My new research project, with my older daughter, is going to be Arthurian stuff. Specifically: what’s up with The Nine Morgens? That’s a lot of Morgens, kicking around in Avalon! (How ’bout them apples!) Don’t seem to be so many stories about them. So I’ve ordered this book
From the monthly archives:
November 2012
The [Irish Times reports](http://www.irishtimes.com/newspaper/frontpage/2012/1114/1224326575203.html) the death of a 31 year-old woman last month in Galway, as a result of being denied an abortion:
> Savita Halappanavar (31), a dentist, presented with back pain at the hospital on October 21st, was found to be miscarrying, and died of septicaemia a week later. Her husband, Praveen Halappanavar (34), an engineer at Boston Scientific in Galway, says she asked several times over a three-day period that the pregnancy be terminated. He says that, having been told she was miscarrying, and after one day in severe pain, Ms Halappanavar asked for a medical termination. This was refused, he says, because the foetal heartbeat was still present and they were told, “this is a Catholic country”. She spent a further 2½ days “in agony” until the foetal heartbeat stopped. The dead foetus was removed and Savita was taken to the high dependency unit and then the intensive care unit, where she died of septicaemia on the 28th.
Writing about the ways of making peace, Brad DeLong describes “the [1944-45] debate between [Secretary of the Treasury Henry] Morgenthau and [General George] Marshall that was carried on–largely below the surface, largely without explicit confrontation” over the fate of postwar Germany and notes “The State and Defense positions win entirely and utterly and completely over the Treasury-based Morgenthau Plan. We get the Marshall Plan instead. I am still not sure why.” Morgenthau, you will remember, wanted – in Winston Churchill’s word – the “pastoralization” of Germany.
I think there are two reasons for Morgenthau’s failure. First, though, I disagree with Brad: there was not a conflict between Morgenthau and Marshall, above or below the surface. The conflict was between Morgenthau and everybody else. As John Morton Blum writes, by the end of January 1945, Morgenthau “had yielded in his views toward Germany neither to his fellow New Dealers, nor to his colleagues in the Cabinet, nor to the arguments of his subordinates. So also, he had conceded nothing to the objections of Churchill, Eden, and Sir John Anderson. Nor was he moved by Russian plans.” That’s a lot of different people not to yield to; almost nobody wanted the Morgenthau plan except Morgenthau. Not even the man whom Brad – I think not 100% seriously – calls a “Marxist,” Harry Dexter White; White wanted internationalization of the Ruhr and its industrial production used to pay reparations. [click to continue…]
Every Armistice Day I write more or less the same post, and every time I do, I’m struck by how hard it is to draw the obvious conclusions from the evidence of war during my lifetime (the last 50 years or so). For around half that time, the US has been engaged in a large-scale war, with Australia as an ally/client. The wars have cost thousands of American, and hundreds of Australian, lives, and trillions of dollars, while wreaking death and destruction on a far more massive scale in the countries in which they have been fought. The outcomes have ranged from total defeat to unsatisfactory partial victories. In no case have there been benefits remotely commensurate with the cost, for either side (for all the millions of lives lost, is Vietnam much different now than if the war had never been fought?). In most of them, the case for war was built on blatant lies and in the remaining cases, the lies started as soon as the guns opened fire. The claims of military and foreign policy “experts” have proved to be false more often than not.
The obvious conclusion is that war is almost always a mistake as well as a crime.
Yet it seems impossible to get away from the assumption that war, or the threat of war, is a reliable method of achieving desired outcomes.
In October 1982, when I was a sophomore in high school, this conversation transpired at a press briefing conducted by Larry Speakes, spokesman for Ronald Reagan.
So here’s a question for the people who know more about this stuff than I do (i.e., everyone): Doesn’t Obama have good reasons not only to lead us over the fiscal cliff, but also to keep us there? That is, not negotiate any kind of deal with the Republicans, neither before nor after January 1? Unless you assume Obama doesn’t want cuts to entitlements — which I don’t assume; I believe he’s an austerian of Reactionary Keynesianism — think about what he gets if he allows the sequester to go through: slightly higher tax rates, cuts to entitlements, and cuts to defense. Those seems like classic New Democrat/Clintonite goals. I recognize it would put the economy in danger of recession, but Obama’s not up for reelection and modern Democratic presidents have shown little interest in the fate of congressional Democrats, particularly at mid-term election time, and in party-building more generally. So, I ask, not rhetorically: will Obama take us over the cliff and then keep us there?
Before engaging in another round with Casey Mulligan, I’d like to say that, while I find most of his arguments implausible, I don’t think he’s silly for making them. Given the position he’s trying to defend, these are the best arguments available. And that position is widely shared, not only by economists much more famous than Mulligan but by lots of governments and policymakers. Most mainstream opponents of Keynesianism are committed, one way or another, to the view that persistent high unemployment must be caused by problems in labour markets. But it’s much easier to talk in vague general terms about rigidities and structural imbalances than to present an operational explanation for the sustained high US unemployment of the last four years. Mulligan at least makes the attempt, which is more than most of the New Classical/Chicago/Real Business Cycle school have done, and necessary if there is to be any progress in the debate.
