Taking a break from my war with Murdochracy, my most recent column in the Australian Financial Review (over the fold) was about Peak Oil. Partly for tactical reasons, but mainly because I believe it’s basically correct in this case, I’m wearing my hardest neoclassical hat.
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“Matt Yglesias”:http://thinkprogress.org/yglesias/2011/08/04/287553/the-new-labour-record-on-income-growth/ responds to Chris’s post below, by suggesting that British “lefties”‘ criticisms of New Labour’s record on inequality are discredited by a Lane Kenworthy graph, which he says he’ll take as a decisive argument in favor of what he calls “progressive neo-liberalism,” “until [he sees] a rebuttal of it.” But didn’t we have a rebuttal of Yglesias’ interpretation from “Brian Weatherson”:https://crookedtimber.org/2010/10/01/fun-with-gini-coefficients/, the last time he was pushing this line, back in October 2010? Perhaps he found this rebuttal inadequate in some way. But even if this were so, one would have thought that Lane’s own quite specific and limited explanation of what the graph suggests – that it showed that the UK poor probably did better under Labour than they would have under the Conservatives – might have given him pause (I’m quite sure that Chris, for all his dislike of New Labour, would agree with Lane’s claim here).

I also should note that he had a “go”:http://thinkprogress.org/yglesias/2011/07/30/283784/the-diversity-of-privilege/ last week at John Quiggin’s arguments about inequality, where he suggested that NYU professors had it pretty good, and that:

bq. a lot of the political dialogue I see online seems to consist of a slightly strange form of class resentment in which intellectuals, nonprofit workers, or public servants express bitterness about the high incomes of businesspeople whose lives they don’t actually envy.

I wrote a somewhat ill-tempered post in response to this, and then deleted it, because I wasn’t greatly looking forward to policing the comments section. So I’ll limit myself to saying that Yglesias’ aside certainly doesn’t do justice to the genuine and quite serious debates around inequality, which, as far as I can see, are not being driven by ‘class resentments’ but by a genuine and well-founded dismay about the current state of the US political economy. Enormous disparities of wealth help reinforce huge disparities in political power (see e.g. Bartels’ findings on how the interests of different economic segments get represented in the electoral process) in a self reinforcing cycle. That’s a problem – and it’s a _particularly big problem_ for someone who wants to concentrate on maximizing growth first, and only on sharing out the goodies afterwards. As “Cosma says”:http://cscs.umich.edu/~crshalizi/weblog/778.html in the best post on this broad set of topics that I’ve read to date.

bq. “When you tell us that (1) the important thing is to maximize economic growth, and never mind the distributional consequences because (2) we can always redistribute through progressive taxation and welfare payments, you are assuming a miracle in step 2.” For where is the political power to enact that taxation and redistribution, and keep it going, going to come from? A sense of _noblesse oblige_ is too much to hope for (especially given how many of our rich people have taken lots of economics courses), and, for better or worse, voluntary concessions will no longer come from fear of revolution.

To be clear – I think that Matthew Yglesias is an extremely smart and interesting writer, even when I disagree with him, as I often do. He’s a net contributor to US public debate. But when he comes up against this particular set of issues, he has an unfortunate tendency to wave difficulties in his position away by making -unsubstantiated imputations about the motives of people who bring up the problem of wealth inequality, and- (update: now withdrawn – see his comment below) referring to graphs which don’t actually say what he thinks they say. I wish he’d do better.

Update – I see that Chris has also updated his post in response.

At one point in Zombie Economics, I tried a Popperian (or maybe Paulian) smackdown, saying that some defenders of EMH used arguments that effectively rendered it unfalsifiable. I thought that was a bad thing, but apparently at least one reviewer disagrees. Following my stoush with Murdoch, a commenter pointed me to this piece by Stephen Williamson of Washington University at St Louis, who has apparently been asked to review the book for the Journal of Economic Literature. Williamson claims that I am badly confused about the EMH, and that

Market efficiency is simply an assumption of rationality. As such it has no implications. If it has no implications, it can’t be wrong.

