Relevant and even prescient commentary on news, politics and the economy.

Italy And The Future Of The European Union

by Barkley Rosser   (Barkley Rosser is now a contributor to Angry Bear)

Italy And The Future Of The European Union

Given that Trumpfreak may guarantee relatively pro-EU politicians winning in France and Germany in the near term (France less certain than Germany), many are now looking at Italian elections next year as the next time when there may be a serious threat in a major EU nation of a leader being elected who may want to pull the nation out, following the UK example.  The most likely candidate for pulling off this feat would be Chiara Appendino, the current apparently fairly competent mayor of Turin, and the new rising star of the Fiver Star Party, with Rome’s Five Star mayor having gotten bogged down in corruption scandals, and long time party leader, Beppe Grillo, more likely to stay in the background.  Why might this come about, quite aside from the fact that the Five Star Party is now dead even with the ruling Democratic Party in polls after rising?

The obvious main explanation is that the Italian economy has simply been dead flat since around 2000, in contrast to the other large EU nations: Germany, France, UK, Poland, and Spain.  The latter certainly has had some worse experiences in the last decade and a half, notably a much higher unemployment rate.  But that has been coming down in more recent years as Spain has gotten it together and finally gotten growing, despite crises and debt issues.  Italy never had it as bad as Spain, and certainly never as bad as still declining Greece.  But its stagnation has begun to really sour, and those who claimed to fix it have fallen on their faces, with the EU itself increasingly putting unpleasant pressures on Italy that are drawing forth resentment.  The Five Star Movement may be semi-incoherent and contradictory in its populism, but it seems to be rising as the ruling PD (Partita Democratia) has increasingly floundered, and it has a strongly anti-EU position.

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Could Incompetence Lead To Reelection?

by Barkley Rosser  (originally published at  Econospeak)

Could Incompetence Lead To Reelection?

I know, I know, it is way too early to talk about the presidential election of 2020, so maybe this is more relevant to midterms, and more likely it is just something merely momentary.  Nevertheless, it occurs to me that the increasingly apparent incompetence of our current president could possibly play into helping him get reelected in 2020.

His incompetence is manifesting itself substantially in his inability to achieve many of the things that he campaigned on most loudly, including repealing and replacing Obamacare, introducing massive trade protectionism, sharply cutting taxes for the rich, and sharply stopping immigration. Of course his new administration, which included probably the most incompetent, insane, and corrupt set of cabinet secretaries and other officials in US history, are doing and will be doing things that will be terribly damaging to American society on many fronts, including the environment, education, womens’ rights, the arts, financial market stability, minority rights, and a long list of others, with many of these very important.  The Trump administration is doing and will do a great deal of damage.  But none of  these were really red meat headline issues in his campaign.  They were not the items that got his angry mobs at rallies chanting and yelling and more generally making public fools of themselves while scaring much of the rest of the population.  Those issues were the ones I mentioned up front, the ones that Trump seems so far not to be actually doing much about after all the ranting and raving.

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Should The Complacent Class Be Called The Fearful Class?

by Barkley Rosser  (originally from Econospeak)

Should The Complacent Class Be Called The Fearful Class?

Tyler Cowen has published his most successful book yet, The Complacent Class, now on the Washington Post nonfiction bestseller list and getting reviewed by everybody from The Economist to the New York Times and on.  It is the Book de Jour that all are commenting on one way or another.  Is America declining because so many of its people have become complacent?  (Shame on them.)

The book has much to offer.  It is chock  full of many interesting facts, although many of them Tyler has publicized at one point or another on his blog, Marginal  Revolution.  He even pushes some newly fashionable ideas that have been in the dark for too long, such as a sort of cyclical theory of history.  And he certainly makes the case that there are lots of trends that seem to show the American people not being as energetic or adventurous as they used to be, with headline data including reduced interstate migration, reduced changing of jobs, reduced patenting, and reduced entrepreneurial startups, among other things.  He does note some external matters that may be adding to some of this, with building codes and land use restriction in economically dynamic urban areas a big culprit as it makes it harder for many to take advantage of the high paying jobs in those areas.  He has also noted that we may be running out of new scientific knowledge to learn or discover, which makes it harder to find dramatic things to patent, and indeed he wrote a previous book about this, blaming this as a major reason for secular stagnation.

