Things to Read on the Morning of May 27, 2014

Should-Reads:

1. DougJ.: Their eyes were watching Jeb: “This [by Michael Barbaro] sounds eerily like some of the North Korean-style Dear Leader fan fiction Elisabeth Bumiller used to write about W in the [New York] Times…”

2. Matthew Boesler and Aki Ito: Piketty Rejects ‘Ridiculous’ Allegations: “Thomas Piketty rejected allegations that data behind his best-selling book on inequality are flawed as fellow economists spoke up in his defense… called a Financial Times analysis of his statistics ‘just ridiculous’…. The newspaper’s economics editor, Chris Giles, wrote last week that figures underpinning the 696-page book contain unexplained statistical modifications, ‘cherry picking’ of sources and transcription errors…. Two of the book’s ‘central findings–that wealth inequality has begun to rise over the past 30 years and that the U.S. obviously has a more unequal distribution of wealth than Europe–no longer seem to hold’, according to Giles…”

3. Thomas Mann: Politics Is More Broken Than Ever: Political Scientists Need to Admit It: “I’ve spent decades in Washington explaining and defending the American constitutional system in the face of what I considered to be uninformed and ill-considered attacks on Congress and our way of governing. I’ve also worked scrupulously to avoid any hint of partisan favoritism…. But I believe these times are strikingly different from the past, and the health and well-being of our democracy is properly a matter of great concern. We owe it to ourselves and our country to reconsider our priors and at least entertain the possibility that these concerns are justified–even if it’s uncomfortable to admit it…. Congress has ceased to operate as an effective legislative body…. The supposed promise of linking more tightly party and ideology was that it would offer more clarity and accountability for voters…. Austin Ranney… argued that more ideologically coherent, internally unified, and adversarial parties in the fashion of Westminster-style parliamentary democracy would be a disaster within the American constitutional system…. Republicans have become a radical insurgency–ideologically extreme, contemptuous of the inherited policy regime, scornful of compromise, unpersuaded by conventional understanding of facts, evidence, and science; and dismissive of the legitimacy of its political opposition. The evidence of this asymmetry is overwhelming.”

4. Minxin Pei: Minxin Pei asks whether the Chinese Communist Party can rule for another quarter-century: “25 years ago the Chinese Communist Party (CCP) was nearly toppled by a nationwide pro-democracy movement. It was the late paramount leader Deng Xiaoping’s steely nerves and the tanks of the People’s Liberation Army… that enabled the regime, at the cost of several hundred civilian lives, to avoid collapse…. How has the CCP survived the last quarter-century, and can its rule endure for another 25 years?… Policy adjustments, clever tactics of manipulation, and a healthy dose of luck enabled the CCP to win the support it needed to retain power and suppress destabilizing forces…. Deng again managed to save the Party… an unprecedented wave of growth and development… granting Chinese citizens considerable personal freedoms…. Carefully orchestrated moves to promote Chinese nationalism and exploit xenophobia also helped. Even repression, the mainstay of the regime’s survival, was fine-tuned…. The post-1992 reforms coincided with a surge of globalization… the so-called demographic dividend…. The problem facing the CCP now is that most of the factors that enabled it to survive since Tiananmen either have already disappeared or are headed in that direction. Indeed, for all practical purposes, pro-market reforms are dead. A kleptocracy of government officials, their families, and well-connected businessmen has colonized the Chinese state and is intent on blocking any reforms that might threaten their privileged status…. Rampant corruption and rising inequality, together with obvious environmental decay, are causing ordinary Chinese–especially the middle class, which once had high hopes for reform–to become increasingly disillusioned…. That leaves only repression and nationalism in the CCP’s post-Tiananmen toolkit. And, indeed, both of them continue to play a central role in President Xi Jinping’s strategy for ensuring the Party’s survival.”

