I didn't watch last weekend's republican debate, and no new polls are out yet. Still, one of the surprising results of polling to date is the continued strong showing for Herman Cain.
I just came across a blog post from a couple of weeks ago by Bruce Bartlett, an experienced republican operative, titled "The Secret of Herman Cain's Success." It is worth reading, for the view it gives of the post-civil war history of partisan leanings by African Americans.
His post includes useful reminders of the history of the Democratic Party as a pro slavery party and a racist party for a century after the Civil War. I think he gives insufficient recognition to support of some white southern democrats during this period for economically progressive and populist measures. I totally reject Bartlett's view that republican policies at the present time are at all beneficial for racial minorities or anyone else not in the top one percent economically. Herman Cain, of course, is in the top one percent.
If you read Bartlett's post, be sure to read the comments. They contribute a lot to understanding the context.
I'm working on my own detailed critique of Bartlett's views.
Monday, November 14, 2011
Sunday, November 13, 2011
Mario Monti, Technocrat, To The Fore
So now, at the insistence of Brussels technocrats, economist Mario Monti has become Prime Minister of Italy.
This completes the process begun in the 1980's and 90's when Italian technocrats, briefly in control of Italy's government, sought to exchange Italian economic independence for German central bankers.
There were many economists who warned that a plan where countries had to borrow money in someone else's currency would eventually not work.
Eventually may be this year, next year or the year after, but looks like sooner rather than later.
Many Italians cheered the departure of Berlusconi and the arrival of the technocrats. Lat's see what they say a year from now.
This completes the process begun in the 1980's and 90's when Italian technocrats, briefly in control of Italy's government, sought to exchange Italian economic independence for German central bankers.
There were many economists who warned that a plan where countries had to borrow money in someone else's currency would eventually not work.
Eventually may be this year, next year or the year after, but looks like sooner rather than later.
Many Italians cheered the departure of Berlusconi and the arrival of the technocrats. Lat's see what they say a year from now.
Businessmen In Government
For those pining to turn government over to a businessman to run, I have a one-word response: Berlusconi!
Saturday, November 12, 2011
So How's The Football Team Doing?
I confess. Over the years, I have enjoyed watching college sports. When I was a student at Ole Miss, I even watched some of the games from the sidelines, wearing a press pass and carrying a 4x5 Speed Graphic press camera. I can still, fifty odd years later, give a rousing "Hotty-Totty," the Ole Miss cheer.
But I never understood what big time college sports have to do with education. Lately, I have to conclude that college sports interfere with education.
Last September, I received a weird e-mail from the Chancellor of the University of Mississippi complaining about "anonymous, malicious and public attacks" on the athletics director, including threats on the chancellor that it "will get real ugly" if the director isn't removed. A month later I received an e-mail from an organization seeking my support in their effort to get rid of the athletic director. Earlier this month I received a letter informing me that both the football coach and the athletic director have resigned.
All of this came to mind as I heard the news about Joe Paterno and the Penn State football team. Plainly in both cases, the tail is wagging the dog.
I imagine few members of the public in either Pennsylvania or Mississippi know the name of a single college professor or the head of the institution, but they know the name of the coach. And to most of them, the most important fact about a public university is the football team's won-loss record.
In the face of this set of priorities, any talk by our political leaders of a need to improve higher education is whistling in the wind.
The distortion of priorities starts well before college. This morning I read that a group of high school parents has filed a suit in New Mexico seeking to insert their high school into the state playoffs. The issue? Game officials started the clock too soon at the end of the game (by three seconds), depriving the team of the chance to kick a forty-one yard field goal and possibly get three additional points in a game they won, that would have improved their ranking enough to make the playoffs.
Does anybody really care about education?
But I never understood what big time college sports have to do with education. Lately, I have to conclude that college sports interfere with education.
Last September, I received a weird e-mail from the Chancellor of the University of Mississippi complaining about "anonymous, malicious and public attacks" on the athletics director, including threats on the chancellor that it "will get real ugly" if the director isn't removed. A month later I received an e-mail from an organization seeking my support in their effort to get rid of the athletic director. Earlier this month I received a letter informing me that both the football coach and the athletic director have resigned.
All of this came to mind as I heard the news about Joe Paterno and the Penn State football team. Plainly in both cases, the tail is wagging the dog.
I imagine few members of the public in either Pennsylvania or Mississippi know the name of a single college professor or the head of the institution, but they know the name of the coach. And to most of them, the most important fact about a public university is the football team's won-loss record.
In the face of this set of priorities, any talk by our political leaders of a need to improve higher education is whistling in the wind.
The distortion of priorities starts well before college. This morning I read that a group of high school parents has filed a suit in New Mexico seeking to insert their high school into the state playoffs. The issue? Game officials started the clock too soon at the end of the game (by three seconds), depriving the team of the chance to kick a forty-one yard field goal and possibly get three additional points in a game they won, that would have improved their ranking enough to make the playoffs.
