## Memo Question for February 27: Colonialism

"The treasure captured outside Europe by undisguised looting, enslavement and murder, floated back to the mother-country and were there turned into capital." -- Marx, Capital, Vol. 1 Ch. 32.

Do the other assigned readings provide any basis for assessing the general truth of this passage from Marx? In what sense did colonial trade in the 1497-1800 period contribute to capital formation in Europe?

## Buce on Plutarch on Kindness

Buce writes:

Underbelly: Plutarch on Kindness: Plutarch’s... discussion of Cato the Elder. Cato was the archetypical “old republican”—hard-working, thrifty, honest and just. Plutarch thought Cato a good man in so many ways, but he does notice one odd or unexpected quirk. When Cato’s slaves “became too old to work,” Plutarch says, “he felt it his duty to sell them rather than feed so many useless mouths.” Plutarch sees fit to pause and reflect on the point:

For my own part I regard his conduct towards his slaves in treating them like beasts of burden, exploiting them to the limits of their strength, and then, when they were old, driving them off and selling them, as the mark of a thoroughly ungenerous nature, which cannot recognize any bond between man and man but that of necessity. And yet we see that kindness possesses a far wider sphere of action than justice, for it is in the nature of things that law and justice are confined to our dealings with our fellow men, whereas kindness and charity, which often flow from a gentle nature like water form an abundant spring, may be extended even to dumb animals. A kindly man will take good care of his horses even when they are worn out in his service, and will look after his dogs not only when they are puppies, but when they need special treatment.

For my part, I would not sell even my draught ox simply because of his age, far less turn out an old man from the home and the way of life to which he has grown accustomed for the sake of a few paltry coins, especially since he would be of no more use to the buyer than he was to the seller...

## Jim Poterba to Head National Bureau of Economic Research

An excellent choice...

## Ben Sargent Is a National Treasure

Somebody just said, "Ben Sargent is a national treasure." They're right. Now who was it?

## Obama Wins Wisconsin

I am told that, demographically, Wisconsin seemed good for HRC. But she doesn't seem to have made much of an effort to contest it. And I have just been told that Obama has won Wisconsin 58%-41%.

And John McCain says:

I will fight every moment of every day in this campaign to make sure Americans are not deceived by an eloquent but empty call for change.

John McCain: for the status quo; against hope.

## We Should Go See Carrie Fisher...

Edward Guthman of the Chronicle:

Carrie Fisher tames her demons in solo show: Carrie Fisher has a phrase to describe the low points in her life: "Bad reality, good anecdote." It applies equally to her parents' scandal-sheet marriage; her problems with bipolar disorder and addiction to painkillers; her failed marriages to musician Paul Simon and talent agent Bryan Lourd; the morning she woke up and found a friend, 42-year-old Republican operative R. Gregory Stevens, dead in her bed.

It applies as well to "Star Wars," the empire-building franchise that made her wealthy but identified her forever with a hideous, matching-cinnamon-buns hairdo and turned her character Princess Leia into a doll, a shampoo bottle and a Pez dispenser.

In "Wishful Drinking," the one-woman show she wrote and is now performing at Berkeley Rep, Fisher spares no one in her will to spill...

## Jim Hamilton Welcomes the Rising Price of Oil

He thinks oil at $100 a barrel is good news: Econbrowser:$100 a barrel: Crude oil reached a record high on Tuesday, and there's an embarrassing oversupply of theories to explain why.... Venezuelan President Hugo Chavez' decision to cut off sales of crude, gasoline, and diesel to ExxonMobil... output from West Africa has been reduced by problems in Nigeria... speculation that OPEC will cut production quotas... Monday's explosion at the Big Spring refinery in Texas... speculation that Shiite cleric Muqtada al-Sadr may announce his intention to abandon his participation in the present Iraqi cease fire....

[W]hat of those who say, like Joe Friday, "all we want are the facts." Well, here are some. On the same day that crude oil gained 4.8% in price, gold was up 2.6% and copper shot up 5.8%.... [L]et me bring up one more fact that I believe may be quite pertinent. The expected fed funds rate implied by the April fed funds futures contract shot up 7-1/2 basis points Tuesday. Whereas traders last Friday were anticipating an average fed funds rate of 2.415% for April, Tuesday's closing price brings that up to 2.49%.

Now, if you really try, you can still fit that last little nugget into your inflation meme. Say, traders know that $100 oil will scare the Fed into worrying more about inflation so Bernanke will have to slow down lowering rates. Or something. Or you could try a line that to me seems a bit more natural: incoming data aren't confirming the initial notion held by many that a recession began in December. If so, it means that the Fed's easing will come to an end within a few months, and that the demand for oil, copper, and most everything else is going to be stronger than many of us had been anticipating as of a few weeks earlier. If so,$100/barrel might not be as bad news as you thought.

## Los Gusanos--the Worms--Infest the Comment Section Tonight...

Ah. The Fidel Castro fans are out in force, I see:

Bloix: Let's do a thought experiment: Imagine that the year is 1960 and that you are a soul about to be inspirited into a foetus about to be born. God gives you a choice: you may become the son or daughter of a poor rural woman in either Cuba, Guatemala, Haiti, or the Dominican Republic. What would you choose?

Reply #1: That is the wrong comparison: Cuba in 1960 is like Costa Rica, northern Mexico, Puerto Rico, or Portugal. The fact that you today think of Cuba as to be plaed in the same basket as Guatemala, Haiti, or the Dominican Republic is Castro's doing, and is worth thinking about. The normal course of development should have given Cuba today the wealth, freedom, and health that Costa Rica, northern Mexico, Puerto Rico, and Portugal possess. It has only the health--and perhaps not even that. The only excuse for breaking eggs is if you manage to make a tasty omelette.

prov: Too bad for an academic like you using such a language. you clearly depict the other side of the communist coin that of brutal capitalism, of dictatorships in Latin America etc.. Too bad taking an extreme position in an issue that must always be addressed in a more serious way. Too bad that you used Rosa's words to support you anti communist feelings

Reply #2: So it's forbidden to use Rosa Luxemburg's words to support her anti-Leninist feelings?

