CapitalistImperialistPig

What's the practical use of history? Well, it's mostly captured in Edmond Burke's "Those who cannot remember the past are condemned to repeat it" Those who do can often exploit it. In Guns, Germs, and Steel , Jared Diamond gives an example of a simple trap that Pizarro used to to help his tiny army defeat the millions strong Inca empire. His advantage, he claimed, was literacy, and his knowledge of the uses of the strategem from time immemorial - or rather from time memorialized in historical record. Without literacy, the Inca fell for the trap. Most literate civilizations have practiced some sort of history, and the West imbibed the spirit of Greek and Roman history and has been diligent in it's practice. The great exception is India. The oldest extant civilization has been singularly remiss in recording its own track through time. It's hard to believe that it hasn't sometimes paid Burke's penalty for that neglect. Almost all that we know

The historical sciences - economics, anthropology and history - are viewed rather dismissively by a lot of those who read me. I think that's a mistake. Geology and astronomy used to be historical sciences too, but physics invaded with it's equations and "redeemed" them. Economics has imbibed a mighty dose of mathematics but still has trouble feeling respectable. One of the things I got from reading Feynman - YMMV - is that science starts with narrative. The story is the primary tool we humans use in explaining the universe and mathematics is one of the ways we keep track of the implications of our stories. That's worked out wonderfully for physics, astronomy, meteorology and some other sciences, but slightly less well - so far - for economics. One very crucial scientific idea Feynman emphasizes is the necessity for honesty and self criticism. These traits are not especially congenial for human nature, and I think economics has provided a perfect growth mediu

...Or the scientific method . Nonetheless, he does make a sincere effort to deal with the problem - while refusing to acknowledge that Sean Carroll is doing the same thing. The problem is that his solution effectively assumes what he is trying to prove - which leaves him in good company, since Boltzmann was forced to a similar expedient. Of course, when the past is determined by the correct method – the method of retrodictions which is a form of Bayesian inference – we will find out that the lower-entropy states are exponentially favored. We won't be able to become certain about any property of the Universe in the past but some most universal facts such as the increasing entropy will of course follow from this Bayesian inference. In particular, the correctly "retrodicted past entropy" will more or less coincide with the "actual past" curve. The secret sauce is the statement that in retrodictions ...the lower-entropy states are exponentially favored. I'm

We have been arguing about what is, and what is not a science, in particular, about economics. On such matters it's often useful to consult the experts. Who better than Feynman: What is Science? You might not learn whether economics is a science, but you will learn not to trust such matters to experts.

Like everybody else, Keynes made mistakes. A lot of people who accepted his ideas also have made mistakes. His core ideas, the ones that have provided the the subject of innumerable policy debates, are a critique of Neo-classical economics with the follwing key elements (Wikipedia): Keynes' theory was significant because it overturned the mainstream thought of the time and brought about a greater awareness that problems such as unemployment are not a product of laziness, but the result of a structural inadequacy in the economic system. He argued that because there was no guarantee that the goods that individuals produce would be met with demand, unemployment was a natural consequence. He saw the economy as unable to maintain itself at full employment and believed that it was necessary for the government to step in and put under-utilised savings to work through government spending. Thus, according to Keynesian theory, some individually rational microeconomic-level actions such as

In Conrad's The Heart of Darkness , the jungle that borders the river is a wall or barrier between the river boat our narrator captains, and the darkness beyond. This barrier is both real and metaphorical - beyond are black limbs and white eyes peering out and sometimes firing arrows and spears. Chinua Achebe wrote Things Fall Apart , he says, as a response to Conrad. As a response, I find it more counterpoint than counter. It tells the story of a man in an Ibo village, with the first part coming almost entirely before any vestige of contact with whites, but the final grim conclusion impelled by the coming of missionaries and soldiers. Obviously Achebe lived many years after Conrad, but I suspect we can trust his depiction of village life. The life he depicts is neither idyllic nor squalid, but eventful, human and highly organized by principles of community and ritual. It was also sometimes violent, brutal and to our eyes terrible - twins were always murdered by abandonment, f

We have been talking about whether economics is a real science. Physicists are mostly pretty suspicious of economics, because it isn't enough like physics. The problem with that defining principle, I think, is that it depends far too much on the state of the science at a given point. Physics, today, is a very mature science - possibly even an arthritic science. The same might be said of chemistry and geology, and biology isn't far behind. If you want to compare economics, you might need to compare it with pre-Galilean physics, or chemistry before Lavosier, or geology before continental drift.

