics.

What's missing here is an understanding of what actually happened to European social democracy along the way. So let me supply a hopefully slightly better potted history.

During the inflationary crisis of the 1970s, elite policymakers in Western Europe came to the conclusion that it was no longer possible for the welfare state to operate as it had since 1945. Their project thereafter has been twofold: to convince the public that their diagnosis is right, and to enact (what they consider) necessary neoliberal reforms by any means necessary.

The first task proved difficult with certain reforms (notably liberalizing labor markets) and easier with others (implementing a fixed exchange rate regime, effectively blocking full employment macroeconomic policy, though not explicitly described as such by its proponents).

Gradually, elites shifted their emphasis toward the second strategy. Their primary means of forcing through reform has been the non-democratic policymaking machinery that the European Union put in place in the 1980s and '90s to straitjacket national political actors. (A policymaking machinery that national actors have largely gone along with, since they too are convinced that their domestic policies need a heavy dose of neoliberal reform.)

This hollowing out of national politics has had a profound effect on European social democracy. As power shifted from democratically accountable to democratically unaccountable institutions through privatization and European integration, the state's capacity to do anything about popular (as opposed to elite) grievances eroded and discontent exploded.

The ideal end goal of contemporary European social democratic parties is perhaps best embodied by Germany's Hartz Reforms. Enacted by a Social Democratic government in the early to mid 2000s over the objections of the country's labor unions, the labor market reforms occasioned a split in the party that has not been bridged since. According to the consensus narrative, the measures left Germany in better shape than ever, allowing it to weather the Great Recession and become a haven for economic and political refugees.

Beauchamp buys this assessment, endorsing - without evidence - the view that too much redistribution and regulation causes economic problems. Yet the Hartz Reforms are not responsible for Germany's relative macroeconomic success. In fact, they've worsened its labor market outcomes.

Beauchamp's point is not to conduct a policy evaluation, of course, but to presuppose that such an evaluation has already been conducted. And that serves his real rhetorical aim: to discredit the notion that social-democratic policies offer a solution to an emboldened far right. That it might be exactly the failure of these neoliberal reforms and the disrepute they've brought the leaders and factions who spearheaded them that caused social democracy's parlous state is nowhere entertained. The sea change in social democracy goes entirely unmentioned in Beauchamp's piece.

Which brings us to the parallel potted history of the European far right. Beauchamp's method is to recount a series of dates and country names: Jen-Marie Le Pen's creation of the Front National in France in 1972; its electoral breakthrough in the 1984 European elections (which Beauchamp doesn't note immediately followed a round of fiscal austerity inflicted by a Socialist government); Jorg Haider's takeover of the Freedom Party in Austria in 1986; Pim Fortuyn's 2002 assassination on the cusp of winning an outsized share of the vote in a Dutch parliamentary election; and Le Pen's success at reaching the French presidential election's second round that year. The narrative here is of a transnational, steady rise to power.

That telling is almost wholly false. The European far right has existed continuously since World War II, with outbreaks in different countries at different times, each of which is an interesting political phenomenon in its own right.

Beauchamp doesn't mention, for instance, Le Pen's first appearance on the French political scene: the 1956 general election, when Le Pen was elected as part of a wave of followers of the lower-middle-class, xenophobic, populist tax-revolter Pierre Poujade. Why omit that election? Because it would hinder Beauchamp's claim, pointing as it does to a social movement that has long existed on the fringes of politics and society and comes closest to power only when the political establishment is most discredited in the public mind. And that is exactly where we are now.

The reason the European political establishment, particularly of the center-left variety, is held in contempt is not because it tried making the welfare state more generous, only to have the electorate turn against them out of the racist belief that foreigners were vacuuming up all the benefits. The center-left establishment is disdained because it tried to bypass national politics and become the high priest-caste of a regressive European order.

Which brings us to the UK Labour Party and Jeremy Corbyn's election as its leader. Beauchamp's move here is to conflate Corbyn with his hapless predecessor, Ed Miliband, and thereby link Labour's poor performance since 2010 to one big move to the left. In truth, Miliband inherited a party burned by its association with the financial crisis and its willingness to go along with the Iraq War, and steered it through treacherous waters with a mix of Blairite and more populist rhetoric (his greatest success being a proposal to regulate power companies).

Although Beauchamp paints the 2015 general election result as a disaster for Labour, the incumbent Tory-led coalition government came very close to losing, and the current Tory government enjoys the slimmest parliamentary majority since the 1970s. Labour netted seats at Conservative and Liberal Democrat expense in England; its total count suffered because the Scottish electorate deserted the party in favor of the Scottish National Party - a move driven by Scotland's overwhelming disgust for the incumbent government and hostility to the Westminster Labour faction's record under Blair and Brown. Far from being a failure of the left, these results were further evidence of the establishment's tarnished legitimacy.

This is the environment that propelled Corbyn to the top of Labour. His candidacy in the leadership election later that year was given a crucial boost by the parliamentary party's failure to oppose the reelected Tory government's cuts to social welfare early in the parliament's term - feeding the perception of a hapless, ideologically adrift party leadership in need of a drastic shake up.

Notably, the name "David Cameron" appears not once in Beauchamp's account of recent British political history. Yet the reason Cameron won the 2015 election was the big giveaway he made to shore up his right flank: the Brexit referendum. When Brexit ended up passing - despite the opposition of every major party - it was a gigantic slap in the face to the incumbent establishment. (Oddly, Beauchamp portrays Brexit as discrediting Corbyn - mirroring the way that Corbyn's intraparty opponents blamed his leadership for the vote, even though the Labour electorate overwhelmingly opposed Brexit and its winning margin was drawn from the English middle class, long the Tories' electoral backbone.)

The reason this political moment feels different - the threat of the far right more threatening, the wan protection offered by the political establishment least reassuring - has nothing to do with the far right itself, nor with the failure of traditional social-democratic policies. Indeed, since Beauchamp assumes that social democracy has been static since 1945, it cannot possibly have caused a political phenomenon that only thrust itself upon us in the last few years.

The difference - the critical break - lies in the behavior of the establishment near-right in the aftermath of the financial crisis. It perceived, far sooner than the hapless social democrats of the European mainstream, that the consensus economic policies of the post-1970s era were doomed in the public mind. Having no other acceptable economic program to fall back on, they moved to assimilate xenophobia and use it as both an offensive and defensive weapon for the coming populist onslaught. That is what Cameron did when he acceded to a Brexit referendum, and that is what the Republican Party did when it nominated Donald Trump for the presidency.

Which brings us, finally, back home. The last section of Beauchamp's article draws upon the great work of Eric Foner and his many disciples. American democracy and American government, Foner argues, have been stained by white supremacy from the country's founding right up through the present. The disenfranchisement of a large segment of what would have been a core constituency for an American social-democratic party - southern blacks - helps explain twentieth- and twenty-first century political and policy outcomes, well beyond the dire consequences for disenfranchised blacks themselves. This is a basic, ineluctable fact of American politics.

That's not where Beauchamp ends up, however. Instead he blames the victim for social democracy's failure in the US: by advocating economic egalitarianism in hostile political territory, he argues, economic populists brought defeat upon themselves as a racist electorate interpreted that agenda as a bid to overturn the racial hierarchy.

As Matt Bruenig has written, the unspoken implication of Beauchamp's narrative is that any left economic agenda must first make it clear that the racial hierarchy will under no circumstances be threatened. "You can have diversity or you can have economic justice, but you can't have both," to use Bruenig's characterization. The acceptance of that false dichotomy, of course, is what gave us "super-predators," "the end of welfare as we know it," and the Obama administration's absolute prohibition on uttering the word "poverty" in public prior to its 2012 reelection.

Yet if Beauchamp's interpretation is correct, then the US should never have seen anything other than reactionary economic policy. And that's obviously not the case.

Interracial, interethnic social movements in the late nineteenth and early twentieth century won major reforms in the face of implacable hostility from both white supremacists and capitalist interests. And insofar as Progressive Era politicians betrayed the integrated coalitions that brought them to power, the sellout took place behind the closed doors of the statehouses and the United States Capitol. They most certainly did not reflect the impossibility of forming a class-based, multiracial political coalition.

Then there was the period from 1940 to 1970, which witnessed the greatest progress in closing the racial wealth and earnings gaps since Reconstruction, thanks to the strength of the New Deal coalition and the labor movement, which integrated the federal government's military-industrial supply chain (as well as the military itself, following the war), and the Civil Rights Movement, which successfully pressed the federal government to intervene in the South on behalf of equal rights. That advance was eventually turned back the same way it was during Reconstruction: through an alliance of white supremacy and implicitly racialized "free market" ideology, the latter of which came to dominate both major political parties.

In short, Trump cannot simply have been caused by white supremacy, because we have always had white supremacy. What we haven't always had is the breakdown of elite consensus and the center-left's veneration of procedural norms and reliance on "non-partisan" third-party validators to fight what is in fact an ideological power struggle.

