Conventional wisdom is a pox on our society. The problem isn’t that it is wrong — often times it is not. The problem is that it is invisible. I noted a great example of this a couple days ago in an otherwise good article by Jonathan Chait, Why Benjamin Netanyahu Lost His Mind. It is about how the Israeli leader is really screwing up by alienating Obama and thus the entire Democratic Party. It is quite possible that Democrats will control the White House for the next decade. Is he really looking out for the best interests of his country? I doubt it. But craven politicians are not something unique to the United States.

But in discussing the issue, Chait wrote, “One obvious cause of the Zionist right’s deepening millennialism is Iran’s quest to obtain a nuclear weapon.” So it isn’t the belief of the Zionist right, it is the fact that Iran is in a quest for a nuclear weapon. How it is that Chait “knows” this is not a mystery: it is what everyone “knows”! But it is not based upon evidence. It just seems right. Of course Iran would want a nuclear weapon! What fundamentalist theocracy wouldn’t want a nuclear weapon?!

I know that people may scoff and my having a problem with this, but I have a good reason. In the lead up to the Iraq war, it was just taken as a fact that of course Saddam Hussein had weapons of mass destruction. And the fact that Hussein repeatedly said that he didn’t have these weapons only made people think that he must. This culminated in unintentional high comedy when Scott Pelley (but there were many others saying the same thing), “So why keep the secret [that he had no WMDS]?” There was, of course, no secret keeping. In fact, the very news outlets that claimed Hussein kept this secret had previously reported his denials. For example, before the invasion, Bob Schieffer reported, “Saddam Hussein says he has no weapons of mass destruction, but should we believe him?” The answer was: of course not! Iraq was our enemy, so it wasn’t necessary to find evidence.

With regard to Iran, all the actual evidence indicates that Iran does not have a nuclear weapons program. After the Iranian revolution, the government shut down the Shah’s nuclear weapons program. Much later, the Iranian government seemed to do some fairly trivial research toward nuclear weapons. But for at least 12 years, there does not seem to have been any Iranian nuclear weapons program. But there could be. Just as with the teapot orbiting the sun between Earth and Mars, we can’t prove the negative.

The casual assumption that of course Iran has a nuclear weapons program is very dangerous. There are many powerful people in the United States who want to go to war with Iran for the very purpose of stopping its nuclear weapons program. Because they “know” that Iran has one and that it would be the end of the world if Iran got such a weapon. And these people are part of a larger delusion that we know that Iran has a nuclear weapons program.

But we don’t. And if we invaded Iran, I’m pretty sure that we would find that Iran did not, in fact, have a nuclear weapons program. And we would doubtless hear from many mainstream commentators the burning question, “So why keep the secret that Iran had no nuclear weapons program?” We have the perfect media system — for a fascist state.

Afterword

While looking for images to go with this article, I came upon a lot of political cartoons. They were almost without exception mocking the idea that Iran didn’t have nuclear weapons. What good is a free press when even the political cartoonists all repeat the government line?

Despite the fact that I often hate the results of them, I greatly admire heterodox economists. It is really important to have people who push against the grain of what everyone else “knows.” Usually, everyone else thinks they know things because they are more or less right. But not always. And sometimes heterodox economists have important results that everyone just chooses to ignore. Alan Greenspan showed that unemployment could go way down without causing inflation, yet most economists continue to believe that an unemployment rate much below 5.5% will bring back the 1970s. This tends to be the way of it. When a new idea comes around that helps working people, the economics profession is very skeptical.

The problem with hererodox economists is that when they come up with an idea that is completely wrong, but which justifies what the power elite want to do, it is accepted as Hoyle in much of the policy establishment. There were two big examples of this recently. First there was Alberto Alesina’s work that purported to show that cutting government spending in a recession was consistent with economic growth: expansionary austerity. And then there was Reinhart and Rogoff’s idea economic that growth stalled out after government debt reached 90% of GDP. Neither of these theories was ever compelling, but it told conservatives what they wanted to hear, “The budget must be balanced!”

