Tuesday, June 28, 2016

Brexit and the Incorrigibility of the EU

A standard argument from the left runs like this: in principle there are three positions a country like Britain could take toward the EU, opposition/exit, support/remain, and transform.  But transforming the EU is not on the table, so the choice comes down to whether a country should remain part of the existing EU with all its faults or leave it.  This is a lousy pair of options, and the debate between them can’t help but be muddled and unproductive.

The interesting question for me is why the EU is such a determined enforcer of neoliberalism and so resistant to fundamental reform.  I asked this on Crooked Timber yesterday, and one of the commenters (thanks!) sent me to Gerassimos Moschonas, the Greek political scientist.  I haven’t read his book In the Name of Social Democracy: The Great Transformation, 1945 to the Present yet (what’s taking me so long?), but I did take a look at this article, which was published in 2009 after the first edition of In the Name and seems to summarize his position.

Moschonas is very insightful about the structural constraints on anti-neoliberal (or genuinely social democratic) politics in Europe.  The EU obstructs transformative political projects at the national level; meanwhile it prevents party formation and radical political action at the supranational level.  This structure, which institutionalizes the deregulation of national economies in the name of the single market and imposes anti-Keynesian policies through the Stability and Growth Pact, is intrinsically resistant to change.  Moreover, it coincides with a grand coalition at the EU level whose political ideology is resolutely neoliberal.  Some of this is obvious to anyone who follows events, but Moschonas’ analysis of the structural aspect of “embedded neoliberalism” (my term) is enlightening.

But there is a hole in his narrative.  Somehow, during the crucial period from the mid-80s to the early 90s, this neoliberal consensus in Europe was forged, and its project was the creation of exactly those structures that Moschonas studies.  How could it be that, in a Europe that lacked explicit political organization at the confederal level, such a coalition, powerful enough to create entirely new institutions, could be assembled?  Here structural political analysis of the sort represented by Moschonas is useful for posing the problem but doesn’t give us the resources to begin to answer it.

I think the missing dimension is political economy.  Politics does not occur in a vacuum, with ideas competing on the basis of pure logic or emotional resonance.  Political economy proposes a larger terrain, in which wealth and material interests generally condition politics and make particular ideas or projects more “realistic” or attainable.  I’ll be the first to admit, however, that political economists have relied primarily on indirect evidence—historical or geographical correspondences between economic motives and political outcomes—and have been mostly unsuccessful in tracing the actual processes through which they occur.  Understanding them is important not only in a general intellectual sense, but also, especially, for coming up with counter-hegemonic political projects.

I see this difficulty, for instance, in Varoufakis’ DiEM25 project to democratize the EU.  He has in mind a two-step process: first the political structures are changed to enable a Europe-wide political space, and then that space can used to combat neoliberal hegemony.  I’m not against this, but it seems to me that the first step presupposes the second: the existing structures exist precisely because of that hegemony, and it will have to be challenged in order to create new ones.  It would be interesting to get Moschonas’ reaction to DiEM25.

In any case, DiEM25 was not on the ballot in Britain.  You could vote to be part of the actually existing EU or vote to leave it.  Like I say, lousy choice.

Chat Shit Get Sacked

Dear Bernie Sanders supporters,

I hope you are paying close attention to what is happening in the British Labour Party. 

If Bernie Sanders had somehow managed to win the Democratic Party nomination for President, the anti-Corbyn coup is exactly the kind of behavior you would have seen from the Democratic Party establishment. 

Sabotage. During the election campaign.

The same pundits who now demand that Sanders immediately endorse Hillary Clinton in the name of party unity would walk away in disgust from a Sanders nomination, declining to get involved with a campaign so "out of touch" with the American electorate, a foregone conclusion that would be rerun incessantly in the liberal media.

Pillorying Hilary Benn: "Chat Shit Get Sacked"
Meanwhile, in a Sanders-nominated universe, Donald Trump would be profiled on TV as the kind of guy you'd like to have a beer with -- a straight-talking tycoon who says outlandish things but whose frenzy will be tamed once he is anaesthetized by the trappings of office.

The establishment does not find losing amusing. But when they do have to lose, they would much prefer losing to a megalomaniac than to a movement. Megalomaniacs can be flattered and manipulated more predictably. Or so the professional courtiers believe. Whether this is true or not is doubtful. But then a lot of what courtiers believe is based on abject conformism, not observation and reflection.


I remember waking up in a sweat one night in late June or early July of 1972 with the realization that "they" would not let "it" happen. Exactly who they was wasn't clear -- the military? the Republicans? the Democratic Party establishment? Or what -- the nomination? an election?

And they didn't let it happen. But of course it was all the fault of McGovern and his supporters, just as the Leave vote in European Union referendum was all the fault of Jeremy Corbyn and Trump's election will be all the fault of Bernie Sanders and the Bros.

The establishment is never responsible for anything.

