Grasping Reality on TypePad, by Brad DeLong

Note to Self: One take on how we can learn better:

• Andy Matuschak and Michael Nielsen: How Can We Develop Transformative Tools for Thought? https://numinous.productions/ttft/: 'It’s difficult not to be disappointed, to feel that computers have not yet been nearly as transformative as far older tools for thought, such as language and writing.... We believe now is a good time to work hard on this vision again. In this essay we sketch out a set of ideas we believe can be used to help develop transformative new tools for thought...

• Andy Matuschak: Why Books Don’t Work https://andymatuschak.org/books/: 'Books are magical! Human progress in the era of mass communication makes clear that some readers really do absorb deep knowledge from books... the people who really do think about what they’re reading.... Readers must learn specific reflective strategies... run their own feedback loops... understand their own cognition.... These skills fall into a bucket which learning science calls “metacognition”.... It’s challenging to learn these types of skills.... Worse, even if readers know how to do all these things, the process is quite taxing...

• Andy Matuschak and Michael Nielsen: Quantum Computing for the Very Curious https://quantum.country/qcvc: 'Presented in a new mnemonic medium which makes it almost effortless to remember what you read...

Knowledge system and cognitive science guru Andy Matuschak writes a rant called Why Books Don’t Work https://andymatuschak.org/books/, about big, difficult books that take him six to nine hours each to read.... [His] points have strong relevance for students in U.C. Berkeley’s Econ 105: History of Economic Thought: Do we live in a Smithian, Marxian or Keynesian World?. The core of the course is an assisted reading of three big books that are d—-ably difficult.... To assist you in this process, we have compiled 150 questions-and-answers—50 about Smith, 50 about Marx, and 50 about Keynes—that we think you should review and learn as part of your active-learning incorporation of the thought of these three authors into your own minds.... For those of you reading this who are in the intended audience of Econ 105 students in the fall of 2019, here is an incentive.... Some of these questions will be on the exam...

https://www.icloud.com/pages/0yyHboa030OEohMkflwYE1u5w

Science fiction and fantasy publisher Baen Books is publishing some truly totally weird batshit these days. Far beyond Fox News totally weird batshit. Perhaps the weirdest:

Perhaps the most outrageous, and certainly most damaging for our civilization is the campaign of “women’s liberation,” male-bashing, "role-reversal,” or whatever you care to call it. Again, as most of these epidemics are at the beginning, it seems to be far more vicious in America and Britain than in the rest of Europe. Yet, all the signs are in evidence that the infection is rapidly spreading, particularly through the electronic media, invaded as it is by the images of glamorous, bright, articulate, hyper-energetic and.super-successful women executives...

Just what is the grift here? Who is the target audience for this? How dumb do the editors think the people who buy their books are?

Just saying:

Vladimir Bukovsky (1992): Judgment in Moscow: "Epilogue.... There are much more far-reaching consequences of the West’s failure to win the Cold War.... From the collapse of the world order to the bankrupcy of welfare state, and from the crisis of representative democracy, abused and besieged by power-hungry 'minorities', to degeneration of our cultural life-these all are direct results of the collectivist egalitarian dream which reigned supreme since French Revolution.... The case of Bosnia is probably the most illustrative.... God only knows why did they decide, in their wisdom, to make an independent state governed by a Muslim minority (43.6% by the 1991 census) out of a Yugoslav province.... Serbs, constituting“ the largest "minority" (31.2%) particularly objected to any attempts at separating them from Serbia proper.... The Serbs in Bosnia have suddenly woke up one nice morning in an “independent" Muslim-governed state. Small wonder they have taken to arms.... The ensuing civil war, barbaric as it usually is between peasants fighting for their land, has been cleverly termed the "ethnic cleansing.” Ethnic? Since when did "Muslim" become an ethnicity?... Most of the main culprits in Yugoslavia-the leaders of "ethnic communities"-have routinely committed similar crimes for the past few decades in.their former capacity as the communist bosses. But, no, no one is going to judge them for those crimes. And if they continued to murder capitalists and kulaks, priests and "reactionaries,” no one would have dared to condemn them. Our moral indignation must be reserved only for the mythical "ethnic cleansing”...

Comment of the Day: Graydon https://www.bradford-delong.com/2019/10/note-to-self-we-hear-a-lot-about-the-military-revolution-at-the-end-of-the-sixteenth-century-we-hear-about-gustaf-adolf.html?cid=6a00e551f0800388340240a4e53f05200b#comment-6a00e551f0800388340240a4e53f05200b: 'Yup. Suleiman has a unified state; Suleiman has a sort of post-classical central bureaucracy able to make and sustain policy. Suleiman has a professional army. (And a less professional army.) And yet Suleiman couldn't quite take Vienna or make the conquest of Hungary stick; the result is not stable control of Hungary, but a hundred and fifty years of conflict which the Ottoman Empire eventually loses. This isn't the pattern Brad's talking about with Babur; that's an example of someone able not so much to achieve victory as to change the local rules of warfare in the process of achieving victory. Afterwards, the things which conferred power no longer do so. (Napoleon isn't usually thought of as an example but would be one.) Suleiman specifically and the Ottomans generally can't do that in Hungary; they're using the same rules the various European powers are using. They start with a significant advantage in application, but not a sufficient advantage; they haven't got the ability to change the rules...

Introduction

Outside of the charmed magic circle of western and central Europe, North America, and the other Anglo-Saxon settler colonies, few indeed are the economies that have managed successful economic development in the sense of convegence: materially closing any significant fraction of their productivity and living standards gap vis-a-vis the world's economic leaders. The Northeast Asian Pacific Rim, now including China; further south, Malaysia, Thailand, Indonesia, and Vietnam; India and Sri Lanka; elsewhere, Turkey, Chile, Botswana, Mauritius, and Cabo Verde. That is all. And with perhaps one or two exceptions, those few have followed the particular economic development path of using low-wage manufacturing exports to nurture their domestic communities of engineering practice—a path that is now closing.

It has long been easy to see the glass half-full with respect to global economic growth: technologies and organizational forms can be imitated and adopted, do diffuse, and even the poorer parts of the globe are much richer than they were two or one or even half a century ago. It has been much harder to see the glass half-full with respect to convergence: the catching-up and closing of the gap vis-a-vis the world's industrial leaders. Why have so few countries been able to walk the path? And what are our prospects for the future? With the prospective closing of the standard parth for convergence, seeing the glass half-full is becoming harder: perhaps there will be no glass at all.

2.5) Adam Smith & Inequality: 2.5.1. Inequality Generated Outside the Market: Smith’s first way of minimizing the importance of inequality—or at least minimizing the responsibility of the market and of the economy for fighting inequality—is to argue that inequality springs from politics and sociology rather than from market economics. Inequality arises from the role that hierarchy and command-and-control play in the mixed-up processes that are human society. The society of England becomes more unequal because William the Bastard from Normandy and his thugs with spears—300 families, plus their retainers—kill King Harold Godwinson, and declare that everyone in England owes him and his retainers 1/3 of their crop. The society of England becomes more unequal because Queen Elizabeth I Tudor grants a monopoly over trade with America to Sir Walter Raleigh. Why? Because he had successfully flirted with her. These are not economic processes. These are not closely connected with the “system of natural liberty” than is the market economy.

