Archive for the ‘Economics’ Category

Economics and sex

September 10, 2020

(NOTE: the following was actually written before the pandemic (I have a backlog). Question for discussion: how is this analysis altered, if at all, by the new economic environment created by the pandemic?)

I heard Professor Paul Hohenberg review Binyamin Applebaum’s book, The Economists’ Hour. That title plays off “The Children’s Hour” with a hint that economists don’t do much better. The book chronicles recent decades when they had much influence on policy. Hohenberg says two things ended that: the 2008 financial crisis, leaving economists with egg on their faces; and Trump’s election, blowing up the whole idea of relying on expertise.

Government used to be dominated by lawyers, Hohenberg noted. But that was when it didn’t do much. That changed with the Depression, WWII, and the rise of the welfare state, with government now seen as managing the economy.

The basic challenge there is stability. Its textbook is John Maynard Keynes’s 1936 opus, The General Theory of Employment, Interest, and Money. Positing a tradeoff between unemployment and inflation. If unemployment is low, businesses must compete for staff, driving up wages, which must be recouped through raising prices — inflation. Which tends to feed on itself by shrinking the value of paychecks, driving workers to demand still higher pay. It was thought some optimal unemployment level would keep things in balance.

But the ’70s brought “stagflation,” high unemployment coupled with high inflation, breaking Keynes’s law. The explanation, Hohenberg says, was demographic. Baby Boomers reaching adulthood flooded the workforce. Also women, now much freer to work outside the home. These extra working hands produced much wealth and higher living standards, but the economy couldn’t create new jobs fast enough, hence high unemployment. While higher family incomes boosted consumer demand, pushing up inflation.

It took a serious recession to break stagflation, thanks to Fed Chief Volcker aggressively raising interest rates. Since then, the problem has actually been to get enough inflation to avoid deflation, a different economic curse.

Keynesianism also meant government stabilizing the economy through the stimulus of spending when it’s weak, borrowing the needed money, then reversing course when the economy is strong. Stimulus does seem to work, notably in 2009. But it’s unfortunately addictive, and politicians like to keep the spigot open even when the economy is booming.

Meantime the anti-Keynesian stagflation episode brought to the fore a different economic theory — monetarism, personified by Milton Friedman, arguing that it’s really through regulating the money supply that government controls economic ups and downs. But just as Keynesianism proved oversimplified, monetarism too is not the whole story.

There was also “supply-side” economics, touting tax cuts as stimulus, arguably engendering enough added economic activity that the cuts would actually pay for themselves. This has been widely derided. However, there ought to be some optimal level of taxation, enabling government to collect enough revenue while maximizing the economic activity that produces earnings to be taxed. Whether tax cuts “pay for themselves” probably depends on how they’re structured and who benefits.

With my bodyguards in Somaliland

Hohenberg also discussed free market fundamentalism, trying to limit regulation so that business and industry can just get on with wealth-creation. I have noted, apropos my Somaliland visit, how government’s scant regulation there actually leaves businesses vulnerable to predation and thus inhibits economic activity. Here again the issue really isn’t regulation versus no regulation. It’s having the right kind of regulation that protects the right things, thereby maximizing economic opportunities. But that’s hard to do, and government hasn’t proven very good at it.

Also a butt of ridicule is so-called “trickle down” economics. This relates to the cause du jour, inequality. There’s a notion of equalizing things by just taxing away the wealth of the rich. (Sanders says billionaires should not even exist.) It’s legitimate to have affluent people pay a greater share if government needs the money to fund what it does. Taxing them simply because some envious people feel they just have too much is not any kind of “justice,” social or otherwise.

Hohenberg observed that, ironically, economists get attention when there’s debate but not when there’s consensus. They almost unanimously support a carbon tax; politicians almost unanimously demur. And while practically all economists say trade is beneficial, few politicians have the courage to argue this, and so the public increasingly rejects it.

One audience questioner posited we should just seal America off from global trade and meet all our needs domestically. At least we’d all have jobs. Whereas trade leaves too many without — increasing our impoverishment, ever more Americans unable to afford all the goods being imported.

This idea is indeed commonly believed. But it’s quite false. As Hohenberg explained, the autarky envisioned by the questioner would send consumer prices through the roof; buying stuff cheaper from China than we can make it ourselves saves us money and thus enriches us. The savings we can spend buying other stuff we do make ourselves. It’s also untrue that the average American has been growing poorer. Average incomes have been rising, and trade plays a role in that.

And it’s also untrue that “we don’t make anything anymore.” We manufacture as much as ever, but can do so with ever less labor; it’s advancing technology and automation, far more than trade, that’s responsible for reduced manufacturing employment. But that increased productivity also makes us richer. It frees up labor to do other things, particularly in services, which consumers increasingly spend money on. There’s a notion that producing intangible services is somehow less real than manufactured goods. That’s yet another fallacy; people’s willingness to pay money for something decides its value.

