What the Hell?!? Friday, Part 2 - "Dude, Where's My Inflation?!?" Edition

Via Krugman we find this FRED graph, showing a decade of inflation on a log scale.

Oh, and by the way: the hyperinflation types are not claiming some future event — they’re claiming that it’s happening now, and if you go back, you’ll find them predicting hyperinflation by 2010.

What those of us who are reality-based find is that we had an actual deflationary event when everything collapsed in late 2008.  Since then, inflation has returned to such a wild and extravagant extent that is has established a new trend line, with a lower slope.

But what about all that government spending, and deficits, and stuff?

Yeah -- What about it?
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What the Hell?!? Friday - "Wher the Hell Am I ?!?" Edition

Blogging will again take a back seat for a while.  Just too much going on between now and the middle of May.  All good stuff - but YIKES - I'm on overload.  Nobody said retirement would be like this.

Perhaps you can track me down.

Meanwhile, I pretty sure the world will not become more sane while my attention is otherwise directed.  For timely updates, check out my list of links in the Right Hand side bar.

I might be in and out, but out is far more likely, for the nonce.

Cheers!
JzB

Quote of the Day, with a Moment of Penguinesque Satire

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This blog is ANTI-commercial. As in, if you tried to donate money or *anything* to me for running this blog, I'd reject it out of hand. No ads, no solicitations, *nothing* that might imply that I might ever see one red cent out of running this blog will *ever* be posted here, for reasons clear and simple: so that nobody can ever call me and accuse me of using their trademarked name or seal for profit.

                                - Bad Tux the Snarky Penguin

Exactly the way I feel about my blog, BTW.

So, "where is the s-a-t-i-r-e?" you ask.

Check it out. 

BTW, that there is a pretty good seal.  But, GREAT?!? 
I dunno . . .

Anyway, aren't penguins and seals kind of a bad combination?

Quote of the Day, With a Moment of Personal Irony

Most truly.  For we each must have death come unto us in our time -- it is the law of the universe -- and what pain it is as we lie dying to know that others will survive after we depart!  But if all are to meet their end at once, then there is no reason to feel the bite of envy, and we can go easily as equals to our common destruction.

                                             - Kesztrel Tsaye*

Between legs of granddaughter conveyance this evening, with a few moments to spare, we happened upon a very nice public library in one of our many local communities.  While there, we were happy to discover that there is reciprocity among the library systems, and we could not only borrow their books, but also return them conveniently at our own local library.

This was a nice discovery, since a themed book of short stories had caught my eye.  Some of my favorite authors - Neil Gaiman, George R. R.Martin, and Robert Silverberg - were listed on the cover.

The anthology kicks off with a deeply personal tribute to Jack Vance - upon whose work it is based - by Dean Koontz.   It wasn't until I had read that, and was well into the first story, by the above-mentioned Mr. Silverberg, that the irony, vis-a-vis today's earlier post, struck me.  The title of the collection is SONGS OF THE DYING EARTH.

My fervent hope is that I can finish all 669 pages before May 21st.  Actually, it's due back on the 17th, but I don't suppose I need to worry about that.

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* From Robert Silverberg's Dying Earth story THE TRUE VINTAGE OF ERZUINE THALE

Now THIS is Courageous!

Thom Hartman.

Contrast.
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Repent and be Saved!

"If you have already repented, please disregard this notice."

Also sprach Kliban, in a cartoon that I unfortunately cannot track down anywhere on-line.  This quip is also variously attributed to George Carlin, and probably others, as well.

This is what repenting looks like.

This pic of a billboard in Connecticut comes from this website, tracked down via images on TEH Googly, but I've seen one just like it in Toledo, my old home town.  It seems there are people who, under the influence of  "a California radio station led by 89-year-old Harold Camping, who initially predicted the world would end in 1994,"  now believe the world will end on 5/21/11.   Check here for updates.  Well, maybe not - I might forget.  Just like Camping's believers have forgotten the 6 years of relative peace and prosperity that followed the world's last use-by date.

OTOH, what followed that was Bush the lesser's terms 1 and 2, and quasi-term 3, currently in progress; so maybe they are on to something.

But not very much.

Many May 21 believers say the Bible contains clues that brook no argument. God tells Noah the world will end in seven days; the Bible also equates a day to 1,000 years. The date of the flood has been set at 4990 B.C., so adding 7,000 years plus one for the missing year "0" produces the year 2011. Translating a biblical reference to a month and day, from the Hebrew calendar to the Gregorian, results in May 21.

"It's no other date. It's only that date," said Michael Garcia, special projects coordinator at Camping's Family Radio enterprise.

The gathering up of saved souls will begin, followed by five months of chaos and tribulation that will serve as a spiritual going-out-of-business sale. It will culminate with the end of the world on Oct. 21.

That is daunting to Anthony Hernandez, a 44-year-old technology worker from Chester Township who runs a monthly Bible study class in his home. Although he devotes himself to proclaiming the message of the May 21 date, he knows that doesn't guarantee his salvation.

"If I find myself here May 22, then I'll be unsaved, because all the believers will be taken," he said. Asked if that scared him, the father of seven answers, "It is scary. I don't know if my children are saved."

Hmmm.  I know that the bible, like the Q'ran and the Kama Sutra, is literal truth, and all that.  But, what if someone made a slight miscalculation?  And doesn't that missing year "0" thang look a bit like a fudged digit?   Look - 1 year out of 7000 is only 0.014%, relative.  Even literal, divine-inspired truth has to have that kind of a margin for error.

Which takes us to 2012!

You know, if the Aztecs and the Bible agree on an earthly expiration date within 0.014%, then you have to suspect something is up.

What I suspect is collusion.  I don't know how they got together on this, back in the day; but - you know - the Lord does move in mysterious ways.

Regardless, I predict a very troubled Anthony Hernandez will still be here on 5/22, which happens to be a Sunday.  So - according to the prediction, Jesus would come down to save his true believers on Saturday.   In Old Testament times, when God put the date stamp on the human race, Saturday was The Sabbath.  Saving the anointed sounds like a bit of servile work, and - if you remember - even God rests on the Sabbath.

The only thing I can conclude is that Camping hasn't thought all this through very well.   I'm leaning towards some random Thursday (I never could get the hang of Thursdays) in 2012, though even by then we'll be nowhere near having maximized entropy.

The thing that troubles me is that if we are supposed to have "five months of chaos and tribulation" before the curtain falls, how in the hell will we recognize it?

(H/T to the LW)

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The Aggressively Regressive Misinformation Feedback Loop

Via Johnathon at Plain Blog we get word of Johnathon at The New Republic blowing the cover on the lying liars at the WSJ. One of their recent big lies - Surprise! - has become a Rethug talking point.

Sen. Mitch McConnell (R-Ky.), the minority leader, is also among those who have pointed to a recent Wall Street Journal op-ed that said that taking every taxable dollar of top earning Americans still wouldn’t fully take care of the current deficit.

The NR article points to a Jeffry Sachs HuffPo entry that lays out the numerical facts.

