Why Some Economists Can’t See the Truth

Paul KrugmanPaul Krugman claims to not understand why smart economists would make claims that they know to be wrong. It is too bad that Krugman doesn’t read me, because I am going to use my super-powers of cynicism to explain why these economists behave in this way. But first, we have to consider the question that the economists are grappling with.

As you may know, Japan has a huge amount of debt because of its very long recession. It is currently about 240% of the nation’s GDP. Compare this to the freak out we have among conservatives in the United States with our debt level being just over 100%. (Note: this is ridiculous; most homeowners owe a lot more than they make in any given year.) So some economists maintain that one day, people who buy Japanese bonds may just require a higher interest rate than they are now getting. This would cause the Japanese government to have to pay much more to support its debt. Thus catastrophe would ensue.

The problem is that it doesn’t work this way. What would happen instead is that the Japanese yen would simply go down in value. And here is the critical thing: this would be great for the Japanese economy! Suddenly, Japanese exports would be in greater demand and the Japanese people would be importing less. The only potential problem would be that the yen would fall so much that it would cause an inflation crisis. But as Krugman noted, this “seems unlikely and certainly isn’t the way the warnings are usually phrased…”

So why is it that economists would forget about this and claim that Japan must enact austerity policies like the ones that are working so badly in the United Kingdom and throughout Europe? That is such an easy question! And I don’t actually think that Krugman is ignorant of this. He just can’t be seen as questioning the integrity of such a huge figure as Ken Rogoff. So he pretends not to know that Rogoff is just an apologist for the power elite.

There is one group of people who would be harmed if investors lost faith in Japan: the people who already have a lot of Japanese yens. You know: the owning class. But the Ken Rogoffs of the world can’t say, “Japan really needs to get its fiscal house in order or a bunch millionaires and billionaires are likely to lose some serious money!” But I doubt that people making these arguments are even aware of what they are actually doing. I suspect that they are just so used to seeing the world through the eyes of this class that it just seems natural.

But imagine if we could get economists to think in terms of workers! Imagine if the unknown assumption was always, “How will this affect working men and women?”! That would be something. But it won’t happen. The economics profession is like a priesthood. It’s primary interest is in the purity of its models. And workers just pollute that purity. If there were truth in advertising for academia, economics would be renamed “oligarchic apologia.”

The Problem With Small Government Conservatives

Simon Wren-LewisSimon Wren-Lewis wrote a great article today, The Imaginary World of Small State People. It is about this conservative notion that because they want a small government just for the sake of having a small government, liberals must want a big government just for the sake of having a big government. According to Wren-Lewis, there was a time when there were people on the left (in Europe anyway) who wanted a large government for its own sake. I’m not sure such people have ever much existed here in the United States — except for the explicit communists, who have never been a large enough group to think much of.

What definitely is true is that for my entire life, people on the left have been in favor of making “a more perfect union” by whatever means works. And that makes people on the left simple pragmatists. Maybe that is a problem. Maybe that’s why we were so susceptible to the con that was the New Democrats. One thing is for sure: the right is highly ideological and without an ideology to counter that, we are toothless in a turf war. If you have people who argue that the government should be destroyed on one side, and people who think the government should be whatever size is reasonable on the other, it should not be surprising that you end up with a government that is far too small.

There is another aspect of Wren-Lewis’ article that I disagree with. I don’t think that conservatives actually want a small government. They certain say that they want one. But when it comes to big government in the military, policing, and the bedroom, they seem to think the bigger the better. And let’s not forget that it just doesn’t cost that much money to feed poor people. You can serve up a whole lot of meals for the cost of a single roughly $100 million F-35.

But Wren-Lewis is dead on about the rhetoric of the small government conservatives. He correctly noted that most people really don’t care about the size of the government as an end in itself. (This includes many conservative voters.) He puts forth four problems he has with the small government types, but they are really all the same: the small government people are disingenuous. They don’t look at proposals on the merits because they are blinded by ideology. And they don’t look at evidence, because when you have an ideology, you don’t need no stinking evidence.