Insofar as Beauchamp has a rhetorical opponent rather than a straw man, it is the Left's backlash against this retrograde, apologetic politics, which comes at a time when the latter has finally and abjectly failed to win or hold power at the federal, state, or local level. And that failure has occurred because centrist apologetics are up against the real thing: far-right xenophobia, shoulder to shoulder with plutocracy, dominating our national politics and threatening the lives and wellbeing of millions of our American and immigrant brethren.

Winning justice for those oppressed groups, if it is to happen, will owe nothing to the politics for which Beauchamp fights his rearguard action.

[Mar 24, 2017] GDP and statistican charlatans

Notable quotes:
"... With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. [...] ..."
Mar 24, 2017 | economistsview.typepad.com
libezkova -> pgl... Reply Friday, March 24, 2017 at 10:38 AM , March 24, 2017 at 10:38 AM

Do you really think that GDP is "econofact"?

Or is it "econo-opinion" ?

People like you pray on the altar of GDP growth, don't they?

Look at the formula and shake from fear because the formula:

GDP = C + G + I + NX 

or

GDP = consumption + government+ investment + (exports − imports) 

is clearly open to huge machinations (BTW G includes purchase of weapons for the military; you get the idea what I am hinting at). Also all the contribution of financial firms to GDP should probably be counted with negative sign ;-). Because large part of it is either racket or illicit rent extraction from the society which weakens the "real" economy.

The problem with all major statistical aggregates is that "it is better not to see them being made."

And if you measure GDP via

GDP = Compensation of employees + Gross operating surplus + Gross mixed income 

are you sure that you will get the same metric?

The same is true for unemployment, inflation, oil production, and other "politically sensitive" economic metrics.

When I see a person who quotes GDP figures or unemployment without discussing his view of its reliability and margin of error (for example for GDP via inflation, or the method of including "services" part of economy; same for the difference between fake U3 and more realistic U6 for unemployment), I suspect that particular person is either charlatan, or neoclassical economist ( which is basically highly intersecting subsets ).

We probably should introduce the term "statiness" in analogy with "mathiness" (or would "number racket" be a better term?)

As Kuznets told to "statistical charlatans" long ago:

The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria.

With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. [...]

All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known.

And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.

[Mar 24, 2017] Economism vs neoliberalism

Notable quotes:
"... Facts are always presented via lens of some underling theory and if the theory is wrong, facts can lie, even when the figures are more or less correct, or within the margin of error. ..."
"... Technocratic neoliberal economists well represented here actually serve as a fifth column of financial oligarchy, and always were. ..."
"... Simplistic and wrong supply-and-demand theory fed a market fundamentalism ideology. As a result we have a financial crash, a dysfunctional health-care system, spiraling inequality and a deficient, inadequate for a modern society social-safety net. ..."
"... When competitive free markets and rational well-informed actors are the baseline assumption, the burden of proof shifts unfairly onto anyone proposing a government policy. Government programs and regulations start to seem dangerous and inefficient, while inequality begins to feel like the natural and just order of things. ..."
"... The Amazon page to Kwak book explains, "Economism: an ideology that distorts the valid principles and tools of introductory college economics, propagated by self-styled experts, zealous lobbyists, clueless politicians, and ignorant pundits." ..."
"... Economism is reduction of all social facts to economic dimensions. The term is often used to criticize economics as an ideology, in which supply and demand are the only important factors in decisions, and outstrip or permit ignoring all other factors. ..."
"... It is believed to be a side effect of neoclassical economics and blind faith in an "invisible hand" or "laissez-faire" means of making decisions, extended far beyond controlled and regulated markets, and used to make political and military decisions. ..."
"... Conventional ethics would play no role in decisions under pure economism, except insofar as supply would be withheld, demand curtailed, by moral choices of individuals. Thus, critics of economism insist on political and other cultural dimensions in society. ..."
Mar 24, 2017 | economistsview.typepad.com

libezkova : Friday, March 24, 2017 at 08:38 AM

Re: Facts or EconoFacts? - Noahpinion

Facts are always presented via lens of some underling theory and if the theory is wrong, facts can lie, even when the figures are more or less correct, or within the margin of error.

Technocratic neoliberal economists well represented here actually serve as a fifth column of financial oligarchy, and always were.

Rehashing Noah Smith thoughts we can say:

  1. Simplistic and wrong supply-and-demand theory fed a market fundamentalism ideology. As a result we have a financial crash, a dysfunctional health-care system, spiraling inequality and a deficient, inadequate for a modern society social-safety net.
  2. So when people like Krugman are now expressing their rage about Trump social policies they should understand that they created Trump.
  3. When competitive free markets and rational well-informed actors are the baseline assumption, the burden of proof shifts unfairly onto anyone proposing a government policy. Government programs and regulations start to seem dangerous and inefficient, while inequality begins to feel like the natural and just order of things.
  4. Neoliberalism with its set of myth, sold as economic theory maintains an almost unshakeable grip on thinking of most people in the USA. It is the USA civil religion, national ideology that displaced Christianity. So they now somebody claims the this is one nation under God, they factually incorrect if we mean Jesus ;-) It is a newly-born nation which rejected Christianity, adopted neoliberalism instead and now prays to the altar of "free market".
  5. Because those myths when shared by most people, they obtained its own dynamics. In this sense too we can say that most people in the USA are totally and possibly irrevocably "neoliberally-brainwashed". That means that neoliberalism has huge staying power and it is unclear when and how and into what it collapses.
  6. That might well mean that like Bolsheviks who used to hold the same ideological grip on the people of the USSR people of the USA will march toward the cliff without much thinking.
  7. The abuse of simplistic econ theories for political ends gives neoliberal economists enormous prestige. It also sustains the enormous demand for the undergraduate econ major and corresponding courses and textbooks (look at Mankiw ;-). Passing economic courses with high grade now serves like SAT for those who want to go into business or management. The mark of indoctrination. Look at disdain with which "economists" here treat the people who does not know or does not want to know all this neoclassic nonsense.
  8. The worldview neoliberalism promulgates is too simplistic, and inevitably ends up hurting the many to benefit the few.

There one additional notion that is more general then neoliberalism and that is applicable here. It is called "economism" (please read Kwak book, it is really worth reading).

This is the reduction of all social facts to economic dimensions which is at the core of mental model that most "economists" here use. Unlike mathiness, it is a very old term which was use since late 19th century.

The Amazon page to Kwak book explains, "Economism: an ideology that distorts the valid principles and tools of introductory college economics, propagated by self-styled experts, zealous lobbyists, clueless politicians, and ignorant pundits."

Here is a relevant quote from Wikipedia

== quote ==

Economism is reduction of all social facts to economic dimensions. The term is often used to criticize economics as an ideology, in which supply and demand are the only important factors in decisions, and outstrip or permit ignoring all other factors.

It is believed to be a side effect of neoclassical economics and blind faith in an "invisible hand" or "laissez-faire" means of making decisions, extended far beyond controlled and regulated markets, and used to make political and military decisions.

Conventional ethics would play no role in decisions under pure economism, except insofar as supply would be withheld, demand curtailed, by moral choices of individuals. Thus, critics of economism insist on political and other cultural dimensions in society.

Old Right social critic Albert Jay Nock used the term more broadly, denoting a moral and social philosophy "which interprets the whole sum of human life in terms of the production, acquisition, and distribution of wealth". He went on to say "I have sometimes thought that here may be the rock on which Western civilization will finally shatter itself. Economism can build a society which is rich, prosperous, powerful, even one which has a reasonably wide diffusion of material well-being.

It can not build one which is lovely, one which has savor and depth, and which exercises the irresistible power of attraction that loveliness wields.

Perhaps by the time economism has run its course the society it has built may be tired of itself, bored of its own hideousness, and may despairingly consent to annihilation, aware that it is too ugly to be let live any longer."[1]

libezkova -> libezkova... , -1
"It is a newly-born nation which rejected Christianity, adopted neoliberalism instead and now prays to the altar of "free market"."

Neoliberalism explicitly rejects the key ideas of Christianity -- the idea of ultimate justice for all sinners. Like Marxism this is an atheistic philosophy which asserts that "each individual is his or her own god and there is no room for any other God. "

Here is Pope Francis thought of the subject (Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013):

... Such an [neoliberal] economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a "disposable" culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society's underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the "exploited" but the outcast, the "leftovers".

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed.

Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people's pain, and feeling a need to help them, as though all this were someone else's responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase; and in the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

No to the new idolatry of money

55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

No to a financial system which rules rather than serves

57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: "Not to share one's wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs".[55]

58. A financial reform open to such ethical considerations would require a vigorous change of approach on the part of political leaders. I urge them to face this challenge with determination and an eye to the future, while not ignoring, of course, the specifics of each case. Money must serve, not rule! The Pope loves everyone, rich and poor alike, but he is obliged in the name of Christ to remind all that the rich must help, respect and promote the poor. I exhort you to generous solidarity and a return of economics and finance to an ethical approach which favours human beings.