The Journal writes that it is impossible to get enough income out of the top 1% to close the deficit, and invites us to undertake the "thought experiment" of taxing all of the income this group. In other words, the Journal claims that even the total income of the richest taxpayers wouldn't close the deficit. This claim is nonsense.
If the tax rate were 100% rather than 23% (and assuming in the Journal illustration an unchanged AGI), the extra revenues would be $1,300 billion, or 9 percent of GDP. Even allowing for other taxes already paid by the richest 1%, the incremental federal tax revenues would be at least 6 percent of GDP. Since every baseline scenario by the Congressional Budget Office and the Office of Management and Budget shows a deficit between 2013 and 2021 that is less than 6 percent of GDP, the total income of the top 1% would close the budget deficit entirely. 

With great bravado, the Journal claims that even the income of the top 10% of the taxpayers wouldn't close the deficit. The top 10% reported $3,856 billion in AGI, equal to 46% of total reported income in the United States, almost 27 percent of GDP. On that, they paid $721 billion in personal federal income taxes, or an average of 18.7% of income. If the remaining 81% of income were paid in federal income taxes, the increment in tax revenues would be more than $3,100 billion, or roughly 21% of GDP. The budget deficit would obviously be closed many times over. 

The real point is obvious. The money received by the richest households is vast, and higher taxes on the rich will make a major contribution to closing the deficit. Nobody says that the rich should carry the entire tax burden* or that spending cuts shouldn't play a role.** The waste in military spending alone is so large that we can and should save at least 2 percent of GDP per year from the defense budget alone. 

America's richest households have enjoyed quite a ride in recent decades as they've accumulated a mountain of wealth unprecedented in human history, at a time when much of the rest of society has been suffering. The average income tax rate paid by the top 1% has declined from 34.5% in 1980 to just 23.27% in 2008. During this period, the share of total income accruing to the richest 1% has soared from 8.5% in 1980 to 20% in 2008. The share of total AGI accruing to the top 10% of taxpayers has similarly risen from 32% in 1980 to 46% of income in 2008.

In one of his closing paragraphs at NR (linked above,) Johnathon Chait points out the "problem involved in wasting one's time examining very bad arguments."  Indeed, the righteous are always at a disadvantage, since it is a lot of work to track down and present the truth, while the lying liar can always just pull another lie out of his -  well, whatever lie reservoir he finds handy.  I think they store their heads there, as well.

Well, I've done all the leg work for you -- but at least click through the first NR link.  The angelic photo of halo-adorned St. Thinlips McChinless is worth the trip, all by itself
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*  Well not in so many words, perhaps, but I came pretty damned close, just today.
**  Further, I'll say that spending cuts shouldn't play much of a role, or at least that the role needs to be specifically defined and carefully delineated.  Domestic spending has never been a major portion of deficits.  It's always been military spending and under taxation.  So go after military earmarks, weapons programs the army doesn't need, and needless wars in far-away places.  Get real and sensible about solutions to rising health care costs that don't continue to protect and favor big insurance and big pharma. That is just about the extent of it.
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Shared Sacrifice

Every budget concept to the left of Atilla the Hun Paul Ryan has as one of it's supposed good points the idea of shared sacrifice.  I am sick to the teeth of talk about shared sacrifice.  Here's Krugman.

The point is that we aren’t that heavily taxed, either by historical standards or in comparison with other nations. So if you’re truly horrified by the budget deficit, why not propose tax increases as part of the solution? 

Wait, there’s more. The core of the Ryan proposal is a plan to privatize and defund Medicare. Yet this would do nothing to reduce the deficit over the next 10 years, which is why all the near-term deficit reduction comes from brutal reductions in aid to the needy and unspecified cuts in discretionary spending. Tax increases, by contrast, can be fast-acting remedies for red ink. 

And that’s why the only major budget proposal out there offering a plausible path to balancing the budget is the one that includes significant tax increases: the “People’s Budget” from the Congressional Progressive Caucus, which — unlike the Ryan plan, which was just right-wing orthodoxy with an added dose of magical thinking — is genuinely courageous because it calls for shared sacrifice.

No, God damn it!  This is half-assed courage, at best.  I don't mean to disparage the Progressive Caucus, nor gainsay their plan, which is both reasonable and moderate.  But reasonable and moderate is not the same as courageous.  Nor is it particularly progressive.  Here are the revenue details.

Individual Income Tax Policies

• Allow the Bush-era tax cuts to expire at the end of 2012, but extend marriage relief, credits, and
incentives for children, families, and education
• Immediately rescind the upper-income tax cuts in December’s tax deal
• Index the AMT for inflation for a decade (the AMT patch is fully paid for)
• Schakowsky millionaire tax rates proposal (adding 45%, 46%, 47%, 48%, and 49% top rates)
• Tax all capital gains and qualified dividends as ordinary income
• Progressive estate tax (Sanders’ estate tax, repeal of Kyl-Lincoln)
• Limit the rate at which itemized deductions can reduce tax liability to 28%  for high earners
• Replace the tax exclusion for interest on state and local bonds with a subsidy for the issuer

Corporate Tax Reform

• Tax U.S. corporate foreign income as it is earned
• Eliminate corporate welfare for oil, gas, and coal companies
• Enact a financial crisis responsibility fee
• Financial speculation tax (derivatives, foreign exchange)
• Reinstate Superfund taxes

OK - in the corporate tax reform list, I do see some courage expressed.  But on the Personal income tax side, it's pretty damned weak tea.

A courageous plan would go back AT LEAST to the marginal rates we had in Reagan's first term.  As things stand now, there is little progressivity, and far too little revenue taken in.  I'm not saying we necessarily need to go back to 26 brackets, but some number up around a dozen can certainly be justified, as can a top marginal rate in the 60% range.

The main reason I've had it with shared sacrifice is that from at least the median income level on down, we've been doing our part for the last 40 years.  The great stagnation has resulted from large and continuously growing wealth disparity and the misallocation of economic resources that this dislocation has enabled.  To a large extent, all this results from the Reagan-era tax code changes.

Far from being the John Galt-like heroes of a vibrant capitalism, the wealthy elite are leaches who devote a great deal of time, effort and resources to squashing what little is left of the middle class.  You can see this playing out in Florida, New Jersey, Michigan, Ohio, and Wisconsin.

For anything close to shared sacrifice to occur, the wealthy will have to make up for 4 decades of taking it all.  A truly courageous plan would have that as its primary goal.
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Utterly Predictaible

Really.

I knew this was going to happen.

H/T to Keiran Healy at C. T.
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Where Have I Been?

In case you

1) give a rip
2) don't have access to my cell phone.

here is a lousy pic I took with the phone's camera function.

i

So, as you can plainly see, I was in a largish room with Wayne Bergeron and some other cats.  This was rehearsal for our performance last Monday.

Wayne is an amazing musician and a VERY cool guy.  It was a thrill and real treat to perform with him.

Here is one of the songs we did.  There are a lot of YouTube vids of Wayne performing this sweet minor blues by Tom Kubis with various groups.