I just finished the first of my "novels for 2013" - oops - it was short and I finished early. It was Conrad's The Heart of Darkness, often considered the best short English novel of African colonialism. For balance, I also read the acclaimed Nigerian novelist Chinua Achebe's highly critical review. Beside's closely paralleling certain event's in Conrad's life, Heart of Darkness was also the inspiration and pattern for Apocalypse Now , the parallelism extending to the names of the critical characters Mr. Kurtz (Conrad) and Colonel Kurtz (Coppola) and their respective last words. Conrad's narrator is a sailor named Marlow who undertakes a journey up the Congo river to relieve Mr. Kurtz, a charismatic character who's dealing seems to produce an incredible bounty of ivory. Achebe's critique of the novel charges Conrad with racism, mostly on the basis of his portrayal of Africans and Africa. It's certainly true that no African character

Wolfgang and I have managed to bait each other into another of our usually fruitless debates on the Eurozone. Rather than continue in the ever narrowing margins of the Disqus comment system, let me start by specifying a few points on which we may agree: (a)Other things being equal, higher taxes tend to suppress economic activity. (b)At some point, said Art Laffer, that suppression is so great that tax revenues actually fall despite the higher rates. I don't think that this is controversial either, though my understanding is that the available evidence points to this occurring at marginal rates about twice as high as the highest current rate in the US. (c)Taxes are a lot higher today in Greece, Ireland, Spain and Portugal than they were in 2005. I want to also specify what I mean by austerity: a combination of higher taxes and lower government spending. That said, I still believe that the troubles of the PIIGS all stem from excessive borrowing/reckless lending. Greece is a speci

The total gravitational potential energy of the Earth, that is, the amount of energy necessary to disperse the planet to dust at infinity, is a bit more than 2.2x10^32 Joules. That's roughly the energy in an earthquake of magnitude 18.37 on the steeply logarithmic Richter scale (2.25 x 10^32 Joules). Phil Plait of Bad Astronomy reports that about 8 years ago, the planet got hit with the after effects of a Richter Scale magnitude 23 event. Fortunately, it wasn't terribly close (50,000 light years): Eight years ago today—on Dec. 27, 2004—the Earth was rocked by a cosmic blast so epic its scale is nearly impossible to exaggerate. The flood of gamma and X-rays that washed over the Earth was detected by several satellites designed to observe the high-energy skies. RHESSI, which observes the Sun, saw this blast. INTEGRAL, used to look for gamma rays from monster black holes, saw this blast. The newly-launched Swift satellite, which was designed and built to detect bursts of gam

You can make really big bucks whoring for corporate crooks. Brad DeLong excerpts Matt Taibbi's piece on the "work" of W's former Chairman of the Council of Economic Advisers and and Columbia Dean Glenn Hubbard in defense of bankrupt junk mortgage factory Countrywide. A sample: source Matt Taibbi observes: Glenn Hubbard, Leading Academic and Mitt Romney Advisor, Took 1200 an Hour to Be Countrywide's Expert Witness: What's fascinating in the deposition is the way Hubbard repeatedly tries to avoid answering the question about what kind of research he did, or didn't do…. His sneering annoyance shines through as brightly as it did in Inside Job, but this time he couldn't just say, "You've got three more minutes." Here, for instance, he actually tries to play dumb when asked if he looked into Countrywide's origination practices: Q. Did you make any inquiry into how Countrywide actually originated its loans? A. I'm not sure exactl

Via Tyler Cowen. Tyler doesn't mention comparisons with other countries, but his commentators do.

Bryan Caplan proposed this libertarian thought experiment: Suppose there are ten people on a desert island. One, named Able Abel, is extremely able. With a hard day's work, Able can produce enough to feed all ten people on the island. Eight islanders are marginally able. With a hard day's work, each can produce enough to feed one person. The last person, Hapless Harry, is extremely unable. Harry can't produce any food at all. Questions: 1. Do the bottom nine have a right to tax Abel's surplus to support Harry? 2. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to support Harry? 3. Do the bottom nine have a right to tax Abel's surplus to raise everyone's standard of living above subsistence? 4. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to r

Paul Krugman takes on the third industrial revolution , and is nearly perfect in his analysis: And this means that in a sense we are moving toward something like my intelligent-robots world; many, many tasks are becoming machine-friendly. This in turn means that Gordon is probably wrong about diminishing returns to technology. Ah, you ask, but what about the people? Very good question. Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots. And then eventually Skynet decides to kill us all, but that’s another story. Of course smart AI people have been saying all this for a while. And I think the earlier part of his essay underestimates how fast this is happening.

Josh Marshall points out Amy Gardner's rococo tale about the right-wing propaganda house FreedomWorks in the Washington Post: The day after Labor Day, just as campaign season was entering its final frenzy, FreedomWorks, the Washington-based tea party organization, went into free fall. Richard K. Armey, the group’s chairman and a former House majority leader, walked into the group’s Capitol Hill offices with his wife, Susan, and an aide holstering a handgun at his waist. The aim was to seize control of the group and expel Armey’s enemies: The gun-wielding assistant escorted FreedomWorks’ top two employees off the premises, while Armey suspended several others who broke down in sobs at the news. The coup lasted all of six days. By Sept. 10, Armey was gone — with a promise of $8 million — and the five ousted employees were back. The force behind their return was Richard J. Stephenson, a reclusive Illinois millionaire who has exerted increasing control over one of Washington’s most

The Pew report on world religions has a figure that shows the scope of conquest by the two aggressively proselytizing Middle Eastern religions. Much of this was the product of military conquest, but not quite all. Only the ancient and sophisticated civilizations of Asia and their indigenous religions were able to resist - and even them imperfectly.