The great Mike Konczal at Next New Deal brought my attention to another heterodox paper from a group at National Bureau of Economic Research (NBER) that already has conservatives all tittering. He discussed it in, Did Ending Unemployment Insurance Extensions Really Create 1.8 Million Jobs? The idea is that cutting off unemployment insurance to 1.3 million people suddenly made 1.8 million people employed. It isn’t impossible in theoretical terms; it could be that there is a kind of multiplier effect: when one person gets a job, he’s able to spend more and that works its way through the economy.

One of the problems with the paper is that it uses a model that is “an empirical disaster.” This is very typical of Chicago school type models. Decades ago, they decided that it wasn’t necessary for their economic models to actually mimic or predict the real economy. And there is something to be said for this. One can learn things from models that aren’t predictive. Just the same, because of this, pretty much all the policy models are New Keynesian. And one has to wonder why economists would make claims about the real economy when using models they know don’t model reality.

There are many other problems with the NBER paper — read Konczal’s article for all the details. I’m more interested in (and worried about) the fact that this will be used by conservatives to claim that the only reason we ever have unemployment is because we are so nice to the unemployed. (Insert Paul Ryan hammock remark here!) Somehow, the 25% unemployment rate in 1930 — before these was UI — doesn’t seem to matter to these people. We end up with these horrible false equivalence arguments: “Some economists (99%) say that unemployment insurance raises the unemployment by a couple of tenths of a percentage point, and other economists (1%) say that unemployment insurance raises the unemployment by over a percentage point. Who can say?!”

This is a fundamental problem with economics and public policy. And this was the only valid criticism of Seven Bad Ideas. Many people, most notably Brad DeLong, noted that the bad ideas listed in the book weren’t really what economists believe. But the bad ideas are everywhere in economic policy debate. And heterodox papers like this new one from NBER only intensify this problem.

Watching economic policy debate feels very much like watching a doctor set a broken arm while the patient dies with blood gushing out of an artery. We look at minor issues and ignore major ones. And then when someone like me points this out, people complain, “Well at least they’re doing something!” That might be a sensible retort if the minor things that were being done were unquestionably good. But that’s never the case.

Take the case of Obama’s new budget line item that gives $15 million to states so that they can evaluate the costs and benefits of professional licensing. Jonathan Chait wrote a very excited article about it, Obama Budget Attacks Big Small Government. In many ways, I agree. The truth of the matter is that if you are going to be oppressed by the government in the United States, it is almost certainly going to be by state and local government — not the federal government. And a lot of professional licensing really is stupid. I’ll go further: there are tremendous state and local regulations that are extremely onerous to people like me who operate what I’ve come to think of as micro-businesses — businesses that consist of one or two people that often don’t even have store fronts.

Where I part company with Chait is in thinking that licensing requirements are really what are getting in the way of people climbing the economic ladder. To begin with, property tax laws that require businesses to pay taxes on all their inventory that they might some day sell are far more inhibiting than licensing. Or consider one of Chait’s favorite examples: barbers. Having to go to school and be licensed is certainly a barrier to entry. But it isn’t as big a barrier to entry as having to rent a shop rather than working out of your house.

But the macro-scale problem is worse. Becoming a barber is currently a path to the middle class precisely because it is a licensed profession. Get rid of that barrier to entry, and more people come into the field, and the quality of the job goes done. And pretty much, the quality of the job goes down to the same extent that it becomes an easier job to have. Allow people to have barber shops in their kitchens and it becomes as much a pathway to the middle class as itinerant farm work.

But hey, that’s the free market, right? Sort of. The truth is that writ large and long, the economy would grow as a result of cheaper haircuts. But there are two reasons why we shouldn’t care. The first is just a matter of fairness. Why is it that it is always the middle and lower-middle classes that have to suffer so that the poor might get a small advantage? We saw this during many of the lame attempts at integration in the early 1970s. The ultimate effect was that the lower and middle classes were disrupted and minority groups ended up just as segregated as when they started. This is what happens when the power elite decide that the only way to help the disadvantaged is by disadvantaging a different, almost as powerless, group.