UPDATE:  Full disclosure - in case it is not perfectly clear, this is NOT the group I play with.

High Clouds and a Good Chance of Wayne Tonight

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Quote of the Day

This from Winterspeak, in critque of Steven Randy Waldman's article on MMT.

Again, Steve's Progressive instincts cloud what remains of his judgement. A government's capacity to impose taxes has nothing to do with the quality of the real economy it oversees and everything to do with its sovereign power.

I've been looking at Waldman's article off and on over the past many days, but have been unable to give it any real attention, in the press of other things, which is not going to get relieved any time soon.  Oh, well.  So I can't add anything meaningful about the pros and cons of MMT, or anyone's view of it.

Further, I only discovered Winterspeak fairly recently, and haven't read enough to form an opinion of the views and/or viewpoint expressed there.  However, a couple of things strike me wrong about the above quote.  First, does progressivism really cloud judgment?   Sure, a dogmatic clutching at any ideology can lead to a negation of reality, whenever it comes up against the tenets of the one true faith.  But isn't an open-minded and pragmatic inquiry into the real nature of things a trade mark of progressivism?  Not that any way of thinking has a corner on the truth, but suggesting that progresivism is an impediment to seeking the truth smacks of ideological claptrap.

More importantly, the dogmatic statement about the nature of taxation is simply wrong.  Sure taxation policy is a vital element of sovereign power.  But to suggest that tax policy is irrelevant to the quality of the economy is nonsense.  Besides funding the government, taxation always and everywhere accomplishes some sort of wealth distribution.  The government does more than just engage in warfare and maintenance of the nation's physical plant.  It buys stuff, it lets contracts, it employs people, it provides medial care, food stamps and, best of all, Social Security payments to old fogies like me.  The latter two are particularly effective ways of getting money to flow into the economy.  I certainly spend every penny of my SS check. 

So - sorry Winterspeak - poorly thought-through, and badly done.  I wonder why?  Could your ideological instincts be clouding your judgment?
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What the Hell?!? Friday - "Where the Hell Have You Been ?!?" Edition

Via Krugman, we learn that owners of iPhones and iPads ae leaving a data spoor trail, and it doesn't take a cyber blood hound to track them down.

British researchers who uncovered the hidden file say it logs the phone’s whereabouts for the previous 10 months, and includes a date and time stamp with each location. They also created a program allowing users to upload their data and build a map that researchers termed “remarkably detailed” and iPhone owners called “depressingly accurate.”

Users are non-plussed.

“I find it absolutely outrageous that my phone has been secretly documenting the fact that for nearly the past year, I have been going, basically, nowhere,” said Daphne Coleridge, a receptionist and mother of two in Houston. “This is a map of tedium. Home, school, work, store, home, school, work, store, home… wait… dentist. I stand corrected.”

Some are, quite frankly, minused.

“I value routine, so for me and my wife, it confirms our life is stable,” said Mark Tedeschi, a computer programmer in London. “It shows I usually go to the same places: work, the shops, our flat, and my best mate Dan’s house. I mapped my wife’s iPhone and it’s the same with her: work, the shops, our flat, and my best mate Dan’s house. Day after day, we’re both doing exactly … hang on.”

While it's easy to make light of this, there's a "BIG-BROTHER-IS-WATCHING" aspect to it that I've been worried about since I first read 1984, which was some time around 1964, IIRC.  Others are troubled, as well.

Sharp-eyed readers might notice that I am posting this on Saturday, not Friday. Well, give me break -- I was busy on Friday.

If you want to know where I went, just check my cell phone.

Update (4/25):  In comments, Steve directs us to this link.  Money and power.  Always a lovely combination.
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Are Consevatives Really This Crazy?

Well, if crazy implies a demented and distorted (not to mention self-serving) view of the world, then  - - Yes.

Here is Niklas Blanchard's take on Tabarrak  and Landsburg, as I mentioned yesterday.

I love this:

.  .  .  doing economics from accounting identities leads to patently absurd conclusions. There are no concrete relationships between savings and investment. They are both dependent variables. Neither is there a concrete relationship between I and C. Both depend on other economic variables, as well. But, zero-sum accounting would get you this result.

I am validated!

And, since I have absolutely no compunction about piling on egregious right-wing idiocy, here's Noah Smith.

OK, clever readers, your assignment is to reread the above blog post very carefully, and think of four reasons why Landburg's post is utter nonsense. That's right, four. I don't want to make it too easy for you.

Noah wraps it up with this.

"Economics by accounting identity" is dubious at the best of times, but "economics by patently false accounting identity" is just inexcusable. You can get economic theory to say damn near anything you want. But by Adam Smith and all that is holy, you just cannot get it to say that consumption is constant by definition! You just...can't!!!

This is about a snarky as Noah gets, which is really a shame. I think he has the gift. (sigh.)

Update:  Krugman has something to add; it is a serious and well-deserved indictment of his profession.

Discussions like this really disturb me; they indicate that there are a lot of people with Ph.D.s in economics who can throw around a lot of jargon, but when push comes to shove, have no coherent picture whatsoever of how the pieces fit together.

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Are Consevatives Really This Stupid?

Or do they just think we are?

Here's Delong, exploding Alex Tabarrok and Steven Landsburg.

It is simply not true that "Robert Kendrick cannot be taxed." Not true at all. No, no, no, no, no.

To save you a few tedious click-throughs and the ignominy of adding to Tabarrok's and Landsburg's  hit counts (I did it for you, god forgive me) here is the source document, an article in The Bay Citizen, by Elizabeth Lesly Stevens.

Notable Quote:

Yet public policy in recent years has all but conspired to allow ever greater amounts of wealth to be accumulated by a few without much benefit to the commonweal. Call me unkind for singling out Kendrick. But the great policy debates under way in Washington and Sacramento ultimately get personal: Do we take money from the pockets of the rich — heirs and magnates alike — or do we continue to dismantle everything from Head Start to the state parks system to California’s once-fabled public universities?

Source: The Bay Citizen (http://s.tt/12hAc)

Yet public policy in recent years has all but conspired to allow ever greater amounts of wealth to be accumulated by a few without much benefit to the commonweal. Call me unkind for singling out Kendrick. But the great policy debates under way in Washington and Sacramento ultimately get personal: Do we take money from the pockets of the rich — heirs and magnates alike — or do we continue to dismantle everything from Head Start to the state parks system to California’s once-fabled public universities?

Clearly MS Stevens is a socialist.

But - and I mean this with the utmost sincerity - are conservatives EVER right about ANYTHING?
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Yet public policy in recent years has all but conspired to allow ever greater amounts of wealth to be accumulated by a few without much benefit to the commonweal. Call me unkind for singling out Kendrick. But the great policy debates under way in Washington and Sacramento ultimately get personal: Do we take money from the pockets of the rich — heirs and magnates alike — or do we continue to dismantle everything from Head Start to the state parks system to California’s once-fabled public universities?