But the big question is whether the title is an accurate representation of what is in the book, which has come up in a series of inconclusive blogposts about “Who is the Complacent Class?”  Frankly, it is not clear  that there is one, or if there is one, they are not the people who are responsible for the data he puts forth as supposedly claiming there is one.  If there is a complacent class in the US, it is the top 1 or 2 percent of the wealth and income distribution, who get lots of attention, but who are not the people who are not moving across state lines or changing jobs.  That is going on in the other 98 percent mostly.

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My response to Run’s and Barkley Rosser’s analogies to the 1980 election

Run’s post here discusses and elaborates on a comment by Barkley Rosser in the Comments thread to this post of mine.  I posted the following reply to Barkley’s comment, and reposted that comment as a comment to Run’s post:

Barkley, I certainly share your fear that Trump actually could pull this off, but I don’t think your analogy to Carter-Reagan works.  Key here is the generational change.  Reagan had been a two-term governor of California, and although even back in 1980 I had only a pretty general idea of what he’d done as governor, I read a detailed article recently discussing his actions during the Free Speech Movement (that’s what it was called, right?) at Berkeley.  It was pretty aggressive, rough stuff.

I don’t think I realized back in 1980—or at least I don’t remember doing so—that apparently a part of Reagan’s appeal to blue-collar whites and I guess to some WWII and Korean War generation, and Silent Generation voters was an anti-counterculture persona, which still mattered, a lot, in 1980.

After all, the Vietnam War had ended only six years earlier.  And the Cold War was still very much raging.

What I remember about the 1980 election was a dog-whistle racist appeal to blue-collar whites, coupled with inflation that seemingly could not be brought under control and for what unions (along with the oil cartel) was given substantial blame.  The unions would incorporate anticipated high inflation into their three-year wage contracts, providing part of the inflation spiral—so Reagan’s anti-union schtik didn’t have the normal effect on union members.

But more than anything else, there was the Iran hostage situation—which, it later was reported, continued past the election because Reagan somehow quietly was able to communicate with Iran’s powers-that-be that they should hold out until after the election and that Reagan, as president, would negotiate better terms with them.  (Like Nixon’s secret plan to end the war!!)

The reason that the “There you go again” line was so effective was that a key thing that Carter had going for him was something similar to a key thing that Johnson had going for him against Goldwater: a real fear that he could start a nuclear confrontation or actual war.   So “There you go again” was a promise that he was not Goldwater on the issue of confrontation with the Soviet Union, and would instead use other means against it.  It was, in other words, a promise that Reagan would avoid nuclear war, not precipitate it.  And although Reagan, like Trump, was a pathological liar, he was not so obvious a one.

Nor did Reagan gyrate wildly between opposite policy positions, nor come off as clueless about policy and the workings of government, nor seem care about policy.  To the contrary, Reagan was all about ideology and therefore policy proposals.

So while it’s not inconceivable that Trump could beat Hillary Clinton, I guess the bottom line on that is:  I knew Ronald Reagan. Ronald Reagan was no friend of mine.  And, Donald Trump, you’re no Ronald Reagan.  Nor is today’s electorate the 1980 electorate.

As for the possibility of a Clinton indictment, I think it’s virtually nil.  But if something major happens before the Convention, then as long as Sanders manages to keep Clinton from clinching with pledged delegates, I think that there would be a consensus draft of Warren or (possibly but less likely, in my opinion) Biden, now that the story was published that he would ask Warren to be his running mate.

One thing that I think matters in whether Trump can get a sizable vote among blue-collar workers in Rust Belt states—I don’t know how his vote total compares with Clinton’s in those states, but remember: Kasich beat Trump in Ohio—is that Build the Wall doesn’t have even nearly the same appeal to Rust Belt blue-collar workers as it does to Southern and Southwestern older and middle-aged white voters.

Another is the critical allegiance of blue-collar Rust Belt voters to the idea of unionization.  Suffice it to say that few blue collar workers in the Rust Belt these days fear an inflationary spiral caused by generous union-negotiated contracts, as, I noted above, was the case in 1980.