5. Michael Hiltzik: Tim Geithner gets FDR very wrong (but so did Obama): “It’s necessary to correct an old canard repeated by former Treasury Secretary Timothy Geithner about Franklin Roosevelt’s behavior in the long interregnum between the 1932 election and his 1933 inauguration…. Geithner’s goal is to draw a distinction between FDR’s ostensibly shocking irresponsibility and President Obama’s ostensibly laudable behavior in going along with his predecessor’s economic crisis response…. The truth is that Hoover didn’t need FDR’s help–he just didn’t want to act on his own. It’s important to set the record straight, because Geithner’s version was ginned up by Hoover himself and is cherished by Hooverite conservatives, who still walk among us today…. A fuller discussion is in my book about the Roosevelt administration…”

Should Be Aware of:

• Wolfgang Munchau: The inflation target orthodoxy has lasted too long

And:

1. Corey Robin: Free-Market Orientalism: “From an interview with Friedrich von Hayek in 1983 (p. 490): Robert Chitester: ‘Going back to the question I asked you about people you dislike or can’t deal with, can you make any additional comments in that regard, in terms of the characteristics of people that trouble you?’ Friedrich A. von Hayek: ‘I don’t have many strong dislikes. I admit that as a teacher—I have no racial prejudices in general—but there were certain types, and conspicuous among them the Near Eastern populations, which I still dislike because they are fundamentally dishonest. And I must say dishonesty is a thing I intensely dislike. It was a type which, in my childhood in Austria, was described as “Levantine”, typical of the people of the eastern Mediterranean. But I encountered it later, and I have a profound dislike for the typical Indian students at the London School of Economics, which I admit are all one type—Bengali moneylender sons. They are to me a detestable type, I admit, but not with any racial feeling. I have found a little of the same amongst the Egyptians—basically a lack of honesty in them…'”

2. Robert Allen (2009): Why was the Industrial Revolution British?: “It is still not clear among economic historians why the Industrial Revolution actually took place in 18th century Britain. This column explains that it is the British Empire’s success in international trade that created Britain’s high wage, cheap energy economy, and… was the spring board for the Industrial Revolution…. In the late sixteenth and early seventeenth centuries a European-wide market… England took a commanding position in this new order as her wool textile industry outcompeted the established producers… in the late seventeenth and eighteenth centuries… an intercontinental trading network… acquisition of colonies, mercantilist trade promotion, and naval power… vigorous imperialism…. The British Empire was designed to stimulate the British economy–and it did…. The growth of London created a shortage of wood fuel that was only relieved by the exploitation of coal…. The growth of cities and manufacturing increased the demand for labour with the result that British wages and living standards were the highest in the world…. The growth of cities and the high wage economy stimulated agriculture… the amalgamation of small holdings into large farms, which employed fewer people per acre…. High wages and cheap energy created a demand for technology…. The famous inventions of the Industrial Revolution were responses to the high wages and cheap energy of the British economy. These inventions also substituted capital and energy for labour. The steam engine increased the use of capital and coal to raise output per worker. The cotton mill used machines to raise labour productivity in spinning and weaving. New technologies of iron making substituted cheap coal for expensive charcoal and mechanised production to increase output per worker. These technologies eventually revolutionised the world, but at the outset they were barely profitable in Britain, and their commercial success depended on increasing the use of inputs that were relatively cheap in Britain. In other countries, where wages were lower and energy more expensive, it did not pay to use technology that reduced employment and increased the consumption of fuel…”

3. Emily J. McAllister et al.: Ten Putative Contributors to the Obesity Epidemic: “The obesity epidemic is a global issue and shows no signs of abating, while the cause of this epidemic remains unclear. Marketing practices of energy-dense foods and institutionally-driven declines in physical activity are the alleged perpetrators for the epidemic, despite a lack of solid evidence to demonstrate their causal role. While both may contribute to obesity, we call attention to their unquestioned dominance in program funding and public efforts to reduce obesity, and propose several alternative putative contributors that would benefit from equal consideration and attention. Evidence for microorganisms, epigenetics, increasing maternal age, greater fecundity among people with higher adiposity, assortative mating, sleep debt, endocrine disruptors, pharmaceutical iatrogenesis, reduction in variability of ambient temperatures, and intrauterine and intergenerational effects, as contributing factors to the obesity epidemic are reviewed herein. While the evidence is strong for some contributors such as pharmaceutical-induced weight gain, it is still emerging for other reviewed factors. Considering the role of such putative etiological factors of obesity may lead to comprehensive, cause specific, and effective strategies for prevention and treatment of this global epidemic…”