The Maya, and Sheldon, were right. The world has in fact ended. PASADENA – They have gathered in a modest room on a brisk Thursday night to assemble a makeshift stage, run lines and finalize light cues. Their mood is light but purposeful as "curtain time" nears. Soon, the director leads the company in a warm-up to loosen their limbs and vocal cords. This is one of their final rehearsals at the Armory Center for the Arts in Old Town Pasadena. Most are students at the California Institute of Technology, renowned for cultivating the minds that helped produce the personal computer and the Mars rovers, and for developing the world's future leaders in science and technology. But these students are learning how to move on stage, project to the back row and yes, put on a show. Students here are among the brightest mathematicians and scientists, but another, lesser-known aspect of life at the Pasadena campus is an interest in the arts and humanities. A small but slowly growi

Landon Thomas, writing in the NYT , tells the story of how the hedge funds once again outmaneuvered the Eurozone and scarfed up big profits in the process. Makes me suspect once again that the whole bailout farce is mostly a scam to reward the already rich. When the results were tallied on Dec. 12, Greece had reached its target of buying back enough bonds at a discount to retire 21 billion euros, or about $27 billion, of its debt. The bigger winners, though, were hedge funds, which pocketed higher profits than many had expected, in yet another Greek bailout financed by European taxpayers. To some experts, this latest chapter in the long-running Greek drama is another reminder of how private investors have outmaneuvered European officials at various stages of the debt crisis. And they caution that each time it happens, future debt workouts in the euro zone will become even more costly. “I just don’t understand why they did this,” said Mitu Gulati, a sovereign debt specialist at Duke

What the heck do you do with a penny? The one cent coin is certainly more of a disincentive to commerce than the reverse. Nickels, dimes and quarters are little better - I mostly spend them only on junk from the coke machine. Most of us hate walking around with a pocket (or pocket book) full of metal. We can, and should, get rid of the one and five cent pieces immediately. Dime and quarter may need to wait for electronic money. On the whole, brick and mortal businesses would benefit. Many of their transactions require use of coins, while none of those of on-line stores do. Vending machines would adapt.

One trouble with science fiction and fantasy is that there are fewer and fewer cool things we can imagine that haven't been done yet. BuzzFeed has 27 cool/mind blowing/scary as hell discoveries of the year here. A certain amount of skepticism might be called for - especially re the invisibility cloak.

Arun and I have been "discussing" the role of conquest and colony in cultural spread. In today's world of movies, television, and the internet, there is certainly a fair amount of cultural spread by means less direct than conquest, and there was some even in the distant past, but the evidence is strong that conquest was the big driver, especially of linguistic change. Languages are hard. The big linguistic changes that we have seen in history (Latin, Arabic, English, and Spanish, for example) were driven purely by conquest. There is good reason to suspect the same of prehistoric language expansions. Such linguistic expansions have brought vast cultural shifts in their wake, including massive changes in agriculture, economic organization, and political institutions. None of which proves that colonialism is good, or even had good side effects. But it does mean that essentially all of our cultures have been strongly shaped by those conquerors. One of the huge mysteries

Krugman: OK, so I’ve just spent a number of hours on domestic flights, the kind that show sitcoms on screens down the middle of the aisle. (Which is why I was too tired for Friday Night Music — next week). I didn’t listen to any of the dialogue – I was reading – but I did find myself watching some of the acting. And with the sound off, you can really see just how artificial the conventions of sitcom acting are: the telegraphed double-takes, the faux-angry declarations of the men, the perkiness of the women, etc., etc. – none of it resembling at all the way real people behave. It’s an art form, if you like, that’s as deeply stylized and full of conventional signifiers as Kabuki theater or Chinese opera; the actors might as well be wearing ritual masks representing their alleged characters and emotions. It’s also, of course, a cultural form that’s very, very stupid. CIP: I just spent a few hours looking at economics textbooks, which is why I'm too tired now to write anything coher

Elite universities in the US have long had so-called diversity programs. The diversity programs were originally a response to the SAT test. When colleges started admitting students on the basis of academics, the elite quickly found that they had an alumni annoying problem - too many Jews. The answer was the diversity program, a set of policies intended to ensure that they had a broad representation of the public. With affirmative action, these programs expanded to encourage acceptance of disadvantaged minorities, which in practice meant those whose academics would otherwise exclude them. Nowadays, the main point of such programs has been limiting the proportion of Asians in the student body. Carolyn Chen's Op-Ed in the NYT (Are Asians Too Smart for their Own Good?) is the latest essay on the topic . Asian-Americans constitute 5.6 percent of the nation’s population but 12 to 18 percent of the student body at Ivy League schools. But if judged on their merits — grades, test scores

I enjoyed Peter Jackson's The Hobbit . Mostly that's because I like Tolkien, but the sets and and scenery were also nice. That said, it's easy to imagine how any non-fan of Tolkien -- the benighted few -- would find a lot to dislike. The interminable fight scenes - mostly a pure invention of Jackson's - were awful. Trite, boring, and absurd. It's amazing how thoroughly he managed to remove suspense from a very suspenseful story. Jackson took some liberties with the plot. It's pretty hard to find the dangling over a cliff gimmick very suspenseful after the characters have survived repeated thousand foot falls without suffering any discernible harm. I'm guessing that the White Council might have been more successful against Sauron and friends if Galadriel hadn't been stoned all the time. Radagast the Brown and his rabbit-mobile were OK though. So how did Jackson, who made a mostly pretty good version of Lord of the Rings , make such a hash of The H

