Economics and the Neolithic Revolution

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I came upon a very exciting article headline, On the Economics of the Neolithic Revolution written by Kevin Bryan. The Neolithic Revolution was the time about 12,000 years ago when humans transitioned from nomadic hunters and gatherers into stationary farmers. I find it fascinating. What’s more, I have my own idiosyncratic ideas about it. For example, it is usually claimed that the invention of farming led to settlements. But as I’ve discussed before, there are settlements that started before farming. I tend to think that people settled down first. But most likely, it was a muddle with people hunting and gathering while they were also playing around with agriculture.

Bryan’s article on the economics of the Neolithic Revolution, is actually a review of a couple of recent papers. So my problem with his article is not exactly his fault. But he noted that the lives of people in settlements were not at first as good as those in nomadic tribes. But the reason for thinking that is so “economist stupid” that I want to scream: nomadic people were taller. Phrases like “man does not live by bread alone” are apparently drummed out of economics students. And Bryan even noted that those living in settlements showed fewer signs of “food availability shocks.” Humans, you may have noticed, are risk adverse. Most people would choose to have a dependable but lower quality diet than to have a higher quality diet that went along with significant risk of starvation.

The broader issue is that there are lots of other reasons that people settle down. And I don’t buy this whole idea that farming is this back-breaking work. Farming is back-breaking during certain times of the year. For most of the year, it’s actually quite a relaxed lifestyle. Hunting and gathering, on the other hand, is something that you have to do constantly. Plus, you are far more threatened by the vagaries of life. In a settlement, you can always escape inclement weather. And you are much less likely to be attacked by a leopard.

Bryan does bring up some good questions, however. He noted that inequality was worse in settlements. He doesn’t mention it, but rats were a huge problem too — which is why the invention of pottery was so important. But there are no doubts that settlements were not a complete improvement. Again, however, I think it all comes down to risk aversion. The rise in inequality probably happened because settlements tended to attract raiders. This caused the formation of governments for collective protection. But it is probably better to think of the mafia than a representative democracy.

Above all, what bugged me about the article was the two reasons offered for why people in settlements would create statues and such, which had no material value. Again: this is “economist stupid” thinking. Why did people create cave paintings? But okay, let’s look at what the economists come up with. First is the idea that it was the social equivalent of braying: to show off the strength of the society, “See, we are so strong, we can do useless things!” Even Bryan thinks that’s pretty lame.

The second idea is building totems acted as a kind of social branding — a way of establishing norms in the settlement. But doesn’t that beg the question? Isn’t the fact that people are willing to build these totems an indication that the norms have already been well established? To me, it is all about social bounding and shared meaning. The totems were something that the people believed in. In most cases, they were of a religious nature, which means — Listen up, economists! — that building them wasn’t rational.

No one makes individual choices based upon what is most rational for the collective. No one thinks, “I’ll be nomadic because statistically speaking, my children will be two inches taller!” That’s the kind of thinking of people playing Dungeons & Dragons. People live their lives primarily to minimize discomfort. It really has surprisingly little to do with economics — as powerful a way as it is for understanding the way the world works.

Afterword

Just to be clear, since economists do occasionally come by here: I am not saying that any of the economists involved in this are stupid. Far from it! I assume they are all brilliant. But people get caught in certain ways of looking at the world and lose their grip on reality. Models become reality. And since people are rational in the models, they must be rational in reality. It’s totally understandable, and I have done it myself.

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Mark Blyth on the Greek Situation

Mark BlythIt’s not a question of Greek being blameless. Of course they’re blameful. But that doesn’t matter if people were giving them money. You can’t have over-borrowing without over-lending. Why is all the conversation about the terrible over-borrowers rather than the reckless over-lenders? …

Nobody gets called on their busted calls. The number of times I’ve seen, “Europe has turned the corner into growth,” and then it went straight back into recession. If you’re a bookie and you continually make bad bets, you go out of business. If you’re a doctor and you continually injure patients, they put you in jail. But if you’re a financial journalist or an institutional economist, then you can make bad call, bad bet, and bad policy time after time, and you get promoted. That’s what’s most annoying about it…