He follows up with “Like the “efficient markets hypothesis,” DSGE has no implications, and therefore can’t be wrong.””
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Last night’s BBC Newsnight in the UK featured “an item on living standards”:http://www.bbc.co.uk/iplayer/episode/b0132003/Newsnight_03_08_2011/ (at about 29′) and an interview with Doug McWillians of the “Centre for Economics and Business Research”:http://www.cebr.com/ think tank (whoever they are). McWilliams asserted that the UK faces a decline in living standards of 25 per cent over the next 20 years or so because of wage competition from overseas: “we” are going to be 25 per cent worse off. I have no idea how plausible this is.{fn1} However, if I’d been the interviewer I’d have followed up by asking McWilliams, “so, the economy is going to shrink by 25 per cent over the next few years?” Because I’m pretty sure that the economy is going to continue to grow, and that McWilliams also believes this, (eventually, and maybe sluggishly) and asking that follow-up would have forced him to make it explicit that he thinks we face a future of contraegalitarian redistribution (and, judging by some of the other elements in the item, longer hours). Unfortunately, the question never came. Until these questions get asked though, we’ll still have a political debate dominated by the assumption that growth-promoting policies will provide people with better lives, even though it seems that they won’t. (Which doesn’t, of course, establish that in the absence of such policies things wouldn’t get even worse.) To protect and improve the real living standards of ordinary people, we need to get redistribution explicitly onto the agenda and not just allow the assumption that rising tides lift (the key political assumption of “left neoliberalism” it seems to me) to stand.

1. To be fair, McWilliams says the decline isn’t predetermined, but can be avoided if “we” provide ourselves with enough in the way of high-tech skills to “command a premium”. Of course this is another feature of the “left neoliberal” toolkit, but as the experience of new Labour shows, it is one thing to sloganize (“education, education, education”) it is another to actually change things.

UPDATE: For some reason Matthew Yglesias has “linked to this post”:http://thinkprogress.org/yglesias/2011/08/04/287553/the-new-labour-record-on-income-growth/ taking it to be a data-free assertion that Blair and Brown failed on inequality (I believe that they failed, but it isn’t the subject of this post) and then waving around a Lane Kenworthy graph that he’s fond of in refutation. Two points: (1) the only point in the post that touched on the failure of New Labour was the footnote, which alludes to their record on education not inequality; (2) “Brian posted a few months ago”:https://crookedtimber.org/2010/10/01/fun-with-gini-coefficients/ in response to “the last time”:http://thinkprogress.org/yglesias/2010/09/30/198683/new-labour-and-inequality/ Matt deployed his favourite graph against “me on New Labour’s record”:https://crookedtimber.org/2010/09/30/its-about-the-distribution-stupid/ on inequality, given that, I’m surprised Matt is still waving it around.

Shorter <a href=”http://www.mindingthecampus.com/forum/2011/07/breitbart_thinks_back_on_his_c.html”>Mark Bauerlein</a>: The leftist books Andrew Breitbart didn’t read in college eventually inspired him to slander Shirley Sherrod.
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I’ve received the ultimate accolade from News Corporation, graduating from snarky asides and dark mutterings in which I’m identified only indirectly to a full-length hit piece in our only national (general) newspaper, The Australian. This worked out pretty well for me, giving my friends the opportunity to say nice things in my defence, and even the Oz comments thread was mostly favorable. I was even, briefly, a trending topic on Twitter! Perhaps the spell of Murdoch is starting to fade?

Some remarkable logic on display in the Washington Post ombudsman’s defense of Jennifer Rubin’s notorious jihadism in Norway post.

bq. There are other reasons I got so many e-mails on Rubin; they have much less to do with terrorism and tragedy and more to do with modern technology and partisan politics. Liberals and conservatives don’t talk to each other much anymore; they exist in parallel online universes, only crossing over to grab some explosive anti-matter from the other side to stoke the rage in their own blogosphere. The liberal blogosphere, propelled by tweets, picked up Rubin’s piece and spread it around rapidly, helped by a trifecta of posts from theatlantic.com. … This brings us back to the shootings in Norway, an act committed by a disturbed man who drew some of his inspiration from extremist Web sites. A blogosphere given to vitriol and hasty judgments ought to consider the possible consequences of its own online attacks.

If I understand the logic of this column correctly, the ombudsman, one Patrick Pexton, thinks something like the following.

(a) Bloggers are partisan and don’t usually engage with people on the other side. In this sense, they are rage-filled extremists.
(b) Breivik was partly inspired by rage-filled, extremist websites.
(c) _Therefore,_ rage-filled extremist leftwing bloggers ought to consider their own culpability, and shut the hell up about Jennifer Rubin.

