May 2009

This is a follow-up to the distinctly non-sober but not wholly unuseful thread attached to my post on the Boston Review piece on Malhotra and Margalit’s survey research on anti-semitism and the financial crisis. The authors have asked for a chance to explain themselves, and their methodology, which has come in for a lot of criticism of an unavoidably speculative sort in comments to my post. Let’s hope this clears a few things up. Let’s try to be civil, shall we? The following is, obviously, not by me but by Malhotra and Margalit. And not edited by me in any way. – John Holbo

We are glad that our article generated thoughtful discussion, and we would be happy to address some of the questions people raised in the comments section. If our responses do not specifically address your particular comment, apologies in advance. Our goal here is to touch on some of the main issues. [click to continue…]

Hey, you know those psychedelic bio text images I posted about? Well, someone took an interest in the post and the images and went and did a bit of research on the textbook itself: [click to continue…]

This “common trope”:http://politics.theatlantic.com/2009/05/obamas_new_capitalism.php (this particular example is taken from Marc Ambinder) in discussions over the auto industry seems to me to be based on faulty logic.

Bondholders are kicking and screaming, but it appears as if General Motors Corp. is headed for an orderly bankruptcy, and the Obama administration is about to be handed the keys to a venerable corporate institution. Again. And again, the administration seems to be rewriting the rules of capitalism to fashion a deal to its liking. Purists — and virtually every academic economist one happens to encounter — wonder what happened to the once inviolate principle of rewarding risk-takers. Unsecured creditors will get less of a stake in the new GM than its employees, and you can forget about poor unadorned stockholders.

As I understand it (commenters may have different rationales), the idea that people should be rewarded for taking risk is that people making risky investments should receive higher returns on those investments in order to compensate for those risks. In capitalist systems, you often see the argument being made that the owners of capital should receive high returns on their capital to compensate them for the risk that the companies they have invested in go bust. But this does _not_ mean that capital owners should have first bite at the cherry if the company _does_ go bust. The risk that the company goes bust – and that capital owners lose their shirts in the process – is precisely the risk that they are supposedly already been compensated for. In other words, you can’t have it both ways – getting special compensation for the risk that you will lose your money if the firm goes bust implies that you shouldn’t get special compensation in the event that the company does go bust. Or you wouldn’t have been taking any risks in the first place.

So I simply don’t see that this cod-Schumpeterian argument makes any sense. A real Schumpeterian, I suspect, would be saying that no-one should get compensated at all, either capitalists or workers, and that the companies should be allowed to go bust (but that of course is a quite different argument). You could perhaps make a case on normative grounds that people who took a higher risk should get a bigger share of whatever is left. But you would have to take account of the fact that it isn’t only owners of capitalists who take these risks. Workers in GM have made risky investments themselves – in specialized skills that are difficult to sell on the market – and these risks were arguably greater than the ones taken by capitalists (bankers and investors, for all their travails, are surely doing better than unemployed auto workers).

But first: why aren’t you reading more Squid and Owl. It’s cheap and morally improving. For example, last night’s exciting episode:

What we learn from this is, for example, that we should read comics. But which? (you gesticulate approximately and therefore helplessly?) Some are good, but some are bad. I have recently enjoyed the Eisner-nominated The Amazing Remarkable Monsieur Leotard [amazon], by Eddie Campbell, who has a blog. Since First Second has a generous preview online, you could sample before buying.

And, under the fold, I’ll just tuck a few circus-related images I’ve stumbled on on Flickr: [click to continue…]

Bryan Caplan and I have now agreed on the settlement conditions for a bet on US_EU jobless rates while also agreeing to differ on the interpretation. The stake is $US100 and the agreed criterion is that, for Bryan to win, the average Eurostat harmonised unemployment rate for the EU-15 over the period 2009-18 inclusive should exceed that for the US by at least 1.5 percentage points.

Since the implied difference in the proportion of the population who are unemployed is almost exactly equal* to the difference in the proportion of the population who are incarcerated, I interpret my side the bet as follows

Averaged over 2009-18, the sum of incarceration and unemployment rates in the US will exceed that in the EU-15

Caplan wants to leave incarceration out of the discussion and focus only in unemployment. Since we’re agreed on how to settle the bet, there’s no problem with differing on how to interpret the result.

[click to continue…]

Have you seen this piece in the Boston Review? “Anti-semitism and the financial crisis”. I honestly don’t know what to make of it and would like your sober opinion. Kindly keep non-sober opinions to yourself, however. The internet already has more of those than it can consume locally.

Basically, a weirdly high number of responses to “How much to blame were the Jews for the financial crisis?” were in the ‘moderate’ to ‘a great deal’ range. 32% of Democrats and 18% of Republicans ‘blame the Jews’ at least moderately for the financial crisis. I realize there is such a thing as the crazification factor. But that’s still pretty high. (I’m guessing the Republican numbers are lower in part because high numbers of them don’t actually admit there’s a crisis. They might be more willing to blame the Jews if it were made clear that they weren’t thereby committed to conceding the existence of the thing the blame is for. But that’s just an unscientific guess.)