Indeed, the system of natural liberty is only one way you can organize society. Societies can be organized as ones of feudal lords and peasants, as priests and worshippers, robbers bands and their victims. But these ways of organizing society are impoverishing and, Smith claims in his very naming of his system the “System of Natural Liberty”—unnatural. Dugald Stewart quotes from one of Smith’s lectures that, at least in the lecture hall at Glasgow in 1749, Smith was blunt:

Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things…

I believe that the later Adam Smith would note that “tolerable administration of justice” covers a lot of ground: the later books of An Inquiry into the Nature and Causes of the Wealth of Nations are very long indeed: Book III on how the historical development of Europe has let it to deviate from the System of Natural Liberty is 43 pages, Book IV on errors being made in 1776 by the governments of Europe is 273 pages, and Book V on what governments should and should not do is 276 pages—a total of 592 pages on what governments should, should not, and have unfortunately done, with only a total of 346 pages laying out Smith’s analytical system and its conclusions, among them that:

All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and, to support themselves, are obliged to be oppressive and tyrannical…

As Heilbroner puts it:

The great enemy to Adam Smith's system is not so much government per se as monopoly—in any form. “People… meet[ing] together… [and] the conversation ends in… some diversion to raise prices.”… If the working of the market is trusted… anything that interferes… lowers social welfare. If, as in Smith’s time, no master hatter anywhere in England could employ more than two apprentices or no master cutler in Sheffield more than one, the market system cannot possibly yield its full benefits…. If, as in Smith's time, great companies are given monopolies of foreign trade, the public cannot realize the full benefits of cheaper foreign produce. Hence, says Smith, all these impediments must go…

Michael Kades: "Kodak https://twitter.com/Michael_Kades/status/1185290953483079683 invented the Digital Camera in 1974. You know who did not want to develop it and bring to market for fear it would canabalize their film monopoly? Yup, Kodak. https://businessinsider.com/this-man-invented-the-digital-camera-in-1975-and-his-bosses-at-kodak-never-let-it-see-the-light-of-day-2015-8 My guess is Kodak made the right choice to maximize its profits. That is why competition is important for innovation.... Actually Kodak did anticipate it. They just realized they were better off sucking every last dollar out the film monopoly and delaying the digital revolution as long as possible. Also, I would not call a near century of dominance ephemeral.... Isn't the question whether Kodak's decision to milk its existing monopoly was more profitable than pursuing a digital camera. I tend to think Kodak knew what it was doing. Even a couple of years up front of large monopoly rents >> a long tail of competitive profits...

I agree with Arvind and Dani here: It is quite puzzling that financial globalization still has as many strong advocates as it does among policymakers and their ilk: Arvind Subramanian and Dani Rodrik: The Puzzling Lure of Financial Globalization https://www.project-syndicate.org/commentary/financial-globalization-neoliberalism-discredited-by-arvind-subramanian-and-dani-rodrik-2019-09: "Although most of the intellectual consensus behind neoliberalism has collapsed, the idea that emerging markets should throw their borders open to foreign financial flows is still taken for granted in policymaking circles. Until that changes, the developing world will suffer from unnecessary volatility, periodic crises, and lost dynamism...

Definitely this week's most important must-read: Dylan Matthews: Should the Minimum Wage Be Raised? The Economic Debate, Explained https://www.vox.com/future-perfect/2019/11/20/20952151/should-minimum-wage-be-raised: 'There’s still disagreement. But it looks like in many cases, pay raises swamp any lost jobs.... Dube, Cengiz, Lindner, and Zipperer find that much of the disagreement between the Card/Krueger and Neumark/Wascher approaches is attributable to a quirk in the late 1980s and early 1990s. During that period, blue states experienced an economic downturn relative to red states that predated the biggest blue state minimum wage increases; that made it look like minimum wages were lowering employment growth, when what was really happening was that blue states both had lower employment growth and separately increased their minimum wages. “In our QJE paper we showed that the specifications under argument (lot of controls, little controls) actually all suggest little job loss in the post 1995 period; and that this appears to be driven by the quirky 80s boom/bust,” Dube told me. “None of us knew this until recently. This is actually progress.”... Dube notes in his review that the best evidence we have suggests minimal job impacts on minimum wages of up to 60 percent of the median wage. The median hourly wage in El Centro, California is about $15.50, meaning the $13 an hour minimum (effective January 1 of next year) is over 80 percent of the median wage there. The effects there might be very different...

Prolegomenon to a Reading Course on Karl Marx https://www.bradford-delong.com/2014/12/2014-12-18-th-oaeg-atwm-reading-about-marx-thursday-virtual-office-hours.html: These days, when people come to me and ask if I will run a reading course for them on Karl Marx, this is what I tend to say:

The world is divided into those who take Karl Marx's work seriously and those who do not.

On the one hand, those who do not take Karl Marx's lifetime work-project seriously are further divided into three groups:

Those who ignore Marx completely.

Those who use selected snippets from his work as Holy Texts, and

Those modern "western Marxists" who find inspiration in the works that Karl Marx wrote exclusively before he was thirty.

I recommend reading Kurt Vonnegut, as perhaps more relevant and informative for our times than he was for the post-WWII era in which he wrote. I found Mother Night striking me harder than Slaughterhouse 5, but mileage will vary:

Daniel Kennelly: A Triumphant Failure: "There’s nothing intelligent to say about a massacre, wrote Kurt Vonnegut of his book about the firebombing of Dresden. So why are we still reading it a half-century later?.... Re-reading Vonnegut’s collected works from the vantage point of 2019, I had the strange experience of believing that all along Slaughterhouse had somehow been reaching its way backward in time into Vonnegut’s literary career. It was as if the book were to Vonnegut what Billy’s wartime experiences became to him: a moment in time, trapped in amber, surfacing randomly in his work, unbidden, frequently unwelcome. Dresden haunted Vonnegut’s life, and Slaughterhouse haunted his career—this 'short and jumbled and jangled' book, a 'failure'. So how does an understanding of the three unique temporal perspectives contained in Slaughterhouse-Five—our own, Billy’s, and the Tralfamadorian one—help us appreciate this 'failure' of a book?.... We are the Tralfamadorians, collectively, creating nuclear weapons because 'if we don’t, someone else will'.... And we are Billy, each of us as individuals. We could stand up and yell, 'Don’t get on that plane! It’s going to crash!' But Billy 'didn’t want to make a fool of himself by saying so', and we don’t want to sound like fools either...

The extremely smart Ricardo Hausmann has good ideas for the reform of public-policy school education: Ricardo Hausmann: Don’t Blame Economics, Blame Public Policy https://www.project-syndicate.org/commentary/blame-public-policy-not-economics-by-ricardo-hausmann-2019-08: "Public-policy schools, which typically have a strong economics focus, must now rethink the way they teach students–and medical schools could offer a model to follow.... Economics is to public policy what physics is to engineering, or biology to medicine. While physics is fundamental to the design of rockets that can use energy to defy gravity, Isaac Newton was not responsible for the Challenger space shuttle disaster. Nor was biochemistry to blame for Michael Jackson’s death. Physics, biology, and economics, as sciences, answer questions about the nature of the world... generating... propositional knowledge. Engineering, medicine, and public policy, on the other hand, answer questions about how to change the world.... Although engineering schools teach physics and medical schools teach biology, these professional disciplines have grown separate from their underlying sciences.... Public-policy schools, by contrast, have not undergone an equivalent transformation.... Policy experience before achieving professorial tenure is discouraged and rare. And even tenured faculty have surprisingly limited engagement with the world, owing to prevailing hiring practices and a fear that engaging externally might entail reputational risks for the university. To compensate for this, public-policy schools hire professors of practice, such as me, who have acquired prior policy experience elsewhere.... The teaching-hospital model could be effective in public policy.... Consider, for example, Harvard University’s Growth Lab, which I founded in 2006 after two highly fulfilling policy engagements in El Salvador and South Africa...

3) Karl Marx’s Intuitions: Marx’s Enthusiasm for the Market: But back up. First, note that Karl Marx was much more enthusiastic about the market economy and the prospects for the societal division of labor than Smith had been. This enthusiasm had multiple causes:

• Marx lived 75 years later, in a time of much more rapid economic growth.
• Marx saw, much more clearly, technology as the magic force that it was going to be.
• Smith wanted to make his way in the world as an upwardly mobile outsider intellectual taking a measured view of things and entertaining his potential audience; Marx wanted to leave his mark upon the world—hence all his enthusiasms, and all his hates, were outsized.
• Marx was, in a very strange way, a Fundamentalist Christian—albeit a massively heretical one: a firm believer in the redemption and total transformation not of an individual soul bur of humanity at the hands of a benevolent power. As American literary critic Edmund Wilson was to write in 1940: a lot of Marx’s and Marxist writing makes no sense unless you replace phrases like “progress of history” and “dialectic of history” with “Providence” and “God”.