Monday, June 27, 2016

National Income Accounting in Iceland

One account notes:
gross national income per capita is still down by a quarter since 2007
But Dean Baker checks with the IMF and notes:
per capital GDP in Iceland is around 2.0 percent higher now than its pre-recession peak. That is a very different story. In fairness, the NYT piece refers to gross national income (GNI), not gross domestic product.
Dean argues that GDP is preferred over GNI but why if the citizens of a nation enjoy significant net income from abroad. Dean adds:
GDP is usually the preferred measure, but it can be inflated by things like foreign companies claiming profits in the country for tax purposes, as happens in Ireland. If the NYT's GNI numbers are correct, it is most likely due to foreign profits of Iceland's major banks in the bubble years before the crisis. It's not clear that the loss of these profits, which were based on speculation and fraud, is a negative for Iceland's economy.
Actually this represents two stories. Is it the bank speculation tale only? Or how much of this difference is due to transfer pricing manipulation? Ireland is known for its tax haven status with lots of multinationals shifting income there, which is why its reported GDP in 2013 on a PPP basis was almost 30% greater than its reported GNP in 2013 on the same basis. Iceland’s reported GDP in 2013 on a PPP basis was 15% higher than its reported GNP in 2013 on the same basis. While there is not much discussion of Iceland being a tax haven or transfer pricing with respect to this nation, it is interesting that its corporate tax rate is only 20%.

Sunday, June 26, 2016

Who Really Are The "British"?

At one level this is a trivial question with an easy answer.  A British person is a citizen of Great Britain, whose more formal and official name is the United Kingdom, or UK for short. That should be the end of that, and the recent vote vote by citizens of Great Britain (I think permanent residents may also have been allowed to vote) to leave the European Union, the "e," arguably reinforced the meaningfulness of this identity, especially in regard to the broader alternative of being a "European."

But then we have this problem that this vote appears to be stirring up divisions within these British people, with the Scottish in particular having voted strongly against the majority outcome, resulting in renewed pressure to have another referendum on Scottish independence, for them to cease to be citizens of Great Britain, arguably to cease to be "British."  Is this identity then much more fragile than we might think  it  is?  This gets pushed further in that people in Northern Ireland also voted to Remain, although not by as large a margin as did the Scots, 56% rather than 62%.  The Welsh went with the national majority, indeed mirroring it closely at 52%, with the English making that the national average by more strongly supporting Leave and offsetting the Remain majorities in Scotland and Northern Ireland, with this even more  strongly the case in more rural parts of England as London went strongly for Remain, almost as strongly as did Edinburgh and Glasgow in Scotland.  There seem to be some pretty sharp divisions on this among the main identifiable sub-groups among the British.

This then suggests that we should take this internal division and apparent lack of agreed upon identity a bit more seriously.  The word "British" comes from the word "Britain," which while often used as a short hand name for the entire nation, the United Kingdom, more specifically means the island of Britain, large island to the east of the island of  Ireland. That the UK is "Great" Britain is partly because it involves more than just the people on that island, most notably the Northern Irish, as well  as those on other much smaller islands such as Lewis (birthplace of Donald Trump's mother) where Scottish Gaelic is still spoken, and the Isle of Man, where the now-extinct language of Manx was spoken, related to Irish and Scottish Gaelic (and where the cats without tails come from),among some others.  Thus being a British citizen includes people not living on the island of Britain.

The name "Britain" itself is quite old, going back to at least the Roman period, when those living on the island, or at least in the part of it ruled by the Romans, were known as the "Brythons."  However,  that proves to have involved a narrower group than those who live there now,  not including the people now in Scotland who were called the "Picts" by the Romans, although they never viewed themselves as a group and identified themselves by tribal group names constituting sub-groups of themselves.  That Scotland itself is sub-divided is clear in the division between the Highlands, where one is more likely to find people who can speak Gaelic, the language of people who invaded from Ireland several centuries after  the Romans stopped ruling in the southern part of the island of Britain, the Romans having built Hadrian's Wall to protect the zone they ruled and full of Brythons largely to keep out the troublesome Picts, who reportedly painted themselves blue.  Modern Scots are descended from ancient Pictish tribes, but also with this Irish Gaelic ancestry in the Highlands, as well  as Viking ancestry, and Anglian ancestry in the Lowlands (Lowland Scottish fishermen reportedly can communicate easily with Frisian ones from the Netherlands, the Frisian language supposedly close to Old English).   Yes, the Lowland Scots have serious English ancestry.

As for those original British, the "Brythons" who were ruled by the Romans, they lived in what is now England.  But the language that the spoke was an ancestor to the modern Welsh language.  Perhaps this is why the vote totals in Wales on Brexit so closely corresponded to the overall totals in Great Britain as a whole.  However, clearly the modern Welsh are distinct from the Scottish, the Northern Irish (or "Scotch-Irish" as they are called in the US), not to mention the modern English.  After all, Welsh is a Celtic language, if one more closely related to Breton spoken in northwestern France, as well as the now dead Cornish language, once spoken in Cornwall in the very southwestern most part of modern England, than to the Gaelic languages that came out of the island of Ireland.  These modern Welsh are not all that closely related to the modern English, who now  occupy the territory once occupied by the Roman-ruled Brythons, ancestors of the modern Welsh.

