Things to Read on the Morning of June 1, 2014

Should-Reads:

1. Ian Johnson: “Every spring, an old friend of mine named Xu Jue makes a trip to the Babaoshan cemetery in the western suburbs of Beijing to lay flowers on the tombs of her dead son and husband. She always plans her visit for April 5, which is the holiday of Pure Brightness, or Qingming…. A few days before Xu Jue’s planned visit, two police officers come by her house to tell her that they will do her a special favor. They will escort her personally to the cemetery and help her sweep the tombs and lay the flowers. Their condition is that they won’t go on the emotive day of April 5. Instead, they’ll go a few days earlier. She knows she has no choice and accepts…. On her husband’s tombstone is a poem explaining what killed both men: ‘Let us offer a bouquet of fresh flowers/Eight calla lilies/Nine yellow chrysanthemums/Six white tulips/Four red roses’. Eight-nine-six-four: June 4, 1989…”

2. Buce: Underbelly: The Best (Though Incomplete) Case Against the Bailout: “This is where Mian/Sufi get really interesting. They argue that there are really two banking systems at issue here: one, the mundane, boring payment system… the other is the business of mega-borrowing and mega-lending that gives Wall Street so much of it swashbuckling charm. The government did need to step in and save the ‘fluid flowing’ part…. But… once they’d saved the fluid-flowing system, they could safely have let the swashbuckling system just dangle from the yardarm. No, strike that: not only could we have let the swashbucklers go: it would have been good to let them go…. And that, dear reader, is the case.  It’s almost elegant, straightforward, and as a contribution to our understanding of the crisis, I’d say it is as helpful as anything since The Banker’s New Clothes by Anat Admati and Martin Hellwig. But… I’m not as clear as I would like to be on the relationship between the two parts of the banking system…”

3. Suresh Naidu: Capital Eats the World: “The forces that drive the wealthy to accumulate might not just be the realization of future consumption, but instead an insatiable drive for security, sociological pressures, psychological fantasies of future empires, or other structural imperatives. When you start thinking of savings this way, the case for taxing capital becomes much clearer. If the supply of capital is more like immobile real estate and less like footloose cash, basic economics suggests that we can tax it, because it won’t disappear, and you might even be doing some social good. If people are saving to pass inheritances onto their kids, then the cost of taxing capital is depriving some of trust funds, not a comfortable retirement. Not only does it mean that certain standard theories saying optimal capital taxation is zero don’t hold up anymore. It also means that one-off redistributions of assets won’t stay equal for long, so some kind of permanent capital tax is needed…”

Should Be Aware of:

• Brad DeLong (2013): Noise Trading, Bubbles, and Excess Volatility in the Aggregate Stock Market: Noah Smith and Robert Shiller and Andrei Shleifer and Jeremy Greenwood vs. John Cochrane and Gene Fama and Company: Progressive vs. Degenerative Research Programs in Finance
• Peter Rubin: The Inside Story of Oculus Rift and How Virtual Reality Became Reality
• William Davies: After Neoliberalism
• Marcos Otero: The real 10 algorithms that dominate our world
• John Locke: “And a man can no more justly make use of another’s necessity to force him to become his vassal by withholding that relief God required him to afford to the wants of his brother, than he that has more strength can seize upon a weaker, master him to his obedience, and, with a dagger at his throat, offer him death or slavery…”
• Amartya Sen: “Peter Bauer’s rhetorical question (point 9) as to ‘How far back should we go to redress historical wrongs?’ does not really affect those who do not seek moral justification of inherited advantage. It is, on the contrary, peculiarly relevant to the position of those who—like Bauer—do seek it…”

And:

1. Brad Plumer: On Monday, June 2, the Obama administration will propose new rules to cut carbon-dioxide emissions from the nation’s coal- and gas-fired power plants. 1) US carbon-dioxide emissions have fallen in recent years–but they’re now rising again…. 2) Electricity is responsible for about 40 percent of US carbon-dioxide emissions…. 3) Most of America’s electricity still comes from coal and natural gas…. 4) The electricity mix can vary wildly from region to region…. 5) Lots of US coal plants are getting retired…. 6) Meanwhile, global carbon emissions are rising fast…”

2. L.T. Hobhouse: “Well, it may be said, volenti non fit injuria. No wrong is done to a man by a bargain to which he is a willing party. That may be, though there are doubtful cases. But in the field that has been in question the contention is that one party is not willing. The bargain is a forced bargain. The weaker man consents as one slipping over a precipice might consent to give all his fortune to one who will throw him a rope on no other terms. This is not true consent. True consent is free consent, and full freedom of consent implies equality on the part of both parties to the bargain. Just as government first secured the elements of freedom for all when it prevented the physically stronger man from slaying, beating, despoiling his neighbors, so it secures a larger measure of freedom for all by every restriction which it imposes with a view to preventing one man from making use of any of his advantages to the disadvantage of others…”