No to the inequality which spawns violence

59. Today in many places we hear a call for greater security. But until exclusion and inequality in society and between peoples is reversed, it will be impossible to eliminate violence. The poor and the poorer peoples are accused of violence, yet without equal opportunities the different forms of aggression and conflict will find a fertile terrain for growth and eventually explode. When a society – whether local, national or global – is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root. Just as goodness tends to spread, the toleration of evil, which is injustice, tends to expand its baneful influence and quietly to undermine any political and social system, no matter how solid it may appear. If every action has its consequences, an evil embedded in the structures of a society has a constant potential for disintegration and death.

It is evil crystallized in unjust social structures, which cannot be the basis of hope for a better future. We are far from the so-called "end of history", since the conditions for a sustainable and peaceful development have not yet been adequately articulated and realized.

60. Today's economic mechanisms promote inordinate consumption, yet it is evident that unbridled consumerism combined with inequality proves doubly damaging to the social fabric. Inequality eventually engenders a violence which recourse to arms cannot and never will be able to resolve. This serves only to offer false hopes to those clamouring for heightened security, even though nowadays we know that weapons and violence, rather than providing solutions, create new and more serious conflicts. Some simply content themselves with blaming the poor and the poorer countries themselves for their troubles; indulging in unwarranted generalizations, they claim that the solution is an "education" that would tranquilize them, making them tame and harmless.

All this becomes even more exasperating for the marginalized in the light of the widespread and deeply rooted corruption found in many countries – in their governments, businesses and institutions – whatever the political ideology of their leaders.

RC AKA Darryl, Ron -> libezkova... March 24, 2017 at 11:34 AM
An excellent set of comment posts. THANKS!
RGC -> libezkova... March 24, 2017 at 11:47 AM
"It is a newly-born nation which rejected Christianity, adopted neoliberalism instead and now prays to the altar of "free market"."

How about "Mammon"

Mammon /ˈmæmən/ in the New Testament of the Bible is commonly thought to mean money, material wealth, or any entity that promises wealth, and is associated with the greedy pursuit of gain. "You cannot serve both God and mammon."

https://en.wikipedia.org/wiki/Mammon

[Mar 24, 2017] The Mechanical Turn in Economics and Its Consequences

Notable quotes:
"... In the same way, neoliberals are no different. They aren't bad people – they just see their policies as right and just because those policies are working well for them and the people in their class, and I don't think they really understand why it doesn't work for others – maybe, like Adam Smith, they think that is the "natural state" .. ..."
"... Read the first sentence of the Theory of Moral Sentiments – it makes an assumption which is the foundation of all of Adam Smith. He asserted that all men are moral. Morality in economics is the invisible hand creating order like gravity in astronomy. Unfortunately, Adam Smith's assumption is false or at least not true enough to form a sound foundation for useful economic theory. ..."
"... But "morality" means different things to different people. Smith only saw the morality of his own class. For example, I am sure a wealthy man would consider it very moral to accumulate as much money as he could so that he would be seen by his peers as a good and worthy man who cares for his future generations and the well being of his class – he doesn't see this accumulation as amoral – whilst a poor man may think that kind of accumulation is amoral because he thinks that money could be better used provide for those without the basic needs to survive ..."
"... "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." ..."
"... Another I remember from Smith was something like, "The law exists to protect those who have much from those who have little." Sounds about right. ..."
"... One of Steve Keen's favourite analogies is astronomy. Neoclassical economics is like Ptolemy's epicycles; assume the Earth is at the centre, and that the planets orbit in circles and simply by adding little circles-epicycles-you can accurately describe the observed motion of the planets. The right epicycles in the right places can describe any motion. But they can't explain anything, they add nothing to understanding, they subtract from it, because they are false but give the illusion of knowledge. Drop the assumptions and you can begin to get somewhere. ..."
"... Steve Keen seems to have latched onto this in the last year or so, pointing out that all production is driven by energy. And the energy comes ultimately from the sun. Either it is turned into production via feeding workers, or by fueling machinery (by burning hydrocarbons extracted from plant and animal remains). ..."
"... I have a question about a similar thing. Simon Kuznetz is credited as someone who has invented modern concept of GDP and he revolutionized the field of economics with statistical method (econometrics). However, Kuznets , in the same report in which he presented modern concept of GDP to US congress, wrote following(from wikipedia): ..."
"... "The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. ..."
"... All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above. Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what." ..."
"... "So , my question is why economists keep treating GDP as some scared metric when its creator himself deems it not reliable? Why all qualifications about GDP by Kuznetz is ignored by most of the economists nowadays?"@Vedant ..."
"... That is your explanation right there. Large abstract numbers such as GDP obscure social issues such as "the personal distribution of income." and the effort that goes into creating that income. Large abstract numbers obscure the moral dimension that must be a part of all economic discussion and are obscured by statistics and sciencism. As the genius of Mark Twain put it, "There are lies, damned lies and statistics." Beware the credentialed classes! ..."
"... Interesting. There is a great book by John Dupré called 'Human Nature and the Limits of Science (2001)", which tackles this subject in a general way: the facts that taking a mechanistic model as a paradigm for diverse areas of science is problematic and leads to myopia. ..."
"... He describes it as a form of 'scientific imperialism', stretching the use of concepts from one area of science to other areas and leading to bad results (because there are, you know, relevant differences). As a prime example, he mentions economics. (When reading EConned;s chapter of the science ( 'science') of economics, I was struck by the similar argument.) ..."
"... Soddy was a scientist. He should have written as a scientist with definitions, logic and rigour, but he wrote like a philosopher, full of waffle and unsubstantiated assertions like other economists. It is unscientific to apply universal laws discovered in physics and chemistry to economics without proving by observations that those laws also apply to economics. ..."
"... I get irritated by radical free-marketeers who when presented with a social problem tend to dogmatically assert that "The free market wills it," as if that ended all discussion. It is as if the free market was their God who must always be obeyed. Unlike Abraham, we do not need to obey if we feel that the answer is unjust. ..."
"... Gibbon's Decline and Fall of the Roman Empire ..."
"... The moralistic explanations for the disintegration of the (Western) Roman Empire were long ago discarded by all serious analysis of late antiquity. More practical explanations, especially the loss of the North African bread basket to the Vandals, are presented in the scholarly work these days. ..."
"... That book of Gibbon's is an incredible achievement. If it is not read by historians today, it is their loss. Its moral explanations, out of fashion today, are actually quite compelling. They become more so when read with de Tocqueville's views of the moral foundations of American township democracy and their transmission into the behavior, and assumptions, of New Englanders, whose views formed the basis of the federal republican constitution. ..."
"... The loss of the breadbasket was problematical, too. And it may be that no civilization, however young and virile, could withstand the migrations forever, as they withstood or absorbed them, with a few exceptions, for eight hundred years. But the progressive losses to the migratory tribes may have been a symptom of the real, "moral," cause of the decline. ..."
"... From 536-539AD the entire planet suffered a staggering holocaust. Krakatoa blew up - ejecting so much dust that it triggered a 'nuclear winter' that lasted through those years. ..."
"... It was this period that ended agriculture in North Africa. ( Algeria-Tunisia ) The drought blew all of the top soil into the Med. It was an irreversible tragedy. ..."
"... Economics is not science, simply because economics does not take facts seriously enough to modify flawed theories. ..."
"... In college I couldn't help but notice the similarities between modern economic theory and the control theory taught in engineering. Not such a great fit though, society is not a mechanical governor. ..."
"... " ..."
Mar 21, 2017 | www.nakedcapitalism.com
Yves here. This post takes what I see as an inconsistent, indeed, inaccurate stance on Adam Smith, since it depicts him as advocating laissez faire and also not being concerned about "emotions, sentiment, human relations and community." Smith was fiercely opposed to monopolies as well as businessmen colluding to lower the wages paid to workers. He also saw The Theory of Moral Sentiments as his most important work and wanted it inscribed on his gravestone.

Nor is it true that Smith advocated government not intervening in business. From Mark Thoma , quoting Gavin Kennedy :

Jacob Viner addressed the laissez-faire attribution to Adam Smith in 1928 ..Here is a list extracted from Wealth Of Nations:

"Viner concluded, unsurprisingly, that 'Adam Smith was not a doctrinaire advocate of laissez-faire'.

By Douglass Carmichael, perviously a Professor at University of California at Santa Cruz and a Washington DC based consultant, which clients including Hewlett-Packard, World Bank, Bell laboratories, The White House and the State Department. For the last ten years he has focused on the broad social science issues relevant to rethinking humanity's relationship to nature. Cross posted from the Institute for New Economic Thinking website

With Adam Smith, and hints before in Ricardo and others, economics took the path of treating the economy as a natural object that should not be interfered with by the state. This fit the Newtonian ethos of the age: science was great, science was mathematics; science was true, right and good.

