Category: Equitablog

Should-Read: Henry Farrell: The Thousand Day Reich: The Double Movement: “A simple Polanyian account of Trump and right wing populism would explain it… http://crookedtimber.org/2017/05/01/the-thousand-day-reich-the-double-movement/#comment-708419

…as a backlash to the renewed efforts of… neoliberals… to free the economy from the social restraints that make it bearable for human beings. It would argue that we are again seeing a ‘double movement,’ as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections.

The best evidence for this perspective comes from the rhetoric of Trump and other right wing populists… a detestation for foreigners… anger towards a perceived cosmopolitan elite… a promise to protect ordinary Americans from both. Irrationalist philosophies. Racialist esthetics. Anticapitalist demagogy. Heterodox currency views. Criticism of the party system. Widespread disparagement of the ‘regime.’ Und so weiter. Orban and Kaczynski, pari passu, offer much the same blend. So, for that matter, does Theresa May in a watered down form. They may or may not deliver… but each bases their appeal on it….

Polanyi’s arguments about great transformations differ from civil society oriented approaches like Gellner’s in some important ways. Gellner is, in the end, on the side of the cosmopolitans…. Civic nationalism, for Gellner, is the homage that virtue pays towards vice–an identity politics homeopathically diluted…. Polanyi, in contrast, values community attachment and accompanying ‘thick’ notions of society as good things in their own right. While he also sees great virtue in some aspects of liberalism, he seeks always to prevent it from overwhelming society, both because of the devastation that it wreaks itself, and the corresponding devastation that may be wreaked by Society taking its revenge…

Must-Read: Arthur Goldhammer: The Piketty Phenomenon: “I will discuss anticipations of the book’s reception… show that even the most optimistic forecasts failed to predict the extent of the Piketty phenomenon… http://amzn.to/2pynukp

…consider… the political and social context created by the Great Recession…. I will survey the major early critiques of the work, insofar as they may have influenced its reception…. I will consider academic responses… from outside… economics…. I will assess the political response… and briefly discuss Piketty’s conception of the relation between democracy and capitalism….

Piketty… strengthen[s] the notion that patterns of class domination tend to persist over lengthy periods—a notion that had fallen into neglect with the ascendancy of neoliberal ideology…. Robert Lucas, whom Paul Krugman calls “the most influential macroeconomist of his generation,” declared in 2004, for instance, that “of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution.” By making it once again respectable to raise distributional questions… Piketty earned the gratitude of historians aware… that economists like Lucas were entirely too sanguine in their belief that the normal operation of the market sufficed to ensure that wealth and its concomitant power did not settle all too comfortably into the hands of a restricted and (to a degree) self-reproducing class of capitalists. “Poisonous” ideas may after all turn out to be true…

Heather Boushey, J. Bradford DeLong, and Marshall Steinbaum, eds.: After Piketty: The Agenda for Economics and Inequality http://amzn.to/2pynukp

Must-Read: Suresh Naidu: A Political Economy Take on W/Y: “The full political-economy equilibrium… lets us see the determinants of the wealth/income ratio… http://amzn.to/2pynukp

…as being more about bargaining, monopoly, and finance than about savings and growth rates…. leads us to examine noncompetitive, nonaggregative theories of distribution…. brings institutions into the forefront in explaining the capital-labor split… and the capitalization of expected future capital income into wealth at the current rate of profit. We no longer even attempt to deduce the distribution of wealth from the timeless principles of competitive markets and the twin Eulers: Euler’s theorem applied to CRS production functions and an Euler equation for consumption. We wind up… having to investigate the details… idiosyncratic rules, market structures, and norms….

As a payoff from this point of view, we get to reinterpret and refine the Kuznets curve predictions. Regulations, policies, norms, and “institutions” determine the capital share parameter α and the rate of profit r, which in turn determine the level of W/Y. The distribution and level of wealth can then generate political influences that alter those same regulations, norms, and policies. We can imagine multiple path-dependent Kuznets trajectories. They all begin with some technologically induced initial inequality of wealth (possibly including human capital). That level then reproduces itself by generating a set of institutions and policies that amplifies and secures the returns to wealth holding. This trajectory can lead to a “Kuznets plateau”, which it would take a substantial shock to disrupt. But there can be other trajectories…

Heather Boushey, J. Bradford DeLong, and Marshall Steinbaum, eds.: After Piketty: The Agenda for Economics and Inequality http://amzn.to/2pynukp

