Economics

Paul Krugman: It’s All About Trump’s Contempt

Published by Anonymous (not verified) on Fri, 26/05/2017 - 9:16pm in

"The mother of all sucker punches":

It’s All About Trump’s Contempt, by Paul Krugman, NY Times: For journalists covering domestic policy, this past week poses some hard choices. Should we focus on the Trump budget’s fraudulence — not only does it invoke $2 trillion in phony savings, it counts them twice — or on its cruelty? Or should we talk instead about the Congressional Budget Office assessment of Trumpcare, which would be devastating for older, poorer and sicker Americans?

There is, however, a unifying theme to all these developments. And that theme is contempt — Donald Trump’s contempt for the voters who put him in office. ... He is ... betting that he can break every promise he made to the working-class voters who put him over the top, and still keep their support. Can he win that bet?

When it comes to phony budget math — remember his claims that he would pay off the national debt? — he probably can. ...

The bigger question is whether someone who ran as a populist, who promised not to cut Social Security or Medicaid, who assured voters that everyone would have health insurance, can keep his working-class support while pursuing an agenda so anti-populist it takes your breath away. ...

So what did [Trump voters] think they were voting for? Partly,... they ... believed that he was a different kind of Republican. Maybe he would take benefits away from Those People, but he would protect the programs white working-class voters ... depend on.

What they got instead was the mother of all sucker punches.

Trumpcare, the budget office tells us, would cause 23 million people to lose health insurance, largely through cuts to Medicaid... It would also lead to soaring premiums — we’re talking increases on the order of 800 percent — for older Americans whose incomes are low but not low enough to qualify for Medicaid. That describes a lot of Trump voters. Then we need to add in the Trump budget, which calls for further drastic cuts in Medicaid, plus large cuts in food stamps and in disability payments. ...

So many of the people who voted for Donald Trump were the victims of an epic scam by a man who has built his life around scamming. ...

Will they ever realize this, and admit it to themselves? More important, will they be prepared to punish him the only way they can — by voting for Democrats?

The end of Liberalism; or the coming age of unreasonable views

Published by Anonymous (not verified) on Fri, 26/05/2017 - 8:13pm in

Tags 

Economics, Racism

David Held and Pietro Maffettone collect essays exploring the global dimensions -- and arguing for the necessarily global character -- of contemporary political theorizing...In addition to the familiar topics of human rights and global distributive justice, it includes contributions on the legitimacy of international law and transnational political institutions; on just war theory; and on a cluster of issues including territoriality, the global economy, and humans' relations to the natural environment and to future generations.

This integrated approach is welcome, and the book as a whole is a valuable resource for readers seeking to acquaint themselves with the state of the art in global political theory. The editors' introduction makes two agenda-setting points. First, they claim, political theory has reached a "cosmopolitan plateau," where acceptance of the equal moral status of all individuals (regardless of birthplace or location) defines the boundaries of reasonable disagreement in normative theorizing. Of course, different authors draw significantly different conclusions from the assumption of equal moral status; many theorists accept it without understanding themselves to be thereby committed to radically revisionist conclusions about global distributive justice or about the entitlements of states to control their own borders.--Emma Saunders-Hastings @NDPR Reviewing David Held and Pietro Maffettone (eds.), Global Political Theory, Polity, 2016.

When I started reading the review of Global Political Theory, I naively assumed that it would be an eclectic -- in the traditional sense of choosing the best from different stuff -- book trying to canvass what different intellectual traditions, necessarily partially interpreted and constituted, from different parts of the globe can contribute to political theory today. As the reviewer and the introduction of the volume make clear that's not what the volume is about. Global political theory (hereafter GPT) develops the implications of a certain class of moral egalitarianisms to ethical issues that have a global reach. It does so, as the editors of the volume under review note in their introduction (pp. 8-9), by quoting and accepting Thomas Pogge's (1992) framework of cosmopolitanism, which entails that (i) individuals are the units of ultimate moral concern (individualism); (ii) it applies to all humans (universality); (iii) such moral concern (ought) to have moral force for everyone (generality).