I can’t remember the term for this logical fallacy (it’s of the ‘all cats have fur – all dogs have fur – therefore all cats are dogs’ variety). No doubt someone who, unlike me, took Philosophy 101, will inform me in comments within moments of publication. But an awful lot of work is being done by the elasticity of the notion of rage-stoking extremism here. And this is not to mention the intimation that James Fallows and Ta-Nehisi Coates are rage-filled hatebloggers …

However, there is a serious point to be extracted from this muddle. Which is that discussions of online extremism often tend to confuse two, quite different forms of extremism (here, I think Cass Sunstein’s work has had quite some problematic consequences). One is not really extremism at all – it is common or garden partisanship. That is, it is plausible that online interactions makes vigorous partisanship (in which you perceive yourself as in competition with the other side, perceive little value in direct intellectual exchange with them etc) more prominent, either because it makes it easier for partisans to find each other and organize, makes people’s partisanship stronger through mutual reinforcement, or both. Here, though, there is a crucial moderating influence. Partisans are engaged in political contention through _electoral competition._ This (as Nancy Rosenblum argues) has a substantial moderating effect – in the end, they need to win votes by influencing people if they want to succeed. This also leads to all kinds of indirect learning. The second is _actual_ extremism, where people are potentially willing to abandon democratic politics and pursue violent means to achieve political ends. Here, there is no such moderating influence.

There is _no necessary reason_ to believe that the former necessarily leads to the latter. In the US case, the online forces that push towards partisanship on the left tend overwhelmingly push against the other kind of extremism. There is no effective contact between e.g. MoveOn or the Daily Kos on the one hand, and the various subgroups and splinters who are more enthusiastic about violence on the other. When the latter try to influence the former, they get mobbed and repelled. The right is a quite different matter – there are dense social ties between online partisans and anti-Muslim bigots and crazies claiming that universal dhimmidom is right around the corner.

Pexton’s suggestion that leftwing bloggers need to think carefully about whether they too will inspire the mass-murder of scores of teenagers doesn’t deserve a serious response in itself. But it is worth looking at as a specific manifestation of a more pervasive intellectual confusion between two different forms of ‘extremism,’ one of which is not in fact a form of extremism at all.

Responding to the Mordor-inspired debt ceiling deal, I thought it was time for yet another Lord of the Rings post

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I’m teaching “Philosophy and Literature” this semester. For one unit – Well Wrought Urns and Stuffed Owls, or somesuch subtitle – we’re going to read the really strong stuff. Like Irene Iddesleigh, Chapter 1 (not the whole book). But also more genuinely enjoyable incompetence: The Young Visiters. And Crippled Detectives. See this Village Voice piece for some – rather sad – background on the latter. Maybe a bit from A Nest of Ninnies. Who knows? Maybe even Ulysses? I’ve always thought of that book as basically The Young Visiters writ old. Bloom is Mr. Salteena, all grown up, but still a child at heart. [click to continue…]

My last post, arguing that the share of US income going to the top 1 per cent of households is now so great that any effective policy must be financed by reducing or more effectively taxing the income of this group produced a range of interesting (and some not so interesting responses). First up, it elicited what appears to be new variants on a couple of standard rightwing talking points. More interesting to me is a response from Matt Yglesias arguing (as I read him) that, even if there is no serious prospect of reversing the shift of income to the top 1 per cent[1], there is still plenty of capacity for progressive political actions based on a broadly neoliberal (US sense) agenda.
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Prompted by a passing thought about TextMate, I thought I’d make a comprehensive, accurate, unbiased, and irrefutable survey of text editors by way of comparison to locations in The Lord of the Rings.

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I’ve been thinking about what, if anything, to write about the events in Norway. Obviously one’s first thoughts are with the victims of what was an especially horrible crime. I was in Oslo in April, and it really is hard for me to imagine an event such as this taking place there. Really dreadful and heartbreaking, especially since so many of the victims were young, committed, people who looked likely to make an important contribution to the life of their country.

I’m going to limit myself to a few thoughts on its wider significance. Obviously the killer is in some sense crazy, though whether that is technically true is a matter for the professionals. He was imbued with some version of an ideology which is widespread on the internet and to some extent in Western societies: nativism, extreme anxiety about Islam, hatred for liberal multiculturalist “enablers” of this, and so on. Ideas to be found on thousands of blogs, in the writings of wingnut columnists and neocons, in the shared beliefs of Tea Partiers and birthers, among the rabble of the English Defence League, and among the further fringes of extreme supporters of Israel. Is this fascist? I don’t think arguments about definitions are particularly useful. Some of this current predates 9/11, but in its current form it is a product of the US and global reaction to the attacks on the Word Trade Center. Plain and simple racist movements existed before 9/11, but this focus on a particular religion and its adherents coupled with the adoption of extreme pro-Zionism by the formerly anti-semitic right is something new. (This isn’t a single movement though, it is a spectrum, and elements of it have even been given cover, credibility and respectability by people who think of themselves as being on the left but who backed the Iraq war, strongly supported Israel over Lebanon and Gaza and who disseminate propaganda attacking those who take a different line to them on the Middle East as antisemitic racists.)