Ken Houghton: Model that one up and show me the results. Your major local trading partner when you were run by a Mob-backed dictator unilaterally refuses to buy your goods, or to import anything to you...

Reply #3: You know, there is something very wrong with an argument that goes (a) Leninist centrally-planned communism is necessary because market exchange is inherently exploitative an destructive, and (b) it's not Castro's fault Cuba's economy is in the toilet--America won't trade with it. That simply does not compute.

dsquared: I'm not getting this Brad. At precisely which point after the Cuban revolution would it have made sense for Cuba to decide to switch allegiances, throw itself open to American capitalism and step onto the development path of Honduras, Haiti, the Dominican Republic and other Caribbean and Central American quasi-colonies? Or is the idea that Castro should have tried to start a revolution in a banana republic in the backyard of a superpower without any support from the other superpower? Or that all things considered, life under Batista wasn't so bad and the Cubans ought to have toughed it out for another forty years?...

Reply #4: Stepping, at any point, onto a eurocommunist development path would have been fine. Stepping back onto the development path Cuba had been on--Costa Rica, Puerto Rico, etc.--would have been even better. Stepping onto the southern European Italian, Portuguese, or post-Franco Spanish development path would have really good. But any of those would have rapidly meant an end to the dictatorship of the Castro brothers.

One Salient Oversight: Was Castro good or bad? He was both. Forget for a moment the brutality of his regime, especially in the early days. Instead focus upon what the nation has achieved since he took power. The United Nations Human Development Index has Cuba at a respectable 0.838 - a number higher than Mexico and can be defined as a nation with "High Human Development". If this increase in standards of living continues for another 10-20 years, Cuba will be considered a "First World Nation". I'm not going to defend Castro's sins. He did, however, prove to the world that Communism could improve the living standards of its citizens

Jessica: Cuba is certainly something there are intensely felt emotions about on all sides. I would not put Castro in a class with Stalin at all. Nor with Mother Theresa. Best comparisons would be Muhammed Ali of 19th century Egypt. Some elements of Menachim Begin/Ariel Sharon.... Castro's choice for the Soviet economic model turned out very poorly. But this was not at all obvious back when he was making that choice (and making it under severe pressure). Back then, North Korea was economically in far better shape than South Korea. (I know it's hard to believe, but that was the world in which Castro made his choices.) And once that die was cast, I don't see where Castro ever had a chance to switch directions without risking not only US invasion, but vindictive and brutal US invasion...

Reply #5: Muhammed Ali of Egypt did not know that democracy was possible, and so cannot be blamed for not instituting it. Menachim Begin and Ariel Sharon held elections. History will judge Fidel Castro much more harshly than them, I think--most of all because he made the choice of political strategy, he did not let the people of Cuba make that choice. As to when Fidel could have switched to a eurocommunist or social-democratic model without immediately losing his head--well, 1968 with Dubcek, or 1975 with Sadat, or anytime in the Carter administration, certainly.

Neal: Freedom and elections are fine sentiments for the comfortable--as long as you have enough to eat.

No reponse seems possible

James Killus: The last time I calculated the difference between infant mortality in Cuba vs the average in Latin America, it amounted to something like 3,000 per year infants that did not die in Cuba, but would have had they been born elsewhere in Latin America. Apparently the "stupidest man alive" contender thinks that this amounts to something. Apparently, smarter men do not believe it does.

## Bad Blurbs for Good Books

A parlor game: write the worst blurb you can imagine for the best book you can think of. For example:

Making Light: This can't be good for one's soul: Plucky heroes travel across a fantasy world, encountering strange creatures and languages (invented by the author!) to destroy a magic artifact, while being pursued by Minions of the Dark Lord. They are aided by a King in Exile, an elven archer, and a wizard with a long beard. People sing at them a lot, occasionally in fake languages (invented by the author!). Did we mention the author made up some languages for the book?

## Good Riddance to Fidel Castro!

Fidel Castro has retired. Good riddance!!

That the Lenin-Trotsky-Stalin Authoritarian Project of which Fidel Castro was the next-to-last exemplar was not an advance toward but a retreat from a better world was obvious long, long ago. Quite early--Kronstadt?--it was clear to all save the dead-enders that the project was a mistake. As Rosa Luxemburg wrote in "The Russian Revolution":

Freedom only for the supporters of the government, only for the members of one party -- however numerous they may be -- is no freedom at all. Freedom is always and exclusively freedom for the one who thinks differently... because all that is instructive, wholesome and purifying in political freedom depends on this essential characteristic....

The tacit assumption underlying the Lenin-Trotsky theory of dictatorship is this: that the socialist transformation is something for which a ready-made formula lies completed in the pocket of the revolutionary party, which needs only to be carried out energetically in practice. This is, unfortunately -- or perhaps fortunately -- not the case.... What we possess in our program is nothing but a few main signposts which indicate the general direction in which to look.... The socialist system of society should only be, and can only be, an historical product, born out of the school of its own experiences, born in the course of its realization, as a result of the developments of living history... socialism by its very nature cannot be decreed or introduced by ukase. It has as its prerequisite a number of measures of force -- against property, etc. The negative, the tearing down, can be decreed; the building up, the positive, cannot. New Territory. A thousand problems. Only experience is capable of correcting and opening new ways. Only unobstructed, effervescing life falls into a thousand new forms and improvisations, brings to light creative new force, itself corrects all mistaken attempts. The public life of countries with limited freedom is so poverty-stricken, so miserable, so rigid, so unfruitful, precisely because, through the exclusion of democracy, it cuts off the living sources of all spiritual riches and progress.... The whole mass of the people must take part in it. Otherwise, socialism will be decreed from behind a few official desks by a dozen intellectuals.... [Lenin] is completely mistaken in the means he employs. Decree, dictatorial force of the factory overseer, draconian penalties, rule by terror.... It is rule by terror which demoralizes.