Does anybody really care about education?
Friday, November 11, 2011
Pamlico County Election Results
For those who want to look at the complete unofficial election results for Pamlico County, here is a link to the State Board of Elections web site. There are still a few provisional ballots to be counted. They will be counted at the official canvass at the Pamlico County Board of Elections office Tuesday, November 15 at 11:00. The count announced at that time will be certified as the official count unless there has been a protest or challenge filed before the canvass.
11-11-11
At the eleventh hour of the eleventh day of the eleventh month of 1918, along the trench line from the English Channel to the Swiss Border, the guns that had first sounded in August, 1914, fell silent. The greatest human conflict up to that time, that set in motion the fall of empires and the creation of new nations, had come to a pause.
The silence of the guns was not because one side or the other had won or lost. There was no surrender. It was only an armistice - a temporary agreement to stop fighting. It was a truce, not a surrender.
Even that truce almost didn't happen. In late October, the German Naval Command, without authority to do so, organized a final great sea battle with the Royal Navy. They were only prevented when sailor's mutinies broke out in Wilhelmshavn and Kiel. The mutiny grew into a revolution that overthrew the Kaiser and established a republic.
During subsequent peace negotiations, the Western allies treated Germany as a defeated power. John Maynard Keynes, who viewed the punitive provisions of the Versailles treaties as disastrous, wrote a short book, The Economic Consequences Of The Peace, that foretold many of the events that led to the renewal of conflict in 1939.
Still, we continued to celebrate Armistice Day as a day of hope that war would be no more. The custom began of wearing a poppy on Armistice Day, a custom visible at yesterday's session of the British Parliament during the interrogation of James Murdoch.
The wearing of poppies was inspired by the poem, "In Flanders Field:"
In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie,
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.
The silence of the guns was not because one side or the other had won or lost. There was no surrender. It was only an armistice - a temporary agreement to stop fighting. It was a truce, not a surrender.
Even that truce almost didn't happen. In late October, the German Naval Command, without authority to do so, organized a final great sea battle with the Royal Navy. They were only prevented when sailor's mutinies broke out in Wilhelmshavn and Kiel. The mutiny grew into a revolution that overthrew the Kaiser and established a republic.
During subsequent peace negotiations, the Western allies treated Germany as a defeated power. John Maynard Keynes, who viewed the punitive provisions of the Versailles treaties as disastrous, wrote a short book, The Economic Consequences Of The Peace, that foretold many of the events that led to the renewal of conflict in 1939.
Still, we continued to celebrate Armistice Day as a day of hope that war would be no more. The custom began of wearing a poppy on Armistice Day, a custom visible at yesterday's session of the British Parliament during the interrogation of James Murdoch.
The wearing of poppies was inspired by the poem, "In Flanders Field:"
In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie,
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.
Thursday, November 10, 2011
If You Wish Upon A Star
Just came across some amusing observations about libertarians, anarchists and other utopian visionaries in a blog post by Belle Waring. A quote that conveys the main idea:
"Now, everyone close your eyes and try to imagine a private, profit-making rights-enforcement organization which does not resemble the mafia, a street gang, those pesky fire-fighters/arsonists/looters who used to provide such "services" in old New York and Tokyo, medieval tax-farmers, or a Lendu militia. (In general, if thoughts of the Eastern Congo intrude, I suggest waving them away with the invisible hand and repeating "that's anarcho-capitalism" several times.) Nothing's happening but a buzzing noise, right?
"Now try it the wishful thinking way. Just wish that we might all live in a state of perfect liberty, free of taxation and intrusive government, and that we should all be wealthier as well as freer. Now wish that people should, despite that lack of any restraint on their actions such as might be formed by policemen, functioning law courts, the SEC, and so on, not spend all their time screwing each other in predictable ways ranging from ordinary rape, through the selling of fraudulent stocks in non-existent ventures, up to the wholesale dumping of mercury in the public water supplies. (I mean, the general stock of water from which people privately draw.) Awesome huh? But it gets better. Now wish that everyone had a pony."
"Now, everyone close your eyes and try to imagine a private, profit-making rights-enforcement organization which does not resemble the mafia, a street gang, those pesky fire-fighters/arsonists/looters who used to provide such "services" in old New York and Tokyo, medieval tax-farmers, or a Lendu militia. (In general, if thoughts of the Eastern Congo intrude, I suggest waving them away with the invisible hand and repeating "that's anarcho-capitalism" several times.) Nothing's happening but a buzzing noise, right?