We see this enthusiasm show through in the passages of Capital in which Marx talks about the transformative work that is being done by the capitalist market economy. But it shines through much more clearly in Marx and Engels’s 1848 Communist Manifesto, in an extended passage that outstrips pretty much anything ever written by capitalism’s friends:

The bourgeoisie, historically, has played a most revolutionary part…. The bourgeoisie has disclosed how it came to pass that the brutal display of vigour in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades.

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.

The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.

The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.

The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life. Just as it has made the country dependent on the towns, so it has made barbarian and semi-barbarian countries dependent on the civilised ones, nations of peasants on nations of bourgeois, the East on the West.

The bourgeoisie keeps more and more doing away with the scattered state of the population, of the means of production, and of property. It has agglomerated population, centralised the means of production, and has concentrated property in a few hands. The necessary consequence of this was political centralisation. Independent, or but loosely connected provinces, with separate interests, laws, governments, and systems of taxation, became lumped together into one nation, with one government, one code of laws, one national class-interest, one frontier, and one customs-tariff.

The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?…

“What earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?”

The bourgeoisie —the market economic system in which the capitalists, the business class, hold the reins and have the wealth—has, is, and will create the material abundance needed for humanity to pass through the gates of history and enter its proper destiny of utopia.

One of the most intriguing anomalies in all of behavioral economics is the so-called Monty Hall problem—many people refuse to believe that revealing apparently irrelevant information—that there is a goat behind door #2—about where the automobile is can and should change your assessment of likelihoods and thus your optimal decision. Perhaps this is because we are wired at a fairly deep level to believe in no correlation without causation—that we have to see a causal link between two phenomena in order to be willing to believe that they are correlated. Whether that is the explanation or not, it is clear that those of us who are bears of little brain need a lot of systematic help in parsing out issues of causation in complicated systems. And here Dana Mackenzie and Judea Pearl's _The Book of Why is going to be of enormous help in providing a gentle introduction to the issues and framework for thought. Here it is reviewed by the extremely sharp Lisa Goldberg:

Lisa Goldberg: Review of "The Book of Why: https://www.ams.org/journals/notices/201907/rnoti-p1093.pdf: "Pearl’s co-author Dana Mackenzie spoke on causal inference.... It concluded with an image of the first self-driving car to kill a pedestrian.... With a lead time of a second and a half, the car identified the object as a pedestrian. When the car attempted to engage its emergency braking system, nothing happened. The NTSB report states that engineers had disabled the system in response to a preponderance of false positives in test runs. The engineers were right, of course, that frequent, abrupt stops render a self-driving car useless. Mackenzie gently and optimistically suggested that endowing the car with a causal model that can make nuanced judgments about pedestrian intent might help.... Professor Judea Pearl has given us an elegant, powerful, controversial theory of causality. How can he give his theory the best shot at changing the way we interpret data? There is no recipe for doing this, but teaming up with science writer and teacher Dana Mackenzie, a scholar in his own right, was a pretty good idea...

The Premature Kingdom: On Twitter: Perhaps the question "should Christians be Christians?" is like the question "should Communists be Communists?".

For in its essence, the problem—the poisoned chalice—that Flavius Valerius Aurelius Constantinus Augustus handed the Christian bishops of his day in the fourth century C.E. was closely analogous to the problem that Lenin's successful coup 100 years less two days ago handed him and his comrades.

John Maynard Keynes (1919): The Economic Consequences of the Peace https://delong.typepad.com/files/keynes-peace.pdf

Very few of us realize with conviction the intensely unusual, unstable, complicated, unreliable, temporary nature of the economic organization by which Western Europe has lived for the last half century. We assume some of the most peculiar and temporary of our late advantages as natural, permanent, and to be depended on, and we lay our plans accordingly. On this sandy and false foundation we scheme for social improvement and dress our political platforms, pursue our animosities and particular ambitions...

After 1870 there was developed on a large scale an unprecedented situation.... The pressure of population on food, which had already been balanced by the accessibility of supplies from America, became for the first time in recorded history definitely reversed. As numbers increased, food was actually easier to secure.... [Any] tendency of cereals to rise in real cost was balanced by other improvements; and—one of many novelties—the resources of tropical Africa then for the first time came into large employ, and a great traffic in oil-seeds began to bring to the table of Europe in a new and cheaper form one of the essential foodstuffs of mankind. In this economic Eldorado, in this economic Utopia, as the earlier economists would have deemed it, most of us were brought up...

What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London... most important of all... regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice...

Europe was so organized socially and economically as to secure the maximum accumulation of capital.... The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption.... If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect.... The railways of the world, which that age built as a monument to posterity, were, not less than the Pyramids of Egypt, the work of labor which was not free to consume in immediate enjoyment the full equivalent of its efforts.... This remarkable system depended... on a double bluff.... The laboring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority, and the well-established order of Society into accepting a situation in which they could call their own very little of the cake.... The capitalist classes were allowed to call the best part of the cake theirs... on the tacit underlying condition that they consumed very little of it in practice. The duty of "saving" became nine-tenths of virtue and the growth of the cake the object of true religion..... And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation..... The virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.... In the unconscious recesses of its being Society knew what it was about. The cake was really very small in proportion to the appetites of consumption, and no one, if it were shared all round, would be much the better off by the cutting of it. Society was working not for the small pleasures of to-day but for the future security and improvement of the race.... If only the cake were... allowed to grow in the geometrical proportion... of compound interest... a day might come when there would at last be enough to go round, and when posterity could enter into the enjoyment of our labors. In that day overwork, overcrowding, and underfeeding would have come to an end, and men, secure of the comforts and necessities of the body, could proceed to the nobler exercises of their faculties...

The war has disclosed the possibility of consumption to all and the vanity of abstinence to many. Thus the bluff is discovered; the laboring classes may be no longer willing to forego so largely, and the capitalist classes, no longer confident of the future, may seek to enjoy more fully their liberties of consumption so long as they last, and thus precipitate the hour of their confiscation...

I have selected for emphasis... the instability of an excessive population dependent for its livelihood on a complicated and artificial organization, the psychological instability of the laboring and capitalist classes, and the instability of Europe's claim, coupled with the completeness of her dependence, on the food supplies of the New World. The war had so shaken this system as to endanger the life of Europe altogether.... It was the task of the Peace Conference to honor engagements and to satisfy justice; but not less to re-establish life and to heal wounds. These tasks were dictated as much by prudence as by the magnanimity which the wisdom of antiquity approved in victors...

Smith Gets Snarky, Stoic, and Cynical: Snarkism: Adam Smith’s third way of minimizing the importance of economic inequality is to snark. The aim of wealth is to make you happy. Smith thinks that what wealthy women wish they could buy is beauty, and what wealthy men wish they could buy is strength. But who are the beautiful and strong in England? Adam Smith tells us in an aside on nutrition on the good qualities of the potato:

The chairmen, porters, and coal-heavers in London, and those unfortunate women who live by prostitution, the strongest men and the most beautiful women perhaps in the British dominions, are said to be, the greater part of them, from the lowest rank of people in Ireland, who are generally fed with this root [the potato]…

The rich aren’t doing a terribly good job of using their wealth to promote human flourishing, are they? And there is the implication that the rich are none too happy. We see Smith, and what he is doing here, I think.