When all this is eliminated, what really remains?... Without general elections, without unrestricted freedom of press and assembly, without a free struggle of opinion, life dies out in every public institution, becomes a mere semblance of life, in which only the bureaucracy remains as the active element. Public life gradually falls asleep, a few dozen party leaders of inexhaustible energy and boundless experience direct and rule. Among them, in reality only a dozen outstanding heads do the leading and an elite of the working class is invited from time to time to meetings where they are to applaud the speeches of the leaders, and to approve proposed resolutions unanimously -- at bottom, then, a clique affair -- a dictatorship, to be sure, not the dictatorship of the proletariat but only the dictatorship of a handful of politicians, that is a dictatorship in the bourgeois sense.... Yes, we can go even further: such conditions must inevitably cause a brutalization of public life: attempted assassinations, shooting of hostages, etc....

That--written some ninety years ago--strikes me as a good epitaph for Castro's rule.

But there are, of course, dead-enders like Chris Bertram of Crooked Timber, who makes an impressive play for the stupidest man alive crown with:

: [W]hat the capitalists and their lackeys really really hated about Soviet Russia was not its tyrannical nature but the fact that there was a whole chunk of the earth's surface where they were no longer able to operate. Ditto Cuba, for a much smaller chunk. So let's hear it for universal literacy and decent standards of health care. Let's hear it for the Cubans who help defeat the South Africans and their allies in Angola and thereby prepared the end of apartheid. Let's hear it for the middle-aged Cuban construction workers who held off the US forces for a while on Grenada. Let's hear it for Elian Gonzalez. Let's hear it for 49 years of defiance in the face of the US blockade. Hasta la victoria siempre!

## New York Times Death Spiral Watch (William Kristol Edition)

Why oh why can't we have a better press corps? The mind boggles at the idea that somebody--William Kristol--and some newspaper--the New York Times--could actually deploy George Orwell in an attempt to support the proposition that a government needs fewer not more checks-and-balances controlling its ability to spy on its citizens.

Why am I not surprised that William Kristol is unable to read either George Orwell or Rudyard Kipling? But I am still surprised that Kristol is still employed by the New York Times. The rot--Rosenthal, Keller, Sulzberger--is very far advanced indeed.

Here is William Kristol:

Democrats Should Read Kipling: Browsing through a used-book store Friday -- in the Milwaukee airport, of all places -- I came across a 1981 paperback collection of George Orwell's essays. That's how I happened to reread his 1942 essay on Rudyard Kipling.... One shouldn't be surprised that its argument would shed light... on contemporary American politics....

If I may vulgarize the implications of Orwell's argument a bit: substitute Republicans for Kipling and Democrats for the opposition, and you have a good synopsis of the current state of American politics. Having controlled the executive branch for 28 of the last 40 years, Republicans tend to think of themselves as the governing party -- with some of the arrogance and narrowness that implies, but also with a sense of real-world responsibility. Many Democrats, on the other hand, no longer even try to imagine what action and responsibility are like. They do, however, enjoy the support of many refined people who snigger at the sometimes inept and ungraceful ways of the Republicans. (And, if I may say so, the quality of thought of the Democrats' academic and media supporters -- a permanent and, as it were, pensioned opposition -- seems to me to have deteriorated as Orwell would have predicted)...

Here's Orwell on Kipling:

George Orwell: Rudyard Kipling: [T.S.] Eliot... falls into the opposite error of defending [Kipling] where he is not defensible. It is no use pretending that Kipling's view of life, as a whole, can be accepted or even forgiven by any civilized person. It is no use claiming, for instance, that when Kipling describes a British soldier beating a "nigger" with a cleaning rod in order to get money out of him, he is acting merely as a reporter and does not necessarily approve what he describes. There is not the slightest sign anywhere in Kipling's work that he disapproves of that kind of conduct -- on the contrary, there is a definite strain of sadism in him, over and above the brutality which a writer of that type has to have. Kipling is a jingo imperialist, he is morally insensitive and aesthetically disgusting. It is better to start by admitting that, and then to try to find out why it is that he survives while the refined people who have sniggered at him seem to wear so badly....

Kipling, morally or politically... was not a Fascist.... An interesting instance of the way in which quotations are parroted to and fro without any attempt to look up their context or discover their meaning is the line from "Recessional", "Lesser breeds without the Law". This line is always good for a snigger in pansy-left circles. It is assumed as a matter of course that the "lesser breeds" are "natives", and a mental picture is called up of some pukka sahib in a pith helmet kicking a coolie. In its context the sense of the line is almost the exact opposite... "lesser breeds" refers... to the Germans, and especially the pan-German writers, who are "without the Law" in the sense of being lawless, not in the sense of being powerless. The whole poem, conventionally thought of as an orgy of boasting, is a denunciation of power politics, British as well as German....

[Kipling] in the second stanza he had in mind the text from Psalm CXXVII: "Except the lord build the house, they labour in vain that build it; except the Lord keep the city, the watchman waketh but in vain." It is not a text that makes much impression on the post-Hitler mind. No one, in our time, believes in any sanction greater than military power; no one believes that it is possible to overcome force except by greater force. There is no "Law", there is only power.... [This] is the belief which all modern men do actually hold. Those who pretend otherwise are either intellectual cowards, or power-worshippers under a thin disguise, or have simply not caught up with the age they are living in. Kipling's outlook is prefascist. He still believes that pride comes before a fall and that the gods punish hubris. He does not foresee the tank, the bombing plane, the radio and the secret police, or their psychological results.

But in saying this, does not one unsay what I said above about Kipling's jingoism and brutality? No, one is merely saying that the nineteenth-century imperialist outlook and the modern gangster outlook are two different things.... He was the prophet of British Imperialism in its expansionist phase.... Kipling spent the later part of his life in sulking, and no doubt it was political disappointment rather than literary vanity that account for this. Somehow history had not gone according to plan. After the greatest victory she had ever known, Britain was a lesser world power than before, and Kipling was quite acute enough to see this....