But along the way the discussion in, for example, Montaigne and Machiavelli - about the powers of imagination, myth, emotions, sentiment, human relations and community - was abandoned by the economists. (Adam Smith had written his Theory of Moral Sentiments 20 years earlier and sort of left it behind, though the Wealth of Nations is still concerned with human well-being.) Gibbon's Decline and Fall of the Roman Empire was published in 1776, the same year as Smith's Wealth , but hardly read today by most economists.

In philosophy and the arts (romanticism among others) there was great engagement in these issues economics was trying to avoid. But that philosophy and art criticism have not been widely read for many years.

The effect of ignoring the human side of lives was to undermine the social perspective of the "political," by merging it with the individually focused "interest." So, instead of exploring the inner structure of interest (or later utility or preference), or community feeling and the impact of culture, these were assumed to be irrelevant to the mechanics of the market. Politics, having to do with interest groups and power arrangements, is more vague and harder to model than economic activity.

Those who wanted economics to be a science were motivated by the perception that "being scientific" was appreciated by the society of the time, and was the path to rock-solid truth. But the move towards economics as a science also happened to align with a view of the landed and the wealthy that the economy was working for them, so don't touch it. We get the equation, embracing science = conservative. This is still with us because of the implication that the market is made by god or nature rather than being socially constructed. Since economics is the attempt at a description of the economy, it was more or less locked in to the naturalist approach, which ignores things like class and ownership and treated capital as part of economic flow rather than as a possession that was useable for social and political power.

Even now, economics still continues as if it were part of the age of Descartes and avoids most social, historical and philosophical thought about the nature of man and society. Names like Shaftesbury and Puffendorf, very much read in their time, are far less known now than Hobbes, Descartes, Ricardo, Mill and Keynes. Karl Polanyi is much less well known than Hayek. We do not learn of the social history such as the complex interplay in Viennese society among those who were classmates and colleagues such as Hayek, Gombrich, Popper and Drucker. The impact of Viennese culture is not known to many economists.

The result is an economics that supports an economy that is out of control because the feedback loops through society and its impact of the quality of life - and resentment - are not recognized in a dehumanized economics, and so can't have a feedback correcting effect.

The solution, however, is not to look for simplicity, but to embrace a kind of complexity that honors nature, humans, politics, and the way they are dealt with in philosophy, arts, investigative reporting, anthropology and history. Because the way forward cannot be a simple projection of the past. We are in more danger than that.

Anthony Pagden, in Why the Enlightenment is Still Important , writes that before the enlightenment, late feudalism and the Renaissance, "The scholastics had made their version of the natural law the basis for a universal moral and political code that demanded that all human beings be regarded in the same way, no matter what their culture or their beliefs. It also demanded that human beings respect each other because they share a common urge to 'come together,' and it required them to offer to each other, even to total strangers, help in times of need, to recognize 'that amity among men is part of the natural law.' Finally, while Hobbes and Grotius had accepted the existence of only one natural right - the right to self-preservation - the scholastics had allowed for a wide range of them." -

Pagen also writes, "The Enlightenment, and in particular that portion with which I am concerned, was in part, as we shall now see, an attempt to recover something of this vision of a unified and essentially benign humanity, of a potentially cosmopolitan world, without also being obliged to accept the theologians' claim that this could only make sense as part of the larger plan of a well-meaning, if deeply inscrutable, deity."

But as Pagen shows, that effort was overcome by market, technical and financial interests.

The reason this is so important is that the simple and ethical view in Smith (and many other classical economists if we were to read them) that it was wrong to let the poor starve because of manipulated grain prices, was replaced by a more mechanical view of society that denied human intelligence except as calculators of self interest. This is a return to the Hobbesian world leading to a destructive society: climate, inequality, corruption. Today, the poor are hemmed in by so many regulations and procedures (real estate, education, police) that people are now starved. Not having no food, but having bad food, which along with all the new forms of privation add up to a seriously starved life, is not perceived by a blinded society to be suffering. Economics in its current form - most economics papers and college courses - do not touch the third rail of class, or such pain.

HeadShaker , March 21, 2017 at 11:13 am

Interesting. I've been reading (thanks to an intro from NC) Mark Blyth's "Austerity" and, thus far, seems to imply, if not outright state, that Adam Smith was quite suspicious of government intervention in the economy. The "can't live with it, can't live without it, don't want to pay for it" perspective. The bullet points you've listed above seem to refute that notion.

justanotherprogressive , March 21, 2017 at 11:39 am

Adam Smith tried to make a moral science out of what his class wanted to hear. If he had actually gone into those factories of his time, he might have had a different opinion of what labour was and how there was no "natural state" for wages, but only what was imposed on people who couldn't fight back. If he had gotten out of his ivory tower for a while, he might have had a different opinion of what those owners of stock were doing. He also might have had different views on trade if he could have seen what was happening to the labourers in the textile industries in France. And I could go on. But instead he created a fantasy that has been the basis for all economic thinking since.

In the same way, neoliberals are no different. They aren't bad people – they just see their policies as right and just because those policies are working well for them and the people in their class, and I don't think they really understand why it doesn't work for others – maybe, like Adam Smith, they think that is the "natural state" ..

Sorry, but there needs to be a Copernican Revolution in Economics just as there was in science. We have to realize that maybe Adam Smith was wrong – and I know that will be hard – just as it was hard for people to realize that the Earth wasn't the center of the universe.

Since I am retired, maybe I will go back to school, hold my nose and cover my lying eyes long enough to finish that Economics degree, so that I can get good access to all the other windows in Economics. I can't really believe I am the only person thinking this way – there must be some bright people out there who have come to similar conclusions and I would dearly love to know who they are.

Lyonwiss , March 21, 2017 at 2:49 pm

Read the first sentence of the Theory of Moral Sentiments – it makes an assumption which is the foundation of all of Adam Smith. He asserted that all men are moral. Morality in economics is the invisible hand creating order like gravity in astronomy. Unfortunately, Adam Smith's assumption is false or at least not true enough to form a sound foundation for useful economic theory.

justanotherprogressive , March 21, 2017 at 3:18 pm

But "morality" means different things to different people. Smith only saw the morality of his own class. For example, I am sure a wealthy man would consider it very moral to accumulate as much money as he could so that he would be seen by his peers as a good and worthy man who cares for his future generations and the well being of his class – he doesn't see this accumulation as amoral – whilst a poor man may think that kind of accumulation is amoral because he thinks that money could be better used provide for those without the basic needs to survive

Lyonwiss , March 22, 2017 at 2:29 am

You have not read the first sentence of the book, where he stated what he meant – to me, it is his general statement of universal morality.

lyman alpha blob , March 21, 2017 at 3:03 pm

I've read a fair amount of Wealth of Nations although far from all of it and my take was that Smith was describing the economic system of his time as it was , not necessarily as it should or must be. Smith gets a bad rap from the left due to many people over the last 200+ years hearing what they wanted to hear from him to justify their own actions rather than what he actually said.

I'm cherry picking a bit here since I don't have the time to go through several hundred pages, but I think Smith might actually agree with you about the plight of labor and he was well aware of what the ownership class was up to –

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Adam Smith – Wealth of Nations

diptherio , March 21, 2017 at 7:00 pm

Yup, wish I would have had that one handy in my intro to micro course

Another I remember from Smith was something like, "The law exists to protect those who have much from those who have little." Sounds about right.

Grebo , March 21, 2017 at 4:58 pm

there needs to be a Copernican Revolution in Economics

One of Steve Keen's favourite analogies is astronomy. Neoclassical economics is like Ptolemy's epicycles; assume the Earth is at the centre, and that the planets orbit in circles and simply by adding little circles-epicycles-you can accurately describe the observed motion of the planets. The right epicycles in the right places can describe any motion. But they can't explain anything, they add nothing to understanding, they subtract from it, because they are false but give the illusion of knowledge. Drop the assumptions and you can begin to get somewhere.

digi_owl , March 22, 2017 at 1:36 pm

And that is exactly what Marx did, but then got himself sidetracked by trying to find (or create) support for his labor theory of value.

Actually most of what he writes in Capital basically refutes said theory, instead hinting at energy being the core source of value (how much food/fuel is needed to produce one unit, basically).

Steve Keen seems to have latched onto this in the last year or so, pointing out that all production is driven by energy. And the energy comes ultimately from the sun. Either it is turned into production via feeding workers, or by fueling machinery (by burning hydrocarbons extracted from plant and animal remains).

mejimenez , March 21, 2017 at 1:41 pm

Since words have somewhat flexible boundaries, it's hard to tell from what perspective this response is looking at the history of science. Characterizing cybernetics as mechanistic would require an unusually broad definition of "mechanistic". Even a superficial reading of Norbert Wiener, Warren McCulloch, W. Ross Ashby, or any of the other early contributors to the discipline will make one aware that they were explicitly trying to address the limitations of simplistic mechanistic thinking.