The weird thing, of course, is that people are willing to go with ‘the Jews’ as a cohesive, mass-noun sort of designation. In part, people must be responding the way they do on the basis of a vague awareness that there are lots of Jewish names in the stories about the financial crisis. Bernie Madoff, for example. That is, they are saying: among those responsible (if we assume those at the top of the financial world are responsible) there were a number of Jews. Yes. But suppose you asked people whether to blame ‘the Jews’ for all the bad movies Hollywood keeps making. All the vaguely unfunny romantic comedies that keep being inflicted on innocent Americans – on Mainstreet, if you will. Look at the lists of producer and executive names on these productions. See any Jewish names? I’ll bet you see a couple. I like my Blame The Jews For Unfunny Romantic Comedies as premise for a Mel Brooks movie. Kind of a cross between “The Producers” and “Good Night, and Good Luck”. Some sort of hysterical anti-semitic, McCarthyite rumbling across America. Innocent Jewish producers of unfunny comedies having to go into hiding. And Jewish producers of perfectly funny comedies suffering guilt by association.

Suppose you ask who gets credit for America’s first class higher education system. Would people be willing to say ‘the Jews are somewhat or mostly responsible’, just because lots of professors are Jewish. Suppose you asked people whether ‘people whose names start with ‘M’ are somewhat responsible for the financial crisis’. Literally, that’s probably true, in some analytically vastly uninteresting sense. Madoff. I’m sure I could find other bad actors with names that start with M in the financial sector.

Probably you don’t need me to tell you that ‘blaming the Jews’ for the financial crisis is a bad idea. But I’m really at a loss as to what the hell so many respondents thought they were saying. Did 30% think they should answer ‘somewhat’ if they merely believed there were a number of Jewish individuals in the financial sector in positions of authority? Or do substantial numbers of Americans seriously suspect that there might be Jewish conspiracies afoot?

UPDATE: Malhotra and Margalit respond to critics. See this newer post.

It is traditional for the end of a football season in the UK to bring a chorus of moaning about how uncompetitive the Premier League is, and how things would be better if we followed some system loosely based on the “millionaires’ socialism” of US professional sports – salary caps, preferential drafting of new players, all the other hilariously anticompetitive interferences in the market. When making any such comparison, though, one has to remember that the USA is not the size of the UK; it’s roughly the size of Europe.
[click to continue…]

Both Alan “the Minister” Johnson [sorry, in-joke] and Ed Miliband “have raised the prospect of electoral reform in the UK”:http://www.guardian.co.uk/politics/2009/may/24/ed-miliband-political-reform-mps-expenses . Ostensibly, this is all about restoring public confidence in the political class after duck/moat/flip-gate, but it also makes sense as a way of cooking the Tory goose. Under the present system, Cameron stands to win a landslide and Labour would be in opposition for a generation. But introduce a proportional representation system and the Tories couldn’t get a majority on their own. (And even if they were in government for a while, the Lib Dems would probably bring them down before long.) This move is reminiscent of Francois Mitterrand’s introduction of a party-list PR system for the 1986 French legislative elections. The right still won, but the Parti Socialiste and its allies maintained a healthier legislative presence than they otherwise would have done, and the right eventually tore themselves apart over the issue of dealings with the Front National. In the UK context, the analogy would be the Tories wrangling over relations with UKIP and the BNP. It could happen.

I’ve only seen the headlines, but I expect all the clowns put on their clown suits this morning and are presently climbing out of their clown car at the studio. I’m thinking liberal, activist, Puerto Rico isn’t even a state and the Bronx isn’t either, law-into-her-own-hands, affirmative action, closeted lesbian, the guy in front of me at Dunkin D’s said she wasn’t too bright. On that last point, it’s well known amongst alums that whereas the Princeton Sam Alito graduated from in 1972 was a bastion of civilized learning, the Princeton Sotomayor graduated summa cum laude from four or five years later was a hippie “learning cooperative” where minorities got a coupon book of “A” grades upon admission to use up as needed, were all given the Pyne Prize automatically, and the concept of truth was rigorously suppressed by the leftist faculty.

“Three Quarks Daily”:http://www.3quarksdaily.com/3quarksdaily/2009/05/3-quarks-daily-announces-4-annual-blog-prizes.html has an announcement.

we have decided to start awarding four prizes every year in the respective areas of Science, Arts & Literature, Politics, and Philosophy for the best blog post in those fields. Here’s how it’s going to work: Starting next month, the prizes will be awarded every year on the two solstices and the two equinoxes. So, we will announce the winner of the science prize on June 21, the arts and literature prize on September 22, the politics prize on December 21, and the philosophy prize on March 20, 2010. … Just for fun, the first place award will be called the “Top Quark,” and will include a cash prize of one thousand dollars; the second place prize, the “Charm Quark,” will include a cash prize of three hundred dollars; and the third place winner will get the honor of winning the “Strange Quark,” along with two hundred dollars.