[B]ecause he identifies himself with the official class, he does possess one thing which "enlightened" people seldom or never possess, and that is a sense of responsibility. The middle-class Left hate him for this quite as much as for his cruelty and vulgarity. All left-wing parties... have internationalist aims, and at the same time they struggle to keep up a standard of life with which those aims are incompatible. We all live by robbing Asiatic coolies, and those of us who are "enlightened" all maintain that those coolies ought to be set free; but our standard of living, and hence our "enlightenment", demands that the robbery shall continue. A humanitarian is always a hypocrite, and Kipling's understanding of this is perhaps the central secret of his power to create telling phrases. It would be difficult to hit off the one-eyed pacifism of the English in fewer words than in the phrase, "making mock of uniforms that guard you while you sleep".... He sees clearly that men can only be highly civilized while other men, inevitably less civilized, are there to guard and feed them....

How far does Kipling really identify himself with the administrators, soldiers and engineers whose praises he sings? Not so completely as is sometimes assumed. He had travelled very widely while he was still a young man, he had grown up with a brilliant mind in mainly philistine surroundings, and some streak in him that may have been partly neurotic led him to prefer the active man to the sensitive man. The nineteenth-century Anglo-Indians, to name the least sympathetic of his idols, were at any rate people who did things. It may be that all that they did was evil, but they changed the face of the earth (it is instructive to look at a map of Asia and compare the railway system of India with that of the surrounding countries)....

When he is writing not of British but of ‘loyal’ Indians he carries the ‘Salaam, sahib’ motif to sometimes disgusting lengths. Yet it remains true that he has far more interest in the common soldier, far more anxiety that he shall get a fair deal, than most of the ‘liberals’ of his day or our own. He sees that the soldier is neglected, meanly underpaid and hypocritically despised by the people whose incomes he safeguards. ‘I came to realize’, he says in his posthumous memoirs, ‘the bare horrors of the private's life, and the unnecessary torments he endured’. He is accused of glorifying war, and perhaps he does so, but not in the usual manner, by pretending that war is a sort of football match. Like most people capable of writing battle poetry, Kipling had never been in battle, but his vision of war is realistic. He knows that bullets hurt, that under fire everyone is terrified, that the ordinary soldier never knows what the war is about or what is happening except in his own corner of the battlefield, and that British troops, like other troops, frequently run away:

I 'eard the knives be'ind me, but I dursn't face my man,
Nor I don't know where I went to, 'cause I didn't stop to see,
Till I 'eard a beggar squealin' out for quarter as 'e ran,
An' I thought I knew the voice an' — it was me!

Modernize the style of this, and it might have come out of one of the debunking war books of the nineteen-twenties. Or again:

An' now the hugly bullets come peckin' through the dust,
An' no one wants to face 'em, but every beggar must;
So, like a man in irons, which isn't glad to go,
They moves 'em off by companies uncommon stiff an' slow.

Compare this with:

Was there a man dismayed?
No! though the soldier knew

If anything, Kipling overdoes the horrors, for the wars of his youth were hardly wars at all by our standards. Perhaps that is due to the neurotic strain in him, the hunger for cruelty. But at least he knows that men ordered to attack impossible objectives are dismayed, and also that fourpence a day is not a generous pension.

How complete or truthful a picture has Kipling left us of the long-service, mercenary army of the late nineteenth century? One must say... it is not only the best but almost the only literary picture we have... from the body of Kipling's early work there does seem to emerge a vivid and not seriously misleading picture of the old pre-machine-gun army — the sweltering barracks in Gibraltar or Lucknow, the red coats, the pipeclayed belts and the pillbox hats, the beer, the fights, the floggings, hangings and crucifixions, the bugle-calls, the smell of oats and horsepiss, the bellowing sergeants with foot-long moustaches, the bloody skirmishes, invariably mismanaged, the crowded troopships, the cholera-stricken camps, the ‘native’ concubines, the ultimate death in the workhouse. It is a crude, vulgar picture, in which a patriotic music-hall turn seems to have got mixed up with one of Zola's gorier passages, but from it future generations will be able to gather some idea of what a long-term volunteer army was like.

On about the same level they will be able to learn something of British India in the days when motor-cars and refrigerators were unheard of. It is an error to imagine that we might have had better books on these subjects if, for example, George Moore, or Gissing, or Thomas Hardy, had had Kipling's opportunities. That is the kind of accident that cannot happen. It was not possible that nineteenth-century England should produce a book like War and Peace, or like Tolstoy's minor stories of army life, such as Sebastopol or The Cossacks, not because the talent was necessarily lacking but because no one with sufficient sensitiveness to write such books would ever have made the appropriate contacts. Tolstoy lived in a great military empire in which it seemed natural for almost any young man of family to spend a few years in the army, whereas the British Empire was and still is demilitarized to a degree which continental observers find almost incredible.... It took a very improbable combination of circumstances to produce Kipling's gaudy tableau, in which Private Ortheris and Mrs. Hauksbee pose against a background of palm trees to the sound of temple bells...