And finally, what about the “sex” promised in my heading? This illustrates another concept of economics. Called “bait and switch.”

Reopening schools

July 24, 2020

Trump wants schools reopened. Because he cares about kids’ education? (Note, that was a laugh line.) No, of course he cares only about himself, seeing open schools as the ticket to economic rebound, his only hope for re-election.

You might think that in his desperation, he’d do what’s really needed to reopen schools and the economy. His latest briefing took matters a tiny bit more seriously. But just a tiny bit. Even now Trump is still trying to keep federal money for testing and tracing out of pending legislation!

Covid forces tradeoffs between economic and health concerns. Life has great value, but it’s not infinite, and it’s not necessarily crazy to posit that the lives saved are not worth the enormous economic costs — which, after all, themselves affect lives and their quality. Unfortunately, thanks to Trump, we took the economic hit, but because of an atrocious lack of leadership and relenting too fast, got the health disaster as well.

For schools, the tradeoffs skew differently. Keeping them closed cripples the economy by forcing parents to stay home with kids rather than work. (This is Trump’s real animus.) But the damage to children’s education could actually be lifelong, with the missed classroom time never made up. Zoom lessons are not the same. The impact on poor children, less able to participate remotely, is all the greater. They will fall further behind, widening inequality. And out of school they’re more likely to suffer abuse, malnutrition, and mental problems.

The World Bank estimates that losing five months of school will cut the lifetime earnings of affected children by $10 trillion, equal to 7% of current annual GDP.

Against these huge detriments, the health risks are smaller than for other societal sectors. Studies indicate that children are much less susceptible to infection than adults, and way less likely to die. And infected children seem to be less contagious. One reason is that they’re shorter. The virus-laden droplets they eject tend not to reach higher altitudes where adults can ingest them.

So I too actually want schools reopened. But it entails serious risks that must be seriously addressed.

Much unlike Trump (who simply threatens to force schools to reopen, ready or not), Joe Biden has presented a careful comprehensive plan for reopening schools while minimizing the risks. His plan follows CDC guidelines. (Which Mike Pence said schools should feel free to ignore. Yes, our national covid response coordinator actually said that.)

The plan’s key elements are clear:

• First, schools can’t reopen where the virus is not under control. That requires masks, social distancing, and intensive testing and tracing. (On all these, America is still an underachiever.)

• The most vulnerable (mainly older) teachers and school personnel must be specially protected.

• Good supply of masks and PPE.

• Reduced class sizes, staggered schedules, and other measures to prevent crowding.

• Giving schools the money needed to meet added costs for PPE, sanitizing, reconfiguring classrooms, etc.

• Communication with parents, giving them confidence they can send kids to school in reasonable safety.

• Where schools cannot provide full in-person teaching, much more is needed so all students, but especially disadvantaged ones, can fully participate in remote learning programs.

Some further thoughts: with all the unemployment, shouldn’t we hire some people to help bring kids up to speed on learning? And shouldn’t we consider shortening if not eliminating next summer’s vacation?

Other countries have implemented plans like Biden’s with good results. I note that the elementary schools I’ve been supporting in Somaliland seem to be doing great at working with (very poor!) children stuck at home. Surely we should expect as much for America’s kids.

Find the details of Biden’s plan here:  www.fsrcoin.com/98.html

(As a contributor I received it from his campaign. As a former Republican donor, I get all their e-mails too. The contrast is stunning. The Biden ones are always sober, serious, fact-based, inspiring confidence. The Republican messages are an hysteria of wild falsehoods.)

Ethics of humanitarian and development efforts: problems versus symptoms

July 1, 2020

My daughter Elizabeth, 27, has worked for five years in the Mid-East for humanitarian organizations, currently for a consultancy much involved in Afghanistan. Wonderful, you might say. She herself is less sure — always engaging in critical self-scrutiny.

There’s much literature criticizing the whole foreign aid and development landscape, the road to Hell being paved with good intentions. Much aid has wound up serving to strengthen dictators. Other downsides may be less obvious. Send aid directly to schools and you relieve government of that expense so it can spend more on, say, weapons. Send used clothing and you undermine a nation’s own garment industry. And so forth.

Elizabeth and I have discussed such issues as relating to my own support for a Somaliland education project. Her thing is trying to find what actually works best in the context of a local culture and its idiosyncrasies. She’s troubled that the project was started by a rich white guy who went there with good intentions but scant local knowledge. She pointed me to a sardonic short story in the voice of an African employed by some sappy do-gooder Americans who created a program actually accomplishing nothing. But I was moved by the proven success of the one in Somaliland.

The words “white savior” come up. We’re told to worry instead about problems closer to home. But Africans are no less my fellow humans than those across the street. And their problems tend to be much the greater, with resources to tackle them far smaller. I don’t see myself as a white savior; hopefully, a human contributor.

