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Monday, August 26, 2013

Who? And When?

At any given moment in time, I have no doubt that some number of poor individuals are better off with the big government welfare state. I don't mean better off in just a gaming-the-system somewhat materially enhanced sort of way, but truly better off.  Some number of other individuals are no doubt worse off.  The welfare state saves some lives.  Others die because of the welfare state.

As with any set of policies, there are winners and losers.  With the welfare state, lobbyists win, politicians win, bureaucrats win, some of the poor win, some of those win who have a strong subjective preference that some of the poor win via help from the government, and most others lose.  Given that there are winners and losers, it's always possible to construct utility functions that justify the welfare state or show that it's a net negative.

Let's for a moment examine one of the more well thought out analyses that's often used to justify the welfare state. A Theory of Justice by John Rawls does just that.  He does this by stepping through a set of clever thought experiments.

Everything flows from the first innovative thought experiment called the original position:
The original position is a hypothetical situation developed by American philosopher John Rawls as a thought experiment to replace the imagery of a savage state of nature of prior political philosophers like Thomas Hobbes. In the original position, the parties select principles that will determine the basic structure of the society they will live in. This choice is made from behind a veil of ignorance, which would deprive participants of information about their particular characteristics: his or her ethnicity, social status, gender and, crucially, Conception of the Good (an individual's idea of how to lead a good life). This forces participants to select principles impartially and rationally. [...]
Rawls argues that the representative parties in the original position would select two principles of justice:
  1. Each citizen is guaranteed a fully adequate scheme of basic liberties, which is compatible with the same scheme of liberties for all others;
  2. Social and economic inequalities must satisfy two conditions:
    1. to the greatest benefit of the least advantaged (the difference principle);
    2. attached to positions and offices open to all.
The reason that the least well off member gets benefited is that it is assumed that under the veil of ignorance, under original position, people will be risk averse. This implies that everyone is afraid of being part of the poor members of society, so the social contract is constructed to help the least well off members.
In other words, Rawls claims that those in the original position would all adopt a maximin strategy which would maximize the prospects of the least well-off.  Inequality is allowed to happen, but only to the extent that it creates incentives for the well-off to produce more such that it benefits the least well-off:
The Difference Principle regulates inequalities: it only permits inequalities that work to the advantage of the worst-off. 
The vast majority of academic criticism of A Theory of Justice came from the Left (i.e. it's not socialist enough).  However, "in Anarchy, State, and Utopia, Robert Nozick argues that ... Rawls's application of the maximin rule to the original position is risk aversion taken to its extreme."

But depending on when the maximin rule is applied, I'm not sure it is extreme in its risk avoidance.  A thousand years ago, it was pretty important to avoid being among the worst-off pretty much everywhere in the world.  Even now, an awful lot of the world is pretty awful and if Rawlsian justice were achievable in those awful places, it would be pretty tempting to adopt it.  Unfortunately, it's precisely because no sort of justice is achievable in most of the awful places that they are awful in the first place.

To me, the primary problem with the original position, the veil of ignorance, the maximin rule, and the difference principle, is that they don't even attempt to take into account the effect of the structure of society on the future.  For example, assume that human civilization will ultimately span 100,000 years (it's spanned somewhat less than 10,000 years so far).  If a society constructed around completely free markets grew at a mere one-hundredth of one-percent per year faster than a society constructed around Rawls' difference principle, the median GDP per capita over the 100,000 year period for the free market society would be 148 times greater than for the difference principle society.  Even if we assume that the worst off get only one-hundredth as large a piece of the pie, the better bet from the original position, if you didn't know which time frame you were going to be part of, is the free market approach for all but the most extremely risk adverse people in the original position.

One of the biggest problems I have with the welfare state is that I believe that it's stealing from me now, but even worse, it's stealing even more from my children's future, and a tremendous amount from their descendants.

To summarize, the welfare state has winners and losers, but more and more losers over time.

202 comments:

1 – 200 of 202   Newer›   Newest»
Harry Eagar said...

Well, you can believe that if you want but there is no evidence for it.

The South had and still has less welfare state than the rest of the country and is far worse off, and, eh voila, even within the South, the less welfary parts show less economic growth than the other parts.

Bret said...

Then why are blacks moving back to the South again"?

Clovis e Adri said...

Bret:

This was indeed a thoughtful one. You've touched deep aspects of the question in such a light way, the result was a wonderful text.

I would like to point out a few issues though.

First, I am lost to what you've meant with the "The welfare state kills others" part. The link provided states no relationship with anything welfare related.

Second, I am happy to see that you appreciate some places are different from others, as you show in the part "Even now, an awful lot of the world is pretty awful [...]". I believe part of our continuing disagreement over the role of the welfare state has some root on the different societies we live in. I woud like to add though, that it is naive to place the difference only in space. It acts over time too - regions that are not "pretty awful" now may well be in future.

Third, you show to be indeed an Engineer in your calculation of the two different societies long run GDP. I say so in the good and not so good sense. The good is that I love to see numbers in any discussion, they help us to clarify matters. The not so good sense is that, as most engineers, you are too focused on linear aproximations. So, even if I accept that the all-free-market society achieves a better GDP than the other now - something that deserves another discussion - nothing guarantees that is will continually do so afterwards.

It goes back to my old point of stability. One free market society that decays into feudalism may well be producing far less in future, for example.

Fourth, there is another more subtle point in your comparison, related to the definition of wealth. After some level of wealth and production of these worlds, to say which one is richer than the other is highly dependent on context, and there is none to compare (for you can not have both universes at the same time).

In the end, I think your main critique to Rawls, "[...] they don't even attempt to take into account the effect of the structure of society on the future" is unfair, for to take that in account (i) either asks for an absolute system of morals and ideas to define what should be the future or (ii) presuppose far more knowledge of the future evolution of present systems than we can possibly know (which is the weaker point of the comparison you offer).


Anyway, thanks a lot, you gave me plenty of food for thought.

Bret said...

Clovis wrote: " I am lost to what you've meant with the "The welfare state kills others" part."

Oops. Terribly sloppy on my part. I've changed the words a little in the post because "kill" is an active verb and I didn't mean to imply that the welfare state takes any action in order to kill anyone. Rather the redistribution from some to others makes the some worse off, and in some cases they end up dying because they are worse off. The example I gave was that some, being worse off than they might have otherwise been, committed suicide. We can imagine a large number of other possibilities. For example, perhaps someone who was drained by taxes and otherwise had less economic opportunity, felt he couldn't afford a new car with better anti-lock brakes, and got in a fatal accident.

All the examples illustrate the concept of seen versus unseen. In other words, one can "see" the benefits of the welfare state. For example, you can see social security checks going to the elderly. You don't see the piano lessons foregone, the new, safer car not bought, the family vacations that don't happen, the free time lost because taxes cause people to work harder because of financial obligations for their children, the opportunities that didn't happen, etc.

Bret said...

Clovis wrote: "...regions that are not "pretty awful" now may well be in future."

Superficially, we agree here. I'd bet where we don't agree is this: my bet is that the single best predictor of how awful a state will be a few generations in the future is how much of a welfare state it is now.

Clovis wrote: "...nothing guarantees that [the free market society] will continually do [better than the welfare state] afterwards."

Of course, there are no guarantees of anything. I worked for more than a decade with a futures trader and traded myself. During that time I intensely studied finance, markets, and economics. I look at hundreds of papers and endless reams of statistics and data. While there simply isn't enough data to have a very high degree of confidence (if there was, then there wouldn't be any debate, would there?), my analysis is the that the data backs up the hypothesis that free markets grow faster in lower tax, low regulation states.

I fully understand that there are other economists and others who have studied this with equal or greater intensity than I have who disagree. However, it remains my firm belief that they are very likely badly mistaken. In 500 years there will be enough data (maybe) and I think that those future people will look back and sadly shake their heads regarding our foolish insistence of maintaining the big government welfare states that we have because we thought it was justified by some set of utility functions. I could be wrong, but that's my best guess.

Clovis wrote: "... to say which one is richer than the other is highly dependent on context ..."

That statement renders all analysis meaningless and gets us back to subjective preference. For example, I could say that an individual leads a "richer" life struggling to support, even if he dies of starvation, rather than being supported by others. What objective context is there? Ultimately, that's why I lean towards subjective preference. I prefer the free market. That's the context that matters most to me.

Clovis wrote: "(ii) presuppose far more knowledge of the future evolution of present systems than we can possibly know"

But that's also a perfect criticism of those in the original position with the veil of ignorance. They happen to know what's convenient for Rawls and welfare state advocates to have them know, and they don't happen to know anything else. Like how things will evolve over time. If you don't know that, then you can't construct a just society using his principles.

Bret said...

Oops. Another total misstatement by me.

I wrote: "...my bet is that the single best predictor of how awful a state will be a few generations in the future is how much of a welfare state it is now."

What I meant to write: "my bet is that the single best predictor of how awful a currently rich state will be a few generations in the future is how much of a welfare state it is now."

Clovis e Adri said...

Bret:

---
All the examples illustrate the concept of seen versus unseen.
---
Ok, now I get your meaning.

I do believe you are only partially right on the existence of the unseen effect. I'll discuss it below, when I clarify my "context and definition of wealth" comment.


---
"my bet is that the single best predictor of how awful a currently rich state will be a few generations in the future is how much of a welfare state it is now."
---
You do have an experimental problem here. We have already many decades of welfare state to try your hypothesis. IMHO the result is the opposite you expect: the places in the world with best living standards strongly correlate with the ones who implemented sound welfare programs after (or even before) WWII.



---
my analysis is the that the data backs up the hypothesis that free markets grow faster in lower tax, low regulation states.
---
How do you explain China, for example, in this frame?


---
Clovis wrote: "... to say which one is richer than the other is highly dependent on context ..."
Bret: That statement renders all analysis meaningless and gets us back to subjective preference.
---
I think I did not made myself clear. I stated that with the "After some level of wealth and production of these worlds" condition, for I was implying a subtle point about the definition of wealth.

What I mean, Bret, is that after some degree of sophistication, economies tend to operate on very abstract terms. What sets the price of many, many things we buy today is not their real cost of production, but basically the price the market accepts to operate with. So, after some specific level of advancement of those imagined worlds, both would be able to achieve basically the same things, even if you could possibly compare which one is more "productive".

So, taking your example of the unseen struggle the tax payers goes through: in practice, if you did not pay 20% of taxes, but 10%, you still would not buy that better car, for everyone would be operating with more money (since everyone pay less taxes), and the price of the car wuold adjust to that too.

This effect is not absolute, it depends on reasonable levels of taxes (so as to not collide with the Laffer curve, for example) and possibly other things, but I believe it is very real for our modern fiat money economies.

---
But that's also a perfect criticism of those in the original position with the veil of ignorance.
---
In principle, I agree. But, as you recognize, they are taking the most risk averse option, which is what we usually do when having no idea whatsoever of the future :-)

Bret said...

Clovis wrote: "...the places in the world with best living standards strongly correlate with the ones who implemented sound welfare programs after (or even before) WWII."

You mean like the Soviet Union? China? Cuba? Vietnam? Etc.?

Or are you just going to look at countries that have not yet failed and are leaning socialist and ignore all the failed ones? I won't find an after the fact analysis like that convincing.

In the 1930s, the Left in this country put forth that the Soviet Union was a workers' paradise. After a few decades, it didn't seem to work out so well.

Clovis wrote: "How do you explain China, for example, in this frame? "

China is still a desperately poor country (about 1/8 GDP per capita as the U.S and 1/2 GDP per capita as Brazil and Brazil isn't exactly rich). If a country closes its door for decades, does little or no innovation during that time, then finally opens its doors, even if only a tiny crack, it's fairly straightforward that technology adoption will boost growth for a bit.

To put it in perspective, one question I like to ask (yes, it's a trick question): in the last 20 years which country has grown more, China or the United States?

Answer: United States

Explanation: During that period, the United States went from GDP per capita of roughly $30,000 to roughly $50,000, an increase per capita of $20,000. China went from about $1,000 to $6,000, an increase of $5,000 per capita. So the increase in GDP per capita was 4 times as large in the United States as it was in China.

On the other hand, China frees its markets just a bit, and what happens? Huge increase in the growth rate! No surprise to me there.

Clovis wrote: "...if you did not pay 20% of taxes, but 10%, you still would not buy that better car, for everyone would be operating with more money..."

That might be true if the government continues to spend the same amount (i.e. use the same amount of resources) after the tax cut to 10% which, of course, would necessitate that it borrow the rest. Of course, Keynesians would be THRILLED since that is a type of Keynesian stimulus and they would say it should cause a faltering economy (like ours) to grow by leaps and bounds. Yee-haw!

On the other hand, if the government cut its spending to match the cut in taxes, then the resources previously deployed by the government would be directed towards other productive uses via price information in the market. If people wanted nicer cars, the free market would direct some of those freed resources in that direction. There would then be more and nicer cars per capita. If done overnight, it would be disastrous in the short term. However, if done over several years it would be quite beneficial in my opinion.

But in the United States, regulations are a bigger problem than taxes at this point. I believe we're hurting more than it might seem from the statistics and the statistics aren't all that strong. I think the 2nd derivative (since you're a 2nd derivative kind of guy) of our wealth and culture is strongly negative at the moment, so the momentum that carried us through the last few decades is petering out.

It may well be that advances in technology will counteract other downward forces for a long time, but we'll see over the next few decades (well, I'm old enough that I likely won't see, but you'll see).

Harry Eagar said...

While I appreciate the thoughtful repartee between Clovis and Bret, I cannot get into it, for this simple reason (obliquely alluded to by Clovis in his remark about linearity):

The idea that a free market might (or, mutatis mutandis, there is no evidence for it, might not) achieve a slightly better annual average growth does not take into account the well-known fact (regarded by the Austrians as a feature not a bug) that unsupervised markets crash.

Semi-regularly and often. So whatever growth was accomplished is erased, in large part, and the growth rate depends which point you pick3ed to start.

We do not have enough serial data to be sure, but the history of the US economy since the New Deal suggests (atrongly to me) that net expansion over time is greater without frequent crashes than it is with frequent crashes.

History strongly suggests to me that the single greatest embellishment to long-term growth is failure to go to war. No matter what economic organization is adopted.

Peter said...

So whatever growth was accomplished is erased, in large part,

That sounds like the musings of an economic Malthusian. So, if it all evens out, what aren't we at the same level we were two hundred years ago? In fact, Harry, since the 19th century, the economy has expanded seven years for every one it contracted.

Clovis e Adri said...

Bret,

---
You mean like the Soviet Union? China? Cuba? Vietnam? Etc.?
---
Sure not, I thought it was implied we were dealing with capitalist states. Also, I've said "the places in the world with best living standards", which indicates mostly European countries plus a few others out there.

---
Or are you just going to look at countries that have not yet failed and are leaning socialist and ignore all the failed ones?
---
I do not understand why we are differing in definitions here. I believe the concept of welfare only applies to countries that practice capitalism, and where you can end up having no job and in famine without help. To bring up states that had communism, where such possibility was excluded beforehand, is almost to change topics.


---
[...] which country has grown more, China or the United States?
Answer: United States
---
Sure a tricky one - you freely blend different definitions of growth (absolute and relative).

I would hardly say China "is still a desperately poor country", to look for GDP only in this case is misleading, even more when comparing countries of so different population numbers. You will find 300 million Chinese doing quite well - that is the number of people in your country.
Also, their bizarre economic system masquerades a lot of things necessary for the GDP comparison to make sense. So they are still poor, but not desperately poor.



---
On the other hand, China frees its markets just a bit, and what happens? Huge increase in the growth rate! No surprise to me there.
---
It may be too early to say that, but I believe they make a serious case of a Opposite-Of-Libertarian state that may be more productive than any Libertarian one could be.

Another indication that to maximize productivity should never be the Main goal of healthy societies.


On the discussion of the 10% or 20% tax example, you are right, your view is more complete than mine - I was assuming a sudden scenario where everyone has more money and there are yet not much more cars, leading to price inflation.

I still believe there are subtlietes to define in so long a run what society is better, and that in principle both could achieve basically the same things, with differentiation in matters that would not influence comfortable standards of life. But I recognize that, in order to put that in an analytical argument, I would need many hypotheses and would end up not being very persuasive.

I also believe that your present negative views of your 2nd derivative will vanish in a few years, just as the US economy takes off again. Contrary to my own country, you do not really have any huge structural problems to hold you back.

Bret said...

Harry wrote: "... markets crash ... So whatever growth was accomplished is erased ..."

Not true. The knowledge, technology/technique, business practices, majority of companies, employee know how, networks, capital equipment, and much else is not erased at all. Even in "perfect storms" like the great depression, the economy only shrank by around 25%. It is my opinion that it the government didn't meddle the way the did, the contraction would've been substantially smaller and the recovery much quicker. I'm well aware that you disagree, but even if you're right, do you really think the economy would've shrunk 100%? To absolutely nothing? No one would've lifted a finger to try and produce and sell anything at all?

But to count on government to smooth it out is also foolish in the long term. Every government collapses eventually. Then what? People so reliant on government that they're paralyzed? Why is this better?

Bret said...

Clovis wrote: "I also believe that your present negative views of your 2nd derivative will vanish in a few years, just as the US economy takes off again."

We'll see if the "US economy takes off again" "in a few years." It's possible that there will be technology breakthroughs that enable that, but I'm guessing that our economy averages less than 2% per capita GDP growth for the next ten years and perhaps forever. Too many people giving up, too many people very angry with the government and society and working to undermine it, too many people gaming the system which is becoming ever easier and more lucrative to game, and too many people becoming ever more dependent on the government and ever less productive. That's an awful lot energy working against advances in technology.

Harry Eagar said...

Be careful. I said it depends what you pick as your starting point.

After Hurricane Iniki ruined Kauai, the overall economy of Hawaii contracted briefly but then began expanding. However, as the economists said, the expansion was from insurance (except for the largest residential insurer which had the funds to pay but welshed, an instructive episode for admirers of private business), not from resumption of previous enterprises.

Kauai has, in fact, never recovered; although statewide expansion is vigorous despite our leftish ways.

Wouldn't it be better to expand 8 out of 8 years? I think so.

There is another aspect of crashes that I hope to get to at RtO, also, but it is encapsulated in JD Rockefeller's comment that the crash of '29 offered him and his son an opportunity to pick up securities at attractive prices.

Annoying Old Guy said...

Wouldn't it be better to expand 8 out of 8 years? I think so.

Oh, I am sure you do. But math doesn't agree with you.

8 years of 2% growth = 17% net gain.
7 years of 5% grown, then a downturn of 10% = 27% gain.

It's quite easy to generate plausible scenarios where it's worse to grow 8 out of 8 years. So better the Bush years than the Obama years.

Clovis e Adri said...

Bret,

---
Too many people giving up, too many people very angry with the government and society and working to undermine it, too many people gaming the system which is becoming ever easier and more lucrative to game, and too many people becoming ever more dependent on the government and ever less productive.
---

I would be very interested in hearing your take on this. Why are people giving up? Why are they working to undermine govt.? Why would you have more people gaming the system now than before?

What would be the root causes of this phase changes in the system, in your opinion?

To what extent could your pessimism be rooted only in psychological factors?

Harry Eagar said...

Some people live through exciting events without noticing. I don't think many people nearing retirement during the Bush years thought things were so hot.

Annoying Old Guy said...

