I was a bit puzzled by the recent observation of economist (and physicist) Noah Smith that the reason some economists advocate austerity as the solution to our present situation is not because their models say so, but because of their intuition. "Economic theories," he says, "like all scientific theories are built to be counterintuitive..."
Now Noah Smith is a bright guy, and his blog provides some of the best available commentary in his field. But I have a hard time with this particular thought.
It seems to me that the views of those economists usually identified as Keynesian are eminently intuitive. In fact, analysis of any set of numbers (which is what economists do) needs to be tethered at some point with the real world, including the world of intuition. Here, for example, is a recent article by Paul Krugman in the New York Review of Books. One can believe (as I do) that his political analysis is not sufficiently pessimistic and still accept that what he says about the economy makes sense.
Take the economic downturn; if a person loses his job, it seems intuitive to me that he will do his best to reduce spending until he gets another. If he has monthly payment obligations and family to feed, there will be limits to how much reduction in income he can accept in a new job.
If a lot of people lose jobs, a lot of people will spend less. Businesses who sell goods and services to people will make fewer sales. They will have to lay off some workers and reduce their own purchase of equipment and services.
Reduced economic activity will reduce government revenues. Government expenses for safety net programs will increase. If anything, such expenditures ameliorate the negative effect of short term unemployment on businesses. But government at state and local levels will eventually be forced to lay off employees. Which adds to the reduction of purchasing power for goods and services. Which adds to overall economic distress.
Is there anything here that goes against intuition? If so, I don't see it.
What to do?
When FDR came into office, there were no Keynesians. Keynes' General Theory wouldn't be published for four more years. Did he wait for a theory? No. He looked around him and saw a fourth of the population out of work and barely surviving. He acted on his intuition and did something about it.
He ACTED!
Classical economic theory said to do nothing.
Today we have people in that same tradition advocating austerity instead of action.
Now THAT is counterintuitive.
And it won't work.
New note as of May 5, while waiting for the Kentucky Derby:
I still don't get it. Why is it not intuitively obvious that something that may be good for an individual person or company isn't necessarily good for the economy as a whole? Unlike Lake Woebegon, neither we nor our children can all be above average. Nor can every nation have a trade surplus at the same time.
But Paul Krugman has touched on an explanation that makes some sense: it's the "personal incredulity" syndrome. What are the advocates of austerity missing? PK puts it this way: "Mainly, I think, [they are missing] the closed-loop nature of macro[economics]. Our intuitions
about how business-y stuff works come from businesses or households
selling their goods or labor to an external market. In such situations
spending less is a sure-fire way to reduce debt, cutting your price or
your wage demand is a sure-fire way to sell more.
"But in the
economy as a whole, your spending is my income and vice versa; my wage
matters only in comparison to your wage; and so on. This changes
everything...." which is why personal ideas of the virtue of thrift is a poor guide to achieving general national prosperity.
But I still don't get how people can be that obtuse.
Friday, May 4, 2012
South Avenue - This Isn't Personal; It's Business
Five years ago, when I first realized things were going badly awry with the town's lawsuit over South Avenue, I determined to pursue the cause as vigorously as possible. What was the cause? It was public access to public trust waters. It was also, more generally, pursuit of the Town Board's obligation to protect and defend public assets.
I was not motivated by any animosity toward Mr. Henry. I don't know Mr. Henry. Neither in the present case concerning the Town's response to Mr. Fulcher's proposal for what amounts to an exchange of routes of access to the harbor, am I motivated by either hostility or warm feelings toward Mr. Fulcher. Any such feelings are neither here nor there. A few years ago, I set forth my views about the suit here.
The bottom line now, as it was for more than a decade, is: The Board of Commissioners has a duty to protect the town’s assets. South Avenue has been a public right of way for at least ninety-five years and arguably for a hundred and twelve. It extends all the way to Raccoon Creek. The Board would be remiss if it didn’t continue to defend the public’s right of access to public waters, which has been provided by South Avenue.
I was not motivated by any animosity toward Mr. Henry. I don't know Mr. Henry. Neither in the present case concerning the Town's response to Mr. Fulcher's proposal for what amounts to an exchange of routes of access to the harbor, am I motivated by either hostility or warm feelings toward Mr. Fulcher. Any such feelings are neither here nor there. A few years ago, I set forth my views about the suit here.