Should Read: UC Berkeley: Haas Institute for a Fair and Inclusive Society: Othering & Belonging: “How Do We Think About, Talk About, and Give Birth to a World Where All Belong?_: “The Othering & Belonging Conference is a dynamic gathering over 2.5 days… http://conference.otheringandbelonging.org/

…of a diverse group of attendees, visionary speakers, exhibiting artists, leading scholars, and emerging changemakers who will be together in a focused space to advance concrete strategies and aspirational visions for a world centered on inclusion. 2017 SPEAKERS INCLUDE: Shakti Butler (emcee), Zahra Billoo, Dr. Iva E. Carruthers, Jeff Chang, LaToya Ruby Frazier, Marshall Ganz, Alicia Garza, Lisa García Bedolla, Masha Gessen, Melissa Harris-Perry, Chinaka Hodge, Tara Houska, Sarah Kendzior, Taeku Lee, Doug McAdam, Tarell Alvin McCraney, Kumi Naidoo, Dr. Ravi Perry, john a. powell, Tarso Luis Ramos, Rashad Robinson, Jeffrey D. Sachs, Saskia Sassen, Sabrina Smith, Zephyr Teachout…. The Othering & Belonging Conference is organized by the Haas Institute for a Fair and Inclusive Society at UC Berkeley….

Must-Read: Mark Thoma: The Demand for Education: “One of the most rewarding parts of deciding to go online 12 years ago… http://economistsview.typepad.com/economistsview/2017/03/the-demand-for-education.html

…has little to do with the things I post here (the blog’s 12 year anniversary passed earlier this month, but I forgot until a day or two ago). Amazingly, my YouTube class videos have had over 1,200,000 views. Even more surprising, the most popular are–by far, not even close–econometrics videos (just started a new series that will cover time series–something I’ve had a lot of requests for over the years, plus other things such as quasi-experimental techniques).

One time, at the AEA’s in Chicago, I was on my way to meet Noah Smith for the first time (at a Starbucks). As I was walking across a bridge to meet him I noticed someone running up behind me. It was a student on the market that year, and she had chased me down to tell me that the econometrics videos really helped her. I was quite amazed. I had no idea. I just posted the videos for my classes never thinking anyone else would watch. She insisted on a picture together–I was embarrassed, but happy to comply at the same time.

At the same meeting, it happened again–another person in an elevator with the same story, and also wanted a picture. I have heard similar things many times over the years. Email about the videos from developing countries–where educational access is limited–has been especially nice. They come several times a week.

My videos are nothing special, they are just there. There is a huge, unmet demand for education, and not just the basics, technical things like econometrics. That’s what I have concluded.

Must-Read: Sarah Kliff: Trump doesn’t know what’s in his health bill: “Either the president doesn’t understand the proposal — or isn’t telling the truth about it… http://www.vox.com/2017/4/30/15492354/trump-ahca-interview

…President Trump gave a lengthy interview Sunday morning to CBS’ John Dickerson…. His responses to basic questions—like what provisions the bill includes or how it would change the health insurance system—suggest he either doesn’t understand how the American Health Care Act works, or doesn’t want to tell the truth about it…. Dickerson is the first journalist I have seen… [who] isn’t asking about the politics of the bill and whether it will pass. Rather, he focuses on what are arguably basic questions: what elements are in this bill, and what do you think of them? Trump stumbles. He says that people with pre-existing conditions will be protected. Under the latest amendment to the American Health Care Act—the one that got the Freedom Caucus on board—they won’t be. He says that deductibles will go down under the Republican plan. Non-partisan analysis expects deductibles would go up. The health care plan that Trump described on Face the Nation is not the one that the Republican party has offered. His answers suggest an unfamiliarity with basic policy details of a plan that has been public for nearly six weeks at this point—a plan that his administration has pushed Congress to pass….

His answers on CBS suggest that, if he actually read the Republican bill, he would find it sorely disappointing—and at odds with his health care goals…

Must-Read: Jeremy Cliffe: On Twitter: Today’s FAZ Report on May’s Disastrous Dinner with Juncker https://twitter.com/JeremyCliffe/status/858810953353367552: “Today’s FAZ report on May’s disastrous dinner with Juncker…

…briefed by senior Commission sources-is absolutely damning. May had said she wanted to talk not just Brexit but also world problems; but in practice it fell to Juncker to propose one to discuss. May has made clear to the Commission that she fully expects to be reelected as PM. It is thought [in the Commission] that May wants to frustrate the daily business of the EU27, to improve her own negotiating position. May seemed pissed off at Davis for regaling her dinner guests of his ECJ case against her data retention measures-three times.