That makes me feel good. Is my Somaliland involvement really an attempt to buy myself those feelings? We’re actually programmed by evolution to feel good when doing good, it’s a mechanism to promote such behavior, thereby aiding group survival. So is there any such thing as true selfless altruism? But I’d maintain we are what we do. The doer of a good deed doesn’t delude himself believing he’s altruistic — he is in fact behaving altruistically. And his motivation is immaterial to the other beneficiaries of his action.

Elizabeth recently wrote a blog essay concerning the Oscar-winning film Learning to Skateboard in a Warzoneabout an NGO project for Afghan girls — and an Al Jazeera article, Skateboarding Won’t Save Afghan girls. The latter contends the program just covers up the country’s problems, which it blames on “centuries of ruthless Western military and political intervention.” The skateboarding is likened to “palliative care” that makes dying patients feel better without curing them. The article invokes the “white savior” trope, and says the program and film “decontextualize” the girls’ lives, presenting them as “ideal victims for pity.” While making “Westerners feel good about” the Afghan war “which ‘liberated’ girls and women and gave them opportunities their own society would never have afforded them.”

Why put “liberated” in snide quote marks? America’s intervention did liberate them, did give them opportunities the article actually correctly characterizes. Though obviously Afghanistan’s problems were not all solved. Is that really the bar for judging any project’s worth?

Elizabeth says the real question is whether a program like the skateboarding —which does have real benefits — comes at the cost of other initiatives, which might have larger impacts. “Should we address the problems, or the symptoms of the problems — or both?”

She cites a book, Winners Take All, by Anand Giridharadas, arguing that the business world is too focused on symptoms rather than underlying problems — and indeed those so focused are the very people benefiting from the system that perpetuates the problems. Giridharadas cites the example of a phone app to help people with “unpredictable employment” to even out their incomes. Which he characterizes as a symptom of the real problem, an economic system making unpredictable employment so common — a system he says the app’s developers themselves helped create and benefit from.

Seriously? As if they somehow calculatingly orchestrated the whole global economic structure just so they could profit from the app? And does Giridharadas have a workable solution to the underlying problem he sees? No, he just wants other people to simply forgo their self-interest. Thanks a lot.

Casting the problem as the fault of villains is a kind of scapegoating all too prevalent (particularly in the left-wing economic perspective). But those who profit by hiring people for temporary work enable those employees to earn money by creating goods and services whose buyers value them above what they pay. Seems win-win-win to me. Not rendered villainous because Giridharadas imagines some fantasy world in which people’s earnings are divorced from the economic value their work creates. (I suggest the result would actually be a nightmare world.)

Elizabeth too largely disagrees with Al Jazeera and Giridharadas. She sees nothing wrong with addressing “symptoms” — while also working on “problems” — which may take decades if not centuries. These are not mutually exclusive. No reasonable person could view the skateboard film and think all Afghanistan’s problems are solved. Indeed, she considers it important to spotlight such successes. Whereas moralistic symptoms-versus-problems dichotomizing can make doing what’s merely feasible seem pointless.

Elizabeth’s main concern is with the impact one’s actions can achieve, and thus whether to target “problems” or “symptoms” — the “policy level” versus the “personal level.” But as for what any individual can do, she interestingly invokes the concept of “comparative advantage.” That’s an economics doctrine saying a nation gains from trading whatever it’s best at producing, even if other nations can produce that thing better. Applying it here would mean doing what one is best equipped or positioned to do. Better to have a modest success than an over-ambitious failure. But she also suggests a third option: start small and strive to scale up.

I think Al Jazeera’s analogy to palliative care is also fatuous moralizing. One is not usually able to achieve big-picture solutions. But regardless of what level you’re looking at, what matters is quality of life — for the many, or a few, as may be. Every one counts. Every improvement counts. Inability to go big doesn’t negate the value of the small. A cancer patient may not be cured but meantime palliating the pain is worth doing. Likewise for the Afghan skateboarding girls.

No individual can “solve” the kinds of big problems at issue. All one can do is what helps as much as one can. A lot of people doing that helps a lot.

Don’t let the perfect be the enemy of the good.

You can help Afghanistan fight Covid-19

April 27, 2020

Intense as the Covid-19 coverage is, I have the sense that most of us can only dimly grasp, yet, the human tragedy’s true depth. More the economic devastation than the sickness and death. Both hit our poorer citizens hardest; they’re less able to protect against infection; and, in precarious financial straits to begin with, they’re suffering the brunt of the economic collapse. The recent legislation actually gives more money to people who need it less than to those needing it most. (Some voices blame the poor themselves for their poverty. No such idea could apply here.)