Voting rules etc explained at the post in question. Just to be clear, I personally don’t think you should be voting for a CT post in any of these categories. The value of competitions like this is in highlighting bloggers who people would be unlikely to come across otherwise, and we’re high profile enough that we really aren’t a deserving case. But I am very happy that 3QD is taking this initiatve increase the profile of the more intellectual side of the blogosphere (which doesn’t usually do well in larger competitions), and strongly recommend that you nominate good posts, read other nominees, and vote for whoever seems best.

Clive Crook “positions himself as a reasonable moderate”:http://www.ft.com/cms/s/0/55522abc-4894-11de-8870-00144feabdc0.html between the extremes of Republican torture-and-detention-porn crazies, and people who, you know, who take civil rights seriously.

The left’s complaints make far more sense than Mr Cheney’s. Mr Obama is adjusting the Bush administration’s policies here and there and seeks to put them on a sounder legal footing. This recalibration is significant and wise, but it is by no means the entirely new approach that he led everybody to expect.

Mr Obama is in the right, in my view, but he owes his supporters an apology for misleading them. He also owes George W. Bush an apology for saying that the last administration’s thinking was an affront to US values, whereas his own policies would be entirely consonant with them. In office he has found that the issue is more complicated. If he was surprised, he should not have been.

The signature intellectual defect of the non-compromisers on each side of this debate is an inability to recognise conflicting ends. The Democratic party’s civil libertarians seem to believe that several medium-sized US cities would be a reasonable price to pay for insisting on ordinary criminal trials for terrorist suspects. There can be no trade-off between freedom and security, because the freedoms they prioritise trump everything. To many on the other side, no trampling on the liberty of ordinary citizens, no degree of cruelty to detainees, no outright illegality is too much to contemplate in the effort to stop terrorists. On this view, security trumps everything.

The “seem to believe” is a weasel-phrase, which would (to use his own dubious phrasing) “seem” to be nicely calculated so as to allow him to make very nasty insinuations and accusations without having to prove them, and the “several medium-sized US cities would be a reasonable price to pay for insisting on ordinary criminal trials for terrorist suspects” bit is a common-or-garden shameful and disgusting slur. If Crook has _any_ substantial evidence that ‘several medium sized cities’ have been put at risk, or are likely to be put at risk, because of civil libertarians’ tiresome insistence on trials and such, I invite him to produce it. And no, “hypothetical ticking bomb scenarios”:https://crookedtimber.org/2004/06/18/by-the-power-of-stipulation-i-have-the-power/ don’t do it, thank you very much.

The underlying claim of this shoddy exercise, such as it is, has three parts. First, that the people who are insisting on civil liberties in the GWOT are wild-eyed and extremist zealots, fundamentally similar in kind to the members of the lock-em-up-and-torture-em-to-death crowd on the other side. Second, that a difficult balance has to be struck between civil liberties for terrorists on the one hand and the need to avoid the destruction of medium-sized American cities on the other. Third, that the only people capable of making the necessary complex choices are sceptical moderates like Clive Crook who realise, as others don’t, that differing ends are incompatible, there are unavoidable trade-offs in life &c&c. In its fully fledged form, this might be described, after the example of Isaiah Berlin, as High Table Liberalism – that anguished and serious engagement with the difficulties of political choice in a world of irreconcilable and competing values which occurs somewhere between the end of the main course and the serving of the port and Stilton. But it reminds me even more of a radio comedy sketch I remember from my youth in Ireland, where a punter representing the Plain People of Ireland and a nun are discussing how best to deal with football hooligans. The punter says that they’re a pack of bastards, and the only solution is to chop off their goolies. The nun says no, we need to think too of the principles of charity and forgiveness, of Christian love etc – and the only solution is to chop off their goolies. Clive Crook is taking the part of the nun here.

Bryan Caplan responds to the data on US and EU-15 unemployment by offering a bet.

The average European unemployment rate for 2009-2018 (i.e., the next decade) will be at least 1 percentage point higher than U.S. unemployment rate. The bet will be resolved when Eurostat releases its final numbers for 2018.

Betting is usually unwise, but nonetheless I’m willing to take Bryan on, with one amendment. I will take the bet provided that people in prison are counted as unemployed. By my estimate, that raises the US rate by about 1.5 percentage points and the the EU-15 rate by about 0.2 percentage points. That is, assuming current imprisonment rates remain unchanged, the bet is that the Eurostat measure of unemployment (which excludes prisoners) should be no more than 2.3 percentage points higher in the EU-15 than in the US.
[click to continue…]

According to the latest Eurostat data*, the unemployment rate in the US was equal to that in the EU-15 in March, and is now likely to be higher. Writing in the NY Times, Floyd Norris refers to the conventional wisdom that flexibility inherent in the American system — it is easier to both hire and fire workers than in many European countries implies that unemployment should be lower (at any given point in the business cycle) in the US than in Europe.

[click to continue…]

Standard & Poors have issued a Very Serious Warning to the UK, with regard to its AAA credit rating. I reach into the archives and pull out John’s excellent article on the general subject.