Source: The Bay Citizen (http://s.tt/12hAc)

Yet public policy in recent years has all but conspired to allow ever greater amounts of wealth to be accumulated by a few without much benefit to the commonweal. Call me unkind for singling out Kendrick. But the great policy debates under way in Washington and Sacramento ultimately get personal: Do we take money from the pockets of the rich — heirs and magnates alike — or do we continue to dismantle everything from Head Start to the state parks system to California’s once-fabled public universities?

Source: The Bay Citizen (http://s.tt/12hAc)

Are People Waking Up?

Lying lizard Paul Ryan gets booed and guffawed at  by his conservative constituents at a town hall meeting.

Thom Hartman has audio, and some background. He also reads a transcript of the constituent's comments, which are otherwise hard to make out.  To hear Thom, click this link.

http://bit.ly/h2XCdP 

From media matters, via Ed Shultz, here it is on video.



Not much I can add.
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Posting Takes Back Seat

We just had a great weekend watching granddaughters perform in dance competition.

Tonight, I have a performance with a guest artist who flew in from L.A. for the occasion.  Hope he appreciates the snow.  (Yes, it SNOWED this morning.)

House full of granddaughters tomorrow, then I'm blogging the crossword puzzle, which will keep me up half the night.

Wednesday I'll probably be zombicated.

So if I post in the next few days, be on the alert for more than the usual level of babbling incoherence.

Here is something from tonight's program by way of compensation.

Speechless

Congressman Joe Crowley strips a flip chart and undresses the Rethugs.





H/T to Beale.
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What the Hell?!? Friday - Quote of the Day - Balance of Trade Edition

I'm almost out of Friday, but just ran across this post which was making excellent sense until the final sentences.

Exports are real costs. Imports are real benefits.

OK -- this is in a specific context.  Though it looks like an absolutist kind of statement.  And maybe it makes excellent sense, too, but I just don't get it.   Does this suggest that running a large trade deficit is a good thing?

Somebody help me out here.  Meanwhile, I have a headache, and I'm going to bed.
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Obama Redux

I missed the President's speech yesterday.  I guess I assumed that what has been correctly billed as the defining moment of this term would be broadcast in prime time, not middle of the afternoon, middle of the week. Oh, well.  I have seen some of the clips Rachel and Ed showed last night, recovered the text from Rachel's blog, and plan to read it tomorrow.

Rachel and Ed are thrilled.  Dennis Kucinich appeared to be seriously underwhealmed.   I'm somewhere in between - heartened, but not thrilled. 

I'll probably have more to say, after I've read the full text.  For now, at least, I'm marginally less pessimistic.

This is quite a small move, but it is in a positive direction, and that hasn't happened for the longest time.
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Economics vs Science

Some really good minds have wasted their valuable mental energy pondering this question:  Is Economics a science?

I have, at best, only a pretty good mind, but I think I have a pretty good answer, and that is -- not only no, but HELL NO!

I guess the only thing that disguises the fact that the question is risible is that Econ clothes itself in the trappings of science - simplification constructs that allegedly attempt to represent real-world phenomena.  Both scientists and economists call these constructs "models."

This is where the similarity ends.  By way of example, lets consider two fundamental "LAWS," from science, the ideal gas law, and from economics, the law of supply and demand.  The similarity between the two constructs is that while each represents a theoretical possibility, neither is applicable to anything in the real world.  The difference lies not in the constructs themselves, but in the way practitioners think about them.

Scientists look at the ideal gas law, and the behavior of real gasses, take note of the difference and try to learn something about matter, based on the deviation from theoretical behavior.  Thus, we get an understanding of things like  Van der Waals force, polarity, and hydrogen bonding.

Economists look at the law of supply and demand, and the behavior of real market interactions, and call anything that deviates from the theoretical a distortion.  Thus, rather than an attempt to better understand reality, we have a reverence for the abstract model.  This is not so bad, per se, but along with it comes the implication that REALITY IS WRONG.  

Unfortunately, in the real world there are lumpy assets, barriers to entry, monopolies, monopsonies, cartels, inflation, deflation, monetary crises, credit crises, tariffs, duties, political disruptions and natural disasters - all of which can make the supply-demand relationship go ka-blooie.   But, dag nab it, the model is right, and these things are all distortions!  Well, at least the ones imposed by governments are.  I'm not so sure about the others, though they affect the model in non-quantifiable ways.

There is an important, but rather simple reason why scientists and economists use models differently.  Science is an exploration into the ultimate truths of life, the universe, and everything.   New discoveries in science are built on old discoveries in science.  With the passage of time, our understanding of things scientific improves, because scientists are building a better and more robust understanding of reality.

Economists have no such goals.  It hasn't always been this way, but now, new "discoveries" in Economics negate previous discoveries in Economics, and along the way, "they reinvent 80-year-old fallacies when they try to discuss the subject."   The basic problem is that economics and politics are two sides of the same coin, and politics is in no way a search for truth.  It is a grasping at power.  And in power politics, as Rethug Senator John Kyl so graphically demonstrated, truth is irrelevant.

There is another correlated and more subtle difference, that relates to the economist's reverence for their models.  Science is probabilistic, and recognizes that there are uncertainties - in measurement, observation, control, and experimental design. 

Economics is absolutist.  Get into a disagreement with an economist, and he will throw models at you - like the "lump of labor fallacy' canard I got from Adam Ozemek (sorry - that is long past, and I'm not going to go search for a link), and that even Krugman falls for.   Or this, that I got from "The Masked Economist" in an exchange at Macromania:  "You still don't seem to get the point that monetary policy doesn't change relative prices and so doesn't increase the cost of the Q1 bundle relative to the Q5 bundle."   The Q's here represent economic quintiles of American society.  How many layers of absolutist assumptions does it take to believe that pumping money into the financial sector boosts the economy, but in a way that has no effect on relative prices of different bundles of goods and services?   That goes beyond the super-neutrality of money to a whole lot of rational and frictionless efficiency, and flies in the face of concurrent movement in commodity, bond and equity prices.

Here's Hayek (quoted in the super-neutrality link, above):

. . . it seems obvious as soon as one once begins to think about it that almost any change in the amount of money, whether it does influence the price level or not, must always influence relative prices. And, as there can be no doubt that it is relative prices which determine the amount and the direction of production, almost any change in the amount of money must necessarily also influence production.

A bit long-runnish, in my view, but certainly not what the Masked Man was telling me.

In principle, Economics could be, or perhaps become, a science.  But to do so, it would have to separate itself from politics.  But in the real world, there's just no way for that to happen.
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Obama

Karl Smith thinks that Obama is a Fabian Progressive.

This explains the steady even if bloody push to pass the PPACA. It explains the seeming disinterest in meaningful shifts in policy in other areas. It explains why Obama was for the stimulus when it seemed popular and conceded to austerity when it seemed popular.

This is a classic Fabian approach. Avoid engaging the enemy when time is on your side. This also seems like an accurate description of the progressive movements position. While at the moment Progressivism may lose a head-on confrontation, time is indeed on its side. Its opposition is older and grounded in institutions which are losing power. The intellectual base of the right is eroding. Political opinion is solidifying around the notion that there will be some form of universal health care.

