Good Guys And Bad Guys

I'm always a little uneasy when I hear young soldiers talking about "good guys" and "bad guys." How, I wonder, do they tell the difference, especially in someone else's civil war. Our guys weren't very good at it in Viet Nam, though I remember the time an airborne spotter called off a gunfire mission. He could tell the villagers weren't acting like bad guys.

All of us who grew up watching cowboy movies could easily tell the good guys from the bad guys. Good guys wore white hats and light-colored clothing. They were straight talkers.

Bad guys not only wore black hats, they sneered and bullied people.

Back in the 1950's, John Steinbeck wrote an essay about good guys and bad guys. He described the conventions of the cowboy movie in great detail. It was his young son who decoded the art form for him.

During the Army-McCarthy hearings, he asked his son if he had watched the hearings on television. He had. Could the son tell who was the bad guy? Yes. McCarthy was the bad guy. He wasn't clean-shaven and he sneered at people and bullied them.

Watching Congressional Republicans on TV, I think they didn't get Steinbeck's memo. Most of them seem clean-shaven enough, but they haven't dropped the sneering and bullying.

Fiscal Cliff Hanger

I say, again: we have a persistent economic crisis, but right now that crisis is jobs, not deficit. The deficit is a consequence, not a cause of job loss.

The looming 'fiscal cliff" is itself a consequence of a disastrous agreement last year to persuade Republicans not to throw the country into renewed, deep recession by refusing to raise the debt limit - essentially refusing to pay our bills.

No one disputes that, in the long run, we must reduce deficits. Reduce them back to the levels of the last two years of the Clinton administration.

But first we have to put people back to work. But Republican obstructionists don't want the economy to succeed. They will continue to obstruct economic progress.

At the state level, further obstruction will proceed apace in every state whose government is dominated by Republicans. We are about to enter that category here in North Carolina.

I don't make this stuff up, but I do read a lot of what is said by the best economists.

One of the economists I follow is Jared Bernstein. He's a very clear writer and thinker. Today he examines the question of what the last year has taught us about economic beliefs that have not served us well. Here's his summary.

Valentina Lisitsa - Concert Star

Marvelous concert this evening at Oriental's Old Theater. World class pianist Valentina Lisitsa played Rachmaninov, Bach, Beethoven, Chopin, Shubert, Liszt. Absolutely virtuoso playing. Marvelous acoustics in the old movie theater. Attendees treated to Champagne afterward and a DVD viewing of Valentina's recording session with the London Symphony Orchestra.

 A cause to celebrate.

An Economist's Take On Guns

It's hard these days to have a rational conversation about guns. We mostly seem to share views with those who share our views. I have posted a couple of things on my facebook page, and mostly don't hear anything from my gun nut enthusiast friends.

But here are some thoughts by an economist: http://newmonetarism.blogspot.com/2012/12/guns.html

I'm not sure what I think about his ideas, but guns are certainly a good example of economic externalities. A Pigouvian tax? Interesting idea. Maybe liability insurance as a practical way to implement the idea. It works (mostly) with cars.

Former Chief Justice Warren Burger: Second Amendment

Warren E. Burger, Chief Justice of the United States (1969-86) had this to say in an article in Parade Magazine, January 14, 1990, page 4:

"The Constitution of the United States, in its Second Amendment, guarantees a "right of the people to keep and bear arms." However, the meaning of this clause cannot be understood except by looking to the purpose, the setting and the objectives of the draftsmen. The first 10 amendments -- the Bill of Rights -- were not drafted at Philadelphia in 1787; that document came two years later than the Constitution. Most of the states already had bills of rights, but the Constitution might not have been ratified in 1788 if the states had not had assurances that a national Bill of Rights would soon be added.

"People of that day were apprehensive about the new "monster" national government presented to them, and this helps explain the language and purpose of the Second Amendment. A few lines after the First Amendment's guarantees -- against "establishment of religion," "free exercise" of religion, free speech and free press -- came a guarantee that grew out of the deep-seated fear of a "national" or "standing" army. The same First Congress that approved the right to keep and bear arms also limited the national army to 840 men; Congress in the Second Amendment then provided:

"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

"In the 1789 debate in Congress on James Madison's proposed Bill of Rights, Elbridge Gerry argued that a state militia was necessary:

"to prevent the establishment of a standing army, the bane of liberty ... Whenever governments mean to invade the rights and liberties of the people, they always attempt to destroy the militia in order to raise an army upon their ruins."

Plainly the goal of the Second Amendment was to prevent the establishment of a large standing army. That endeavor failed more than a century ago. We now maintain the second largest standing military force in the world. Only China's is larger.

A Way Ahead For Europe - But Europe Won't Like It

Yesterday I posted a speech by professor Galbraith. He was speaking in Berlin.

The Eurozone problem is a German problem. Not a Greek problem or a Spanish problem or an Italian problem.

Professor Galbraith understands this and explains a lot about debt, especially international debt.

Here's a very illuminating interview.

