Sunday, October 26, 2014

Ben Affleck: Defining Pretentious

Pretentiousness is generally defined as attempting to affect greater importance or ability than one actually possesses:
pretentious
adjective  |  pre·ten·tious  |  \pri-ˈten(t)-shəs\
1
:  characterized by pretension: as
a :  making usually unjustified or excessive claims (as of value or standing) <the pretentious fraud who assumes a love of culture that is alien to him — Richard Watts>
b :  expressive of affected, unwarranted, or exaggerated importance, worth, or stature <pretentious language> <pretentious houses>

For a real life example, consider this segment from an October 2014 episode of 'Real Time with Bill Maher', where author Sam Harris, actor/director Ben Affleck, MSNBC Political Analyst Michael Steele, and New York Times columnist Nicholas Kristof, argue about the composition of the followers of Islam --


This discussion had the typical uselessness of most panel discussions (at least with respect to the supposed topic), and especially the panel discussions on Bill Maher's show — even in the unusual event that a panel member has important insights, they get lost in the melee.

But Ben Affleck offered up a valuable lesson with his behavior in that segment.  He served as an excellent negative role model, in that he demonstrated behavior that one should strive to avoid.

Bill Maher began by saying that liberals are essentially politically correct — that they pretend to defend freedom, but they will not defend it against attacks from the religion of Islam.  This was more than a little ironic coming from Maher, given his well established track record as a politically correct liberal.  That's a separate topic — but here is just one obvious example of Maher's overall view, where he leads a panel discussion, again in October 2014, at a Minnesota Town Hall called 'Flip a District', criticizing the voting record of the Republican Congressman John Kline --
       https://www.youtube.com/watch?v=8EDnuLqj3cU.

Maher demonstrates his own criticism, in that, like most liberals, he does not consistently defend freedom — but at least he was making an effort in that segment of 'Real Time', by trying to at least get people to acknowledge the terrible pattern that is specific to the religion of Islam.

Sam Harris agreed that liberals have failed on the topic of theocracy, adding that liberals have no problem criticizing Christians, whereas they treat criticisms of the religion of Islam as an expression of bigotry toward all Muslims.

Ben Affleck immediately went on attack, proving exactly what Harris had just stated — that criticizing the oppressive nature of Islam is normally treated as a form of racism.

The exchange was not especially interesting, except as a demonstration of psychology, and a lack of critical thinking skills.  Ben Affleck gave no indication that he was even capable of listening to what was being said — he wanted to give the appearance that he is not a racist, so he kept repeating his claim that Maher and Harris were attacking all Muslims, no matter how many times they made reference to particular beliefs that are incredibly harmful to civilized society.

Like the widely held belief among British Muslims that publishers of the Danish cartoons of the Prohpet Muhammed in 2005 should have been prosecuted, and that freedom of speech should not be allowed when religious views are involved --
http://ukpollingreport.co.uk/blog/archives/291
...
Asked about attitudes towards free speech, there was little support for freedom of speech if it would offend religious sensibilities. 78% of Muslims thought that the publishers of the Danish cartoons of the Prophet Muhammed should be prosecuted, 68% thought those who insulted Islam should be prosecuted and 62% of people disagree that freedom of speech should be allowed even if it insults and offends religious groups. ...

Or, the widely held belief among Muslims that a penalty of death is appropriate for those that leave the religion of Islam.  As proof, consider page 55 from the April 2013 Pew Research Center poll, 'The World's Muslims: Religion, Politics and Society' (this may also be the poll Maher referred to in countering Affleck) --

https://www.pewforum.org/wp-content/uploads/sites/7/2013/04/worlds-muslims-religion-politics-society-full-report.pdf



Ben Affleck was completely incapable of responding to the argument being made — that liberals will not criticize harmful Islamic religious practices, even those that directly contradict supposed liberal values.  And notice the other panel members, Nicholas Kristof and Michael Steele, also helped demonstrate the point Harris and Maher were making.

Nicholas Kristof's responses were almost comical is this regard.  Kristof began by accusing Harris and Maher of advocating intolerance, but to defend Islam and his accusation, he raised as examples individuals who were imprisoned or killed by Muslims for attempting to oppose Islamic intolerance.  Kristof's mention of Rashid Rehman in an attempt to defend Islam was especially bizarre, given that Rehman was a Pakistani attorney who was murdered in cold blood in his office, for agreeing to defend a college lecturer accused of blasphemy.  It is reported that Rehman had received numerous death threats from highly educated people — other lawyers.  Here is Kristof trying to give Islam a 'kinder' face  --
... but the picture you are painting is to some extent true, but is hugely incomplete. It is certainly true that plenty of fanatics and jihadis are Muslim, but the people who are standing up to them. Malala [Yousafzai], Mohammad Ali Dadkhah in Iran, imprisoned for nine years for speaking up for Christians. A friend that I had in Pakistan who was shot this year, Rashid Rehman, for defending people accused of apostasy.
You could not make up better examples to help support the point Harris and Maher were attempting to make.

