Relevance Is Irrelevant

In his Washington Post column Robert Samuelson laments that the economics textbooks widely in use are largely obsolete:

Mankiw’s introductory text, and surely some others, has been overtaken by events.

To be sure, in a book of roughly 800 pages, there’s a huge amount of useful, clearly presented information on many subjects: supply and demand; global trade; competition or its absence; wages; government regulation, spending and borrowing — and much more. When there are disagreements among economists, Mankiw does his best to summarize conflicting views.

But as a teaching device, “Principles of Economics” has fallen behind. There’s little analysis of the impact of the Internet and digitalization on competition and markets. I couldn’t find either Apple or Facebook in the index; Google gets a few mentions.

Likewise, little attention is paid to the 2007-2009 Great Recession, the worst business downturn since the Great Depression, which also receives scant coverage relative to its significance. (Together, the two recessions receive about three pages, from 725 to 727.)

There’s some misleading information about the Great Recession and parallel financial crisis. On Page 691, we have this: “Today, bank runs are not a major problem for the U.S. banking system or the Fed.” This would surely surprise the Fed, which poured trillions of dollars into the economy to prevent financial collapse.

Mankiw’s assertion can be defended on narrow, technical grounds. There was no run by retail depositors (people like you and me) against commercial banks. We were protected by deposit insurance. But there was a huge run — a panic — by institutional investors (pension funds, hedge funds, insurance companies, endowments) that withdrew funds from traditional banks, investment banks and the commercial paper market.

Allow me to present an alternative view. You will know that economics is primarily a science and only secondarily politics by other means when demands for relevancy disappear. Do people demand relevancy from physics, chemistry, or mathematics texts? If they do we have entered a very sad period.

I was taught introductory economics from Paul Samuelson’s text. I’ll need to take a look at it again. I suspect it’s about as relevant as it was 60 years ago.


There Oughta Be a Law

The editors of the Washington Post have a simple strategy for eliminating ransomware attacks on cities and other institutions:

There is a way to break the cycle: pass a federal law barring ransomware payments. Along with such a prohibition, funds should be devoted to help cities and states become more secure in the first place, focusing especially on the need to have backups of critical data. Then the Department of Homeland Security could set up a digital ghostbusters task force to help municipalities come back online after an attack. Those that had implemented adequate defenses could get aid from the feds in footing the bill. Those who surrender to hackers would face fines sufficiently larger than the ransom.

That would eliminate ransomware attacks in the same way that laws against speeding have eliminated speeding and those against smoking marijuana have abolished use of the demon weed. Perhaps a more apt analogy would be to illegal immigration. We have laws against entering the United States without presenting yourself to a duly constituted authority. Those have been effective, haven’t they?

And subsidizing state and local governments for inadequate security? I can tell you with a confidence based on experience that governments would use less money for computer security and more to give raises to public employees.

By their very nature it’s hard to point the finger at where these attacks are originating but forensic evidence suggests that the overwhelming preponderance of the attacks originate from one or more of the following: Russia, Ukraine, China, North Korea, Iran. See a pattern here? Sanctions. What about China? I would suggest that it is nearly impossible for cyberattacks to originate in China without at least the tacit approval of the Chinese government.

What all of this suggests is that there is an urgent need to for an international accord on cyberwarfare similar to those governing bacteriological and chemical warfare and taken if anything more seriously.

Here’s another suggestion: hold the companies that produced the vulnerable operating systems (mostly Microsoft and Google) responsible.


It’s About Power

I don’t think that in his New Yorker piece John Cassidy has entirely put his finger on the reasons that there’s been a resurgence of interest in the United States in a political-economic theory that’s been on life support for 30 years—state socialism. I think he’s got this part right:

In retrospect, a key moment for the revival of American socialism was the Wall Street bailout of 2008 and 2009, when taxpayers were forced to rescue the very rogues who had helped bring about the financial crisis, even as many ordinary families were being evicted from their homes for failing to service their mortgages. From an economic perspective, there were some sound reasons to prevent the financial system from collapsing. From a political perspective, the decision to save the banks persuaded many Americans—on the left, center, and right—that the political system had been captured. There is a direct linkage from the Wall Street bailout to the Occupy Wall Street movement, the Sanders campaigns of 2016 and 2020, and to the Presidential campaign of Elizabeth Warren, who made her reputation as a vocal critic of rapacious and irresponsible financiers.