Robert Bork: 1927-2012

Robert Bork was a brilliant professor and one of the most divisive figures in recent American history.

He also has been described as a person with a large brain and a small mind. Conservatives who mourn the fact that Bork was not confirmed as a justice on the Supreme Court don't often point out that six Republican senators voted against his confirmation. And two Democratic senators voted for. That was on the floor vote. In the committee on judiciary, Republican Senator Simpson also voted "no."

Here is a link to a segment of Bork's senate confirmation hearing. The exchange is between Bork and Senator Kennedy. The intellectual level of exchange far exceeds anything we hear these days.

Lawyer, author and legal analyst Jeff Toobin expresses a less-favorable picture of Robert Bork.

Economic Changes - Existing And Prospective - Mostly Europe

Professor James K Galbraith made a really fine presentation December 6th at an IG Metall conference in Berlin. Conference theme: The Good Life. Thanks to Mark Thoma for the link. The title of professor Galbraith's presentation is "Change of Direction."

Professor Galbraith draws attention to the existence of one overarching worldwide crisis. "Yesterday," he says, "Professor Nouriel Roubini give a magisterial and very high speed tour of the world situation making it clear of course that the promised recovery has not occurred. But if Nouriel is Sir Isaiah Berlin’s fox, who knows many things, let me try this morning to be the hedgehog who knows one big thing, and that one big thing is that what we are experiencing is a single, unified, global crisis of the economy and of the financial system. It is not a cluster of distinct and separated events; a subprime crisis in the United States; a public debt crisis in Greece; a bank crisis in Iceland; a real estate bust in Ireland and Spain; nor are there distinct U.S. and European crises, nor can the financial be separated from the real, nor is Germany a country to which crisis has not yet come with the suggestion that there might be some separate way out. There is one crisis, only one crisis, a deeply interconnected crisis of the world system. This crisis has, I think, three deep sources going back not twenty years but forty years to the early 1970s and the end of what we sometimes call the “golden age,” the “glorious thirty” years in the immediate aftermath of the second World War."

This calls to mind Noah Smith's observation that "something big" happened  early in the 1970's. Smith doesn't know what.

Professor Galbraith has some ideas.

"The first of the three deep sources is, I think, the rising real cost of the resources that we use, of energy and of everything that we use energy for. This was a problem that emerged in the 1970s and was then submerged again; it was deferred by new discoveries, by the geopolitical situation, and by the financial power of the western countries, which because of the debt crisis in much of the rest of the world had the effect of suppressing demand for these core resources. But this is a problems that can no longer be avoided or deferred. The cost of energy is roughly twice of what it was a decade ago and the future is far more uncertain. Both of these factors, cost and uncertainty, place a squeeze on the surplus or profitability in regions, continents, and countries that are importers of these resources. And as we confront, as we must, the problem of climate change and as we begin, as we must, to pay the price of climate change this problem is going to become more difficult. That’s just an economic reality that we have to cope with as we face the imperative before us."

"The second great underlying issue ....is technical change, the particular character of which in our time is quite different from ... before. If you take the digital revolution together with globalization, the ease of transnational manufacturing and ... the outsourcing of services, we ... live in an era where technology ... supplants workers. ...[T]he computer and ... associated technologies ... are now doing to the office worker what a century ago the internal combustion engine did to the horse."

"And the third great source of our problem is ideological. It is the neo-liberal idea that has given us deregulation and de-supervision; that has given us the notion that markets can function on their own without breaking down or blowing up. It is this notion as applied especially to finance. This is the great illusion of the last generation, and it fostered a form of economic growth that was intrinsically unstable and unsustainable. Why? ... [I]t was based on declining standards for loans and ... lax accounting standards, it was based upon financial fraud, on the most massive wave of financial fraud that the world has ever seen.... It was known to be such to the lenders at the time. This was true of housing loans in the United States made by the tens of millions that were known to the lenders as “liar’s loans,” as “ninja loans,” no income, no job, no assets; as “neutron loans” destined to explode leaving the building intact but destroying the people. This was known at the time. These were loans that had to be refinanced or they would default.

"It was also true of loans to the public sector, for example Greece....The fact that Greece had a weak public sector and a weak tax system was not a state secret before the crisis...." 

"Rising inequality is often linked to these phenomena. But I think we should be clear about what the linkage is. It is not the case that inequality rose and people compensated for it by borrowing more so they could have a higher standard of consumption. This is not what happened. It certainly did not happen in the United States. What happened was, is that the lenders went out to find new markets often fostering fraudulent loans on low-information borrowers, poor borrowers, inner city home owners, for example, forcing those loans to be refinanced so that the recipient only saw a fraction of the debt with which they were ultimately saddled. And the inequality arose from the booking of fees on those loans. This is how bankers get rich. They make their money in this way. And you can see this in their tax statements and you can see it in the geographical distribution of income gains in the United States."

 Professor Galbraith goes into more detail. You will find it rewarding to read the entire presentation.

You may not find it reassuring.