As it is, English not a Celtic language, although having many Celtic loan words in it,but mostly a Germanic  one, related to modern Frisian as noted above, although also now with many loan words from Latin languages as a result of the Norman Conquest in 1066 and all  that.  The Germanic Anglo-Saxons (who also included the Jutes from Denmark who mostly ended up in Kent in the southeastern most part of England) invaded the island of Britain around and especially after the removal of Roman rule of  what is now  England and Wales, pushing the Celtic-speaking Welsh westwards into modern Wales, although also certainly killing many of them and intermarrying with some of their women to create the modern English.  We indeed have some complicated migrations and wars that lie behind the identities of  the main modern groups that inhabit both the island of Britain as well as the nation of Great Britain, not getting into all the groups that have arrived more recently ranging from Jews from Central Europe through Hindus from India and Muslims from Pakistan to Polish plumbers especially recently under the auspices of the European Union, from which the English in particular seem so keen on leaving, much more so than their fellow "British" in the Celtic fringe.

So we have it that the modern British are a bunch of sub-groups, ones that do not intermarry or mingle all that much, except maybe in London and a few other large cities.  At some deeper level there really are not many "British" in Great Britain in the sense of people who are the descendants of fully intermarried members of these older constituent sub-groups who are very much aware of their identities, with this awareness if anything being heightened by their different attitudes towards this Brexit vote.  This vote has if anything undermined what it means to be "British," even as it supposedly reinforces it.  Indeed, quite a few observers are noting that this vote was really about the English asserting themselves, with those rural parts especially in the north and east often called "Little England" being the most strongly pro-Brexit parts of Great Britain of all.

While I have not  seen anybody doing so, I am going to  raise the question then about if there is a place where this intermingling of these different sub-groups has happened, where indeed we might find people who might represent this type that does not, or only barely does so  in Great Britain itself. I think there is.  It  is the United States of Ameica, although also probably to a lesser degree in some of the other former English-speaking colonies of Great Britain, such as Canada, Australia, New Zealand, and parts of South Africa.  However, in the US, this is not immediately obvious, and this is partly because most of these people are certainly not called "British" or even "British-Americans," but something else.  They are called WASPs, or "White Anglo_Saxon Protestants," and I am one of them by ancestry, or so a sociologist who would use this term would argue.

There is a problem, however, with this label, which misleads most people to the real background of these so-called "WASPs," a term that was invented in the 1950s by sociologists and poltiical scientists, although sometimes the "W" in it is argued to stand for "wealthy," with the real WASPs being only the wealthier and more elite branch of this group, who arguably were long the dominant ruling elite of  the US.  The problem lies in the use of the term "Anglo-Saxon," which has the more specific meaning and association with the English of Great Britain.  The term's specifically literal meaning is White English Protestants.  But in fact only in certain parts of the US are the so-called WASPs largely of only English ancestry, especially in rural parts of New England (hence that name) as well as in the more Tidewater areas of the southeastern states, especially in Virginia.  These people are more likely to be Episcopalian or Congregationalist or Quaker  (or curiously Morman, with Utah probably the US state whose population is more strongly descended from the English than any other).

Most people in the US identified as being WASPs are of  mixed ethnic descent.  English is certainly a major part of it, but especially in the US South this descent usually includes people from Celtic fringe of Great Britain, the Scots, the Ulster or Northern Irish called the Scotch-Irish, especially in the Appalachian mountains, as well as the Welsh.  My last name is Welsh, but I am descended from all these groups.  And these WASPs often have other groups as well, mostly other Protestant northwestern Europeans, with the Dutch prominent in New York, the Germans in Pennsylvania, the French Huguenots in South Carolina, and the Scandinavians in the upper Midwest, as well as often some unacknowledged amounts of Native American, African-American, or others (I have both German as well as some Gypsy ancestry). And these people often adhered to religious groups not so strictly tied to the English as are the Episcopalians, Congregationalists, Quakers, and Mormons,such as Presbyterians (Scottish), Methodists (Welsh), Baptists (German), and Lutherans (German and Scandinavian).

So, the bottom line is that the real "British" are the British Americans now labelled as "WASPs." It was in America where this mixing of these groups that have not mixed so much back in Great Britain have mixed, creating that type that might have constituted a unified ethnic identity in the home country, but have not done so there.  It has been in America where this mixing happened, even as the label applied to this group in the US suggests that it is mostly or only of English descent.  In any case, whatever  one thinks about it, the power of this group has been fading since the end of World War II.

I shall close this by simply noting that I because aware of this personally only about two decades ago, although I was intellectually aware of the fact that American WASPs, especially those in the US South (who include the lower class "rednecks"), were of this mixed English-Celtic ancestry.  It was on a visit indeed to Great Britain when we went driving around, although I had done this more than once at earlier times.  I kept realizing that I found myself sympathetic to and feeling a kindred with all of the people who were local to each area, even as I realized that I was not so fully sympathetic for the reason that I was not just English or Scottish or Welsh, but all of these in my ancestry.  I realized that I was one of the "real" British, a British-American, somebody not found very often in Britain itself.  Curiously this difference was long recognized between the British British and the British Americans, but in the earlier era, prior to World War II, this odd group that dominated in the US was simply called "Americans," although that term has now lost that meaning as it now means something like what "British" means in Great Britain, that is, somebody who is a citizen of the US whatever is their ethnic ancestry.  Thus we have since identified that group with this oddly misleading term, White Anglo-Saxon Protestant, which is not precisely correct in general.