Stoicism: Adam Smith’s fourth way of minimizing the importance of economic inequality is to assume the philosophical pose of the stoic. One works hard. One sacrifices one’s peace and leisure in order to get rich. And what does that get you as you age? Adam Smith writes that to the aging, looking back at a life in which they have sacrificed their ease and their happiness in order to gain wealth:

Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body, consisting of springs the most nice and delicate, which must be kept in order with the most anxious attention, and which in spite of all our care are ready every moment to burst into pieces, and to crush in their ruins their unfortunate possessor. They are immense fabrics, which it requires the labour of a life to raise, which threaten every moment to overwhelm the person that dwells in them, and which while they stand, though they may save him from some smaller inconveniencies, can protect him from none of the severer inclemencies of the season. They keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more, exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death…

Who then benefits from all the industry and toil of the upwardly-mobile? Adam Smith argues that it was, somewhat paradoxically, the poor. The rich sacrifice their true happiness to set in motion enterprises. And the commodities produced by those enterprises are principally consumed by the poor:

The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants…. The proud and unfeeling landlord…. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of… all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice…

Cynicism: Fifth and last, Adam Smith minimizes the importance of economic inequality by claiming that there is little or nothing to be done about it. Human nature is such that people will seek to create, and then to obey, those whom they will call their superiors. It is the view expressed by Calvera in the movie The Magnificent Seven. Chico asks Calvera:

And the people of the village? What about them?

Calvera responds:

I leave that to you. Can men of our profession worry about that? If God did not want them to be sheared, he would not have made them sheep!

As Adam Smith puts it in his Theory of Moral Sentiments:

A stranger to human nature, who saw the indifference of men about the misery of their inferiors, and the regret and indignation which they feel for the misfortunes and sufferings of those above them, would be apt to imagine, that pain must be more agonizing, and the convulsions of death more terrible to persons of higher rank, than they are to those of meaner stations.

Upon this disposition… is founded the distinction of ranks, and the order of society. Our obsequiousness to our superiors more frequently arises from our admiration for the advantages of their situation, than from any private expectations of benefit from their goodwill…. We desire to serve them for their own sake, without any recompense but the vanity or the honour of obliging them…

To attempt to eliminate inequality is, for Smith in his cynical mode, like trying to bail out the sea: make society equal, and people will find somebody to look up to, and then figure out a way to give their money away to the rich.

So that is Adam Smith: worry about prosperity and wealth, yes; worry about poverty and want, yes; worry about inequality, not so much.

Needless to say, Karl Marx did not agree that income inequality is not worth a great deal of concern. He saw inequality as a necessary product of the market economy, a necessary product that poisoned all of its fruits, and one that made hopes of eliminating or even reducing poverty and dire poverty vain.

Comment of the Day: Brad DeLong: "Yes, the Communist Manifesto Is Worth Reading. Why Do You Ask?" https://twitter.com/delong/status/1198452201531703296 Ashton Kemerling: "If you can’t read things you disagree with, you’ll never ever get anywhere. Besides, Marx had a pretty good critique of capitalism, even if you’re not sold by his recommendations. Dad, Capital is a really hard read though." Brad DeLong: "Which is why when I control the syllabus I assign the Manifesto; Wage Labor & Capital; the Gotha Program; (maybe) On the Jewish Question; and Value, Price, and Profit..."

Very Briefly Noted 2019-11-24:

1. FRED: Employment Rate: Aged 25-54: All Persons for the United States https://fred.stlouisfed.org/graph/?id=LREM25TTUSM156S,...

2. hoakly: macOS Catalina Boot Volume Layout https://eclecticlight.co/2019/10/08/macos-catalina-boot-volume-layout/: 'One valuable trick for always using the right path in Terminal is to locate the folder or file in a Finder window, and drag and drop that into the command line. macOS then magically performs any path conversions for you. You may also find my utility Precize useful, as it gives paths, inode numbers, and a great deal more. For details of the roles and purposes of these folders, and those within the Home folder, please refer back to the previous article detailing the volume layout of macOS 10.14 Mojave...

3. Piotr Wozniak: SuperMemo https://www.supermemo.com/en/articles/history: 'The true history of spaced repetition...

4. FRED (DeLong): Four Key Components of Aggregate Demand https://fred.stlouisfed.org/graph/?graph_id=524363&rn=654...

5. John Mack Faragher: A Great and Noble Scheme: The Tragic Story of the Expulsion of the French Acadians from Their American Homeland https://archive.org/details/greatnoblescheme00fara...

6. Hans Mühlestein (1948): Marx and the Utopian Wilhelm Weitling https://www.jstor.org/stable/pdf/40399878.pdf...

7. Marx/Engels Internet Archive: The Communist League https://www.marxists.org/archive/marx/works/1847/communist-league/index.htm...

Dwight Eisenhower (1954): Letter to Edgar Newton Eisenhower: "You say that the foreign policy of the two Administrations is the same.... It is well for us to have friends... to encourage them to oppose communism... to promote trade... and to attempt the promotion of peace in the world, negotiating from a position... strength.... The party... in power... must perforce follow a program that is related to these general purposes and aspirations. But the great difference is in how it is done and, particularly, in the results achieved. A year ago last January we were in imminent danger of losing Iran, and sixty percent of the known oil reserves of the world.  You may have forgotten this. Lots of people have. But there has been no greater threat that has in recent years overhung the free world. That threat has been largely, if not totally, removed. I could name at least a half dozen other spots of the same character. This being true, how can anyone be so unaware of what is happening as to say that this Administration has conducted foreign affairs under the same policies as did the former Administration?...

#noted #2019-11-24

2.5.2) Wealth Inequality Prevents More Damage: Adam Smith’s second way of minimizing the importance of economic inequality is to claim that it is a relatively gentle alternative to other forms of inequality that will emerge if economic inequality is reduced. Smith argues in Book III of the Wealth of Nations that the rise in inequality in market income and consumption went along with reduced inequality in social status and hierarchy—and in reduced societal violence as well. Great landlords who cannot earn and spend their wealth in the city will focus on arming and maintaining retainers, and the result will be that they will “make war according to their own discretion, almost continually upon one another, and very frequently upon the king; and the open country still continued to be a scene of violence, rapine, and disorder”. But once there are luxuries to be purchased by wealth earned by selling produce to the growing cities, “it was impossible that the number of their retainers should not as gradually diminish, till they were at last dismissed altogether”, and so peace came to the countryside.

As John Maynard Keynes was to write a century and a half later: “It is far better for a man to tyrannize over his bank balance than over his fellow citizens…”

Andy Matuschak and Michael Nielsen: How Can We Develop Transformative Tools For Thought? https://numinous.productions/ttft/: 'One of the ideas motivating Quantum Country is that memory systems aren’t just useful for simple declarative knowledge, such as vocabulary words and lists of capitals. In fact, memory systems can be extraordinarily helpful for mastering abstract, conceptual knowledge, the kind of knowledge required to learn subjects such as quantum mechanics and quantum computing. This is achieved in part through many detailed strategies for constructing cards capable of encoding this kind of understanding. But, more importantly, it’s possible because of the way the mnemonic medium embeds spaced repetition inside a narrative...

In general, I am not a believer in studying by rereading things you have read before. I am a believer in reading new things, related to but different from those already assigned in the course. This seemed (and seems) to work far better for me than going back over what I have already read. (Some clues as to why this works can be found in Andy Matuschak: Why Books Don’t Work https://andymatuschak.org/books/: "People [who] do absorb knowledge from books... are the people who really do think about what they’re reading.... If they take some notes, they’re not simply transcribing the author’s words: they’re summarizing, synthesizing, analyzing. Unfortunately, these tactics don’t come easily..." It comes easily to me if I am reading something new but related.) If you are like me, you might find it more productive in studying for the exam not to reread already assigned passages, but rather to take a look at three books from Oxford's Very Short Introduction series:

• Christopher J. Berry (2028): Adam Smith: A Very Short Introduction https://www.google.com/books/edition/Adam_Smith_A_Very_Short_Introduction/B_lyDwAAQBAJ...
• Robert Skidelsky (2010): Keynes: A Very Short Introduction https://www.google.com/books/edition/Keynes_A_Very_Short_Introduction/ji7qS75PtMYC...
• Peter Singer (2000): Karl Marx: A Very Short Introduction https://www.google.com/books/edition/Marx_A_Very_Short_Introduction/j1WsDAAAQBAJ...