I just think that when you start to do things like replace governments, and have something called the Eurogroup, which decides that government shouldn’t be in power, that’s kind of dangerous. I don’t think that’s kind of leftist or rightist or whatever. And everything that I’ve said here is based on evidence — chapter and verse, real data, the whole thing. It’s not a set of, “I just made this up” opinions. What gets me is the faith-based reasoning on the other side, which is, “Well, the Greeks haven’t tried hard enough!” Well, I can show you evidence that they’ve actually done a heck of a lot of reform. “Yeah, that doesn’t count because they’re all lazy!” But, in fact, they work 800 hours more than the Germans. “Yeah, but they don’t pay taxes!” But neither do rich people in the United States. And you can go point after point after point, and it makes no difference. This is an article of faith.

—Mark Blyth
Interview with On the Media

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Dishonest Republican Meddling at the CBO

Congressional Budget OfficeOne of the first things that the Republicans did during this term of Congress was to change the way that the Congressional Budget Office (CBO) “scored” proposed changes to the budget. The Republicans have long been upset that the CBO does not use “dynamic scoring.” This is when stimulative effects are taken into account. An example will help to explain it.

If you ask a Republican, she will very likely tell you that tax cuts pay for themselves. The proposed mechanism works as follows. If you cut taxes, the government will have less money coming in as a direct result — no one questions that. But given that people will have more money, they will spend it. This will stimulate the economy. The increased economic activity will increase tax revenues. There is no question that this does, in fact, happen: if you cut taxes by $100, it will hurt the budget by something less than $100. But no reasonable person thinks that the stimulative effect will end up with the full $100 in taxes being replaced. And the reason no reasonable person thinks this is because we have lots of experience with Republicans cutting taxes, saying it will pay for itself, and ending up with a big gaping hole in the budget.

But I’m not against dynamic scoring — as long as it is done reasonably. Part of the problem with introducing dynamic scoring in the CBO estimates is that it is hard to say exactly how much of this indirect effect will be produced. And that means that the whole thing can be politicized. But it doesn’t look like the CBO is turning into some kind of crank outfit that is going to say that cutting the top marginal tax rate to 25% would be a-okay because of stimulative effects.

But the Republicans have stacked the deck. That is clear from the CBO’s recently released report, Answers to Questions About Dynamic Analysis. You might be wondering, “If tax cuts partially pay for themselves, doesn’t government spending partially pay for itself because of its stimulative effect?” Yes it does! In fact, the mechanism is more direct. If you give out food stamps, they must be used. A tax break could just be hoarded. And in fact, some percentage of it will be. So anyone arguing for dynamic scoring who is being the least bit intellectually honest would call for the process on both taxing and spending sides of the ledger. But of course, that is not what the Republicans have instructed the CBO to do.

The CBO gives a special stimulus for tax cuts but not for extra spending. In an e-mail, Dean Baker told me that the base CBO model does include “some very modest productivity impact of public investment” — but that limited form of spending is “certainly on the low end of what research indicates.” The whole point of it is to weight the debate so that things like welfare programs look extra costly and tax cuts look extra thrifty. The whole thing is so frustrating. I really don’t mind that conservatives have different ideas on how best to create a booming economy. But this is just pure deception. And I don’t know of any liberals doing the same thing. In fact, liberals tend to under-sell their policy ideas.

But of course you won’t be hearing about any of this on the mainstream news. And I understand: it is too technical for most people. But CBO budget projections will continue to be quoted in mainstream news, as though they are the same as ever. And they won’t be the same as ever. There will now be a conservative thumb on the scale. And will be there at least as long as the Republicans control Congress.

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The Oligarchs Are Not Warning Scott Walker; They Are Protecting Him

Scott WalkerThere has been a lot of attention paid to the Maggie Haberman and Jonathan Martin article in The New York Times, Scott Walker’s Hard Right Turn in Iowa May Hurt Him Elsewhere. It’s about how a “growing number of party leaders” are unhappy with Scott Walker highlighting his extreme social conservative views. When I first saw it, I smelled a rat. But it would seem that most commentators are buying it. At No More Mister Nice Blog, Steve M wrote, Scott Walker Finds a Horse’s Head in His Bed. And Jonathan Chait wrote, Obama Picks a Labor Fight With Scott Walker.