The bottom line now, as it was for more than a decade, is: The Board of Commissioners has a duty to protect the town’s assets. South Avenue has been a public right of way for at least ninety-five years and arguably for a hundred and twelve. It extends all the way to Raccoon Creek. The Board would be remiss if it didn’t continue to defend the public’s right of access to public waters, which has been provided by South Avenue.
We know that if we lose control over public access to the harbor in the vicinity of South Avenue and Avenue A we will never get it back. Future generations will never be able to use that access to public waters unless it is defended.
We are now faced with a proposal from Mr. Fulcher which, if accepted by the town, may consolidate his holdings in a way that will enhance the value to him and to his "successors and assigns."
Any benefit to Mr. Fulcher should not be the focus of our deliberations. Our focus should be on whether the proposal provides the public with equivalent or improved access to public trust waters in our harbor.
We also have the issue of whether the proposed deal, as negotiated, is legal.
More later.
Thursday, May 3, 2012
Operation MO - May, 1942
A central front in the war with Japan took place in the electromagnetic spectrum. That front was getting hotter.
The tactical surprise of Japan's attack on Pearl Harbor was made possible by Japanese communications security. Communications were sent and received over land lines and undersea cables. Very few communications were sent by radio, using Japan's naval code, known by western cryptographers as JN-25. On top of that, Japan changed the code on December 4, 1941. Prior to December 4, cryptographers had recovered about 10% of the code. After December 4, they had to start from scratch.
That all changed after December 7, as Japanese naval forces operated throughout East Asia, Southeast Asia, the Indian Ocean, and along the expanding periphery of the "Greater East Asia Co-Prosperity Sphere," as they called their empire. They had to communicate by radio.
More radio communications - more intercepts. Allied cryptographers had much more to work with. By April, they could read more than 50% of the intercepts. It was hard work. They combined the disciplines of cryptanalysis, traffic analysis, and other sources of electronic intelligence. They key punched the intercepts into IBM cards and fed them through IBM machines.
By late April they knew Japan was planning Operation MO - an expansion into the Solomons and an amphibious assault on the south coast of New Guinea to take the area around Port Moresby. It would give them airfields from which they could threaten Australia and interdict the sea routes from the US.
On May 3, 1942, Japanese forces invaded and occupied Tulagi, in the Australian protectorate of the Solomons. It would become a seaplane base.
Admiral Nimitz sent two carrier task forces, centered around the carriers Lexington and Yorktown in the direction of New Guinea. The only other US carriers in the Pacific, Enterprise and Hornet, had just returned to Pearl Harbor from the Doolittle raid on Japan. They got ready to join Lexington and Yorktown.
Japan assigned two carriers, Shokaku and Zuikaku, who had taken part in the attack on Pearl Harbor, as well as a smaller carrier, Shoho.
Cryptanalysis indicated the Japanese invasion of Port Moresby was planned for May 10.
The tactical surprise of Japan's attack on Pearl Harbor was made possible by Japanese communications security. Communications were sent and received over land lines and undersea cables. Very few communications were sent by radio, using Japan's naval code, known by western cryptographers as JN-25. On top of that, Japan changed the code on December 4, 1941. Prior to December 4, cryptographers had recovered about 10% of the code. After December 4, they had to start from scratch.
That all changed after December 7, as Japanese naval forces operated throughout East Asia, Southeast Asia, the Indian Ocean, and along the expanding periphery of the "Greater East Asia Co-Prosperity Sphere," as they called their empire. They had to communicate by radio.
More radio communications - more intercepts. Allied cryptographers had much more to work with. By April, they could read more than 50% of the intercepts. It was hard work. They combined the disciplines of cryptanalysis, traffic analysis, and other sources of electronic intelligence. They key punched the intercepts into IBM cards and fed them through IBM machines.
By late April they knew Japan was planning Operation MO - an expansion into the Solomons and an amphibious assault on the south coast of New Guinea to take the area around Port Moresby. It would give them airfields from which they could threaten Australia and interdict the sea routes from the US.
On May 3, 1942, Japanese forces invaded and occupied Tulagi, in the Australian protectorate of the Solomons. It would become a seaplane base.