As you get ready to study for the final exam in Econ 105, let me make a suggestion: rather than going back over the (long and sometimes difficult) large selections from Capital assigned in the course syllabus, take a look at something else Marx wrote (with his BFF Friedrich Engels)—the Communist Manifesto. I recommend the Manifesto itself; an article by George Boyer (that I commissioned) on its historical context; the MEIA's brief sketch of the Communist League, the organization for which the Manifeso was written; and British economist Eric Hobsbawm's introduction to the 150-year-anniversary reprinting of the Manifesto. These pieces are all quick and lively, and they go back over the intellectual terrain and context of Capital and of Marx's ideas from a somewhat different ankle—thus making them excellent things to read as part of your studying process:

Karl Marx and Friedrich Engels (1848): Manifesto of the Communist Party https://delong.typepad.com/files/manifesto.pdf...

Andy Matuschak and Michael Nielsen: How Can We Develop Transformative Tools For Thought? https://numinous.productions/ttft/: 'We have developed a website, http://quantum.country, which explores a new approach to explaining quantum computing and quantum mechanics. Ostensibly, Quantum Country appears to be a conventional essay introduction to these subjects. There is text, explanations, and equations.... But... Quantum Country is a prototype for a new type of mnemonic medium. Aspirationally, the mnemonic medium makes it almost effortless for users to remember what they read. That may sound like an impossible aspiration. What makes it plausible is that cognitive scientists know a considerable amount about how human beings store long-term memories...

Andy Matuschak: Why Books Don’t Work https://andymatuschak.org/books/: 'Books are easy to take for granted.... Words in lines on pages in chapters. And at least for non-fiction books, one implied assumption at the foundation: people absorb knowledge by reading sentences. This last idea so invisibly defines the medium that it’s hard not to take for granted, which is a shame because, as we’ll see, it’s quite mistaken.... Have you ever had a book...come up in conversation... [and] discover that you’d absorbed what amounts to a few sentences?... When someone asks a basic probing question, the edifice instantly collapses. Sometimes it’s a memory issue: I simply can’t recall the relevant details. But just as often, as I grasp about, I’ll realize I had never really understood the idea in question, though I’d certainly thought I understood when I read the book. Indeed, I’ll realize that I had barely noticed how little I’d absorbed until that very moment.... The books I named aren’t small investments. Each takes around 6–9 hours to read...

Price Fishback: World War II in America: Spending, Deficits, Multipliers, and Sacrifice https://voxeu.org/article/world-war-ii-america-spending-deficits-multipliers-and-sacrifice: 'The US became the ‘arsenal of democracy’ by producing a massive amount of military goods that raised real GDP by 72% between 1940 and 1945. Yet, multiplier estimates for this expansion in government spending are less than one. Long-range studies at subnational levels show that military spending was associated with small effects on per capita activity. Military spending in the context of a quasi-command economy crowded out private consumption and investment and forced people into the military. In essence, Americans sacrificed heavily to win the war, while their Allies sacrificed even more...

Comment of the Day: Kansas Jack on Mark Knopfler: Good On You Son https://www.bradford-delong.com/2019/11/mark-knopfler-good-on-you-son-for-the-weekend.html?cid=6a00e551f0800388340240a4c2a9ab200d#comment-6a00e551f0800388340240a4c2a9ab200d: 'Agree with all this. Knopfler is like the tectonic plates moving. It's huge, but mostly unseen and unappreciated. Such smooth guitar and subtle lyrics. And when unsubtle...well, "Money for Nothin'" gets sanitized (even on Sirius) but the offending lyric is exactly how a lot of guys in the 80s talked, which is the whole point. Every time a radio station skips that line I tell myself, "Hey, Huckleberry Finn gets banned over a bad word too but Twain uses that word to point out the evil." Knopfler's solo album Shangri-La was welcomed with mixed reviews (Rolling Stone gave it 3.5 stars which is typically the clearest signal it is a 5-star record) but go back and listen to how easily he makes those chords, lets a few notes just hang in the air, he's a story teller. It is folk and blues and just a classic. Kick back and listen to the lyrics and his haunting guitar expertise. His take on Ray Kroc is so understated and cool, "If they're gonna drown stick a hose in their mouth," he has Ray mumbling about his buying out the McDonald brothers. I dare anyone to listen to the song about Sonny Liston and not be moved. And a juxtaposition of gangsters and coal miners with lyrics like, "There beneath a bridge comes to a giant car/A shroud of snow upon the roof. A Mark X jag-u-ar./Thought the man was fast asleep./Silent still and deep./ No. Both dead and cold./Shot through with bullet hoooooooooles." I just typed that from memory, excuses if I missed a word or two. Knopfler's music is poetry...

2.4) Adam Smith & Poverty: Adam Smith loathes poverty.

Adam Smith is eager to create a society in which there is no poverty.

Adam Smith spends a substantial amount of time investigating the course of poverty over time. For example, he takes time and care to write:

During the course of the last century, taking one year with another, grain was dearer in both parts of the united kingdom than during that of the present…. It is equally certain that labour was much cheaper. If the labouring poor, therefore, could bring up their families then, they must be much more at their ease now. In the last century, the most usual day-wages of common labour through the greater part of Scotland were sixpence in summer, and fivepence in winter.… Through the greater part of the Low country, the most usual wages of common labour are now eight pence a-day; tenpence, sometimes a shilling, about Edinburgh…. In England, the improvements of agriculture, manufactures, and commerce, began much earlier than in Scotland. The demand for labour, and consequently its price, must necessarily have increased with those improvements. In the last century, accordingly, as well as in the present, the wages of labour were higher in England than in Scotland. They have risen, too, considerably since that time, though, on account of the greater variety of wages paid there in different places, it is more difficult to ascertain how much…. Not only grain has become somewhat cheaper, but many other things from which the industrious poor derive an agreeable and wholesome variety of food have become a great deal cheaper. Potatoes… cost half the price which they used to do thirty or forty years ago. The same thing may be said of turnips, carrots, cabbages; things which were formerly never raised but by the spade, but which are now commonly raised by the plough. All sort of garden stuff, too, has become cheaper…. The great improvements in the coarser manufactories of both linen and woollen cloth furnish the labourers with cheaper and better clothing; and those in the manufactories of the coarser metals, with cheaper and better instruments of trade, as well as with many agreeable and convenient pieces of household furniture…

Which he then cross-checks with elite gossip:

The common complaint that luxury extends itself even to the lowest ranks of the people, and that the labouring poor will not now be contented with the same food, clothing, and lodging which satisfied them in former times, may convince us that it is not the money price of labour only, but its real recompense, which has augmented…

Having established that poverty has diminished, he next launches a full-bore attack on all those who claim this is a bad thing:

Is this… to be regarded as an advantage or as an inconveniency?… Servants, labourers, and workmen… make up the far greater part…. What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable…

And then he makes a strong appeal to human solidarity, and to the reciprocal obligations humans undertake by entering into the gift-exchange relationships that knit society together:

It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged…

“It is but equity, besides…” This is a very strong appeal to human solidarity. It is coming from someone often seen as and sometimes dismissed as an apostle of human self-interest.