Who Scott Walker is has never been a mystery — most especially for “party leaders.” Walker’s political problem — in both the primary and the general election — is that he looks very much like the candidate bought and paid for by the oligarchs. Remember back in April when David Koch said that he and his brothers supported Walker? This was immediately walked back, but no one doubts that Walker is the Kochs’ boy. And this is not just a problem among liberals. Remember: the Republican base goes along with the economic policy, but its focus is on social policy — most especially hating fags, spics, and welfare queens. Although easily manipulated by the power elite, the Republican base doesn’t like to see itself as the plaything of the rich.

So I see the Haberman and Martin article as part of an establishment campaign for Scott Walker, not a warning to him. This is a way for them help what looks day by day to be a flagging campaign. Walker has seen his polling drop from roughly 22% in April to less than 18% today. And given that Wisconsin boarders Iowa, it is expected that Walker will win big in the state. If he doesn’t, it means real problems for his campaign. Meanwhile, Ted Cruz — the man who Walker is supposedly chasing — has 6% in Iowa now — the same he had back in February. In addition, Mike Huckabee has seen his support go way down.

What this all means is that Walker is not catching on. Slipping support for other candidates — most especially social conservatives — are not benefiting Walker. Since Walker being very clear that he too hates immigrants and loves Jesus isn’t doing the trick, the power elite have stepped up their faux attacks, “He’s too much of a social conservative! This won’t play in a general election!” I’m sure they are just sad that Walker doesn’t star on a television show so that they could fire him to make him seem all the more authentic.

One of my biggest complaints about the Republican base is not that it is vile, because to a large extent it really isn’t. My complaint — similar to Thomas Frank’s — is that it is easily manipulated. No one understands this better than the Republican establishment. They understand what it takes to win elections. And they know that once in office, Walker will do just what they want him to — cut their taxes, savage the social safety net, destroy regulations. As much as Scott Walker’s hateful personality is a problem in a general election (and it really isn’t all that much), they know it can be whitewashed with a nice narrative about his being the son of a Baptist minister.

Maybe Haberman and Martin and Steve M and Jonathan Chait are right about the donor class freaking out about Walker. But I think this is naive. It seems much more likely that the oligarchs are trying to create a narrative about him being independent of themselves. And that’s exactly the kind of message the oligarchs would want to push about a politician who is absolutely a servant of the oligarchs.

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Morning Music: The Clash

I Fought the Law - The ClassThe great thing about Sonny Curtis’ “I Fought the Law,” is that it takes the usual rock-n-roll bellicosity and turns it on its head. I’ve always had a problem with Bruce Springsteen’s early work because it was all about how we’re gonna drive this car out of town and conquer the world. It offends my sense of dramatic believability. I much prefer “The River,” where an older man looks back on his naive younger self. Anyway, “I Fought the Law,” is wonderfully perverse from the perspective of a traditional rock worldview.

What’s more, the wording is very important. It isn’t, “I fought the law, but the law won.” That would at least go somewhat along with rock bellicosity. I fought the system but fate was conspired against me! No, the wording is, “I fought the law, and the law won.” It is axiomatic. If you fight the law, the law will win. Things didn’t go badly for it. They went exactly as you expected them to go. In fact, maybe you should be glad that you are breaking rocks in the hot sun and not dead. Resignation in rock-n-rock is a great thing.

Here is The Clash’s iconic rendering of the song live at the Lyceum Theatre, London back in 1979.

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Anniversary Post: Piper Alpha Explosion

Piper AlphaOn this day in 1988, the Piper Alpha oil production platform exploded, leading to the deaths of 167 men. These platforms are a whole lot larger than people normally think. The Piper Alpha was 474 feet above the surface of the water. That is more than twice the distance from the roadway of the Golden Gate Bridge to the water. In other words, people can’t easily escape a fire by jumping.