Admiral Nimitz sent two carrier task forces, centered around the carriers Lexington and Yorktown in the direction of New Guinea. The only other US carriers in the Pacific, Enterprise and Hornet, had just returned to Pearl Harbor from the Doolittle raid on Japan. They got ready to join Lexington and Yorktown.
Japan assigned two carriers, Shokaku and Zuikaku, who had taken part in the attack on Pearl Harbor, as well as a smaller carrier, Shoho.
Cryptanalysis indicated the Japanese invasion of Port Moresby was planned for May 10.
Wednesday, May 2, 2012
South Avenue Update
Last night at the regular Oriental Board of Commissioners meeting, attendees were shown a detailed survey of the area surrounding the intersection of South Avenue and Avenue A. The survey was done in support of the contract being negotiated between the town and Mr. Chris Fulcher. The contract itself has apparently not been completed, but some provisions can be deduced from details on the survey. Here is the survey:
I see several potential problems with the proposal as reflected in the survey.
Oriental's Parks and Rec board met this morning at 8:00 to review the plans. There is a brief account here at Town Dock. The main issues were summarized as follows:
"Like some of the public — such as Oriental resident and long-time sailor Art Tierney — who were at the meeting, a majority of the Parks and Rec Board questioned whether the town was getting adequate land and water rights and maneuvering room for visiting boats in the exchange.
"One issue: how savvy were town officials when they negotiated the deal. When asked this morning why the town hadn’t done a real estate appraisal on the land that Chris Fulcher would gain in the land swap, Town Commissioner Larry Summers dismissed the idea and reiterated his position that the right of way land was worth nothing to the town."
I will address these issues over the next day or so.
Oriental's Parks and Rec board met this morning at 8:00 to review the plans. There is a brief account here at Town Dock. The main issues were summarized as follows:
"Like some of the public — such as Oriental resident and long-time sailor Art Tierney — who were at the meeting, a majority of the Parks and Rec Board questioned whether the town was getting adequate land and water rights and maneuvering room for visiting boats in the exchange.
"One issue: how savvy were town officials when they negotiated the deal. When asked this morning why the town hadn’t done a real estate appraisal on the land that Chris Fulcher would gain in the land swap, Town Commissioner Larry Summers dismissed the idea and reiterated his position that the right of way land was worth nothing to the town."
I will address these issues over the next day or so.
Tuesday, May 1, 2012
Liberty
I just finished reading The Attack On The Liberty by James Scott.
The book is a troubling reminder of the deliberate, sustained and unprovoked attack by coordinated air and naval forces of the state of Israel on USS Liberty, AGTR-5, a converted World War II merchant ship of the Victory class. The attack, which occurred in international waters near Egypt June 8, 1967, killed 34 US sailors and wounded 170 others, out of a crew of 300.
For comparison, when an Iraqi pilot under Saddam Hussein fired an Exocet missile at USS Stark May 17, 1987, 37 sailors died. When Al-qaida conducted a suicide attack against USS Cole October 12, 2000, 17 sailors died.
In the case of Liberty, loss of life could have been much greater except for heroic efforts by all of her surviving sailors, but especially her medical officer, Dr. Richard Kiepfer and her Damage Control Assistant, Ensign John Scott, who managed to keep the ship afloat after devastating damage from an Israeli torpedo.
Israel, which admitted the attack and issued an apology, has never provided a believable account of why the attack occurred.
James Scott, the author, is the son of Ensign John Scott, who kept the ship afloat.
The book is a troubling reminder of the deliberate, sustained and unprovoked attack by coordinated air and naval forces of the state of Israel on USS Liberty, AGTR-5, a converted World War II merchant ship of the Victory class. The attack, which occurred in international waters near Egypt June 8, 1967, killed 34 US sailors and wounded 170 others, out of a crew of 300.
For comparison, when an Iraqi pilot under Saddam Hussein fired an Exocet missile at USS Stark May 17, 1987, 37 sailors died. When Al-qaida conducted a suicide attack against USS Cole October 12, 2000, 17 sailors died.
In the case of Liberty, loss of life could have been much greater except for heroic efforts by all of her surviving sailors, but especially her medical officer, Dr. Richard Kiepfer and her Damage Control Assistant, Ensign John Scott, who managed to keep the ship afloat after devastating damage from an Israeli torpedo.
Israel, which admitted the attack and issued an apology, has never provided a believable account of why the attack occurred.