Following the Norway massacre many of the elite scribblers of this spectrum — many of whom have played the guilt-by-association game to the max over the last decade — are disclaiming all responsibility. Well, of course, they didn’t pull the trigger, but they helped to build an epistemic environment in which someone did. We may be, now, in the world that Cass Sunstein worried about, a world where people select themselves into groups which ramp up their more-or-less internally coherent belief systems into increasingly extreme forms by confirming to one another their perceived “truths” (about Islam, or Obama’s birth certificate, or whatever) and shutting out falsifying information. Put an unstable person or a person with a serious personality disorder into an environment like that and you have a formula for something very nasty happening somewhere, sooner or later. Horribly, that somewhere was Norway last Friday.

I’ve been largely on the sidelines of the debate about neoliberalism and political theory. That’s mainly because, observing the US political and economic situation, I have a very clear view on what policies could, in principle, sustain a progressive political movement, but (given my distance from the scene and the absence of anything substantial enough to force its attention on the mass media) no real idea about how such a movement might develop.

My analysis is quite simple and follows the apocryphal statement attributed to Willie Sutton. The wealth that has accrued to those in the top 1 per cent of the US income distribution is so massive that any serious policy program must begin by clawing it back.[1]

If their 25 per cent, or the great bulk of it, is off-limits, then it’s impossible to see any good resolution of the current US crisis. It’s unsurprising that lots of voters are unwilling to pay higher taxes, even to prevent the complete collapse of public sector services. Median household income has been static or declining for the past decade, household wealth has fallen by something like 50 per cent (at least for ordinary households whose wealth, if they have any, is dominated by home equity) and the easy credit that made the whole process tolerable for decades has disappeared. In these circumstances, welshing on obligations to retired teachers, police officers and firefighters looks only fair.

In both policy and political terms, nothing can be achieved under these circumstances, except at the expense of the top 1 per cent. This is a contingent, but inescapable fact about massively unequal, and economically stagnant, societies like the US in 2010. By contrast, in a society like that of the 1950s and 1960s, where most people could plausibly regard themselves as middle class and where middle class incomes were steadily rising, the big questions could be put in terms of the mix of public goods and private income that was best for the representative middle class citizen. The question of how much (more) to tax the very rich was secondary – their share of national income was already at an all time low.

The problem is that most policy analysts and commentators grew up in the world of the 1950s and 1960s, or at least in the mental world created by that era. So, we are busy fighting about tax expenditures, barber licensing and teachers unions, and the implications of these things for a hypothetical working class mobilisation. Meanwhile, most of the anger created by the collapse of middle class America is being directed not at the rich but at those who don’t look, sound or pray like Americans of the vanished golden age.

One thing the Tea Party has shown is that, in the current dire state of the US, there are few penalties for abandoning moderation. What the US needs at this point is someone willing to advocate a return to the economic institutions that made America great – 90 per cent top marginal tax rates, strong trade unions, weak banks and imprisonment for malefactors of great wealth.

It seems to me that a good place to start would be a primary challenge to Obama (Bernie Sanders suggested this, and he’d be a good candidate I think). It would be impossible for the media to ignore completely, and might get enough votes to shift the Overton window. Whether such a challenge could form the basis of a mass movement, I don’t really know, but it seems to be worth a try.

fn1. When I was at the American Economic Association meetings in January I went to a session where a group of Very Serious Economists (Holtz-Eakin, Elmendorf and others) discussed the US budget problem, which comes down to the fact that on a structural basis US public expenditure exceeds revenue by something like 7 per cent of national income. I made the comment that this gap was almost exactly equal to the increase in the share of income going to the top 1 per cent of households over the last decade or so. The Very Serious Guys declined to respond, and waited for a serious question. I wasn’t surprised, but I wasn’t impressed either.

A number of people (including Matthew Yglesias) suggested that they didn’t really understand my arguments about the deficiencies of left neo-liberalism, because they were too abstract. I’ve spent the weekend reading an Advance Reading Copy of Suzanne Mettler’s “The Submerged State”:http://www.amazon.com/gp/product/0226521656/ref=as_li_ss_tl?ie=UTF8&tag=henryfarrell-20&linkCode=as2&camp=217145&creative=399373&creativeASIN=0226521656, which in addition to being a fantastic little book in its own right (and excellent value!), has a number of relevant – and quite concrete – points. Mettler wrote up a broad summary of her arguments “last month”:http://www.washingtonmonthly.com/magazine/julyaugust_2011/features/20000_leagues_under_the_state030498.php for the _Washington Monthly._ But in the book, she goes into much more detail about the sources of the pattern of policy making that she argues against – the provision of welfare state benefits through semi-invisible tax breaks and forms of private provision rather than directly. [click to continue…]