Nor do most blue-collar Rust Belters worry that a raise in the federal minimum wage would cause them to lose their Walmart or fast-food jobs because of competition from Chinese or Indian or Vietnamese workers.  Most Walmart and fast-food customers in the Rust Belt don’t commute to Asia to shop or dine.  Not often, anyway.

And as for Michiganders, I can attest that fear of Muslims living in their midst is no widespread.  Southeast Michigan has the largest population of Middle Eastern immigrants and descendants in this country, and make up a large percentage of small-business owners in the area.  Only once did I hear a derogatory comment about—as this man put it to me—“AY-rabs”, from a Michigander.  Only once.

Clinton makes a mistake if she opts to focus mainly on Trump’s misogyny, racism, xenophobia, meanness, vulgarity, physically aggressive language.  Everyone already knows these things.  She needs to focus, in addition to her own policy proposals, on two things about Trump: that he is openly demonstrating that he will be a tool of the Club for Growth and Ayn Ryan, and that this is especially so because he has no ability to understand actual policy; that because he is a pathological liar, and prides himself on it, they cannot ever actually rely on any promise he makes, any more than they could rely on a promise by a typical four-year-old.

I don’t think there can be any real doubt that Trump suffers from severe, untreated mental illness—severe bipolar disease or non-hallucinatory schizophrenia, is my guess, but I’m certainly no expert in the field.  But I think Clinton should expect that that is something that most voters will see for themselves by November; they will not need her to tell them this.

Not that Clinton normally refrains from telling people the obvious or the already-widely known, a point I made in a recent post here, but ….

She needs to educate the public about what the Ayn Ryan policy agenda is.  I mean, the actual specifics of it.  Not in her usual singsong soundbite cliché manner, which is likely to be as effective in informing the public as her rotating string of vapid campaign slogans (“Breaking down barriers!” is the current one, I think, although that might be out-of-date) has been in generating excitement.

No, actual specifics, enunciated in normal conversational sentences.  Nothing cutesy, no sleights of hand, no non sequiturs, no seminar-speak like “the energy sector,” a phrase she used when campaigning in West Virginia because she confused her audience (many of them former energy-sector workers) with members of the finance sector.  Just the facts, Ma’am.  And just in normal-speak.

She needs, in other words, to give herself–and us–some breathing room.

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Remembering the Carter-Reagan Race

Barkley Rosser made an interesting comment on one of the threads which is worthy of a separate posting. He is pointing out similarities between Trump and Reagan in saying whatever they want to say, backing away from them (it was just a suggestion), and never being held accountable for making statements devoid of facts. People leap to the unrealistic or untrue commentary and when the statement is challenged, the candidate disavows them while the voters remember what was initially said.

“Trump is pulling something that I think he is going to get away with, which is that he can just say all kinds of things that appeal to certain people, but when people who dislike those things complain, well, he just disavows them or “walks them back,” maybe, for a little while, whatever. So he gains with those who like this stuff, but he manages to avoid being really held accountable seriously for any of it (“that is just a suggestion”). So none of us really know what his positions are on anything, and he in fact may not really have any. It is all about him and his ego and his claim to power, and those who are impressed will vote for him.

What I worry about on this is remembering the Carter-Reagan race. About this time in 1980 Dems were hoping Reagan would be the nominee. He had just said that “trees cause pollution” (which is technically correct if one counts pollen as pollution), which had led to him having very low poll ratings. Oh boy, the Dems were drooling at the prospect of running against this numbskull who would say all kinds of goofy stuff in contrast to more serious candidates like BWH Bush.

Now of course there were other reasons Reagan won, including a bad economy and the embarrassment of the Iran hostage crisis, but I remember all too well the first debate between them, which was universally viewed as a victory by Reagan, with Carter never recovering after that in the polls. I remember that if one was paying close attention, Carter “won on points,” doing well at pointing out the silliness of much of what Reagan was saying. But then there was that magic moment when after Carter criticized him for his warmongering foreign policy statements, Reagan just leaned back and said, “There you go again,” and that was it. He won the debate on a single well-delivered phrase that was in fact devoid of content. But, it sold.