Some historians have argued that Americans need to study empires because the US is the current big one. Is that fair? Yes and no, I think. The US is more dominant as a superpower today than Britain at its peak. Our adventures in ruling overseas colonies have been relatively limited, though, in both time and space. With relatively few exceptions, we have avoided grabbing up huge chunks of the rest of the world and occupying them in long term fashion. The big exceptions we acquired as the result of WWII (Japan and parts of Germany, plus some Pacific Islands) and most of them we were happy to turn loose fairly early. Iraq was an aberration and is now independent. We do have a large list of client states, though, countries that are allied with us and under a certain amount of pressure to follow our lead. NATO is one prominent institution of the type. We also have a history of meddling around the world, by military, economic, and other means. For the most part, however, being part

"They grabbed what they could get for the sake of what was to be got. It was just robbery with violence, aggravated murder on a great scale, and men going at it blind– as is very proper for those who tackle a darkness. The conquest of the earth, which mostly means the taking it away from those who have a different complexion or slightly flatter noses than ourselves, is not a pretty thing when you look into it too much." ............Marlow in Conrad, Joseph (2012-11-01). Heart of Darkness (Kindle Locations 103-106). . Kindle Edition. The sins of empire are easy to catalog, but also easy to exaggerate. Not everything bad that happens to a nation that becomes a colony can be fairly attributed to the colonizers. Plagues and famines happen to free countries as well as colonies. It's also easy to ignore the evils colonialism ended. It was not so long ago that the British found and figured out how to eliminate the most brutal kind of human sacrifice in India. In America

Although I read a fair amount, I have gotten out of the habit of reading novels. I rarely read any contemporary literature, or lately, any novels at all. I thought I might promise myself to attempt ten novels next year. I'm probably most attracted to the classics, so I started surfing the 100 best lists. Modern Library has a list, or rather two lists , one by a panel of supposed experts and the other by the public. The public list is pretty much a joke, as it was obviously hacked by a few flavors of nutcase. Their top ten has four by Ayn Rand and three by L. Ron Hubbard. My skepticism about Hubbard is founded purely on hearsay, but I did force myself a couple of Rand's garbage books. I can't be too thrilled with the choices of the pros, either. Ulysses leads the list and more Joyce follows not far behind. James Joyce was a genius, no doubt, but his attempt to transcend narrative form was a bad idea that didn't work. I've read a number of books, by no me

There is pretty good evidence that humans have been conquering and often exterminating each other for more or less ever. It's likely that our pre-human ancestors behaved similarly. By that grim standard, empire building has mostly been a less brutal alternative, though often not a whole lot less brutal. According to Niall Ferguson, the former colonies collectively asked in the UN that they be paid an idemnity of 777 trillion dollars for the harm they suffered in conquest. Well, they shouldn't hold their breath. One problem, of course, is that most of the perps and victims have already passed from the world, and the survivors, in many cases, are descended from both. More to the point, we are all of us survivors of those who stole, murdered, and otherwise competed viciously for the privilege of bringing us into the world. The peoples of the former colonies are not the people that the conquerors found. They have been transformed and usually racially mixed. That is even more

Cosma Shalizi, as quoted by Brad DeLong , on economics: The realization that this applies to economists --- that much of the discipline is not a branch of science or even of dialectic, but merely of rhetoric (and not in an inspirational, D. McCloskey way either) --- cannot come too soon.

I'm reading a new book, The Empire Project: The Rise and Fall of the British World-System, 1830-1970 by John Darwin. An early quote: It was also the case that British expansion had no master-plan. It had almost always been true that colonial schemes or their commercial equivalents were devised not by governments but by private enthusiasts in search of wealth, virtue or religious redemption. Sometimes they dragged Whitehall in their wake, to get its protection, secure a monopoly or obtain a licence to rule through a charter or patent. By ‘insider-dealing’ in the political world, they might conscript Whitehall's resources for their colony-building. Sometimes Whitehall insisted on an imperial claim on its soldiers’ or sailors’ advice, or to appease a popular outcry. But, once entrenched at their beachhead, the ‘men on the spot’ were hard to restrain, awkward to manage and impossible to abandon. Darwin (2009-10-15). The Empire Project (p. 3). Cambridge University Press. Kindle E

It's a familiar notion, at least on the economic left, that capitalist industrialism was built on the surplus extracted from Europe's colonies. I wonder if the truth might not be almost the reverse: that the colonies were build from the surplus extracted from industrialization. Spain and Portugal were the foremost early colonial powers, and extracted fantastic fortunes from their brutally oppressive colonies. The trouble with extractive colonialism in the model of the various East India companies is that they give enormous profits to a few individuals but at great cost to economic efficiency. Rent extraction adds little or nothing to technology or production, but it also penalizes all sorts economic productivity, especially in the colonies, but also in the colonizers. Settler colonialism, in the model of the US, Canada, and Australia has generally been a big success - for the colonizers, though of course catastrophic for the victim nations). They have developed industrially

Arun has me thinking about Capitalism and and Colonialism. Many, perhaps most, of colonial ventures started with trade, or ambitions of establishing trade. That is a very capitalistic enterprise. It's when the capitalist sees an opportunity to establish a exclusive license, as in the British East India Company that he becomes transformed into a rent seeker. Many of the worst evils of colonialism are associated with the consequences of this rent seeking. As usual, the successful rentier makes a great fortune, but as Adam Smith pointed out in The Wealth of Nations comes at the expense of both the colony and the colonizing nation. It's a matter of economic efficiency. My attempts to find a good, reasonably brief, reasonably ideologically uncontaminated book on colonialism have so far failed.