John Quiggin: Russia or California? http://crookedtimber.org/2019/11/23/russia-or-california/: 'Most Republican voters don’t yet realise the path they are following. But if you had told them, in 2015, that they would be cheering Trump a few years later, they would have laughed. There’s no sign yet of any improvement. In this context, it’s interesting to look back at the claims of Jonathan Haidt that conservatives understood liberals better than vice versa. His method was to compare the views liberals imputed to conservatives (essentially that they were Trumpists) with the self-descriptions of conservatives. As it’s turned out, liberals knew conservatives better than conservatives knew themselves*. Haidt’s own trajectory, from progressive concern troll to the “Intellectual Dark Web” illustrates this. The standard defense now is that conservatives were so outraged at being called racists that they became racists just so they could trigger the libs...

Duncan Black: What Was It All About https://www.eschatonblog.com/2019/11/what-was-it-all-about.html: 'There isn't going to be much soul-searching from New York Times journalists about how they, specifically, were the marks for this Ukraine stuff. Donald Trump is the stupidest man in America, but he is smart enough to know that the New York Times would run with "battling accusations of corruption" every time they mentioned Candidate Biden. And I mean the New York Times. They were the target. Whether they are active players or dumb saps is another question...

Gregory Meyer: Why US farmers Are Falling Out Of Love with Donald Trump https://www.ft.com/content/41b3c728-0a11-11ea-b2d6-9bf4d1957a67?shareType=nongift: 'As impeachment gathers momentum, anger over ethanol policy threatens the president in the Corn Belt.... Siouxland is a biofuel refinery, taking corn by the truckload from some of the nation’s best land and brewing it into ethanol for car engines. Built with local farmers’ capital and political muscle, these plants have established a market for excess grain supplies over the past 15 years and helped cut US reliance on foreign oil. But this autumn, the plant laid idle for six weeks, one of dozens to have slowed or halted their operations even as demand for transport fuel creeps higher. Plant owners blame government waivers that allow smaller oil refineries to ignore quotas requiring biofuel use. The policy shift has capped demand growth and pressured prices for corn and soyabeans. The resulting pain for farmers is now creating a problem for Donald Trump. “We pretty much supported President Trump in the last election,” says Kelly Nieuwenhuis, one of 391 local farmers with a stake in Siouxland. “I know the polls say he has still got a lot of strong [farmer] support, but I’ve heard a lot of people that won’t support him again because of biofuels.” The anger highlights the Trump administration’s difficulty satisfying rival constituencies in the Corn Belt and oilfields. The number of “small refinery exemptions”, or SREs, has shot up since 2017 and shaved 7.4 per cent from the government biofuel target in the latest round, according to the Energy Information Administration. The government says low-volume oil refineries are entitled to such waivers if they can prove hardship from biofuels quotas. This obscure policy shift, conducted in the shadow of national news about impeachment, is now weakening Mr Trump’s standing in a core voting bloc ahead of the 2020 elections...

Very Briefly Noted 2019-11-23:

1. Hagit Caspi: Interview with Berkeley Economics Professor Yuriy Gorodnichenko https://www.econ.berkeley.edu/content/interview-berkeley-economics-professor-yuriy-gorodnichenko...

2. Ben Thompson: Integration and Monopoly https://stratechery.com/2019/integration-and-monopoly/: 'I have written about Apple’s integration multiple times over the years.... First, integration provides for a superior user experience.... Second, integration maximizes the likelihood of success for new products.... Third, integration is incredibly profitable because it is, from a money-making perspective, a monopoly: Apple devices are the only ones that run iOS...

3. Andrew Liptak: Amazon’s Lord of the Rings Series Is Getting a Second Season https://www.tor.com/2019/11/18/amazon-lord-of-the-rings-series-second-season-renewal/: 'Amazon’s upcoming Middle-earth series is still years away from debuting on the company’s streaming service, but it’s already granted the series an early second season renewal, according to Deadline. The news isn’t a huge surprise...

4. Eric Roston: The Man Who Got Economists to Take Climate Nightmares Seriously https://www.bnnbloomberg.ca/the-man-who-got-economists-to-take-climate-nightmares-seriously-1.1308840...

5. Rebecca Araten: Harvard Economist Martin Weitzman, Known for Climate Change Scholarship, Dies at 77 https://www.thecrimson.com/article/2019/9/6/martin-weitzman-obituary/: 'The New York Times reported that the Nobel decision ushered Weitzman into a period of emotional distress, and that the famous economist wrote a note doubting his ability to make further advances in the economic field...

6. John Hawks (2008): Did Humans Face Extinction 70,000 Years Ago? http://johnhawks.net/weblog/reviews/genetics/mtdna_migrations/sub-saharan-africa-population-size-behar-2008.html...

7. Tom Junod: Can You Say...“Hero”? https://classic.esquire.com/article/1998/11/1/can-you-say-hero: 'Fred Rogers has been doing the same small good thing for a very long time...

8. Felix Salmon: Meltdown! : 'Situational awareness: Jack Dorsey, the founder and CEO of Twitter, came clean yesterday about how the "machine learning-based optimization of messaging and micro-targeting" in digital ads erodes our civic discourse. Take solace that doesn't happen here at Axios Edge: You're about to read the exact same ad that every other subscriber gets to see...

9. Sarah Han: Bites https://www.berkeleyside.com/2019/11/19/bites-chef-preeti-mistrys-juhu-returns-to-oakland-this-summer-at-a-huge-new-jack-london-square-food-hall: 'Chef Preeti Mistry’s Juhu returns to Oakland this summer at a huge new Jack London Square food hall...

And over in Britain, the quality of governance is even worse than here in America: Martin Wolf: Why I Want Another Hung Parliament https://www.ft.com/content/863c9b96-fca0-11e9-a354-36acbbb0d9b6: 'Victory by fanatics on a modest share of votes is all too likely under the UK’s first-past-the-post system, with several parties in competition. Since the two biggest parties are likely to be an English nationalist party and a hard-left socialist party, the outcome of the December 12 election might harm Britain irreparably.... One explanation for the weakness of investment is uncertainty over when, how, or even whether the UK is going to leave the EU. Some will argue that it is essential, for just this reason, to get it done. That is not so: first, the deal reached by Mr Johnson is a really bad one; second, it will not end uncertainty, precisely because it is a bad one.... The notion that a new trade deal would be finished by the end of 2020 is also a fantasy. It is likely to take many years, with more cliff edges threatening a “no-trade deal” option along the way.... Since “getting it done” quickly is a fantasy, I am delighted Mr Johnson has put his bad deal on ice to pursue the alternative of a general election, even though it is likely to be dreadful.... Electoral Calculus currently predicts... a 52 per cent chance of a Conservative majority, an 11 per cent chance of a Labour majority and a 37 per cent chance of a hung parliament. This last possibility is enticing.... Under the Tories, the UK would get a hard Brexit, prolonged uncertainty and a regulatory race to the bottom... under Labour, it would get a softer Brexit, but a government that wants to take the UK out of the west politically (Mr Corbyn’s goal) and economically (that of John McDonnell, shadow chancellor). How can a country dependent on the confidence of global investors survive a government committed to expropriation? Policy Exchange is persuasive on these risks. Yet, under a hung parliament, the UK could negotiate a new deal and then put it to the people for confirmation. The sillier ideas of the two main parties would also have to be abandoned. After such a sobering failure, both the Tories and Labour might even consider moving away from some of their more extremist posturing...

These two are Equitable Growth's not-so-secret but very powerful intellectual weapon on issue of public finance: Greg Leiserson and Will McGrew: Taxing Wealth bu Taxing Investment Income: An Introduction to Mark-To-Market Taxation: "The sharp increase in U.S. wealth inequality in recent decades has spurred interest in increasing taxes on wealth. This issue brief introduces mark-to-market taxation, one approach to raising taxes on wealth by reforming the taxation of investment income.1 In a system of mark-to-market taxation, investors pay tax on the increase in the value of their investments each year rather than deferring tax until those investments are sold, as they do under current law. This issue brief first defines investment income and explains how mark-to-market taxation works. It then reviews the revenue potential of this approach to taxing investment income, explaining why a mark-to-market system can raise substantial revenues. Finally, it summarizes the distribution of the burden that would result, which would fall overwhelmingly on wealthy individuals...