The suffering is even greater in poorer countries, many with shambolic health systems and no real social safety nets. Their disaster is only starting. Here’s one chilling aspect. Much of the income in these countries is “remittances,” money sent by people working abroad, to their families. They’re losing their jobs in droves. Moreover, the systems used for remittances are becoming problematic, many of the little stores and kiosks being closed or locked down. Some estimates put the plunge in remittances at 80% or more.

Afghanistan is struggling to cope with Covid-19 on top of its other big challenges (like the Taliban). My daughter has been working on projects there to improve quality of life. Her consulting company, Magenta, has a fund-raiser to directly provide soap and personal protective equipment. Here’s the link for donations: https://www.justgiving.com/crowdfunding/afghanistanfightscovid-19 *

It’s sometimes said, “Charity begins at home.” I see the whole world as my home. Bad as things are here, they’re worse in many other places, that need more help.

* Note, donations are in British pounds (= about $1.30); they get converted to dollars if you complete the process.

COVID-19: How much is a life worth?

March 22, 2020

Watching news reports about the economic devastation, my wife said the unsayable: “This isn’t worth it.”

The economic disaster is not from people falling ill, but the aversive measures. They’re hurting huge numbers very badly. Is this worth it? Would it entail less suffering to just let COVID-19 run its course? Many millions would get sick, but for the vast majority it would be minor. Only a fairly small percentage would die. Common flu annually sickens tens of millions and kills tens of thousands.

Dr. Fauci (a real hero) was asked why we’re taking extreme measures for COVID-19, but not for common flu. He didn’t have much of an answer — basically that common flu is, well, common, and COVID-19 is not. It’s also called “novel coronavirus.” Novelty grabs attention that the familiar doesn’t.

Suppose, if unchecked, COVID-19 would kill a million Americans, even several million. Fighting it costs many trillions. Governments will lose tax revenues and spend several trillion on bailouts and economic aid. Individuals, collectively, will lose even more in reduced incomes; personal wealth is already shredded. A trillion is a million million. So the fight is costing us quite a few million for every life saved.

How much is a life worth? That might sound like a crass question, or an unanswerable one. But in reality we answer it all the time, in many contexts. For example, when juries decide what dollar damages to award in “wrongful death” lawsuits. More pertinent here, public policy is forced to answer it when weighing the costs of any health and safety measures against the benefits.

Take pollutants. We might be able to remove 99% of a pollutant at a cost that’s pretty reasonable for every resulting life saved. But to get the last 1% out might cost a lot more — too much in relation to the few additional lives that would save. We recognize that lives have value, but not infinite value.

That’s not callous but rational simply because resources are not infinite either. The money spent to eradicate that last 1% of a pollutant would mean less money for other things — which could save more lives. Imperfect humans don’t always make these choices with perfect rationality, but we intuitively grasp the point and act accordingly in at least a general way.*

Economists can analyze all these instances in which, explicitly or implicitly, we put a value on a human life, and calculate a number. It’s been done. The answer seems to be somewhere in the range of a million or two.

But are some lives worth more than others? One could note that most COVID-19 deaths are elderly and frail, not long for this world anyway, so the loss is arguably much less than for a youngster with many years ahead. Wrongful death cases often entail estimating what the deceased might have gone on to earn. This was taken into account by the 9/11 compensation fund. But for all the logic of trying to put a number on a life’s value, such an earnings-based approach seems faulty. That views lives as economic assets for others. Whereas the value of people’s lives is primarily to themselves.

A homeless person’s life is not worth less to them than a billionaire’s. And don’t be quick to say the latter derives more enjoyment from living. Many homeless people are happier than many billionaires.

What I’ve written here is shaped by my humanist philosophy. Which tells us to apply reason to human problems. And that human life (as Vince Lombardi said of winning) “is not the most important thing, it’s the only thing.”

Those two precepts might seem to clash in a dilemma like COVID-19. That’s far from unique in human affairs. The value of human life — of any single human life — is ultimately an ineffable thing. But respect for it is the cornerstone of humanism. That is why we are doing what we are doing to contain COVID-19. We cannot do otherwise, even if the cost seems disproportionate.

With common flu (and all other normal threats to life), we’re set up to provide medical care to those who need it; recognizing that some will die even with everything done for them. We’re not similarly equipped to deal with a spike of COVID-19 victims in the millions. Hospitals and medical personnel would be overwhelmed, unable to cope. Great numbers of people would die simply for lack of care. A horrific scenario that would sear all our souls. To avoid that is why we’re trying to “flatten the curve,” so everyone will at least get proper medical help. We may yet actually fail.

This is about who we are as a society, as human beings. We cannot let ourselves say that the lives of some people — frail aged people — are of lesser value, and we can just kiss them off. That would put us on a road whose destination we know all too well.

* Economist Robert Frank has said there’s actually an optimal amount of dirt in your house. Up to a point, cleaning is worth it, but the effort to banish the last speck of dirt is not.