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland probably didn't restructure my world view quite so drastically as Guns, Germs, and Steel but it is another book packed with deep insights into the way today's world works. Freeland knows her subjects very well, and has spent a couple of decades observing them. It is by no means a "life-styles of the rich and infamous" book, though there is a sampling of that, but rather, a detailed economic history. It's pretty clear that she combines a certain admiration for their intelligence, diligence and entrepreneurial spirit with a well-justified suspicion of the risks their ascendancy poses for the rest of us. I have written extensively on her ideas in these previous reviews , but her final chapter deserves some additional commentary. It's theme is the natural human tendency of those who have scaled the heights to pull up the ladder after them, and the method is t

I'm a big believer in the power of books. The most important books alter your life, or least your understanding of how the world works. I've read a lot of such books, but mostly a long time ago. The only one I've read this year was Jonathan Haidt's The Righteous Mind . I've written a good deal about that here , but if you want to understand the roots of moral behavior and the reasons for moral differences, I can't think of a better place to start. Take that, Plato, Aristotle, and Augustine. The last book I can remember of similar impact was Jared Diamond's Guns, Germs and Steel . I'm a big fan of all his books, but this one for me is the go to place for understanding the underlying dynamics of history. As a young person, I read Will Durant's The Story of Philosophy , which led to an infatuation with the subject, mercifully short lived enough that the only serious damage I accumulated was to my book buying budget. Robert L Heilbroner's The

According to Paul Krugman: Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid. So what’s a radical to do? The answer, for a long time, has involved two strategies. One is “starve the beast,” the idea of using tax cuts to reduce government revenue, then using the resulting lack of funds to force cuts in popular social programs. Whenever you see some Republican politician piously denouncing federal red ink, always remember that, for decades, the G.O.P. has seen budget deficits as a feature, not a bug. Krugman thinks the tide has turned

UN Ambassador Susan rice has apparently withdrawn her name from consideration for Secretary of State. Part of this is doubtless do to the phony hysteria whipped up by the McCain-Graham sisters, but there also has been a critique of her temperament - and her undiplomatic temper. Reportedly, she once gave Holbrooke the finger in a meeting. Much as I liked him, any chick who gives him the finger is OK in my book. He was a temperamental bully himself.

Sean Carroll has a new book out on the Higgs particle. I haven't read it, but I did catch his interview on the Colbert Report. Sean is a good writer, and the book has been well received, but Colbert had a couple of questions that stumped him. The request for a twenty second explanation elicited the "Higgs is like molasses" explanation. Of course nobody yet has explained Higgsy in 20 seconds. It's pretty hard to explain to quantum field theory students in less than a week or two. Even tougher was the question "What's it good for?" Aside from the amusement of the several thousand or so geeks in the world who actually do understand it. When a British PM asked Faraday the same question about electromagnetism, he told the PM that he didn't know, but that someday it would be taxed. It's much harder to make that case for the Higgs. The technological implications, if any, are not even hinted at. I suppose it's possible, though, that someday t

299 Gigatons? Yachts of the rich and famous. Ironically, though part of a yacht’s appeal stems from the privacy it offers its owner, very large yachts ( in excess of 299 gigatons ) are required by the International Maritime Organization to publicly transmit their location at all times via an Automatic Identification System transponder. (You can see the current location of all such yachts—and other very heavy boats—at marinetraffic.com.) That's about 4 million times the mass of a Nimitz class aircraft carrier. I guess you need a big boat if you are going to land your private A 380 on it.

Matt Yglesias is cheering the Fed's targeting of employment and inflation. This is huge. With today's policy announcement, the Federal Reserve's Open Market Committee has stopped screwing around and started doing real expectations-based monetary easing. The new policy is a version of the plan from Charles Evans that I wrote about in March. They've said that interest rates will remain low until unemployment falls below 6.5 percent or the inflation rate exceeds 2.5 percent. That is a softer and weaker form of monetary easing than Evans originally proposed, but apparently a meager inflation target is the price you have to pay politically to get this done. As I explained yesterday, this kind of strategy should be partially successful in getting corporate cash off the sidelines in a way that "certainty" and "confidence" won't. The higher inflation target makes cash-like safe liquid investments look slightly less reasonable than they did yesterday, wh

The mostly off-stage hero of Ayn Rand's Atlas Shrugged is John Galt, purportedly an engineer, but actually an evil magician who plots the destruction of human civilization out of pique. His magical powers include conjuring electric power out of the air, creating invisibility shields, and a variety of other handy plot drivers. Today's Plutocrats can't do any of those magical things, though most of them are pretty handy with a spreadsheet. In their own minds, though, they are Galt and more. They are the job creators, the masters of technology. What they actually do, aside from bribing and hustling government officials, is allocate capital. That is a very important job, and a far from trivial one. It also has enormous rewards for those who chose, or guess, correctly. Given those immense rewards, and the resultant sycophantic bubbles they live in, it's pretty easy for them to convince themselves that they were indispensable. In reality, though, I suspect that there