Karl Marx: Capital, Vol.3, Chapter 52: Classes https://www.marxists.org/archive/marx/works/1894-c3/ch52.htm: 'The owners merely of labour-power, owners of capital, and land-owners, whose respective sources of income are wages, profit and ground-rent, in other words, wage-labourers, capitalists and land-owners, constitute then three big classes of modern society based upon the capitalist mode of production...

Yes, we are now in a manufacturing recession and have a profit recession too. Why do you ask? And it's not like we are having a big wage boom: Charlie Bilello: "With 90% of companies reported https://twitter.com/charliebilello/status/1195007972222676999, S&P 500 GAAP earnings down 5% over the past year, largest decline since Q4 2015...

Yes, we know that job training programs can be very effective. But how to keep them effective as they scale up? Normally we rely on markets and the profit motive to incentivize preserving effectiveness with scale. But with social-insurance and other pro-poor programs, the beneficiaries do not have the social power to use the market to keep the programs that serve them on track: Paul Osterman: How to Turn Bad Jobs into Good Ones https://www.bostonglobe.com/magazine/2019/11/12/mit-economist-how-turn-bad-jobs-into-good-ones/H5z8xFljzvA8EFedkTeiNJ/story.html?event=event25: 'Research shows the benefits of retraining and raising wages outweigh the costs.... Part of the problem lies in low skill levels. In Massachusetts, 53 percent of workers who earn 15 an hour or less have no more than a high school degree. But we also know that most people can improve their skills. Effective job training programs, such as those offered by the workforce development organization JVS Boston, can make a real difference. As an example, in the past year, its 12-week pharmacy technician training program placed 45 people in better-paying jobs; graduates went from earning an average of 13 an hour before gaining new skills to 17 an hour after. We have good evidence that well-run job training programs, ones that include significant investments in training, support services (for example, help with small unexpected expenses), and coaching for participants, are effective in moving people into better jobs and raising their earnings. High-performing programs are also characterized by strong relationships with employers. We know how to make these work, but we face two big challenges: spreading the model to reach more workers, and providing the resources needed to pay for it...

Alan M. Turing (1950): Computing Machinery and Intelligence: "The view that machines cannot give rise to surprises is due, I believe, to a fallacy to which philosophers and mathematicians are particularly subject. This is the assumption that as soon as a fact is presented to a mind all consequences of that fact spring into the mind simultaneously with it. It is a very useful assumption under many circumstances, but one too easily forgets that it is false...

Kate Bahn: Domestic Outsourcing of Jobs Leads to Declining U.S. Job Quality and Lower Wages: "One prototypical example is janitorial work, where most office cleaners today are employed by a janitorial services company that is contracted by the building owner where individual office places lease their space. These kinds of fissured employment patterns have led economists and other social science researchers to examine a variety of empirical research questions about what has caused domestic outsourcing, what the impacts have been and for whom, and what the future of the firm will be...

Morgan Kelly and Cormac Ó Gráda: The Preventive Check in Medieval and Preindustrial England: 'England's post-Reformation demographic regime has been characterized as “low pressure.” Yet the evidence hitherto for the presence of a preventive check, defined as the short-run response of marriage and births to variations in living standards, is rather weak. New evidence in this article strengthens the case for the preventive check in both medieval and early modern England. We invoke manorial data to argue the case for a preventive check on marriages in the Middle Ages. Our analysis of the post-1540 period, based on parish-level rather than aggregate data, finds evidence for a preventive check on marriages and births...

A little bit aggressive and overcertain from the brilliant Esther Duflo, but only a little: Channel 4 News: _"'There is no reason to fear low-skilled migration' https://twitter.com/Channel4News/status/1194652089814855680. Nobel prize-winning economist Esther Duflo says 'the effect of low-skilled migration on low-skilled wages is zero'. Esther Duflo is... guest on this week's Ways to Change the World podcast... https://www.youtube.com/watch?v=i1pZfFY132Q

Adam Smith (1776): On the Disturbances in the American Colonies https://www.econlib.org/archives/2012/07/adam_smith_on_u.html Wealth of Nations IV-7-152: "To propose that Great Britain should voluntarily give up all authority over her colonies, and leave them to elect their own magistrates, to enact their own laws, and to make peace and war as they might think proper, would be to propose such a measure as never was, and never will be adopted, by any nation in the world. No nation ever voluntarily gave up the dominion of any province, how troublesome soever it might be to govern it, and how small soever the revenue which it afforded might be in proportion to the expence which it occasioned. Such sacrifices, though they might frequently be agreeable to the interest, are always mortifying to the pride of every nation, and what is perhaps of still greater consequence, they are always contrary to the private interest of the governing part of it, who would thereby be deprived of the disposal of many places of trust and profit, of many opportunities of acquiring wealth and distinction, which the possession of the most turbulent, and, to the great body of the people, the most unprofitable province seldom fails to afford. The most visionary enthusiast would scarce be capable of proposing such a measure with any serious hopes at least of its ever being adopted. If it was adopted, however, Great Britain would not only be immediately freed from the whole annual expence of the peace establishment of the colonies, but might settle with them such a treaty of commerce as would effectually secure to her a free trade, more advantageous to the great body of the people, though less so to the merchants, than the monopoly which she at present enjoys. By thus parting good friends, the natural affection of the colonies to the mother country which, perhaps, our late dissensions have well nigh extinguished, would quickly revive. It might dispose them not only to respect, for whole centuries together, that treaty of commerce which they had concluded with us at parting, but to favour us in war as well as in trade, and, instead of turbulent and factious subjects, to become our most faithful, affectionate, and generous allies; and the same sort of parental affection on the one side, and filial respect on the other, might revive between Great Britain and her colonies, which used to subsist between those of ancient Greece and the mother city from which they descended...

2.3) Society & the “System of Natural Liberty”: Adam Smith was a genius because he had a truly game-changing insight into how our societal division of labor should be organized. As far as the production and distribution of our collective material wealth is concerned, you see, most of what we need and want is both excludible and rival.

If something is “excludible”, that means we can assign it an owner—some one of us can be designated to control it, and to decide on its use, or decide to transfer “ownership” of it to something else. If something is excludible, we can push the decisions about how it is to be used out to the periphery of society, to the people on the ground who know what is going on, rather than have the decision made by some centralized bureaucracy clueless because of its inability to reliably judge information conveyed to it at third- or fourth-hand. Having ownership makes sense if information about what is going on is dispersed and hard to assemble: giving control to people on the spot is then a very good idea.

If something is “rival”, that means that one person's use of it forecloses the opportunities of others: if I am using this iPhone, you cannot be using the same iPhone. If a good is rival, that one of us is using it diminishes the opportunities and possibilities available to others. That makes them poorer. Thus it makes sense to charge a price for somebody using a rival commodity. That makes them feel in their gut the effects of their decisions on the opportunities open to others. Charging prices is a way to align individuals’ incentives about whether it is worth it for them to make use of a commodity with the effects of their decision on the overall well-being of the society.

Hence, Adam Smith argued in his Inquiry into the Nature and Causes of the Wealth of Nations, the wealth of nations is most greatly enhanced by following the dictates of what he named the System of Natural Liberty—“liberty” because it leaves people free to do what they wanted with their labor and their possessions, “natural” because it conforms with human nature, "system" because it can be and is extended to the status of a general principle. Let people decide what they want to do with their things and their labor, and they arrange themselves in a large highly-productive societal division of labor. Self-interest focuses people on creating value. Competition curbs any distracting focus of self-interest on accomplishing exploitation.