The Piper Alpha was originally designed to be safe. When it went into operation in 1976, it contained three firewalls between where the most dangerous work was done and where the men lived. But it was later converted from its initial purpose of drilling for oil to the new purpose of drilling for natural gas. This basically destroyed the original design. Let’s be clear about that: why design and build a whole new platform when that’s going to cost money? So as always, the company — Occidental Petroleum — was fine with safety, as long as it didn’t add much in terms of costs. When costs are substantial, lives don’t matter, because those who are getting the quarterly bonuses are not working on the platforms.

By 1988, the platform was in need of major maintenance. By July, they had taken out its Gas Conservation Module to replace it. This meant that they could not drill for natural gas. But instead of just shutting down the drilling while the repairs were going on, the company put it back into oil drilling mode. They were drilling almost 120,000 barrels per day. None of which is to say that this is the reason for the explosion. There were mistakes that were at least nominally made by workers. But the larger context is that Occidental Petroleum did not have proper procedures in place and, as always, put profits before people. No criminal charges were ever filed against the company, and I’m sure all its executives went on to have have very nice careers and retirements.

We mark this day 27 years ago when 167 men died as a result of corporate greed and incompetence on the Piper Alpha.

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Frank’s Unskewed Score: USA and Japan Tie

Soccer - USA vs JapanLast night, I sent an email to my cousin, “Are you a soccer fan? Looking forward to the big game tomorrow? I figure since we have 2.5 times the population of Japan, we should have to win by 2.5 times as many points.” Well, by that standard, today’s game was a tie. I discussed this last year, You Don’t Care about World Football. At that time, I scoffed at the fact that Americans were excited by the fact that we beat Ghana, which has a population just 8% of ours. So go ahead and feel good about the game. That’s fine. But it really isn’t that big a deal.

And I was rooting for Japan. Because I’m just like that.

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Democracy Wins in Greece

Greek ReferendumGreek voted no to the austerity plan that the Troika was forcing on it. I’m a little surprised that it went down to such a stunning defeat, “Greeks voted by more than 60% to 40% in support of the prime minister.” This is much different from what the polls showed, which was that it was a tight race and that the margin would be razor thin. I’m thinking that the polling was skewed toward the rich. But it hardly matters. This is a good result, even for those who thought Greek should agree to decades more of crushing austerity. At least the current Greek government has a mandate.

Of course, I’m glad for the no vote because I think it was the right decision on the merits. I discussed this earlier today, The Shortsighted Viciousness of the Greek Haters. And it is the right decision in so many ways. But I think the most important way is that the no vote was a vote for democracy. If the Greeks had voted yes, they would have been admitting that democracy doesn’t exist. Or at least that democracy doesn’t exist if the Troika doesn’t like the government. Of course, this isn’t over. And the Troika will now do everything it can to make the Greek people regret this vote.

But we should be clear about what cannot be done. On Friday, James Galbraith wrote, Nine Myths About the Greek Crisis. His first myth was, “The referendum is about the Euro.” He noted that a lot of people had been talking about how a yes vote would make Greece exit the euro and the EU. Syriza — the Greek government — has always maintained that it is committed to both. It has been those who want to control Greece that have made claims otherwise. As Galbraith noted, “And legally, according to the treaties, Greece cannot be expelled from either.”

That doesn’t mean that the Troika won’t do everything it can to push Greece out of the euro. The European Central Bank (ECB) has already pursued policies designed to bully the country. In February, it stopped direct funding of Greek banks, only providing so called emergency liquidity — which was very expensive. And then a couple weeks ago — after Syriza backed out the negotiations and called for a referendum — the ECB capped support causing a bank run requiring the initiation of capital controls. It’s only going to get worse.

I must admit to being confused as to where things go from here. What I assume will happen is that the Troika — and really, pretty much all of Europe — will see this referendum as just another example of how terrible Greece is. And this will lead to the Troika doing everything in its power to harm the country. And it may just get to the point where Greece has no practical alternative to leaving the euro. I certainly think that’s the best thing for Greece in the long run. But it’s going to be very difficult — and dangerous — in the short term. I wish them the best. And I certainly hope that the Troika comes to be seen widely for the brutal and incompetent minions of the power elite that they have shown themselves to be over the last five years.