Barkley Rosser

Addendum:

Another unfortunate fallout from the Brexit vote may involve the Good Friday Accords and the broader peace agreements between Ireland and UK over the status of  Northern Ireland, which agreements were ultimately carried out within the framework of EU rules and regulations.  This is now threatened, with the possibility of either a hard border between the two parts of Ireland reappearing or Northern Ireland leaving the UK to join  the now  more prosperous Republic of  Ireland.  Hopefully whatever happens there will not see a return to outright violence as we have seen in the not so distant past.

This shows up in the US with there recently being more attention paid to those people desended from Northern, or Ulster, Irish, known here as Scotch-Irish (or more recently Scots-Irish), alhough the westernmost county of traditional Ulster is in the Republic of Ireland rather than the UK.  Anyway, among others former senator and presidential candidate, Jim Webb, has written books about them and their  heritage in the US, which indeed has been heavily concentrated in the Appalachian mountains, with them having a history of  being martially oriented, with such figures as the now unpopular Andrew Jackson, being a prominent president of this background.  This group has been culturally important as the main source of folk and country music forms in the US, which when combined with blues and jazz with their African and German marching band music influences led to rock and roll.  However, from an early period these musics had been intermixing, with hardest core instrument of country/folk music, the banjo, having been imported straight from western Africa, with almost no changes (and ironically with that instrument never used by any modern African-American musicians).

Prior to the arrival of the Catholic Irish in large numbers after the potato famine of the late 1840s, the Scotch-Irish simply called themselves "Irish," but started with this Scotch-Irish stuff so as to distinguished themselves from their Catholic co-islanders, thus making them able to join that odd mass of WASPs or "Americans." and join in with discriminating against the Catholic Irish.  I note that I also  have Scotch-Irish ancestry, with in fact my middle name that I go by, Barkley, being a Scotch-Irish last name, the English spellings of that name being Barclay and Berkeley.

Who Really Are The "British"?

At one level this is a trivial question with an easy answer.  A British person is a citizen of Great Britain, whose more formal and official name is the United Kingdom, or UK for short. That should be the end of that, and the recent vote vote by citizens of Great Britain (I think permanent residents may also have been allowed to vote) to leave the European Union, the "e," arguably reinforced the meaningfulness of this identity, especially in regard to the broader alternative of being a "European."

But then we have this problem that this vote appears to be stirring up divisions within these British people, with the Scottish in particular having voted strongly against the majority outcome, resulting in renewed pressure to have another referendum on Scottish independence, for them to cease to be citizens of Great Britain, arguably to cease to be "British."  Is this identity then much more fragile than we might think  it  is?  This gets pushed further in that people in Northern Ireland also voted to Remain, although not by as large a margin as did the Scots, 56% rather than 62%.  The Welsh went with the national majority, indeed mirroring it closely at 52%, with the English making that the national average by more strongly supporting Leave and offsetting the Remain majorities in Scotland and Northern Ireland, with this even more  strongly the case in more rural parts of England as London went strongly for Remain, almost as strongly as did Edinburgh and Glasgow in Scotland.  There seem to be some pretty sharp divisions on this among the main identifiable sub-groups among the British.

This then suggests that we should take this internal division and apparent lack of agreed upon identity a bit more seriously.  The word "British" comes from the word "Britain," which while often used as a short hand name for the entire nation, the United Kingdom, more specifically means the island of Britain, large island to the east of the island of  Ireland. That the UK is "Great" Britain is partly because it involves more than just the people on that island, most notably the Northern Irish, as well  as those on other much smaller islands such as Lewis (birthplace of Donald Trump's mother) where Scottish Gaelic is still spoken, and the Isle of Man, where the now-extinct language of Manx was spoken, related to Irish and Scottish Gaelic (and where the cats without tails come from),among some others.  Thus being a British citizen includes people not living on the island of Britain.

The name "Britain" itself is quite old, going back to at least the Roman period, when those living on the island, or at least in the part of it ruled by the Romans, were known as the "Brythons."  However,  that proves to have involved a narrower group than those who live there now,  not including the people now in Scotland who were called the "Picts" by the Romans, although they never viewed themselves as a group and identified themselves by tribal group names constituting sub-groups of themselves.  That Scotland itself is sub-divided is clear in the division between the Highlands, where one is more likely to find people who can speak Gaelic, the language of people who invaded from Ireland several centuries after  the Romans stopped ruling in the southern part of the island of Britain, the Romans having built Hadrian's Wall to protect the zone they ruled and full of Brythons largely to keep out the troublesome Picts, who reportedly painted themselves blue.  Modern Scots are descended from ancient Pictish tribes, but also with this Irish Gaelic ancestry in the Highlands, as well  as Viking ancestry, and Anglian ancestry in the Lowlands (Lowland Scottish fishermen reportedly can communicate easily with Frisian ones from the Netherlands, the Frisian language supposedly close to Old English).   Yes, the Lowland Scots have serious English ancestry.