Michael Steele basically repeated his own version of this, adding that Muslims who do oppose the fanatical members of the religion, do not receive the same media coverage, and that if they did, it would create a better picture of the Muslim community.  Of course, this begs the obvious question, why is this "picture" of the Muslim community in such desperate need of being balanced?  And, of course, Steele's comments had the same problem as Kristof's rebuttal, in that Steele specifically mentioned "braver souls" who are "risking their lives" to oppose the fanatical elements of the religion.

Why on earth does Islam need "braver souls" who must be willing to "risk their lives"?

Ben Affleck's behavior was especially fascinating in that 'Real Time' segment, in that he had the least to add to the conversation, but acted as if his comments were the most important — Affleck acted as if he were being forced to suffer fools.  And note that Sam Harris pointed out on his blog that he was meant to do the five minute mid-show interview on that episode of 'Real Time', and that everyone on the panel knows that time is not meant to be a group discussion — Affleck decided there was no reason he should have to wait for Maher to finish the interview with Harris, so he interrupted, taking over the conversation.

But what made Affleck's behavior so useful as a negative role model, was not just that he was so arrogant, but that he was not able to raise any real criticism.  Initially, Affleck threw out a sarcastic remark, but then he asked Harris, "are you the person who understands the officially codified doctrine of Islam?", as if one has to be an expert in some officially codified doctrine (if it even exists) to raise any criticisms of the ideas advocated by that doctrine.  For example, does one have to spend years studying the Quran, to be qualified to criticize the belief that those who leave Islam deserve the death penalty?  Obviously, this is nonsense.

To be clear, I am not trying to criticize Ben Affleck for his ignorance — it is that he gives new and deeper meaning to the importance of this piece of advice —
It's OK to be ignorant, and it's OK to be arrogant, just not at the same time.

Here is a partial transcript of the discussion from the 'Real Time' segment for reference --

...
MAHER: Liberals need to stand up for liberal principles. This is what I said on last week's show, obviously I got a lot of hate for it. But all I'm saying is that liberal principles, like freedom of speech — freedom to practice any religion you want without fear of violence — freedom to leave a religion — equality for women — equality for minorities, including homosexuals. These are liberal principles, that liberals applaud for, but then when you say in the Muslim world this is what's lacking, then they get upset.

SAM HARRIS: Yeah, yeah, well liberals have really failed on the topic of theocracy. They'll criticize white theocracy. They'll criticize Christians. They'll still get agitated over the abortion clinic bombing that happened in 1984. But when you want to talk about the treatment of women and homosexuals, and free thinkers, and public intellectuals in the Muslim world, I would argue that liberals have failed us. And the crucial point of confusion [applause, Harris turns to audience] ... Well, thank you.

BEN AFFLECK: [with disdain, Affleck interjects over the applause] Thank God you're here!

SAM HARRIS: The crucial point of confusion is that we have been sold this meme of Islamophobia, where every criticism of the doctrine of Islam gets conflated with bigotry toward Muslims as people

MAHER: Right.

SAM HARRIS: That is intellectually ridiculous.

BEN AFFLECK: So, hold on, are you the person who understands the officially codified doctrine of Islam?

SAM HARRIS: I'm actually well educated on this topic.

AFFLECK: I'm asking you. So if you saying that Islamophobia is not a real thing? That if you're critical of something--

BILL MAHER: It's not a real thing when we do it.

It really isn't!

HARRIS: I'm not denying that certain people are bigoted against Muslims as people. And that's a problem.

AFFLECK: That's big of you.

HARRIS: But, the --

MAHER: Why are you so hostile about this concept?

AFFLECK: It's gross, it's racist.

MAHER: It's not! But it's so not.

AFFLECK: It's like saying, "You shifty Jew."

MAHER: You're not listening to what we are saying.

AFFLECK: You guys are saying that if you want to be liberals, believe in liberal principles.

MAHER: Right.

AFFLECK: Like freedom of speech.

MAHER: Right.

AFFLECK: Like we are endowed by our forefathers with inalienable rights, like all men are created equal --

MAHER: No!

HARRIS: Ben, we have to be able to criticize bad ideas.

AFFLECK: Of course we do. No liberal doesn't want you to criticize bad ideas.

HARRIS: Okay, but Islam at this moment is the motherlode of bad ideas.

AFFLECK: Jesus Christ!

MAHER: That's just a fact.

AFFLECK: It's not a fact. It's an ugly thing to say!

NICHOLAS KRISTOF, NYT COLUMNIST: ... it's the basic liberal principle of tolerance.

SAM HARRIS: Let me unpack it.

MAHER: But not for intolerance!