Our present crony capitalist system should be condemned loudly and often. It is at odds with liberal democracy.

It astonishes me that he has apparently never heard of Fabian socialism. Fabian socialism is a gradualist approach to socialism (rather than by revolutionary overthrow) that largely came to rely on control of the primary means of production—money. Bernie Sanders likes to cloud the issue by calling himself a “democratic socialist” but he’s actually a Fabian socialist.

Socialism is a completely inadequate way of characterizing the states that he and those who proclaim themselves democratic socialists claim to admire. Christian-ethnic democracy would be better. Everywhere that cradle-to-grave welfare states were adopted were tiny, Christian, and ethnically homogeneous. Religion is a key component. The countries of Scandinavia were all Lutheran and 90% or more Danish, Norse, Swedish, or Finnish when their welfare state systems were adopted. That they are abandoning their welfare states as they become more diverse is prima facie evidence for my case.

Whenever multi-confessional, multi-ethnic empires (like the United States) have adopted socialism it has been Stalinist state socialism. You may not like that it has been the case but it has been the case.

That’s what drives my hypothesis about why state socialism has survived despite its failures. It’s about power. There will always be people who want to control the rest.


A Shock from the Sun-Times

I was somewhat shocked by this editorial from the Chicago Sun-Times urging newly-elected Chicago Mayor Lori Lightfoot not simply to balance Chicago’s budget by increasing taxes (as the State of Illinois has done) but by cutting costs as well:

Mayor Lori Lightfoot is telling Chicagoans to expect higher taxes and fees as she and the City Council work to close a budget gap this summer that could be $700 million to $1 billion.

That should surprise nobody. Skyrocketing pension obligations alone have long made it obvious that more revenue will be necessary — and that the city will have to pinch pennies in union contract negotiations.

But the immediate shock to the wallet will be easier for taxpayers to bear if they see city officials working overtime to close at least part of that fiscal year 2020 budget gap with more creative cost savings.

Here are their proposals:

  • Finding ways to reduce the millions of dollars the city pays to manage pension investments. The city should look at turning to private fund managers or consolidating pension funds into the Illinois Municipal Retirement Fund.
  • Holding tough in negotiating collective bargaining agreements. Most of city’s collective bargaining contracts are up for renegotiation, which creates an opportunity for the city to find cost savings. The savings would come, most obviously, from holding down salary increases. But as city Inspector General Joe Ferguson argued persuasively in a report two years ago, simple work rule changes, such as how the duties of a particular job are defined, could help the city contain costs.
  • Rethinking the city policy of self-insuring itself as the city spends millions of dollars to settle lawsuits against the Police Department. A suggestion has been to use an outside insurance company, which might be able to bring down those costs. Professional auditors might be able to manage claims in a manner more beneficial to taxpayers.
  • Ensuring the city follows through on Lightfoot’s initial steps toward professionally managing workers compensation claims, which are significantly higher than in comparable cities. Now that Ald. Ed Burke is no longer in charge of the worker’s comp program, running it like a private club, we would expect to see major finance savings.
  • Replacing the scattershot “aldermanic menu money” system of funding repairs for streets, sidewalks, alleys streetlights and the like with a centrally coordinated and more cost-efficient system based on long-term planning.
    Creating an online portal for approving and issuing some types of permits. As it works now, they must go through the City Council, chewing up staff time and generating unnecessary red tape.
  • Consolidating city and county election services. This one won’t happen anytime soon, given the need for legislation from Springfield, and it likely would save more money for the county than the city. But it represents the kind of long-ranging planning that can instill confidence in taxpayers.

Two major cost-savings strategies go unmentioned: converting all new city employees from the present defined benefit plan to a defined contribution plan and a critical overhaul of wages throughout the city. There are laborers employed by the city who bring down $75,000 a year plus a city-provided health care plan and a defined benefit pension plan. Everyone knows those “laborers” are mostly relatives of Chicago pols being carried on the city payroll.

Chicago is already teetering on the brink of a precipice. Chicago’s low credit rating places the time at which the city will be unable to borrow in sight. Half measures aren’t enough.