As an illuminating aside (in order to bring out the intellectual parochialism of GPT), something weird happens in the quote from Pogge's widely reprinted and influential 1992 essay, which self-consciously was written to fill the moral gap made available by "a new world order." The essay's general ambition is to make "moral progress" possible and it hopes that with the "gradual institutional reform" it proposes, "borders could be redrawn to accord more easily with the aspirations of" -- peculiarly enough not individuals, but -- "peoples and communities." (48) In Pogge's essay the second feature, universality, is contrasted with moral concern for a "subset" of humans, for example, "men, aristocrats, Aryans, whites, or Muslims." This happens to be one of two mentions of Muslims in the book (or, as it happens, Pogge's essay). (In the volume, the other is a reference to Muslim Brotherhood.) While it is no doubt true that Muslims have done immoral things to non-Muslims (as well as, countless Muslims) in the name of Islam, Islam is a religion that is especially hospitable to a variety of cosmopolitanism;* and it is no surprise that in it, self-consciously cosmopolitan perspectives have been embraced. One could argue, as William Gallois does, that this legacy is the source of continued revival of cosmopolitanism in later European thought and (perhaps more speculatively) one reason why asylum seekers are welcomed with comparative generosity in some Muslim majority states.

In his 1992 paper, Pogge contrasts his concrete inspiration with the ways "politicians are speaking of a new world order." In historical context this is a nod to President Bush's first Gulf war to restore the border between Iraq and Kuwait and restore a (protected) sovereignty to Kuwait sanctioned by international law and global institutions. In that context, a new world order referred to American supremacy within the constraints of, and channeled  by, international law and institutions. The complex entanglement of contemporary ethics with American hegemony (in the way Mill's or Green's thought was intertwined with imperial power) demands to be better understood and, I would argue, questioned (recall Khan on Singer). Be that as it may, Pogge's willingness to revisit borders is prescient, although as we've learned since, the actual process of redrawing of borders tends to be (a few notable exceptions granted) violent. 

That there are many who wish to turn political theory (and international law) into a branch of a certain flavor of ethics is familiar enough. As it happens, this past year I have conducted three job searches in political theory (including comparative), and so have  seen about (by a conservative estimate) 300 job dossiers of candidates with PhDs fairly recently minted in North America and Western Europe. The vast majority of these projects buy into some version of such moral egalitarianism and a good many apply it in the manner of GPT.

What I had not truly grasped before is that within GPT deviation from such cosmopolitan egalitarianism marks one as unreasonable (in the way predicted by Carl Schmitt). Again, I had naively assumed that being reasonable would consist in something like the disposition of treating disagreement even conflict with others by way of discussion in which reasons are (sincerely) offered, analyzed, and jointly evaluated. But in GPT to be reasonable means that one cannot enter the conversation unless one accepts certain moral commitments (in professional terms, a certain "consensus"). In their introduction, Held and Maffetono do not explain where such views about the boundary of legitimacy originate and who polices the boundary of who is let into the conversation (presumably that dirty job is farmed out to anonymous referees who -- like the marines -- do their work outside the scope of publicity).

One thing one learns from Thomas Kuhn (or George Stigler) is that where we find a professional consensus absent science, there are other forces that produce uniformity. In fact, Kuhn teaches that if one wants the appearance of intellectual progress one does well to create such uniformity of background commitments. The previous paragraph suggests, then, that the avalanche of work on GPT is the collective considered wisdom of our young scholars that the primary road to professional advancement and (for the more idealistic among them) improvement of humanity requires one to work within some version of GPT. 

We know from history that intellectual mono-culture are great at problem-solving (and this can generate great creativity), but otherwise not very robust. They are incapable of adapting to changing circumstances and unable to confront, truly, the most urgent questions in which one must come to terms with arguments of the deviants from orthodoxy. (For this would require it to be self-critical about its own commitments.)+ So, a moment of reckoning is due. If history were ironic, then the professional triumph of GPT is also the moment it becomes obsolete.** After all, the political and democratic resurgence of views that reject versions of GPT's normative cosmopolitanism is the striking feature of our time. So, it is tempting to preach the end of liberal cosmopolitanism and become a prophet for a new order.

But history is probably not ironic. So, while some of us, outside the professional boundaries, search for alternative political theories, GPT may well continue to thrive even if the political conditions that gave rise to it, and that allow it to shape the political order, have long passed. After all, some of the greatest philosophical scholastics lived in the twentieth century and have enriched our intellectual universe.

 

 

*I mean this at an ethical level. Politically this is less so. It's only when you collapse these two that one fails to discern this.

+ Slavoj Žižek claims that "The Western legacy is effectively not just that of (post)colonial imperialist domination, but also that of the self-critical examination of the violence and exploitation the West itself brought to the Third World." (115) The example of GPT suggests that this examination falls short of trying to listen to what others might say if they are taken to be unreasonable.

**Some other time I'll say more about the proper intellectual response to this.

Just face it — austerity policies do not work!