Mr. Eagar;

Once again you substitute Bush bashing for logic. Is your view that once it is admitted that things "were not so hot" during the Bush years all other facts and comparison become irrelevant? That, if a 4-5% GDP growth under Bush isn't good, it's irrelevant if the growth rate is less than 2% during the Obama years?

Howard said...

BDS, one of the most debilitating maladies known to man. There is still no known cure.

Clovis e Adri said...

AOG:

It is funny how you separate your economy in Bush and Obama eras, as if that had much sense.

The present lower growing rates are directly connected to the higher ones of Bubble years. Obama or not Obama.

Annoying Old Guy said...

No. The lower growth and higher unemployment compared to the Bush Years are directly attributable to the economic and regulatory policies of the Democratic Party and President Obama. It's just like the New Deal, where bad economic policy took a normal downturn and turned it in to a lost decade. Similar policies, similar results. In contrast the tech bubble burst and the 1987 crash were basically ignored and hence growth resumed much more quickly. The historical record is there for those who don't want to ignore facts in favor of their ideology.

Bret said...

Clovis wrote: "Why are people giving up?"

That some of them are giving up should be obvious from the comments by erp, aog, and me.

The "why" part is quite complicated and varies by group. To avoid writing 20 pages, I'll grossly oversimplify everything, though that will make it not very useful to you.

The poor are giving up because it doesn't make sense to work even if they could find jobs and work towards prosperity.

Investors are giving up because the future is very uncertain, with a high likelihood of the United States becoming an ever higher tax state with an ever increasing regulatory burden making expected risk adjusted returns on investment worse and not good enough to bother.

Entrepreneurs are giving up because it's difficult to raise money (see above), regulations are making it harder to succeed, and success is likely to be dampened by higher taxes.

There are a number of groups that are doing well, of course. For example, politicians, lobbyists, regulators, bureaucrats, and lawyers that work politics and litigation. Managers and CEOs that specialize in dealing with the aforementioned groups are also doing quite well. So those people aren't giving up. Unfortunately, they don't actually produce anything. I've strongly suggested to my older daughter to consider politics, bureaucracy, and lobbying as a career. Lobbyists work pretty hard and make boatloads of money. Politicians work moderately hard and at the national level also end up rich because lobbyists cut them in. Bureaucrats make great money and have great benefits compared to the private sector and don't have to work at all, yet have very, very good job security.

Clovis wrote: "Why are they working to undermine govt.?"

When I was younger there was this concept called "consent of the governed". The vast majority of the people believed that the government had the consent of the citizens to govern. Now we have over half the country having very little or no trust in government entities such as congress.

Without the consent of the governed, the government isn't considered legitimate, and it makes sense to undermine and get rid of it as quickly as possible. What's saved the government for the past decades, is that everybody would say, "well, this particular government is a bunch of losers, but surely we can pick better next time." However, after decades with congress being distrusted, more and more people are wondering if the corruption and bureaucratic meddling are inherent in the system.

Bret said...

Clovis wrote: "Why would you have more people gaming the system now than before?"

That's how the numbers work. The more people in a political system, the more it makes sense to game it as it becomes more likely you'll get away with it.

First, a quick primer on how lobbying works. Well, it works many ways, but here is the simplest and completely legal way. Company X goes to lobbying firm L with the goal to get some legislation passed that's worth $1 million (as an example) for them. L puts together one or more congress persons C to pass the legislation that L writes. L directs people from X to donate to C's campaigns. In addition, X pays L, and we can bet that some of that money also makes it to C in various forms.

The way that X donates the money to C's campaigns is interesting. The money actually comes from the individual employees and is limited by law to $2,000 per employee per congress person. The company representative that's working the deal will put in some company wide communication that C is working on important legislation for the company. This is code for "donate $2,000 to each of C's campaign(s)". The employees don't have to do it, of course, but if they do, they'll get a raise or bonus to more than cover the contribution. If they don't do it, well, they won't be high on the list for raises or to keep their jobs if there are layoffs or company restructuring (not official policy or even discussed, of course, but everybody knows that's how it works).

It used to be that campaign contributions were not public information. Now, however, they are all publicly registered, so X, L, and C can all check that the campaign contributions have been paid and by whom and in what total amount. Then C wheels and deals and gets the desired legislation added to some monstrous bill (like Obamacare) that nobody can possibly make heads or tails of, the legislation passes, is signed by the President, and voila!, the company is ahead by $1 million! Not only that, but L has made a bunch of money and C has got a bunch of campaign contributions and money for other activities. All legal. Perfectly legal. This story is repeated tens of thousands of times per year, creating "pork" of many tens of billions of dollars, creating lots of rich lobbyists and funding a lot of politicians and bureaucrats, and making crony-capitalist companies better off (and their shareholders too!). Everybody's really happy about the setup. Except, of course, the tax payer and also X's competition.

So now to the numbers. If you have a political entity of 1,000 people, to get a windfall of $1 million via the government, it's going to cost each person in the entity $1,000. Pretty steep and a pretty tough sell to the rest of the constituents. On the other hand, if you have a political entity of 300,000,000 people (roughly the population of the United States), $1 million is only one-third of a penny per person, and nobody can worry about blocking a transaction that only costs them one-third of a penny.

This is all described and modeled in Public Choice Theory and further described in The Rise and Decline of Nations by Mancur Olson. It's inherent in the system and gets worse as the government grows and has more constituents.

Bret said...

aog,

Bush initiated the bailouts and allowed (encouraged even) the federal government to expand (did he ever veto anything?). In my opinion, just as Roosevelt was Hoover on steroids and made things even worse, it's true that Obama is Bush on steroids. In both cases, the initial blame and a significant part of the overall blame should be assigned to Hoover and Bush, in my opinion.

Annoying Old Guy said...

Bret;

By comparison...

Bush was no libertarian, and a big spender, but he did try to

1) Stop the mortgage bubble well before it burst, but was stymied by a Democratic Party controlled Congress

2) Authorized TARP as an asset relief program, which was quickly hijacked in to a crony bank bailout under the Obama Administration. Bush clearly must take some of the blame there, but I think it's clear the majority must fall on Obama and his party.

So, yeah, the parallels to Hoover/FDR are quite strong, aren't they?

Clovis;

Part of the increased gaming of the system is active encouragement to do so by the federal government, even so far as to encourage foreigners to take advantage. Welfare here is no longer treated a regrettable necessity, but marketed to people by the government like a pusher getting people hooked.

It's part of what I call "neo-feudalism", the goal being to create a peasant caste dependent on the Aristocracy of Pull to get by. The people doing this think they'll be that aristocracy, controlling the lives of the little people.

Clovis e Adri said...

AOG:

The level of leverage involved in the last crisis was superior to the previous ones mentioned. The dynamics leading to the Bubble too.

You are basically denying that periods after a Bubble burst are of low growth. Again you make claims contrary to what almost every economist believes, presenting no evidence or link, and laments in the end how everyone else is ideologically blinded. Oh yes.

As for your dailycaller.com link, I would like to stress the year of that agreement: 2004. Sure only Democrats and Obama can be accused of acting as "poverty pimps". Let's talk again about ideology and blindness...

Clovis e Adri said...

Bret:

Thank you very much for your take on those matters. I've learned a lot.

I am appaled by your description of the lobbying system. It as a shock to me that it is legally allowed. Since when it was made so??

Living in a very corrupt country myself, I can hardly point fingers, but I can tell we at least still call corruption by its name.

I will need more time to sink in your answers.

Annoying Old Guy said...

Clovis;

The level of leverage involved in the last crisis was superior to the previous ones mentioned. The dynamics leading to the Bubble too.

I have no idea at all what you mean here.

You are basically denying that periods after a Bubble burst are of low growth

No. This is why it is tiring for me, because you seem to be unable to just read what I write and respond to that. I must constantly guess what false presumptions about me you are introducing and correct those.

I would like to stress the year of that agreement: 2004. Sure only Democrats and Obama can be accused of acting as "poverty pimps"

Again, no. Point out where I made that claim specific to Democrats and Obama. You asked, "why are people gaming the system more?" and I answered.

As best I can tell, you presume I have ideological blinders and interpret my statements that way, rather than what I actually write. I've been asking you for quotes when you do this, in the hope you would notice you can't actually find one and therefore you've misread me and be a bit more cautious in the future. That clearly hasn't been a successful strategy.

So, how about you give it a try - when you write something like, find the quote from me that makes that case. If you can't, reconsider whether I wrote that, or you just presumed I did.

Bret said...

Clovis,

I described the raw mechanics of the lobbying system as a basis to understand why larger political entities are more subject to this sort of thing and answer why more people game the system.

Now watch. I'm going to spin it so it doesn't seem so bad.

Very few of the deals, if any, are raw payouts, and most can be described in terms of social good. For example, how about a $10 million earmark for a robot company to extend their technology to develop battle field robots to help protect soldiers and save their lives while at the same time offering the prospect of high technology jobs? Saving lives is a good thing, right? High technology jobs are good things, right? How about a few hundred million dollars per year program to enhance agricultural productivity including some robot technology? Eating is a good thing right? How about safety regulations that only one company (who hired the lobbyist) can meet efficiently and will just happen to screw the competitors? Consumers might pay more both for the product and taxes, but safety is a good thing, right? And on and on and on. In each case (or at least most cases), the deal is arguably a good thing.

So the congress person is doing an arguably good thing. In order to keep doing arguably good things, they need to get re-elected. That requires money. Therefore, it makes sense to prioritize which arguably good things they focus on according to which deals will bring in the most money for their campaigns and provide other benefits. The congress people I've talked with (about deals exactly like some of the ones described above) seem to genuinely think they are doing good things (or they're very convincing liars).

The lobbyists are setting up deals that do arguably good things. They make the process more efficient. They also give smaller companies access to the congress people. The big companies have resources to influence congress directly, so if anything, the lobbyists level the playing field a little bit.

The companies at least sometimes think they are doing an arguably good thing. Often, they're perfectly well aware that being self-serving is the primary motivation. So that may be the single most corrupt point.

The employees cannot legally be forced to give money to the campaign funds. But who doesn't want to be a team player? Especially when the grape vine tells you that it may damage your career not to be. Besides, maybe that congress person really is good, or at least better than the alternative. Also, the congress persons are doing an arguably good thing, so maybe they really are the best choice.

Doesn't seem so bad now, right?

erp said...

... and best of all, at least they're not Republicans.

Clovis e Adri said...

Bret,


Taking the risk of being called not serious again by Erp, I ask you to read Krugman's latest column at NYT:

http://www.nytimes.com/2013/09/02/opinion/krugman-love-for-labor-lost.html?partner=rssnyt&emc=rss

For he also discuss welfare, and he has a different take of it from you.

Putting aside for one moment the distrust most here have for him, please try to put yourself in my place: I see two different smart Americans with very different opinions on welfare and its effect in their society.

By Krugman's opinion, welfare has been minimal and most people are hard workers in need of govt. extra hand due to the greedy system. On the opinions here, most look to be lazy moochers who refuse to work.

Is there a possibility that both of you are looking only for the data you want to see, hence the radically different conclusions?

Clovis e Adri said...

AOG:

On leverage, I only meant there was far more money on the hook in this last crisis then the others you've cited, as far as I know.


===
Clovis: You are basically denying that periods after a Bubble burst are of low growth

AOG: No. This is why it is tiring for me, because you seem to be unable to just read what I write and respond to that. I must constantly guess what false presumptions about me you are introducing and correct those.
===
Please let's review this last case then. I offered you my viewthat, no matter the President, you would have low growth because you were in post-Bubble years.

You gave me a straight "No." Followed by:

"The lower growth and higher unemployment compared to the Bush Years are directly attributable to the economic and regulatory policies of the Democratic Party and President Obama"

So I concluded you believe Obama policies were to blame, and that another set of policies would give you high rates of growth in the post-Bubble years.

I believe most economists would reason that, after such a Bubble burst, crisis and low growth for some years was to be expected. Hence my answer to you.

Now, can you please point to me where have I misinterpreted you?

I am always ready to apologize, AOG, if I deliberately misread you. But I also ask for you to review if your wording and style may be contributing to my persistent errors of interpretation, for I believe the above example was really straightforward.

Clovis e Adri said...

Bret,


On your spin of the lobbyist profession, it was so well devised that I almost gave you my money.

I believe that your legal lobby rules are something like bottling corruption. You are making a market of it, with the advantadge of clear rules and good propaganda, but it does not make it moral.

Again, I can hardly point fingers here - I live in a country that has never known real capitalism, only crony capitalism. I only regret that yours is going from the real thing to the crony one.

Annoying Old Guy said...

Clovis;

can you please point to me where have I misinterpreted you?

I use the term "the Bush years" to refer to the entire 8 years of his Presidency.

You use the term "post-Bubble years" to mean, what, exactly? 1 year? 5 years? 20 years? Those are all "post-Bubble years". You write "low growth for some years". Again, what is "some" here? Whatever it is, it doesn't seem to match with what I wrote, and that's the problem.

On the other side, I still don't understand your statement. What, precisely is "this last crisis"? What metric are you using to measure "money on the hook"?

Clovis e Adri said...

AOG:

Last crisis = subprime US crisis.

On duration of after-effects pos-crisis peak, you may help yourself:

http://www.bresserpereira.org.br/terceiros/cursos/Rogoff.Aftermath_of_Financial_Crises.pdf

On a measure of how serious a crisis can be, there are of couse many possible metrics, as for example their contagion capacity:

http://www.imf.org/external/pubs/ft/wp/2010/wp1014.pdf

Or if you want a layman measure, take the pre-crisis value of all the companies bailed out, including banks, autos, insurance companies, etc, and you'll be making a very conservative guess which will probably account for not even half of the "money on the hook".


Now, I would like to see your references to back up your point that Obama's actions are the only thing to blame for your present relatively low growth.

Harry Eagar said...

'On leverage, I only meant there was far more money on the hook in this last crisis then the others you've cited, as far as I know.'

Vastly more, so there is really no comparison.

In the S&L collapse, the only people affected were the minority of people who kept their money in S&Ls (and even then few kept more than a part of it there); and the developers who were counting on S&L financing.

Since by 1987, many S&Ls had been taken over by developers for self-dealing, the crisis had a self-sealing effect and next to no impact on the overall economy.

The '29 and '08 crashes were worldwide failures of financial markets, affecting virtually everybody who used money (and in the US, even farmers, who had quit using money during Coolidge Prosperity).

Th '08 crash had nothing to do with government policies, except the dire fallout of the Gramm-Leach-Bliley Act, which forced banks to overleverage.

Once that wave started, the only possible result was a big crash, no matter what other government actions were taken.

The alleged stretchout of the Great Depression is disproved by a number of considerations, including the slower recovery of the franc bloc because it stayed on gold; and the failure of the US farm sector to revive after 1921, although it was treated to exactly the policy that the rightwingers allege would have shortened the wider contraction after 1931.

History does indeed tell us a thing or two.

Annoying Old Guy said...

Clovis;

your point that Obama's actions are the only thing to blame for your present relatively low growth.

Why, since I never wrote that? Again, find the quote.

I also think your layman's metric vastly overstates the money at risk, because those assets don't vaporize in bankruptcy. I would consider that a ceiling, not a floor.

But here are four charts showing how different this post-bubble is from others.

Mr. Eagar;

Of course, it's all completely different when your preferred policies are demonstrated to not work.

But if things are going to crash no matter what other government actions are taken, why take action? That seems futile and wasteful.

Annoying Old Guy said...

Clovis;

Let's not forget this chart, demonstrating that the Obama Administration didn't believe what your cite either.

P.S. I am trying to read through your article, presuming that its measures of duration are what you mean.

Clovis e Adri said...

AOG:

===
Clovis: [...] your point that Obama's actions are the only thing to blame for your present relatively low growth.

AOG: Why, since I never wrote that? Again, find the quote.
====

I did quote it already, and I quote again:

"The lower growth and higher unemployment compared to the Bush Years are directly attributable to the economic and regulatory policies of the Democratic Party and President Obama."

What proof and references you have to believe your exact quote above?

Your last link (aei-ideas.org) surely is not a proof that Obama policies are the reason for the unemployment levels, for there are many economists who can equally argue that things would be worse. Krugmann, for example, has tons of posts on how he did not approve of the stimulus due to his belief it was too small. He has just this on the subject:

http://krugman.blogs.nytimes.com/2013/08/31/the-arithmetic-of-fantasy-fiscal-policy/




Annoying Old Guy said...

Clovis;

Those are not at all the same.

1) You removed the reference to the Democratic Party.
2) You changed "policies" to "actions".
3) You removed the comparison to the Bush years.
4) You added the qualifier "only".

All of those are significant semantic changes, which indicates that you are not reading what I am writing.

I also wonder, you ask for "proof". Is that the standard now? For everyone, or just me?

I provided evidence for my actual thesis, which is that downturns are to be expected after a crisis but current economic policies are making it deeper and more persistence in comparison to other such events. Therefore I provided proof of the latter, and infer the former based on the correlation.

I understand Krugman argues "it would be worse" but where is his evidence? Not in the actual historical data in those charts. Does he need "proof" of that contention, or that my burden alone?

P.S. The Obama Administration clearly didn't believe Krugman about that - was that a mistake on their part? Krugman also ignores the experience of the actual stimulus which was mostly wasted on paying for over-extended state and local governments. It turned out (as even Obama admits) that the stimulus was too big in terms of the availability of "shovel ready jobs" that could be done. Krugman also ignores the cost/job of what stimulus there was. I would say he's the fantasist in this case.

Howard said...

...the slower recovery of the franc bloc because it stayed on gold

Glad you're aware of that Harry. That should make it easy to see how any sane person would realize that regarding the turn in both the ag sector and the broader economy, the 1933 dollar devaluation against gold is an explanatory howitzer vs the explanatory peashooter of the AAA.

Clovis e Adri said...

AOG:


---
All of those are significant semantic changes, which indicates that you are not reading what I am writing.
---
OK. I will stop loosely rephrasing your points.


---
I also wonder, you ask for "proof". Is that the standard now? For everyone, or just me?
---
"Proof" is a too strong word, in fact I wanted only "evidence".


---
I provided evidence for my actual thesis, which is that downturns are to be expected after a crisis but current economic policies are making it deeper and more persistence in comparison to other such events.
---
Now I believe you are using too strong inferences. Your graphs show that present downturns are more persistent and deep then previous ones. In no way it is possible to drawn, from your links, that the root causes are "policies of the Democratic Party and President Obama". Also, as I've pointed before, the last crisis was in greater orders of magnitude than the ones you were using in comparison.


---
I also think your layman's metric vastly overstates the money at risk, because those assets don't vaporize in bankruptcy.
---
I would usually agree with you here, except the subprime crisis was, mostly, a banking crisis. The possible contagion effects are vastly greater than non-banking crisis as the dot.com one. The panic and disruption induced could lead to losses far greater than my layman estimative, if I believe what economists say.




---
I understand Krugman argues "it would be worse" but where is his evidence? Not in the actual historical data in those charts. Does he need "proof" of that contention, or that my burden alone?
---
I think you greatly understimate him for his politics, while forgetting he is an economist by profession, and probably not a bad one. So he does present a convincing case IMHO, that you can "test" the two realities by looking to USA and Europe, since the last one practiced less stimulus and soon turned to austerity. Help yourself with these two arguments please:


http://krugman.blogs.nytimes.com/2012/11/17/transatlantic-divergence/

http://krugman.blogs.nytimes.com/2012/02/18/austerity-and-growth/




Annoying Old Guy said...