Gunsmoke on the Radio

Gunsmoke premiered on the radio on June 26, 1952. It was the first radio Western targeted at an adult audience—previous radio Westerns, of which there had been many, were intended for a kiddie audience. Its stories were grittier and well-acted, written, and directed. It was certainly the best radio Western and IMO the best radio drama full stop.

Such was its popularity that shortly after premiering on radio Gunsmoke was adapted for television where it remained a fixture for decades. Radio’s Matt Dillon was voiced by William Conrad. The deftness of his vocal acting is indescribable. The other regulars were Georgia Ellis (Kitty), Parley Baer (Chester), and Howard McNear (Doc). Not usually listed as a regular but appearing in nearly every episode was John Dehner. He played almost every sort of character imaginable from buffalo hunters to sod busters to gunslingers to government bureaucrats.

Episodes may be streamed for free at the Internet Archive. Each episode is about 28 minutes long. Most include the original commercials. The early episode embedded above, “Never Pester Chester”, should give you an idea of what the show was like. Radio’s Matt Dillon was if anything tougher, grittier, and grimmer than television’s.


The Bloody-Minded

There is an op-ed in the Washington Post from Michael Vickers urging “limited U. S. military strikes” against Iran:

Just as in 1987 and 1988, Iran’s most recent attacks on U.S. military aircraft and international shipping cannot go unanswered. The United States must ensure its ability to operate over Yemen (where al-Qaeda in the Arabian Peninsula still plots against the United States and American interests around the world) and in international airspace and sea lanes. The United States must also ensure the free flow of goods in the Strait of Hormuz, through which one-third of the world’s seaborne oil transits.

Iran’s drone shoot-down on Thursday wasn’t accidental or the result of a rogue operator, as Trump has suggested. The Iranians fired a missile at another U.S. drone a week ago but missed. Senior Iranian officials have not only acknowledged their successful attack on our Global Hawk but have also celebrated it.

Shooting down unmanned aircraft, moreover, is every bit as much an act of aggression as firing on manned aircraft. As automation advances, military force structures are increasingly unmanned, and unmanned systems — whether in space, in the air, on land, or on or under the sea — must be protected and defended.

The Trump administration should respond to these recent attacks with strikes of its own on Iranian and Houthi air-defense assets, offensive missile systems and Revolutionary Guard Corps bases. A measured but firm response is what is required. It needn’t rise even to the level of the Reagan administration’s successful counter to Iran’s Tanker War, but it must impose sufficient costs to make Iran think twice about doing this again.

Well, that didn’t take long. Have we ever actually deterred the Iranian government? Or was the Iranian government reluctant to escalate the conflict because it had just concluded a punishing but indecisive war against Iraq and didn’t want to be fighting on two fronts? How did that deterrent impede Iran from killing hundreds of Americans in Iraq, at least 15% of the total killed there?

Have I ever outlined the stages of newspaper editorial conviction for you? The lowest level is “Opposed”. That’s when an editorial against doing something. Then there’s “Not Convinced”. That’s when an op-ed is published and it’s accompanied by another op-ed opposing whatever position the op-ed advocated. After that there’s “Convinced”. That’s when an op-ed appears and the paper doesn’t contradict it, either with an opposing op-ed or editorial.

Finally, there’s “In Support”. That’s when the paper produces an editorial advocating a course of action. Unless an op-ed or editorial appears by the end of the day opposing war with Iran, put the WaPo down as “Convinced”.


Is This Important?

How important is it that the last battle in which Chinese forces were victorious was the Battle of Cao Bằng during the Sino-Vietnamese War in 1979?


Not All Threats Are Created Equal

The neocons are steering us towards war. The military is steering us towards war. Today I’m hearing just about every possible explanation for what’s going on with respect to Iran. The best remark I’ve heard is that we’ve dodged the bullet of war with Iran for tonight.

The revolutionary government of Iran declared war against the United States 40 years ago. So far we’ve largely ignored it for a simple reason. Iran doesn’t really threaten us. I think that has been prudent and remains prudent. Iran is larger than Iraq, more populous than Iraq, richer than Iraq, has better friends than Iraq, and is culturally better prepared to mount a strong defense than Iraq.

We should not go to war with Iran unless and until we are prepared to bomb its cities into oblivion which is presently not the case.