KRISTOF: No, of course not, but the picture you are painting is to some extent true, but is hugely incomplete. It is certainly true that plenty of fanatics and jihadis are Muslim, but the people who are standing up to them. Malala [Yousafzai], Mohammad Ali Dadkhah in Iran, imprisoned for nine years for speaking up for Christians. A friend that I had in Pakistan who was shot this year, Rashid Rehman, for defending people accused of apostasy.

BEN AFFLECK: Or how about the more than a billion people who aren't fanatical, who don't punch women, who just want to go to school, have some sandwiches, pray 5 times a day, and don't do any of the things you're saying of all Muslims. It's stereotyping. ... You take a few bad things and you're painting the whole religion with that same brush...

MAHER: No, No, let's get down to who has the right answer here. A billion people you say, all these billion people don't hold these pernicious beliefs?

BEN AFFLECK: No, no they don't.

MAHER: That's just not true Ben. That's just not true. ... You're trying to say that these few people, that's all the problem is, these few bad apples. The idea that someone should be killed if they leave the Islamic ...

BEN AFFLECK: That's horrible! That shits horrible.

MAHER: Wait, wait, but wait, you're saying the idea that someone should be killed if they leave the Islamic religion is just a few bad apples?

BEN AFFLECK: The people who would actually believe in an act that you murder somebody if they leave Islam is not the majority of Muslims at all.

SAM HARRIS: As you say, we have 1.5, 1.6 billion Muslims. Now ...

BEN AFFLECK: Second biggest religion in the world. A quarter of the human population of the earth.

SAM HARRIS: Ben let me unpack this for you.

BEN AFFLECK: Please do, I've been waiting, luggage has been sitting there packed up...

SAM HARRIS: Just imagine some concentric circles here -- you have at the center you have jihadists, these are people who wake up in the morning wanting to kill apostates, wanting to die trying, they believe in paradise, the believe in martyrdom ...

BEN AFFLECK: Horrible bad people that ... yeah

SAM HARRIS: Outside of them we have Islamists, these are people who are just as convinced of martyrdom, and paradise, and wanting to foist their religion on the rest of humanity, but they want to work within the system, they're not going to blow themselves up on a bus, they want to change governments, they want to use democracy against itself. That ... those two circles, arguably, are 20% of the Muslim world -- OK, this is not the fringe of the fringe.

BEN AFFLECK: What are you basing that research on.

SAM HARRIS: A bunch of poll results that we can talk about. To give you one point of contact: 78% of British Muslims think that the Danish cartoonist should have been prosecuted. 78%. So, I'm being conservative when I roll this back to 20%. But outside of that circle you have conservative Muslims who can honestly look at ISIS and say that does not represent us, we're horrified by that, but they hold views about human rights, and about women, and about homosexuals that are deeply troubling. So, these are not Islamists, they are not jihadists ...

AFFLECK: Those views are anathema to ours ...

SAM HARRIS: ... but they also keep women and homosexuals immiserated in these cultures and we have to empower the true reformers in the Muslim world to change it. And lying about the link between doctrine and behavior is not going to do that ...

AFFLECK: [making a circling gesture, disdainfully] OK, let Nic talk for a second ... a lot of talk.

KRISTOF: The great divide is not between Islam and the rest, it's rather between the fundamentalists and the moderates in each faith.

HARRIS: But we're misled to think the fundamentalists are the fringe. OK, we have jihadists, Islamists, and conservatives...

MAHER: That's the key point.

HARRIS: There's hundreds of millions of people [inaudible]

MICHAEL STEELE: You're saying that the strongest voices are coming from those who are jihadists and extremists. And that represents a bigger piece of the pie than we often think is true.

HARRIS: There's no question about that.

STEELE: OK, so having said that, even if that is true statistically or otherwise, the key thing to recognize that I don't think is part of the argument, but I think should be, is that there are voices that are often time raised in opposition to these jihadists, and to these extreme acts ...

HARRIS: Yes.

STEELE:... But guess what, they don't get covered, they don't get exposed. And they are not given the same level of platform that we see the jihadists get...

BILL MAHER: One reason they don't get exposed is because they're afraid to speak out because it's the only religion that acts like the mafia, that will fucking kill you if you say the wrong thing, draw the wrong picture, or write the wrong book. There's a reason why Ayaan Hirsi Ali needs bodyguards 24/7.

STEELE: You do have that element of fear as well, but you also have other braver souls out there who do speak out, and who do ... like ...

KRISTOF: And who are risking their lives to do that.

STEELE: Like the Muslim clerics and others, from Australia, to Europe, to the United States, just recently publicly put their names on paper, declaring their opposition to what ISIS and others are doing.

HARRIS: Yeah, we need, we need more of that.

STEELE: So there are those voices, but where was the coverage, where was that story to sort of create a different picture of the Muslim community.

AFFLECK: What is your solution. What is ... just condemn Islam, is that the question?

HARRIS: No, no, the solution is very much what Nic is saying ...