So I fear that whether it is Hillary or Bernie (still has a small chance, much better if HRC gets indicted before the convention), they can win on points showing how nonsensical statement after statement Trump has said is, but then he wins the darned debate with some wisecrack along the lines of what Reagan pulled with Carter.

As it is, both Hillary and Bernie are seriously wonkish, with pretty well developed platforms. We have seen extended discussions and debates about their positions on various issues here, and it is known that Hillary especially has a very long and detailed set of positions, with some charging that she has overdone it going too wonkish. Unlike others I do not think she will just drop all that the minute she gets in, if she gets in, but I do think that both she and Bernie will end up modifying what they advocate when face a GOP-controlled House, which I think is highly likely, even if hopefully the Dems do manage to take the Senate.

But there is a real possibility of a replay of 1980, whichever of them is the Dem candidate.”

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The Revenge Of Joan Robinson: Capital Theory Controversies Revive

by Barkley Rosser

The Revenge Of Joan Robinson: Capital Theory Controversies Revive

It is easy to argue about what is the most important or influential thing that the late Joan Robinson did in economics.  More conventional types would probably point to her widely accepted and even textbookified Economics of Imperfect Competition.  Some would point to her later more philosophical and methodological writings about historical time versus analytical time.  Many Post (or post-) Keynesians revere her closenss to Keynes and Kalecki and see her as the godmother-founder of their movement  who could see the unity among their various bickering factions.  But others would look to her work on capital theory in the 1950s, her 1954 paper in the RES, “The production function and the theory of capital,” along with the appendices to her 1956 The Accumulation of Capital, as well as her influence on Piero Sraffa to publish his famous book in 1960.  This was the trigger for the famous Cambridge controversies in the theory of capital that reached a culmination a half century ago when Paul Samuelson agreed that the “parable” he and some of his students had set forth was not true in general, given such paradoxes as reswitching (called the “Ruth Cohen curiosum” by Joan Robinson), with him declaring in 1966 in the QJE that, “the foundations of economic theory are built on sand.”

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Gas All Boomers" Or At Least Tax And Cut Their Benefits More Says WaPo

by Barkley Rosser   

“Gas All Boomers” Or At Least Tax And Cut Their Benefits More Says WaPo

No, nobody in today’s Washington Post Outlook section devoted to the boomers said that first line, although it has become a commonplace on such sites as Economics Job Market Rumors where anonymous and frustrated millennials very frequently and fervently spout that opening line to the point that it lost whatever ironic humor it had some time ago.  But then irony is a Gen-X thing, not a millennial or boomer thing.

However, taxing them more and cutting their benefits is certainly called for by new economics reporter (and Gen Xer) James Tankersley, in an astoundingly bad article full of so much nonsense one does not know where to start.  He claims that because of their huge numbers, none of this will happen, even though the latest budget deal has in fact cut benefits for them (really for everybody not already receiving them, but with front end boomers the most likely to have been counting on those now cut benefits in the near term, see my post on this here).

While I shall deal with Tankersley’s numerous misrepresentations, let me note more of the anti-boomer venom filling this special issue (Is this WaPo trying to market to millennials?).  So, Heather Havrilesky has the following:

“For the remainder of the decade, we can expect a brand-new wave of melodramatic retrospectives, each designed to remind us of a magical time when boomer heads were packed full of  idealistic notions and covered in lustrous free-flowing hair.  But just as what goes up must come down, what frolics in the mud of Woodstock must eventually sulk in the flourescent chill of the cardiology office. Somehow as boomers age, their commitment to dragging that dusty 60s archival reel out of the basement yet again seems to grow exponentially”

[I shall accept that some of this complaining is not without merit.  Her eventual take is that people now should take things as seriously now without looking back to the 60s either for inspiration or comparison, especially invidious comparison, and that starting in the 70s and on the more conservative majority of the boomers took over the show.  But mostly she is whining and snarking.]

Not quite as hostile is the much older Landon Y. Jones, one of the early coiners of the term “baby boomers.” who declares:

“The designation has to do with coming of age at the right time. They enjoyed sex, drugs, and rock-and-roll, took all the good jobs and are now retiring and becoming a burden on society,” which is the gist of Tankersley’s whine, although Jones is mostly interested in the origin of the term and how it has been used indifferent countries rather than blasting on and on in this vein, which is in fact him reporting on the views of the late Dutch critic of the boomers, Pim Fortuyn.