Apparently, the Fabian idea is that underlying social forces will bring your ideas about, in the long run.  Well, you know what Keynes had to say about that.  I think Karl is wrong on several counts.  First off, the right does not, and has never had an intellectual base of any great validity.   Second, the right does not need an intellectual base, since conservatism is, and has always been essentially anti-intellectual.  Their mental processes are based on -

-  Ignorance
-  Prejudice
-  Magical Thinking
-  Negation of Reality  (false choice, false equivalence, cherry picking, denialism, etc.)

(It's one of the great mysteries of human nature that all of this is orthogonal to intelligence.)

Third, the mere fact that most old fogies are conservative by nature and will not live forever does not mean that the old fogies of the future will be generally more progressive.  That is wishful (magical?) thinking, at best.

Most fundamentally, though, Obama can't be a Fabian Progressive, since he's not any kind of Progressive.

Obama is a pragmatist, rather like Clinton, in the sense that he does not act according to a set of principles, but rather along the lines of whatever he thinks he can accomplish.  But – since a set of principles is lacking – the result is incoherent.   Thus, one can conclude that Obama holds fast to ACA because that is his firm desire.  OTOH, my read is that  “Obama care” (which is warmed over Romney-care) is pretty popular among the unwashed masses – including small business owners, so that is where he can gain some success, despite the efforts of neanderthal Rethugs at the state level who still will do anything and everything imaginable to make him fail.

Obama’s apparent willingness to give on other issues is not because he is making a trade-off.  It is because he is not a progressive, and has no ideological stake in those issues.  Most progressives think Obama compromises with himself before he goes out to compromise with the Rethugs. I think he compromises based on his actual positions, which are right of center. So the result is far right of center.

I look forward to his big talk tonight with dread and anxiety.
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Ramona The Pest

No, not this.

THIS!
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Economic Accounting Identity

There is a basic Accounting Identity that states that

Private Sector Financial Balance (change in book value)
+ Governmental Fiscal Balance (fiscal deficit/surplus)
= the Current Account Balance (trade deficit/surplus)

Or, in plain English, the sum of public and private debt (or surplus) equals the trade deficit (or surplus.) 

I've seen this displayed in various ways in several locations.  This presentation is courtesy of  David X. Johnson.  A quick glance at Johnson's Post today, plus the one cited above, is just about enough to suggest to me that he and I would have very little common ground.  Frex:

The end game is the raping of retirees and the middle class of their savings and a collapse of the wealth transfer system (including for those who are truly needy). The more the Fed prints, the poorer we all become (but the wealthy know how to protect their wealth from confiscation).

Got gold?

But that is a digression.  When talking about the accounting identity, Johnson says this.

If the goal is to reduce the trade deficit, we can either reduce government debt or we can reduce private debt, but not all three at the same time. 

 Somebody help me out here.  I think there are several things wrong with this statement.

1) An accounting identity is not only a resultant, it is a static description of a moment in time.  He is treating it as a dynamic function.

2) Even worse, he is ascribing a causal relationship among things that are at best resultants of many other factors, and at worst, simply correlated in book-balancing theory. 

3) And if there were to be a causal relationship, wouldn't it be the other way around?  Doesn't the trade deficit drive the need for some combination of public and private debt?

4) Doesn't this assume that none of the variables above affect GDP?

Johnson goes on.

Reversing the trade deficit requires that corporations manufacture more (and therefore invest more) and be more productive. Investment requires that people save their money* rather than spend it or being credit card rich. It also means that we need to attract more investment from abroad - i.e. those evil rich people that the White house likes to vilanize.* It means that tax policy doesn't create dis-intensives to invest in America. It also means that the government goes on a diet.* Increased savings, less debt, improved productivity, more competitive, lower taxes, a weak dollar, no deficits ... exports will increase.*

So then how do we achieve this new balance? More deficit spending? Paying zero interest on deposits? More progressive taxes for the wealthy? Import restrictions? No, no, no and no ... yet this is exactly the President's plan. This administration is also trying to run the economy from the top down,* like a Soviet style Politburo - i.e. statism (19th century) or mercantilism (15th century). For all these reasons, the five-year Obamanomics plan will fail. It's just basic economics.*

 * Here I've indicated items that strike me as either naked assertions, baseless right-wing talking points, or example of erroneous thinking.  Rather than engage in a point-by point refutation, I'll leave pondering these flaws as an exercise for the interested and ambitious reader.  Except for the last one.  Economics is bunk!

Best of all is the way Johnson pushes the Obama as Commie meme.

Understanding the above economic accounting identity can help you understand why the President's Soviet-style 5-year plan to double exports in 5 years has little chance of success. The five-year plan is certainly achievable, but hardly a success story in the past. It happened in the 1970s and early 1980s, and almost occurred in the five years ending in 2008. Realize, however, that all of these periods experienced high-inflation and a weak dollar. The five year Obama Politburo plan will require a weak dollar (it's currently strong), more inflation (it's currently relatively low) and our trading partners will have to experience strong economic growth with demand for American products (they are currently weak and the demand is low). Nevertheless, in real terms (inflation adjusted) the U.S. has never doubled exports in 5 years. So much for central planning.

As revealing as this text is, you really have to visit his site and check out the accompanying picture to get the full effect.

I had no intentions of writing this post.  I just happened to stumble on Johnson's elaboration while tracking down the accounting identity using TEH Googly.

But, when I saw it, I couldn't resist this Molly Ivins moment.

Further, isn't the real point of this accounting identity that, given some level of trade deficit, DGP, currency strength and interest rate that a government deficit is a requirement   (and actually a good thing) at a time when the privates sector is deleveraging?

_____________________________________________

Update (4/21/11):    In a different context, Niklas Blanchard explodes Johnson with a simple sentence fragment:

doing economics from accounting identities leads to patently absurd conclusions.

Perfect!
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Riddikulus! Pt 2 -- Ludicrous!

The saddest part of the current general leave-of-senses we are experiencing is the total failure of the alleged left-wing main stream media to point out the absurdity of the programs Rethugs (yes, Art - THUGS!) are proposing.

One voice crying out in the wilderness is the infamous Keynesian idiot, Paul Krugman.

First, Republicans have once again gone all in for voodoo economics — the claim, refuted by experience, that tax cuts pay for themselves. 

Specifically, the Ryan proposal trumpets the results of an economic projection from the Heritage Foundation, which claims that the plan’s tax cuts would set off a gigantic boom. Indeed, the foundation initially predicted that the G.O.P. plan would bring the unemployment rate down to 2.8 percent — a number we haven’t achieved since the Korean War. After widespread jeering, the unemployment projection vanished from the Heritage Foundation’s Web site, but voodoo still permeates the rest of the analysis. 

In particular, the original voodoo proposition — the claim that lower taxes mean higher revenue — is still very much there. The Heritage Foundation projection has large tax cuts actually increasing revenue by almost $600 billion over the next 10 years.

And where is the President - you know, that flaming socialist, Nazi-Commie, White-person-hating, Kenyan-born Muslim - B. Hoover Obama on all this?

