by Dave Schuler on May 16, 2012
If you’ve listened to any pop, soul, rock, or blues record made in Memphis from the early 1960s to the present, the odds are the bass player was Donald “Duck” Dunn. Dock of the Bay, Hold On, I’m Comin’, many, many others. His syncopated style shaped bass playing for generations. He was also the bass player in Jake and Elwood’s band in The Blues Brothers where he uttered the immortal line “We had a band powerful enough to turn goat piss into gasoline.” He died on Sunday. There’s a good remembrance here.
by Dave Schuler on May 16, 2012
There’s been a lot of clucking in the news media and blogosphere about the need for tighter banking and securities laws, presumably in the wake of the revelation of JPM’s $2 billion losses. I’m in no position to know whether we should be concerned about JPM’s losses. I would prefer it that only JPM shareholders be interested in JPM’s profits or losses but as long as big banks are deemed to be too big to be allowed to fail I don’t think I’ll have my way about that.
However, I did want to weigh in on the need for more regulation. I don’t think we need more regulations; I think we need more enforcement of the existing regulations and the perception that the regulations that are in place will be enforced. Let me give some examples of how, at the very least, we’re sending the wrong signals.
When the president of the New York Federal Reserve, the functionary most responsible for ensuring the stability of New York banks is appointed Secretary of the Treasury immediately following the revelation that big New York banks are teetering on the brink of collapse, that’s a very bad signal.
When the former director of the SEC’s Division of Enforcement on leaving the department goes to work for a large securities company, that’s a very bad signal.
When his successor on leaving the department goes to work for a large DC law firm specializing in defending clients against SEC enforcement actions, that’s a very bad signal.
And when presidential economic advisors after leaving the government go to work for big banks, that’s a very bad signal, too.
As long as the incentives for lax enforcement remain high, don’t expect more laws to produce a sounder system.
by Dave Schuler on May 16, 2012
They are, apparently, sitting on big wads of cash. My interpretation of this is that it’s the very definition of uncertainty. I might also mention that when people start sewing gold into the linings of their coats it’s usually a sign that they want to be prepared to escape across the border.
by Dave Schuler on May 15, 2012
I found this article interesting. As you’re presumably aware, the earliest known sedentary agricultural communities began to spring up a little less than 12,000 years ago—roughly 9,500 BCE. Until very recently the oldest known sedentary agricultural community in the Mediterranean was nearly a millennium younger. However, recently they’ve found an older site on Cyprus:
Sedentary villagers of the Early Neolithic began cultivating wild grains in the Middle East in about 9500 BCE. Recent discoveries have shown that the island of Cyprus was visited by human groups during that period, but until now the earliest traces of cereal crops and the construction of villages did not predate 8400 BCE. The latest findings from the archaeological excavations of Klimonas indicate that organized communities were built in Cyprus between 9100 and 8600 BCE: the site has yielded the remnants of a half-buried mud brick communal building, 10 meters in diameter and surrounded by dwellings, that must have been used to store the village’s harvests. The archaeologists have found a few votive offerings inside the building, including flint arrowheads and green stone beads. A great many remnants of other objects, including flint chips, stone tools and shell adornments, have been discovered in the village. The stone tools and the structures erected by these early villagers resemble those found at Neolithic sites from the same period on the nearby continent. Remains of carbonized seeds of local plants and grains introduced from the Levantine coasts (including emmer, one of the first Middle Eastern wheats) have also been found in Klimonas.
This isn’t entirely surprising since islands provide excellent environments for the development of agriculture. The tidal pools initially provide readily available shellfish and shallow water fish which, in turn, produces the population pressures and over-utilization that makes the adoption of a sedentary lifestyle more attractive. Pressures from other competing groups can be countered by moving. Or driving them off. Population pressures from your own group might lead to the adoption of a sedentary agrarian habit. The comparatively benign climate doesn’t hurt, either.
by Dave Schuler on May 15, 2012
When I saw the graph in this post of Bill McBride’s of the post-recession resurgence in retail sales, the first thought that occurred to me was &147;How in the world is it possible to claim there is no structural component in the persistent high rate of unemployment?”
by Dave Schuler on May 15, 2012
Yves Smith presents the critique of President Obama’s term in office from the left:
Again and again, Obama has shown his true colors. It isn’t simply that Obama lied. Politicians lie. But there are norms for political lying. The depth and dependability of Obama’s misrepresentations constitute a difference in kind.