Replying to my criticism of his NY Times column, Mulligan suggests that I should have read his book. Perhaps so, but the column is presented as a critique of Krugman’s book, not a plug for Mulligan’s, and I responded in that light. His latest post mentions a couple of points where he draws on the book, but for the moment I’m going to continue to rely on data published elsewhere.
Mulligan responds to my points in reverse order, which makes sense, because his response to my central point is by far his weakest. The big difficulty for an explanation of post-2008 unemployment based on US welfare policies (unemployment insurance and food stamps) is that many other countries with radically different labor markets and policy responses experienced a big and sustained increase in unemployment at exactly the same time, following the global financial crisis of late 2008. In particular, lots of countries introduced austerity policies involving sharp cuts in the kinds of benefits Mulligan is criticising. Mulligan’s response to this evidence is handwaving. First he says that I haven’t calculated the implied changes in marginal tax rates, although its pretty obvious that most of them will be reductions. Then he resorts to US exceptionalism, saying
Finally, if marginal tax rates were found to be constant in Estonia (the only specific country that Professor Quiggin points to), does that mean that marginal tax rates do not matter in the U.S.? Please let me know so I can notify American economists that Estonia is our ideal laboratory, and notify policymakers that they can safety hike marginal tax rates to 100 percent without noticeable consequences.
That’s pretty startling for someone representing a school of thought which usually treats economic laws as having the same universal applicability as those of physics.
To try and make sense of an argument like Mulligan’s you’d have to start with the financial crisis as a global shock, then claim that, if only governments had sat on their hands, recovery would have been rapid. Instead, the argument would run, governments acted to alleviate the lot of the unemployed and thereby made things worse. That would be a coherent explanation for simultaneous and sustained increases in unemployment – the only difficulty is that it’s directly contrary to the facts.
It’s worth making the distinction here between changes and levels. Lots of European countries have high marginal tax rates and generous unemployment benefits, relative to the US. But, in many of the worst hit countries, benefits have been greatly reduced. By contrast in the US, benefits are very low but at least some have been increased. If, like Mulligan, you want to argue in terms of changes, then Europe should have seen reductions in unemployment (which was previously higher than the US). In reality, there is very little correlation between labor market policies and changes in unemployment. What has mattered has been exposure to the initial financial sector shock and/or subsequent austerity policies, exactly as Keynesian analysis would predict.
Clive Dunn is dead. The BBC obit is here. The only man to serve 4 years in a prisoner of war camp but 10 in the Home Guard.
Update: I told my 11 year old girl, after posting this, that Corporal Jones was dead. She was horrified — these guys are as live for her as Katy Perry is, and without the suspicion she has the Katy Perry is a fictional character. I assured her he was very old and lived well to the end, and that he was a lifelong socialist, all of which matter to the midwestern sisters. After looking generally sad she suddenly looked up with a grin said “maybe I should be allowed to listen to Dad’s Army in bed tonight” (usually forbidden on a schoolnight). Sure, I said, and wondered whether, whether, despite my unbelief he is in a position to watch. Because hearing that interaction would remove any doubt he may have had about the worth of his career.This weekend will be All Dad’s Army All Weekend in our house. Just in time for poppy day.
Sooooooo, this is a thing that happened …
And the moral is that if you’re in a mood where you’re likely to insult your favourite authors on Twitter, don’t count on them not finding out about it in this modern and interconnected world. I was clearly in an unusually difficult mood that day, as I also managed to piss of Steve Randy Waldman by describing his latest thesis on macroresilience as “occasionally letting a city block burn down in order to clear out the undergrowth”. As with the Taleb quip, I kind of stand behind the underlying point, but almost certainly wouldn’t have said the same thing to the guy’s face, so sorry Steve. In any case, by way of penance I will now write a few things about resilience and unpredictability. Starting with the point that I found “incredibly insightful” in the Taleb extract most recently posted.
The point I really liked was on p454 of the technical appendix (p8 of the .pdf file), which is something I ought to have realised myself during a couple of debates a few years ago about exactly what went wrong with the CDO structure. Translating from the mathematical language, I would characterise Taleb’s point as being that the problem with “fat tails” is not that they’re fat; it’s that they’re tails. Even when you’re dealing with a perfectly Gaussian or normal distribution, it’s difficult to say anything with any real confidence about the tails of the distribution, because you have much less data about the shape of the tails (because they’re tails) than about the centre and the region around the mean. So you end up estimating the parameters of your favourite probability distribution based on the mean (central tendency) and variance (spread) of the data you have, and hoping that the tails are going to be roughly in the right place.
But any little errors you make in estimation of the central tendency are going to get blown up to a significant extent when you start trying to use your estimate to try to say something about the 99th percentile of the same distribution. Which is kind of a problem since we have a whole financial regulatory infrastructure built up on “value at risk”, which is a term effectively meaning “trying to say something about the 99th percentile of an empirically estimated distribution.”