In the related discipline, General Systems Theory, von Bertalanffy expressly argued that we should take our cues from the organic living world to understand complex systems. With the introduction of Second Order Cybernetics by Heinz von Foerster, Margaret Mead, Gregory Bateson and others, the role of a sentient observer in describing the system in which he/she is embedded becomes the focus of attention. Bateson was an original participant with many of the people mentioned above in the Macy conferences where cybernetics was first introduced. The bulk of his work was a direct attack on the mechanistic view of the natural world.

Of course, many writers treat cybernetics, General Systems Theory, and their related disciplines as pseudoscientific. But those are typically people who are firmly committed to mechanistic explanations.

Vedant , March 21, 2017 at 1:02 pm

Yves,

I have a question about a similar thing. Simon Kuznetz is credited as someone who has invented modern concept of GDP and he revolutionized the field of economics with statistical method (econometrics). However, Kuznets , in the same report in which he presented modern concept of GDP to US congress, wrote following(from wikipedia):-

"The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification.

All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.
Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what."

So , my question is why economists keep treating GDP as some scared metric when its creator himself deems it not reliable? Why all qualifications about GDP by Kuznetz is ignored by most of the economists nowadays?

Allegorio , March 21, 2017 at 2:48 pm

"So , my question is why economists keep treating GDP as some scared metric when its creator himself deems it not reliable? Why all qualifications about GDP by Kuznetz is ignored by most of the economists nowadays?"@Vedant

" Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income."

That is your explanation right there. Large abstract numbers such as GDP obscure social issues such as "the personal distribution of income." and the effort that goes into creating that income. Large abstract numbers obscure the moral dimension that must be a part of all economic discussion and are obscured by statistics and sciencism. As the genius of Mark Twain put it, "There are lies, damned lies and statistics." Beware the credentialed classes!

Mucho , March 21, 2017 at 1:20 pm

Interesting. There is a great book by John Dupré called 'Human Nature and the Limits of Science (2001)", which tackles this subject in a general way: the facts that taking a mechanistic model as a paradigm for diverse areas of science is problematic and leads to myopia.

He describes it as a form of 'scientific imperialism', stretching the use of concepts from one area of science to other areas and leading to bad results (because there are, you know, relevant differences). As a prime example, he mentions economics. (When reading EConned;s chapter of the science ( 'science') of economics, I was struck by the similar argument.)

Lyonwiss , March 21, 2017 at 2:31 pm

Science does not imply only mechanistic models, which may be appropriate for physics, but not economics. Science is a method of obtaining sound knowledge by iterative interaction between facts and theory.

http://www.asepp.com/what-is-science/

UserFriendly , March 22, 2017 at 1:37 am

Just because equilibrium is shitty mechanistic model to try and stamp onto economics doesn't mean that all scientific modeling of economics futile. Soddy just about derived MMT from the conservation of energy in 1921.

http://habitat.aq.upm.es/boletin/n37/afsod.en.html?iframe=true&width=100%&height=100%

And refined it in a book in 1923.

http://dspace.gipe.ac.in/xmlui/bitstream/handle/10973/21274/GIPE-009596.pdf?sequence=3&isAllowed=y

UserFriendly , March 22, 2017 at 2:00 am

excellent job with the prepositions there. sigh. WAKE UP!

Lyonwiss , March 23, 2017 at 2:50 am

Soddy was a scientist. He should have written as a scientist with definitions, logic and rigour, but he wrote like a philosopher, full of waffle and unsubstantiated assertions like other economists. It is unscientific to apply universal laws discovered in physics and chemistry to economics without proving by observations that those laws also apply to economics.

Soddy needed to have developed a scientific methodology for economics first, before stating his opinions which are scientifically unproven like most economic propositions.

http://www.asepp.com/methodology/

Jim A. , March 21, 2017 at 1:36 pm

I get irritated by radical free-marketeers who when presented with a social problem tend to dogmatically assert that "The free market wills it," as if that ended all discussion. It is as if the free market was their God who must always be obeyed. Unlike Abraham, we do not need to obey if we feel that the answer is unjust.

PKMKII , March 21, 2017 at 1:57 pm

Gibbon's Decline and Fall of the Roman Empire was published in 1776, the same year as Smith's Wealth, but hardly read today by most economists.

Other than as a reflection of the sentiments of the time Gibbon was writing in, historians don't spend much time reading it either. The moralistic explanations for the disintegration of the (Western) Roman Empire were long ago discarded by all serious analysis of late antiquity. More practical explanations, especially the loss of the North African bread basket to the Vandals, are presented in the scholarly work these days.

PhilM , March 21, 2017 at 5:07 pm

That book of Gibbon's is an incredible achievement. If it is not read by historians today, it is their loss. Its moral explanations, out of fashion today, are actually quite compelling. They become more so when read with de Tocqueville's views of the moral foundations of American township democracy and their transmission into the behavior, and assumptions, of New Englanders, whose views formed the basis of the federal republican constitution.

The loss of the breadbasket was problematical, too. And it may be that no civilization, however young and virile, could withstand the migrations forever, as they withstood or absorbed them, with a few exceptions, for eight hundred years. But the progressive losses to the migratory tribes may have been a symptom of the real, "moral," cause of the decline.

After all, the Romans did not always have that breadbasket; indeed, they had to conquer it to get it, along with the rest of the mighty and ancient civilizations of the Mediterranean and beyond, using the strengths derived from the mores of their martial republic. The story of the Punic Wars is a morality play in history, as much as anything else. But the main problem was the dilution of the Roman republican mores into a provincial stew.

And after that nice detached remark, about which historians can surely natter on in the abstract, I'll toss in this completely anti-historicist piece of nonsense: I think it's actually much the same problem the Americans are having today, as the mores of the founders have dissolved into the idea that the nation is about national government, centralized administration, world leadership, global domination through military might, and imperialist capitalism. That is not a national ethic that leads to lasting nobility of purpose and moral strength-as George Washington and Ike Eisenhower both pointed out.

blert , March 21, 2017 at 6:48 pm

Dendrochronology ( tree ring dating & organic history ) has established a wholly new rationale for the termination of the Roman Empire the re-boot of the Chinese and Japanese cultures and the death of a slew of Meso-American cultures.

From 536-539AD the entire planet suffered a staggering holocaust. Krakatoa blew up - ejecting so much dust that it triggered a 'nuclear winter' that lasted through those years.

The Orientals actually heard the blasts recognized that they emminated from the Indonesian islands. ( Well, at least to the south. ) The erruption and the weather was duly recorded by Court scribes.

Roman accounts assert that 90% of the population of Constantinople died or fled. ( mostly died ) The Emperor and his wife were at the dockside ready to flee - when she talked him back off the boat. Her reasoning was sound: it's Hell everywhere. He won't have any authority once he leaves his imperial guard.

It was this period that ended agriculture in North Africa. ( Algeria-Tunisia ) The drought blew all of the top soil into the Med. It was an irreversible tragedy.

This super drought triggered the events in Beowulf - and the exodus of the Petrans from Petra. They marched off to Mecca and Medina both locations long known to have mountain springs with deep water. The entire Arabian population congregated there.

This was the founding population amongst which Mohammed was raised many years later.

The true reason that Islam swept through Araby and North Africa was that both lands were still largely de-populated. The die-off was so staggering that one can't wrap ones mind around it.

Period art is so bleak that modern historians discounted it until the tree ring record established that this trauma happened on a global scale.

Lyonwiss , March 21, 2017 at 2:21 pm

Economics is not science, simply because economics does not take facts seriously enough to modify flawed theories.

http://www.asepp.com/facts-and-economic-science/

justanotherprogressive , March 21, 2017 at 3:00 pm

Or throw them out! I remember the very first thing I was taught in Economics 101 about supply and demand and how they would balance at an equilibrium price. It didn't take much thinking to realize that there is no equilibrium price and that an equilibrium price was exactly the last thing suppliers or demanders wanted, and that the price of a good depended on who had the most power to set the price. Yet, we had to accept the "supply and demand theory" as coming directly from God. It's as if we were taught in Chemistry that the only acceptable theory of bonding possible was the hydrogen-oxygen bond and even though we could see with our own eyes that hydrogen also bonds to carbon, we should throw that out because it is an aberration from "acceptable theory" ..

PhilM , March 21, 2017 at 4:44 pm

Yes, coming from God; Platonic, like a Form. Economics is written in Forms, like "homo economicus" and "the efficient market." But we live in the Cave, where the markets that humans actually make are sad imitations of the Forms in the textbooks.