AFFLECK: To do what? We've killed more Muslims than they've killed us, by an awful lot. We've invaded more Muslim countries by an awful lot. And yet somehow we're exempted from these things because they're not really a reflection of what we believe in, we did it by accident, that's why we invaded Iraq. Put four million people ... [inaudible]

BILL MAHER: We're not convincing anybody.

AFFLECK: I'm specifically telling you that I disagree with what you think ... [inaudible]

BILL MAHER: OK ... and we're obviously not convincing anybody.

HARRIS: You don't actually understand my argument.

AFFLECK: I don't understand it?

HARRIS: You don't understand my argument.

AFFLECK: Your argument is, "You know, black people, they shoot each other" --

HARRIS: That is not my argument.

MAHER: No, it's not! No, it's not. It's based on facts. I can show you a Pew poll of Egyptians. They are not outliers in the Muslims world, that say like 90% of them believe death is the appropriate response to leaving the religion. If 90% of Brazilians thought that death was the appropriate response to leaving Catholicism you would think it was a bigger deal.

AFFLECK: I would think it's a big deal no matter what.

MAHER: Okay, but that's the fact.

AFFLECK: ... [inaudible] say it's all Brazilians, or I wouldn't say, well, Ted Bundy did this, god damn these gays, they're all trying to eat each other!

HARRIS: Yeah, OK, let me just give you what you want, there are hundreds of millions of Muslims who are nominal Muslims, who don't take the faith seriously, who don't want to kill apostates, who are horrified by ISIS, and we need to defend these people, prop them up, and let them reform...

AFFLECK: ISIS couldn't fill a double A ball park in Charleston West Virginia, and you're making a career out of talking ISIS, ISIS, ISIS!
...


Sunday, October 19, 2014

Krugman: How 'The Man' Keeps You Down

Here's Paul Krugman in October, 2007, speaking at the Commonwealth Club of California, on the 'The Future of the Middle Class'  --   http://fora.tv/2007/10/30/Paul_Krugman_Future_of_the_Middle_Class

Here's a transcript of an excerpt from that talk, where Krugman makes the claim that the long downward trend in union membership in the United States has been caused by 'political forces' that made it acceptable to 'bust unions'.  Krugman compares the U.S. with Canada, where the level of union participation hasn't seen the same declines.

Krugman also compares teachers with hedge fund managers, as a way of showing how dramatic income inequality is present among professions with similar levels of education --

http://www.youtube.com/watch?v=5kwA-CwFK5A
http://fora.tv/2007/10/30/Paul_Krugman_Future_of_the_Middle_Class
...
      In the 1960's Canada and the United States had roughly the same percentage of their workers in unions -- about 30% in both countries.  Today, Canada still has almost 30% of its workers in unions.  In the United States it's down to about 11%, and much less than that it's it's [sic], in the private sector -- it's heavily a public sector thing left.  So, the de-unionization was not something that happened because of the global economy, because Canada faces the same global economy we do -- it was something that happened here.
      And how did it happen?  Well, when you look into it closely you discover that it was ... political, basically Ronald Reagan, above all, though it started before him, declared open season for union busters.  During the 1980's, about 1 in every 20 workers who voted for a union was illegally fired.  And the reason ... sure, we're less of an industrial society, but there's no inherent reason why giant service sector companies -- you know, the iconic corporation of the 60's was General Motors, the iconic corporation of today is Walmart -- there's no inherent reason why those companies should not be unionized.  In fact, similar enterprises are in the rest of the world, but because the shift to a service economy took place in an environment in which politicians -- the dominant political forces -- said it was OK to bust unions, in the way that people had in the 1920's, we've had this dramatic decline in unionization in the United States.  And that in turn has all kinds of ramifications for the income distribution, so I can talk about it at some length, but there's a lot of reason to believe the politics has driven this dramatic increase in inequality -- sure technology is there, globalization is there, but it is very largely political.
      I should say one more thing, there is a view on inequality that you hear all the time, which is: 'well, it's all about the increased demand for skills, for education, in the modern world economy.'  You know, there's no doubt something to that, but if you actually look at the numbers, the huge growth in disparities has not been between the college educated and the non-college educated.  Yes -- people with college degrees have done better than people without, but most of the increase is among people with a lot of education.  So that -- the most dramatic statistic, high school teachers tend to have post-graduate degrees, and so do hedge fund managers.  And, as we all know, last year the highest paid hedge fund manager in the United States made an amount equal to the salaries of all 80,000 New York City school teachers for the next three years.  So, it is not education that is driving this.  It's not that simple.
...


Now consider this chart from the 'Center For Economic Policy And Research', from their 2012 study 'Protecting Fundamental Labor Rights: Lessons from Canada for the United States' --

http://www.cepr.net/documents/publications/canada-2012-08.pdf



It looks pretty dramatic, doesn't it?  And it seems like Krugman is correct, since according to this chart the unionization rate in Canada has been oscillating around 30% (and higher), while the unionization rate in the U.S. has been in a relentless downtrend since about 1960.