The base price of the Volt will be $35K, it might or might not exist in 2011, it might get gas mileage almost as good as the Prius, it has little cargo room, and it will be a completely unproven design from a crappy manufacturer. Lithium-ion laptop batteries last 3 years and then die (regardless of use patterns), currently there is no solution, so unless GM has some magical Li-ion battery technology, the Volt battery pack will need to be replaced every three years. Expensive much? I'm sure (cough cough) that the Volt will be a really big seller. ## Bleg: International Relations and History The seventeen-year-old just asked me what was the best book he should read about the Wilson-Lodge fight over the League of Nations. I confess that I do not know. What do people think? ## The Soft Bigotry of Low Expectations Daniel Drezner no longer expects truth-telling from Brookings Foreign Policy senior fellows: danieldrezner.com :: Daniel W. Drezner :: Drezner's assignment: define the foreign policy community: Spencer Ackerman and Henry Farrell are having some fun at Michael O'Hanlon's expense, in response to the latter's Wall Street Journal op-ed this past week. The O'Hanlon jihad in and of itself I find uninteresting -- O'Hanlon distorted his "hook," but, frankly, I've read a lot worse on major op-ed pages... The bar is indeed low. Why oh why can't we have better thinktanks? ## GM's Failure to Mark Its Beliefs to Reality A Siegel sends us to Glenn Hunter, who reports: : Bob Lutz, General Motors' vice chairman and chief car guru, says what really turns him on is "doing the unexpected."... Maybe that's why Lutz, who made his name developing behemoths like the V-10 Dodge Viper, is so sold on the fuel-efficient new Chevrolet Volt, which will run on a lithium-ion battery and could go on sale by 2010. "The Volt thrills me because it's the last thing anybody expected from GM," the ex-Marine said at a private lunch in Arlington today.... During a closed-door session with several journalists at the Cacharel restaurant, Lutz declared that: • Hybrid cars like those made by Toyota "make no economic sense," because their price will never come down, and diesel autos like those touted by Chrysler are also uneconomic.... • Global warming is a "total crock of s---." Then he added: "I'm a skeptic, not a denier..." • With more and more good-quality cars on the market these days, “you’ve got to look at the business artistically, too. Part of our business is creating blockbusters--just like the movie business--yet we never think of ourselves that way. A car is an exciting mobile sculpture that you want to own, drive and be seen in. That’s why (auto-industry) comeback stories are always design-driven.” One GM car that fills that bill, he said, is Cadillac’s CTS. • The best car dealers will thrive even in a sluggish economy. “They’ve got to isolate themselves from the economic forecasts,” Lutz said, “and say, ‘I make my own prosperity.’” I take such an extraordinary degree of disconnection from reality to be a strong "sell" signal... ## Macroeconomic Rebalancing Paul Krugman is THE EXPLAINER: Paul Krugman - Op-Ed Columnist - New York Times Blog: As we debate interest rates, fiscal stimulus and all that, I thought it might be worth backing up to think about what our macroeconomic problem is right now.... First, in the mid-00s the U.S. economy got badly unbalanced -- too much dependence on housing and housing-inflated consumer spending, too big a trade deficit. This figure shows "deviations" in share of GDP... between 2007 and average 1980-2000 spending on consumption (C), nonresidential investment (NR), residential investment (R), and net exports (NX)... the main thing... is high consumption offset by a high trade deficit. Second, in the process we also got a credit bubble that%u2019'ss now bursting, and threatening to take down spending... like business investment. What we want, and will eventually get, is a rebalancing: smaller trade deficits, consumer spending more in line with income, more normal housing spending. The trouble is in getting there. At the moment it seems likely that consumption and housing investment will fall faster than net exports can rise.... The result will be a recession or at least something that feels like one. The goal of monetary and fiscal policy should be to bridge the gap -- to sustain spending until a falling trade deficit comes to the rescue, and to hasten the rise in net exports (remember, in the current context a weak dollar is good.)... ## Slate Death Spiral Watch Why oh why can't we have a better press corps? Outsourced to "d": >Lawyers, Guns and Money: "Popularity Contest": John Dickerson, while ruminating on the possible limits of Barack Obama's "hipness," asks a profoundly stupid question: >>More generally, shouldn't Democrats who have complained that George Bush was elected on the strength of a popularity contest be nervous that this blossoming Obamadulation is getting out of hand? >Um... Hold that thought while I retrieve a cool, refreshing drink from the linen closet.... >I have a limited amount of time before I go blind and slip into a coma, so I'll make this brief. Could Dickerson possibly be speaking of George "Where Wings Take Dream" Bush? Last I recall, his -- ahem -- "election" to office in 2000 was a "popularity contest" in the following senses: >* He received 50.5 million out of 104 million votes cast. That is to say, he lost the "popularity contest" outright. (Three million of those votes, of course, went to Ralph Nader.) >* F--- off, Ralph Nader. >* Bush was, on the other hand, quite popular with the Dowdified corporate press corps who behaved egregiously thoguhout the campaign, blathering endlessly about his "folksy demeanor" while overlooking the fact that when he spoke about actual policy matters, his breath reeked of model airplane glue. Meantime, Gore was portrayed a desperate, arrogant wonk who -- though not yet fat -- was clearly unworthy of the office he sought. >* Bush was also hip in the eyes of the rent-a-mob who disrupted the "undervote" recount in Dade County and helped their preferred candidate win a state whose "popularity contest" he had, in all likelihood, actually lost. >* And finally, he was popular with five Supreme Court justices who offered the final stroke of legitimacy to the pretense that Bush was indeed "the people's choice." >Beyond those niggling details, it's totally plausible that Dickerson might confuse Obama '08 with Bush '00. The resemblance is just uncanny. ## Washington Post Death Spiral Watch Outsourced to Kevin Drum: The Washington Monthly: HOW DUMB ARE WE?....What a remarkable essay this is. Susan Jacoby spends 1,500 words telling us that Americans are getting dumber but doesn't offer a single piece of evidence to support this notion. Not one. She tells us that we're reading fewer books. She tells us that it's bad for toddlers to watch a lot of TV. She tells us that campaign soundbites