Before going to Tankersley, I will note one other writer a bit more sympathetic to the boomers, Shirley Abrahms, who dispels five myths about them.  Supposedly, in spite of Tankersley et al, they are not as wealthy as widely thought (although some are), they are not clearly much healthier than their parents (and the recent Case-Deaton report on middle aged white males dying sooner since 2000 fits in with this, although she did not mention that), that boomers are reasonably charitable rather than just being “selfish,” that they are not as technologically incompetent as many think, although certainly Xers and millennials are more  competent than they are (not to mention the rising post-millennials now beginning to make their first appearances), and finally that their sex lives are not total disasters, although aside from all the viagra and cialis ads, I was under the impression that they were mostly being criticized for having been too much into sex, etc., although perhaps that wicked past had supposedly led to a pathetic present.  For all her wisdom, Abrahms undercuts her own credibility by somehow thinking that 18 year olds were voting for LBJ in 1964, which was most definitely not the case (why is it that WaPo has gotten so bad that even its supposed fact checkers goof up?).

So, on to Tankersley, regarding whom I really wonder if either he or his anti-entitlement bosses are aware just how totally off this debut article is.  I am not going to quote and will not answer everything, but will try to focus on some of the biggest bloopers.  I shall also note that near the end of his article that a lot of the problems he identifies are really a matter of the large numbers of boomers and not any clearly intentional actions.  But this does not absolve them from deserving to “pay more” somehow for all the damage they have supposedly caused.  A main thrust of my response will be, if indeed they were causing all these problems, were not the earlier Silents and Greatest at least as guilty, if not in some cases worse?
OK, I shall quote one paragraph, which summarizes most of his complaints:

“Boomers soaked up a lot of economic opportunities without bothering to preserve much for the generations to come.  They burned a lot of cheap fossil fuels, filled the atmosphere with beat-trapping gases and will probably never pay the costs of averting catastrophic climate change or helping their grandchildren adapt to a warmer world.  The took control of Washington at the turn of the millennium, and they used it to rack up a lot of federal debt, even before the Great Recession hit.”


For starters let us note that the stagnation of real wages began in the 1970s, about the time when most boomers entered the labor market.  So both the Greatest and the Silents did much better than the boomers on that one, with the period of rapidly rising real wages being 1945-73.  Yes, the early Greatest suffered in the Great Depression and fighting in WW II, but those amazingly quiet Silents really raked it in.  Look at somebody born in 1930.  only barely experiencing the GD as a child and not having to fight in WW II, if experiencing the privations of rationing, again as a young person, but then entering the job market in the late 40s and having the full experience of that postwar boom, well into middle age when the wage growth slowed, and in their 50s when fica taxes rose sharply as part of the Greenspan Commission’s 1983 deal designed to “make sure the baby boomers pay for  their own retirement,” which mostly they have despite the misrepresentations of Tankersley.  There were no payments for  COLA recipients prior to 1971, but any Greatest or Silent retiring not too long after it was put in then paid zippo into Social Security but got many times what they paid in benefits, far more than the boomers will get (who so far have not whined about this latest benefit cut, which Tankersley ignores, needless to say).

Tankersley’s spin is that even though wages have not risen, a point he ignores, boomers got promoted to higher salaries as they aged.  While indeed growth has reverted to its 1975-95 average, there is no reason that Xers and millennials will not be able to have such promotions either. After all, the boomers are now indeed beginning to retire in serious numbers, opening up all those upper tier jobs for their juniors to earn more.  The idea that SS and Medicare will not be there is of course the biggest phone screed that WaPo hands out, when in fact the projections have the millennials receiving more in benefits than current recipients, even if the system “goes bankrupt,” not that Tankersley is anywhere near even being conscious of this I think.  And, of course most of those projected increases in costs are tied to medical care cost increases, which hopefully will be kept more in line in the future.

