Stephen Walt writes a quite odd post on realism, liberalism and the future of the euro.
bq. Over the past few months, however, German Chancellor Angela Merkel and French President Nicolas Sarkozy have been negotiating a joint proposal for deepening economic coordination within the EU (and especially the eurozone) in an attempt to solve some of the problems that produced the crisis in the first place. … Not only does this question have obvious implications for politics and economics in Europe itself, but it also raises some fundamental questions about IR theory and might even be a revealing test of “realist” vs. “liberal” perspectives on international relations more generally. Realists, … have been bearish about the EU and the euro since the financial crisis, arguing that European member states were more likely to pursue their individual national interests and to begin to step back from some of the integrative measures that the EU had adopted in recent years. … By contrast, institutionalists, and EU-philes more generally, have suggested that the only way forward was to deepen political integration within Europe. … So what we have here is a nice test of two rival paradigms, and students of international politics should pay close attention to how this all plays out.
A useful bit of interactive data visualization for Emmanuel Saez’s time-series on historical trends in income growth and distribution in the United States. As you can see, between 1970 and 2008 people in the bottom 90 percent of the income distribution typically chose not to partake of annual increases in total income, presumably because of a tendency to prefer and thus self-select into lower-paying jobs, or possibly because of an innate dislike for the more complex mathematics (surrounding tax calculations, car payments, and budgeting generally) that is associated with earning more money.
In Spring a young man’s fancy turns to love. Rapidly aging academics such as myself, however, have to decide which readings to assign. This semester I’m teaching Organizations and Management to students in Duke’s MMS certificate program and Markets and Moral Order to a small group of seniors at the Kenan Institute for Ethics. Both classes were a lot of fun last year (perhaps not for the students). I’ve rearranged the running order in the Orgs course a bit, as the flow was wrong last time.
If you think there’s something that absolutely has to be included in either course, I’m open to suggestions. But you’re not allowed to suggest something without also saying what I should drop in order to include it. Unlike the economy, a syllabus is not the sort of thing that you want to grow aggressively in order that everyone gets more and bigger slices of the whole.
Brad DeLong has just posted a couple of links to articles that attack an article by David Owen in the New Yorker [subscription required]. Owen’s article relied heavily on the claim that increased energy efficiency doesn’t really deliver the hoped-for environmental benefits, because of something called the “rebound effect”. Here’s an explanation of that effect by James Barrett in one of the linked pieces:
bq. In essence the rebound effect is the fact that as energy efficiency goes up, using energy consuming products becomes less expensive, which in turn leads us to consume more energy. Jevons’ claim was that this rebound effect would be so large that increasing energy efficiency would not decrease energy use….
Owen’s critics say that although the rebound effect is real, whether it is large enough to have the effects Owen claims is an empirical matter, and they are sceptical. Basically, they argue that the increase in energy consumption is not just down to lower prices but also to greater wealth, house size, etc. and so without greater efficiency, we might be consuming a whole lot more energy than we actually are. Basically: it all depends on the facts, and the jury’s out.
Ok, so now let’s do a little substitution in that sentence quoted earlier. [click to continue…]
In First As Tragedy, Then As Farce [amazon], Zizek claims that “the only truly surprising thing about the 2008 financial meltdown is how easily the idea was accepted that its happening was an unpredictable surprise which hit the markets out of the blue” (p 9). He cites the following evidence that people could and, indeed, did know it was coming.
Recall the demonstrations which, through the first decade of the new millennium, regularly accompanied meetings of the IMF and the World Bank: the protester’s complaints tool in not only the usual anti-globalizing motifs (the growing exploitation of Third World countries, and so forth), but also how the banks were creating the illusion of growth by playing with fictional money, and how this would all have to end in a crash. It was not only economists such as Paul Krugman and Joseph Stiglitz who warned of the dangers ahead and made it clear that those who promised continuous growth did not really understand what was going on under their noses. In Washington in 2004, so many people demonstrated about the danger of a financial collapse that the police had to mobilize 8,000 additional local policemen and bring in a further 6,000 from Maryland and Virginia. What ensued was tear-gassing, clubbing and mass arrests – so many that police had to use buses for transport. The message was loud and clear, and the police were used literally to stifle the truth.