James Scott, the author, is the son of Ensign John Scott, who kept the ship afloat.
Monday, April 30, 2012
Is America Exceptional? "Not So Much"- E.L. Doctorow
Here are today's thoughts by the author E.L. Doctorow on the issue of American Exceptionalism. Or how to achieve unexceptionalism. He seems to think we have already accomplished that.
Sunday, April 29, 2012
Republicans
Thomas Mann of the Brookings Institution and Norman Ornstein of the American Enterprise Institute have penned a very interesting article in last Friday's Washington Post examining causes of the vicious partisanship and gridlock in Washington. The article's title telegraphs their conclusions: "Let's Just Say It: The Republicans Are The Problem."
The article opens with a quote from Florida Congressman West asserting that "78 to 81" Democratic congressmen are members of the Communist Party. Shades of Joe McCarthy! But when Senator McCarthy was censured by the Senate, senators of both parties joined in the censure. As did Republican President Dwight David Eisenhower.
But that was then. Mann and Ornstein observe: "We have been studying Washington politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party."
They continue: "The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition."
These observations are not made by partisan operatives, but by serious scholars with a longstanding reputation as objective observers of our political processes.
We should all take them seriously.
The article opens with a quote from Florida Congressman West asserting that "78 to 81" Democratic congressmen are members of the Communist Party. Shades of Joe McCarthy! But when Senator McCarthy was censured by the Senate, senators of both parties joined in the censure. As did Republican President Dwight David Eisenhower.
But that was then. Mann and Ornstein observe: "We have been studying Washington politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party."
They continue: "The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition."
These observations are not made by partisan operatives, but by serious scholars with a longstanding reputation as objective observers of our political processes.
We should all take them seriously.
On Service
I don't remember when it started, but I was startled the first time someone, on finding that I was retired military, said: "thank you for your service."
I understood that the person who said it was sincere, and meant it respectfully, but it made me uncomfortable all the same. Ever since, I have tried to understand the source of my discomfort.
I just finished reading Drift by Rachel Maddow, and I think I now understand why such statements make me uncomfortable. It implies that military service or, perhaps more broadly any kind of public service is an extraordinary thing. According to Ms. Maddow, in today's America, only one percent of adults have served in the military.
It was not that way in the America in which I grew up. Service was taken for granted. Every young man was subject to military service, and public service in general was viewed in a positive light. A half century ago, President Kennedy told an entering class at the Naval Academy, "I can imagine a no more rewarding career. And any man who may be asked in this century what he did to make his life worth while, I think can respond with a good deal of pride and satisfaction: 'I served in the United States Navy.'"
But America's youth in those days were inspired to serve their fellow citizens in other ways as well. Young people flocked to the newly-created Peace Corps and recent college graduates actively sought positions in government service.
Like their predecessors who struggled to bring America out of the Great Depression and who served victoriously in World War II (Tom Brokaw called them the Greatest Generation), this new generation chose to serve in a cause greater than themselves.
Would that those of us who remember those times can inspire our latest generation of Americans to such service.
I understood that the person who said it was sincere, and meant it respectfully, but it made me uncomfortable all the same. Ever since, I have tried to understand the source of my discomfort.
I just finished reading Drift by Rachel Maddow, and I think I now understand why such statements make me uncomfortable. It implies that military service or, perhaps more broadly any kind of public service is an extraordinary thing. According to Ms. Maddow, in today's America, only one percent of adults have served in the military.
It was not that way in the America in which I grew up. Service was taken for granted. Every young man was subject to military service, and public service in general was viewed in a positive light. A half century ago, President Kennedy told an entering class at the Naval Academy, "I can imagine a no more rewarding career. And any man who may be asked in this century what he did to make his life worth while, I think can respond with a good deal of pride and satisfaction: 'I served in the United States Navy.'"
But America's youth in those days were inspired to serve their fellow citizens in other ways as well. Young people flocked to the newly-created Peace Corps and recent college graduates actively sought positions in government service.
Like their predecessors who struggled to bring America out of the Great Depression and who served victoriously in World War II (Tom Brokaw called them the Greatest Generation), this new generation chose to serve in a cause greater than themselves.
Would that those of us who remember those times can inspire our latest generation of Americans to such service.
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