But there's a problem with Krugman's seemingly obvious conclusion.

In the chart above, notice the increase in Canada's unionization rate that began in the mid 1960's.  Could something unique to Canada have happened at that time to explain that increase in unionization?

The answer is yes.  Canada's 'Medical Care Act' was passed in 1966, which created a government controlled universal healthcare system.  This made healthcare part of the public sector in Canada, and the unionization rate in healthcare and social assistance is among the highest of all industries in Canada.  Also, note that the 'Canadian Union of Public Employees', now Canada's largest union, which represents workers in health care (among other public sector industries), was formed in 1963.

Here's a chart from the 'Unionization 2011' study at 'Statistics Canda', showing Canadian unionization rates in various industries in 2011.  The overall public sector unionization rate in Canada is about 70%, and the unionization rate drops to below 10% for certain private sector industries, like 'Agriculture' and 'Technical'  --

http://www.statcan.gc.ca/pub/75-001-x/2011004/article/11579-eng.pdf



So, unionization in Canadian is dominated by the public sector.

And looking at the rate of unionization over time in the private sector in Canada, we see a downtrend similar to that of the U.S.

Here are a couple of charts from the 'Center For Economic Policy And Research', from the same 2012 study cited above, 'Protecting Fundamental Labor Rights: Lessons from Canada for the United States'.  Notice that overall union participation in Canada is higher than in the U.S., but much of the difference is explained by the much higher unionization rate in the public sector in Canada.

As of 2011, the unionization rate in the private sector in Canada is still higher than in the U.S., but the difference is about 9%, versus about 18% when the overall unionization rates are compared --

http://www.cepr.net/documents/publications/canada-2012-08.pdf



In short, Krugman's explanation for the downtrend in unionization in the U.S. as a result of 'political forces' and 'union busting', is clearly false.  Krugman singles out Ronald Reagan as being responsible 'above all', and he mentions illegal firings that supposedly happened in the 1980's, but union membership rates were steadily declining in the 1960's and 1970's, long before Reagan became President.

Krugman uses Canada as an example to demonstrate his claim, but other than the increase in unionization that happened in Canada as a result of its larger public sector, Canada and the U.S. display similar patterns.  From 1997 to 2011, Canada actually had a larger decrease in unionization in its private sector versus the U.S., directly contradicting Krugman's claim that a decline in union membership was specific to the U.S. as a result of so-called 'union busting'.

Here's a table, again from 'Protecting Fundamental Labor Rights: Lessons from Canada for the United States', showing changes in union membership rates in the U.S. and Canada, from 1981 to 2011.  Notice that from 1981 to 2004 the private sector union membership in the U.S. declined 1% more than in Canada, but from 1997 to 2011 the private sector union membership declined 3.1% more in Canada versus the U.S. --

http://www.cepr.net/documents/publications/canada-2012-08.pdf



And, finally, Krugman's comparison of teachers to hedge fund managers is comically absurd.

Hedge funds typically handle billions of dollars of investor money, so they have an enormous responsibility in comparison with teachers.  Even given the importance of teaching, a hedge fund manager's skill has a direct and immediate impact on a fund's customers that can't be reasonably compared with a teacher's skill and responsibilities.  It isn't surprising that hedge fund managers earn incredibly large salaries in comparison with teachers, since what successful hedge fund managers do for their clients is immensely more valuable than what teachers do.

If you believe that being a hedge fund manager is an easy job with trivial responsibilities, you should enter the hedge fund field, and see if you can get investors to give you billions of dollars to manage.

And even if you could prove that hedge funds perform a worthless service, hedge fund clients pay the salaries of the fund managers from the investment profits those managers earn — so the only people that have a legitimate interest in the salary of a particular hedge fund manager, are that manager's investors.  Hedge funds typically have some version of what's called a 'two and twenty' arrangement, where investors pay some percentage of assets as a management fee (typically 2%), and some percentage of the profits the fund earns as an incentive fee (typically 20%).  So to earn an unusually high salary, and to keep clients, hedge fund managers must generate high returns for their investors.

But even if hedge fund managers could earn a high salary without performing well, their salaries would still be paid by their clients, and so the public at large has no legitimate concern in what they earn, because the public is not paying their salaries.  If you don't think what a hedge fund manager earns is fair, you can easily protect yourself by not investing with them.

This is certainly not the case with teachers.  Not only are taxpayers forced to pay the salaries of teachers, there is plenty of evidence to indicate that teachers don't perform well, and so deserve a low salary.