The deep point I see here is that it’s not worth getting worked up about “fat tails” specifically, or holding out much hope of being able to model financial (and other risks) better by changing one’s distribution assumptions. A little bit of model uncertainty in a normal context will do all the same damage as a massively fat-tailed underlying distribution. And the thing about model uncertainty is that it’s even more toxic to the estimation of correlations and joint probability distributions than it is to the higher percentiles of a single distribution. Even at this late stage, it really isn’t obvious whether the large movements in CDO values in 2007-9 were caused by a sudden shift in default correlation[1], a correlation that had been misestimated in the first place, or by an episode of model failure that looked correlated because it was the same model failing in every case.
The basic problem here is that in a wide variety of important cases, you just don’t know what size or shape the space of possible outcomes might have. At the root of it, this is the basis of my disagreement with SRW too – because we have so little reason to be confident at all in our ability to anticipate the kind of shocks that might arrive, I always tend to regard the project of designing a “resilient” financial system that can shrug off the slings and arrows as being more or less a waste of time. So, should we give up on any sort of planning?
[click to continue…]
Californians gave their 55 electoral votes to Barack Obama – of course; the networks called it the instant the Golden State’s polls closed. But more importantly, the state routinely derided as ungovernable1 has got its best chance of governance in generations. [click to continue…]
I don’t have a vote in the US election and, even if I had taken the necessary steps, I would be unlikely to live anywhere my vote counted, with the possible exception of northern Virginia. On the other hand, as someone who lives on the same planet as 300 million or so Americans, I do have a stake in the outcome.
If I had a vote that might be decisive, I would vote for Obama. Despite having failed to mention climate change in the campaign, or to push at all hard for the Waxman-Markey bill for an emissions trading, he has put in place regulations that will significantly reduce US emissions, to the point where the announced target of a 17 per cent reduction between 2005 and 2020 looks achievable. Regulation isn’t the most efficient means of reducing emissions, but I’m happy to leave that choice to the US political system.
If Obama wins, fuel efficiency regulations for cars and emissions limits for power stations will be locked in, and there will be hope for more in the future. If Romney wins, they will be repealed or not enforced. That’s enough reason for me to hope that Nate Silver’s odds are right.
I’m thinking about getting a “Samsung Chromebook”:http://www.amazon.com/gp/product/B009LL9VDG/ref=as_li_ss_tl?ie=UTF8&camp=1789&creative=390957&creativeASIN=B009LL9VDG&linkCode=as2&tag=henryfarrell-20 as a replacement laptop (primarily for light text editing and web browsing). The con appears to be a not very widely used operating system (although I use Google products a lot), the pro is that it looks to be both adequate for purpose and relatively very cheap. Before buying though, I wanted to see whether the hivemind has any useful information on how well ChromeOS stacks up etc. Opinions and information gratefully received …
Following up my higher ed posts, I ought at least to link to the NY Times piece on MOOCS – Massive Open Online Courses. Obviously this is the ultimate inexpensive option for higher education, and it is likely to be the bleeding edge of some disruptive wedge, I don’t know which one – several probably. This will change things. [click to continue…]
Chicago is about as close to the American heartland as you can get and still be in a major city (the infamous Heartland Institute is located there, for example), but even so, I’d expect a professor at the University of Chicago to be aware that the USA is not the only country in the world. That’s not true, apparently, of Casey Mulligan, who claims that the continued weakness of employment in the US is due to policies introduced in 2008 and 2009, which ” greatly enhanced the help given to the poor and unemployed — from expansion of food-stamp eligibility to enlargement of food-stamp benefits to payment of unemployment bonuses — sharply eroding (and, in some cases, fully eliminating) the incentives for workers to seek and retain jobs, and for employers to create jobs or avoid layoffs.”
Mulligan’s claims about US policy are dubious at best (see over fold), but there’s a much more critical problem with his argument. If US unemployment is caused, not by a demand shock but by the mistaken policies of the Obama Administration, why did unemployment move in the same way, and at the same time, in many different countries? Did Iceland expand its food stamp program? Does Estonia pay unemployment bonuses? Sadly, no. And while many countries adopted Keynesian policies in the immediate aftermath of the Wall Street meltdown, others did not, and most have now switched to the disastrous policy of austerity. An even clearer demonstration is given by the Great Depression, where nearly all governments pursued austerity policies after 1929 (Mark Blyth’s soon-to-appear Austerity: The History of a Dangerous Idea tells the story)>
This isn’t just a problem for Mulligan. The simultaneous occurrence of a sustained increase in unemployment in many countries, with different institutions and policies undermines any explanation of unemployment that works at the national level. That includes all forms of New Classical Economics, in which unemployment arises from labor market “distortions”, as well as Real Business Cycle theories (except if you stretch the idea of a technology shock to the point where “technology” effectively means “aggregate demand”).