Economics/Finance

We were talking not long ago about universal basic income policy, and there were a variety of opinions about the desirability, political sustainability and implications of such a policy. But, before arguing about those issues, it’s useful to consider whether a basic income is feasible at all and, if so, what kinds of tax policies, and adjustments to other welfare policies, would be required to support it. I’ve considered the relatively easy case of a guaranteed minimum income, rather than a universal basic income paid to everyone, as advocated by Philippe von Parijs and others.

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Hi there liberal rule-of-law fetishists!

Now that I’ve got your attention, I’d like to mention something that’s been bothering me. This idea that we all order our affairs under a system of predictable rules sounds very nice, but I do wonder whether it’s compatible with some of the other things that you seem to be signed up for. Some of you, I know, are worried about this so-called 1 per cent, and even about the 1 per cent of the 1 per cent: the people who own lots of stuff. Not only do they own lots of stuff, but they own the kind of stuff that is useful if you want to own even more stuff. That’s how it goes. And, of course, they also have the means to bring about a favourable “regulatory environment”, so that they get to hold onto that stuff.

Now I suppose you want to do something about that? Yes? One option would be to let them hang onto all their existing assets – after all, they got them justly (or at least non-criminally) according to the rules of the system they themselves helped to formulate – but to introduce a new system of rules (call it a “basic structure” if you like) that works to the greatest benefit of the least advantaged. Assume you have the knowledge to design it with the distributive effects you want (big assumption that!). Let that system grind away for long enough – a few generations perhaps – and you’ll have shifted things a little bit in the right direction. (Assuming, that is, that the 1 per cent don’t use their residual wealth and influence to throw you off-track as soon as you hit the first bump.)

I think you can see where I’m going by now. If you really want a shift in the distribution of wealth and income, if you really really want it, then realistically you’re going to have to use state power to do a bit of _ex post_ redistribution. You’re going to have to take stuff from some people and give it to others. Doesn’t necessarily have to be that total Marxian expropriation of the expropriators: a comprehensive programme of debt cancellation would fit the bill. Life is about making choices: and you’re going to have to choose. Is it outrageous to dispossess someone of the wealth they acquired under the rules of the game; or are you going to say that substantive fairness sometimes matters more?

Now I know there are some wrinkles there. What about predictability? What about incentives? Sure. (Of course the predictability of stable property rules is a bit overstated: all those people who got their houses repossessed when the economy went bad didn’t see that coming!) You might have to duck and weave. You might have to convince property owners that you’ll only go so far and no further. But don’t kid yourselves that you can do the redistribution you want and treat the rule of law as absolute. If robbing the rich appals you, become a libertarian instead.

(UPDATE: Well I’ve clearly managed to confuse a bunch of people with this post. Probably a consequence of trying to make a serious point in a knockabout style. I had in mind not any old garden-variety idea of the rule of law but something a bit more specific, namely that society ought to be run according to predictable rules that provide individuals with certainty that their efforts won’t be nullified by state action, a view associated with Hayek but endorsed by Rawlsians. So _mea culpa_ for that.)

Oh Christ. IMAGINATIVE EMPATHY FAIL. The imaginative empathy fail button at CT headquarters is turning around and blaring and stuff and I am sick so I don’t have time to deal with this plus it’s an annoying sound. Everyone, please try to imagine you are a poor person for at least 45 seconds at a minimum. Also, if you look at an 80-comment thread and only one commenter with a visibly female handle has said anything, would you please just, go get someone off the street or something, or like maybe the woman next to you at Starbucks, to comment? Don’t tell her it’s about libertarianism!! Don’t be hitting on her either. Unless you’ve got mad game like Kells. Tell her I asked you to. Anyway.

Do you know how becoming a Jesuit differs from taking on a job that is unpleasant? You don’t need to become a Jesuit to get money to buy food and clothes for your family! For real! You’re not even supposed to have a family! So is there an issue there, about whether one can potentially contract oneself to SeaOrg or the Holy Catholic and Apostolic Church and come out missing your freedom? Yes, and that is what separates cults from churches in most people’s mind. This could be an interesting sidebar discussion but it has nothing to say about the “putting up with awful things to have a job” issue.
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[This post was co-written by Chris Bertram, “Corey Robin”:http://coreyrobin.com/ and “Alex Gourevitch”:http://thecurrentmoment.wordpress.com/ ]

“In the general course of human nature, a power over a man’s subsistence amounts to a power over his will.” —Alexander Hamilton, Federalist 79

Libertarianism is a philosophy of individual freedom. Or so its adherents claim. But with their single-minded defense of the rights of property and contract, libertarians cannot come to grips with the systemic denial of freedom in private regimes of power, particularly the workplace. When they do try to address that unfreedom, as a group of academic libertarians calling themselves “Bleeding Heart Libertarians” have done in recent months, they wind up traveling down one of two paths: Either they give up their exclusive focus on the state and become something like garden-variety liberals or they reveal that they are not the defenders of freedom they claim to be.