For example, consider this chart of SAT reading scores, from 1967 to 2011 --

http://www.humanitiesindicators.org/content/indicatorDoc.aspx?i=23



Or, consider this chart from a March, 2014 study, entitled 'State Education Trends', by Andrew Coulson of the Cato Institute — note that the 'Total Cost' line in this figure is adjusted for inflation --

http://object.cato.org/sites/cato.org/files/pubs/pdf/pa746.pdf



Notice that our government monopolized public education system has actually achieved negative productivity.  That is, every year more tax dollars are spent on education, with no improvement in the quality of the result, and sometimes a decline in the quality of the result.

The only thing that is not increasing in our public education system is student performance and enrollment.

No private company could perform this way and stay in business without forced government payments from taxpayers, and certainly no hedge fund manager could perform this way and retain clients.

There is often a good reason for income inequality, and many Krugman supporters also make this claim, when it suits them.  Too bad Krugman won't.

Saturday, October 11, 2014

A Spendthrift Pretending He's Austere

Austerity is generally defined as not being extravagant, and with regard to money, only spending on what is necessary:
1
:  the quality or state of being austere
2
a :  an austere act, manner, or attitude
b :  an ascetic practice
3
:  enforced or extreme economy
So it doesn't make much sense to claim that increasing the amount of debt that you are carrying fits the definition of being austere.  Obviously, quite the opposite is true.  Always spending so much that you must borrow to cover expenses, demonstrates a lack of restraint, and an inability to be responsible.

Nevertheless, here's a writer attempting to make that claim -- that government deficit spending is consistent with austerity --

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/10/why-is-the-recovery-so-weak-its-the-austerity-stupid/

Why is the recovery so weak? It’s the austerity, stupid.

By Matt O'Brien  October 10 at 2:04 PM

Welcome to Austerity U.S.A., where the deficit is back below 3 percent of GDP and growth is still disappointing—which aren't unrelated facts.

It started when the stimulus ran out. Then state and local governments had to balance their budgets amidst a still-weak economy. And finally, there was the debt ceiling deal with its staggered $2.1 trillion of cuts over the next decade. Add it all up, and there's been a big fiscal tightening the past few years, something like 4 percent of potential GDP. Indeed, as Paul Krugman points out, real government spending per capita has been falling faster now than any time since the Korean War demobilization.

And, as you can see above, all this austerity has been hurting GDP growth since 2011. It shows the Hutchins Center's new "fiscal impact measure," which looks at how much total government tax-and-spending decisions have helped or harmed growth. The dark blue line is what policy has actually done, and the light blue one is what a neutral policy would have done. So, in other words, if the dark blue line is below the light blue one, like it has the last three years, then policy has subtracted from growth.
...


Here's a chart from the 'CBO - An Update To The Budget And Economic Outlook: 2014 to 2024', which shows that deficit spending -- while much lower than it was in 2009 -- is still above the historical average from 1974 to 2013 --

https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/45653-OutlookUpdate_2014_Aug.pdf
https://www.cbo.gov/publication/45653



The CBO's monthly estimate for September 2014 shows a budget deficit for 2014 of -2.8% of GDP -- slightly smaller than the average deficit shown above of -3.1%, and inline with the first Projected bar in the chart above -- but note that this is an estimate, not an actual value --
     https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/49450-MBR.pdf
The federal government ran a budget deficit of $486 billion in fiscal year 2014, the Congressional Budget Office (CBO) estimates—$195 billion less than the shortfall recorded in fiscal year 2013, and the smallest deficit recorded since 2008. Relative to the size of the economy, that deficit—at an estimated 2.8 percent of gross domestic product (GDP)—was slightly below the average experienced over the past 40 years, and 2014 was the fifth consecutive year in which the deficit declined as a percentage of GDP since peaking at 9.8 percent in 2009.

Here's the same chart going back to 1930 from the 'Federal Reserve Bank of St. Louis' --

http://research.stlouisfed.org/fred2/series/FYFSGDA188S



Governments certainly don't need encouragement to borrow money, and the charts above demonstrate that point.  A balanced budget for the U.S. Federal government is a rare exception, not the norm, and using the word 'austere' to describe the U.S. government's handling of its finances is absurd on it's face -- the U.S. government has never been austere.

So what's the real premise of those who claim that the U.S. government should borrow even more?  Is a budget deficit over 4% of GDP really required to ensure even mediocre economic growth?

And notice this chart from the same CBO report cited above, which shows the total Federal debt as a percentage of GDP is approaching the levels seen during WWII.  That is, if you believe the CBO's accounting -- some show the current level of debt at about 100% of GDP --

https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/45653-OutlookUpdate_2014_Aug.pdf
https://www.cbo.gov/publication/45653



U.S. taxpayers were able to pay down the debt accumulated during World War II, but what one time expense is going to end that will allow the current debt to be paid down?

Notice how poorly the writer at the washingpost.com attempts to defend his point that the government can improve the economy by increasing it's debt load -- by ending 'austerity', as he put it.  He links to the Brookings Institution's Fiscal Impact Measure to show that a lack of government spending is hurting gross domestic product (GDP) growth, but other than showing government spending is counted in GDP accounting, this proves nothing.