American Nightmare — Sanders versus Trump

March 1, 2020

American Nightmare” is The Economist’s latest cover story. This is an authoritative, extremely serious, sober publication, not given to hysteria. But this editorial is strong stuff. I copy it below, with some editing by me, mainly for brevity:

Sometimes people wake from a bad dream only to discover that the nightmare goes on. This is the prospect facing America if Democrats nominate Sanders against Trump. An appalling choice with no good outcome.

Sanders is so convinced he is morally right, he has a dangerous tendency to put ends before means. And, where Trump has whipped up politics into a frenzy of loathing, Sanders’s election would feed the hatred.

He is not a cuddly Scandinavian social democrat who would let companies do their thing and then tax them to build a better world. Instead, he believes American capitalism is rapacious and needs to be radically weakened. He puts to shame Jeremy Corbyn [hard-left British Labour party leader who recently led his party to electoral disaster] proposing to confiscate not 10% but 20% of the equity of companies and hand it over to workers [actually, the government]. On trade, Sanders is at least as hostile to open markets as Trump is. He seeks to double government spending. With unemployment at a record low and wages in the bottom quarter growing by 4.6%, his call for a revolution in the economy is an epically poor prescription for what ails America.

Sanders displays the intolerance of a Righteous Man. He embraces perfectly reasonable causes like reducing poverty, universal health care and decarbonising the economy, and then insists on the most unreasonable extremes in the policies to achieve them. Like banning private health insurance (not even Britain, devoted to its National Health Service, goes that far). He wants to cut billionaires’ wealth in half over 15 years. A sensible ecologist would tax fracking; Sanders would ban it outright. Making college cost-free is a self-defeating way to alleviate poverty, because most of the subsidy would go to people who are, or will be, relatively wealthy. Banning nuclear energy would stand in the way of his goal to create a zero-carbon economy.

His ideological bent gives him a habit of indulging autocrats, like in Cuba and Nicaragua, so long as they claim to be “socialist.”

Last is the effect of a President Sanders on America’s political culture. The country’s political divisions helped make Trump’s candidacy possible. They are now enabling Sanders’s rise. Leftist activists find his revolution thrilling. They seem to have almost as much hatred for his Democratic opponents as for Republicans.

This speaks to Sanders’s political style. When asked how he would persuade Congress to eliminate private health insurance (which 60% of Americans oppose), Sanders replies that he would hold rallies in the states of recalcitrant senators until they relented. Traveling around the country holding rallies for a far-left program he could not get through Congress would widen America’s divisions. Political realities blocking his revolution would frustrate his supporters. On the right, an actual socialist in the White House would generate even greater fury.

The mainstream three-quarters of Democrats have begun to tell themselves that Sanders would not be so bad. Some say he would not be able to do many of the things he promises. This sounds worryingly familiar. Trump has shown that it is unwise to dismiss what a man seeking power says he wants to do with it.

If Sanders becomes the Democratic nominee, America will have to choose between a corrupt, divisive, right-wing populist, who scorns the rule of law and the constitution, and a sanctimonious, divisive, left-wing populist, who blames a cabal of billionaires and businesses for everything wrong with the world. All this when the country is as peaceful and prosperous as ever. It is hard to think of a worse choice. Wake up, America! 

Postscript (this is Frank writing): Sanders could not be nominated were Obama still alive. Everything he worked for faces destruction. His weighing in would have huge impact. Yet he is inert. One commentator discussing this stressed the word “caution.” Reminds me of Obama’s anemic foreign policy. There are times for caution and times for taking a stand. This time, right now, is the latter.

 

 

Is inequality really worsening?

February 28, 2020

Rising inequality is a fixture of left-wing polemics. Sanders harps on it. Lamenting a widening gap between the richest and the rest. A lot of numbers are invoked — the top X%’s wealth share has grown from Y% to Z% over such-and-such a time span. As if such numbers are simple facts.

They never are. A recent in-depth lead article in The Economist explored all the assumptions and difficulties behind any such calculations. It casts much doubt on the “rising inequality” narrative, at least within rich countries.

Globally, inequality has indisputably been falling. That’s because economic growth rates in developing countries have greatly exceeded those in mature economies, narrowing that gap.

We keep hearing about “exporting jobs.” When we then import the goods produced from, say, China, cheaper than we can make them ourselves, that savings actually makes Americans collectively better off, even while some Americans who lose jobs are worse off. That job shift is a wealth transfer from richer nations to poorer ones — again, decreasing global inequality. Indeed, the numbers of people in extreme poverty have plummeted. Which progressives should welcome, no?

The Economist addresses four pillars of the “rising inequality” narrative: top earners snare a greater share of income; middle class incomes have stagnated; this is because labor’s share of rising productivity has fallen relative to capital’s; thus wealth has been concentrating at the top.