That is what we are about to argue, but it is based on months of discussion with the Bleeding Hearts. The conversation was kicked off by the critique one of us—Corey Robin—offered of libertarian Julian Sanchez’s presignation letter to Cato, in which Sanchez inadvertently revealed the reality of workplace coercion. Jessica Flanigan, a Bleeding Heart, responded twice to Robin. Then one of us—Chris Bertram—responded to Flanigan. Since then, the Bleeding Hearts have offered a series of responses to Chris and Corey.

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* As JW Mason points out in comments, much of the growth in income for the rich has taken the form of capital gains rather than higher salaries. Piketty and Saez rank income-earners based on income net of capital gains, which obscures this fact.

Elinor Ostrom, a great voice for good social science, and good in social science, has died. A political scientist by training, she was the first woman to win the Nobel Prize in Economics. She did a great deal of important work on the creation and management of common-pool resources. Reading her work, it always seemed to me that she was the best kind of researcher—the sort who really cares about getting the right answer to a real empirical problem, even if the problem is very hard and the answer is very tricky.

Let me begin with an apology—for two things, actually. First, for the fact this response to the seminar on my debt book was so long in coming. It happening that at the time the seminar was going on I was desperately trying to finish a book with a very firm deadline (not to mention I was also struggling with a flu, which added all sorts of interesting complications. I did finish it though. Only just.) Second, for the fact that, to make up for the delay, I seem to have overcompensated and the response became… well, as you can see, a little long.

Sorry.

Allow me also to remark as well how flattered I am by so much of this discussion. When I wrote the book it never occurred to me I would end up being compared with the likes of Polanyi, Nietzsche, or even Ernest Mandel. I shall try very hard not to let this go to my head. Now how shall I start? It would be ungracious not to respond to each in some way. But I think it might be best to start by clarifying a few issues that seem to crop up pretty frequently, both in this seminar and in other reviews and comments I’ve seen on the internet. Then I will take on the specific responses.
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I’ve just sent back the proofs for the new edition of Rousseau’s _Of the Social Contract and Other Political Writings_ (edited Bertram, translated Quintin Hoare) that Penguin Classics are publishing in September. One of the “other writings” is the _Constitutional Proposal for Corsica_ . Reading through, I suddenly alighted on an sentence and thought, “hang on, that makes no sense!” The relevant phrase in French (OC3: 936) is

bq. …quand le Prince hausse les monnoyes il en retire l’avantage reel de voler ses créanciers …

For which we had

bq. …when the Prince raises the value of a currency he derives the real advantage of stealing from his creditors …

But, but …. Surely what the prince needs to do to steal from his creditors is the exact opposite? You inflate. You inflate away the debt. You make the currency worth less, not more. Isn’t Rousseau just writing nonsense then?

It turns out not, and, thanks to the help of the estimable Chris Brooke I now understand. My thinking on this, and that of just about all modern readers I suspect, is formed by thinking of fiat currency. But if we have currency that (purportedly) derives its value from its metallic content (such as gold) then you can debase the coinage by raising its _face value_ whilst keeping the metal content the same. (Or alternatively, you could adulterate the metal or clip the coin to get the same effect.) Finding out this kind of thing really is great fun.

Since it’s starting to “filter”:http://krugman.blogs.nytimes.com/2012/03/05/economics-in-the-crisis/?pagewanted=all into “debate”:http://modeledbehavior.com/2012/03/06/in-which-i-am-won-over-by-paul-krugman/, it’s probably time that the paper that John Quiggin and I have written on Keynesianism in the Great Recession be released into the wild. It’s currently under journal review, but still has some holes (we figured it was at the stage where it would be helpful to have reviewers point out what we needed to do rather than try to model their likely responses internally). So, it’s here for downloading – and criticisms, comments and suggestions for improvements will be gratefully received. NB that both John and I have participated in this debate – but we have tried, as best as we can, to look at what happened not from the perspective of whether the people who were winning at any one point in time _deserved_ to win or not according to our subjective criteria, but instead, whether there are general explanations (independent of the quality of the arguments on the one side or the other) for the influence of different arguments at different times. In short, we’ve tried to write a paper about what happened, and why, rather than what should have happened. NB also, that we are aware of some holes (e.g. the fit between some of the theory, and the practical application is not as tight as we would like), and would love to hear suggestions for improvements.

Update: It would be particularly interesting to hear from people with strong, divergent perspectives, so as to make sure that the piece reflects as much information and as many points of view as possible. People should also feel free to email me at keynespaper@henryfarrell.net if they would prefer to make criticisms or suggestions privately rather than in public.