EU side were astonished at May’s suggestion that EU/UK expats issue could be sorted at EU Council meeting at the end of June. Juncker objected to this timetable as way too optimistic given complexities, eg on rights to health care. Juncker pulled two piles of paper from his bag: Croatia’s EU entry deal, Canada’s free trade deal. His point: Brexit will be v v complex.

May wanted to work through the Brexit talks in monthly, 4-day blocks; all confidential until the end of the process. Commission said impossible to reconcile this with need to square off member states & European Parliament, so documents must be published. EU side felt May was seeing whole thing through rose-tinted-glasses. “Let us make Brexit a success” she told them. Juncker countered that Britain will now be a third state, not even (like Turkey) in the customs union: “Brexit cannot be a success”.

May seemed surprised by this and seemed to the EU side not to have been fully briefed. She cited her own JHA opt-out negotiations as home sec as a model: a mutually useful agreement meaning lots on paper, little in reality. May’s reference to the JHA (justice and home affairs) opt-outs set off alarm signals for the EU side. This was what they had feared. I.e., as home sec May opted out of EU measures (playing to UK audience) then opted back in, and wrongly thinks she can do same with Brexit.

“The more I hear, the more sceptical I become” said Juncker (this was only half way through the dinner). May then insisted to Juncker et al that UK owes EU no money because there is nothing to that effect in the treaties. Her guests then informed her that the EU is not a golf club. Davis then objected that EU could not force a post-Brexit, post-ECJ UK to pay the bill. OK, said Juncker, then no trade deal.

Leaving EU27 with UK’s unpaid bills will involve national parliaments in process (a point that Berlin had made repeatedly before). “I leave Downing St ten times as sceptical as I was before” Juncker told May as he left.

Next morning at c7am Juncker called Merkel on her mobile, said May living in another galaxy & totally deluding herself. Merkel quickly reworked her speech to Bundestag to include her now-famous “some in Britain still have illusions” comment. FAZ concludes: May in election mode & playing to crowd, but what use is a big majority won by nurturing delusions of Brexit hardliners?

Juncker’s team now think it more likely than not that Brexit talks will collapse & hope Brits wake up to harsh realities in time.

What to make of it all? Obviously this leak is a highly tactical move by Commission. But contents deeply worrying for UK nonetheless. The report points to major communications/briefing problems. Important messages from Berlin & Brussels seem not to be getting through. Presumably as a result, May seems to be labouring under some really rather fundamental misconceptions about Brexit & the EU27. Also clear that (as some of us have been warning for a while…) No 10 should expect every detail of the Brexit talks to leak.

Sorry for the long thread. And a reminder: full credit for all the above reporting on the May/Juncker dinner goes to the FAZ.

Should-Read: Adam Tooze: Reviewing ‘How Will Capitalism End?’ by Wolfgang Streeck: “Streeck draws urgent practical conclusions… https://www.lrb.co.uk/v39/n01/adam-tooze/a-general-logic-of-crisis

…‘Bringing capitalism back into the ambit of democratic government, and thereby saving the latter from extinction, means de-globalising capitalism.’ Capitalism must be cut back to the scale of the nation-state, because it is at the level of the nation-state that Europeans have over the last two centuries been able to establish ‘social cohesion and solidarity and governability’. The brutality of the Eurozone’s containment of the Syriza government in Greece seemed to vindicate Streeck’s warnings. His following has soared. In the Anglophone academy his work has been embraced as a refreshing return to the basics of Marxisant crisis theory. In Germany his impact has been more ambiguous. By contrast with the UK, France and the US, where Euroscepticism has always been a strand on the left, in Germany Lexit has not….

Streeck criticises the cosmopolitans for their elective affinity with Davos man, but the worry about deglobalisation is that its primary movers would be even less attractive and might, despite their populist slogans, be just as closely associated with big business. The experience of the 20th century suggests that when trying to channel nationalists’ energies into progressive politics, it is crucial to be clear-headed about one’s objectives. When you say you want to put the nation in charge and to throw off the yoke imposed by the invisible power of the cosmopolitan ‘market people’, who do you expect to rally to your banner? Streeck may protest to sympathetic interviewers that when he advocates immigration restrictions that doesn’t make him a closet AfD supporter or a proto-fascist. But given Streeck’s slide from a conflictual notion of class to the idea of an integrated society and from there to an enthusiastic embrace of the nation, and all this against the backdrop of bona fide nationalist mobilisation, what does he expect?…