Clovis;

When I look at that data, I see one far outlier, the current recession. I don't think it's too much of an inference to conclude that current policies (starting with the 2007 Congress) are a dominant to almost sole cause of that. I think that is reinforced by the predictions of the Obama Administration which clearly thought this crisis would proceed basically as the other ones. There was no claim at all before the policies failed that this time it was different. I think the burden of proof should be on those who claim that post facto.

I find this very interesting -

AOG: Where is Krugman's evidence?

Clovis: I think you greatly underestimate him for his politics

So, because I think he's a political hack, you have no expectation he should provide evidence? Really? If you think I'm a political hack, will you let me out of having to provide evidence also?

I think the European experience is very destructive to Krugman's case. After all, the USA had significantly higher growth / higher employment nation until we did a bigger stimulus than Europe. Now our advantage has disappeared. So, yeah, quite an interesting test. After all, Greece has been practicing massive stimulus for decades, on other people's dime to boot, and now it's failing catastrophically. Why does Krugman think his similar policies won't end in a similar collapse?

P.S. With regard to the drop in unemployment, Krugman is simply asserting facts not in evidence. Oh, right, he doesn't need evidence. My bad, sorry.

P.P.S. "Purchases of goods and services" - that's quite an interesting phraseology. Does it include all government spending, or only such purchases? Given Krugman's penchant for picking obscure metrics that happen to favor him, I suspect not.

P.P.P.S. Of course, the policies advocated here include tax cuts, not hikes. Perhaps it is the latter that explain Krugman's graph? That's not a small point to leave unaddressed.

Harry Eagar said...

'But if things are going to crash no matter what other government actions are taken, why take action? That seems futile and wasteful.'

Please pay attention.

Unless 'other government actions' comprehends going back to the New Deal, indeed the crash is inevitable. Since GLB already rejected that, crash.

Harry Eagar said...

'Glad you're aware of that Harry. That should make it easy to see how any sane person would realize that regarding the turn in both the ag sector and the broader economy, the 1933 dollar devaluation against gold is an explanatory howitzer vs the explanatory peashooter of the AAA.;

Of course I'm aware of that. I'm a reality-based student of economy.

However, your conclusion cannot be used unless you are also willing to throw out the alleged Coolidge Prosperity of the industrial sector.

Gold was priced the same for plsnt growers and plant owners. But their experiences were exactlu opposite.

Gold was not, up to the financial crash, a problem for the US, a creditor nation with export surplus. It was for Britain.

Clovis e Adri said...

AOG:

---
I don't think it's too much of an inference to conclude that current policies (starting with the 2007 Congress) are a dominant to almost sole cause of that.
---
I will make an analogy. You go to the doctor and they discover you have cancer. After six months of chemotherapy, all the predictions you would get much better fail. Still, your doctor insists you would be far worse, had you not taken it.

How can we know if he is right or wrong?

Only by looking the statistics of people in very similar conditions who did not take therapy. I believe those two graphs I've last linked by Krugman do just that. I also think my analogy is a good one in other senses, for cancer and economic crisis are both things we have limited knowledge in particular details, but understand much better in statistical terms.

You are blaming the doctor for giving you chemotherapy and you not getting better. One of those doctors think you should have got more. He has statistics to believe that, and still there is chance he could be wrong. It is a complex world, but you should not think the doctor is a dishonest or deluded physician for that.



---
So, because I think he's a political hack, you have no expectation he should provide evidence? Really? If you think I'm a political hack, will you let me out of having to provide evidence also?
---
I thought we have placed a truce on over-interpreting what the other says. I've argued the contrary of what you state here. My point was that, being he a good economist, he would hardly be making statements without some evidence to support it; I've then pointed to you some of this evidence. As he is an economist, I can only expect more from him on this topic than I expect from you, not less.



---
After all, the USA had significantly higher growth / higher employment nation until we did a bigger stimulus than Europe. Now our advantage has disappeared.
---
Could you please point to evidence for that? Have you been paying attention to your growth rates, compared to Europe's core? Or your unemployement numbers?


Howard said...

I realize being impervious to things you don't already believe is a significant limitation for you Harry, but I present this for other people to consider:

"By the end of the war, the U.S. had displaced Britain as the world's financial and commercial hub. The war altered trade patterns. There was widespread overcapacity as belligerents shifted back to peacetime production. Agricultural overcapacity was especially serious, especially for the United States which had tripled wheat exports and increased meat exports ten-fold during the war. After the war, the sharply declining prices during the 1920-1921 recession forced needed agricultural contraction that was often blamed on the gold standard.
Recovery from the 1920-1921 recession was especially rapid, assisted by agricultural exports, something that was no longer possible thereafter. Eichengreen credits the monetary flexibility abroad that existed before reestablishment of the gold standard, but this recovery was also before the 1922 Fordney-McCumber tariff initiated the trade war.
By 1923, the decline in agricultural prices and farm income had ended and rapid recovery had begun. Farm income remained well above pre-war levels until 1930, something left wing economists never mention. With vicious efficiency, the markets had successfully completed a massive rebalancing that no government could have matched. Mechanization and new crop technology was a threat to small farmers throughout the 1920s, but the market itself was healthy and kept expanding until the record wheat crops of 1928."

I notice how tyrannies, human suffering and body counts occurring in the name of the collective get a free pass in your view. It recently dawned on me why you got so upset a few years ago at a mere gentle suggestion to read some historical material that contradicted your beliefs. Seeing almost everything through the lens of oppressed and oppressor results in a very myopic view. Everybody here can see how tenaciously you cling to the progressive narrative.

Annoying Old Guy said...

Clovis;

In your analogy, I've had cancer on a number of previous occasions. Most of the time I get treatment A, and my recovery is rapid. Once before I had treatment B and I took much longer to recovery, and was sicker the whole time. Now I get treatment B again, and once again I take a longer time to recover and remain sicker. So I blame the doctor for using treatment B when A has been shown to work better.

My point was that, being he a good economist, he would hardly be making statements without some evidence to support it

You, my friend, are in for some serious disappointments in life.

I find Krugman's evidence weak, cherry picked, insufficiently detailed, and too short term, and I've stated why. You, on the other hand, have not pointed out (other than to quote Krugman) why the evidence I presented for my case isn't strong enough, even though it is more apropos being a direct comparison on the same economy[1]. It certainly suits your cancer analogy, actually better than Krugman's data.

As for USA vs. European economic statistics, I am taking the longer view and as I've specifically mentioned previously, comparing the Bush years to the Obama years. And yes, I have been paying attention, for quite a long time.

[1] Beyond that, because it compares similar events in different eras, it is less subject to statistical bias or exogenous causation.

Annoying Old Guy said...

Clovis;

More historical examples -

Former Presidents Carter vs. Reagan. Which set of policies did better? Which one do the current USA federal government policies most resemble?

Former President Clinton - his first two years were a disaster, including economically. Then a GOP Congress, riding on the "Contract With America" came in and changed economic policies. Clinton went along so he could grab credit later for other people's success, but the results of the policy change are clear, and as in the previous example, directly opposite Krugman's claims.

And from the New York Times, we have an article about the impending economic failure of France due to its lack of real austerity, which relates to my question "how does Krugman think we will avoid this same fate?".

P.S. Japan vs. Singapore, Hong Kong - that's an instructive one. Or Argentina pre and post Peron. North and South Korea. China pre and post Deng Xiaoping. You can even look at the longer history of European welfare states, many of which got to be wealthy enough to be welfare states by embracing free markets first, such as Germany and Sweden, post WWII.

Harry Eagar said...

So, Howard, if the farm economy was doing so well, please explain how the Nebraska state deposit insurance fund went bust in 1928?

Wheat exports mean something to the macroeconomic bean counters, but if rhe farmers lose money on each bushel, I don't call that economic expansion.

The agricultural depression of the '20s is a classic market failure; the only one in our hiatory that actually drove citizens off money.

You mistake, as Guy mistakes, the success of international finance brokers for economic success.

Not all US producers mechanized, either. If you read RtO, you'd know about the stark difference in the South between rice (mechanized) and cotton and tobacco (unmechanized).

If the key factor to success in ag is control of land (and I think you can make a case for that), then it must be significant that on a single day in 1933, one quarter of all the land in Mississippi was sold at sheriff's sales.

Doesn't sound like prosperity to me.

Howard said...

You see exactly what you want to see Harry. I can't remove your blinders for you.

erp said...

Exactly right Howard. Maybe those kids never left their neighborhoods, but they went to school, watched the world on TV, movies, etc.

When I was a kid, I thought Central Park was the country. So what? The nuns taught us and we learned even those of us who didn't speak a word of English when we arrived on the first day of school and we learned to speak and write correctly, cursive and all.

Give me a break Harry. At least the poverty pimps are making a nice living off these wretched people, but I doubt you are, so what's your angle?

Clovis e Adri said...

AOG:

---
In your analogy, I've had cancer on a number of previous occasions.
---
Then you are most probably dead :-)

I understand your point and counter that, to some extent, you are comparing situations when you've got cancer with the ones you've got a flu. Crises are not all the same, and deserve not always the same answers. This is even more true when comparing banking crisis with the other ones.

---
You, on the other hand, have not pointed out (other than to quote Krugman) why the evidence I presented for my case isn't strong enough, even though it is more apropos being a direct comparison on the same economy[1].
---
I did, and did again right above - IMO you are comparing apples with oranges when comparing so different crises.


As for your historical examples... I will not even try to answer, sorry. You've taken so many different cases that I barely understand what is your point. You even try to turn Clinton's success in a win for Republicans? Wow.

Annoying Old Guy said...

You've taken so many different cases that I barely understand what is your point.

They are all cases there you can compare the two approaches and see that the one I favor beats the one Krugman favors. My point is that my view on this is not just ideology, but backed by quite a lot of historical evidence.

You even try to turn Clinton's success in a win for Republicans? Wow.

I didn't "try to turn", I pointed out evidence that is the historical case. You can ignore facts because of your ideology, or look at the evidence. We all have to make our own choices.

Clovis e Adri said...

AOG:

---
They are all cases there you can compare the two approaches and see that the one I favor beats the one Krugman favors.
---
Quite not. They all involved very different economic circumstances and policies. You are under the impression that Reagan, for example, was the opposite of spendthrift Obama, but then you should call you anti-Krugman squad to explain this:

http://krugman.blogs.nytimes.com/2013/02/18/the-myth-of-reagans-miracle/?_r=0

http://krugman.blogs.nytimes.com/2012/06/07/real-government-spending-per-capita/?_r=0

http://krugman.blogs.nytimes.com/2012/03/03/austerity-recovery-continued/

http://krugman.blogs.nytimes.com/2012/03/04/real-government-spending-in-two-recoveries/

http://krugman.blogs.nytimes.com/2012/03/03/reagan-obama-austerity/

[I keep posting Krugman for you so you can have the benefit of external debunking help, to check if his data is false and so on]



---
Then a GOP Congress, riding on the "Contract With America" came in and changed economic policies.
---
Explain to me, please, how then it can be true of Clinton years, but not of present Republican dominated Congress in Obama years.



---
You can ignore facts because of your ideology, or look at the evidence. We all have to make our own choices.
---
On your request, I've stopped to argue based in my alledged sloppy wording and since then has been giving you links with data and graphs. I believe that counts as evidence. I thank you if you also abandon cheap rhetorical calls that you won the argument and come back to the drawing board.

erp said...

Clovis:

Again you misread events because you only know what the media want you to know. The only success(es) Clinton had for which he can take credit is with the ladies ... and be careful posting and presumably reading all those Krugman columns could be detrimental to your mental health.

Your faith in links, data and graphs borders on religious fanaticism. They can be and are as contrived, massaged and faked as messages from the dead or tea leaf readings of mystics and mediums.

Annoying Old Guy said...

Clovis;

but not of present Republican dominated Congress in Obama years.

Congress has been dominated by the Democratic Party since 2007, 2 years before Obama took office. You need to read some one other than Krugman if you want actual facts.

However, even here we can see parallels, in that during the first two years of the Obama Administration, when his party controlled both houses of Congress, things went even more badly than they did after 2011, when the GOP took control of one house of Congress. Just as before, things go downhill until the GOP steps in to at least stop the bleeding.

You are under the impression that Reagan, for example, was the opposite of spendthrift Obama.

I am of the opinion that Reagan's policies were mostly the opposite of those of the Democratic Party.

To pick one colum, the "Reagan, Obama, Austerity", I can see immediately that Krugman has cherry picked 2009 as his base year, incorporate TARP and other emergency spending as a base line. Very dishonest yet very typical of Krugman. I would also note no mention of tax cuts, the thing for which Reagan is most famous. Another typically dishonest trick by Krugman, especially after the earlier column where Krugman himself defined "austerity" to include tax hikes. Now it doesn't. How can you take this tripe seriously?

So - what is the upper limit on the number of times I have to check him and find him wrong, before I can stop wasting my time on that? You seem to think I've never read him before, but I have many years of experience with his efforts and found them uniformly dismal. I point out problems in the columns you cite, and your response is to just cite another column. I really don't have the time or energy to debunk Krugman's entire work.

P.S. I'm almost out of free reads at the NY Times, which makes it time to stop wasting it on Krugman.

Hey Skipper said...
This comment has been removed by the author.
Hey Skipper said...

From the post:

The welfare state saves some lives. Others die because of the welfare state.

Above, I replaced your link with one that I think far better describes the consequences of the welfare state. The lead para:

The rise of the welfare state in the 1960s contributed greatly to the demise of the black family as a stable institution. The out-of-wedlock birth rate among African Americans today is 73%, three times higher than it was prior to the War on Poverty. Children raised in fatherless homes are far more likely to grow up poor and to eventually engage in criminal behavior, than their peers who are raised in two-parent homes. In 2010, blacks (approximately 13% of the U.S. population) accounted for 48.7% of all arrests for homicide, 31.8% of arrests for forcible rape, 33.5% of arrests for aggravated assault, and 55% of arrests for robbery. Also as of 2010, the black poverty rate was 27.4% (about 3 times higher than the white rate), meaning that 11.5 million blacks in the U.S. were living in poverty.

You'd think that those encouraging even more dependence upon government would consider that, just for a bit, and explain themselves.


With the welfare state, lobbyists win, politicians win, bureaucrats win, some of the poor win, some of those win who have a strong subjective preference that some of the poor win via help from the government, and most others lose.

Which reminds me of line from Pink Floyd's Wish You Were Here: "Would you rather have a walk-on part in a war, or a lead role in a cage?"

The reason I bring that up is that for many on the left — pretty much one defining characteristic — is the preference for equality (a concept bereft of argument, BTW) over prosperity. Better everyone more equal and less well off, then more inequality, even if that means the poor are better off.

Hey Skipper said...

[Bret:] But that's also a perfect criticism of those in the original position with the veil of ignorance.

[Clovis:] In principle, I agree. But, as you recognize, they are taking the most risk averse option, which is what we usually do when having no idea whatsoever of the future.


Rawls theory of social justice is yet another reason why I think the entire field of philosophy amounts to nothing more than elaborate, empty exercises in self-justification.

There are many problems with thought experiments — primary among them is the tendency to take as true that which has been not been demonstrated. His veil of ignorance assumes that if you knew nothing about the circumstances into which you would be born, that you would advocate policies that are most beneficial to the poorest, just in case you ended up as one of them.

Yet this falls afoul of two facile assumptions.

The veil of ignorance hides the specific circumstances into which I will be born, but it doesn't hide the milieu into which I will be born; indeed, in order for this whole thing to work, I must know that milieu. The facile and self justifying assumption is that the policies that would seemingly result from the veil of ignorance would, in fact, produce desirable results.

History strongly suggests otherwise: if there are any conspicuous successes of collectivism, I am unaware of them. But even if there are, the veil of ignorance applies to all futures; if, on average, collectivist policies produce worse outcomes, for everyone, then only a fool would give Rawls' theory anything other than a dismissive single digit salute.

Beyond that, is the extremely questionable notion that if I knew nothing about my future, I would pick the most risk averse option. Really? Humans make no risk-reward calculations? After all, there is a very large likelihood you won't be born into the worst circumstances, and only a very small chance of ending up there.

Ultimately, Rawls is trying to reconcile liberty and equality. Can't be done.

Hey Skipper said...

[clovis:] How do you explain China, for example, in this frame?

My explanation is different than Bret's.

Assume a world consisting entirely of collectivist economies. China discards Maoism as it did. What is China's growth rate going to be?

This isn't a trick question — the answer should be obvious: nil, or close to it. China's growth has been due almost exclusively to the existence of dynamic economies that were not collectivist; indeed, it required the existence of those economies to provide an alternative to the dead hand of collectivism.



[Harry:] The idea that a free market might … achieve a slightly better annual average growth does not take into account the well-known fact (regarded by the Austrians as a feature not a bug) that unsupervised markets crash.

So do regulated markets and economies — just look to what the CRA did to the real estate market, or what state managed economies did to whole societies.

The question, which you elide, is whether, over time, free market economies do enough better so that a crash in them still leaves people better off than those in state managed economies.


We do not have enough serial data to be sure, but the history of the US economy since the New Deal suggests (strongly to me) that net expansion over time is greater without frequent crashes than it is with frequent crashes.

Ignoring for the moment whether the New Deal made things better or worse, I think it a real stretch that New Deal intrusion into the economy, even if it made sense in the 1930s, should still make sense now.

For instance, it is long past time to transition Social Security from pay-as-you-go. Yet collectivists are utterly antagonistic to the notion.

Kauai has, in fact, never recovered; although statewide expansion is vigorous despite our leftish ways.

Your leftish ways can probably take just as much credit for that as China's leftish ways can for its economic growth: none.


By Krugman's opinion, welfare has been minimal and most people are hard workers in need of govt. extra hand due to the greedy system. On the opinions here, most look to be lazy moochers who refuse to work.

Somehow Krugman cannot have learned anything from the consequences of our welfare policies where they have been most concentrated. Somehow Krugman must be ignorant of the fact that incentives have consequences, and that some people will not work for less money than they can get by working. Somehow Krugman has never heard of government workers taking early retirement.

There are many factors that go into concentrations of generational high unemployment, but disregarding the obvious consequences is an amazing act of historical blindness and moral obliviousness.


[aog:] I find Krugman's evidence weak, cherry picked, insufficiently detailed, and too short term, and I've stated why.

Here is another reason. In an column decrying political ignorance with respect to the deficit, he succeeds in making everyone who reads it dumber. Not a single number, nor a bow in the direction of time, and he attributes to Clinton's policies surpluses that were wholly the result of the tech bubble. How many times does the left get to trot out that lie and not get called on it?

Of all the columnists on the Left, he is probably the worst; his behavior after the Giffords shooting should put him permanently outside the realm of polite society.

BTW — despite subscribing to the international edition of the NYT, I still get told I'm out of free reads on my desktop computer, despite looking at International Herald Tribune while I'm trying to read it.

A barrier I got around by opening the link in Safari (I ordinarily use Chrome).

Clovis e Adri said...

AOG:

As before, you are not debunking Krugman at all. None of your arguments make much sense. He could only have chosen 2009 as his base year, for example - in fact, to "cherry pick" would be to do any other choice.

Your concept of debunking someone is to focus in a little detail that, many times, has little to do with the main argument, and try to call wolf over that. What is worst, not even the little detail you focus on is usually wrong.

But you are right, enough of Krugman. Enough of arguing at all - I will not try to counter any of your ideas anymore. I will only listen to them to my own amusement from now on.

Erp:

---
Your faith in links, data and graphs borders on religious fanaticism.
---
You are having your Sarah Palin moment now. This is a phrase I will keep for future reference in my classes. Please let me know if I am allowed to attribute it to you explicitely or not.