The first examples are tendentious, as allegedly successful predictions of market movements tend to be. (Many predicted a crash. They always do. How many predicted the one that actually arrived, and when it would?) But I’m more curious what the last bit is about. What protest was this? The Million Worker March is all I can come up with. But that didn’t involve any far-sighted demands that financial collapse be forestalled. “Organizers have issued 22 demands, a broad array of grievances that go far beyond workers’ rights. Organizers call for universal health care, a national living wage, guaranteed pensions for all working people and an end to the outsourcing of jobs overseas. They also are demanding a repeal of the Patriot Act, increased funding for public education, free mass transit in every city, a reduction of the military budget and cancellation of what they consider pro-corporation pacts such as the North American Free Trade Agreement.” Nothing about the dangers of mortgage-backed securities. Also, so far as I can recall – and Google seems to back me – the Million Worker March was relatively small and peaceful. So is that even what Zizek is talking about?
Also, Zizek has odd ideas about how the bank bailouts were supposed to work. [click to continue…]
As I mentioned a few days ago, the best paper I’ve read on Ireland and the economic crisis was this one by Sebastian Dellepiane Avellaneda and Niamh Hardiman. I’m happy to say that Niamh has agreed to do some guest-blogging for us over the next several days on the Irish crisis as it continues to unfold, and its implications for the EU. Niamh is a senior lecturer at University College Dublin’s School of Politics and International Relations. She has written extensively on political economy and public policy in Ireland and the EU. We’re grateful and lucky to have her. Her first post will be up shortly.
Tyler Cowen links to my post on Ireland, which is somewhat embarrassing, as I was convinced in comments that my basic argument was wrong (short version: _always_ check taxation statistics you think you have a fair idea of before you post opinions regarding their implications). While property taxes played a crucial role in Ireland’s fiscal disaster, corporate taxes were simply not a large enough part of revenue to be worth talking about (and probably would not have been under any plausible alternative regime).
Nonetheless, I still want to make a (weaker and more indirect) argument about the relationship between Ireland’s efforts to attract inward investment (which included, but were not limited to, its taxation regime) and its current state of disaster. The short version: the desires (a) to attract inward investment, and (b) to maintain peaceful industrial relations helped reinforce an unsustainable fiscal strategy. This has implications for the left as well as for the right.
Windsor and Maidenhead Council (UK) is planning a reward scheme (supermarket tokens and the like) for volunteers to help implement David Cameron’s “Big Society”:
bq. it is likely residents would get a loyalty card similar to those available in shops. Points would be added by organisers when cardholders had completed good works such as litter-picking or holding tea parties for isolated pensioners. The council says the idea is based on “nudge theory” – the thought that people don’t automatically do the right thing but will respond if the best option is highlighted. Points would be awarded according to the value given to each activity. Users could then trade in their points for vouchers giving discounts on the internet or high street.
Maybe the Council should have read more widely, since according to another body of literature (Bruno Frey, Sam Bowles ), they risk sending out a signal that only a mug performs good works for no reward. An interesting natural experiment, to be sure, but not one that I’d wish on the residents of Windsor and Maidenhead.
Karl Marx in the Preface to vol. 1 of _Capital_ : “The country that is more developed industrially only shows, to the less developed, the image of its own future. ”
Here’s part of an interview from IHE with Ellen Schrecker, author of _The Lost Soul of Higher Education: Corporatization, the Assault on Academic Freedom, and the End of the American University_ :
bq. Reduced support from state legislatures and the federal government’s decision to aid higher education through grants and loans to students rather than through the direct funding of individual institutions forced those institutions to look for other sources of income, while seeking to cut costs. In the process, academic administrators adapted themselves to the neoliberal ethos of the time. They reoriented their institutions toward the market at the expense of those elements of their educational missions that served no immediate economic function.
bq. As they came to rely ever more heavily on tuition payments, they diverted resources to whatever would attract and retain students — elaborate recreational facilities, gourmet dining halls, state-of-the-art computer centers, and winning football teams. At the same time, they slashed library budgets, deferred building maintenance, and – most deleteriously – replaced full-time tenure-track faculty members with part-time and temporary instructors who have no academic freedom and may be too stressed out by their inadequate salaries and poor working conditions to provide their students with the education they deserve. Meanwhile, rising tuitions are making a college degree increasingly unaffordable to the millions of potential students who most need that credential to make it into the middle class.