are getting shorter. She tells us that FDR urged people to buy maps so they could follow his fireside chats during World War II. She tells us that kids today don't care much about geography. But dumber implies a comparison over time. It demands evidence that kids (or adults, for that matter) are less capable, less knowledgable, or less adept than they were 50 years ago. And who knows? Maybe they are. But I'm only willing to be persuaded if Jacoby is willing to offer up some actual evidence first. Why oh why can't we have a better press corps? ## New York Times Death Spiral Watch (David Brooks Cannot Add Department) Why oh why can't we have a better press corps? Outsourced to Matthew Yglesias: The Price of Reform (Domestic Policy): I thought there were plenty of congenial ideas in David Brook's latest stab at formulating a reformist conservative agenda, but I wonder a bit about his math. Brooks writes that "Income taxes are not going to be coming down, but they need to stay where they are." Things being what they are in the modern conservative movement, Brooks might as well admit that he worships a shrine of Karl Marx as offer this oblique criticism of the Supply Side Gospel. After all, if lower tax rates bring more revenue, why not cut cut cut forever? Meanwhile, what Brooks is offering is inadequate to the scale of his agenda. He wants: • "a new working class tax credit applied against the payroll tax" • "a larger child tax credit" "increases in the Earned Income Tax Credit" • "nurse-home visits for children in chaotic homes" • "Preschool should be radically expanded" • "copy the models -- like KIPP Academies -- that actually work" This is all fine, but it would cost a lot of money. Brooks sort of elides this with the observation that "per-pupil expenditures [. . .] are not sufficient to produce superb information-economy workers" which is true. But it's also true that KIPP teachers "typically earn 15 to 20 percent more in salary than traditional public school teachers." These reform proposals are good idea, but they're not an alternative to the traditional liberal notion that if you want better outcomes for kids you're going to have to spend more money on kids. But higher taxes are off the table. So where does that leave us? You'd need to pare entitlements pretty severely just to stop the costs from rising. Are we cutting the defense budget instead of continuing on the path of large annual increases? I don't want to dismiss the possibility out of hand; I'd certainly favor something like that. But does Brooks? Everybody like me has a big problem with Brooks. He is certainly intelligent. But has he just not done his homework, and does he not know that his program doesn't add up--is he just lazy? Or does he know very well that his proposals are b---s--- and not care because he is not in the informing-the-public business but is instead playing some deep political game to try to get White House mess privileges for his friends? Or both? And everybody like me has a big problem with an organization--like the New York Times--that gives a platform to Brooks. Don't they have any ethics? Don't they think they ought to be in the inform-the-public business? Yet there is not even a single phone call from an editor saying, "David, it's your column, but this just doesn't add up..." ## Another Believer that Hillary Rodham Clinton Has Run a Good--But Not Great--Campaign From Ezra Klein: EzraKlein Archive | The American Prospect: For the record, I agree with Isaac Chotiner that the Clinton team has run a pretty good campaign. Better, indeed, than what I thought they'd run. It may or may not prove to be enough, and looking back, there will surely be identifiable mistakes and botched opportunities. But, in general, I think Clinton's problems were, on the one hand, voting for the Iraq War, and on the other, running against a staggeringly talented insurgent who combined the traditional "wine track" strengths with overwhelming support among African-Americans and huge media power. Neither of those were really messaging or fundraising problems as such. Insofar as her campaign made mistakes, it was in existing. One of the recurrent themes in my experience of the primary is that I like Hillary Clinton (and, for that matter, her policy shop) a lot better than I like the "Hillary Clinton campaign" (the press shop, the consultants, the blind quotes, etc) and "the Hillary Clinton campaign as explained by a petulant Bill Clinton." During periods when I see more of Hillary Clinton and less of her campaign, I'm more favorably disposed. During periods when I see less of Hillary Clinton and more of her campaign, I'm less favorably disposed. ## Why I Like the Atrium of Berkeley's Valley Life Sciences Building ## Washington Post Death Spiral Watch (Peter Slevin and Shailagh Murray Edition) Why oh why can't we have a better press corps? Outsourced to Matt Yglesias: Here (Media): I know this blog has gotten pretty horseracy as this race keeps on going, but I've still got a lot to learn if I want to be a bigtime media player. Yesterday, for example, Peter Slevin and Shailagh Murray did an article for The Washington Post on Barack Obama's economic plan. Well, it was sort of an article about Obama's economic plan. The headline was "Obama's Economic Plan Is A Pitch to the Working Class". Basically, it referred to Obama's economic plan, but didn't say anything about it. "Obama's Economic Plan Calls for Infrastructure Bank"? No. "Obama's Economic Plan Calls for Credit Card Reform?" No. But that's just the headline. Journalists don't write our own headlines. Maybe if you decide to scan the article.... Up until the comma, we're doing well here. We learn that Obama offered a detailed plan. But after the comma, we don't learn any of the details. The next six grafs are all about the political context -- Obama's momentum, the looming primaries, Obama's need to expand his appeal to working class voters. In graf eight, John McCain accuses Obama of offering "platitudes." In grafs nine and ten, Obama fires back accusing McCain of flip-flopping on taxes. In graf eleven, Clinton echoes McCain's attacks. In graf twelve, the fact that Obama delivered a speech on the economy gets re-iterated. In graf thirteen, we learn that Obama says he'll pay for the plan by ending the war in Iraq and rolling back tax cuts. In graf fourteen, the Clinton campaign quotes a McCain advisor as calling the plan "plagiarism." Finally, in the fifteenth graf of an article about Obama's economic plan we get something resembling a description of the content of the plan: The newest element of his proposal was the establishment of a National Infrastructure Reinvestment Bank, which would spend$60 billion over a decade to rebuild deteriorating roads, bridges and waterways. Obama said the spending would generate 2 million new jobs, many of them in a construction industry that has been hard hit by the housing market downturn.