More broadly, Mr. Obama is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice! 

I’m not exaggerating. The House budget proposal that was unveiled last week — and was praised as “bold” and “serious” by all of Washington’s Very Serious People — includes savage cuts in Medicaid and other programs that help the neediest, which would among other things deprive 34 million Americans of health insurance. It includes a plan to privatize and defund Medicare that would leave many if not most seniors unable to afford health care. And it includes a plan to sharply cut taxes on corporations and to bring the tax rate on high earners down to its lowest level since 1931.

But bold, serious-minded, level headed Repugnicants don't see it that way, of course.

Republicans reacted skeptically to word of Mr. Obama’s speech. “I sit here and I listen to David Plouffe talk about, you know, their commitment to cut spending and knowing full well that for the last two months we’ve had to bring this president kicking and screaming to the table to cut spending,” Representative Eric Cantor of Virginia, the House majority leader, said on Fox. 

The timing of Mr. Obama’s remarks reflects a White House strategy devised late last year after Republicans won their House majority, together with the confluence of four events, two last week and two ahead.
 

Friday night’s 11th-hour agreement on spending cuts, which averted a government shutdown, removed what had been a distraction for months over this year’s unfinished federal budget. Administration officials said they also hoped that the compromise helped build trust with the House speaker, John A. Boehner, that would carry over to the larger debates about long-term spending and the national debt.

I, for one, take great comfort in Mr. Obama's efforts to earn the trust of Sir Boner of Orange.  This is not only important, but really, really big, in the context of the impending need to raise the Federal Debt Limit because,

Speaking on Saturday in Connecticut, Mr. Boehner said Republicans would not agree to raise the cap “without something really, really big attached to it.”

And what might that big thing be (emphasis added)?

Three House Republican leaders, including Mr. Ryan, were on the fiscal commission; unlike the three Senate Republicans, they opposed the recommendations because they raised revenues and did not cut enough from health care.

Apparently, raising revenues is a bad thing among the supply-side crowd..  It's clear those serious Rethgs have specific goals, and concrete plans for how to achieve them.

So -- who do you think is ludicrous?

I nominate the hapless, hamstrung President and the Demorat Clown Corps.
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Riddikulus!

In the Harry Potter story, The Prisoner of Azkaban, Hogwarts students practice dispelling a Boggart with the spell Riddikulus! which transforms the Boggart's representation of the thing most feared into something silly that can be laughed off.

The thing I most fear is a degeneration of society into the new feudalism.   To paraphrase my source (below) it may be tedious to just keep repeating, over and over, that this is where Austerians, Rethugs, and Tea Party buffoons are taking us. But this is the dominant political trend in the country this century, and when the dominant political events consist of overwhelming, repeated drives toward feudalism, there's not much to do but keep futily pointing out how feudal it is.  (Or as the greatly-missed Molly Ivens reminded us, IIRC: "Keep rattling the pots and pans.")

Alas, in the real world there is no effective counter to the legerdemain of unicorn-riders like the sainted Ayn Rand, Rand Paul, and Paul Ryan (possibly shorted to Ayn-Ryan?) There is no Riddikulus! counter spell to ward off the budget-cutting insanity.  These cuts not only shrink economic activity directly, they also diminish the future by curtailing programs with paybacks that often go far beyond dollar for dollar.  This includes proposed (or perhaps real, since I don't know the details of the the bridge CR) cuts to the research programs at the National Institutes of Health.

And for what? Once again, and for the umpteenth time: the United States faces a serious debt problem on the order of trillions of dollars over a 20- to 30-year time frame. This debt problem is overwhelmingly driven by rising Medicare and Medicaid spending due to rapid cost inflation in the medical sector. Other significant budget problems include a substantial but demographically limited increase in Social Security expenditures, and immense and spectacularly wasteful defence spending. The final serious budget issue is that American taxes are set at a level that remains several per cent of GDP lower than expenditures throughout the business cycle, a problem either created or severely exacerbated by the Bush tax cuts of 2001 and 2003. Every other federal spending category apart from the ones I have mentioned is, from the point of view of our debt problem, trivial, and cutting any other category has a negligible effect on the debt. Cutting peer-reviewed research funding in order to generate trivial savings that will have no measurable effect on the debt problem is just ridiculous.

It may be tedious to just keep repeating, over and over, that these cuts are ridiculous. But they're the dominant political event in the country this spring, and when the dominant political event consists of overwhelming, repeated ridiculousness, there's not much to do but keep pointing out how ridiculous it is.

As the unidentified author points out above, there is another side to the budget - revenues, if you recall.  By simply closing corporate tax loop holes, rolling back individual tax rates to the Clinton levels, and removing the ceiling from Social Security payments we would come very close to eliminating all the budget problems, and also take a couple of small steps toward reducing the wide and growing wealth disparity that is a key enabler for feudalism to take hold.  But neither party has any willingness - or even awareness - that the revenue side holds the most sensible solutions for the current difficulties.

Riddikulus!
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A Thought about Karl Smith

I find myself in frequent disagreement with Karl Smith.  This is no surprise, really, since he is a free-market ideologue with quasi-libertarian tendencies (not that there's anything wrong with that.)   I try to be pragmatic rather than dogmatic, and do not share his belief system.

Karl posts at MB more frequently than either Niklas or Adam (on whom I have given up, and will not waste my time reading.)  Karl is a bright - possibly brilliant - guy.  But many of his posts are poorly conceived, poorly thought through, or simply fatuous.  I scratch my head over this.

It seems especially odd to me, since I put a lot of thought, word-smithing, proof-reading, and even work into my posts.  Whether it's actually good thought and fruitful work, I'll leave to my readers to decide; but it is certainly an attempt to think hard and get something right.

I've concluded that for Karl, blogging does not serve the same function that it does for me.  My guess is that he just throws stuff out there as it occurs to him, without regard for quality or even sense.  It's a test site for ideas, somewhat like brain-storming, rather than a forum for imparting thoughtful communication.  Why have a critical filter, when your readers - who are taking it all quite seriously - will do this part of your thinking for you, and likely in ways that you'd never think of yourself? There are some kernels of knowledge in there, but the chaff to wheat ratio has driven me to this conclusion.

I think this makes Karl unique among the econ bloggers I read.  Even Tyler Cowan, whom I read seldom and likely would agree with even more rarely (for reasons cited above,) seems serious and thoughtful about his posts. Not so, Karl.  At least not always.

Or am I all wet?
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What People Believe In

What Rethugs believe in is flat-ass lying to gain any possible advantage, political posturing, an ideological assault not only on New Deal programs but every intellectual advance since The Enlightenment, a religious-right social agenda, the inherent meritocracy of a privileged elite, and (for reasons that I cannot fathom)* an actual government shut down.  

OTOH, I have no idea what Demorats believe in or want.   


___________________________________
*  Afterthought:  I might have sussed it.  They still want Obama to fail, and are willing to destroy anything and everything to make that happen.  This is so loathsome, I need to constantly remind myself that it's real.