There's a lot good in the post, I think; noting the important philosophical underpinnings and challenges to Economics, and particularly in making it a moral, and therefore political and "social" science. But it's great to see where people's use of "incantatory names from the past" is called out by the curator. It's a pet peeve.

digi_owl , March 22, 2017 at 1:45 pm

Economics is the last "science" to hold onto the notion of equilibrium. The rest has moved on to complex systems/chaos theory, first demonstrated in meteorology. Trying to apply complex systems to economics have been the goal of Steve Keen's work for several decades now.

Rosario , March 21, 2017 at 2:38 pm

In college I couldn't help but notice the similarities between modern economic theory and the control theory taught in engineering. Not such a great fit though, society is not a mechanical governor.

craazyboy , March 22, 2017 at 7:20 am

Ha. That's the same thing that got economists so excited. Things is, an engineering student attempting to model a simple system with two moving parts cares a great deal about whether the moving parts are connected by a spring, or ball screw, or shock absorber, or lever, or even invisible stuff like a temperature gradient when coming up with the system math model. Economists seem to think wtf is the difference?

Next, if the math gets a bit unwieldy as the number of moving parts increase, which it does in a hurry, they decide to simplify the math. Next, assume they have perfect sensors for everything and system lag can assumed to be zero for talking purposes, and in research papers too. Next, hysteresis effects due to bent parts, leaky valves and stretched springs are assumed not to exist. Congress has the "Highway Bill" thingy to address that.

Next, the guy with the control knob will do the "right thing". Or better yet, a "market" is doing the control knob. There could be "intermediaries", but these are modeled as zero loss pieces of golden wire and gold plated connectors.

Finally, money comes from batteries and there is no such thing in the real world like "shorts", "open circuits", or "semiconductors" with their quantum tunneling properties.

Other than that, it's all good!

knowbuddhau , March 21, 2017 at 5:23 pm

Thanks for this, and especially the heads up about the author's take on Smith. This is exactly what I'm on about. Not only are there more ways of knowing than the infamous mechanical, it itself should've died long ago.

I learned that from this Chomsky lecture I found last year: Noam Chomsky: The machine, the ghost and the limits of understanding; Newton´s contribution to the study of mind" . (Quotes are from Science, Mind, and Limits of Understanding , an essay that seems to me to be the basis of the lecture.) Pretty sure I mentioned it in comments somewhere.

The author stresses economics is stuck in the age of Descartes. The history of Newton's refutation of Descartes's mechanical philosophy is very interesting. Yes, refutation. Descartes's mechanical philosophy is as dead as a dodo. So why does it still plague us? Obviously, because thinking of and acting on nature as if it were all just one great big machine works at getting you paid, much better than that wishy-washy humanism crap. /f (facetious).

I used to go on and on against reducing everything to mechanisms, and I largely blamed Newton. I was wrong.

I've spent an hour trying to boil this down. Ain't happenin. Apologies for the length.

The background is the so-called "mechanical philosophy" – mechanical science in modern terminology. This doctrine, originating with Galileo and his contemporaries, held that the world is a machine, operating by mechanical principles, much like the remarkable devices that were being constructed by skilled artisans of the day and that stimulated the scientific imagination much as computers do today; devices with gears, levers, and other mechanical components, interacting through direct contact with no mysterious forces relating them. The doctrine held that the entire world is similar: it could in principle be constructed by a skilled artisan, and was in fact created by a super-skilled artisan. The doctrine was intended to replace the resort to "occult properties" on the part of the neoscholastics: their appeal to mysterious sympathies and antipathies, to forms flitting through the air as the means of perception, the idea that rocks fall and steam rises because they are moving to their natural place, and similar notions that were mocked by the new science.

The mechanical philosophy provided the very criterion for intelligibility in the sciences. Galileo insisted that theories are intelligible, in his words, only if we can "duplicate [their posits] by means of appropriate artificial devices." The same conception, which became the reigning orthodoxy, was maintained and developed by the other leading figures of the scientific revolution: Descartes, Leibniz, Huygens, Newton, and others.

Today Descartes is remembered mainly for his philosophical reflections, but he was primarily a working scientist and presumably thought of himself that way, as his contemporaries did. His great achievement, he believed, was to have firmly established the mechanical philosophy, to have shown that the world is indeed a machine, that the phenomena of nature could be accounted for in mechanical terms in the sense of the science of the day. But he discovered phenomena that appeared to escape the reach of mechanical science. Primary among them, for Descartes, was the creative aspect of language use, a capacity unique to humans that cannot be duplicated by machines and does not exist among animals, which in fact were a variety of machines, in his conception.

As a serious and honest scientist, Descartes therefore invoked a new principle to accommodate these non-mechanical phenomena, a kind of creative principle. In the substance philosophy of the day, this was a new substance, res cogitans, which stood alongside of res extensa. This dichotomy constitutes the mind-body theory in its scientific version. Then followed further tasks: to explain how the two substances interact and to devise experimental tests to determine whether some other creature has a mind like ours. These tasks were undertaken by Descartes and his followers, notably Géraud de Cordemoy; and in the domain of language, by the logician-grammarians of Port Royal and the tradition of rational and philosophical grammar that succeeded them, not strictly Cartesian but influenced by Cartesian ideas.

All of this is normal science, and like much normal science, it was soon shown to be incorrect. Newton demonstrated that one of the two substances does not exist: res extensa. The properties of matter, Newton showed, escape the bounds of the mechanical philosophy. To account for them it is necessary to resort to interaction without contact. Not surprisingly, Newton was condemned by the great physicists of the day for invoking the despised occult properties of the neo-scholastics. Newton largely agreed. He regarded action at a distance, in his words, as "so great an Absurdity, that I believe no Man who has in philosophical matters a competent Faculty of thinking, can ever fall into it." Newton however argued that these ideas, though absurd, were not "occult" in the traditional despised sense. Nevertheless, by invoking this absurdity, we concede that we do not understand the phenomena of the material world. To quote one standard scholarly source, "By `understand' Newton still meant what his critics meant: `understand in mechanical terms of contact action'."

It is commonly believed that Newton showed that the world is a machine, following mechanical principles, and that we can therefore dismiss "the ghost in the machine," the mind, with appropriate ridicule. The facts are the opposite: Newton exorcised the machine, leaving the ghost intact. The mind-body problem in its scientific form did indeed vanish as unformulable, because one of its terms, body, does not exist in any intelligible form. Newton knew this very well, and so did his great contemporaries.

And later:

Similar conclusions are commonplace in the history of science. In the mid-twentieth century, Alexander Koyré observed that Newton demonstrated that "a purely materialistic pattern of nature is utterly impossible (and a purely materialistic or mechanistic physics, such as that of Lucretius or of Descartes, is utterly impossible, too)"; his mathematical physics required the "admission into the body of science of incomprehensible and inexplicable `facts' imposed up on us by empiricism," by what is observed and our conclusions from these observations.

So the wrong guy was declared the winner of Descartes vs. Newton, and we've been living with the resultant Frankenstein's monster of an economy running rampant all this time. And the mad "scientists" who keep it alive, who think themselves so "realistic" and "pragmatic" in fact are atavists ignorant of the last few centuries of science. But they do get paid, whereas I (relatively) don't.

Vatch , March 21, 2017 at 5:40 pm

Alexander Koyré observed that Newton demonstrated that "a purely materialistic pattern of nature is utterly impossible (and a purely materialistic or mechanistic physics, such as that of Lucretius or of Descartes, is utterly impossible, too)"

I think that Newton considered phenomena like gravity, magnetism, and optics to be non-material, perhaps even spiritual, and separate from matter. Modern physicists would disagree, and would consider gravity and electro-magnetism to be purely material phenomena. Newton didn't prove that the world is non-mechanical; he showed that objects do not need to touch for them to have influence on each other.

It is still quite possible that there are non-material phenomena, but those would be separate from gravity and electro-magnetism, which Newton considered non-material.

diptherio , March 21, 2017 at 7:10 pm

It is still quite possible that there are non-material phenomena

Like love, courage, hope, fear, greed and compassion?

Vatch , March 21, 2017 at 7:37 pm

Sure! The existence of souls is another possibility (even for Buddhists, although I suppose they would have to be pudgalavadins to believe in this).

Plenue , March 22, 2017 at 1:54 pm

Are all products of the brain. I don't see how the results of the interaction of electrical impulses and chemicals are non-material. Magic is not an explanation for anything.

M Quinlan , March 21, 2017 at 7:50 pm

So Newton formulated his theories because of his belief in Alchemy and not, as I had thought, despite it. Discussions like this are what make this site so great.

blert , March 21, 2017 at 7:08 pm

All modern economic thought ( 1900+ ) has been corrupted by the arrogance of Taylor's Time & Motion Studies. The essence of which is that bean counters can revolutionize economic output by statistics and basic accounting.

AKA Taylorism.

Big Government is Taylorism as practiced.

At bottom, it arrogantly assumes that if you can count it, you can optimise it.

The fact is that 'things' are too complicated.