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History of Today’s Referendum in Greece

GreeceFive months ago, the deal reached between the Syriza-led government and the Troika boiled down to this: the creditors could fix broad objectives, from tight fiscal policy to privatizations, but the Greek government would have the margin for maneuver to choose the policy mix with which to achieve these goals. Obviously this was a major climb-down for a party whose political purpose was opposing austerity. But lacking leverage, the Tsipras government took this medium-term deal in the hopes that it could at least consolidate its political support by making austerity less regressive and structural reforms less transparently plutocratic.

What we’ve just seen is this uneasy truce being shattered by the creditors. With a slow-motion bank run taking place in Greece, the creditors took the chance to take the hardest of lines in the most recent negotiations. And Syriza essentially folded. Their most recent proposals acceded to a severely intensified austerity, with no commitment by creditors to debt relief. The only caveat demanded was that the lowest pensions would not be cut and that the tax burden would be increased in a not-entirely-regressive manner: a mix of heavy VAT increases (with carve-outs for medicine, food, and electricity) and taxes on the middle class and corporations.

The government’s proposal for austerity with a human face was already a huge stretch: denounced by Syriza’s left and by angry pensioners in the streets, it would very likely have led to the party’s split. But even this plan was rejected by the IMF, who, without a hint of irony, suggested that taxes on business profits would be recessionary, and that the vast majority of the package should thus be spending cuts, rather than taxes.

It’s difficult to escape the conclusion that the creditors’ latest proposals were about regime change more than economics. The creditors had won a total victory, but were unsatisfied with a solution which didn’t eliminate even the fig-leaf with which the Syriza-led government would defend its political credibility. The last fragile pretense of sovereignty was repudiated: not only would its creditors set the objectives of Greek policy, but they would decide in detail the policies themselves. This was a bridge too far, and Tsipras pulled out of negotiations suddenly and declared a referendum on the Troika’s latest proposals, set for Sunday.

—David Attewell
Putting the Greek Referendum in Context

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Finessing God With Same Sex Marriage Bigotry

Bigot Pride MarchMark Joseph Stern made an excellent point over at Slate, Two Clerks Resigned to Avoid Issuing Gay Marriage Licenses. Good for Them! His point is that there are all kinds of homophobic bureaucrats who want the special right to not do their jobs. At least the two clerks who he talks about in the article showed integrity: they saw that their personal feelings stopped them from doing their jobs, so they quit. Although I think they are wrong about their positions on same sex marriage (so does Stern), I respect people who are willing to suffer a loss for it rather than just whine, which is the normal reaction.

But I’m struck by the fact that Christians seem to think that God cares about same sex marriage. If one is not a literalist, there is no problem at all. The discussions of homosexuality in the New Testament is mostly indirect, and when it is direct can be interpreted as discussing homosexual lust — and the whole Bible is down on lust as a general matter. Most of the Biblical arguments that people make against same sex marriage are based upon passages that actually just talk about procreation and opposite sex marriage — there is nothing explicit about same sex marriage. And if these passages mean that God doesn’t like same sex marriage they also mean that he doesn’t like marriages between old people.

But I’m more interested in the Biblical literalists. Leviticus 20:13 says, “If there is a man who lies with a male as those who lie with a woman, both of them have committed a detestable act; they shall surely be put to death. Their bloodguiltiness is upon them.” This is awkward syntax, but the point is that the men shall be put to death, not something like, “Well don’t be shocked in God strikes them dead!” The New Living Translation, for example, translates the passage, “They must both be put to death, for they are guilty of a capital offense.” The Holman Christian Standard Bible translates it, “They must be put to death; their blood is on their own hands.” The International Standard Version provides, “They are certainly to be put to death.”

So God wants homosexuals put to death long before they start marrying. Yet everywhere you go in America, you find Christian literalists — lots of them — who are not putting Neil Patrick Harris to death. In fact, they are not even calling for his death. I think these people lack integrity. But I understand. It really does go against natural human impulses to kill other people, even if your holy book says you should do it. But why is it okay to be wishy-washy about something God told you to do (killing the gays) and not about something that he was at best unclear about (stopping the gays from marrying).