More concerning is the way that conservatives try to convince everyone that their policies work through pure force of will. Wren-Lewis quoted Chancellor of the Exchequer George Osborne and political commentator Janan Ganesh claiming that the liberals are going to lose big-time now that everyone sees that their austerity plans didn’t hurt the way everyone said they would. Except, no. Austerity in the United Kingdom since 2010 could easily have cut GDP by 5%. And cuts to social programs have inflicted enormous pain on the poorer classes.

I think Wren-Lewis gets the reasons why the small government cheerleaders don’t see the problem:

So how can small state people have the audacity to claim otherwise? Perhaps it reflects the power of an ideology that its protagonists want to see no evil. Perhaps it is because those hurt by austerity somehow do not count. But the claim that Osborne’s cuts have been such a success that they will cause a “deeper intellectual wound to the left than we currently understand” is simply delusional. These are fantasy ideas from those living in an imaginary world, while in reality the policies they support do serious harm.

What bothers me is that there is some sense to what the conservatives are doing. Eventually, economies do heal — even ones that are totally mismanaged. So if the George Osbornes of the world (like Margaret Thatcher before them) can just hold out long enough and avoid admitting that they have inflicted great pain in the name of hurting the macroeconomy even more, they can be rewarded. And I have no idea how you defend against this, other than to wait for the rich to so thoroughly destroy the social contract that the poorer classes start to push back.

Classes Don’t Need to “Understand” Each Other

Thomas FrankThe worst aspect of conservatives’ gripes about classism are the solutions they propose. Never do they suggest that we actually do something to mitigate the extreme imbalance of power between the social orders, because that would change them from compassionate conservatives into dirty commies. The farthest they usually go in this regard is to recommend that we vote for a candidate who shares our values, a guy with whom we can imagine chugging a can of beer while we’re both cleaning our rifles or talking about soybean yield or getting our hair cut in some really authentic small-town barbershop from back before the big-box stores killed small towns.

David Brooks is a daring writer, however, and he pushes it to the limit: We need a “common project,” he declares, in which Americans from different classes can come together to do something jointly and thus learn to understand one another. Such an undertaking, which sounds a lot like one of those team-building exercises that are always suggested by management consultants, would “improve social mobility” so that “social distance will decline.”

Yea, verily: When the venture capitalist shall dwell with the checkout clerk, and the payday lender will lie down with the coal miner, then brotherly concord will prevail at last.

The truth is, though, we already have a common project between the classes — it’s the economy. Technically speaking, the highly educated professional class does know how the other half lives, because they tell the other half how to live. They set their wages and hours. They make suggestions of what to eat and drive and squeeze onto their toothbrushes. They instruct them how to do their jobs — and they even offer friendly advice for how to rationalize it when those jobs get shipped to Mexico or China.

Now, there is something that would change this ugly class situation, and it’s not a society-wide project in which bosses and bossed come together for a series of exciting trust falls. It’s the opposite: An organization of workers that allows them to confront members of the other class and negotiate with them over wages, hours and the other things that actually determine the conditions of their lives.

Unfortunately, such organizations strike most conservatives as a perversion of the natural order. Try to set one up where you work and within minutes David Brooks’s tasteful fans in the C-suite would be on the phone to the Ferguson PD imploring them to show up in full combat mode and make you stop. But let workers form unions and it would actually do something huge and immediate to close the crevasse of inequality, increase mobility, and maybe put a big dent in racism and police brutality along the way.

No empathy from on high required. Do something about class itself, and the rich can keep their “classism.” Snobbery without power behind it is not deadly but merely amusing, a joke from a Monty Python skit long ago.

—Thomas Frank
Ann Coulter and David Brooks Play a Sneaky, Unserious Class Card

No Equality of Opportunity in Education

Vivian in not her bedroomRobert Reich has an annoying habit of claiming that education really is the ticket up the social ladder. It just isn’t the case. Consider Mark Zuckerberg. He wasn’t some poor kid who networked with the elites at Harvard and clawed his way to the top. Both his parents were highly paid professionals — certainly well inside the upper class. And then Zuckerberg didn’t even graduate. Or what about Daymond John? He had no college education. I realize that these are just single instances, the data on it is shockingly inconsistent. And the question is no longer, “Does a college education raise you up?” It is now, “Does the cost of the education pay for itself over the course of your working life?” On that issue the answer seems to be: probably. That isn’t anything close to what a college education would do for you in the 1970s.