The lesson of the Cheney administration, and even more so since, is that when thinking about the Rethugs, it is almost impossible to be cynical enough.

I am forced to conclude that Rethugs HATE America and the ideals on which it is founded, and seriously seek to bring about the new feudalism.
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Judging Wisconsin

4/07 Update:  In comments below, ubetiam points out info that I already received from my lovely wife:  that "Waukesha County Clerk Kathy Nickolaus said more than 14,000 votes weren't reported to The Associated Press on Tuesday due to "human error." Nickolaus previously worked for a GOP caucus that was under the control of Justice David Prosser, who was speaker of the Assembly at the time and who now stands to benefit from the clerk's error."

It is, of course, of no consequence whatsoever that Nickolaus is a staunchly partisan Rethug with close ties to Prosser and a record of both gross incompetence and performance that one could politely call ethically suspect.

But, as I hope I have made plain below, in the grand scheme of things, none of this matters.  As a nation, we are on a path to undo every gain society has made since the enlightenment.  This won't necessarily lead to an exact duplication of 12th century feudalism.  But it will lead to a latter-day near-equivalent.  It's exact size, shape, flavor and degree of charm are yet to be determined.  But once you start sacrificing your freedoms, wealth, and quality of life to the moneyed elite, you don't get them back again until after the next bloody revolution.

We are thoroughly screwed, and a significant portion of the American population is really just fine with that.

___________________________________________________

The off-off-year election in Wisconsin had been billed as a referendum on the person and policies of recently elected Rethug Governor, Koch Brothers Servitor, and infamous college drop-out Scott Walker.  I believe this is true.  Such an election, in normal times, would be a sleepy affair with voter turnout in the low 20% range.  Instead, we see a whopping 33.5 %!  To me, this still indicates an apathy rate in the high 60's, despite national media attention and a great deal of out of State election funding - mostly from right wingers.

Though a recount is a forgone conclusion*, it seems that Democratic challenger JoAnne Kloppenburg has defeated Rethug incumbent State Supreme Court Justice David Prosser by about 200 votes.  Out of 1.5 million. That's a victory margin on the order of 0.013%.  Wisconsin Democrats are ecstatic.

I am not.

Wisconsin is a State where the labor movement has very deep roots.  Walker's agenda is aggressively (and regressively) anti-Union, anti-labor, anti-middle class.   His techniques border on are authoritarian and seriously flirt with illegality.

Under these circumstances, Prosser should get no greater percentage of the vote than the total of tea-baggers, libertards, and purblind Rethugs in the population.  These groups ought not total anywhere close to 40%, let alone 49.87. 49.987!

The 33.5 % turnout is far less than the approximately 50% that turned out to select Walker by a 52/47 margin.

This race has far-reaching implications for the future of Wisconsin, the labor movement, and the country as a whole.  And 2 out of 3 voters blew it off.  Half of the ones who showed up selected Walker's man.

Even if Klappenburg survives the recall - by no means a sure thing - this is a dismal result.

As I pointed out yesterday, for serfdom (or whatever its 21st century equivalent turns out to be) to take hold, the people have to be complicit or coerced.  My reading of this election is that we either welcome our billionaire overlords with at least semi-open arms, or simply don't give a shit.

Either way, we are doomed.

And that's without even considering the impending government shut-down.

__________________________________________________
* UPDATE: Prosser is expected to file for a recount tomorrow (Thus. 4/07.) This should be over by the middle of May!?!

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Honor Thy Father

And a BIG H/T to Steve at Asymptosis for recognizing my dad's wisdom in this quote.

"Figures might not lie, but liars sure know how to figure"

RIP, dad. It's been a long, long time.

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The Brute Economics of Slavery

Late update:  If you happen to read this post, be sure to also read the comments.  They are enlightening.

In thinking about the economics of slavery, I'm considering slavery and serfdom to be economic near-equivalents. Of course, I recognize that there are qualitative differences between chattel-slavery and serfdom:

-  In slavery, the master owns the person of the slave; in serfdom the master owns the labor output of the serf, either as a stated labor quantity, a stated output quantity, or some combination.

-  Serfs enjoy some measure of freedom, and can accumulate personal wealth, after the rents are paid; slaves do not and cannot.  (The point, though is to keep rents so high that accumulation is prohibitively unlikely.)

-  It might be easier to gradually and incrementally impose serfdom on an existing population. First generation slaves need to be captured, conquered, or in some other way removed from - and deprived of - their native state. Thus, serfdom is imposed on the indigenous population, slaves are more typically imported.

-  The individual slave is a depreciating asset.  But, as a population, slaves are self-renewing, since, unlike Shakers, they reproduce.   Serfs are factor inputs rather than assets.  (On the other hand, the master also owes the serf protection, and sustenance in times of famine.  In that sense, the serf resembles an asset that requires maintenance.)

These are significant differences, to be sure, but mostly from a sociological or political perspective.  In terms of the brute economics, they are somewhere between second order and trivial.

The necessary conditions for reducing a population to serfdom are as follows.

- A large wealth and power disparity between the haves and the have-nots.

- Perhaps more significantly, the ownership of virtually all assets by an elite class, with severely limited opportunities for the general population to own or accumulate assets.

- A poorly educated population with limited skill sets.

- Severely impaired individual mobility, due to an impossible debt and/or tax burden and legal restrictions.

- Government of the masters, by the masters, for the masters, with little or no sense of worth or justice for the serfs.  This enforces and reinforces the previous point.

- A social and/or religious system that recognizes the inherent meritocracy of the master class.

- A population that is scared or coerced into ceding their freedom to the masters in exchange for security.

- The political will to deprive people of their fundamental human dignity.

Via Krugman, we find Delong's repost of a short treatise on slavery and serfdom by Evrey Domar.

Domar points out additional requirements, and a mechanism for serfdom to develop.

- Low population density: Labor scarcity favors slavery/serfdom, since the cost of freeman labor will be high.  I'll admit I didn't get this until is was stated the other way around.  Population growth favors freeman labor since the competition for jobs drives wages down.  (Note the implicit denial of the "Lump of labor fallacy" canard.)

- A large class of what Domar calls "servitors" who owe allegiance, taxes, and military support to a higher authority.  They are the equivalent of medieval vassals of a liege lord, who extract from the local peasant population not only their own means of existence, but that of their liege, as well.   This is the beginning of, and most literal sense of "rent-seeking."  The process is that, starting with a free population, by taxation or other forms of indebtedness, the freedom of the common people is eroded.  Those whom Domar calls "servitors" I call leaches.

- Explicit Government complicity in restricting mobility, via legal structures. Besides limiting the population's mobility in a gross sense, it also eliminates the possibility of competition among different servitors.

In this way, serfdom developed in depopulated* Western Europe during or after the late Roman Empire, and in Eastern Europe many centuries later - in fact, long after serfdom has disappeared in the West.  In each case, the critical enabling factor was low population density, resulting in a critical shortage of labor.