The other issue is that I just don’t care about economic growth. Over the last four decades, we have seen the effect of economic growth. The rich (top 1%) have gotten way richer. The upper half of the upper class (top 10%) has gotten marginally richer. And the rest have either gotten nothing or have actually lost. So when cheaper haircuts stimulate economic growth, there is no reason to think that the very people who see their wages cut will get any offsetting benefit from it.

Last week, Dean Baker discussed, Ubernomics. It turns out that despite the fact that Uber drivers have enormous upfront costs and are basically just their own businesses, they seem to make less per hour than traditional cab drivers. This doesn’t even take into account that Uber and similar services are flouting the law. As Baker noted, “Find a way to get around the rules and then claim it as a great innovation.” Regardless, this is also the typical story of our economy: lower wages for poor and middle class workers while the rich pocket the savings.

None of this is to say that we shouldn’t look at professional licensing. But it is a minor issue. We are looking at it because it is an issue that doesn’t threaten the power elite. I understand: that’s politics. But there is a problem with supposedly liberal commentators claiming that this is something great. It isn’t. The long-term effects of this will be to lower the wages of middle class workers. But on the up side, Jonathan Chait will get cheaper haircuts.

I learned from my father today that a FedEx driver he was talking to has been greatly harmed by Obamacare. It seems the driver was complaining because he used to pay $1,200 per year for his health insurance and now he has to pay $3,000. Thanks Obama! I smelled a rat — a dead one that had been festering for a few days. I mean, how is it that Obamacare would have any effect on employer provided healthcare? I could think of a few reasons, but they weren’t compelling. It could be that the insurance the company was providing was something useless and Obamacare does require that insurance not be useless. But that was unlikely at that cost. It could be the tax on “Cadillac plans.” But that would not cause the cost to go up two and half times.

Much more likely was something we are seeing far too often. Many companies are using Obamacare as an excuse to cut worker benefits. It is very difficult for an employer to get its workforce to take a pay cut. But making them pay more for their insurance is much easier. And doing it because of “Obamacare” makes it that much easier. But could workers really be that gullible? With a willing media that has manage to confuse and distort the law, it isn’t much of a problem. And without a union to protect and inform employees, there is no one to prevent it.

There hasn’t been much coverage of what happened, but I did manage to find an article in The Commercial Appeal, FedEx Shifts Gears on Health Insurance. But based upon the article, it doesn’t look like the company was even pushing the Obamacare angle — although it may well have been internally. The only reference to it is that FedEx is making this change “to protect against Obamacare’s penalties on overly generous plans in the future.” This is a nice bit of disingenuousness, “We’re cutting your benefits now because there might be penalties in the future!” But this is a minor thing — it isn’t the main rationalization for the cuts.

The main reason for the cuts is the same as it always is: profits. The article stated, “The change is designed to slow down one of the company’s fastest-growing expenses.” But given that healthcare represents 3.5% of their expenses, that doesn’t mean quite as much as it could. What it really means is that the company wants to increase profits at the expense of its workers. There was a time 50 years ago when this would have been considered outrageous. Today it is thought of as the way things ought to be and even a great thing. As we are told all the time, “The only purpose of a corporation is to increase shareholder value!” Yea team.

But the whole affair highlights how American politics is so screwed up. Here is a worker, who in decades past would have been proudly union — in solidarity with other workers. But now, he’s repeating the lies of the corporate class. The problem isn’t that the company sees easy profits by squeezing him. It is that all those poor people are getting free healthcare and all the corporations are getting unfairly attacked.

Afterword

From the experience of my business partner Will, who has a great deal of shipping experience, the US Postal Service is by far the best shipping company. Both FedEx and UPS suck. This goes along with my experience as well. And the Republican attacks on the USPS are all about providing FedEx and UPS with access to the most profitable USPS routes so they can leave the unprofitable ones to the government so that we taxpayers can pay for them. Capitalism when it is good for corporate America and socialism when it isn’t! And many American workers cheering it on.