It's easy to see how the government can increase GDP, since every transaction the government is involved in is counted in GDP -- one doesn't need to do a study to show that government spending increases GDP.  The difficulty is increasing GDP in a way that doesn't simply consume resources, and make people's lives worse.

In a previous post, I wrote about this obvious problem in using GDP as a measure of the effectiveness of government spending.  World War II demonstrates this point clearly, since rationing had to be introduced in 1942, at the peak of the U.S. government's deficit spending for the war, and well after the war 'stimulus' had begun in late 1940.  Clearly, government spending can increase GDP, while simultaneously reducing the quality of life.

Or, for a more recent example, consider the usefulness of one of the programs that was part of the 'American Recovery and Reinvestment Act of 2009': the subsidization of rural broadband.  In three of the areas that received stimulus funds to expand broadband access, $349,234 was spent per unserved household to get them broadband access.

Of course, a reduction in government spending will reduce GDP, but treating this as an unqualified negative is just a silly assumption that all government spending is good.  There's no reasonable way to defend that assumption.

And all of this begs the painfully obvious question, 'when should the government not run a deficit?'

This is one of the most damning aspects of this notion that governments can run deficits in bad times to 'stimulate' demand to 'smooth' the business cycle -- the FRED Surplus/Deficit chart above proves that as far as government is concerned, there is almost never a good time for a budget surplus and a decrease in the debt.

It should be obvious why -- politicians are in the business of buying votes, and paying down debt does nothing to achieve that goal.  To stay in office, politicians must focus on pandering to current voters, rather than ensuring government finances are sound for future generations.

It's a pity so many people will urge politicians to be even more irresponsible.

Friday, October 3, 2014

Defending Income Inequality (or Arguing Against Yourself)

In a previous post, I wrote about the hypocrisy of 'The Graduate University Center of the City University of New York (CUNY)', and Paul Krugman, in that CUNY will be paying Krugman $225,000 per nine-months with tax dollars to supposedly study income inequality.

In that post, I pointed out how Reihan Salam took the ridiculous position that Krugman wasn't being hypocritical in accepting an unusually high salary to be involved with an income inequality study at a publicly funded university, because Krugman, in Salam's view, has special abilities that justify an even higher salary.

These statements deserve special attention, not so much because of the obvious contradiction that they are a defense of the thing being called a problem, but because the defense given was a justification for income inequality.

Reading the public response to Krugman's new job at CUNY, including Salam's article at slate.com, was like watching a tragic comedy play out.  Over and over, individuals responded with some version of: 'Krugman's unequal pay to participate in the study of inequality, is justified by his special abilities.'

Really.

This common response begs the obvious question: how many people are so crippled in their thinking abilities, that they will give a justification for inequality in their defense of the study of it as a problem?

Consider these reader comments in response to this overview of the Krugman offer at gawker.com, which also includes details about how little other CUNY professors are paid by comparison --

4/16/14 11:47am
Let's not get into a thing about what "irony" means, but suffice to say I don't agree it's "ironic" that a man who cares about income inequality is accepting a salary in proportion to what his credentials merit...

4/16/14 11:44am
He is a Nobel Prize winner. My guess is that $225k for a Nobel Prize winner is pretty reasonable when compared with other Nobel Prize winners.

4/16/14 6:10pm
Let us compare that with a wall street tech. (programmer) who is pulling in 125 - 150 k. So Dr.Krugman call your agent. You should be getting at least 10 times that.
Take some of our current Queen's ( he is as effective as the queen is in changing rhetoric or policy) salary and give it to Dr. Krugman.


In short, defenders of the notion that tax dollars should be used to pay academics to study income inequality, don't have a problem with income inequality, so long as they view the individual being paid a high salary as worth it.

So there you have it.  Income inequality is not a problem, provided you are a popular recipient of that inequality.

To save the best for last, and to drive that point home, consider the priceless irony of this reader's comments --

4/16/14 7:34pm
The main thing that the comment threads teach me is that no one has ever read anything Paul Krugman has written. Ever.
He has no objections to people getting wealthy. Ever. Let's just go ahead and read what he's actually written, rather than strawmen. He doesn't like two things:

1.) Wealth generated for the sake of wealth. This is all of Wall-Street. They produce no goods or services. He's said this numerous times:

'the movie stars. Yes, a handful of media stars make a lot of money. But they are a trivial part of the story (pdf):

The upper tiers of the income distribution are overwhelmingly occupied by executives of one kind or another — corporate, finance, real estate, and lawyers who are surely more corporate than Perry Mason. And even the biggest names in media aren't real players. Remember, the 40 top-paid hedge fund managers and traders made an average of more than $400 million each in 2012.'

So he hates Wall-Street. That's different than hating all rich people.