I don't know whether Obama's campaign was helped or hindered by this strange way of covering the plan. Maybe his efforts to make inroads are being stymied since the ideas he was hoping to help him make them are being muffled by focus on the political context. Or maybe his efforts are being boosted, because the details wouldn't really sway people but random chatter about Obama doing detailed, working class stuff is sends the right message. My guess is probably the latter; this is more helpful to Obama than a straightforward description of the infrastructure bank proposals (it would allow the government to account for infrastructure spending as a kind of investment rather than an expense on continuing operations; it's the kind of distinction companies usually make between capital spending and operating expenses) but it's really no good for the country.

## 101b Exam After-Action Report

Econ 101b First "Midterm" Exam. It's not correct to call it a midterm: it's only February 15, after all. This is really a "professorial reality check exam." The idea is to put the students under substantial time pressure--3 minutes per question part--and see to what extent the facts and tools taught in the course so far have become comfortable parts of their mental furniture: things that they can use to think on-the-fly rather than things they can pull out of their memory and present in response to specific professorial stimuli.

Depending on how they do, we either go superfast, fast, or slow for the rest of the semester...

## Good Horse-Race Journalism from Jackie Calmes

If you are going to cover politics as a horse-race, here is how to do it:

Clinton Bets Big on Ohio and Texas: Hillary Clinton's public bet that Ohio and Texas will be the firewall that salvages her presidential hopes from immolation is shaping up to be the biggest gamble of her campaign -- and perhaps the decisive one.... Before last week's near draw with Democratic rival Barack Obama in Super Tuesday's 22 state contests, her campaign had foreseen trouble ahead for the rest of February. That rough patch is shaping up to be 10 straight defeats. Sen. Clinton needed to signal to supporters -- and, more important, to donors -- that there would be a place to stop the Obama momentum. The March 4 votes in Ohio and Texas, with 389 total convention delegates between them, offered the first realistic prospect for Sen. Clinton to make her comeback. "We expect change to begin March 4," chief strategist Mark Penn reiterated this week....

Texas Democrats include many Hispanics, while working-class voters dominate in Ohio -- the two groups that have been among the most supportive of Sen. Clinton in recent contests. Yet... both primaries are open to independent voters and even Republicans, who have supported Sen. Obama elsewhere. He arrives with momentum from his string of wins, all by wide margins, and more money for the airwave wars that began this week. In nearly every state that has voted to date, Sen. Clinton has led by double digits weeks before, only to see her leads melt by primary or caucus day....

Her elevation of Ohio and Texas to must-win status may well turn out to be a game-changer for the Democratic race.... [T]heir rivalry may be decided much as nominations have been in past years' contests -- based on perceptions: If Sen. Clinton doesn't win both states, she will be widely perceived to have lost.... "Momentum is a real phenomenon in the nominating process, and I think Obama has a real shot at beating her in both places," which would be "devastating," says Democratic consultant Tad Devine, a veteran of five presidential campaigns, who is neutral. Ohio Democratic consultant Dale Butland adds, "If she loses both, how does she justify going on?" Even a split decision could be a mortal wound, some Democratic strategists say.

But the Clinton campaign is planning to compete to the last contest: June 7 in Puerto Rico. Sen. Clinton continues to court the several hundred superdelegates -- party and elected officials -- who remain uncommitted, and to fight to overturn previously agreed-to penalties against Michigan and Florida so their pro-Clinton delegations can vote.

That seems to me to be a very bad move: talking about changing the rules costs you now--among superdelegates and among the informed observers whose discussions help to shape primary voters' opinions.

## The Tudor-Era Fall in the English Standard of Living

Hoisted from Comments: Bloix quotes from:

William Harrison (1577), "A Description of Elizabethan England": The bread throughout the land is made of such grain as the soil yieldeth; nevertheless the gentility commonly provide themselves sufficiently of wheat for their own tables, whilst their household and poor neighbours in some shires are forced to content themselves with rye, or barley, yea, and in time of dearth, many with bread made either of beans, peas, or oats, or of altogether and some acorns among, of which scourge the poorest do soonest taste, sith they are least able to provide themselves of better-- For, albeit that there be much more ground eared now almost in every place than hath been of late years, yet such a price of corn continueth in each town and market without any just cause (except it be that landlords do get licences to carry corn out of the land only to keep up the prices for their own private gains and ruin of the commonwealth), that the artificer and poor labouring man is not able to reach unto it, but is driven to content himself with horse corn %u2014 I mean beans, peas, oats, tares, and lentils: and therefore it is a true proverb, and never so well verified as now, that "Hunger setteth his first foot into the horse-manger."

William Harrison (1577), A Description of Elizabethan England XXXV:3 The Harvard Classics (New York: P.F. Collier & Son, 1909) http://www.bartleby.com/35/3/

## Real Wages of Construction Workers in England

###### Source: Jan de Vries 2/13/08 lecture, originally from Phelps-Brown and Sheila Hopkins (1956), "Seven Centuries of the Prices of Consumables, Compared with Builders' Wage- Rates," Economica 23:92 (November), pp. 296-314 http://links.jstor.org/sici?sici=0013-0427%28195611%292%3A23%3A92%3C296%3ASCOTPO%3E2.0.CO%3B2-C
• The (delayed) triumph of Malthus:
• Real wages rise in the late-Plantagenet fourteenth century as the Bubonic Plague and other biomedical disasters raise the land-to-labor ratio.
• Real wages fall steeply in the Tudor sixteenth century as domestic peace and the attentuation of plagues leads to a demographic boom and a lowering of the land-to-labor ratio.
• In both cases, however, there are long and variable lags: half a century or so during which customary wage rates war with supply and demand.
• And in the Tudor years, you also have the ongoing inflation of the "price revolution" driving changes.
• Nevertheless, it was not until 1880 that the purchasing power of English construction workers over "necessities" once again attained its Lancaster-dynasty medieval apogee.
• But is this a good proxy for standard of living? In 1850 you couldn't buy as much beef and beer and bread as in 1470, but you could take the railroad to Brighton, buy penny-dreadfuls, and put lots of sugar in your tea...