Published by Anonymous (not verified) on Fri, 26/05/2017 - 6:29pm in

Tags 

Economics

 If failing to understand some basic Keynes­ian relations is a part of the explanation of what happened, there was also another, and more subtle, story behind the confounded economics of austerity. There was an odd confusion in policy thinking between the real need for institutional reform in Europe and the imagined need for austerity – […]

For the next two weeks talk should be about the 30,000 excess deaths in the NHS caused by austerity

Published by Anonymous (not verified) on Fri, 26/05/2017 - 5:00pm in

In February this year the Independent reported:

An unprecedented increase in “excess deaths” in England and Wales could be linked to underfunding in the NHS and social care system, new research suggests.

“Relentless cuts” to the health service could be behind 30,000 deaths in 2015, argued researchers in two articles published in the Journal of the Royal Society of Medicine.

The research that backed up these findings was undertaken by highly credible academics. The government, of course, rubbished their work. I believe it. As a result I want to share what the Royal Society of Medicine said on the findings:

Researchers exploring why there has been a substantial increase in mortality in England and Wales in 2015 conclude that failures in the health and social care system linked to disinvestment are likely to be the main cause.

There were 30,000 excess deaths in 2015, representing the largest increase in deaths in the post-war period. The excess deaths, which included a large spike in January that year, were largely in the older population who are most dependent on health and social care.

Reporting their analysis in the Journal of the Royal Society of Medicine, the researchers from the London School of Hygiene & Tropical Medicine, University of Oxford and Blackburn with Darwen Borough Council, tested four possible explanations for the January 2015 spike in mortality.

After ruling out data errors, cold weather and flu as main causes for the spike, the researchers found that NHS performance data revealed clear evidence of health system failures. Almost all targets were missed including ambulance call-out times and A&E waiting times, despite unexceptional A&E attendances compared to the same month in previous years. Staff absence rates rose and more posts remained empty as staff had not been appointed.

Professor Martin McKee, from the London School of Hygiene & Tropical Medicine, said: “The impact of cuts resulting from the imposition of austerity on the NHS has been profound. Expenditure has failed to keep pace with demand and the situation has been exacerbated by dramatic reductions in the welfare budget of £16.7 billion and in social care spending.”

He added: “With an aging population, the NHS is ever more dependent on a well-functioning social care system. Yet social care has also faced severe cuts, with a 17% decrease in spending for older people since 2009, while the number of people aged 85 years and over has increased by 9%.”

“To maintain current levels of social care would require an extra £1.1 billion, which the government has refused.”

Professor McKee continued: “The possibility that the cuts to health and social care are implicated in almost 30,000 excess deaths is one that needs further exploration. Given the relentless nature of the cuts, and potential link to rising mortality, we ask why is the search for a cause not being pursued with more urgency?”

I wish I could answer that question.

The stark fact is that maybe 30,000 people died unnecessarily in a year because of austerity. That is, they died because the government decided that trying to balance its books (which is unnecessary and impossible in the UK at present) was more important than their chance to live.

My question is a simple one and is this. How can anyone vote for a government that decided 30,000 people should die in pursuit of a balanced budget?

I have no answer to that.

Blinder: Why, After 200 Years, Can’t Economists Sell Free Trade? (Video)

Published by Anonymous (not verified) on Fri, 26/05/2017 - 5:32am in

Nicolas Sarkozy: “No Way To Let The French Colonies Of Africa Have Their Own Currencies!”

Published by Anonymous (not verified) on Fri, 26/05/2017 - 3:25am in

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Economics, france

by Matthew, via How Africa In an interview with the BMTV television channel, [former president of France] said that the best way to preserve the health of the French economy is to keep the FCFA as the only currency usable in the former French colonies in Africa. France can not allow its former colonies to create their own currency to have total control over their central banks . If this happens, it would be a catastrophe for the public treasury that will lead France to the rank of 20th world economic power. There is no question, therefore, of letting the French colonies of Africa have their own currencies What is the CFA Franc? The CFA franc is the name of two currencies common to several African countries, partly comprising the Central African franc zone (CEMAC) and the franc zone of West Africa ( UEMOA). How does the CFA Franc work? Principle 4 is the most technical. First, it should be noted that the Banque de France opens an account for each central bank (one for …

Fed Watch: Fed Not Ready To Change Course

Published by Anonymous (not verified) on Fri, 26/05/2017 - 2:22am in

Tim Duy:

Fed Not Ready To Change Course, by Tim Duy: The minutes of the May Federal Reserve meeting reveal central bankers remained poised to raise interest rates again in June:

With respect to the economic outlook and its implications for monetary policy, members agreed that the slowing in growth during the first quarter was likely to be transitory and continued to expect that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace, labor market conditions would strengthen somewhat further, and inflation would stabilize around 2 percent over the medium term…

…Members generally judged that it would be prudent to await additional evidence indicating that the recent slowing in the pace of economic activity had been transitory before taking another step in removing accommodation.