It's not news that factory employment is dropping globally. People are being replaced in such jobs by robots. The trend is hardly confined to manufacturing. Such traditionally person-intensive occupations as law and education are also being impacted. Persons familiar with robotics see huge current areas of employment likely to be swept away in the next decade or two. This is a familiar pattern in human history, as one economic regime after another disrupted familiar patterns of life. Agriculture, trade, industrialization, and related events produced similar convulsions. One familiar pattern in these disruptions is a huge transfer of wealth from labor to capital. Robotics seems certain to repeat the pattern, more dramatically than ever. The irony that those directly responsible for producing the goods that others, and especially the capitalists, consume, has expressed a weak constraint on greed. It was that irony, rather than any internal coherence, that gave Marxism it'

Being the bully on the block may make you popular, but it doesn't make you well liked. It seems we have that problem with the Syrian Rebels.(ANNE BARNARD and HANIA MOURTADA in the NYT As the United States tries attempts to rally international support for the Syrian rebellion, trying to herd the opposition into a shadow government that it can recognize and assist, on the ground in Syria it faces an entirely different problem: Much of the rebellion is hostile toward America. Frustration mounted for months as the United States sat on the sidelines, and peaked this week when it blacklisted the Nusra Front, one of the uprising’s most effective fighting forces, calling it a terrorist organization. The move was aimed at isolating the group, which according to Iraqi and American officials has operational ties to Al Qaeda’s franchise in Iraq. But interviews with a wide range of Syrian rebels and activists show that for now, the blacklisting has appeared to produce the opposite. It has

Since I have always regarded the Bush family as a bunch of upper crust confidence men, this news doesn't surprise me . It seems that a high-profile Miami businessman just got busted for running a big scam. Part of his MO was recruiting high profile guys for his board of directors. Chris Korge, a shrewd Miami developer and lawyer, said Osorio assured him that his company had about $40 million in cash and a lucrative deal with Middle Eastern investors to purchase $500 million in company stock. Korge invested $4 million before he began to suspect that something didn’t add up. “Jeb Bush was on the board, there were a lot of successful people convincing me. We went out and we met and I just began to realize that the cost-effectiveness of building with the materials would never work,” Korge said. By that time, however, it was too late. Some guys like to treat these board positions as free money, but that money comes with real legal liability. Will this affect Bush's credibility a

It's fashionable in some quarters to blame low fertility for situations like the aging of the Japanese population. This is almost entirely nonsense. The real problem is that too many people are living to old age. If Japan had enough people under 65 to have an over 65 population ratio like that of say, Kuwait, its total population would be nearly a billion and a half. It's simply not practical to breed ourselves to a small over 65 population ratio. Unless you adopt policies that will kill off large numbers of oldsters - for example the Ryan budget - you have to face that fact that society will need to devote a significantly larger portion of its resources to caring for them.

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Most important, academics in fields the plutocracy values can multiply their salaries by working as consultants and speakers to super-elite audiences, often in the emerging markets. As Niall Ferguson told me, during a whirlwind weekend when he had given a speech to a private equity conference hosted by a Turkish plutocrat in Istanbul, followed by a speech in Yalta for Ukrainian plutocrat Victor Pinchuk, the roads out of Cambridge, Massachusetts, get jammed on Thursday afternoons as Harvard Business School professors rush to the airport to get to their international speaking gigs. A bestselling New York nonfiction writer likes to tell his more literary— and less well-off— friends that his secret is to write books businesspeople can read on a transatlantic flight. Even as they cash their speaking fees from the super-elite, these academics shape the way all of us think about the economy. That is mostly through their work in the classroom and at their computers, but also in their role as

Football is a great spectator sport, almost as good as Christians vs. lions. It has more tactical and strategic depth - probably more than any other physical sport, and certainly more than soccer, basketball, and hockey. Like Christians vs. lions, though, it's very tough on the competitors. There have been some measures taken - trying to teach proper tackling technique, penalizing hits on so-called defenseless players, and so on, but their effectiveness has been very limited. A major problem is the size and strength of the players. Fast moving 150 kg (330 lb) players are just extremely dangerous. Limiting substitutions drastically would probably cut the weight of the biggest players by 40 to 70 lbs. Shortening the time between plays by 10 seconds or so would take off another 15 lbs or so. If most players played every down, the really big guys simply could not keep up. It would also make football teams smaller and cheaper, and coaches less valuable.

Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.....Not quite what Eric Hoffer wrote, but good anyway. A bunch of former profession football players are suing the National Football League for concealing the evidence that playing football is likely to destroy your brain. I am pretty sure that they have a good case, but ambitious personal injury lawyers really ought to think about a more deserving target - the National College Athletic Association. The NCAA has degenerated into a terrible racket, one whose principal occupation is to churn out vast profits for television, football coaches, and the business of professional college football while exploiting the nearly free labor of some young people. The NFL has taken some tentative steps to try to address the concussion problem. The NCAA has not. The reason it hasn't isn't just reckless disregard for athletes safety. It's mainly fear that they are going to get sued. Th

Some time during breakfast today I noticed that I was an idiot - not alas, a new discovery but unwelcome anyway. As the politicians, say, I had spoken "inartfully." That is to say, I had written the following : So he buys Japanese stuff, like a bunch of Canon 1D X's which may be cheaper (due to inflation) and the Japanese economy is stimulated to the tune of a zillion Yen. Claiming that inflation would make things cheaper. WB thought I might be joking, but in fact I was serious. Seriously in error, of course, since the actual effect of inflation is opposite, so that I literally had it backwards. Nonetheless, I claim, that I had a certain point, which, of course, I failed to make. Start with the theory that people save money with the idea of someday spending it, or having it spent by someone of their choice. If you have an economy with failure of aggregate demand, that means, in effect, that savers are deferring spending to an extent that others are losing their

...er, Forty . Special Issue on String Theory. Sample: Giddings

A good introduction to this important topic here , including Monetarist, Keynesian, new-Keynesian and Real Business Cycle theories, and especially, what distinguishes such episodes from other situations.

ALONG THE PARIS STREETS the death-carts rumble, hollow and harsh. Six tumbrels carry the day’s wine to La Guillotine. All the devouring and insatiate Monsters imagined since imagination could record itself are fused in the one realisation, Guillotine. And yet there is not in France, with its rich variety of soil and climate, a blade, a leaf, a root, a sprig, a peppercorn, which will grow to maturity under conditions more certain than those that have produced this horror. Crush humanity out of shape once more, under similar hammers, and it will twist itself into the same tortured forms. Sow the same seed of rapacious license and oppression over again, and it will surely yield the same fruit according to its kind - Charles Dickens, A Tale of Two Cities I can’t wait to see the tumbrels rumble up and down Wall Street picking up the heedless and greedy financial aristocracy that plundered and sundered free-market capitalism - Maureen Dowd in the NYT ...a private equity baron who divides

Or, Japan, Inflation and the Carry Trade. Japan is in a somewhat peculiar position. It has an enormous national debt (230% of GDP, compared to basket case Greece with about 160%), but its citizens are tremendous savers. Most of the Japanese debt is owed, in fact, to those very savers, who put their money in the Japanese Postal Savings bank. That means that the Japanese people collectively are simultaneously on the hook for 230% of their GDP and equipped with large personal savings. Japan's problem, as I noted elsewhere, is that its economy is in the doldrums. Ultimately a country's ability to provide for its citizens depends on its economic output, though, and big numbers in your savings passbook won't help if your country can't produce and nobody else wants your money because you have nothing valuable to sell for it. The policy of running a the economy at a small inflationary rate is an idea to try to rev up the economy. The theory of how it works and when (when

Just to be clear, we are talking about Milton Friedman here, and the Japanese economy. Most of the West is in the economic doldrums right now, and nobody has been longer becalmed in those dread seas than the Westernmost of the West, Japan. The political party currently leading in Japan has proposed a radical solution , which I call the iCure. . . . Shinzo Abe, the overwhelming favorite to lead the Liberal Democratic Party to victory, is running on a bold platform of unlimited quantitative easing and more inflation. If this works—and the odds are that it will—Abe will not only cure a great deal of what ails Japan, he’ll light a path forward for the rest of the developed world. Given that the original idea came from conservative economist Milton Friedman, and that it has been strongly backed by Japan experts of the center Ben Bernanke, and liberal Paul Krugman, why is the idea so radical? Because the rentier classes really, really hate it. What is proposed is inflation. Now everybod

Ross Douthat is the New York Times designated op-ed moron. OK, I mean he is an even bigger moron than David Brooks, whom I sometimes suspect of merely playing the part of a moron. Since Tyler Cowen often writes sensible things, it really discourages me when he writes nonsense like this, which he entitles, I basically agree with Ross Douthat here: The retreat from child rearing is, at some level, a symptom of late-modern exhaustion — a decadence that first arose in the West but now haunts rich societies around the globe. It’s a spirit that privileges the present over the future, chooses stagnation over innovation, prefers what already exists over what might be. It embraces the comforts and pleasures of modernity, while shrugging off the basic sacrifices that built our civilization in the first place. His link is here, and I willingly admit that I am in some ways part of the problem. Low fertility is a huge factor in producing economic prosperity. Check out this gapminder chart .

Tyler Cowen has a nice article on the Euro situation in the NYT. He outlines both the many reasons for pessimism and the rather fewer for optimism (it has crashed yet). I also think he has most of the bottom line right: Still, we shouldn’t forget that a solution exists. In essence, the required debt write-down is a large check lying on the table waiting to be picked up. No one knows how costly it is, but estimates have ranged from the hundreds of billions to the trillions of dollars. It need only be decided how to divide the bill. The reality is this: The longer that the major players wait, the larger that bill will grow. That they’ve yet to split the check is the worst news of all. I would just add that it's not necessarily just a one time check and that the austerity path to wage adjustment is highly destructive.