## Nominal Wage Rigidity in England in the Long Run

###### Source: Jan de Vries 2/13/08 lecture, originally from Phelps-Brown and Sheila Hopkins (1956), "Seven Centuries of the Prices of Consumables, Compared with Builders' Wage- Rates," Economica 23:92 (November), pp. 296-314 http://links.jstor.org/sici?sici=0013-0427%28195611%292%3A23%3A92%3C296%3ASCOTPO%3E2.0.CO%3B2-C
• Extraordinarily impressive nominal wage rigidity across long spans of history.
• Beware, however: the "ancillary" terms of the wage contract could and did vary at a much higher frequency ("we can still only pay you three pence a day, but we'll add a piece of sausage and a mug of beer at lunchtime"--that sort of thing).
• Neverthless, aside from 1932, 1921, and 1333, nominal wages simply do not fall. It doesn't happen.

## Night Thoughts While Baking Oatcakes

##### Source: Jan de Vries lecture, 2/13/2008

Here we have a graph covering the period from the War of the Pragmatic Sanction to World War I, showing for six global cities the male day-laborer wage divided by the cost of 2000 cheap calories--rice in China, polenta in Milan, rye in Leipzig, and oats in Amsterdam and London. It suggests that in 1740 day laborers in Leipzig, Beijing, Suzhou, and Milan could barely keep body and soul together--if their work was not too strenuous, and if they did not have too many non-working dependents.

By contrast, male day laborers in London and Amsterdam appear to be living the life of Riley: only a quarter of their wages needed to be set aside for the basic caloric requirements, leaving the rest for dietary variety and fortification, clothing, shelter, dependents, entertainment, and so forth.

But this is if people in London ate oats. And people in London did not eat oats. Oats were for Scotsmen--and horses. Englishmen ate wheat bread. And calories from wheat-based bread were two to three times the cost of calories from oats.

So were workers in London in 1740 as miserably poor as workers in Milan, Leipzig, and Beijing, spending most if not all on their income on bare caloric maintenance in the form of the grain typical of their time and place? Or were the workers of London relatively rich--and deciding to spend their relative wealth on the superior taste and mouth feel of yeasty wheat bread rather than leaden oatcakes and on the associated symbolic declaration that they were proud and free Englishmen, not benighted barbarous Scots (or horses)?

## Adam Smith Hosts "What Not to Wear"

Grasping Reality with Both Hands: Economist Brad DeLong's Fair, Balanced, and Reality-Based Semi-Daily Journal: The most perfect modesty and plainness, joined to as much negligence as is consistent with the respect due to the company, ought to be the chief characteristics of the behaviour of a private man. If ever he hopes to distinguish himself, it must be by more important virtues...

## Absent-Minded Clueless Professor Blogging

Scene: in Berkeley's business school cafeteria:

Me: I am sorry I missed your seminar yesterday...

Visitor: Seminar... My seminar... Yes! But it's not here, it's in the [Economics] Department!

Me: Yes!

Visitor: And it wasn't yesterday. It's next Wednesday.

Me: Oh.

## Bernanke Testifies Again...

Further cuts in the federal funds rate are on the way. Ben Bernanke is talking about how we are in a slow-moving financial crisis of DeLong Type II: one in which large financial institutions are insolvent--"pressure on bank balance sheets"--and in which lower short-term interest rates and a steeper yield curve are a way of providing institutions with the life jackets they need to paddle to shore.

Larry Meyers has pointed out that the BBB yield is no lower than it was in July--that all the easing has had no effect on the cost of capital that the financial markets feed to the "real economy," and hence that Fed policy today is no more stimulative than it was last summer.

## Martin Wolf Throws Up His Hands

"[W]e have a banking sector that has a demonstrated capacity to generate huge crises... we lack the will and even the capacity to regulate it. Yet we have no obvious alternative but to try to do so," says the gloomy Martin Wolf:

Why it is so hard to keep the financial sector caged: Consider, for example, the process that brought subprime loans to investors in special investment vehicles (SIVs). In between the ultimate borrowers and the risk-takers were loan-originators, designers and packagers of securitised assets, ratings agencies, sales staff, managers of banks and SIVs and managers of pension -- and other -- funds. Given the number of agents and the wealth of information asymmetries, it is astounding how little went wrong.... The US itself looks almost like a giant hedge fund. The profits of financial companies jumped from below 5 per cent of total corporate profits, after tax, in 1982 to 41 per cent in 2007, even though their share of corporate value added only rose from 8 to 16 per cent.... Yet can anything effective be done to contain the risk-taking this implies?...

The bigger point still, however, concerns macro-prudential regulation. As William White of the Bank for International Settlement has noted, banks almost always get into trouble together. The most recent cycle of mad lending, followed by panic and revulsion, is a paradigmatic example.... [T]he strength of the pressures against taking "away the punchbowl just as the party gets going", in former Fed chairman William McChesney Martin%u2019s famous phrase, is formidable. In addition to bureaucratic inertia, such action is subject both to unavoidable uncertainty about the dangers of current trends and to resistance from private interests. Furthermore, regulators are in constant danger of losing sight of the systemic wood for the institutional trees.... On the one hand, we have a banking sector that has a demonstrated capacity to generate huge crises because of the incentives to take on under-appreciated risks. On the other hand, we lack the will and even the capacity to regulate it. Yet we have no obvious alternative but to try to do so...

## The Big League...

UPDATED:

As I said, it's only the fact that Barack Obama is a superb candidate running a superb campaign that is keeping Hillary Rodham Clinton's good campaign from being good enough...

## Dog-Eating Jew-Counters for McCain!

In the immortal words of Patrick Nielsen Hayden, Dog-Eating Jew-Counters for McCain!

A correspondent tells me that beside John McCain as he gave his Virginia victory speech was the dog-eating Jew-counter himself, Fred Malek--the man who accepted from Richard Nixon the mission of trying to identify and fire the nest of Jews working in the Bureau of Labor Statistics whom Nixon was sure were plotting to undermine him.

That's the modern Republican Party: paranoia, bigotry, and a craven eagerness to do everything possible to assist the criminal enterprises of your highers-up--it's not a disqualification, it's a lifestyle.

Shut down the Republican Party as quickly as possible. America needs an honorable opposition party to face off against the Democrats.