With incoming data brighter and suggesting that the first quarter slowdown was indeed temporary, a June rate hike looks more certain than not. But why are they even contemplating raising rates at all given recent inflation numbers? And how long can the Fed stick with its current rate hike trajectory with inflation persistently below their 2 percent target?

The Fed finds itself stuck in a conundrum of low inflation despite low unemployment. One interpretation of this situation is that it is not a conundrum at all. The Fed’s estimates of the natural rate of unemployment are too high, and hence unemployment isn’t really all that low.

The other interpretation is with unemployment low and projected to be lower, it is only a matter of time before the inflation shoe drops. As noted in the Fed minutes:

Labor market conditions strengthened further in recent months. At 4.5 percent, the unemployment rate had reached or fallen below levels that participants judged likely to be normal over the longer run. Increases in nonfarm payroll employment averaged almost 180,000 per month during the first quarter, a pace that, if maintained, would be expected to result in further increases in labor utilization over time.

This is the potential outcome that keeps Fed Chair Janet Yellen and her colleagues gently resting their feet on the brakes.

To compare inflation-unemployment dynamics during the last three tightening cycles, I use here the estimate of the non-accelerating inflation rate of unemployment (NAIRU) produced by the Congressional Budget Office and core Personal Consumption Expenditures inflation. I assume for consistency that the Fed has a 2 percent inflation target throughout this period, but that is technically true only since 2012. 

Consider the late 1990s. The high productivity growth and rising dollar environment kept downward pressure on inflation even as unemployment fell as low as 3.8 percent:

FedMandate1

Will history repeat itself? Should the Fed take the chance that history will repeat itself? There are risks to such a strategy. Inflation eventually did take hold, accelerating in 2001:

FedMandate2

The return of inflation spooked the Fed enough that they hiked rates 50 basis points in May 2000, the last hike of the cycle. In retrospective that final hike was too much, too late and helped set the stage (or at least worsen) for the 2001 recession. One lesson learned: Even in a favorable macroeconomic environment, there are limits to how low the Fed can let unemployment fall.

Contrast this with the next hiking cycle, initiated by former Fed Chair Alan Greenspan and concluded by his successor Ben Bernanke. The post-2001 economy saw stagnant to falling productivity and a weaker dollar. It also experienced higher inflation with a smaller unemployment gap:

FedMandate3

Greenspan had the best of both worlds, whereas Bernanke arguably had the worst. But the lesson learned was again that unemployment cannot be reduced indefinitely without triggering higher inflation, and once the Fed allowed unemployment to fall too low, reversing course was very difficult and likely to conclude in recession. It is no wonder then that current Federal Reserve Chair Janet Yellen repeats the concern that:

…waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.

This time around, the Fed faces low productivity but a generally stronger dollar. And the unemployment-inflation dynamic is splitting the difference between the past two tightening cycles:

FedMandate4

Stuck in the middle, so to speak. Will the economy face a positive productivity shock that further reduces inflationary pressures? Or will the dollar continue its recent slide with the opposite impact on inflation? Will low unemployment finally start to kindle an inflationary fire? Or is the estimate of the natural rate of unemployment still too high? Interestingly, the minutes suggest that the majority of central bankers expect it more likely than not that these dynamics play out in such a way that the Fed needs to steepen the path of tightening:

Several participants, however, pointed to conditions under which the Committee might need to consider a somewhat more rapid removal of monetary accommodation--for instance, if the unemployment rate fell appreciably further than currently projected, if wages increased more rapidly than expected, or if highly stimulative fiscal policy changes were to be enacted. In contrast, a couple of others judged that the Committee could withdraw monetary accommodation even more gradually than reflected in the medians of forecasts in the March Summary of Economic Projections, noting that slack might remain in the labor market or that inflation was not very sensitive to declines in the unemployment rate below its estimated longer-run normal level.

The Fed, it seems, is biased toward more tightening not less - a situation that doesn't seem tenable if inflation remains persistently low as the year drags on.

Bottom Line: The bar to scaling back the Fed’s plans appears fairly high and requires either a more evident slowdown in growth that is likely to stabilize the unemployment rate or a substantial downward revision of NAIRU estimates. Until then, policymakers look committed to the middle ground of gradual removal of accommodation.

Expansionary austerity? You gotta be kidding!

Published by Anonymous (not verified) on Fri, 26/05/2017 - 2:19am in

Tags 

Economics

[h/t Gabriel Uriarte]

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