3. Peter Frase: Four Futures: “There are… four logical combinations… resource abundance vs. scarcity and egalitarianism vs. hierarchy… the economic base of the post-capitalist future… the socio-political superstructure… socialisms… [and] contrasting flavors of barbarism. Egalitarianism and abundance…. Hierarchy and abundance: rentism…. Even if labor were to become superfluous in production, the ruling classes would endeavor to preserve a system based on money, profit, and class power… intellectual property…. The mutation of the property form, from real to intellectual, catalyzes the transformation of society into something which is not recognizable as capitalism, but is nevertheless just as unequal…. Thus emerges a rentist, rather than capitalist society…. But an economy based on artificial scarcity is not only irrational, it is also dysfunctional. If everyone is constantly being forced to pay out money in licensing fees, then they need some way of earning money, and this generates a new problem…. So what kind of jobs would still exist in this economy?… Hiring people to perform personal services might become a status marker, even if automation makes it strictly speaking unnecessary. The much-heralded rise of the service economy would evolve into a futuristic version of nineteenth century England or parts of India today…. But this society can persist only so long as most people accept the legitimacy of its governing hierarchy…. Egalitarianism and scarcity: socialism…. Hierarchy and scarcity: exterminism…. What if we arrive in a future that no longer requires the mass proletariat’s labor in production, but is unable to provide everyone with an arbitrarily high standard of consumption?… The existence of an impoverished, economically superfluous rabble poses a great danger to the ruling class…”

4. Daniel Friedlander: Conservative Senator Kicks Tea Party to the Curb: “At the Republican Leadership Conference in New Orleans this week, Wisconsin Senator Ron Johnson tried to distance himself from the Tea Party groups that helped elect him in 2010…. Back in 2010, the Wisconsin senator was one of the Tea Party’s first candidates…. But Johnson… blamed national and local Tea Party groups for holding the GOP hostage…. Johnson burst onto the national scene after given a number of fiery speeches at Tea Party rallies before he was even a candidate, and told a reporter that he ‘did kind of spring out of the Tea Party’. At the Republican Leadership Conference however, Johnson downplayed his involvement with the movement, saying, ‘I gave a speech at a few Tea Parties. I never joined a group’…. Johnson also accused Tea Party groups of bashing the GOP establishment to raise money. ‘That is a fact. It is not a conjecture, and so many of these groups it is basically donor capture. They are there to perpetuate themselves.’ Johnson urged conservatives to tone down their rhetoric to try to broaden the base. ‘If you start out bombastic, if you start out with conspiracies, they aren’t going to listen to you.’…”

5. Duncan Black: Eschaton: Nominal Illusion: “I do think some olds… fail to mentally adjust for inflation when they compare the plight of The Kids Today with the horrors of their youths…. I saw some academic blogger deriding her undergraduates for their absurd expectations that they should make $40K year at their first job…. I graduated from a mediocre (in reputation and ranking, not knocking it) state school in 1993. Damn straight students expected that they could earn TWENTY FOUR THOUSAND DOLLARS annually at their first jobs, which is what $40K today would have been then. I’m not saying all students did. We graduated into a recession, and things don’t always work out as they should, but nobody at that time thought TWENTY FOUR THOUSAND DOLLARS was some absurd amount of money for someone just out of college to earn. It was pretty much the minimum of what people expected. 40 hours/week 50 weeks/year is 12 bucks per hour. And I haven’t even mentioned how much cheaper tuition was then…”

Already-Noted Must-Reads:

1. Jason Furman and James Stock: On Energy, ‘All of the Above’ Is Working: “U.S. gasoline consumption has fallen by 5.5 percent since 2007 or half a million barrels per day… gasoline consumption is now on a path to plateau, then decline after 2019…. Production of renewable energy has increased rapidly… electricity generation from wind has tripled while solar generation is up more than tenfold….Much of this energy revolution has been driven by technological advances and entrepreneurial risk-taking by a dynamic private sector. These trends have been supported and advanced by President Obama’s ‘all-of-the-above’ energy strategy… responsible development of oil and natural gas resources… accelerated the development and deployment of low-carbon wind, solar and nuclear projects… advanced energy efficiency… light-duty vehicles… appliances… buildings through the president’s Better Buildings partnership…”

2. Suresh Naidu: Capital Eats the World: “Piketty oscillates between paying homage to fundamental forces of technology, tastes, and supply and demand, and then backtracking to say that politics and institutions are important…”