Then we have all this stuff about burning fossil fuels and ruining the environment.  Last time I checked, the golden era of gas hog polluting cars was the 50s and 60s, with environmental laws arriving in the early 70s and with higher oil prices leading to much greater gas efficiency of cars. This backslid in the later 80s and 90s when oil prices fell and we got the SUV boom.  But offhand the Greatest and the Silents look at least as guilty, and frankly more so, on this matter of polluting the atmosphere than do the boomers, whose main sin would indeed to be their large numbers, not their excessively polluting ways compared to other generations.
Then we get this weird claim that the millennials “took control of Washington at the turn of the millennium,” thus making “the boomers” responsible somehow for the clearly irresponsible policies of George W. Bush, even though he lost the popular vote in 2000.  But Bill Clinton is a boomer, and he was in charge in the 90s, when the national debt actually fell. Do not the boomers get some credit for him?  Or do we only get the blame for his sexual improprieties?  The more striking increase in non-war debt came with Reagan, he of the Greatest Generation, with a full quarter of boomers not even old enough to vote when he came in.  Surely he was more a creature of the Greatests and the Silents, with their failure to obey rational expectations and Ricardian Equivalence by lowering their savings rates when they got his tax cuts (with income tax cuts indeed offsetting those fica increases aimed at the boomers).
He goes on and non about a lot more, but I think I am going to stop here other than to note that he opens by complaining about people talking about raising the retirement age for future retirees not somehow noting that indeed the 1983 agreement put in place such increases for the boomers, increases which are already happening and will continue to do so. Really, this article is a disgrace.

Barkley Rosser

originally published at Econospeak

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VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut

by Barkley Rosser     (Econospeak)

VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut

All the Very Serious People are jumping up and down and cheering.  We have a budget deal in the House and the debt ceiling is being raised and there will be no more artificial budget crises until after the new president is in office, hurray hurray hurray!  Not only that, all the Dems in the House voted for it, with everybody gushing gratitude to John Boehner for making it possible by resigning as Speaker to turn it over to reasonable Paul Ryan once Boehner could get this deal through the House, thwarting the evil Tea Party/Freedom Caucus bomb throwers who want to have a big crisis with the government shut down and indeed bankrupt outright. We are saved!

Well, indeed there certainly are these benefits.  But without much publicity, Paul Ryan is reported to be behind slipping into the deal something that he has long supported, entitlement benefit cuts, which have been heavily featured in past budgets he has proposed.  The particular cut is the ending in Social Security of the ability of couples to “file and suspend” with this being replaced by “deemed filing.”  File and suspend allowed someone to get Social Security benefits prior to retiring, while not having to accept the lower benefits one gets if one retires at 62 or 66.  One can get the higher benefits later.  This will now not be allowed, so one must accept the lower benefits if one starts getting benefits early.  This has only been possible for  married couples with this involving one getting spousal benefits and then their own through some semi-complicated maneuvers that have been allowed since 2001.

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Why Are We Rushing To Get Rid Of Fannie Mae and Freddie Mac?

by Barkley Rosser via Econospeak
(reposted with authors permission)

Why Are We Rushing To Get Rid Of Fannie Mae and Freddie Mac?

“How many Virginians does it take to change a light bulb?

Five: One to change the bulb and four to talk about how great the old bulb was.”

I think I am turning into my late father, a conservative in the old traditional way of defending existing institutions and practices.  Here I go, about to defend Fannie Mae and Freddie Mac, whom all Very Serious People know should go as soon as possible.  President Obama thinks they should go, and we have two bills in Congress that will lead to that outcome, one in the Senate co-sponsored by Dem Sen. Warner of VA (my state) and Rep Sen. Corker of TN, both VSPs in good standing, while in the House Banking Chair Hensarling (R-TX) also has such a bill. I mean wow, we have both the president and VSPs from both parties in Congress on this.  It must be great.  I mean, we all know that they were responsible for all the problems in the housing market that led to you know what!

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Barkley Rosser’s Review of Behavioral Economics (ROBE) Website Goes Live

Review of Behavioral Economics (ROBE) Website Goes Live

Amazingly enough, today on my 65th birthday, the website of the new journal that I am Editor-in-Chief of, the Review of Behavioral Economics (ROBE), has gone live.  So, we are open for business at…. Prof. J. Barkley Rosser


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