As for those original British, the "Brythons" who were ruled by the Romans, they lived in what is now England.  But the language that the spoke was an ancestor to the modern Welsh language.  Perhaps this is why the vote totals in Wales on Brexit so closely corresponded to the overall totals in Great Britain as a whole.  However, clearly the modern Welsh are distinct from the Scottish, the Northern Irish (or "Scotch-Irish" as they are called in the US), not to mention the modern English.  After all, Welsh is a Celtic language, if one more closely related to Breton spoken in northwestern France, as well as the now dead Cornish language, once spoken in Cornwall in the very southwestern most part of modern England, than to the Gaelic languages that came out of the island of Ireland.  These modern Welsh are not all that closely related to the modern English, who now  occupy the territory once occupied by the Roman-ruled Brythons, ancestors of the modern Welsh.

As it is, English not a Celtic language, although having many Celtic loan words in it,but mostly a Germanic  one, related to modern Frisian as noted above, although also now with many loan words from Latin languages as a result of the Norman Conquest in 1066 and all  that.  The Germanic Anglo-Saxons (who also included the Jutes from Denmark who mostly ended up in Kent in the southeastern most part of England) invaded the island of Britain around and especially after the removal of Roman rule of  what is now  England and Wales, pushing the Celtic-speaking Welsh westwards into modern Wales, although also certainly killing many of them and intermarrying with some of their women to create the modern English.  We indeed have some complicated migrations and wars that lie behind the identities of  the main modern groups that inhabit both the island of Britain as well as the nation of Great Britain, not getting into all the groups that have arrived more recently ranging from Jews from Central Europe through Hindus from India and Muslims from Pakistan to Polish plumbers especially recently under the auspices of the European Union, from which the English in particular seem so keen on leaving, much more so than their fellow "British" in the Celtic fringe.

So we have it that the modern British are a bunch of sub-groups, ones that do not intermarry or mingle all that much, except maybe in London and a few other large cities.  At some deeper level there really are not many "British" in Great Britain in the sense of people who are the descendants of fully intermarried members of these older constituent sub-groups who are very much aware of their identities, with this awareness if anything being heightened by their different attitudes towards this Brexit vote.  This vote has if anything undermined what it means to be "British," even as it supposedly reinforces it.  Indeed, quite a few observers are noting that this vote was really about the English asserting themselves, with those rural parts especially in the north and east often called "Little England" being the most strongly pro-Brexit parts of Great Britain of all.

While I have not  seen anybody doing so, I am going to  raise the question then about if there is a place where this intermingling of these different sub-groups has happened, where indeed we might find people who might represent this type that does not, or only barely does so  in Great Britain itself. I think there is.  It  is the United States of Ameica, although also probably to a lesser degree in some of the other former English-speaking colonies of Great Britain, such as Canada, Australia, New Zealand, and parts of South Africa.  However, in the US, this is not immediately obvious, and this is partly because most of these people are certainly not called "British" or even "British-Americans," but something else.  They are called WASPs, or "White Anglo_Saxon Protestants," and I am one of them by ancestry, or so a sociologist who would use this term would argue.

There is a problem, however, with this label, which misleads most people to the real background of these so-called "WASPs," a term that was invented in the 1950s by sociologists and poltiical scientists, although sometimes the "W" in it is argued to stand for "wealthy," with the real WASPs being only the wealthier and more elite branch of this group, who arguably were long the dominant ruling elite of  the US.  The problem lies in the use of the term "Anglo-Saxon," which has the more specific meaning and association with the English of Great Britain.  The term's specifically literal meaning is White English Protestants.  But in fact only in certain parts of the US are the so-called WASPs largely of only English ancestry, especially in rural parts of New England (hence that name) as well as in the more Tidewater areas of the southeastern states, especially in Virginia.  These people are more likely to be Episcopalian or Congregationalist or Quaker  (or curiously Morman, with Utah probably the US state whose population is more strongly descended from the English than any other).

Most people in the US identified as being WASPs are of  mixed ethnic descent.  English is certainly a major part of it, but especially in the US South this descent usually includes people from Celtic fringe of Great Britain, the Scots, the Ulster or Northern Irish called the Scotch-Irish, especially in the Appalachian mountains, as well as the Welsh.  My last name is Welsh, but I am descended from all these groups.  And these WASPs often have other groups as well, mostly other Protestant northwestern Europeans, with the Dutch prominent in New York, the Germans in Pennsylvania, the French Huguenots in South Carolina, and the Scandinavians in the upper Midwest, as well as often some unacknowledged amounts of Native American, African-American, or others (I have both German as well as some Gypsy ancestry). And these people often adhered to religious groups not so strictly tied to the English as are the Episcopalians, Congregationalists, Quakers, and Mormons,such as Presbyterians (Scottish), Methodists (Welsh), Baptists (German), and Lutherans (German and Scandinavian).

So, the bottom line is that the real "British" are the British Americans now labelled as "WASPs." It was in America where this mixing of these groups that have not mixed so much back in Great Britain have mixed, creating that type that might have constituted a unified ethnic identity in the home country, but have not done so there.  It has been in America where this mixing happened, even as the label applied to this group in the US suggests that it is mostly or only of English descent.  In any case, whatever  one thinks about it, the power of this group has been fading since the end of World War II.