Already-Noted Must-Reads:

1. Room for Debate: Did the Bank Bailout Do Enough for the Country? No. It Did Not: “AMIR SUFI, UNIVERSITY OF CHICAGO: Housing Crisis Was Overlooked: Letting bankruptcy judges write down mortgages and providing an ambitious mortgage refinancing plan would have reduced foreclosures. LEE SACHS, FORMER COUNSELOR TO THE TREASURY SECRETARY: Our System Is Safer and More Stable: Radical reshaping should not be an objective for its own sake. Rescue efforts and reforms protected consumers, taxpayers and the flow of credit. DEAN BAKER, CENTER FOR ECONOMIC AND POLICY RESEARCH: Better No Bailout, Than the One We Got: Banks weren’t forced to shrink and get boring. If they were allowed to fail, federal spending could have kept the economy afloat and led to recovery. ANAT R. ADMATI, STANFORD UNIVERSITY: Too Much Debt and Not Enough Equity: Tougher requirements would have prevented banks from hiding their true losses, and loosened credit for businesses and individuals. EDWARD HARRISON, CREDIT WRITEDOWNS: More Focus Is Needed on Deep Economic Flaws: Until we address stagnant income, high household debt, insufficient bank capital and excessive risk, another crisis may be inevitable. GLENN HUBBARD, COLUMBIA UNIVERSITY: Too Narrow a Focus on Banks: There was little discussion of financial institutions other than banks and government institutions, which helped spread contagion.”

2. Erik Loomis: This Day in Labor History: May 26, 1924: “On May 26, 1924, the doors of the United States closed to most immigrants as President Calvin Coolidge signed the Immigration Act of 1924. The law set the yearly quota for a nation’s population to immigrate to the U.S. at 2% of its U.S. population in… 1890…. This law put an end to the immigrant flows to the U.S. that had provided the labor force for the nation’s stupendous industrial growth in the late nineteenth and early twentieth centuries. It also demonstrates the great discomfort many Americans had with the diversity that became a byproduct of the need for such an expanding labor force. Immigrants from southern and eastern Europe seemed to threaten American values for reasons outside their funny religions, peasant clothing, and garlic-eating ways. Most people came to the U.S. for the precise reason they do today: to make money for their families back home… many hoped to make money and then return… and many did that…. But some of these immigrants, even if they just wanted to work, also believed in the need for a better world…. The Jewish women leading the Uprising of the 20,000 against apparel company exploitation in 1909 and after the Triangle Fire in 1911 were the cheap labor the department stores and clothing designers wanted but they had radical tendencies of standing up for their rights that was definitely not what the capitalists wanted…. Individual acts like Russian Jewish immigrant Alexander Berkman trying (and failing in spectacular fashion) to assassinate plutocrat Henry Clay Frick after Homestead or the native-born but son of immigrants Leon Czoglosz killing President William McKinley was a sign of the very real violence…. The American Federation of Labor strongly supported all anti-immigration legislation despite being headed by an English immigrant by the name of Samuel Gompers…. The events of World War I changed the equation. The unfair equation of the IWW with pro-Kaiser sentiment… meant that immigrants were more suspect than ever and that everything about them needed watching…. Perhaps the most notable feature about the Immigration Act was setting the racial quotas to 1890 level. The quotas of immigrants from each country would be based upon their numbers in the United States according to the 1890 census. It meant that Germans, Irish, and English could still come over in relatively undiminished numbers…”

3. Dylan Matthews (2013): The Tuition is Too Damn High, Part II: Why college is still worth it: “Perhaps the most persuasive skeptical case… is that while the average student still benefits from college, that doesn’t mean the marginal student does…. The best study I’ve seen on this comes from Seth Zimmerman, a PhD student at Yale. He compared the earnings of Florida students whose GPAs were just above and just below the Florida State University system’s cutoff. There’s a huge effect of being just above the cutoff (3.0, for most students), suggesting that students at the margin still gain substantially from college…. Work by Nobel laureate James Heckman and his colleagues backs this up…”