Clovis e Adri said...

Hey Skipper:

---
[About left philosophy] Better everyone more equal and less well off, then more inequality, even if that means the poor are better off.
---
Not true. I've long thought that the problem is not inequality, but the bottom line - what is the lowest a capitalist society should allow people to fall. I can perfectly live in a society of zillionaires if we agree to mantain humam conditions to the "losers" of the rat race.

The problem is that, paraphrasing you, many on the right — pretty much one defining characteristic - see maximal suffering for the losers as more important even than prosperity.



---
History strongly suggests otherwise: if there are any conspicuous successes of collectivism, I am unaware of them.
---
History strongly suggest that your separation of history and societies as a fight between collectivism X individualism barely makes sense. This is a dilemma we engendered 2 or 3 hundred years ago. To view everything trhough this prism, as a few here takes joy in doing, is very short sighted from a historical point of view.


---
Of all the columnists on the Left, he is probably the worst; his behavior after the Giffords shooting should put him permanently outside the realm of polite society.
---
I realize his style may be a problem, for he makes right-leaning people to focus so much in their hurt feelings that they barely can take a rational view of his actual arguments. I diagnose it as the main reason you and others here are not able to appreciate a few good arguments he has about economy.

Of all the supposed debunkings I was offered here, the only one that made sense was Bret's point on Krugman mistaken prediction of sequester induced jobs lost. Still, the number was not Krugman's (he only quoted another economic study), and this is pretty much in the error bar of an economist (furthermore, it may be a little early to get the final veredict on that). But compared to the much hyped acussations here of Krugman's dishonesty, it is pretty little.



I am not an Old Guy, but it is getting wearisome to be almost the only one here arguing against many (Harry is not that constant). If I let your many wrong ideas of the world unchallenged from now on, please do not get the impression that it means you are right or that I agree with them.
[Disclaimer: yes, I am being provocative, I am not really stating that I am always right and you guys always wrong]



Annoying Old Guy said...

Clovis;

Well, I consider those points the basis of Krugman's arguments, not peripheral.

erp said...

Clovis: Before I answer, you answer my last question.

erp said...

All: I wonder if anything Clovis has said here is the truth. Sometimes I scare myself that after all these years, I still try to believe someone rather than listen to the little voice in my ear saying it's just a bunch of balderdash.

Peter said...

I still try to believe someone rather than listen to the little voice in my ear saying it's just a bunch of balderdash.

Believe us, erp, those of us who have tried to engage you in civil debate know the feeling.

erp said...

Thank you Peter. It's time to hang it up then.

erp said...
This comment has been removed by the author.
erp said...
This comment has been removed by the author.
Clovis e Adri said...

Erp,

In your last few posts you've managed to call me a liar, dismissed me for the country I live in and questioned my professional qualities based on my personal political opinions. All of that without ever really knowing me personally. So, yes, I do think you have prejudices, demonstrably.

It must be hard to live in your head these days, if you need to go online to offend people to get entertained. I suggest you to go for a movie and popcorn, or a nice walk in a park. Who knows a beach, you have plenty of them nearby. If, after that, you come back with disposition for civilized conversation, I will be still here. Otherwise, farewell.

Hey Skipper said...

[I, about Left philosophy] Better everyone more equal and less well off, then more inequality, even if that means the poor are better off.
---
[clovis:] Not true. I've long thought that the problem is not inequality, but the bottom line - what is the lowest a capitalist society should allow people to fall. I can perfectly live in a society of zillionaires if we agree to maintain human conditions to the "losers" of the rat race.

The problem is that, paraphrasing you, many on the right — pretty much one defining characteristic - see maximal suffering for the losers as more important even than prosperity.


I hope to demonstrate several things: what I said about the Left is accurate; you are not, by your own description, on the Left; and that your assertion of what is one of the Right's defining characteristics is caricature.

This describes, perhaps sarcastically, but — I hope — without any consequent accuracy deficits, a Left justification for an extortionate tax regime the only goal of which is virtually eliminating inequality. There is absolutely no other goal, and the authors' primary motivation is that income inequality has become morally offensive. No concern whatsoever for how people respond to incentives, and what impact that might have on future economic growth. Which, as Brett noted above, makes a huge difference over time.

There is no denying that these Left intellectuals would rather have everyone more economically equal, and are unconcerned about the overall material consequences. They epitomize the Left: nothing belongs to the individual, all most be distributed amongst the collective. Their vision is antithetical to freedom, and requires humans to be ants.

Which is where you part ways with the Left. You say that you are morally satisfied so long as the least fortunate do not live in abject poverty. Not only does that mean you have no objection to income inequality, in and of itself, that also means — and this is the important bit — you have some definition of poverty that is absolute, not relative.

Whereas the Left, in order for it to be able to justify its existence, must invest itself in relative poverty. The poor in the US live lives of material comfort that can scarcely be imagined in most parts of the world, and would, in many material respects be similar to the US middle class of forty or so years ago.

The proof? Flattening of consumption. What used to be considered luxuries for the rich — air conditioning, color TV, dishwashers, micro wave ovens, mobile phones, etc, have spread throughout society. Moreover, as we speak, essentially no one in the US who is not mentally ill is living in material deprivation.

That the Left is not satisfied by this means that good enough will never be good enough for them, because the Left's primary motivation is control, not freedom.

As for the right's defining characteristic the hope of imposing maximal suffering upon the losers, I'll bet you can search high and low and not find that anywhere outside the fevered writings of Krugman or Eagar. You, and I, may disagree with how effective private provision of support might be, but to say that the Right hopes for suffering, particularly at the expense of prosperity for the winners, must be an attempt at sarcasm, because it doesn't have enough basis in reality to even qualify as a strawman.

Hey Skipper said...

[clovis:] History strongly suggest that your separation of history and societies as a fight between collectivism X individualism barely makes sense. This is a dilemma we engendered 2 or 3 hundred years ago. To view everything trhough this prism, as a few here takes joy in doing, is very short sighted from a historical point of view.

I'm not sure what you mean by "historical", but the contest between communism and freedom went on well into my lifetime. Communism as a belief system has been well enough rubbished that only the delusional still cling to it; however, whether calling them the Left, Progressives (their own preferred term) or Collectivists (mine, since it is descriptive), the urge to remove decisions from individuals remains strong.

I need point no further than the Lilly Ledbetter Fair Pay Act. It was predicated upon statistical shenanigans and an utter hostility to the consequences of free choice. Progressives hoped, solely by belief in their own intellect and virtue, to impose their concept of "justice" upon everyone.

Consequently, I believe I am justified in distributing people along a collectivist - individualist spectrum, and also justified in concluding that collectivists are inherently inimical to individual choice: for them it is all about equality of outcome, not equality of opportunity.

And I don't think it is the least bit short sighted, either. There are, in fact, some problems that by their very nature can only have collective solutions.

But their aren't very many, and far fewer than collectivists have claimed for themselves.

Hey Skipper said...

[clovis:] I realize his style may be a problem, for he makes right-leaning people to focus so much in their hurt feelings that they barely can take a rational view of his actual arguments. I diagnose it as the main reason you and others here are not able to appreciate a few good arguments he has about economy.

It isn't just his style. With respect to the Giffords shooting he made some very serious accusations that proved to be utterly unfounded, wrong in every regard, wholly without any relation to reality, so stupendously mistaken as to beggar belief.

When the complete emptiness of his extremely partisan and vicious accusations — perhaps to some degree forgivable in the heat of the moment and absence of information — became apparent, he neither apologized, nor corrected himself.

So that isn't about style, it is about character.

I don't have time to hunt for links, but when Bush was president, Krugman was a deficit hawk. Now that Obama is president, deficits are wonderful.

With regard to tax policy, Krugman relentlessly bases his argument on rate (i.e., the rich don't pay a high enough rate on their income) and never spares a syllable for amount: the top 5% of income earners pay something like 90% of US income taxes. Now I don't claim to know which is the most morally or economically number, but always excluding a very important part of the argument indicates to me that while he may have earned his Noble prize for monetary theory, his analytical skills outside that area simply cannot be trusted.

Just as with the Krugman article I linked above: it is a transparent hack job, one that I didn't really have to read to know what it was going to say, because he, as always, excludes everything contrary to his narrative.

I don't have to go to Krugman to get that, Harry Eagar does that for us right here, and with far more style.

Annoying Old Guy said...

Skipper;

I certainly have to agree. For all my vitriol directed at our dear Mr. Eagar, I do find his writing to be clearly superior to Krugman's both in substance and style.

Harry Eagar said...

'You see exactly what you want to see Harry.'

Well, I see a state with no industry at all outside the UP shops in Council Bluffs going down the tubes under Coolidge. What do you see?

High wheat exports were also a feature of tsarist Russia at a period when 2 million wheatgrowers were starving to death.

Clovis e Adri said...

Hey Skipper:


---
I hope to demonstrate several things: what I said about the Left is accurate; you are not, by your own description, on the Left; and that your assertion of what is one of the Right's defining characteristics is caricature.
---
You take a caricature notion of what is "Left". My comment on the "Right's defining characteristics" was indeed an attempt at sarcasm, for I had my own hope that you would realize so.

The same way I won't find anyone here stating that maximal suffering is their objective, you will not find people not-right-leaning defending equality as an objective on itself.

And please notice that people who speak "against inequality" are also hardly defending "equality", they are usually defending a "lesser inequality", based in their own views of how it should better lead to prosperity. An example here:

http://opinionator.blogs.nytimes.com/2013/01/19/inequality-is-holding-back-the-recovery/

BTW, I link it not to defend it - I do not think it is a trivial question - but only to show that such Left views are not one-dimensional as you indicate.

---
Moreover, as we speak, essentially no one in the US who is not mentally ill is living in material deprivation.
---
But do you realize that, if this is true, it is only due to the same safety net most here would prefer to dismantle?


---
I'm not sure what you mean by "historical", but the contest between communism and freedom went on well into my lifetime.
---
Well, I mean historical as in humanity's history. Which means yours, or mine, lifetimes are really small things.

It is very, very probable that the political discussions in analogues of blogs in, say, 500 hundred years from now, will not be about individualism X collectivism as you see it today. The same way this was not much in people's mind 500 years ago.



---
I need point no further than the Lilly Ledbetter Fair Pay Act. It was predicated upon statistical shenanigans and an utter hostility to the consequences of free choice.
---
Sorry, I am at loss here. I googled for this law, and I have no idea what some law about deadlines for suing employers has to do with hostility for free choice.



---
[I am] also justified in concluding that collectivists are inherently inimical to individual choice: for them it is all about equality of outcome, not equality of opportunity.
---
Look, if you want to define collectivists by the above description, fine. Just be aware, please, that it has little to do with what most people arguing for welfare think, or with what people arguing for more progressive taxation think.

Hey Skipper said...

[I wrote:] Moreover, as we speak, essentially no one in the US who is not mentally ill is living in material deprivation.
---
[clovis:] But do you realize that, if this is true, it is only due to the same safety net most here would prefer to dismantle?


I'm not sure it is safe to say that most here want to dismantle the "safety net". I put scare quotes there on purpose. That is an emotive term that rather elides many aspects of the safety net that aren't, perhaps, so safe after all.

For example: Despite huge advances in work place safety, medical care and therapy, there are roughly twice as many men of working age getting long term disability payments than 30 years ago. Why is that?

For another example: Detroit, as a proxy for the disaster that has befallen African Americans. The "safety net" arguably deserves significant blame for the breakdown of the African American family and the astonishing teen birth rate among young black women. The "safety net" has become, to some extent, a self-licking ice cream cone: its very existence serves to feed itself.

IMHO, a rich economy like the US does need to provide some material insurance for those less lucky in life. The rub comes in not creating something that creates its own self-perpetuating disasters.

Which is why I balk at labels like "safety net", a favorite trope of the Left, because doing so relieves the burden of having to ponder a great many unintended consequences.

Hey Skipper said...

[I wrote:] I need point no further than the Lilly Ledbetter Fair Pay Act. It was predicated upon statistical shenanigans and an utter hostility to the consequences of free choice.
---
Sorry, I am at loss here. I googled for this law, and I have no idea what some law about deadlines for suing employers has to do with hostility for free choice.


Sorry, I thoughtless used a very inappropriate example. (It is more suited to demonstrating how the Left works to the benefit of lawyers.)

Much better example: Title IX. It is a classic example of how the Left is about equality of outcome, not opportunity.

(It is also a classic example of Leftist blank-slate thinking, and resolute unwillingness to accept the notion that evolution's effects may not have stopped at the neckline.)

Clovis e Adri said...

Hey Skipper:

---
I'm not sure it is safe to say that most here want to dismantle the "safety net".
---
In order to be not accused of sloppy wording, I will be very specific: when I say "safety net", it means "government funded safety net".

I believe few things were more clearly stated by the Libertarians here present than their wish for dismantling safety net as above defined. Although a few also clearly stated they also see the need for a privately funded safety net (i.e. charity), no one offered reasons as to how this system would not repeat the problems of the one that existed before the advent of welfare states.

I would be happy to hear smart ideas on that, H. Skipper.


---
Which is why I balk at labels like "safety net", a favorite trope of the Left, because doing so relieves the burden of having to ponder a great many unintended consequences.
---
It is really interesting to hear your points against this label. I mean it.

For a foreigner like me, the label does not carry this supposed "feel good" effect that you admonish. It is just one more word of your language that I repeat because it is the word you natives use (e.g. its direct translation to Portuguese is not part of our vocabulary when discussing welfare). So I could only realize it can have this other effect to your ears after your explanation above.



---
Much better example: Title IX. It is a classic example of how the Left is about equality of outcome, not opportunity.
---
After taking some care to read the wikipedia link, I can tell you that the problem looks to be more the subsequent interpretations of the law than its original wording. I can think of other societies or judiciary systems where this law would hardly be applied to athletism in colleges for example.


Hey Skipper said...

[clovis:]I believe few things were more clearly stated by the Libertarians here present than their wish for dismantling safety net as above defined. Although a few also clearly stated they also see the need for a privately funded safety net (i.e. charity), no one offered reasons as to how this system would not repeat the problems of the one that existed before the advent of welfare states.

I would be happy to hear smart ideas on that, H. Skipper.


At risk of throwing my shoulder out of whack from patting myself so firmly on the back, perhaps the wittiest thing I will say this year is this:

Libertarians see less safety, and more net.

Since you have not lived in the US, I can't possibly expect you to have anything like experiential knowledge of the how urban African Americans have been caught in the "safety" net (I have placed the scare quotes quite purposefully).

Presuming there is some objective truth to that, then the "safety" net is guilty of the worst consequences, in modern times, of a specific group of people that is not Jewish or descended from original Americans.

In this regard, collectivists (aka Liberals, Progressives, the Left) have a great deal to answer for.

Unfortunately, they can't be bothered to ask the question of themselves in the first place.

Smart ideas?

Unlike collectivists, I don't presume to have any. However, I do presume to believe that the collectivist ideas that collectivists have are worse than no ideas at all. Hint: rewind the clock 40 years, and change just one thing. Instead of the Great Society, the US govt completely ignores blacks.

Individualists assert that in many regards, no ideas beat smart ideas every time.


Hey Skipper said...

For a foreigner like me, the label does not carry this supposed "feel good" effect that you admonish.

First off, for a foreigner and a non-native English speaker, your acquaintances with other countries' affairs, and another language, are astonishing. Full stop.

There must be similar words in your language that convey cuddly, maternal, impressions that by their use presume the very things they stand for.

With regard to things that are, in fact, cuddly and maternal -- i.e., anytime one wishes to discuss why honoring women and mothers is essential to civilization, fine.

Otherwise, using such terms is trafficking on halo effect.

You didn't consciously do that, but Leftists do. Or, they are so ignorant of their milieu that any opinions they have about how society should be organized should be ignored out of hand because their ignorance of said society is so profound.

Hey Skipper said...

[I said: ] Much better example: Title IX. It is a classic example of how the Left is about equality of outcome, not opportunity.
---
[clovis:] After taking some care to read the wikipedia link, I can tell you that the problem looks to be more the subsequent interpretations of the law than its original wording.


Distinction without difference. The law is collectivist to the core, so it should come as no surprise that the implementation of the law is collectivist, as well.

And not just a little collectivist, either. The complete disregard of human nature, the preconception that people are nothing other than clay for collectivism to mold, is on full, blaring, display.

Bret said...

Clovis wrote: "...you will not find people not-right-leaning defending equality as an objective on itself."

I certainly have. Here's a question I often ask:

Let's assume there's only three economic policy choices possible and the outcomes are miraculously known ahead of time:

Choice 1 result: Rich get richer by 50% and poor get richer by 10%

Choice 2 result: Wealth of rich and poor remains unchanged.

Choice 3 result: Rich get poorer by 50% and poor get poorer by 10%.

The vast majority of my Leftist friends and acquaintances hem and haw and the admit that they'd choose #3. That to me is "defending equality as an objective on[to] itself." Especially since they claim that would help the poor by reducing inequality.

Reading your comments, I suspect you're not really much of a Leftist and are often playing devil's advocate, so my guess is that you wouldn't choose #3. Or would you?

Harry Eagar said...

'[I wrote:] Moreover, as we speak, essentially no one in the US who is not mentally ill is living in material deprivation.'

Yes, you have said that several times, usually citing the cheapness of televisions, but I have never seen you address the real issues of material deprivation that poor Americans do face.

The computation is not difficult. Take a common set of inputs: say, 30 hours a week wages at minimum wage, cost of heating oil, degree-days for a specific place, and multiply out.

It is true that the situation is better than it used to be. When I was a young reporter in the South, after every cold snap, we ran stories about the poor people whose bodies had been found dead from the cold. It was such a usual event that no one gave it a second thought (except me, and I was too junior to carry the point that there was a larger story to be told).

I believe that deaths from cold are not so blatant these days; the bodies are seldom found on the streets now; although Pat Michaels published some numbers 20 years ago about the statistical differences in mortality between hot and cold months.



Clovis e Adri said...

H. Skipper:


---
Since you have not lived in the US, I can't possibly expect you to have anything like experiential knowledge of the how urban African Americans have been caught in the "safety" net (I have placed the scare quotes quite purposefully)
---
You are right that I have no experiential knowledge on the matter. But I've seen recent statistics where many states have more white people on food stamps than black people. So I do not understand why you restrict the matter to one racial group.


---
Hint: rewind the clock 40 years, and change just one thing. Instead of the Great Society, the US govt completely ignores blacks.
---
I do not think I understand your point here. I mean, black people were not allowed to ride a bus in seats near white people. Are you wishing to go back to that?

Clovis e Adri said...

H. Skipper:

Sorry, I've checked that the Rosa Parks thing was in 1955, 58 years ago. So my question above is very misguided. I did not know that your welfare programs had the name of Great Society, something I've checked only now. As you see, my knowledge of your countrty's affairs are not that good.

Clovis e Adri said...

Bret:

I would choose #1 every day.

To tell you the truth, I can hardly believe you know people who would go for #3. Are you sure? Maybe they understood something like "Rich get poorer by 50% and poor get richer by 10%", which may be another way of seeing the end result of progressive taxation and welfare.

I do not consider myself a Leftist by usual standards, but since I have been arguing here in favor of some level of welfare and State powers, it should make me look like very Leftist for the standards of most people here.

Harry Eagar said...

Clovis, I don't know when Skipper signed on to th 'everything was fine' story. He didn't use to talk this way.