I shall close this by simply noting that I because aware of this personally only about two decades ago, although I was intellectually aware of the fact that American WASPs, especially those in the US South (who include the lower class "rednecks"), were of this mixed English-Celtic ancestry.  It was on a visit indeed to Great Britain when we went driving around, although I had done this more than once at earlier times.  I kept realizing that I found myself sympathetic to and feeling a kindred with all of the people who were local to each area, even as I realized that I was not so fully sympathetic for the reason that I was not just English or Scottish or Welsh, but all of these in my ancestry.  I realized that I was one of the "real" British, a British-American, somebody not found very often in Britain itself.  Curiously this difference was long recognized between the British British and the British Americans, but in the earlier era, prior to World War II, this odd group that dominated in the US was simply called "Americans," although that term has now lost that meaning as it now means something like what "British" means in Great Britain, that is, somebody who is a citizen of the US whatever is their ethnic ancestry.  Thus we have since identified that group with this oddly misleading term, White Anglo-Saxon Protestant, which is not precisely correct in general.

Barkley Rosser

Saturday, June 25, 2016

The Tale of the Dragon Slayer

The background for this tale is that I have just finished attending the 9th MDEF conference on Dynamic Modeling in Economics and Finance (actually, Modelli Dynamiche Economiche e Finanza) in Urbino, Italy.  Alan Kirman was in attendance and was much frustrated (as was I) with the tendency for junior scholars from around the world to present very conventional neoclassical models, even if they were doing some interesting things with them, Cobb-Douglas production functions, aggregate, with ratex and rep agents, and the whole schmeer. When confronted, they would whimper and say that they did it so that it would be easier to get published, which I  am sure is true, and in today's job market, I have sympathy. But they sure looked embarrassed and clearly mostly recognize that their models are fundamentallyflawed.

At the social dinner last night, Alan told the following tale of the dragon slayer over dessert.  Some of these young scholars looked to be squirming a bit.

The dragon slayer was widely recognized as being the best in the world at his craft, for which he wandered about gaining praise and prestige.  Then one day, a wise man informed him that there are no dragons.  He became very depressed and soon dropped completely out of sight. 

Then a few months later he reappeared, driving around in a fancy new car all dressed up  spiffily and with a beautiful woman hanging all over him in the car.  A friend asked him what was up.  He said, "I have started a school to teach others to become dragon slayers."

Barkley Rosser


Friday, June 24, 2016

Neo-liberalism and the European Social Model

From "The Dysfunctional Nature of the Economic and Monetary Union," Philip Arestis, Giuseppe Fontana and Malcolm Sawyer:

"The policy framework governing the euro can be aligned with a more general theoretical framework, which finds its expression in the ‘new consensus macroeconomics’ (NCM). The essential features of that theoretical framework are as follows:
(i) politicians in particular, and the democratic process in general, cannot be trusted with economic policy formulation with a tendency to make decisions, which have stimulating short-term effects (reducing unemployment); but which are detrimental in the longer term (notably a rise in inflation). In contrast, experts in the form of central bankers are not subject to political pressures to court short-term popularity, and can take a longer-term perspective, where it is assumed that there is a conflict between the short term and the long term. Policy makers’ scope for using discretion should be curtailed and the possibility of negative spillovers from irresponsible fiscal policy must be reduced.  
(ii) There is only one objective of economic policy and this is price stability. This objective can only be achieved through monetary policy, and through manipulating the rate of interest in particular.  
(iii) inflation is a monetary phenomenon and can be controlled through monetary policy. The central bank sets the key policy interest rate to influence monetary conditions, which in turn through their short-run effects on aggregate demand affect the future rate of inflation. Central banks have no discernible effects on the level or growth rate of output in the long run, which is determined exclusively by aggregate supply factors like technology, capital, and labour inputs. However, central banks do determine the rate of inflation in the long run.  
(iv) the level of unemployment fluctuates around a supply-side determined equilibrium rate of unemployment, generally labelled the NAIRU (non-accelerating inflation rate of unemployment). The level of the NAIRU may be favourably affected by a ‘flexible’ labour market, but is unaffected by the level of aggregate demand or by productive capacity.  
(v) fiscal policy is impotent in terms of its impact on real variables (essentially because of beliefs in the Ricardian Equivalence theorem, and ‘crowding out’ arguments), and it should be subordinate to monetary policy in controlling inflation. There is allowance for the operation of ‘automatic stabilisers’ as the actual budget surplus or deficit will fluctuate during the course of the business cycle with tax revenues rising in boom and falling in recession, and this provides some dampening of the cycle. The budget should though be set to average balance over the course of the business cycle. 
"The structure of the ECB clearly conforms to all five points. The sole objective of the ECB is price stability, and decisions are made by a governing body composed of bankers and financial experts. There are, and can be, no involvement by any other interest groups or any democratic body. The only EU level policy from controlling inflation is monetary (interest  rate) policy, which presumes that monetary policy is a relevant and effective instrument for the control of inflation. Inflation is in effect targeted by the ECB in the form of pursuit of ‘price stability’ interpreted as inflation between 0 and 2 per cent per annum. The third point is fully accepted and adopted by the ECB. This can clearly be confirmed by the monthly statements of the Governor of the ECB at his press conferences after the announcement of the decisions on the level of the rate of interest.