2.) He hates people who earn their money by offshoring the responsibility of payments onto taxpayers.

He has consistently criticized Wal-Mart, Amazon, and other companies that get rich because the cost of their operations are subsidized by taxpayers. If these companies had to pay for the health care and welfare that their workers get, then their profits would go down by half. And that would cut down their executive pay. And hey, what's that group of people that he hates? (See post 1).

This is a broad range of people: The entire agriculture business (15 billion per year), oil (between 25 to 75 billion), and so forth. The average recipient of this government largesse is already very, very, very rich:

http://theweek.com/article/index/...

So if you claim that it is hypocritical for him to earn money, you are engaging in a strawman argument. People who produce goods and services should be rewarded but if they are earning rentier profits or earning money because taxpayers are shouldering the burden, then they receive unearned wealth.


It was nice of him to clearly state his extreme bias.  He's supposedly summarizing Krugman here, in an approving way --
Wealth generated for the sake of wealth.  This is all of Wall-Street.  They produce no goods or services.
This seems like psychological projection — when he says Wall Street doesn't produce anything, does he mean like a professional academic, paid with tax dollars to study something that can't possibly bring benefit to anyone, like income inequality?

Even if you agree that income inequality is a problem, how is an academic study about it supposed to help those with the lowest incomes?  Academics like Krugman certainly don't produce anything that will raise the living standards of the working poor.  Short of making those with the lowest incomes more productive — which is the only real solution, that no academic study can achieve — there's only one way to reduce inequality, and that's to force those who earn the most down, by taking away most of their income.  This supposed problem has long since been 'solved' by countries like North Korea.  So let's stop this pretense that paying an academic to study differences in income will somehow raise the level of fairness of society, when those income differences are justified by differences in individual ability — as Krugman supporters are quick to point out, when it suits them.

And let's pretend for a moment that this reader's absurd claim is true — that no one on Wall Street provides a service.  The appropriate response to this claim is: So what -- how does that affect you?  If you're convinced that everyone on Wall Street is engaged in graft, don't do business with them.  In short, no one is forcing you to pay a financial services company for a service that you consider worthless.

Even if the reader comment above is absolutely correct regarding Wall Street, those that work in financial services would still be morally superior to Krugman and CUNY, because those that work in financial services are not paid with tax dollars, that were taken by force — they're paid from voluntary transactions with customers.  Even considering the highly unusual government bailouts during the financial crisis, which Krugman supported, taxpayers aren't forced to pay the salaries of the various executives and hedge fund operators, that the reader complained about in his comment above.

The reader's second claim, regarding 'offshoring the responsibility of payments onto taxpayers', is a commonly used red herring fallacy, where one attempts to make corporations responsible for the costs of the lifestyle choices of their employees, in order to avoid the obvious point that workers can't be paid more than their work is worth on an open market, and so it's obviously individual workers who are being subsidized by welfare payments, and not their employers.  In a previous post, I also wrote about this often repeated fallacy, that employers can simply pay to support a certain lifestyle for employees, regardless of how much customers are willing to pay for the services those employees are providing.

The reader then confuses that issue by bringing up the direct subsidies the government pays to certain industries, like agriculture.  Certainly, such subsidies aren't fair, but I wonder which subsidy the vast majority of taxpayers would eliminate first, if given the choice — a subsidy for food products they regularly purchase, or a subsidy for a group of academics to study the income of taxpayers?

Overall, this reader's comments did little more than reveal a hateful envious mindset, in that he simply attacked the success of particular professions, based upon his unsupported claim that those professions have no value in all cases, and that everyone in those professions makes an egregiously high salary.

And the reader's closing sentences are a kind of climax of absurdity on this --
So if you claim that it is hypocritical for him to earn money, you are engaging in a straw man argument.   ...   if they are earning rentier profits or earning money because taxpayers are shouldering the burden, then they receive unearned wealth.
Obviously, Krugman isn't being criticized for earning money, or even a lot of money — the criticism is that it's hypocritical to exemplify that which you are calling a problem.   If Krugman were instead receiving a multi-million dollar salary as an economic analyst from a private company, there would be no basis for criticizing his income.

And regarding 'earning money because taxpayers are shouldering the burden' — I guess this reader missed the part about CUNY being a publicly funded university, and that Krugman is a perfect example of this criticism, whereas a hedge fund operator is not.

I would certainly like to see some pork barrel spending eliminated, so I don't have to participate in 'shouldering the burden of unearned wealth', and Krugman's job at CUNY, along with all the other 'jobs' at CUNY's Luxemborg Income Study Center, are a good place to start cutting.

Though Krugman is not being hypocritical in regard to burdening taxpayers, since he normally advocates for wasteful government spending, even when it helps no one.

In that sense, studying income inequality at CUNY is Krugman's dream job, since it is paid for largely by taxpayers, and it won't help anyoneother than Krugman.