"Now try it the wishful thinking way. Just wish that we might all live in a state of perfect liberty, free of taxation and intrusive government, and that we should all be wealthier as well as freer. Now wish that people should, despite that lack of any restraint on their actions such as might be formed by policemen, functioning law courts, the SEC, and so on, not spend all their time screwing each other in predictable ways ranging from ordinary rape, through the selling of fraudulent stocks in non-existent ventures, up to the wholesale dumping of mercury in the public water supplies. (I mean, the general stock of water from which people privately draw.) Awesome huh? But it gets better. Now wish that everyone had a pony."
Wednesday, November 9, 2011
Europe - Is Anybody Watching?
Europe doesn't seem to be getting its act together. The new head of the ECB does look more willing to take action, but the pressure for austerity in the peripheral countries is strong. This seems likely to drag those countries further into debt and economic distress.
I believe this is economic foolishness on a grand scale. These are contractionary policies and European countries aren't going to be able to reduce their debt burden without expanding their economies. The big question is whether they have already entered a death spiral. The Euro zone is looking more and more shaky.
Last month I mentioned that the discussion blaming Greek and Italian debt entirely on improvident actions by Greece and Italy reminded me of discussions in the sixties and seventies about balance of payments issues.
British economist Gavyn Davies makes the connection explicit and clear in a recent blog post "The Eurozone Decouples From the World."
"It is normal to discuss the sovereign debt problem," Davies explains, "by focusing on the sustainability of public debt in the peripheral economies. But it can be more informative to view it as a balance of payments problem." I think that analysis is exactly right. He goes on to provide statistics: "Taken together, the four most troubled nations (Italy, Spain, Portugal and Greece) have a combined current account deficit of $183 billion. Most of this deficit is accounted for by the public sector deficits of these countries, since their private sectors are now roughly in financial balance. Offsetting these deficits, Germany has a current account surplus of $182 billion, or about 5 per cent of its GDP."
So what should be done? If it is a balance of payments problem, Davies explains, "it is clear that there needs to be a capital account transfer each year amounting to about 5 per cent of German GDP from the core to the periphery. Without that, the euro will break up. Until 2008, this transfer happened voluntarily, by private sector flows, mainly in the form of bank purchases of higher yielding sovereign bonds in the peripheries, and to a lesser extent via asset purchases (notably housing in Spain). Since 2008, these private flows have dried up, and in fact reversed, so the public sector has had to step in. It has done so in the form of direct sovereign loans, and more importantly by international transfers which have been heavily disguised within the balance sheet of the ECB. Although disguised, these transfers are very real." What Davies fails to explain as clearly as he might, is that the reason the current account balance is a problem is that: a) the periphery countries don't have their own currency, but are forced to borrow in a currency over which they lack control; b) they are precluded from achieving balance by devaluation (that is, they have a very fixed exchange rate); and c) they still have all of the burdens of sovereignty with respect to things like funding armies, police forces, social programs, etc.
Davies goes on: "The eurozone’s proposed solution to this problem – budget contraction plus economic reform in the debtor nations, with no change in policy in the creditor nations – is very familiar to students of balance of payments crises in fixed exchange rate systems such as the Gold Standard or the Bretton Woods system in the past. It is not impossible for these solutions to work, but they are very contractionary for economic activity, and very frequently they fail. When they fail, they lead to devaluations by the debtor economies, normally because the required degree of contraction proves politically impossible to undertake. That is where Greece probably finds itself today. Others may be in the same position before too long."
Now Davies reaches the crux of the matter. The EU has decreed a punishing regime for Greece and soon will for Italy. It isn't clear how long Greek and Italian voters will stand for the solution. Leaving the Euro zone will not be painless, but it may turn out to be the best solution.
"The reason why the eurozone strategy is so difficult to implement is that both of its required actions are likely to make the European recession worse in the immediate future. This has already become clearly apparent in the negative feedback loops which have developed as budgetary policy has been tightened. None of the austere budgetary plans which have been announced during 2011 will achieve their fiscal targets in 2012 in the context of the recessions which will probably be encountered by many countries, and that includes France. There is no such thing as “expansionary austerity”, certainly not in countries which cannot devalue or reduce their long term interest rates. These countries are now chasing their own tails."
"Less widely appreciated," Gavyn explains, "is the fact that structural economic reform will also make the recession worse in the next couple of years. This reform is absolutely essential in countries like Italy, which are otherwise facing a future of indefinite stagnation, but IMF research shows that in previous similar examples, labour market reform has initially led to higher unemployment and lower GDP as workers are shaken out of unproductive employment. The IMF warns that these reform programmes work best when economies are beginning to recover from recessions, and when there is scope in government budgets to compensate the losers through tax cuts or other measures of support. Neither of these conditions apply today."