It wasn't fine. The Great Society had a mountain to climb, made worse by the rightwing policy of hollowing out the US economy.

Nevertheless, black Americans are better off than they used to be. Had the government not interfered, you can bet nothing would have happened.

There is now a biggish black middle class, which did not exist 40 years ago. The black underclass remains mired in trouble, but some of the worst abuses have been ameliorated.

You do not often see black families living in buildings that have cracked in two.40 years ago, I saw that.

Annoying Old Guy said...

Clovis;

I can hardly believe you know people who would go for #3. I've done the same experiment with similar results. It would be interesting to know which option Mr. Eagar would pick.

Peter said...

I think it's important to recognize that among a large segment of the modern left, the commitment to equality and "the poor" has become somewhat pro forma. The brighter among them know history has proven their macroeconomic thinking wrong, or at least carrying much quicker negative economic trade-offs. The focus of their attention today is not the poor (who loses sleep over obese junkfood-eaters wearing Nikes?), it's the environment and notions of "sustainability", which is why they have become much more feudal in their thinking than their socialist grandfathers, who really did believe their programme was consistent with growth and a improved material life for all, except the dastardly plutocrats, of course. Today, the bugbears are growth and prosperity, which we greedy little people don't understand are not "sustainable". If the rich got richer by 10% and the poor by 50%, it would still outrage Mother Earth and they still wouldn't like it. In fact, substantially increasing the wealth of the world's "poor" is in some ways their worst nightmare, which is why they don't worry much about welfare dependency.

Harry represents the old left, which I'm sure he realizes. His history may be wacky and selective, but he does know what poor meant.

Clovis e Adri said...

Peter:

---
who loses sleep over obese junkfood-eaters wearing Nikes?
---

It is another instance where outsiders like me may disagree.

If any day you wish to visit Brazil, I can show you great places, good retaurants and nice beaches, as Erp pointed out a while ago. But I can also show you a lot of poor people who hardly fits the description above. We still know down here what poor means.

The irony is that, while a few here like to indicate there is almost no one in material deprivation in US, I do not see here any recognition that it means the war on poverty initiated with that "Great Society" was way more efficient than they acknowledge.

Annoying Old Guy said...

Peter;

You mean like leftists who say the planet will boil over if the third world develops?

Clovis;

I think it's easy to make the case that the Great Society effort slowed down and inhibited the development that has reduced material poverty in the USA, based on trend lines before and after. I don't think it was inefficient, I think it was harmful, that had it never existed, poverty in America would be even less of a burden than it is now, with much less social pathologies.

I don't think that because these programs did not totally stamp out progress, they therefore get credit for what progress they failed to eliminate.

Had the government not interfered, you can bet nothing would have happened.

Is it Mr. Eagar's view that nothing happened in terms of improvement for the poor from 1776 until 1962?

Clovis e Adri said...

H. Skipper:

On your remark that no material deprivation remains in US, please tell me what I am losing in this story:

http://www.nytimes.com/2013/09/05/us/as-debate-reopens-food-stamp-recipients-continue-to-squeeze.html?_r=0

The people they portray do not look like much of obese junkfood-eaters wearing Nikes.

I am constantly confused as to how the views many here have of your own country differ from much of what your own media portrays.



AOG:

---
I think it was harmful, that had it never existed, poverty in America would be even less of a burden than it is now, with much less social pathologies.
---
I get it. My only problem with this view is that I find not much experimental support
for it up to now. I understand that to argue "only if back then" is always a difficult position, so I do not want to make much of this weakness of your arguments - it is, though, the main reason I can not yet change my views for yours.

Clovis e Adri said...

AOG:

I realize that it is unfair from me to say you do not provide experimental evidence of your claims, while I do not provide it myself for mine.

To correct that, I did search for something well written in your own language and media. Maybe this one was the best I could find:

http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/

Here it is a welfare program that visibly reduced poverty, faring hugely better than the situation you prefer (not much govt. involvement) that endured for decades before 2003.


It may be that I am only presenting here a situation in a place which is "pretty awful and if Rawlsian justice were achievable in those awful places, it would be pretty tempting to adopt it", by Bret's own words. So it may be that in a better place, served with better justice, the above solution may be counterproductive as your argue. But there again, I did not yet see convincing evidence for this position of yours.

Annoying Old Guy said...

Clovis;

Here in the USA, a similar thing was tried. It was called "Welform" and was passed in 1996. It was, as far as I can tell, a significant improvement. It was of course opposed by almost all the poverty advocates who, just like you did about education, claimed it would leave millions without any help or support. That such claims turned out to be completely nonsense has had no effect on the rhetoric.

Now, of course, the Obama Administration has been and continues to roll back those reforms, precisely the kind of thing mentioned in your article. The New York Times, of course, strongly supports this (for example, Paul Krugman - does this mean your cite is now discredited?).

Here in the USA, it is the right wingers who try for programs like that, and the Democratic Party and the tranzis who oppose any restrictions or requirements. The Great Society was, of course, an welfare program without any such requirements, which doesn't provide much support for your view.

Annoying Old Guy said...

I meant to type "Welfare Reform", 1996.

On a deeper point, I do not think it incumbent on the opposition to the welfare state to prove it doesn't work, it is those who want to spend all that money and impact all those lives to demonstrate the success of their policies. "First, do no harm" is an excellent policy rule.

Bret said...

Clovis wrote: "The people they portray do not look like much of obese junkfood-eaters wearing Nikes."

Perhaps the picture at the top of the article is different for you, but when I open it, I see one reasonably well fed man with an obese woman on either side and the obese woman on the right is wearing Nikes!

I laughed out loud at that. Surely, the NY Times and you can do better choosing pictures and articles to make their points?

Just in case the link is taking us to radically different places, I've captured a screenshot of the article you linked to.

In case you're not aware, here's the definition of food insecurity: "reports of reduced quality, variety, or desirability of diet. Little or no indication of reduced food intake."

So it turns out that if you eat a lot of junk food (food with "reduced quality") instead of more healthy food, you are defined to be someone with "Low Food Security", a subcategory of "Food Insecurity".

Annoying Old Guy said...

Bret;

I used to regularly call this out, when Old Media would publish a sob story like that and illustrate with people for whom it was difficult to feel much compassion. Desperately poor people who owned a house with hardwood floors, a bigger TV than mine, and cell phones. A woman who was on welfare because she couldn't get a job, due to her not being a "morning person". I couldn't help but think "if this is the best example, I don't see the problem".

Bret said...

Peter,

Those I've talked to simply believe that inequality is such a great evil that making the poor 10% worse off is a price worth paying to reduce inequality. I don't believe they projected it into the realm of environmental impacts.

If one does a google search on "Inequality Evil" there are just under 5 million hits. Many of them have nothing to do with this topic and many of them are defending inequality, but sampling a few of the others, I think a significant percentage would also choose to make both rich and poor less well off to reduce inequality.

They are really just Rousseau's philosophical descendants.

Bret said...

aog,

Yeah, if you're gonna write propaganda, at least do it well!

I guess the NY Times writers can rest assured that most of their readers tow the party line so completely that they'll never notice stuff like that.

Clovis e Adri said...

Bret,

In my defense, the article did not load the pictures at my first reading of it (the connection was a little stalled this morning).

If you pay attention to the text, it talks about people who can only eat once a day.
If the people in the photo are the same of the text, it does not make much sense, unless they are eating a horse at this one meal.



Peter said...

Clovis, I do not believe you are anything other that what you say you are, and you certainly haven't said anything that makes me think you are a leftist without knowing it. I don't doubt there is much real poverty in Brazil, and it hasn't disappeared here. The hard part is that, when you are talking about real poverty (not the relative kind beloved by activists), it is frequently mixed in with mental deficiencies, addictions and disabilities. I'm really not very proud of how we deal with those, but it's hard to shift resources to them when the left is so dogmatic about universalism and means tests. Another problem is single mothers and I don't have a clue what to do about them, but whatever I decided, I'm pretty sure folks here would see me as "wet".

Also, I, too, am pretty suspicious of that NYT article. I certainly don't believe a quarter of Americans are "food insecure" in the sense of being undernourished and I don't believe a lot of people are getting by on just one meal a day.

Bret said...

Peter,

Read the official definition of "food insecurity" that I posted above. Given that definition, which is nearly meaningless, it's easy to believe that a quarter of Americans are "food insecure" and 75% of the rest of the world.

It's brilliant propaganda - using terminology that tugs on emotional strings with definitions that makes it apply to a huge number of people.

Annoying Old Guy said...

All;

With regard to Bret's 3 policy choices, let's remember that President Obama was willing to take choice #3 when he was asked about it. So, yeah, these people exist and some are in positions to implement such policies.

Clovis e Adri said...

AOG:

---
On a deeper point, I do not think it incumbent on the opposition to the welfare state to prove it doesn't work, it is those who want to spend all that money and impact all those lives to demonstrate the success of their policies.
---

I agree. The ones that were applied in Brazil (as described in the link I provided) were tested in pilot programs for a few years before full implementation. They were not tried in large scale without prior demonstration of workability.

It is the reason I believe it is possible to "exercize welfare" in technically controlled ways, where unintended effects are diminished. I am happy that you, at least this time, did not discard it all under the label "govt. only makes it worse". I am under the impression you would even approve of it if we were in the 90's, like your fellow Republicans then. I do not understand why today you, and Republicans, look so opposed to it.



Bret:

You are right, "food insecurity" is wonderful propaganda, I was not aware of that definition. I feel duped by that NYT article. I am seriously thinking about cancelling my paid subscription. I will lose my main source of US news, but they ought to pay a price for bad journalism (or for making me a fool in blog's discussions :-).





Peter said...

Bret:

Yes, and I particularly liked how hunger is defined as a potential consequence of food insecurity. I would have thought death would have added more dramatic lustre, but I suppose it's harder to fudge. The other one that gets me is how one of the indices of food insecurity is "not being able to afford a balanced diet". I'd love to ask them for particulars.

Clovis:

Are you aware that the UN has declared obesity to be the world's #1 health problem and that it is now more prevalent in low-income countries? Fortunately they have found a low-cost solution.





Harry Eagar said...

I think the attempt at values clarification fails, on a variety of levels (besides the fact that as a reality-based student of economies, I'd rather spend my time worrying about real stuff).

I can easily think of situations where you would dislike #1, for non-economic reasons. In fact, France under the ancien regime comes close to #1.

I am a New Dealer, that is, a capitalist, with regulations. I am a 'socialist' only in the sense that I am more concerned about society than about abstract principles or economic expansion at any cost.

But the policy questions facing us today are not in any sense reducible to 1,2 or 3. Now, if you add something about the distribution of voting power, not just dollars, we might almost start getting somewhere.

Right on this blog, we have numerous examples of wanting to eliminate political rights for the economically lesser off. Scary stuff for a democrat like me.

Annoying Old Guy said...

Clovis;

I am under the impression you would even approve of it if we were in the 90's, like your fellow Republicans then. I do not understand why today you, and Republicans, look so opposed to it.

Because it's proven politically untenable, as I noted above. If you repeatedly fall victim to alcoholism, at some point you must just give up consuming alcohol entirely, not because any particular drink is bad, but because you know where it will end up.

Mr. Eagar;

Right on this blog, we have numerous examples of wanting to eliminate political rights for the economically lesser off.

Examples, please.

I think the only difference between you and actual socialism is that you want the state to control production through regulation, rather than outright ownership. After all, as far as I can tell from your writings, free markets are the root of all economic evil. That is, whenever something goes wrong economically, you view whatever vestiges of free markets are left as the culprit and advocate policies to stamp it out. When you label Tsarist Russia as a "free market economy", what remains as a government controlled economy?

Bret said...

Harry wrote: "But the policy questions facing us today are not in any sense reducible to 1,2 or 3."

Okay, now humor me. If they were reducible to 1, 2, or 3, which would you pick?

Clovis e Adri said...

Peter:

I keep looking to some indication that your "eating insects" link is a joke, but that looks to be presented as real news. Maybe this only adds to the joke, it is hilarious.



AOG:

---
If you repeatedly fall victim to alcoholism, at some point you must just give up consuming alcohol entirely, not because any particular drink is bad, but because you know where it will end up.
---
Sorry but this is precisely the kind of approach to policy that I avoid most. It abandons rational thinking in favor of dogmatic positions.

Now, on Obama being for #3, the argument in that link is unfair. They are basing their whole analysis on a conversation that usually develops too fast for more careful thinking by both parties. And if you take Obama's answer, it was a careful "Well, that might happen, or it might not". It is really not possible to imply #3 for Obama based only on that transcript.

If you really did find people who are for #3, AOG, fine, I will believe you. But if you are counting examples as the one above, I will say I was right on my skepticism with Bret on this point.

Annoying Old Guy said...

Clovis;

Could you then tell me what, in your view, Obama saw as the benefit of that policy? Other than punishing the rich for being rich (i.e., option #3)? He makes no claim it will increase government revenue and admits it might well decrease it.

Clovis e Adri said...

AOG:

My point is that the exchange is no proof that Obama was, at that particular moment, really aware or convinced that said policy would lead to less revenue.

And in a more general note, those exchanges that happen in oral conversations in front of cameras are hardly thoughtful. People easily get confused and say things they did not really think through.

Hey Skipper said...

[clovis:]The people they portray do not look like much of obese junkfood-eaters wearing Nikes.

I am constantly confused as to how the views many here have of your own country differ from much of what your own media portrays.


The most important word in that sentence is "portrays". I have no doubt that given sufficient time, I could find individual hard luck stories, all of them true. However, by its very definition, collectivism is not about individuals. So, as a reader of what our media portrays, I, and you, must observe everything it portrays. If I find stories about how progressives want to restrict fast food companies because the greatest plague afflicting the poor today is obesity, then I, and you, are obligated to wonder which of these two seemingly irreconcilable facts are true.

I think both are, because they capture different things. Statistically speaking, hardly anyone in the US is suffering anything even remotely approximating starvation. Just as surely, if I look hard enough, I'm sure I can find some cases of real hardship.

The obvious question then becomes this: if I wish to create a collectivist policy towards avoiding hunger, which is the most important?

Then there are a few other questions that should pop up almost as quickly. There is more than one reason I think the word "portrayed" is important. Being a daily reader of the NYT, I am convinced it sees itself as opinion forming. That means the NYT has an institutional position, and it will frame straight news stories to that end.

Note: I am not saying that only the NYT does this, or that the NYT is particularly egregious in this regard. (I'd be happy to make that case, but it is beside my point.) Rather, I am saying that the NYT does have, in fact, an editorial position that strongly advocates expansion of public provision of private goods, and that this story fits exactly with its position regarding efforts by the GOP to restrain SNAP excesses. (SNAP: Supplemental Nutrition Assistance Program.)

Of course, Harry is going to say that the GOP wants to restrain SNAP because there is nothing like widespread rickets to make a conservative's day.

Aside from that, I am going to be at least somewhat suspicious of this portrayal, because it is exactly what I would expect. Now, if the Wall Street Journal was to run a story, that would be an admission against interest, which would definitely get my attention.

Takeaway: Just because a collectivist-oriented mass media outlet portrays a need for more collectivism is not necessarily meaningful, or realistic. It could be, but absent more citations that bring the concept of plural to your use of the word "media", I'm not convinced.

[Warning to women, children, and easily frightened horses: I am making these comments without the benefit of proof reading, and with the benefit of two maryteinies.] [I hope that keeps the lawyuers at bay.]

Annoying Old Guy said...

Clovis;

this is precisely the kind of approach to policy that I avoid most. It abandons rational thinking in favor of dogmatic positions

The counter quip is the Einstein quote, "Insanity is doing the same thing over and over and expecting different results". Is there not point at which that becomes a better policy?

But if you want a villian in this piece, may I suggest the leftists who dogmatic resist any restrictions on welfare, such as those in the programs you cited? How does that fit with actual concern about the poor?

Hey Skipper said...

[clovis:] I realize that it is unfair from me to say you do not provide experimental evidence of your claims, while I do not provide it myself for mine.

To correct that ...


Fascinating. The US government transfers something like $1T per year, much of it through sprawling bureaucracies in the name of poverty alleviation. Nit picking about details aside, one obvious alternative is to just give it to the poor instead, because doing so would, in one fell swoop, eliminate poverty. Well, mathematically, at least, since there are at least some people who would suggest that material poverty is frequently accompanied by cultural poverty, as well.

Recently, This American Life, a radio show with a decidedly progressive viewpoint, aired an episode entitled Just trying to help. In brief, it was about a couple of guys taking a new path to reducing poverty -- which happened to be exactly the one your link discusses.

Two things struck me about that episode. First, it seems to work, which I wouldn't have expected. And second, progressives such as Harry be forewarned, it is amazing how allergic reality based progressive economists are to being pestered by reality. (One of Harry's favorite charities features prominently, but not well)

Of the many endemic problems with Progressives is their preening presumption of moral superiority. Harry is exhibit A -- two shining examples in the space of four sentences -- but it is a real contest between Krugman and your link to Stiglitz as to who deserves second place.

As easy as it is to poke holes in Krugman's arguments, Stiglitz is perhaps an even fatter and slower target. Whether the fact that both of them are Nobel laureates is mere coincidence, or a real insult to the Nobel committee is a real poser.

I had started a comment on just that article alone, but it quickly started running to a book length list of particulars about facile presumptions, reality based economics avoiding reality, suspect logic, and drearily predictable conclusions. And none of that is a mere matter of tone.

I will pick just one example. In decrying the growth of inequality, nowhere does Stiglitz bother himself with causes that might be unfriendly to his narrative. In what counts as something like an admission against interest, last year the NYT had an <a href="http://economix.blogs.nytimes.com/2012/07/14/economic-inequality-and-the-changing-family/>article</a> that attributes as much as 40% of the inequality increase to family breakdown. (Same wealth over more households, divorce rates not evenly distributed).

It requires rather more reasoning than what Stiglitz provided to explain why taking money from one group of people will affect, for the better, personal decisions made by another group.

I'm not saying it isn't possible, but an article like Stiglitz's that leaves out a major component of the very thing upon which his article focuses leaves me rather suspicious about not only his article, but every claim by similarly situated reality economists.

Harry Eagar said...

Not enough nformation to choose, Bret.

The poor were doing slightly better in late tsarist Russia than earlier, hile th rich were doing very much bwtter: Your #1. But the poor realized the deal was stacked againat them and rebelled.

Thy asked for bread and were given votes, which were then taken away. So, in that case, I'd have been against #1.

In the South in the '30s and '40s, the poor were doing a little better and the rich were doing much better, but the political rights of the poor were taken away, so in that case, I'd have been against #1.

Offer me a real #1 you like, and I'll try to decide if I'd go for it.

Bret said...

Harry,

This is an all else is equal question for the United States right now. 1, 2, or 3?

Peter said...

If you repeatedly fall victim to alcoholism, at some point you must just give up consuming alcohol entirely, not because any particular drink is bad, but because you know where it will end up.

Quite right, AOG. This is why I am strongly in favour of abolishing the federal government's alcohol stamp program.

I endorse Skipper's comment about how the welfare system sits underneath a huge and very entrenched bueaucracy that is dependant on it and has its own institutional interests. I don't like analyses that imply personal hypocrisy or conscious bad faith and there are a lot of righteous individuals working in the system (starting with my daughter), but it is striking how ambivalent the left generally can be about people who actually rise out of poverty. Witness their wariness of home ownership, suburbia and popular culture (NASCAR, Disneyworld). I enjoy taunting some leftist colleagues by telling them that, if Steinbeck were writing today, they would dimiss the Joads as fundamentalist racists whose resource-gobbling lifestyles were a threat to the global environment.