In each respect, you get very different results depending on how the numbers are parsed. It’s complicated: you must take into account not just raw income data but also taxes and government transfer programs, and fringe benefits, especially increasingly valuable medical benefits. And demographic factors — “household income” is often the focus, yet households grow smaller as marriage rates fall, with more single parenthood, thus income is divided among more “households.”

Results also greatly depend on how you adjust for past inflation. It’s widely acknowledged that government inflation numbers are too high, failing to properly account for, among other things, technological changes. For example, they actually disregard the valuable benefits from smartphones. When you chart pay levels over time using overstated inflation estimates, you can show pay falling even while the quality of life people get from it is rising.

The Economist also notes that while “returns to capital” (that is, to owners of corporate shares) have grown, a lot of that actually flows to the middle class because an increasing chunk of the stock market is owned by pension funds. Furthermore, as far as wealth is concerned, the effect of shareholding is actually eclipsed by the long-term rise in the value of home ownership, again mostly benefiting the middle class. This is another (usually overlooked) counter to the idea of rising wealth concentration at the top.

But on the other hand — showing how complex all this is — at the bottom of the income scale, educational inequality looms large. Kids born poor tend to stay poor because of lousy education. That’s largely because of where they live. Rising home values tend to lock them out of better locales. Moreover, higher house prices go with areas where good jobs concentrate. Everything is interconnected.

Meantime, when we say the top 10% or 1% of Americans’ wealth share has risen, we imagine we’re talking about the same people in Year X as in Year Y. Life doesn’t work that way. Those in the top groups in 2020 often differ from those who comprised those groups in 1990 or 2000. At the beginning, your income and wealth may be low because you’re a student or just starting out. The picture changes greatly in your peak earning years. So people move in and out among income groups at different stages of life. Students will of course appear very unequal vis-a-vis middle agers. Differences like that are a huge part of “inequality.”

So where does all this leave us? “Inequality” is almost surely not growing in the way many scream about. That doesn’t mean all is fine. A dynamic complex economy — and society— like ours will always have inequities of one sort or another, and we must constantly seek to diagnose and combat them.

I’ve mentioned one big example, educational inequity. Another factor is our allowing some businesses to be protected against competition. But we have to be clear on what the problems really are, and what they are not.

One thing that’s not a problem is people being rich. They’re not the cause of others being poor. Our focus should be not bashing the rich but lifting up the poor, giving more people opportunities to earn enough to live decently. And worldwide, thanks to globalization, capitalism, and free trade, that’s been happening a lot. A real social justice revolution.

Broken politics and rule-of-law augur U.S. decline

February 20, 2020

Trump boasts about the strong economy. What makes it strong? Certainly not his “policies,” like stupid trade wars, and curbing immigration, very harmful. But if the government pumps a trillion dollars a year into it, you’ll have a good economy. That’s the big story: huge budget deficits, mostly borrowed money. Mortgaging tomorrow to live high today.

America does still have a lot of genuine economic strengths. Our free-market capitalist system is a great machine for producing wealth and human welfare. But that, Steven Pearlstein recently wrote in the Washington Post, will be undermined by the political division paralyzing government, and Trump’s war on rule of law.

Back in antediluvian 2013, I reviewed a book by Thomas Friedman and Michael Mandelbaum, That Used to Be Us. A can-do nation that could come together, tackle challenges, bite bullets, and do big things. If that seemed moribund in 2013, it’s a lot worse now.

The book talked about deteriorating infrastructure; shrinking investment in research and development; virtually ignoring climate change; a broken immigration system that shuts out legions of motivated brainy people we desperately need; an education system inadequate for the competitive high-tech globalized marketplace. Instead of all that, we spend resources on a military to re-fight WWII, farm subsidies, burgeoning pensions, overly expensive healthcare, and other “entitlements.”

And we’re not paying even for those, as already noted, going deeply in debt to finance them. Testing the limits on how much we can borrow. We’re OK as long as interest rates stay rock bottom and the market still has great confidence in America. If it decides our game is up, we’ll be like Wile E. Coyote in the old cartoons — running off a cliff till he realizes nothing holds him up. Then he drops like a stone.

But our supervening problem, Friedman and Mandelbaum said, is our political dysfunction, blocking action on all the rest. A partisan tribal war on every issue which, in a closely divided nation, neither side can really win. It’s gotten worse since.

Back to Pearlstein: he says what “really distinguishes a successful economy from a failing one” is “the quality of institutions — the laws, rules, norms and policies that create the framework in which any economy operates.” And broken politics are degrading the quality of U.S. institutions. Pearlstein cites the same familiar challenges as Friedman and Mandelbaum, saying a “working political system would . . . embrace the obvious compromises, building on what works and fixing what doesn’t.”

But instead, Americans “deny the problem, demonize those with whom we disagree and ostracize anyone who dares to compromise.”

And today’s great tragedy is Trump’s destruction of even those institutions that were still continuing to function. For all our political conflict, we still operated under strong rule of law, with a basic level of civic decency, and acted as the responsible global leader.