His pattern of grand promises producing at-best-in-name only and at worst outright bait and switch was well established by his 2008 campaign. Some close observers pointed out his past legerdemain, for instance, his misleading account of his years in New York, his record of fronting for finance and real estate interests in Chicago, his promise to bring a state-wide health care program to Illinois, which in the end was walked back to a mere study. And there were more decisive tells in 2008: the high level of Wall Street funding for his campaign, the inclusion of neoliberal “Chicago boys” in his economics team, his reversal on FISA after promising to filibuster it, which gave retroactive immunity to telecoms for aiding and abetting illegal wiretapping, and his whipping for TARP.
Obama didn’t make compromises necessary to lead effectively. He entered office with majorities in both houses and a country eager for a new direction. He has repudiated or retraded every pledge he made. He promised transformational leadership, and instead emulated Wall Street, devising complex programs that to sell average Americans short and reap his funders handsome rewards in the process. Rather than elevate his fellow citizens, Obama’s transactional focus and neoliberal philosophy have kicked the struggling middle class down the road greased by the right.
She goes on to state her case that the Democrats are actually worse than the Republicans at this point because more effective. My view is, perhaps, even more jaded than hers: I think that too many nominal progressives are just looking for jobs with some prospective progressive Democratic administration. They’ll throw any principle under the bus in a mad grab for a paycheck.
There are exceptions: Glenn Greenwald is just as critical of the Obama Administration’s detentions and human rights violations as he was of those of the Bush Administration. Principled progressive don’t have much of an alternative: either Obama or Romney will be elected in November.
by Dave Schuler on May 15, 2012
You might want to check out Scott Winship’s post at Atlantic Online on the changes in income inequality in the 20th century in the United States. Rather than restate it I’ll summarize it: incomes flattened except within the top 10% of income earners. That corresponds pretty well to my intuitive feel for what happened. And also supports my observation that the real fight about income inequality is within the top 10% of income earners.
I haven’t seen any proposals for taxing the rich and giving the proceeds to the poor but I have seen lots of proposals for taxing the rich and giving the proceeds to other relatively rich people, e.g. physicians, highly educated government bureaucrats, etc. Note that a teacher whose total compensation is around $90,000 is among the top 10% of income earners. That’s not that hard: the starting salary for bachelor’s only for a ten month job in Chicago is around $50,000 plus benefits. Assume the benefits are around a third again more.
The assumption is that the poor will benefit indirectly by paying physicians, bureaucrats, and teachers more. I think that’s speculative.
by Dave Schuler on May 15, 2012
Tyler Cowen muses about what people, economists particularly mean when they say “austerity”:
I could imagine a definition something like this: “the net effect of all government fiscal policies on ngdp, relative to the baseline of a stabilized path for expected ngdp growth.” Or should it read: “…relative to what will happen to ngdp growth in the absence of budgetary changes”? I wonder if some Keynesians have in mind the baseline of “the expansionary policies which I think would be appropriate,” in which case doing less than the Keynesian optimum is always a form of austerity. Angus notes correctly that clear definitions of austerity are hard to come by.
In Bucharest I cannot alas consult my library for further definitions.
In any case, austerity is a misleading and often misunderstood word. It is better if we describe policies more concretely, and in fact that is not hard to do. Furthermore, insisting on a clearer accounting should not be equated with “austerity denial.”
I would restate Tyler’s proposed definition for Keynesians somewhat along the lines of “austerity is any level of government spending below a level that produces full employment” which I think a) is what they have in mind and b) makes altogether too many assumptions.