"Is there," Gavyn asks, "any way of improving the chances of success for the eurozone’s chosen strategy? Theoretically, yes. Germany, as the main creditor nation could choose to grow faster, and accept higher domestic inflation for a while, in order to ease the process of adjustment. In practice, Germany shows no sign of accepting this, but it is the best solution available, not only for the debtor economies, but also for Germany itself."
So the logical conclusion is, if the Euro zone collapses, it should not be Greece or Italy which shoulders the blame, but Germany.
I believe this is economic foolishness on a grand scale. These are contractionary policies and European countries aren't going to be able to reduce their debt burden without expanding their economies. The big question is whether they have already entered a death spiral. The Euro zone is looking more and more shaky.
Last month I mentioned that the discussion blaming Greek and Italian debt entirely on improvident actions by Greece and Italy reminded me of discussions in the sixties and seventies about balance of payments issues.
British economist Gavyn Davies makes the connection explicit and clear in a recent blog post "The Eurozone Decouples From the World."
"It is normal to discuss the sovereign debt problem," Davies explains, "by focusing on the sustainability of public debt in the peripheral economies. But it can be more informative to view it as a balance of payments problem." I think that analysis is exactly right. He goes on to provide statistics: "Taken together, the four most troubled nations (Italy, Spain, Portugal and Greece) have a combined current account deficit of $183 billion. Most of this deficit is accounted for by the public sector deficits of these countries, since their private sectors are now roughly in financial balance. Offsetting these deficits, Germany has a current account surplus of $182 billion, or about 5 per cent of its GDP."
So what should be done? If it is a balance of payments problem, Davies explains, "it is clear that there needs to be a capital account transfer each year amounting to about 5 per cent of German GDP from the core to the periphery. Without that, the euro will break up. Until 2008, this transfer happened voluntarily, by private sector flows, mainly in the form of bank purchases of higher yielding sovereign bonds in the peripheries, and to a lesser extent via asset purchases (notably housing in Spain). Since 2008, these private flows have dried up, and in fact reversed, so the public sector has had to step in. It has done so in the form of direct sovereign loans, and more importantly by international transfers which have been heavily disguised within the balance sheet of the ECB. Although disguised, these transfers are very real." What Davies fails to explain as clearly as he might, is that the reason the current account balance is a problem is that: a) the periphery countries don't have their own currency, but are forced to borrow in a currency over which they lack control; b) they are precluded from achieving balance by devaluation (that is, they have a very fixed exchange rate); and c) they still have all of the burdens of sovereignty with respect to things like funding armies, police forces, social programs, etc.
Davies goes on: "The eurozone’s proposed solution to this problem – budget contraction plus economic reform in the debtor nations, with no change in policy in the creditor nations – is very familiar to students of balance of payments crises in fixed exchange rate systems such as the Gold Standard or the Bretton Woods system in the past. It is not impossible for these solutions to work, but they are very contractionary for economic activity, and very frequently they fail. When they fail, they lead to devaluations by the debtor economies, normally because the required degree of contraction proves politically impossible to undertake. That is where Greece probably finds itself today. Others may be in the same position before too long."
Now Davies reaches the crux of the matter. The EU has decreed a punishing regime for Greece and soon will for Italy. It isn't clear how long Greek and Italian voters will stand for the solution. Leaving the Euro zone will not be painless, but it may turn out to be the best solution.
"The reason why the eurozone strategy is so difficult to implement is that both of its required actions are likely to make the European recession worse in the immediate future. This has already become clearly apparent in the negative feedback loops which have developed as budgetary policy has been tightened. None of the austere budgetary plans which have been announced during 2011 will achieve their fiscal targets in 2012 in the context of the recessions which will probably be encountered by many countries, and that includes France. There is no such thing as “expansionary austerity”, certainly not in countries which cannot devalue or reduce their long term interest rates. These countries are now chasing their own tails."
"Less widely appreciated," Gavyn explains, "is the fact that structural economic reform will also make the recession worse in the next couple of years. This reform is absolutely essential in countries like Italy, which are otherwise facing a future of indefinite stagnation, but IMF research shows that in previous similar examples, labour market reform has initially led to higher unemployment and lower GDP as workers are shaken out of unproductive employment. The IMF warns that these reform programmes work best when economies are beginning to recover from recessions, and when there is scope in government budgets to compensate the losers through tax cuts or other measures of support. Neither of these conditions apply today."
"Is there," Gavyn asks, "any way of improving the chances of success for the eurozone’s chosen strategy? Theoretically, yes. Germany, as the main creditor nation could choose to grow faster, and accept higher domestic inflation for a while, in order to ease the process of adjustment. In practice, Germany shows no sign of accepting this, but it is the best solution available, not only for the debtor economies, but also for Germany itself."
So the logical conclusion is, if the Euro zone collapses, it should not be Greece or Italy which shoulders the blame, but Germany.
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