Rule of law is a truly great human achievement and a bulwark for a society working well. A key underpinning for a dynamic economy. People must be able to make investments knowing the law will be there for them. Recall Putin’s regime jailing a big oil entrepreneur to steal his company. Pearlstein writes, “perhaps the greatest threat to the U.S. economy is the deterioration in the rule of law that has become a hallmark of the Trump presidency.”

We see it lately in the cases of Roger Stone and Michael Flynn, convicted of serious crimes; then political interference trying to get them off the hook. While Trump critics are targeted. The Justice Department’s credibility is now in shreds.

Trump flouts such basic norms at every turn. No tax transparency. Exploiting the presidency for personal gain. Abusing tariffs to punish longtime allies who annoy him. Abusing pardons to reward supporters. Undermining institutions like the FBI with lying accusations. Firing diplomats and civil servants who thwart his illicit aims. Dismissing uncooperative judges as political hacks. Calling journalists who report the truth “enemies of the people,” any investigation of wrongdoing a “witch hunt,” and calling a liar anyone who unmasks his own lies. Breaking the law to hold up vital military aid to an ally to extort a bribe in the form of smearing a political opponent, trying to cover it up, lying about it, and trying to block Congress from investigating it.

And getting away with it all. That’s what acquittal by a feckless Senate majority, in the impeachment debacle, signifies. The death of accountability and rule-of-law. Our economy will not eternally be immune from the effects.

As Friedman and Mandelbaum wrote, America had crises before, which we overcame. Like the Civil War, and the Depression. Trump’s presidency is truly just such a crisis — a crisis of the very soul of this nation. Voting him out could be at least a start on repairing the damage. But if we can’t even see clearly enough to do that . . . .

A vote for Sanders is a vote for Trump

January 29, 2020

Four years ago, Democrats nominated the one candidate Trump could beat. Will history repeat?

Four years ago, I didn’t think my then-fellow Republicans would be crazy enough to nominate Trump. Then I watched in horror as, like lemmings, they plunged en masse off that cliff.

I’d underestimated Trump fans’ reckless passion, and the resulting momentum. A similar dynamic could propel Sanders. Though while winner-take-all Republican primaries enabled Trump to rack up delegates, Democrats instead mostly use a proportional system. Sanders could “win” most primaries with, like, 30% of the vote, yet lose the nomination. That would enrage his fans, kneecapping the Democratic campaign.

Meantime Trump tries to paint Democrats as dangerous crazy radicals. Sandernistas seem determined to help him. They fantasize the moment has arrived for their “social justice” revolution. Revved up for years with demonizing capitalism, they imagine “socialism” is somehow a viable alternative, even romanticizing the word.

Sanders himself has long worn the “socialist” badge as a puckish provocateur. This won’t be indulged by the wider American electorate. It will be a leaden albatross around his neck, in November. He’ll be called a communist. And why not? He honeymooned in that socialist paradise, the USSR.

He and his supporters are actually either confused or disingenuous about what “socialism” means. We’re told that if you like publicly provided roads, schools, libraries, etc., why, that’s socialism! No. It’s simply government performing normal governmental functions. Socialism is government taking over functions that in a free society are the purview of the private sector.

Sanders talks of “democratic socialism,”  as if such government monopolization of power is democratic. It isn’t. History proves — as one might expect — such concentration of power is fundamentally antithetical to democracy.

He invokes as models the Nordic countries (Sweden, Norway, Denmark, Finland). Another misconception. These nations do have strong social safety nets, but not socialist economies. In fact they’re more free-market capitalist than America. That produces a lot of wealth, which they tax heavily, to fund their social spending.

Class war is central to Bernie’s candidacy. He’s all about the idea that the rich and corporations are screwing everybody else, and taking them down is the way to a fairer, better society. But such class war rhetoric puts off most Americans, for good reason: it’s wrong.

The idea that corporations and the affluent get their profits and wealth at the expense of the rest is a fallacy. Steve Jobs got rich not by ripping people off but by giving them products they valued above their cost. Improving, not worsening, societal welfare. That’s what productive effort does in a free market economy.

Americans who do well are not the cause of others doing less well. What’s happening instead is technology changing the economic landscape ever faster, with many Americans not positioned to benefit. Often because their education is crap. What’s needed is not tearing down businesses and successful people, but equipping more people for success.

Moreover, this country is being torn apart and wrecked by increasingly bitter political polarization. We desperately need some way out of this, restoring common purpose. Not class war politics further enflaming societal divisions. And those divisions make that class war unwinnable for Sandernistas. Even if he somehow got elected (unlikely), his program would unleash a firestorm of conflict.

All this is why Bernie’s candidacy augurs disaster. Nominating him will bring us not to a socialist Jerusalem, but more likely destruction of the American idea with four more years of a depraved, deranged, and out-of-control monster.