David Graeber’s three social principles – hierarchy, exchange and communism – are useful devices to think about the world, particularly when you become sensitized to the way in which one can turn into or mask another. One site of human interaction that may be illuminated by Graeber’s principles is the modern university: perhaps especially the British version which has evolved from nominally democratic modes of governance to extremely hierarchical ones within a generation.
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This is less a review of Ken MacLeod’s new novel, _Intrusion_ than a response to it. Ken is famous for having said that history is the trade secret of science fiction (also: for describing the Singularity as the “Rapture for nerds”) – but I can’t help wondering whether history is being overtaken by the cognitive and social sciences. Since Cosma Shalizi and I are both thinking and starting to write about some of the arguments that Ken takes on in his book, I’ll focus on drawing out the ideas. This is obviously dangerous if you do it naively – good novels of ideas play with their subject matter rather than expound it, and take care to leave a lot of space for ambiguity, counter-perspectives, the awkwardness of real human beings with human motivations and so on. And _Intrusion_ is a good novel of ideas. Even so, there may be value in drawing out the ideas that Ken is engaging with – I don’t think that the book mentions the names of Thaler and Sunstein once, but one significant skein of the book argues against them. NB that while I don’t _think_ that there are any major spoilers below the fold, some possible readers may reasonably want to preserve their reading experience from my conceptions and misconceptions of what the book is about. Certainly, people who have already read the book will get a lot more from this essay than people who haven’t. NB also that while I don’t know whether the book will have a US edition anytime soon, it can be ordered from the usual UK sources by US readers, who will also soon be treated to his robots-meet-Calvinism-and-contractarianism-and-the-illusion-of-free-will near future thriller, _The Night Sessions._

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Fortunately I didn’t contract with Chris in advance to contribute to the Graeber seminar, so I’m not in debt on this score, paying late and therefore a bad person.

Right. I’m only about halfway through the book – on audiobook: must have something to do on the bus – and quite enjoying it. Some skepticism about Graeber’s scholarship has been expressed in the wake of revelation of that embarrassing bit about Apple computers that he got totally wrong. I am not an expert on all the ancient and exotic anthropological and etc. evidence Graeber cites, but I’m not an absolute beginner. I started studying the history of ideas of debt, and related subjects, a few years back. See here and here. I started because it occurred to me the Plato I was teaching was, to a surprising extent, about debt, reciprocity and, generally, the convertability of moral into monetary categories, and vice versa. Euthyphro on piety. It’s ‘care of the gods’, which – this is his final suggestion – turns out to be the capacity to enter into healthy exchange relations. Meno on whether being good boils down to getting your hands on the goods. Cephalus, the old man, launches the mighty ship, Republic, with the thought that justice is ‘speaking truth and paying debts’, which morphs into the lex talionis thought that justice is payback – doing good to friends and harm to enemies. Plato, like Graeber, is really really concerned to shred this stuff, if he can. So I find Graeber interesting. I haven’t gotten to the bits where Graeber discusses Plato, but I see he does discuss him. And I haven’t found any flagrant inconsistencies between what he says about other ancient stuff and what I have read in other authors about ancient stuff. So I’m inclined to think the Apple slip was a one-off accident, not indicative of larger problems. As to the tribute system stuff. It sounds like Henry is right about that and Graeber is wrong. I haven’t gotten to that part of the book yet.

Right. Getting down to business. Here’s what seems to me a fundamental tension in the book. On the one hand, Graeber wants to emphasize that debt is a very specific relation. Everything isn’t debt, human relations-wise. More generally, everything isn’t exchange. For him, this is the larger significance of defeating the myth of barter and the double-coincidence and all that (go read the other posts if you don’t know what I’m talking about.) Money emerges as a way of accounting for debt, but not everything is debt. So money isn’t a way of accounting for everything. I’m simplifying, but this is the gist. (One of many gists, but enough for one post.) [click to continue…]

David Graeber’s Debt: The First 5000 Years begins with a conversation in a London churchyard about debt and morality and takes us all the way from ancient Sumeria, through Roman slavery, the vast empires of the “Axial age”, medieval monasteries, New World conquest and slavery to the 2008 financial collapse. The breadth of material Graeber covers is extraordinarily impressive and, though anchored in the perspective of social anthropology, he also draws on economics and finance, law, history, classics, sociology and the history of ideas. I’m guessing that most of us can’t keep up and that we lack, to some degree, his erudition and multidisciplinary competence. Anyway, I do. But I hope that a Crooked Timber symposium can draw on experts and scholars from enough of these different disciplines to provide some critical perspective. My own background is in political philosophy and the history of political thought: so that naturally informs my own reactions as do my political engagements and sympathies. So mine is merely one take on some of the book’s themes.

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