Peter said...

I suppose this would be a good point to add that, if the only response from the right to these leftist myths and protective self-interest is to posit a scenario where the welfare dependant are a repository of untapped energy, potential self-reliance and creativity that is just waiting to be released once we cure them of their "addiction", preferably cold turkey, it'll be a long time before anybody finds a workable solution.

Annoying Old Guy said...

Peter;

Or the opposition to normal marriage, which is the strongest known correlate with non-poverty.

Nothing worse for the neo-Fuedalists than for people to escape the plantation.

Harry Eagar said...

Peter, you're off the rez. The rightwing meme is that the left wanted too much home ownership.

Bret, I don't feel like dealing with non-real scenarios. There are sufficient real ones to consider.

But, in principle, an endless trend of +50 for the rich, +10 for the rest would lead to a social catastrophe. At least, it has in the past.

People react to fairness perceptions. Reaganism has produced something akin to your #1 (more like +50 for the rich, +0 for the rest), and it is not desirable to continue it.

Consider CEO pay. And Richard Grasso. Do you really want to extend that trend line much longer? You understand math. I think you do not.

Peter said...

Fair enough, Harry, but that was a historical first, I think. The British left rent their garments over Thatcher's sell-off of public housing to its occupants. And as the only plausible way in most places for the poor to crack the housing market is by buying suburban starter homes, they're up against the left's sixty-year aesthetic, cultural and now environmental campaign against them. For every leftist priming Freddie Mac and Fanny Mae, there were ten bemoaning the lack of "vertical public housing".

Annoying Old Guy said...

The rightwing meme is that the left wanted too much home ownership.

No. Howard was right, we can explain and explain but until you listen, it's pointless.

Clovis e Adri said...

AOG:

---
The counter quip is the Einstein quote, "Insanity is doing the same thing over and over and expecting different results". Is there not point at which that becomes a better policy?
---
The thing is, Einstein never said that. It is one of the many false quotes atributed to him.

Now, when something (anything!) goes wrong, we usually try to learn where and why it went wrong, and fix it. I believe you do that everyday with your codes. I see no reason for this process to be invalid for any kind of policy, welfare included.


---
[After Harry points to the housing bubble]
No. Howard was right, we can explain and explain but until you listen, it's pointless.
---
But did you give serious thought for Harry's arguments on this one, AOG? It is about orders of magnitude. It is true that some leverage was induced by CRA, but it was a second order effect only. Most of the lended money was *not* in the hands of the poorest.




Hey Skipper:

---
Whether the fact that both of them are Nobel laureates is mere coincidence, or a real insult to the Nobel committee is a real poser.
---
There again, I really do not like (in fact, I dislike) arguments of authority. So I will never say Krugman or Stiglitz must be right because they have fancy titles. Nonetheless, we should concede that those people do not get where they are being dumb. So I would be careful before discarding all they say when in their fields of expertise, and we are indeed discussing things very much in their fields.



---
I will pick just one example. In decrying the growth of inequality, nowhere does Stiglitz bother himself with causes that might be unfriendly to his narrative.
---
It may well be something about orders of magnitude. I have seen this here many times - mainly with AOG when he thinks to be debunking Krugman. The fact they do not mention some particular source of inequality is not evidence they want to hide it (like the divorce case you cite), but only that it may count much less than the other factors they are discussing.



---
It requires rather more reasoning than what Stiglitz provided to explain why taking money from one group of people will affect, for the better, personal decisions made by another group.
---
I do not believe this is his point, H. Skipper. He is not interested in affecting for the better the decisions made by the recipient group. The main argument is along the lines that those recipients will put this money to use in the real economy, while in the hands of the former owners it would be, to some good extent, locked in their safes.




Harry Eagar said...

'locked in their safes'

Worse than that, it will be deployed as hot money chasing the goal of additional points of return.

Didn't we just see how bad that is in 2008? But they're back to it now.

If they brought down only themselves, we could all cheer. But that isn't how it works.

Annoying Old Guy said...

Clovis;

[After Harry points to the housing bubble]

No, he didn't. Let me quote him again - "The rightwing meme is that the left wanted too much home ownership"

That's not about the housing bubble, or government policy, or economic data. It is a claim about the statements of a political faction, a claim that is simply false and for which Mr. Eagar has provided no evidence. That Eagar so blithely makes the claim, IMHO, makes his credibility on other claims more dubious. I have, many times in the past, explained to Eagar how he gets this wrong, but he simply doesn't know or care about that. But I'll tell you what - you tell me what Eagar's actual argument on the political point of view of the conservatives in America is (other than a raw assertion), and I'll give it some thought.

As for the bubble, here is a starting point on serious thought on the matter. I would also point out that the CRA was hardly the only leverage created by the federal government.

It may well be something about orders of magnitude. I have seen this here many times - mainly with AOG when he thinks to be debunking Krugman. The fact they do not mention some particular source of inequality is not evidence they want to hide it (like the divorce case you cite), but only that it may count much less than the other factors they are discussing.

Is it permitted for me to decide some factor may not count as much as other factors and therefore it is so irrelevant I can omit any mention of it when I make an argument, even if many others think it is a relevant factor?

Clovis e Adri said...

AOG

---
That's not about the housing bubble, or government policy, or economic data [...] you tell me what Eagar's actual argument on the political point of view of the conservatives in America is [...]
---
OK, so I've entered in the wrong discussion. I am not interested in clarifying what are the opinions of Harry on US conservatives, foremost because I hardly know them all. Also, I believe he is perfectly capable of doing it himself.


As for your link on the Housing Bubble, it contains many affirmations without evidence, backed by the final citation of Peter Wallison, from the American Enterprise, a guy already debunked many times before:

http://www.ritholtz.com/blog/2011/07/why-wallison-is-wrong-about-the-genesis-of-the-u-s-housing-crisis/



---
Is it permitted for me to decide some factor may not count as much as other factors and therefore it is so irrelevant I can omit any mention of it when I make an argument, even if many others think it is a relevant factor?
---
To tell you the truth, I do not even understand your question.

If you are asserting your right of making any argument you want, by all means, keep exercizing it.

I am only remarking that, sometimes, your arguments remind me of that situation when the bill in the restaurant comes surprisingly high, like $1000, and someone in the table decides to fret over the 20 cents charge for lemons in the water.

I am not disputing the guy is in his rights to complain for that. Only that he would save more money by noticing the $120 Champagne no one ordered.

Annoying Old Guy said...

Clovis;

My point is that you seem to dismiss my concerns as a priori not relevant (e.g., 20¢ important) because the data doesn't fit your preferred ideological narrative. You are presuming we agree on the value, when in fact that's the heart of what is being debated.

What's really amusing is to hear people who claim things like the stimulus have all of these knock on effects far beyond direct spending claim that CRA and the Mac's have little to none.

Clovis e Adri said...

AOG:

---
My point is that you seem to dismiss my concerns as a priori not relevant [...]
---
I do not think I ever discarded your concerns - I pay attention to all you write, even though I may get you wrong a few times.

So when I do not agree with one particular argument, it is not a priori, it is a posteriori.


---
What's really amusing is to hear people who claim things like the stimulus have all of these knock on effects far beyond direct spending claim that CRA and the Mac's have little to none.
---
I did not claim none of the above. CRA and Mac's can be a contrived discussion and my last link on the subject takes care to account for complex points. But in the end of the day, the private market went over-leveraged mainly by its own making. A good way to see that is to look for Europe: they had a similar real state bubble, with no CRA or Mac to make your case.


Now, I must say it does not bode well for your Libertarian positions that, when a free market (as the real state is in good aproximation in US) goes down, you refuse to own it up. I can think of other ways to defend the legacy of the free enterprise for the US housing market without shying away from adult responsibilities.

Annoying Old Guy said...

Clovis;

Your link - "such as the fact that Fannie and Freddie securitized virtually no subprime loans"

Official report from the CBO - "As housing prices dropped nationwide and foreclosures increased, the two GSEs suffered large losses on various investments in their portfolios, such as subprime mortgages (loans made to borrowers with poorer-than-average credit)" [emphasis added]

You say I won't take responsibility, but that presumes I agree where the fault lies. Let's also note that by "shrinking market share" it is meant a decrease from 50% to 30% or so. That's not a free market. The idea that an organization that serviced almost a third of all mortgages at the low point was not a major influence is something I find quite implausible.

Clovis e Adri said...

AOG:

Are you offering the two quotes above as evidence of contradiction?

If so, you look to be overlooking the distinction they are making between securitized and non-securitized loans, and its composition within Mac's portfolio, as far as I understand.


In a broader picture, since those details above get really boring, I would like to point out that the bubble grew up and exploded during the 8 years presidency of a Republican. Since you look to be more comfortable with Republicans than with Democrats (I hope I am not assuming too much here), I would like to hear your take on this little coincidence.

Hey Skipper said...

[Harry:] [Hey Skipper has said the poor in the US do not face material deprivation] several times, usually citing [Progressives' reliance upon bogus CPI statistics], but I have never seen [him] address the real issues of material deprivation that poor Americans do face.

The computation is not difficult. Take a common set of inputs: say, 30 hours a week wages at minimum wage, cost of heating oil, degree-days for a specific place, and multiply out.


And then ignore all the "safety" net programs in place to help pay heating bills.

Clearly, in this regard at least, the superiority of socialism to red in tooth and claw capitalism should be obvious. Because, unlike the US where individualists, after a long day grinding the proletariat under their hobnailed boots, cheer themselves with thought of frozen women and children to come, nothing like that would ever happen in France.

The biggest health issue facing the poor today is obesity. Consumption has greatly flattened over the last forty years. Those are facts — not mere assertions — which strongly suggest that poverty in the US has become more relative than absolute. Hence my assertion: absent the mentally ill and hopelessly addicted, material deprivation is no longer a feature of US poverty.

Hey Skipper said...

It wasn't fine. The Great Society had a mountain to climb, made worse by the rightwing policy of hollowing out the US economy.

Nevertheless, black Americans are better off than they used to be. Had the government not interfered, you can bet nothing would have happened.


Speaking of mere assertions.

You keep harping on the rightwing policy of hollowing out the US economy, but never explain what it is, or what an alternative policy would look like. One that, as the reality based economist you are, would surely take into account, of all things, reality.

And no, I won't bet that nothing would have happened without government interference. More accurately, not only do I bet something would have happened, it would have been far less awful than one actually took place. Had the federal government done nothing other than aim for eliminating institutional repression — i.e., act like the Declaration of Independence meant something — then African American culture wouldn't have become nearly so toxic as it is today. But there is no need to take my word for it. Patrick Moynihan called it 48 years ago.

The report concluded that the structure of family life in the black community constituted a 'tangle of pathology...capable of perpetuating itself without assistance from the white world,' and that 'at the heart of the deterioration of the fabric of Negro society is the deterioration of the Negro family. It is the fundamental source of the weakness of the Negro community at the present time.' Further, the report argued that the matriarchal structure of black culture weakened the ability of black men to function as authority figures. This particular notion of black familial life has become a widespread, if not dominant, paradigm for comprehending the social and economic disintegration of late twentieth-century black urban life. (pp.218-219)

Moynihan generally concluded in the report: "The steady expansion of welfare programs can be taken as a measure of the steady disintegration of the Negro family structure over the past generation in the United States".


Proof, as if any further was needed, that Progressives are have insuperable antibodies to humility.

Hey Skipper said...

Peter, you're off the rez. The rightwing meme is that the left wanted too much home ownership.

No, it isn't. Whether out of simple ignorance, or willful disregard of the facts, I don't know, but that is wrong root and branch.

The reality based economists' assertion is that the entire government viewed homeownership as a good so substantial that it required intervention in the market to extend that good to those against whom the market was discriminating.

Except it wasn't.

What the government was really doing was mucking about in a well functioning marketplace in order to bring about a state of affairs which the market didn't cause, and couldn't cure. Disaster ensued.

That the CRA, and the collectivist thinking underlying it, was the original sin should be restating the obvious. NB: politicians of every political persuasion fell under the spell of collectivist magical thinking.

Hey Skipper said...

[clovis:] There again, I really do not like (in fact, I dislike) arguments of authority. So I will never say Krugman or Stiglitz must be right because they have fancy titles. Nonetheless, we should concede that those people do not get where they are being dumb. So I would be careful before discarding all they say when in their fields of expertise, and we are indeed discussing things very much in their fields.


The fact they do not mention some particular source of inequality is not evidence they want to hide it (like the divorce case you cite), but only that it may count much less than the other factors they are discussing.


That amounts to disingenuousness. If nearly half the trend Stiglitz is analyzing is due to a factor that has nothing to do with his proposed solution, then at the very least I can suspect that a substantial part of the problem will remain unaffected. I can't think of any explanation that fails to insult either his integrity, grasp of the readily apparent, or simple diligence.

And that isn't the only gob-smacking elision.

At one point he states that when even a free-market oriented source such as The Economist argues that "… the magnitude and nature of the country's inequality represents a serious threat to America …" Then later lauds the German economic model in comparison to the US.

Fine. Forgive me though, if I find his omitting frequent Economist criticisms of the German economy as being unbalanced, relying upon US consumers for growth.

He repeats the Krugman error of confusing rate with amount. In criticizing the rate of taxation on investment income, he neglects the double taxation on investment income. He states that more than a fifth of our children live in poverty is contrary to our meritocratic ideal without noticing that fact is a practically ironclad consequence of meritocracy. There is merit in not getting divorced, there is merit in not having children outside of marriage, there is merit in graduating high school before having children. The lack of merit is directly responsible for the vast majority of children living in poverty.

Which is why neglecting the obvious in the first place allows him to conclude the fallacious in the second.

His essay is rife with similar nonsense, and it concludes by demanding more education funding for schools whose problem isn't lack of money, and more funding for "infrastructure" without wondering whether government at all levels is not suffering from lack of money, but rather from incontinent spending.

(You also said The main argument is along the lines that those recipients will put this money to use in the real economy, while in the hands of the former owners it would be, to some good extent, locked in their safes. His essay uses the word "inequality" 28 times. He makes one reference to lower income people spending more of what they get.)

Annoying Old Guy said...

Clovis;

I will note that this was ramped up under President Clinton, and President Bush made a strong effort to reign in Fanny Mae and Freddy Mac but was defeated by Democratic Party members in Congress who assured everyone nothing could go wrong (e.g., Representative Barney Frank). I tend to look at who promoted the bad policies, not who happened to be in the vicinity.

As for the quotes, either it's a contradiction, or your cite is being disingenuous by using technicalities to create the impression the GSEs were not involved in sub-prime loans. Take your pick.

Harry Eagar said...

Here's some reality, courtesy Bloomberg (ignore the topic of the report which is not germane to this thread and just look at the numbers):

"Lehman, which listed $613 billion in debt when it filed, is scheduled to pay out $14 billion to creditors on Oct. 3, bringing total distributions to $43 billion since the Chapter 11 plan was approved, according to court records and Miller."

http://www.bloomberg.com/news/2013-09-11/lehman-recovery-seen-as-justifying-2-billion-bankruptcy.html

As Bloomberg notes, it was the failure of Lehman that crippled the financial markets. Lehman assets were overvalued by about 500% (relevant to Guy's delusions about growth rates before 2008) and none of that was related to the CRA.

That's around 1,200 Solyndras.

Hey Skipper said...

Bankruptcy of Lehman Brothers, explained.

To be perfectly thorough, of course, one would have to consider the role of GSEs.

Harry, I'll leave that up to you.

Harry Eagar said...

If you read your own link, you'd have noted that the bankruptcy was caused by what I said caused it -- hot money.

Hey Skipper said...

From the link:

In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis. Lehman's loss was apparently a result of having held on to large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages.

You have to continue reading below the fold.

BTW -- what were the GSEs doing?

Clovis e Adri said...

AOG:

---
I will note that this was ramped up under President Clinton, and President Bush made a strong effort to reign in [...]
---
I find your double standards ever more interesting.

So, Clinton's presidency was only sucessfull, according to you, due to Republicans reigning in Congress during his mandate. How powerful those Republicans were. But then, when themselves have the Presidency, you have only one single Democrat guy, Mr. B. Frank, to blame for the worst crisis of the last 40 years. How those Republicans, capable of saving the country from Clinton, could not save it from one little Congressman?

IMHO, I do not think you are getting the housing bubble right, AOG. But even if I were to accept your take on it, your overall logic above would make me dizzy, to say the least.



---
As for the quotes, either it's a contradiction, or your cite is being disingenuous by using technicalities to create the impression the GSEs were not involved in sub-prime loans. Take your pick.
---
Again, none of the above options.

The article can not be possibly stating that GSE's had no subprime loans, for there would be no discussion at all here.

What the article is implying in that passage, as far as I understand, is: GSE's had certainly sub-prime loans, but it did not securitize much of it, i.e. most of it was non-securitized.

Which, in plain language, look to means that GSE's were not bottling their bad loans and reselling it in toxic papers in the market. It also means, if you follow the reference you first quoted from that link, that the category of subprimes in GSE's hands (mostly non-securitized) was defaulting less than the securitized type circulating in stock markets under other names.

Also, when you state GSE's had 30% of market share, I guess you are talking abount number of loans. Please search for the number of its market share in terms of total lended money. I do not have it, but I bet it will be a lesser number - and I hope you see the difference here.


Clovis e Adri said...

H. Skipper:

---
That amounts to disingenuousness. If nearly half the trend Stiglitz is analyzing is due to a factor that has nothing to do with his proposed solution [...]
---
From where did you take this number, please?

I hardly believe the divorce rate would be responsible for half the trend of inequality.

There are many measures of inequality, and a good way to start is, IMO, to look for the growth of productivity versus salaries:

http://www.epi.org/publication/ib330-productivity-vs-compensation/



Also, that big corporations are sitting on their cash instead of putting the money to use is hard to deny:

http://krugman.blogs.nytimes.com/2013/02/08/corporate-hoarding-and-the-slow-recovery/


Taking the example of Bret's trap above, what would you choose if only one of the policies below were possible:

Choice 1: Govt. increases taxes for companies and rich people and "redistributes" the money to middle/poor class by tax incentives, leading to result: Rich get richer by 50% and poor get richer by 10%.

Choice 2 result: Govt. changes nothing at all, result: Wealth of rich and poor remains unchanged.

Choice 3 result: Govt. lowers taxes to companies and rich people and keep it the same for every one else, leading to result: rich get poorer by 50% and poor get poorer by 10%.

What would you choose?
(Forget other conditions and if the options are realistic, just as Bret asked for in his example)


If I believe some economic models out there, H. Skipper, there are conditions in a economy when the lack of money in the hands of middle/lower classes leads to stagnation, for simple lack of consumers. I am not arguing if this is the case right now or not, only pointing you to the main drive behind a few economist's notions that inequality may affect economy.

Annoying Old Guy said...

Clovis;

"e.g." means "exampli grati", or "an example". I made no claim that it was Barney Frank alone against President Bush, only that he was a leading figure in one particular battle. You think I have double standards only because you rephrase what I write in to something completely different.

I would also point out that even in your interpretation, both cases consist of Congress winning a policy contest against the President. How is that dizzying for you?

With regard to the GSE's, to me the key point is whether the GSE were involved in the sub-prime market. According to the CBO, the answer is yes, which IMHO strongly undermines your cited article.

But let me ask, is a market that is 30%-50% controlled by GSEs what you consider a free market? At what level of participation does the government acquire some level of responsibility?

