I suspect that most people who want one have gotten one already. But in case any CT readers haven’t, and would like to try it out, click here to get one of the 150 invites I have to distribute …

S&P’s decision to downgrade US Treasury bonds from AAA to AA+ has elicited various reactions, some of which I’ll doubtless repeat here. Obviously, S&P has no particular expertise (apparently it couldn’t even get the arithmetic right) and based on its historical and continuing performance, its opinions ought to carry no particular weight with anybody (they say so themselves, when under pressure over obvious cases of misrating, asserting that they are merely offering an opinion).

On the other hand, it’s also pretty obvious (and even more so after the Repubs successful use of the debt ceiling to force Obama to abandon any call for tax increases along with the cuts they both wanted) that the US has some fairly intractable problems in dealing with its (technically quite manageable, but still substantial) public debt. Finally, as I said last time I discussed this, a decision of this kind (including a decision to maintain AAA ratings) is inherently political

There are two reasons why S&P’s choice of rating matters more than, say, my own opinions on the matter
* First, a lot of investors still pay attention to ratings agencies, for whatever reason
* Much more importantly, agency ratings are embedded in global regulations concerning prudent management of investment. If a second major agency were to join S&P in downgrading, large numbers of institutions would be debarred, under existing rules, from investing in Treasury bonds

That’s clearly unsustainable, so what will happen?

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This one goes with the others. (Having posted two, it would be more strange not to post a third.)

In other news, I notice that Erick Erickson has some difficulty with the is/ought distinction. He reasons that, since Republicans in fact will not raise taxes under any circumstances, it follows that one can’t fault Republicans for not raising taxes. That would be like blaming the rain for raining. Or something. A nice illustration of the advantages and disadvantages of extreme intransigence for political life, perhaps.

This is just a short post seeking, for the purposes of mutual clarification, to highlight where I think the real differences lie between someone like me and “left neoliberals” like Matt Yglesias. I think that something like Yglesias’s general stance would be justifiable if you believed in two things: (1) prioritarianism in the Parfit sense and (2) that real (that is, inflation adjusted) income levels reliably indicate real levels of well-being, at least roughly. For those who don’t know, prioritarianism is a kind of weighted consequentialism, such that an improvement in real well-being counts for more, morally speaking, if it goes to someone at a lower rather than a higher level of well-being. So prioritarism is a bit like a utilitarianism that takes a sophisticated and expansive view of utility and weights gains to the worse-off more highly. This view assigns no instrinsic importance to inequality as such. If the best way to improve the real well-being of the worst off is to incentize the talented (thereby increasining inequality) then that’s the right thing to do.
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Look, most of us have met a celebrity, burbled something insanely stupid, and lived to regret it.

When I was a teenager, I met Mats Wilander and had the bright idea of giving him my autograph, instead of the other way around. That way he’d remember me. Cringe. Another time, in college, I met Umberto Eco and blurbled away to him about smoking for several minutes until the postgrads he was there to speak to managed to get a word in. Why, only last month, I was introduced to Alastair Darling and asked him if he’d ever been to DC.

Maybe that’s what happened to the girl from Reason.tv. In this video clip (spotted on BoingBoing a couple of days ago) Matt Damon responds to her assertion that he works hard because acting is insecure, therefore teachers would be better if their ‘incentives’ were similar. Coz it’s in their interest to, see?

Asking a man who financially never needs to work again to agree that the fear of not having a job is what motivates him/teachers is head-scratchingly silly.
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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…]