But apart from this little affliction of Reich’s, he’s right about the problems with our educational system, How a Wealthy California Town Makes Sure No Poor Kids Attend Its “Public” School. In the article, he discusses the town of Orinda, which is very wealthy and so has a really well funded public school system. This is the number one thing that is wrong with our educational system: we give the rich far more money to educate their kids than we give to the poor. That’s real “equality of opportunity” for you!

To give you some idea of the inequality here, all the schools in Orinda, 94% white or Asian, get a perfect score of 10 on the GreatSchools rating system. Twenty miles away in Bay Point, a majority Latino town, the grammar schools get ratings of 2 to 4 points. Equality of opportunity! Equality of opportunity! Hooray! But that’s not all. The Orinda school district uses part of its torrent of cash to pay private investigators to make sure that the children in Orinda schools really live in Orinda. This is the public school equivalent of a gated community. For the rest of this article, just inject “Equality of opportunity!” after every sentence.

Reich highlights one such student: Vivian a seven-year-old Latina. Her technical address is in Bay Point of the Awful Schools. But she lives with her mother in Orinda during the week. Her mother is a live-in nanny for a rich couple in Orinda. And Vivian has her own bedroom. On weekends, they both live with the grandmother in Bay Point. So it is clear that the Orinda school district is using whatever means is necessary to get rid of the Latina interloper.

The article was written a week before the school was set to throw out Vivian. And as expected, the school did exactly that. But the whole thing blew up in the Bay Area news. So a day later, the school district reversed course. But what’s interesting here is that previous to this whole thing, the school denied Vivian a free school lunch because they said that she was an Orinda resident. So I guess the idea here was just to “Get the Latina!” at all costs.

But my main interest here is not about this particular student and this particular school. It is the broader issue that we have an incredibly unequal educational system. Some of our public schools are the best in the world. And others are right at the bottom. What’s more, the resources are being used poorly. The children at the bad schools are the ones who need the greatest help. But this is entirely typical of this country: aflict the aflicted and comfort the comfortable. I wonder when Billie and Mindy are going to start caring about this issue. My guess is: never.

See also: Education Reform Billie and Mindy Can’t Abide

Pietro Mascagni

Pietro MascagniOn this day in 1863, the great composer Pietro Mascagni was born. He is primarily known for four operas: Le maschere, Iris, L’amico Fritz, and Cavalleria rusticana. The last of these literally revolutionized opera — at least in Italy. It more or less created verismo opera — a more realistic approach to opera storytelling. For example, in Cavalleria rusticana, the hero comes home from military service to find that his girlfriend has married another man. So he seduces another woman to make his ex jealous. This works, so he casts the woman aside and takes up with the now married ex. Her husband finds out, and kills him in a duel. Rightly so: what a jerk!

Musically, I’m not that fond of Cavalleria rusticana. It is very much in the Romantic tradition. But Mascagni was still developing — he was only in his mid-20s when he wrote the opera. Just two years later, he wrote the charming L’amico Fritz. It is still performed, but I wonder that it isn’t performed more — especially compared to Cavalleria rusticana. Here is “Cherry Duet” — probably the most famous number from it:

Later still came Iris. It is a wonderful three act tragedy set in Japan. But apparently, the opera world only has room for one three act tragedy set in Japan, so Madama Butterfly is the only one that is performed. What you can most hear in it is a greatly expanded harmonic palette. But that was something that Mascagni was known for throughout his career: very creative use of harmony. He was also know — celebrated — for was his clear and forceful melodic lines. It is surprising to me that he isn’t a bigger deal in the world of opera.

Here is the Intermezzo from Cavalleria rusticana, which is supremely beautiful:

Happy birthday Pietro Mascagni!