Basically, it comes down to an economic evaluation of costs and returns.   But these are not easy to determine with any precision in the abstract, and probably not in the actual event, either, unless the increment is quite large.  The slave, and even the serf, needs maintenance in a way that the free laborer does not.  The serf can be compelled to work past his willingness in way that the free man cannot.  On the other hand, the free man might have higher willingness and unit productivity.  The wild card here is what the free man can demand as wages, and that depends on the competition for available jobs.  The bottom line is that serfdom will dominate whenever the profit (revenues less costs) of keeping a serf is greater than that of hiring a free laborer.

Of course, all of this was long ago - pre-industrial revolution in fact, and centered on a low-technology agrarian system.  What message does it have for us today?   Here, Krugman wonders** why, after the the plagues of the mid-14th century, serfdom wasn't reestablished in Western Europe, since the population was greatly depleted.  Domar has no clear answer, and Delong won't hazard a guess. I will -- but it's only a guess.  Perhaps society had moved on, and the culture was no longer accepting of serfdom as a social institution.  Serfdom had faded away from lack of interest and due to population growth many decades before the plague epidemics occurred around 1350.  There were sufficient numbers of artisans, craftsmen, guilds, merchants, and bankers, such that tying people back to the soil might not have been easy, or even desirable.   The growth of towns might have played a part.  Another social factor is that in late Eastern European serfdom, the servitor's status was determined by the number of serfs he controlled.  I don't think that was ever the case in the West.  Sometimes social factors trump economics.

Also, as Barbara Tuchman points out in A Distant Mirror (Ch 11, frex.), though the population decreased due to the plague, total wealth in coins and material possessions did not, and they were largely in the hands of the elite.  It could be that with this wealth maintained, the brute economic drive for serfdom was absent, or severely attenuated, despite the labor shortage.

Krugman also wonders: "And an even bigger question: why hasn't indentured servitude made a comeback in the modern era? Yes, I know, human rights and all that - but if it was profitable to have indentured servants in the modern world, I'm sure that Richard Scaife's think tanks would have no trouble finding justifications, and assorted Christian groups would explain why it's God's will."  

Well, that was in 2003, when Scaife was well known and the Koch brothers weren't. This statement also gets a lot of ridicule in comments at Delong's Domar post. But, there were certainly many Christian apologists for slavery, and you can see today that tea-baggers and the Christian Right do not exactly align themselves on the side of human rights vs the brute force of the elite.

So Krugman's question remains, hanging over us like the sword of Damocles.  Here is the way I see it. First off, you need to be skeptical about translating a socio-economic phenomenon from a different place and time to the here-and-now.  Our population is not sparse nor badly educated (yet), and we do not have a pre-industrial agrarian economy.  But these differences effect the possibilities and modes of implementation.  They don't effect the ongoing defects of human nature that Krugman obliquely alludes to.  These are greed, ego, and the lust for power, and you can see them manifesting themselves right here in the U.S. today in the struggle between labor and the minions of the wealthy elite. When I think about serfdom, I also think about more modern analogs - sharecroppers, coal miners who owed their soul to the company sto'e, child laborers in early industrialized England, indentured servants, the exploitation of illegal immigrants, and the union busting practices that have been highly successful here since 1980.

In evaluating the conditions that favor and disfavor serfdom as such, something is missing from the analysis.  That is that somewhere along whatever spectrum of conditions makes serfdom more or less economically favorable to the elite, there is a point (or region) of indifference.  If working people are reduced to the point where the economics are no less favorable to the elite than serfdom, then actually going through the formality of making them serfs simply isn't worth the effort, and doesn't make any economic difference.

What do we have today?

- The largest wealth disparity since before the great depression - at every stratum of society, growing larger every day.

- An all out assault by the moneyed elite on the wealth and status of working people.   Union busting is one of the tools.

- Deliberate undermining of public education.

- Segments of the population tied to the land by under-water mortgages or the inability to unload a property.

- Popular social movements with religious backing that favor the interests of the elite over the interests of the people.

- Constant fear-mongering as a pretext for inducing people to give up their basic rights.

- A moneyed elite that effectively owns government.

Krugman's apparent underlying assumption, which I share, is that - for the servitors at least, and possibly for the serfs as well - serfdom is a strategy of least resistance, and therefore the default social order, whenever the conditions for it are right.

One of the things that can make conditions not right for serfdom is regulated entrepreneurial capitalism - inventiveness, innovation, industry, and real competition.  Capitalism generates wealth, increases wages, opportunities and the standard of living, and reinforces concepts of freedom, liberty, and fair practices.  Effective regulation assures that fair practices are maintained, keeps the playing field even, and increases the likelihood that reward is in some way proportional to a combination of skill and effort.  Capitalism is expansionist by nature, serfdom is static.

Unfortunately, over time, capitalism transmogrified into Corporatism.

Corporatism, for all its acquisitiveness, is a very different phenomenon.  Ownership is remote.  Assets are used in large part for executive bonuses, dividends, and mergers and acquisitions.  Though the track record of M&A in meeting stated goals is dismal, the real net effect is monopolization - corporatists hate competition.  Corporatism seeks always and everywhere to decrease wages, and is utterly indifferent to the living standards, freedom, and opportunities of anyone outside the elite.  Ethics and fairness are non-existent.  Rewards are in proportion to rapacity.  In other words, Corporatism is the new feudalism.

This is why I say that the goal of the Rethug party, as servitors to Scaife, the Koch's and their ilk, is to take us back to the 12th century.  I've stated that trans-national corporations with no loyalty to anyone or anything constitute the real road to serfdom, in contradistinction to what Hayek said.   That is a bit inaccurate, though. Once wage scales are reduced to the par value of slave maintenance, it doesn't matter what the correct technical description of our condition is, and the elite won't care.

So - are we screwed, or what?!?

__________________________________________________
* Antonine Plague of 165-180, Cyprian Plague of 250-270, Justinian Plague of 541-2
** The link to the Surowiecki article that Krugman mentions is broken.  It can be found here.
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What the Hell?!? Friday - "Transocean Cites Safety in Bonuses " Edition

I know it's still April Fool's Day, but the WSJ has this item pre-dated April 2.

Rachel just mentioned this and it took about 5 seconds to locate it using TEH GOOGLY.

In case you need to be reminded, Transocean is the company that was running the BP oil rig that exploded last April 20, killing 11 people instantly and several hundred miles of shoreline in a rather more leisurely fashion.  The fate of several thousand people along the shore is decidedly uncertain.

Transocean Ltd. had its "best year in safety performance" despite the explosion of its Deepwater Horizon rig that left 11 dead and oil gushing into the Gulf of Mexico, the world's largest offshore-rig company said in a securities filing Friday.

 .   .   .

The payout contrasts with that for 2009, when the company withheld all executive bonuses after incurring four fatalities that year "to underscore the company's commitment to safety."

In a filing on executive pay, Transocean said, "Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record." Based on the total rate of incidents and their severity, "we recorded the best year in safety performance in our company's history."

I don't think there is anything I could say that would make this better.

I don't think there is anything I could say that would make this worse.

Really.  Vocabulary fails me.
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