"The implementation of what is in effect a balanced budget requirement at the national level under the Stability and Growth Pact and the absence of fiscal policy at the euro area level has eliminated the use of fiscal policy as an effective instrument for the reduction of unemployment (or indeed of containing inflation pressures)."

FLEXIT

"If, as a result of Brexit, the economy crashes it will not vindicate the economists, it will simply illustrate once more their failure." -- Ann Pettifor
You can see immigrants. You can't see NAIRU or flexible labor market policies. Most people wouldn't know a NAIRU from a Nehru jacket and have probably never heard of flexible labor market policies.

There is a simple logic behind the "growth through austerity" policies beloved by Cameron and Osborne: "wages are too damn high." But there is also a more technical-sounding  obfuscation. This more convoluted explanation is that there is a long-run, "natural" rate of unemployment that is unaffected by aggregate demand, therefore fiscal stimulus will result in inflation. Thus the only non-inflationary way to reduce unemployment is to fine tune this hypothetical natural rate by removing labor market rigidities.

Sounds plausible? What it means in practice is "wages are too damn high." In the 19th century, this superstition was known as the wages-fund doctrine. Also known as this magazine of untruth.

Another euphemism for these "flexible labor market policies" (i.e., "wages are too damn high.") is "structural reforms." In a press release from the  Center for Economic and Policy Research, Mark Weisbrot pointed out the connection between Brexit and these so-called structural reforms:
"While the movement in the UK to leave the EU had right-wing, anti-immigrant and xenophobic leaders, in most of Europe that is not the driving force of the massive loss of confidence in European institutions. The driving force in most of the European Union is the profound and unnecessary economic failure of Europe, and especially the Eurozone, since the world financial crisis and recession. 
"It has cost European citizens millions of jobs, trillions of dollars in lost income, and is sacrificing a generation of youth at the altar of fiscal consolidation and 'structural reforms.' It has delivered an overall unemployment rate in Europe that is twice the level of the United States; more than seven years of depression in Greece; more than 20 percent unemployment in Spain, and long-term stagnation in Italy. In recent weeks French workers have been fighting against 'structural reforms' that seek to undermine employment protections and the ability of organized labor to bargain collectively."

Lumps of Brexit

So it turns out the establishment telling people they are a bunch of foolish xenophobes is not an effective electoral strategy. I wonder if the DNC is paying attention? I doubt it.



Wednesday, June 22, 2016

Brexit Is A Dead Heat

Last night my wife, Marina, and I watched live the debate at Wembly Arena in over Brexit, BBC, with three on each main side. The betting markets have never said Leave will win, with their lowest forecast being 58% Remain.  Now, after the assassination of pro-Remain Labour MP by a neo-Nazi.the prediction markets have gone to 75% for Remain, and on Monday, the markets and the pound surged.  But the 'shpolls remain near tied, with the main one on this morning's FT with Leave still ahead by one point.  Looks pretty close, like a dead heat.

So what may be pushing in the Leave direction after the assassination of Jo Cox, is the debate last night, with 6000 in the live audience, and without doubt most of UK watching.  Behavioral economics comes in here, particularly Danny Kahneman's peak and end point theory. What matters for memory is the peak point and the endpoint.  In this, I am not sure about  the peak point, but somehow the main pro leave leader, Boris Johnson, got to speak last, and he really jammed it up, declaring that tomorrow will be an "Independance Day!" for the UK.  That drew the only standing ovation of the evening.

Dead heat.

Barkley Rosser

Lawyers Guns and MaxSpeak

Tuesday, June 21, 2016

Open Up that Golden Gate!

Only two weeks after primary day and California has less than a million presidential ballots left uncounted. An estimated 923,515 ballots as of 11:56 am this morning, June 21.

Gee, it's a good thing AP declared the winner the night before the primary. Otherwise, the suspense might have undermined confidence in the Democratic democratic process.

The Death Of Carl Chiarella

Carl Chiarella died this morning after a long illness, which had forced him to fully retire last summer from his position at the University of Technology in Sydney, Australia.  Long one of  the leading figures in the  Bielefeld School branch of Post Keynesian economics, he was coauthor of numerous books with people like Peter Flaschel, Willi Semmler, Reiner Franke, and numerous others.  The Bielefeld School takes seriously nonlinear dynamics as well as integrating ideas from Marx, Keynes, and Schumpeter, with Carl being the leading nonlinear dynamicist in this group, having written several books and important papers in that area by himself.

He also served as a coeditor of the Journal of Economic Dynamics and Control for several years as well as being an associate editor of the Journal of Economic Behavior and Organization when I was its editor.  In later years he wrote more on finance, including about speculative bubble dynamics in agent-based models.  For many years he organized and oversaw annual conferences on quantitative finance at the UTS.  He was a good guy who helped many out on many things and had a great dry wit.

The first time I met him was in 1995 when I spent a month visiting at the University of Newcastle in Australia as a guest of Bill Mitchell,which was when I also first met Steve Keen, who used to show up at some of Carl's finance conferences.  I gave a talk at UTS on the invitation of Carl, who had read my 1991 book, From Catastrophe to Chaos: A General Theory of Economic Discontinuities.  In its first two printings, the copyright page mistook me for my late father and had my birth date as 1907 (who had died in 1989, but somehow the Library of Congress had not gotten that point; this was my first book but my old man had published seven in his life and has my name, or maybe it is that I have his, except for the "Jr." at the end).  Anyway, just before Carl introduced me at the talk in his department, he said to me that he had expected me to be much older, and this was due to his having seen this erroneous birth date, which he thought was for real.  His PhD was in applied math.