Taylor's principles only work in a micro environment. His work started in machine shops, and at that level of simplicity, still applies.

Its abstractions and assumptions break down elsewhere.

MOST economic models in use today are the grandsons of Taylorism.

They are also the analytic engines that have driven the global economy to the edge of the cliff.

RBHoughton , March 21, 2017 at 7:24 pm

For my penny's worth the sentence "Today, the poor are hemmed in by so many regulations and procedures (real estate, education, police) that people are now starved" reveals the main problem.

Too many of the most lucrative parts of every national economy have been closed off by politicians and reserved for their friends.

Peter L. , March 23, 2017 at 9:55 pm

The introductory remarks on Adam Smith reminded me of a funny exchange between David Barsamian and Noam Chomsky. Barsamian complements Chomsky on his research on Adam Smith :

DAVID BARSAMIAN: One of the heroes of the current right-wing revival is Adam Smith. You've done some pretty impressive research on Smith that has excavated a lot of information that's not coming out. You've often quoted him describing the "vile maxim of the masters of mankind: all for ourselves and nothing for other people."

NOAM CHOMSKY: I didn't do any research at all on Smith. I just read him. There's no research. Just read it. He's pre-capitalist, a figure of the Enlightenment. What we would call capitalism he despised.

People read snippets of Adam Smith, the few phrases they teach in school. Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be.

And therefore in any civilized society the government is going to have to take some measures to prevent division of labor from proceeding to its limits.

And here is a link to Adam Smith's poignant denunciation of division of labour:

http://www.econlib.org/library/Smith/smWN20.html#V.1.178

This mention of division of labor is, as Chomsky points out, left out of the index of the University of Chicago scholarly edition! Of George Stigler's introduction Chomsky claims, "It's likely he never opened The Wealth of Nations. Just about everything he said about the book was completely false."

I recommend reading the entire paragraph at the link above. Smith writes:

"The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it. "

[Mar 24, 2017] Facts or EconoFacts?

Notable quotes:
"... My main problem with the site, though, isn't aesthetic. It's the idea that the public will buy a "just the facts" approach. Many readers will suspect that what they're getting is not a simple recounting of incontrovertible facts, but a mix of received wisdom, theory, and carefully cloaked ideology. And they won't entirely be wrong about that. ..."
Mar 24, 2017 | noahpinionblog.blogspot.com

EconoFact is a non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. It is written by leading academic economists from across the country who belong to the EconoFact Network...

Our mission at EconoFact is to provide data, analysis and historical experience in a dispassionate manner...Our guiding ethos is a belief that well meaning people emphasizing different values can arrive at different policy conclusions. However, if in the debate we as a society can't agree on the relevant facts, then the nation itself loses a common base for constructive debate and policy will suffer.

EconoFact does not represent any partisan, personal or ideological point of view...Our network of economists might disagree with each other on policy recommendations, but all will similarly rely on widely agreed upon facts in their analysis.

My main problem with the site, though, isn't aesthetic. It's the idea that the public will buy a "just the facts" approach. Many readers will suspect that what they're getting is not a simple recounting of incontrovertible facts, but a mix of received wisdom, theory, and carefully cloaked ideology. And they won't entirely be wrong about that.

[Mar 24, 2017] The main story is the incompetence and corruption of the neoliberal leadership of the Democratic Party

Notable quotes:
"... Why should anyone in the working or middle class believe that voting for a Democrat is in their interest given the way in which the Democratic Party has been co-opted by the neoliberal ideology that brought us the draconian social welfare and irresponsible financial deregulatory legislation of the 1990s that led to the Crash of 2008? ..."
"... Why would they rally around a candidate who had lost the 2008 primary and who could barely win in 2016 without the party's rigging the primaries in her favor? ..."
"... Why would their candidate refuse to offer any kind of coherent message around the issue that propelled her two Democratic predecessors into office--it's the economy, stupid? ..."
"... As Blackford says, "the main story is the incompetence of the Democrats." The only question is whether their incompetence is willful or not. ..."
"... Wall Street supplied the money. ..."
"... LOL! A centrist party that has been triangulating -- chasing oligarch tail -- for decades. The 2018 election is going to provide me some excellent schadenfreude. ..."
Mar 24, 2017 | economistsview.typepad.com
George H. Blackford : March 24, 2017 at 02:54 AM , 2017 at 02:54 AM
False symmetry may be a part of the story, but the main story is the incompetence of the Democrats. There was a 20 percentage point shift away from Democrats in Michigan from 2008 to 2016, a14 pp shift in Pennsylvania, a 24 pp shift in Iowa, a 15 pp shift in Ohio, and a 24 pp shift in Indiana.

Does anyone really believe these kinds of shifts from Obama to Trump and third party candidates can be explained in terms of racism and bigotry or voters failing to understand that they were voting against their own interests because of Republican flimflam?

The real question is: Why should those who shifted from Obama to Trump and third parties have believed it would have been in their interest to vote for Hillary given her ties to Wall Street and the way in which the Democrats abandoned home owners and bailed out Wall Street during the crisis?

Why should anyone in the working or middle class believe that voting for a Democrat is in their interest given the way in which the Democratic Party has been co-opted by the neoliberal ideology that brought us the draconian social welfare and irresponsible financial deregulatory legislation of the 1990s that led to the Crash of 2008?

Democrats have been running on a "lesser of two evils platform" for 30 years now. Why would anyone be surprised that a significant portion of their base grasped at a straw when given the chance? http://www.rweconomics.com/Deficit.htm, http://www.rweconomics.com/htm/Ch_1.htm , and http://www.rweconomics.com/IVR.htm

George H. Blackford -> mulp... , March 24, 2017 at 03:50 AM
Re: "Do you think Clinton is more Wall Street than Trump?" It's not about what I think. It's about what the voters think. For what it's worth, I think it is quite clear that those voters who voted for Obama in 2008 and switched to Trump in 2016 are grasping at straws, and they did that because they saw no hope in voting for the Democratic Party.

As for: "Clinton staved off a crash in the 90s by high taxes." I think you are a bit confused on this. Not only was the deregulation signed into law by Clinton responsible for the Crash in 2008, his appointment of Greenspan facilitated the dotcom and telecom bubbles of the 1990s, the bursting of which led to the 2001 recession: http://www.rweconomics.com/htm/Ch_1.htm

The real question is why do "voters want the free lunch of tax cuts"? The reason is that Democratic Party, starting with the Clintons, bought into the neoliberal ideology championed by the Democratic Leadership Council and have refused to challenge the Republican's free lunch arguments and tell the voters that government programs are essential to our economic, social, and political wellbeing and that they have to be payid for. I believe that I have explained this quit well in: http://www.rweconomics.com/Deficit.htm

George H. Blackford -> jonny bakho... , March 24, 2017 at 05:26 AM
You'r wasting your time trying to convince me of this? I know what the Clintons did for the banks in the 1990s: http://www.rweconomics.com/htm/Ch_1.htm

And you are not going to be able to convince those who voted for Obama in 2008 and switched to Trump in 2016 either.

Paine -> George H. Blackford ... , March 24, 2017 at 05:51 AM
Blackie I love your stuff

The main line power core Democrats have layed their horrible liberal supporters and their minority bases like side walk gulls

And he gulls ...god bless em ... just can't believe they've backed the sunny side of all street all these past 25 plus years

Bernie tried to blow the whistle Ralph Nader tried to blow the whistle

JohnH -> George H. Blackford ... , March 24, 2017 at 07:14 AM
You really have to wonder if Democrats are trying to lose.

Why else would the party's elite rally around a candidate who had huge negatives and try to block anyone else from running?

Why would they rally around a candidate who had lost the 2008 primary and who could barely win in 2016 without the party's rigging the primaries in her favor?

Why would they refuse to sack an inept congressional leadership that had lost three straight elections?

Why would their candidate refuse to offer any kind of coherent message around the issue that propelled her two Democratic predecessors into office--it's the economy, stupid?

Why would the pigheadedly refuse to do a post mortem of their failure and insist on blaming Putin instead?

As Blackford says, "the main story is the incompetence of the Democrats." The only question is whether their incompetence is willful or not.

JohnH -> EMichael... , March 24, 2017 at 07:59 AM
"Other than a insignificant number of insane people, no one voted fro Obama and then voted for Trump"

LOL!!! According to EMichael, lots of Rust Belt voters must be insane...exactly the kind of disdain and disparagement that made them switch their vote in the first place.

EMichael, ever the partisan hack, still can't come to terms with the fact that Obama and Hillary ignored the concerns working class voters...the real reason they voted for Trump.

Could EMichael's delusional denial be characterized as insanity? Or just a partisan hack ineptly doing his job?

RGC -> jonny bakho... , March 24, 2017 at 06:49 AM
"Wall Street has little to do with it"

Wall Street supplied the money.