bq. Unfortunately, the competitive atmosphere produced by the academic community’s long-term obsession with status and its more recent devotion to the market makes it hard for its members to collaborate in solving its problems. Institutions compete for tuition-paying undergraduates and celebrity professors who can boost their institutions’ U.S. News & World Report ratings. Faculty members compete for tenure and research grants. And students compete for grades after having competed for admission to the highly ranked schools that will provide them with the credentials for a position within the American elite.
bq. Thanks to the IMF, multiple experiments have been conducted – for instance, in east Asia in 1997-98 and a little later in Argentina – and almost all come to the same conclusion: the Keynesian prescription works. Austerity converts downturns into recessions, recessions into depressions. The confidence fairy that the austerity advocates claim will appear never does, partly perhaps because the downturns mean that the deficit reductions are always smaller than was hoped. Consumers and investors, knowing this and seeing the deteriorating competitive position, the depreciation of human capital and infrastructure, the country’s worsening balance sheet, increasing social tensions, and recognising the inevitability of future tax increases to make up for losses as the economy stagnates, may even cut back on their consumption and investment, worsening the downward spiral.
Charles Ferguson has a nice piece in the _Chronicle of Higher Education_ about Larry Summers, the economics profession and their position in American public life. Definitely worth a read.
In May this year, I did an interview with Amartya Sen in Cambridge (the British one) on the Quality of Life. The concrete occasion for this interview was a workshop/conference I was involved in, organized by the Dutch National Science Foundation, on the Quality of Life.
Sen couldn’t come to give a talk at this conference, but was happy being interviewed by me. So if you fancy watching 22 minutes of Sen’s views on how to conceptualise and measure the quality of life, on the Sarkozy report on the measurement of economic progress (Mismeasuring Our Lives: Why GDP Doesn’t Add Up) and, at the end, on global poverty and whether the rich people really care about the global poor, you can watch it here.
I recently had the pleasure of attending the European Society for Philosophy and Psychology conference in Bochum, Germany . The highlight for me was attending a talk by Michael Tomasello of the Max Planck Institute, Leipzig on pre-linguistic communication. Getting home, I ordered a copy of Tomasello’s Why We Cooperate in which he argues, on the basis of detailed empirical work with young children and other primates, that humans are hard-wired with certain pro-social dispositions to inform, help, share etc and to engage in norm-guided behaviour of various kinds. Many of the details of Tomasello’s work are controversial (the book is essentially his Tanner Lectures and contains replies by Silk, Dweck, Skyrms and Spelke) and I lack the competence to begin to adjudicate some of the disputes. But this much is, I think, clear: that work in empirical psychology and evolutionary anthropolgy (and related fields) doesn’t – quelle surprise! – support anything like the Hobbesian picture of human nature that lurks at the foundations of microeconomics, rational choice theory and, indeed, in much contemporary and historical political philosophy. [click to continue…]
In the spirit of more engagement with the left rather than a mere continuation of lobbing potshots at libertarians, let me point out a disjunction between these two recentposts at Lenin’s Tomb
The first, riffing on David Harvey, and what sounds to be a terrible book by Ben Fine and Dimitris Milonakis, is your standard-issue dismissal of economic notions of rationality as a kind of imperialism.
bq. One aspect of this specious conception of “reason” is the encroachment of a set of analytical principles established by marginalist economics into other fields of social science. … Underpinning this approach is three basic analytical principles. … individualism … rational self-interest … exchange. … This imperialism of “reason” (“economic imperialism”, as Fine and Milonakis dub it), has policy consequences. ‘Public choice’ economics, for example, has acquired a prized position in the academia, in think-tanks, and among policy ‘wonks’. … rightist political animus … What I’m describing as the imperialism of market “reason” is nothing other than the ability of the ruling class to naturalise and universalise its accumulation activities, to express it as an ideology, a pseudo-sociology with pseudo-explanations for social phenomena, and to use that ideology as a justification for advancing on and enclosing all areas of public life that are not commodified, not subject to the laws of accumulation. [click to continue…]
[amazon], Zizek claims that “the only truly surprising thing about the 2008 financial meltdown is how easily the idea was accepted that its happening was an unpredictable surprise which hit the markets out of the blue” (p 9). He cites the following evidence that people could and, indeed, did know it was coming.
[amazon]: 
) and, at the end, on global poverty and whether the rich people really care about the global poor, you can watch it