Anyway, I and many others will miss him.  RIP, Carl.

Barkley Rosser.  

The Iatrogenic and Incoherent "Theory" of Flexibility

In its report on "The long-term decline in prime-age male labor force participation," President Obama's Council of Economic Advisers writes:
Conventional economic theory posits that more 'flexible' labor markets—where it is easier to hire and fire workers—facilitate matches between employers and individuals who want to work. Yet despite having among the most flexible labor markets in the OECD—with low levels of labor market regulation and employment protections, a low minimum cost of labor, and low rates of collective bargaining coverage—the United States has one of the lowest prime-age male labor force participation rates of OECD member countries.
Although it has indeed become conventional, the 'flexible' labor markets mantra is not a theory. It is dogma. An article of faith. The theory behind the nostrum of flexible labor markets is Milton Friedman's natural rate theory of unemployment, which, as Jamie Galbraith pointed out twenty years ago, was constructed by adding expectations to the empirical Philips Curve observation of a relationship between unemployment and inflation:
The Phillips curve had always been a purely empirical relation, patched into IS-LM Keynesianism to relieve that model's lack of a theory of inflation.  Friedman supplied no theory for a short-run Phillips curve, yet he affirmed that such a relation would "always" exist. And Friedman's argument depends on it. If the Phillips relation fails empirically— that is, if levels of unemployment do not in fact predict the rate of inflation in the short run—then the construct of the natural rate of unemployment also loses meaning. 
Galbraith's evisceration of the natural rate theory and NAIRU is incisive, persuasive and accessible. Read it.

At the other end of the flexibility spectrum, intellectually, is Layard, Nickell and Jackman's Unemployment: Macroeconomic Performance and the Labour Market. In their influential textbook, Layard et al. grafted the dubious NAIRU concept onto the archaic lump-of-labor fallacy claim to create their own chimera hybrid, the LUMP-OF-OUTPUT FALLACY.

Galbraith's "Time to Ditch NAIRU" has 293 citations on Google Scholar. Layard et al's "Unemployment" has 5824.

To appreciate the pretzel logic of Layard et al., one has to first understand that the old fallacy claim is essentially an inversion of the "supply creates its own demand" nutshell known as Say's Law. Jamie's dad, John Kenneth Galbraith, had argued back in 1975 that Say's Law had "sank without trace" after Keynes had shown that interest "was not the price people were paid to save... [but] what was paid to overcome their liquidity preference" and thus a fall in interest rates might encourage cash hoarding rather than investment, resulting in a shortfall of purchasing power.

So, at one end of their graft Layard et al. were resuscitating the old canard that Keynes had supposedly "brought to an end." At the other end of the graft was Friedman's tweaking of an atheoretical empirical observation -- the Philips Curve -- that was  "patched into IS-LM Keynesianism to relieve that model's lack of a theory of inflation. (James Tobin once elegantly described the Phillips curve as a set of empirical observations in search of theory, like Pirandello characters in search of a plot.)" And let's not even get started with IS-LMist fundamentalism

Churchill's "riddle wrapped in a mystery inside an enigma" quip about the Soviet Union has nothing on Layard et al.'s antithetical and anachronistic graft on a tweak of an atheoretical patch on an unsatisfactory "attempt to reduce the General Theory to a system of equilibrium," as Joan Robinson described IS-LM "Keynesianism":
Whenever equilibrium theory is breached, economists rush like bees whose comb has been broken to patch up the damage. J. R. Hicks was one of the first, with his IS-LM, to try to reduce the General Theory to a system of equilibrium. This had a wide success and has distorted teaching for many generations of students. Hicks used to be fond of quoting a letter from Keynes which, because of its friendly tone, seemed to approve of IS-LM, but it contained a clear objection to a system that leaves out expectations of the future from the inducement to invest.
And by "expectations," Keynes clearly had in mind uncertainty, not honeycomb equilibrium.

So that's the tangled 'theory' behind 'flexible' labor market policy prescriptions. A regurgitated dog's breakfast of contradiction and amnesia. Layard et al.'s lump-of-output fallacy flexibility chimera thus resembles a sort of a theoretical ouroboros chicken-snake swallowing its own entrails:
To many people, shorter working hours and early retirement appear to be common-sense solutions for unemployment. But they are not, because they are not based on any coherent theory of what determines unemployment. The only theory behind them is the lump-of-output theory: output is a given. In this section we have shown that output is unlikely to remain constant.
This is simply FALSE. Shorter working hours is based on the same theory as full employment fiscal policy: Keynes’s theory. But don’t take my word for it. In an April 1945 letter to T.S. Eliot, Keynes wrote:
The full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result just as well by consuming more or working less. Personally I regard the investment policy as first aid. In U.S. it almost certainly will not do the trick. Less work is the ultimate solution.

Friday, June 17, 2016