 

The Omnivore’s Dilemma, Part II — Is it OK to eat animals?

January 8, 2020

I eat meat; not a lot, but am troubled by the ethics. Michael Pollan too, discussing this in depth in his book, The Omnivore’s Dilemma. Like me, he’d like to be able to justify meat eating. While recognizing that bias.*

Descartes saw animals as just machines without feelings. We know better. Pollan quotes Jeremy Bentham in 1789, that the question isn’t animals’ mental abilities, but can they suffer? (Note, we’re really talking about higher animals; seafood creatures don’t have much inner life to fret over.) However, Pollan notes, pain and suffering are different things. Humans suffer from pain in great part due to the mental constructs we form around it, which animals generally cannot do. (Having no conception of death or really, even, the future.)

Eating them is defended on the basis of nature. We evolved to do so, part of the overall natural schema of predators and prey. Certainly the ubiquitous animal predators think nothing of eating other animals alive. Ethics is indeed a purely human thing, evolved to regulate relations among ourselves, and absent in the rest of nature.

So we don’t treat other humans like animals, don’t eat our weaker kin. Just because they’re “humans” and animals are not? Thusly privileging humans in a way denied to other animals is called “speciesism.”

Its basis is dubious. As Peter Singer (the leading animal rights thinker) argues, most of us subscribe to an ethic of human equality. But that’s a moral, not a factual, idea. We recognize humans vary greatly in, say, intelligence, yet hold everyone’s lives and interests nonetheless entitled to equal consideration. Hence you may not exploit another for your own ends. Why then are humans entitled to thusly exploit animals — those that are sentient, feeling, and certainly possessed of lives with interests?

While cynics and pessimists deny it, humanity has in fact made great moral progress over time. Yet again, read Pinker’s The Better Angels of Our Nature. People used to accept practices — like slavery — now condemned morally. Will that one day be true of meat eating?

Pollan suggests, however, that Singer is looking at the matter from the standpoint of an individual animal, but he urges a wider species-oriented perspective, positing that species have interests too. The domesticated animals we eat actually represent a mutualism or symbiosis between their species and ours — rooted in an opportunistic aboriginal deal with us, enabling them to survive and prosper better than if on their own. And their populations are now vast, while those in the wild have shriveled. So the deal is advantageous even while individual animals do die. Which of course is true of all individuals in any case. “As a rule,” Pollan says, “animals in the wild don’t get good deaths surrounded by their loved ones.”

(One might counter that a species has no consciousness; only its individual members do. So a species cannot value enjoyment of life as an individual can, and its having larger numbers serves no moral value.)

But meantime, also looking at the big picture, Pollan deems it “doubtful you can build a genuinely sustainable agriculture without animals to cycle nutrients and support local food production.” He doesn’t think it’s practicable for all of us to become vegetarians. A totally plant-based food chain would consume even more fossil fuels and chemical fertilizer, and might actually kill even more animals as collateral damage. If our goal is the fewest animal deaths, we should all eat the largest possible ones grazing the least cultivated land.

But all this assumes animals, before and during slaughter, are at least treated humanely. Finally returning to Bentham’s suffering point. Whatever else can be said about our overall interspecies relationships, inflicting suffering on innocent sentient beings is indefensible. And while it can be avoided, as Pollan’s reportage about a model farm showed, our vast industrial American meat-producing machine tends to sacrifice such niceties to economic efficiency. Though it’s true that absent that industry, the animals would not even exist, their existence is no boon either to them as individuals or to their species when it’s an existence of misery.

Consistent with the book’s title, for Pollan this issue remains a dilemma. He does not advocate vegetarianism. He sees the problem as our simple obliviousness to the reality, modern consumers being thoroughly insulated from how food gets to us.** Transparency is his answer; if only we really knew, we wouldn’t tolerate the animal suffering. Producers would have to heed consumer qualms. Making meat costlier. We’d eat fewer animals, and “with the consciousness, ceremony, and respect they deserve.”

When pigs fly.

And what about me? Giving up meat entirely is hard; making ethical distinctions among meats even harder. Being human, my morality is imperfect. I live with that, perhaps consoled by being at least above average. Of course, everyone thinks that.

However, right after I finished Pollan’s book came an article in The Economist (“Fake Moos”) about great strides in developing plant-based imitation meat. It doesn’t yet taste quite the same, and costs more, but both problems are on track for resolution. So maybe we can have our cows and eat them too.

* He quotes Franklin that the great advantage of being a reasoning creature is that you can always find a reason for whatever you want to do.

** Unwilling to eschew his inner carnivore, Pollan decides he’s honor-bound to, at least once, eat something he’s personally killed. His successful wild pig hunt is detailed at length, with much nuanced meditation on what it all means. Initial atavistic elation mixes with later disgust and shame. But here too Pollan arrives at no definitive conclusion.