It Worked

As states hurtle willy-nilly towards legalizing marijuana and movements to legalize prostitution gain steam, at German Lopez presents the evidence that what you’ve probably heard about Prohibition is wrong:

Alcohol policy “needs to be considered in light of an accurate interpretation of the history of Prohibition,” Cook said. “Instead of saying that Prohibition was a failure so alcohol control is a nonstarter, turn that around and say that Prohibition on its own terms was successful to some extent. And there’s no reason to reject this overall approach [of alcohol control] just because of a misread of history.”

There’s a balancing act to strike. Prohibition had benefits when it came to health and some areas of crime and public safety, but it had a negative impact on pleasure, freedom, and other areas of crime and safety. That’s true in general for alcohol and other drug policy: Policies can impact freedom, pleasure, health, crime, safety, or a combination, but almost always with downsides in one or more of these categories as well — with different effects depending not just on the policy but the type of drug, too. Maybe a higher alcohol tax or some other approach would achieve a better middle ground than Prohibition did.

That’s something I have been saying for some time. What the real history tells us is that Prohibition broke the back of the saloon culture, injurious to poor families, reduced drinking, and did not spark an increase in violent crime. It worked. Its repeal was balanced by another reform implemented shortly after repeal: Aid to Families with Dependent Children.


Revolt of the Liberals

An old liberal has figured out that today’s progressives are not liberal. In an op-ed in the Wall Street Journal Michael Blechman writes:

I had always thought it was only bigoted Jim Crow juries and redbaiters like Joe McCarthy who rode roughshod over due process. Yet in 2011 the Obama Education Department sent a “dear colleague” letter to colleges and universities, threatening to cut off federal funding unless the schools changed their procedures to make it easier to discipline students accused of sexual assault. As a result, many students were stripped of their rights to counsel, cross-examination of their accusers and discovery of the evidence against them. Those procedures were re-examined by the current secretary of education, a step that was bitterly criticized by progressives because it may make it more difficult to punish the accused—the price of all due-process protections.

My first reaction to the #MeToo movement was satisfaction that victims of sexual harassment could feel safer about speaking out. Then, during the Brett Kavanaugh hearings, “women deserve to be heard” transformed into “women deserve to be believed.” A presumption of guilt replaced the presumption of innocence, and progressives seemed unconcerned. I can imagine a #MeToo version of “To Kill a Mockingbird,” with Mayella Ewell as the heroine, Atticus Finch condemned for “toxic masculinity” and the lynch mob cheered as an engine of popular justice.

Another tenet of American justice that inspired me to lean left was the idea that every defendant, however unpopular, is entitled to legal representation. Here my childhood heroes were lawyers like William Kunstler, who defended politically unpopular leftist clients, and the American Civil Liberties Union, which defended clients of every stripe when their constitutional rights were threatened.

This year, however, Ronald Sullivan, a Harvard Law School professor, became the object of student protests after joining disgraced movie mogul Harvey Weinstein’s defense team. The protests led Harvard to fire Mr. Sullivan and his wife as faculty deans at Winthrop House, a campus residential college. The right of an unpopular defendant to counsel, it seems, is no longer a progressive value.

Another of my core values is free speech. In the McCarthy era, one often heard of professors and screenwriters being forced out of their jobs for expressing far-left views. Today it’s conservative professors that are an endangered species on campus. Progressive students have become expert at forcing the dismissal or resignation of professors who allegedly display insufficient sensitivity about racial or gender issues. All too often, such students are able to keep anyone they disagree with from even speaking on campus. Once again, progressives have become the most visible enemies of a core “liberal” value.

I know that young people are often idealistic and attracted to anything that seems like a fight against injustice. But progressives today are riding roughshod over much of what liberalism once stood for. I hope that old 1960s liberals like me will stand firm, not be shamed into silence, and call out those who challenge our core values, whether from the left or the right.

He’s right that liberalism is dying a hard, painful death. I think he’s whistling past a graveyard in hoping that “liberals like me will stand firm”. Most are either too old and tired or dead.

The news that came this week of a decision to cover up a WPA mural of Washington in San Francisco because students found it offensive is an epitome. It isn’t only that Washington owned slaves that today’s young find offensive. It’s what he has come to represent as well.