Clovis e Adri said...

AOG:


---
I would also point out that even in your interpretation, both cases consist of Congress winning a policy contest against the President. How is that dizzying for you?
---
But in both cases Congress was in the hands of Republicans for most of the time, or am I wrong? If I am right, dizzy I am.


---
With regard to the GSE's, to me the key point is whether the GSE were involved in the sub-prime market. According to the CBO, the answer is yes, which IMHO strongly undermines your cited article.
---
How so? I've explained above and state again: you are taking a paragraph destined to say that GSEs had a "slightly less bad" subprime than others, and misinterpreting it as saying GSEs had no subprime at all.



---
But let me ask, is a market that is 30%-50% controlled by GSEs what you consider a free market? At what level of participation does the government acquire some level of responsibility?
---
First, please give me the market share in terms of money, not number of loans.

Second, I never denied GSE had a role, I've only indicated it was not determinant. Place the same rules but subtract CRA and GSE, and I state the private market would get over-leveraged anyway. Look to Europe.

Now, your last question - what level of govt. participation allows for a free market - is an excellent one. I do not know. What I can tell you is that, compared to most other parts of the world, the US is one of the most easy places to negotiate houses. It is, comparatively, quite a free market.

Annoying Old Guy said...

Clovis;

But in both cases Congress was in the hands of Republicans for most of the time, or am I wrong? If I am right, dizzy I am.

Yes. Why does that make you dizzy?

How so?

We must be reading different paragraphs. The one for my quote talks about default rates for securitized mortgages. The only mention of subprime is "virtually no sub-prime loans". How you can read that as "slightly less bad", I simply can't see.

Place the same rules but subtract CRA and GSE, and I state the private market would get over-leveraged anyway. Look to Europe.

Yes, that's quite likely true. As always, though, my claim is that the GSEs turned a minor problem in to a major disaster. Look at the recovery data you cited earlier.

Hey Skipper said...

Clovis:

The fundamental problem with GSEs is that they enjoyed implicit government backing. Because of this, the securities markets viewed their MBSs as default proof. Therefore, the GSEs could sell securities at a lower rate, which made them more profitable. It is this government-supplied profit margin boost against which other financial institutions had to compete.

It is worth nothing that the GSEs are the ones holding the biggest piles of toxic mortgages.

I hardly believe the divorce rate would be responsible for half the trend of inequality.

The math is inexorable, though perhaps I could have been more specific. The divorce rate is not evenly distributed across US society. Particularly at higher education levels, divorce plummets. And the flip side of that coin is marriage. At higher education levels, the marriage rate is higher.

Income is measured by household. The divorce rate is inversely correlated with income, while the marriage rate is positively correlated. Income is positively correlated with education. Over the last forty years the divorce rate has skyrocketed among the less well off, and the marriage rate has plummeted.

So even if every worker's' income remained unchanged, income inequality would increase because the same income would be spread over proportionately more households at lower income levels.

The New York Times wrote an extensive article on this. (SocialistWorker.org offers a delusional rebuttal.) See also Charles Murray's book Coming Apart.

Hey Skipper said...

There are many measures of inequality, and a good way to start is, IMO, to look for the growth of productivity versus salaries.

This quote, summarizes the gist of the article:

This divergence of pay and productivity has meant that many workers were not benefitting from productivity growth—the economy could afford higher pay but it was not providing it.

There are a lot of begged questions and a questionable assertion in just this one sentence, none of which are answered.

Productivity has doubled since 1975. Did corporate profits? If profits have remained relatively stable (I don't know, and the article neglects to provide other than subjective terms), then how would prices change if wages went up?

Hourly compensation has only increased by 13% since then. Does that mean hourly workers are only 13% better off? (Compare an average new car of today vs. a new car of 1975, then note that it takes precisely the same number of average work weeks now as then to purchase it. Then note that the average new car of today is far better than the most expensive car in the world in 1975. Estimate how much money it would have taken in 1975 to buy a car as good as the average new car today. What is the rate of inflation in car prices over the period? (This is a serious question, by the way.)

What happened after 1975 to cause productivity and compensation curves to diverge? Did the size of the work force change? Perhaps computer technology might make a difference?

There are other problems en route to their tendentious conclusion, which includes a call for re-unionizing the economy — might that have a negative effect on productivity growth? — and increasing the minimum wage to half the average wage. Why stop there?

To be clear, I'm not saying that there has been no increase in wage inequality. But so far as I have read, all Progressives assert, without argument, that the increase in inequality came at the expense of the less well off. That is, because entertainers and athletes in the US have seen huge pay increases over the last 40 years, hourly workers earned less. Or, because CEOs earned more, hourly workers earned less. Or, as is prominently on display here, hourly workers are no better off now than 40 years ago. That last assertion, standing on a single nonsense number, is the most laughable of all.

Clovis e Adri said...

AOG:

It is my last try on this one. The paragraph you quote states "such as the fact that Fannie and Freddie securitized virtually no subprime loans". You look to interpret it as saying they had given no subprime loans. I am saying it only implies they have not securitized subprime loans. Completely different things.


---
Yes, that's quite likely true. As always, though, my claim is that the GSEs turned a minor problem in to a major disaster. Look at the recovery data you cited earlier.
---
I am happy we could agree to some extent here.

Now, on your theory that govt. made it even worse, can you then explain why the real state market of Europe - where much less stimulus was practiced - is lagging behind the one in US?

Clovis e Adri said...

H. Skipper:

---
The fundamental problem with GSEs is that they enjoyed implicit government backing.
---
No one is denying that. I started this conversation acknowledging the GSE did play a role, only that it was not the determinant one. Simple like that. AOG now looks to be in agreement that the market could get over-leveraged even in absence of GSEs, and this was my basic point. If you disagree with it, H. Skipper, I invite you to explain Europe similar bubbles to me.



---
So even if every worker's' income remained unchanged, income inequality would increase because the same income would be spread over proportionately more households at lower income levels.
---
Again, the point is about which measure of inequality we are talking about. I agree with your point on marriage and divorce, only that this is not a social trend I believe government can impact on.

Now, govt. can have impacts on policies directed to maintain a middle class large enough to keep business running. As I've explicited before to you, the problem of inequality in the eyes of some economists is that it can lead to lack of consumers, hence stagnation or crisis. This point is one I did not see being addressed by Libertarians here, maybe because they think the free market will automatically take care of it. If so, I tend to disagree.



---
Productivity has doubled since 1975. Did corporate profits? If profits have remained relatively stable (I don't know, and the article neglects to provide other than subjective terms), then how would prices change if wages went up?
---
I guess you did not bother to click on Krugman's link I provided in that same argument. I link it again:

http://krugman.blogs.nytimes.com/2013/02/08/corporate-hoarding-and-the-slow-recovery/

Just look to the graph to have your answer: profits almost doubled.


---
What happened after 1975 to cause productivity and compensation curves to diverge? Did the size of the work force change? Perhaps computer technology might make a difference?
---
Sure the explanation has many components, technology being the main one.

But whatever the reasons, you still can end up with the same problem I alluded above if the above trend continues indefinitely: lack of consumers with purchasing power.


Let me rephrase it all taking Bret's question above, where I've chosen #1 (richs get richer by 50% and poors by 10%). I've got #1 because the other ones meant stagnation or crisis, and there were no strings attached.

But if we get #1 for a long, long period of time, it will happen that money base and services may be redefined, in a way that the poor (and the middle class) may effectively be unable to buy things - and you will have crisis. So a smarter thing weill be to have not #1 alone, but to rebalance it from time to time. It asks for sporadic mild government intervention in the economy, which ask for more flexible ideologies than Libertarianism.



Byt the way, I have discovered that part of my feeling of being the outsider here may have a lot to do with age, instead of nationality. At least if I believe this article:


http://www.thedailybeast.com/articles/2013/09/12/the-rise-of-the-new-new-left.html


Hey Skipper said...

[Clovis:] I started this conversation acknowledging the GSE did play a role, only that it was not the determinant one. Simple like that. AOG now looks to be in agreement that the market could get over-leveraged even in absence of GSEs, and this was my basic point. If you disagree with it, H. Skipper, I invite you to explain Europe similar bubbles to me.

I'm not sure why explaining European bubbles is at all relevant. There could be many reasons why they occurred at about the same time, starting with correlation fallacy and working up from there. Most importantly, though, is that even if the US had existed on its own planet, the CRA and GSEs would have started a residential real estate bubble.

The over-leveraging was due to the CRA. Traditional, pre-CRA loan standards looked for at least 10% equity, an income-to-mortgage ratio of about 3:1, and an extensive work and credit history. The CRA eliminated all of those. So, among other things, the leverage ratio for both banks and homeowners went to infinity. Since that hugely exceeded banks own cap ratios, that required the creation of a huge secondary market. The GSEs were a very large part of that market. I agree, with the CRA and all its perverse incentives, the bubble would have probably happened anyway, but it would have probably been slower to develop.

As I've explained before to you, the problem of inequality in the eyes of some economists is that it can lead to lack of consumers, hence stagnation or crisis.

Ok, let's take that as read. That means a mathematical problem begging for a solution. Pick some number, let's say the top 1% of income earners. Or 2, 5, whatever. Then specify how much more money you are going to take from them. How much is it (ignoring any dynamic effects)? How much difference will it make?

A further point here is for that position to make any sense at all, it requires that the rich got richer through making everyone else poorer.

Hey Skipper said...

I guess you did not bother to click on Krugman's link I provided in that same argument. I link it again.

Just look to the graph to have your answer: profits almost doubled.


Does Krugman always cherry pick that much?

Hey Skipper said...

Oh, one other thing I forgot to mention.

Look at Krugmans's graph, carefully.

What is the result of (Bil of $/Bil of $) where Bil of $ <> 0?

The answer should be obvious by inspection.

I don't mean to claim that it invalidates the graph, but it is an error so glaring as to suggest credulousness on the part of whoever (Krugman) used it.

After all, if a glorified heavy equipment operator can find that, surely it must be well within the skill set of a Nobel Prize winner.

Clovis e Adri said...

H. Skipper:


---
Then specify how much more money you are going to take from them. How much is it (ignoring any dynamic effects)? How much difference will it make?
---
I do not think you phrase it right. Usually, no one is defending to take money those people already have, but to set up rules where you better spread out the next money to come.

In very gross terms, somehow like Ford smartly has done in past - realizing he would sell more cars if his employees themselves could buy it.

In this sense, the relationship between corporate profits growing and wages not is worrisome, more due to future buying power an economic growth than for any leftist moral concerns you disagree with.


---
Look at Krugmans's graph, carefully.
What is the result of (Bil of $/Bil of $) where Bil of $ <> 0?
The answer should be obvious by inspection.
---
Well, call me dumb, but I am at loss on what you mean here.

He is dividing corporate profits (in billion $ unit) for GDP in the same units.
The denominator is never negative, so as the numerator gets positive or negative, so does the final result. What is your point?


---
[...] a glorified heavy equipment operator [...]
---
Sorry to ask, but what do you do in this profession? You operate big industrial machines? Of what kind?

Annoying Old Guy said...

somehow like Ford smartly has done in past - realizing he would sell more cars if his employees themselves could buy it.

That's basically a fabrication. Ford paid his employees well to deal with retention problems. You statement here make no sense at all, economically.

Also, "curse of the black gold" has a well defined meaning, which is how I interpreted it.

Clovis e Adri said...

AOG:

I've followed your link but did not understand what you mean. What do retention problems mean?

Also, independent of Ford's real intentions, I believe many economists argue that the final result was the one I've pointed before. Do you disagree?


I knew the resource curse you've pointed by your link by the name of Dutch disease. Nowhere in that link the phrasing "curse of the black gold" is explicitely stated. So, I do understand why you assumed it as meaning that, but I was really meaning that and more: the geopolitical entanglements coming from Oil have no parallel IMO, with all the good and bad things associated to it.

Annoying Old Guy said...

Clovis;

Ford paid his workers more so they would quit less frequently. The link uses the term "worker attrition".

I believe many economists argue that the final result was the one I've pointed before

I am not aware of any serious economist who believes that. Certainly none of the ones I've read.

You could netsearch on "curse of the black gold" and see what comes up - I did and it was all about countries with large oil reserves.

Annoying Old Guy said...

Clovi

Here are some economists debunking your claim about Ford. Or you could read this one. My memory is that this is one of the most frequently cited "things people believe about economics that are not true".

Clovis e Adri said...

AOG:

It is a funny thing of communication these days.

I did not use the phrase "curse of the black gold" aware of any previous specific meaning. Very probably I've read it before, so I do not claim to have come with the name on my own, but I did remark on it by myself, not with any other wide usage in mind. So it is pretty funny to have you telling me to netsearch on it.

Maybe Google is the end of spontaneous conversation.

Hey Skipper said...

[clovis:] He is dividing corporate profits (in billion $ unit) for GDP in the same units.

The denominator is never negative, so as the numerator gets positive or negative, so does the final result. What is your point?


Nit picking, mostly. If someone was to hand you that graph standing alone, you would have absolutely no idea what it is portraying.

The number in question is a ratio, so it is dimensionless. The label for the Y axis should have been Profit/GDP. The units don't matter, so long as they are the same. And if someone was to hand you that graph with Profit/GDP, you would know immediately what it is portraying.

It doesn't invalidate the graph, but it is a weird mistake for someone who is supposed to be, in his words, wonkish.

Hey Skipper said...

I do not think you phrase it right. Usually, no one is defending to take money those people already have, but to set up rules where you better spread out the next money to come.

Everyone of the articles I have read focussing on inequality always end up with taking more (the post I wrote, linked to above, is a perfect example). They always want the rich to pay a higher (typically far higher) rate, without regard to quantity. The top 5% of taxpayers already pay something like 60% of federal income tax.

Unless Stiglitz, Krugman, et al believe they are such geniuses that they can decide what everyone should get paid, then the only game in town is to take more, lots more.

Hey Skipper said...

Here is a perfect example of taxation meant to penalize the rich that made everyone worse off.

Harry Eagar said...

'You have to continue reading below the fold.'

I read it all, and other sources as well.

The Times has an anniversary piece about how Lehman provided the construction money in Central California, then bought the paper, thus exposing itself to both sides of the deal, a classic hot money mistake.

When any part dropped, the whole row of dominoes went down. Exactly the sort of thing that brought VMS down in the '80s.

The paper was from Countrywide, not a CRA-covered business.

Hey Skipper said...

The paper was from Countrywide, not a CRA-covered business.

You have an astonishingly narrow view CRA's affects, and the scope of regulation.

Hey Skipper said...

[clovis:] Sorry to ask, but what do you do in this profession? You operate big industrial machines? Of what kind?

I operate a 600,000 lb transportation machine known as the MD11.

Or, instead of trying to be too cute, I could just have said that I'm an airline pilot.

Harry Eagar said...

'That's basically a fabrication. Ford paid his employees well to deal with retention problems. You statement here make no sense at all, economically.'

Not a fabrication exactly but a successful corporate whitewash.

Ford's turnover was 13000%/yr -- the average worker lasted less than a month. That says something about unregulated capitalism, I'd say; and if you follow the history somewhat further, you discover that that Ford's treatment of workers was evil. (His treatment of franchisees wasn't a lot better, either; but somehow I doubt I'll go to my grave with memories of erp excoriating employer thugs like Ford.)

Clovis e Adri said...

Hey Skipper:

Nice job! I envy you greatly, I would love to know how to fly such a heavy machine.


AOG:

I will retreat from this Ford discussion for lack of time.

I agree with you that I was mistaken about Ford's intention. Your links, though, hardly touch the greater subject, which is to what extent inequality may drive economy to stagnation due to lack of consumers.

I believe I can take many examples from my own economy, in Brazil, that indicate inequality can do just that. But it would take more time and energy than I have now - and I do not think you would change your mind anyway.

Hey Skipper said...

That says something about unregulated capitalism ...

Yes, supply and demand isn't just a good idea, it is the law.

It is also interesting how well both workers and companies do in the absence of unions. Never mind the how greatly reduced the opportunities for rampant union graft and involvement with organized crime have become.

Hey Skipper said...

Clovis:

In many parts of South America, inequality is indeed a problem, but its (SFAIK) much different. Land seizures during the colonial era hugely concentrated wealth in a very few hands. In that case, the wealthy got that way by making everyone else poorer.

In the US (leaving aside for the moment African Americans and Indigenous Americans), it cannot be said that the "1%" are getting richer at the expense of everyone else. Those who try, like Stiglitz, Krugman and Beinart always trot up the phrase "inflation adjusted". The problem is that the consumer price index systemically overstates inflation.

Most economists without an axe to grind thinks the error is somewhere between 0.8% and 1.6%. Given that inflation has been quite low (2%-3.5%) over the period that constitutes the Left's parade of horribles, that means their statements, and the conclusions they make based on those statements, are about 30% wrong.

When Stiglitz stated that over the last 10 or 15 years, the middle class has had to spend 110% of what it earns, after adjusting for inflation, to maintain its lifestyle, he is either ignorant, or trafficking in propaganda.

Up above, you asked if I had any genius ideas for reducing inequality. Where inequality is the consequence of the vast range in human aptitude, there is no solution that doesn't attack freedom.

But there are some other things we could do:

-- Eliminate corporatism (Hey, ethanol industry, that's YOU I'm talking about)

-- Make divorce harder

-- Re-stigmatize childbirth outside marriage

-- Replace Social Security with mandatory personal retirement savings, backed up by a very small charge for a social insurance policy (i.e., like fire insurance -- everyone pays, but it would go only to the most bereft).

-- Eliminate the minimum wage

-- Pay Earned Income Tax Credit bi-weekly

-- Make the EITC sufficient to, in combination with wages, reach some minimum level, and phase it out in such a way as to not penalize harder work or advancement.

-- Greatly reduce the duration of unemployment compensation.

-- And add a separate income tax that is logarithmic , so that everyone pays at least something, and the more you earn, the faster you pay more. It would be specifically labeled as a GIT -- government incontinence tax -- the purpose of which is to make it obvious how much additional we have to pay because Congressional budgeting isn't close to reaching the already questionable standards set by a bunch of drunken sailors.

Clovis e Adri said...

Hey Skipper:

---
Land seizures during the colonial era hugely concentrated wealth in a very few hands. In that case, the wealthy got that way by making everyone else poorer.
---
Yes, this is the original sin. But do not think of it as restricted to rural settings. That economic dispiratity got new incarnations in modern industrial and city centered economies. Although the agroindustry is still our main source of exports, it is safe to say that Brazil is mostly an industrialized nation (as many others in South America), and IMO the inherited economic inequality continued to play a role in holding back the economy up to today.

Also, I do believe the same thing (inequality driven stagnation) can happen in different forms in any other country that allows disparities to grow too much for too long. It is what I call the Brazilianization of the world. To what extent it may be true to the US is beyond my knowledge to say.



On your recipes above, I have a few comments:

---
Eliminate corporatism (Hey, ethanol industry, that's YOU I'm talking about)
---
This is the single most difficult step in a political system already dominated by corporations. With your laws on lobbies, I can say the job only gets harder.

In an unrelated comment, I'd like to point out that the Ethanol industry is under-efficient only in US, due to its choice for corn. Ours, although still somehow subsidized due to corporatism (and other kinds of corruption), points to a real alternative for Oil to some extent.

---
Make divorce harder
Re-stigmatize childbirth outside marriage
---
I hope you recognize that the above wishes are both i) contradictions on your Libertarian views and ii) very much outside government scope of influence.