According to Gallup, roughly 30% of Americans think, “The Bible is the actual word of God and is to be taken literally, word for word.” This must be the group that is so concerned that giving out marriage licenses to same sex couples will cause them to burn in hell. But I just don’t see God saying to these people, “Well, you didn’t do what I explicitly told you to do. You just brushed that aside because it was hard to do. But you did make a big deal about giving out marriage licenses to the people I told you to kill. I guess that’s good enough, welcome to heaven!” I don’t see it happening that way. But for all the literalists’ claims, they seem to think that they can finesse God. And that, beyond anything else, is offensive.

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The Shortsighted Viciousness of the Greek Haters

SyrizaToday is the Greek referendum. Will the people be so afraid of the oligarchs that they will vote to accept savage austerity, aimed at the bottom of their economy? In a fundamental sense, it doesn’t matter. Even if the people vote “no” — as I think they should — it will not be an overwhelming victory. As in the United States, apparently, half the people in Greece still think the best thing is to allow the power elite to bash in their heads with ball-peen hammers. And as I’ve noted many times before, people are very risk adverse. Doing what all the “smart” powerful people want them to do is a natural response, even if the last five years of failure of the “smart” people ought to give cause for reflection.

But I don’t blame the Greek people. And I’m not really very interested in talking about them. I am interested in talking about the German people — and more specifically, the power elite who have caused the German people (and many others besides) to think of Greece as a badly behaving child. It reminds me of something that Paul Krugman used to say all the time, “Economics is not a morality play.” It doesn’t matter what Greece did in the past, there is a situation today. And regardless of how badly Greece behaved in the past, even if you did think that it needed to be punished, wouldn’t the last five years have been enough? Isn’t it time to move on?

Of course, the issue isn’t about “morality” for the power elite. That’s just what they use to make the German people puff themselves up as the paragons of virtue while looking down at naughty Greece. The power elite are involved in economic engineering. They are trying to turn Greece into the kind of “free market” dystopia that will allow them to take an ever larger fraction of the European economy. And that makes them just like the power elite here at home.

Right now, Syriza controls the government in Greece. The Troika and the power elite that it represents, could have decided to make the best of that situation. But instead, it set about destroying the government — even going to the extent of not allowing Syriza to save face after it had given in to every conceivable demand — totally repudiating everything it was elected to do. And let’s suppose that the power elite get what they want. Suppose that the Greek people vote for the austerity. It will be the end of the current Greek government. And it will send a powerful message to people in struggling euro countries.

But what will that message be? The power elite think that message will be that that their will is supreme and that the people should never forget that democracy is a myth and that the power elite will crush them should they ever vote to do what the people actually want. That might be the immediate effect. But in a year, a month, even a day, people are going to start thinking differently. People are going to conclude that they can’t depend upon those nice people on the left, so maybe they should give those strong people on the right a look.

A big part of the EU project was to eliminate the possibility of another world war. But I guess no one thought that whole thing through. The EU has provide the main belligerent of both the world wars — Germany — with unrivaled political power due to its economic power. I’ve watched in amazement over the last five years as Germany has abused its power. If Greece turns into a fascist state — or just a failed state — it will be because of the power elite of Europe. But the German people are not worried about the shortsighted greed of the power elite; they are worried about teaching the Greek people a lesson.

Regardless of what happens, it is going to be a bumpy ride. Greece should have left the euro zone five years ago. The Germans — and to be honest, the whole of Europe — was never going to allow the Greek economy to heal.

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Morning Music: Renaud

Mistral Gagnant - RenaudAfter the Fourth of July, I think we could use a little French music. So I offer up to you Renaud — a French singer-songwriter so popular, he actually has an English language Wikipedia page. We are going to listen to a very sweet song, “Mistral Gagnant” off his most successful album, 1985’s Mistral Gagnant. The title refers to a kind of candy, apparently. The song is sung to Renaud’s daughter and reflects on his own childhood, including stealing candy from the store.

People know that I’m fond of French film and music. But that’s not exactly true. I do tend to like things more if I know that they are French. I like some idea I have about the French. And the one time I was there, I liked it very much. But it is rather that I like certain kinds of French films and music. I’m sure that France produces all the same dreck that America does. But thankfully, I’m spared that. Also: I’m very fond of wine and cognac.

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