Tom aka Rusty -> RGC... , March 24, 2017 at 07:43 AM
http://www.dailykos.com/story/2016/3/4/1496194/-Complete-List-of-All-91-of-Hillary-s-Corporate-Speeches-and-Speaking-Fees
George H. Blackford -> kthomas... , March 24, 2017 at 06:05 AM
The reason I post all this BS is that as far as I can see, the only hope for the country is for the DAs in the Democratic Party to wake up and face reality.

I fear that if Democrats' do not wake up and they continue down the same neoliberal path they have been traveling since Carter--a path that led directly to Trump--even if we survive Trump and Democrats do regain power again, the demigod that follows the disaster that results is going to be even worse than Trump: http://www.rweconomics.com/LTLGAD.htm

George H. Blackford -> kthomas... , March 24, 2017 at 06:37 AM
"There is no fun in being in the middle, yet that is where the ability to wield power and effectively governing resides: in the middle. It's not pretty. it's not graceful. America exists as it does today only because we have been able to compromise for a long time. It's that ability to comprise that has been lost in great volume."

You seem to be missing my point: TRUMP IS PRESIDENT!

The things we are taking from the right DON'T WORK!

They are a disaster: http://www.rweconomics.com/htm/Ch_1.htm

http://www.rweconomics.com/LTLGAD.htm

yuan -> kthomas... , March 24, 2017 at 07:22 AM
LOL! A centrist party that has been triangulating -- chasing oligarch tail -- for decades. The 2018 election is going to provide me some excellent schadenfreude.
JohnH -> George H. Blackford ... , March 24, 2017 at 07:38 AM
Not exactly: "even if we survive Trump and Democrats do regain power again, the demigod that follows the disaster that results is going to be even worse than Trump."

If a Democrat follows Trump, his/her job will be to normalize and put a bipartisan imprimatur on what Trump did. That was Obama's role on many issues, including torture, Guantanamo, and NSA spying.

George H. Blackford -> JohnH... , March 24, 2017 at 07:55 AM
I think you may be missing my point.

Getting along is exactly what Bill Clinton did and it led to 2008. It's also what Pelosi and Obama did and it led to the loss of congress. It's also what more-of-the-same Hillary promised to do, and it led to Trump.( http://www.rweconomics.com/blame.htm )

The so-called center today is neoliberal nonsense that leads to disaster. If we can survive the current disaster, the only hope to avoid another disaster in the future is for the Democrats to move the center back to a point where it is possible avoid an even worse disaster:
http://www.rweconomics.com/htm/Ch_1.htm
http://www.rweconomics.com/Deficit.htm
http://www.rweconomics.com/blame.htm
http://www.rweconomics.com/LTLGAD.htm

JohnH -> George H. Blackford ... , March 24, 2017 at 08:04 AM
Fat chance! "the only hope to avoid another disaster in the future is for the Democrats to move the center back to a point where it is possible avoid an even worse disaster."

The DNC is adamant about NOT learning any lessons from their election debacle. But they are counting on Republicans to screw up so that they can have their turn in power.

[Mar 24, 2017] "Economics Upside Down" or Why "Free Markets" Don't Exist

Mar 24, 2017 | www.nakedcapitalism.com

"Economics Upside Down" or Why "Free Markets" Don't Exist

This is an instructive interview with Ha-Joon Chang, author of the new book "23 Things They Don't Tell You About Capitalism." He debunks some widely accepted beliefs, such at the existence of "free markets" or the necessity of "free trade" for the development of capitalism.

Enjoy!


Topics: China, Corporate governance, Credit markets, Free markets and their discontents, Globalization, The dismal science

Email This Post Posted by Yves Smith at 12:09 am

11 Comments " Links to this post


11 Comments:
Charles Frith says:
June 15, 2011 at 2:25 am
Bravo.

Reply
Septeus7 says:
June 15, 2011 at 5:57 am
Ha-Joon Chang is one of the best real world economists out there and I find it sad that Asians now have to teach Americans about traditional American system development and industrial policies but we should take any help we can get at this point.

When will we stop with these idiotic so-called "free market" economics and start understanding that if we run away from our responsibility to look out for our own economic interest politically then we will have our lunch taken by those "free market" types pouring billions into political influence because they obviously don't believe a word of their own faux-economic ideology?

Reply
Another Gordon says:
June 15, 2011 at 6:22 am
An excellent book, nicely structured and easy to read.

However, he does leave out a couple of things, for example that competition does not always lead to lower prices and/or better outcomes as the neoliberal fantasy has it.

Competition only works when it costs less than its benefits. Yet it is often horribly expensive and the benefits often modest at best.

Reply
Iolaus says:
June 15, 2011 at 11:02 am
Ha-Joon says "You can't have slaves." But we do have slavery, right here.

Reply
Anonymous Jones says:
June 15, 2011 at 12:42 pm
What is truly amazing is that something this obvious (that all markets are regulated by some means, and that whether you prefer those means versus others is almost entirely based on outcomes rather than procedures) is such a fringe idea.

I was watching the Bobby Fischer documentary on HBO, and it struck me how easy it must be slip into madness living in this completely insane world. There are so many obvious fallacies you must accept to "fit into" normal society (the existence not just of a god, but the particular consensus "God" of your community; the belief that your community (oh, let's say America) always has good intentions and could never (gasp) be using its might to enrich the people running the place; the weird idea that "honor" for samurai or other military types is selflessly serving the elite who are exploiting the rest of society). To be thought sane, one's insanity must match others' insanity.

To investigate the world, to examine the BS that you have been told over and over, has the potential to completely untether the psyche. Look at all the rampant conspiracy theorists on this site. Are they really different (in kind, not in specifics) from the "Protocols" crazies or the bilderberg lunatics or the "end of the world" preachers? Another thing that is so amazing is that you read history and watch documentaries and you realize these crazies are doing almost *exactly* the same thing as someone else in another generation 50 years ago, 100 years ago, 150 years ago, 1000 years ago. Fischer himself was once in the thrall of an "end of the world" preacher who was doing almost exactly what Harold Camping just did and then Fischer moved onto this insane "Protocols" fixation.

I guess people are just incapable of reflecting on themselves enough to see this. Or I guess it would make them as crazy as Fischer if they ever did.

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Just Tired says:
June 15, 2011 at 3:13 pm
Read Eric Fromm's, The Sane Society. In the 1950's, Fromm recognized that a whole society could be mentally ill and those who were thought to be out of the mainstream were really the sane ones. He also raised the question to the mental health profession as to who were the proper ones to treat given that reality. It is almost as if the mental health takes a kind of democratic approach to the definition of mental illness, i.e. the majority of the population was defined as sane by definition. Fromm argued that the approach should be more objective.

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Foppe says:
June 15, 2011 at 5:25 pm
subjectivity and objectivity are meaningless notions once you start 'diagnosing' entire societies as mentally ill or diseased. What is perceived as either is done so through consensus formation; this cannot meaningfully happen if you exclude the majority of the population from weighing in on the basis of an argument that they are mentally ill. (I do not find Fromm's vocabulary very helpful in this case)

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LifelongLib says:
June 15, 2011 at 5:00 pm
Conspiracy theories are often twisted versions of things that are really happening. Mark of the Beast, without which you can't buy or sell? Try getting a plane ticket or renting a hotel room without a major credit card. World ruled by alien reptiles? Some kid joins the army to get money for college, and ends up getting blown apart 10,000 miles from home. Sure sounds like something alien reptiles would set up. Actual human beings wouldn't do those things to each other, right?

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Fed Up :-) says:
June 16, 2011 at 5:05 am
How have individuals been affected by the tech­nological advances of recent years?

Here is the answer to this question given by a philosopher-psychiatrist, Dr. Erich Fromm:

Our contemporary Western society, in spite of its material, intellectual and political progress, is in­creasingly less conducive to mental health, and tends to undermine the inner security, happiness, reason and the capacity for love in the individual; it tends to turn him into an automaton who pays for his human failure with increasing mental sickness, and with despair hidden under a frantic drive for work and so-called pleasure.

Our "increasing mental sickness" may find expres­sion in neurotic symptoms. These symptoms are con­spicuous and extremely distressing. But "let us beware," says Dr. Fromm, "of defining mental hygiene as the prevention of symptoms. Symptoms as such are not our enemy, but our friend; where there are symp­toms there is conflict, and conflict always indicates that the forces of life which strive for integration and happiness are still fighting." The really hopeless victims of mental illness are to be found among those who appear to be most normal. "Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been si­lenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does." They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their per­fect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted, still cherish "the illusion of indi­viduality," but in fact they have been to a great extent deindividualized. Their conformity is developing into something like uniformity. But "uniformity and free­dom are incompatible. Uniformity and mental health are incompatible too. . . . Man is not made to be an automaton, and if he becomes one, the basis for mental health is destroyed."

http://www.huxley.net/bnw-revisited/index.html#overorg

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Andrew P says:
June 15, 2011 at 9:07 pm
My main problem with Chang's book is t