One thing that bothers me a little also is that, usually, conservative Americans are keenly aware of the underclass lack of "marriage morals" (thinking of them almost as cattle, as Peter once complained here), while never saying much about the hyprocrisy it generates: Most of the super rich people commanding the Republicans are a long, long way from ideal examples of husband/wife/parent. I remember that Romney ironically gave that 47% moochers remark in a party given by a millionaire famous for his orgies in parties with hundreds of his upper class friends.


---
Pay Earned Income Tax Credit bi-weekly
---
The point being that... we should waste more time with this kind of bureaucracy?

Bret said...

Hey Skipper wrote: "Make divorce harder."

I'm with Clovis on this one. First, I think the State (especially the Federal Government) needs to get out of the marriage business altogether. Second, I think in this day and age it would backfire because it would make people less likely to get married in the first place, but NOT less likely to have children.

And how would you "Re-stigmatize childbirth outside marriage?" Churches used to do that (probably still do to some extent) but pushing morals on people is difficult.

Annoying Old Guy said...

Bret;

Stop subsidizing it.

Bret said...

aog,

To which subsidies are you referring?

Annoying Old Guy said...

With regard to ""Re-stigmatize childbirth outside marriage?" As a part-time Objectivist, I tend to think morality arises from the necessities of reality and if the government stops paying for people to do immoral things, many fewer people will do so.

Clovis e Adri said...

AOG:

I disagree. As tired as you may be of hearing me talking about other countries, I ask you to look beyond yours.

The rule in most of the world is that people in poor conditions and with deficient education tend to only have more children, not less. So to make the poor more poor (by taking welfare away) is certain only to give you higher birth rates.

Clovis e Adri said...

Hey Skipper & AOG:


I ask your pardon if I am playing too harsh, but your positions above beg the question:

Suppose you have a daughter, and she gets pregnant from a boyfriend. What would be your reactions?

Imagine now she is an adolescent with no means to support herself, would you kick her out of home? In order to not... subsidize it?

Annoying Old Guy said...

Clovis;

As tired as you may be of hearing me talking about other countries, I ask you to look beyond yours.

I look beyond my own country all the time. You falsely interpret my disagreement with you as not doing so.

So to make the poor more poor (by taking welfare away) is certain only to give you higher birth rates.

That is not at all clear. There is a maximum human fertility. Generally the very poor are at the rate so more poverty doesn't increase the birth rate.

I am also taking the long view, which is that non-welfare states grow much faster and that general increase in wealth will more than compensate. Your argument seems to presume the claim that the only escape from poverty is welfare, whereas I think that is what is most likely to trap people in poverty.

Suppose you have a daughter, and she gets pregnant from a boyfriend. What would be your reactions?

It certainly wouldn't be to expect you to pay for it. A subsidy, in the sense being discussed here, is an involuntary monetary transfer. Therefore family support and all private charities are not subsidies.

Bret said...

The "poor have more children" meme is pretty complicated and huge vats of ink have been dedicated to it. It's easily true simply because rural populations have substantially higher fertility rates than urban populations and in the vast majority (if not all) countries, the rural population is poorer, on average, than the urban population. Therefore, poorer correlates with more children.

The "cause" is a little tougher to discern though. Each of the 7+ billion people on the planet has his or her own personal approach to sex, marriage (or not), pregnancy, child-rearing, and life. I've looked at this a number of times over the years and I remain unconvinced that there's any good causal explanation that spans more than individuals or perhaps micro-cultures.

On the other hand, everybody can find data to support their causal hypotheses.

In the face of substantial uncertainty, I keep coming back to the question of whether or not it's reasonable or even sustainable for group A to take from group B to give to group C when group B is dead set against giving and the policies enacted with those resources are not preoven to be beneficial over the long term to group C (including future members).

I think many people would actually say that it's NOT reasonable. But what seems to happen is that group A and group C have a strong inclination to ignore the uncertainty. Then the above question becomes: is it reasonable for group A to take from group B to give to group C whether or not group B is dead set against giving if the policies supported by those resources are the only thing between C and lives of unbearable pain and misery. Then, suddenly, most people say it's reasonable.

And here we are.

Bret said...

Clovis wrote: "Suppose you have a daughter, and she gets pregnant from a boyfriend. What would be your reactions?"

Well, you specifically addressed that to aog and Hey Skipper, but I'll answer anyway.

I have a 17-year-old daughter who is a senior in high school, so the question has come to mind before this. Especially since she has a boyfriend and she's sexually active.

I wouldn't be the least bit unhappy if she got pregnant. If she wanted an abortion, I wouldn't discourage her, but if she wanted to keep the baby, I'd encourage that. I'd like to have a grandchild.

Ten years ago my answer would've been different. But now, the writing is on the wall that the ever growing regulatory state is going to choke off opportunity of all sorts for my children. Except for child rearing. So why not just have kids/grandkids? They're pretty fun. And might as well get the State to support them.

Hey Skipper said...

[Clovis:] Also, I do believe the same thing (inequality driven stagnation) can happen in different forms in any other country that allows disparities to grow too much for too long.

I think you are taking as true something which hasn't been demonstrated: that reducing inequality will produce better results than just leaving well enough alone. The problem is tied up in one word: "reducing". How?

Punitive taxation, which the Left advocates, and justifies through reflexive demonization, is itself morally troubling. If half the growth in inequality is due to personal decisions, in what regard is it "fair" to take money from the prudent? If the problems with our education system are due to both to educators and dysfunctional cultures, why does anyone think that taking money from the wealthy is going to fix either one of those problems?

[HS:]Make divorce harder
Re-stigmatize childbirth outside marriage
---
[Clovis:]I hope you recognize that the above wishes are both i) contradictions on your Libertarian views and ii) very much outside government scope of influence.


While I have libertarian tendencies, I think libertarianism is useless with certain classes of problems (which is maybe a good idea for a future post, but suffice to say that my libertarian views vary greatly depending on the subject).

I don't think there is any alternative to government involvement in marriage, if for no other reason than protecting property rights. Divorce laws are very much within the realm of government influence.

Asking what I think the answers are is a different question than whether, or how, they can be achieved. Clearly, women having children within marriage is far better for everyone concerned, and would go along way towards reducing inequality.

Of course, conservatives could have told us that long ago.

AOG is right, btw, if we want less illegitimacy, then we should pay less for it.

Suppose you have a daughter, and she gets pregnant from a boyfriend. What would be your reactions?

Profound disappointment, just as I would be if my son fathered a child without marrying the woman.

Eight years ago I bought home a Golden Retriever puppy. My son and daughter, who were pre-teens at the time, loved him. One of my reasons for getting the dog was for sex education. I said to them at various times and in various ways "Think about how much you love this dog." To my son: "Would you dump him on the street?" To my daughter: "Would you kill him? Should we have him if we can't provide for him?" To the both of them: "If you wouldn't do those things to a dog, how could you possibly do them to a baby?"

So far, so good. But I can't tell whether that is due to my fatherly brilliance or just luck. Or the fact that my kids are immersed in a portion of US society that does not condone illegitimacy.

Of course I wouldn't kick either out of the house, or fail to support them. But my kids have to think about profoundly disappointing their parents, and from their parents they have gotten very direct moral guidance. Neither of which governments are capable of.

So to make the poor more poor (by taking welfare away) is certain only to give you higher birth rates.

I don't buy your assertion that taking welfare away will make women poorer. Particularly in urban communities, poverty is a consequence of teenage mothers having children, and one of the reasons for it is that the children come with money attached. Therefore, it is entirely possible that removing the financial incentive will result in fewer girls having the babies that insure they will live their lives on welfare in the first place.

Clovis e Adri said...

AOG:

---
I look beyond my own country all the time. You falsely interpret my disagreement with you as not doing so.
---
So let me rephrase: please look to other countries in more general ways, not only when doing the math if it is worthwhile to invade it or not.

Better this way? :-)


---
Generally the very poor are at the rate so more poverty doesn't increase the birth rate.
---
If you state that explicitely about poor people in US, I can bet you are wrong: they are far away from maximal birth rate.

---
I am also taking the long view [...] increase in wealth will more than compensate.
---
You are right, I am taking the short view (i.e. next few years) to argue so. The long view is anyone guess.


---
[Clovis] Suppose you have a daughter, and she gets pregnant from a boyfriend. What would be your reactions?
It certainly wouldn't be to expect you to pay for it.
---
It is a good thing you don't, I do not even pay my taxes in your country. But you did not answer my question. Would you kick her out? Would you stigmatize her and your grandson/granddaugher?

Clovis e Adri said...

Bret:

---
The "poor have more children" meme is pretty [..] It's easily true simply because rural populations [...] the rural population is poorer, on average, than the urban population. Therefore, poorer correlates with more children.
---
You give me the impression you believe the correlation poor <-> more children is true only due to rural populations. It is not, if you take the statistics only over cities, the correlation is pretty clear there too.


---
In the face of substantial uncertainty, I keep coming back to the question of whether or not it's reasonable or even sustainable for group A to take from group B to give to group C when group B is dead set against giving and the policies enacted with those resources are not preoven to be beneficial over the long term to group C (including future members).
---
I believe the only certain fact above is that "group B is dead set against giving". I do not think groups A or C agree that said policies are not beneficial over the long term. On the contrary, most in group B are convinced the world is a better place thanks to them. See that I did not even add the conditional "if the policies supported by those resources are the only thing between C and lives of unbearable pain and misery" to say so.

---
So why not just have kids/grandkids? They're pretty fun. And might as well get the State to support them.
---
I thank you for the honest and good humored answer.

I believe though, if you ask you daughter, she probably has very different plans than being on welfare, pregnant or not.

I guess your half joke/half jab above tries to show how welfare would induce negligence, but the truth is that most people know a welfare life is no fun, and the fact it exists does not imply people wish it for themselves.

Clovis e Adri said...

H. Skipper:

---
I think you are taking as true something which hasn't been demonstrated: that reducing inequality will produce better results than just leaving well enough alone. The problem is tied up in one word: "reducing". How?
---
Well, "demonstrated" is a too strong word.

What I can tell you though, is that my own country experience points to that. We are among the most unequal countries in the world. In the last decade, the decline in inequality has been clearly linked to economic gains overall. Millions who where out of the formal economy where included, and the gains of scale due to this greater market has been clearly noted in the economy.

I am aware though that such correlation may include many other factors. And also that, in initial lower levels of inequality, the effect may be not the same. So I am not really stating this applies to US economy. But I understand some economists do, and I see some logic on it.

Now, on your "How", that's tricky. In our case, having already a bloated state, the added spending to pay for welfare for the very poor was not, relatively speaking, much noticed.

You have a much more lean state in US (although you do not notice so, by what I see here), and also a culture that allows for less "free rides". So, IMHO, your optimal "how" need to pass through wages and private market arrangements. In other words, the state need to find a way for the companies to better repass their profits, concentrating less of it in the higher management. A tough call, I know.


---
I don't think there is any alternative to government involvement in marriage, if for no other reason than protecting property rights. Divorce laws are very much within the realm of government influence.
---
But if your main target with the above changes of law are the poor, property rights are not really impediments they take in account in divorce - for they do not have much, right?


---
One of my reasons for getting the dog was for sex education.
---
Hehe. Machiavellic, I would say.


---
Of course I wouldn't kick either out of the house, or fail to support them. But my kids have to think about profoundly disappointing their parents, and from their parents they have gotten very direct moral guidance. Neither of which governments are capable of.
---
Govts. are not capable of, and are not supposed to be - that's my point when I said those are things outside govt.' scope.

I see that you are being true to your thoughts on your answer: you do expect your children to be somehow stigmatized by that experience. Still, you would support them.

I believe you would support them not only because you love them, but because you probably do not think they would be better if you withdraw your support.

I know you do not love all those strangers in welfare with their babies, but it is still true that they will not be better if the lose their support. They will be worse, and in situations in life that may incur only more children. Experience and data support this conclusion, as ugly it may look to you.

Talking about my own country again, do you know what more went down when inequality diminished? Birth rates. Upper and middle class are below reposition now (1.9 children per family). The pporest families (yes, those in "favelas") are near 3.0, from much hihger numbers in past.

To Bret: the numbers above are for city families, to reinforce my point.

Annoying Old Guy said...

Would you kick her out? Would you stigmatize her and your grandson/granddaugher?

No. But if the community did, I would accept that as a valid response. I would, as Skipper would, let her know how deeply disappointing I found that result.

I would support her because it's money to use as I want. I would not expect any stranger to do so. But you do, apparently, through the welfare state. This is why I see no comparison at all between these two situations.

Bret said...

Clovis wrote: "You give me the impression you believe the correlation poor <-> more children is true only due to rural populations."

The point of my comment was that the causes of differences in fertility rates is very, very complex and focusing on one factor is certain to miss the big picture.

Bret said...

Clovis wrote: "...she probably has very different plans than being on welfare, pregnant or not."

Perhaps, but in a generous welfare state, that may be the best choice for a young woman with a child or two or three. In a low welfare state, it would probably be better to pursue some sort of career.

Clovis e Adri said...

AOG:

---
I would support her because it's money to use as I want. I would not expect any stranger to do so. But you do, apparently, through the welfare state. This is why I see no comparison at all between these two situations.
---
That because you are thinking only about money. The purpose of my question was more to have your take on the stigmatization thing.

The curious thing is, much as you and H. Skipper take this conservative view, our Christian culture - that you both look to think as superior than some other ones (e.g. Muslims)- started with a girl who got pregnant, before marriage. And had a son who was not very fond of throwing stones at stigmatized people. Sometimes I wonder if you, dear conservatives, thought hard enough about what made your culture to thrive above so many others. Just saying, no need to answer...

Annoying Old Guy said...

Clovis;

our Christian culture - that you both look to think as superior than some other ones (e.g. Muslims)

Where do you get that? You are the first one to mention Muslims or Christians in this thread.

I think you're the one making things up to feel morally superior. You realize that both Skipper and I are atheists, right?

thought hard enough about what made your culture to thrive above so many others

Yes, quite a lot, for decades.

Clovis e Adri said...

AOG:

---
Where do you get that? You are the first one to mention Muslims or Christians in this thread.
---
I've concluded so based in your comments in many threads. Please correct me if I grossly mispresent your opinion - I need to always remind myself you have strong feelings about my loose rephrasings.

---
I think you're the one making things up to feel morally superior. You realize that both Skipper and I are atheists, right?
---
I do not think I get you here. What is your point?

---
Clovis: thought hard enough about what made your culture to thrive above so many others
AOG: Yes, quite a lot, for decades.
---
Would you like to share your conclusions up to now?

Annoying Old Guy said...

I certainly think the Anglo-Judeo-Christian culture we have had in the West is the best culture that humans have created, and this is what made it thrive. Of course, as an part time Objectivist, I have to consider "thriving" and "being superior" strongly correlated, in that it is the latter is proven in large part by the former. I think we have lost quite a bit of that in the last 50 years or so and we are now seeing the economic consequences of that.

Clovis e Adri said...

AOG:

Thank you for your take.

I would say then that my description above ("you both look to think as superior than some other ones") was reasonably right, the only reason you disavowed it being the fact that you apparently enjoy disagreeing with me.

Now, please tell me in which ways "we have lost quite a bit of that in the last 50 years or so". Is it still about welfare or something else?

Annoying Old Guy said...

Clovis;

I objected to your paraphrase as thinking it superior with particular regard to other cultures, rather than in general, and casting it in religious terms.

Welfare is certainly a big part of it - a key element of it was a self disciplined, self sufficient citizenry. A citizenry that is in large part dependent on the state is a major change. It's the change from "we can do it" to "the government can do it". Quite different.

Clovis e Adri said...

AOG:

Hmmm. But do you think a "self disciplined, self sufficient citizenry" has been a characteristic only of Anglo-Judeo-Christian culture?

Annoying Old Guy said...

Since the fall of the Roman Republic, yes.

Clovis e Adri said...

AOG:

And do you believe the Roman Republic was a "self disciplined, self sufficient citizenry"?

Taking one more recent example, have you ever had closer contact with Japanese culture? If yes, would you describe them as not "self disciplined, self sufficient citizenry"?

Annoying Old Guy said...

Yes, I think that of the Roman Republic. In my view the loss of this was equivalent to the transition to the Roman Empire.

I've spent time in Japan and studied their culture. The history there is a bit more complex. Before the Meiji Restoration it was much more of a feudal society. It was the importation of much of Western culture that transformed them in to what they are today.

Clovis e Adri said...

AOG:

You are falling for easy stories, IMO. The Roman Republic was not much better than the Roman Empire in any meaningful way, the political change not being associated to cultural changes in the population in any noticeable way. Or you are reading different history books than I am.

Now, on Japan, I do not get what their feudal period implies. You model Anglo-Judeo-Christian culture also did have their feudal period, right?

If self-discipline and self-sufficiency are the key to success, your studies of Japanese culture should have showed to you they cherish these characteristics very much, since old times. More than Anglo-Judeo-Christian culture, I easily risk to say.

Why your theory is not delivering here?

Annoying Old Guy said...

The Roman Republic was not much better than the Roman Empire in any meaningful way, the political change not being associated to cultural changes in the population in any noticeable way.

Read up on the rise of the Latifundia, which set the stage for the later feudal period. Some articles on the tax farming system would be informative, as well.

You model Anglo-Judeo-Christian culture also did have their feudal period, right?

No. That's why I added the "Anglo" because this culture arose out of feudalism, particularly in Britian (although Scandinavia contributed quite a bit as well).

One in fact sees the same thing in Japan with regard to the Meiji Restoration.

self-discipline and self-sufficiency are the key to success

Hard work and delayed gratification are keys to success - does that mean every one who does that becomes rich?

I would also note that "self sufficient" includes governance - people who think they need a government or feudal lord are not quite there on that scale.

P.S. Isn't it interesting that you require me to provide all sorts of supporting evidence, while your views (such as "because Oil!") don't? I think we can see who's trying to deal with reality.

Clovis e Adri said...

AOG:

---
No. That's why I added the "Anglo" because this culture arose out of feudalism, particularly in Britian (although Scandinavia contributed quite a bit as well).
---
OK. As is common in our discussion, we are dealing with different definitions here then. Can you place explicitely then, in place and time, what culture you are talking about? Is it England+ America 1600-1960?

Notice also that you are changing chairs and not answering my question on the Japanese. Take both periods of those cultures where you believe self-sufficiency and self-discipline was in place, and tell me why one thrives more than the other, if they share your distinguishing characterists for success.


---
P.S. Isn't it interesting that you require me to provide all sorts of supporting evidence, while your views (such as "because Oil!") don't? I think we can see who's trying to deal with reality.
---
I did not ask for links nor references in the previous posts. So what are you talking about? I did provide the same level of argument on my resources points that you are providing me here. In no point I did deny to answer any question. So...?

Hey Skipper said...

[Clovis:] So, IMHO, your optimal "how" needs to pass through wages and private market arrangements. In other words, the state needs to find a way for the companies to better repass their profits, concentrating less of it in the higher management. A tough call, I know.

Ignore "how" for the moment, there is the problem of ratios. Even if you extended the top 1% to the top 5%, (i.e., anyone on more than roughly $300,000 per year) and took every cent of their annual income above that amount, then the remaining 95% get about a $13,000 bump.

Sounds like a fair amount. Except that it is a lot less than that, because those people are already paying something like 40% of their for taxes, so the actual amount would be closer to $6,000.

Still a fair ways from nothing, but the total tax the rich would be paying to produce that result would be about 90%.

That has been tried before. It didn't go well.

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