This “System of Natural Liberty” is, Smith argues, good. As Heilbroner summarizes:

Self-interest… drives men to action…. [But] a community activated only by self-interest would be a community of ruthless profiteers. This regulator is competition, the socially beneficial consequence of the conflicting self-interests of all the members of society. For each man, out to do his best for himself with no thought of social cost, is faced with a flock of similarly motivated individuals who are in exactly the same boat…. A man who permits his self-interest to run away with him will find that competitors have slipped in… will find himself without buyers in the one case and without employees in the other. Thus very much as in the Theory of Moral Sentiments, the selfish motives of men are transmuted by interaction to yield the most unexpected of results: social harmony…. The… market is that it is its own guardian. If output or prices or certain kinds of remuneration stray away from their socially ordained levels, forces are set into motion to bring them back to the fold. It is a curious paradox which thus ensues: the market, which is the acme of individual economic freedom, is the strictest task master of all…

This leads to a fraught question: Is this a theological point? Is the fact that acting “naturally” in the sense of giving market exchange free rein produces good results evidence that there is a benevolent Providence out there? Is this a teleological point? Are, in some sense, money and gift-exchange aimed at creating prosperity? How is it that processes that are not human—that lead to consequences not desired directly by any human—have a mind of their own, and lead to good ends? It is indeed a marvel that, as Smith puts it, in his theory at least:

[While] every individual… endeavours… to direct that industry that its produce may be of the greatest value… labours to render the annual revenue of the society as great as he can…. He… neither intends to promote the public interest, nor knows how much he is promoting it…. He intends only his own security…. He intends only his own gain…. In this, as in many other cases, [he is] led by an invisible hand to promote an end which was no part of his intention…”

It is a marvel. But what kind of a marvel is it?

It is not that Smith is opposed to government. Government is necessary to protect property, and to enforce contracts: people—most people—will respect others’ property and keep their own contracts, most of the time. But for the non-most people and at the non-most times we need the police, hence we need government. We need public works. We need public education. We need national defense. Adam Smith is very clear on all of these. In fact, Book V of the Wealth of Nations on what the government should do and how it should do it is the largest of the five parts of the book. But, Smith is certain, attempts of some centralized bureaucrat to undermine the System of Natural Liberty in its proper sphere—to direct who should do what when and where—were likely to produce not wealth and prosperity but poverty and misery.

The book that is going to come out of Ober's 2019 Sather lectures is going to be so great: Josiah Ober: Agamemnon’s Cluelessness: Economic Rationality and the Alternatives. https://tinyurl.com/dl20191121: 'Among the many goals of Politics book 1 is to put chrêmatistikê—as expert knowledge of a particular relationship among production (poiêsis), exchange (allangê/metablêtikê), and consumption/possession (ktêsis), all characteristically involving coined money—into the normatively correct place in his naturalized hierarchy of value. The critical conclusion is that chrêmatistikê (or one specific type of chrêmatistikê) is a subordinate part of oikonomia. It is not “according to nature” (kata phusin) but rather a technê arising from practical experience (empeiria) . It aims the possession and increase of wealth, at accumulation of money, as an end. That accumulation is by its internal logic unbounded and unconstrained, insofar as wealth denominated in monetary terms has no natural limit. Chrêmatistikê thus is a matter of maximizing a single resource (one thought to give access to all other resources), rather than optimizing or satisficing in respect to other values. It is at once contrary to the true end of human existence, a prevalent approach to the management of material goods, and (at least potentially) an essential instrument for both the oikonomos and the politikos. Among the delicate tasks of book 1 of the Politics is, then, to demonstrate that Aristotle knows enough about this dangerous and vulgar (phortikon) instrument to specify its proper uses, while avoiding appearing to honor it as a science worthy of a detailed treatment...

Adam Smith starts with the observation that humans are largely but not exclusively self-interested creatures: we are, largely but not exclusively greedy. Yet we have a complex and sophisticated societal division of labor. And that division of labor is essential to our prosperity. Indeed, it is essential to our survival: drop one or two of us into the Sierra Nevada, even in summer, and we will quite likely die. Drop 100 of us, and we will quite likely survive, and even flourish. How can animals that are by nature greedy nevertheless cooperate on a large scale? That is the deep moral-philosophical question that we can see in both of Smith’s big books...

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Timothy B. Lee: No, Apple Isn’t Opening a New Manufacturing Plant in Texas https://arstechnica.com/tech-policy/2019/11/trump-brags-he-opened-apples-texas-mac-pro-plant-it-opened-in-2013/: '“I opened a major Apple manufacturing plant in Texas,” Trump wrote Wednesday.... Trump echoed that theme in a tweet after the tour. "Today I opened a major Apple manufacturing plant in Texas that will bring high paying jobs back to America," he wrote.... It's technically owned by Apple contractor Flex, not Apple.... More important, it's not new. Apple has been building the Mac Pro at the same location since 2013. Apple is opening a new facility in Austin—a 3 million-square-foot office complex where Apple says its employees will perform... "engineering, R&D, operations, finance, sales and customer support".... But that new facility isn't a manufacturing plant. It will create some high-paying jobs, but they'll mostly be white-collar jobs in areas like engineering, finance, and sales...

...Apple's decision to keep Mac Pro manufacturing in the United States follows contentious negotiations with the Trump administration. Back in June, a Wall Street Journal story suggested that Apple was preparing to move Mac Pro manufacturing to China. The Journal story included remarks from an Apple spokesman that didn't dispute plans to move to China. Instead, the spokesman emphasized that "final assembly is only one part of the manufacturing process." Behind the scenes, Apple was seeking tariff concessions that would make it more affordable to assemble the Mac Pro in the United States. Several key components of the Mac Pro were made in China, and Apple would incur tariffs if it shipped those parts to the US for assembly. Donald Trump took a hard line on the issue in a July tweet.... But then in September, Apple announced that it would continue making the Mac Pro in Austin after all—and the company credited the Trump administration for the shift. "The US manufacturing of Mac Pro is made possible following a federal product exclusion Apple is receiving for certain necessary components," Apple wrote in its September announcement. Despite Trump's threats, his administration granted 10 out of 15 Apple requests for relief from Trump's 25% tariff on Chinese imports...

Claire Jones: How and Why Economics Forgot Keynes’ Warnings on Panics https://ftalphaville.ft.com/2019/11/05/1572966859000/How-and-why-economics-forgot-Keynes--warnings-on-panics/: 'The skill of the good economist, like the good writer, lies not just in what they include in their work, but what they choose to leave out. The real world is hideously complex. So too are people. If economists are going to tell us anything about either, then they must resort to abstraction. The trouble is what happens when what you choose to leave out one of the things that ends up mattering the most? In a new paper (hat-tip to the University of Washington’s Fabio Ghironi for drawing our attention to it), Nobel Prize winning economist George Akerlof does a brilliant job of explaining how and why, in the decades before the financial crash, macroeconomists failed to include any meaningful role of the financial system in their economic models. The paper takes us back to his graduate studies at the Massachusetts Institute of Technology in 1962, “when a particular version of Keynesian economics was ascendant”. This “particular version” did not, Akerlof notes, pay much heed to John Maynard Keynes’ “beauty contest” theory of market behaviour, which helps explain why asset prices become unmoored from economic fundamentals.... What we like about Akerlof’s paper is not only the degree of examination he applies to himself and his profession, but also the (not all that common) acceptance of the broader social and political forces that influence its findings...

Comment of the Day: Ronald Brakels https://www.bradford-delong.com/2019/10/gdp-b-accounting-for-the-value-of-new-and-free-goods-in-the-digital-economy.html?cid=6a00e551f0800388340240a48e6cf3200c#comment-6a00e551f0800388340240a48e6cf3200c re "GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy": 'It's a very interesting question, but I will say any country that needs to rely on the unmeasured benefits of new technology to be able to say life has improved over the past generation or two for the lower income half of their population is doing something wrong...