One of the expected consequences of global warming is global sea level rise. There are a few mechanisms responsible for this, but at present the main one is thermal expansion of the oceans. Another, currently slightly less important mechanism is the melting of mountain glaciers and the glaciers of Greenland and Antarctica. Lubos likes the sea level rise as a measure of global temperature increase, apparently because he has found a set of tide gauge measurements that appear to show a nearly linear increase. It's typical of his climate science naivete that he thinks that measuring sea level change in one place is good enough. Of course it isn't, for all sorts of reasons* well documented in the literature, and more systematic and scientific analyses show a different pattern of sea level increase - slower at first, and more rapid recently, just as temperature change patterns would lead us to expect. Most of his acolytes remain faithful, though. * To name just a few potential

Latin America has produced a number of superb writers, but it's hard to find their work on Amazon Kindle. Amazon boasts 30,000 books in Spanish on Kindle, but most of them are either aimed at young readers or translations from English. I recently started reading on of the few South American classics they do have on Kindle in Spanish, One Hundred Years of Solitude. . It's actually very difficult for me - my vocabulary is too small - but the first three sentences blew me away. Each is a small but gorgeous work of art. Anyway, I want more of these books for my Kindle.

Via Tyler Cowen , Peter T Leeson has an interesting article on the economics of human sacrifice . He links human sacrifice to property rights and rational choice theory, but the fundamental idea doesn't depend on these right-wing shibboleths for its validity, IMHO. It's one of the many disreputable bits of human history, but it seems to be a fact that human sacrifice has been pretty widely practiced at certain stages of human history. Why? Economists have their own fish to fry, but to me a good explanation needs to explain some selective advantage to the practice. Leeson's theory does that. Besides the libertarian mumbo-jumbo, Leeson cloaks his model in a sort of Rube Goldberg mathematics - some funky algebra where a straight forward minimization would be more to the point - but the key points don't depend on either of those. His model subjects are the Konds of Orissa India, who practiced a truly gruesome form of human sacrifice in historically recent times. These

I wrote a bit ago about the rent seeking billionaires who made their fortunes off the fire sale of the assets of formerly government owned enterprises. We should resent them them for the bite they have taken out of GDP and their corruption of the political process but we should not forget the positive role they played either. The political machinations of Carlos Slim played a key role in making him the richest man in the world, and probably played a role in the fact that Mexico has grown much more slowly than some other similar countries, but it's undeniable that he has done a far better job of managing those enterprises than their former socialist managers. The same thing can be said of the Russian and Indian oligarchs and a fortiori , of their Chinese counterparts. Why are governments so bad at managing(at least some) enterprises? It's probably complicated, but one component is surely rent seeking by the managers, workers, and above all, politicians. The incentive struc

I've had a number of arguments over the years where logic and information don't seem to settle things one way or the other. My theory is that that fact is due to actual differences of interest - the Sinclair principle that it's very hard to persuade somebody of something when his paycheck depends on his not being persuaded. The part I have trouble with is the ideological component of such arguments. That is, I have no trouble figuring out why oil executives and coal miners are skeptical of global warming despite the evidence, but why do random right wingers - and not just the bought and paid for right wingers - nod in such ferocious assent.

...sounds to me like it should be part of a tobacco pitch, but apparently not. Some of you may recall that I'm something of a student of the Austro-Bahamian school of economics, as exemplified by the writings of its foremost exponent. Of course his works are occasionally a bit cryptic, even Derridesque , perhaps. Anyway, he recently trashed the famous IS/LM model , which made me think that if it's that bad, I really ought to at least try to understand it. It seems that the model is actually two curves, often drawn as straight lines, in a space that represents interest rates (vertical axis) and gross domestic product (horizontal axis), as above. Now if you suspect that econo-space might have more dimensions than two, just consider it a two-slice of that hyperspace. The two curves represent hypothetical equilibria, with the participants being S, the propensity to save; I, the demand for investment; L, the so-called liquidity preference; and M, the money supply. The worki

The Palestinians have been rather slow to grasp how the world works these days. Partly this is due to the fact that it's convenient both for their leaders and Israel to nurture the myth that armed resistance is likely to aid their cause. Most of the problem is simply human nature, of course. If realistic goals are unachievable, then why not cling to the fantasy of throwing the Jews out by force? They haven't yet grasped the lesson of Gandhi, or if they have, how to use it. Jeffrey Goldberg explains to them the tactic they need to adopt: There is, however, a strategy the Palestinians could implement immediately that would help move them toward independence: They could give up their dream of independence. It’s a very simple idea. When Abbas goes before the UN, he shouldn’t ask for recognition of an independent state. Instead, he should say the following: “Israel occupied the West Bank and Gaza 45 years ago, and shows no interest in letting go of the West Bank, in particular.

The quickest way to get rich is to occupy some valuable resource and collect a lot of rent for doing it. Wikipedia on Rent Seeking: In economics, rent-seeking is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. One example is spending money on political lobbying in order to be given a share of wealth that has already been created. A famous example of rent-seeking is the limiting of access to lucrative occupations, as by medieval guilds or modern state certifications and licensures. People accused of rent seeking typically argue that they are indeed creating new wealth (or preventing the reduction of old wealth) by improving quality controls, guaranteeing that charlatans do not prey on a gullible public, and preventing bubbles. Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of a market. The term