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

Not on Tax (or only indirectly so): GOPer Akin’s "legitimate rape" comment

by Linda Beale

Not on Tax (or only indirectly so): GOPer Akin’s “legitimate rape”

As most of you have heard by now, the Missouri Republican nominee for Senate, current House Rep. Todd Akin, in a Sunday interview with KTVI-TV, justifying his opposition to any abortion ever, even in the case of rape, made the following incredibly absurd statement:

First of all, from what I understand from doctors [pregnancy from rape] is really rare.  If it’s a legitimate rape, the female body has ways to try to shut that whole thing down. But let’s assume that maybe that didn’t work, or something.  I think there should be some punishment, but the punishment ought to be on the rapist and not attacking the child.  Amy Davidson, What Does Todd Akin Think ‘Legitimate Rape’ is?, New Yorker (Aug. 19, 2012).

Davidson makes a number of worthy points about this troubling statement by a sitting Congressman who happens to serve on the House committee dealing with science issues.   The statement demonstrates:

  • “biological ignorance” (women do get pregnant from rape)
  • disregard of women’s interest in the matter (“Akin apparently has not [realized] that people possessing a ‘female body’ are also part of the political conversation”)
  • Akin’s ethically challenged thinking (“There is the puzzling idea that the putative rarity of pregnancies caused by rape would make it any less of a ‘tough sort of ethical question.'”)
  • absurd categorization of rape into “legitimate” and otherwise (“[D]oes Akin think that doing what one could to survive would delgitimze the rape–or that a legitimate victim is [only] one who sees rape as a fate worse than death? …The problem here is not just whether Akin thinks conception during rape is possible, but what he thinks rape is.” emphasis added)

Even when Akin tried to limit the harm done by his statement (he twittered “I have great empathy for all victims.  I regret misspeaking”), he nonetheless confirmed his view that pregnancies resulting from rape don’t merit abortions.
What GOP Rep. Akin’s statement reveals is the craven indifference of the right-wing of the Republican party to the suffering of a woman left to bear a child of her rapist, its unconscionable disregard of scientific fact, and the inexcusable attempt to appeal to America’s fundamentalist “value” extremists on the right who want to impose their views on social and fiscal issues on all the rest of us, no matter what the consequences.

As a recent poll by the Washington Post and Kaiser Family Foundation demonstrated, the strongest group of Republicans, albeit still a minority at 28%, is represented by Tea Party members who support radical social visions of 1900s morality rules being imposed on everyone (fundamentalist religious views enshrined in law and in “traditional” interpretations of the Constitutions, resulting in no same-sex marriage, no same-sex adoptions, no abortions (even for rape victims)) combined with 1900s ideas about tax revenues and spending provisions (removing the safety net provided by Medicare and Social Security and substituting some version of privatization or elimination of these programs, so that the elderly are thrown back on charity care; allowing today’s robber barons (corporate moguls and private equity vulture capitalists) to fire workers and reduce their pay indiscriminately through dismantling of unions whenever possible; elimination of tax burdens on capital income; and remaking the corporate tax code to be even more favorable to multinationals).

 And Paul Ryan, Romney’s vice presidential selection, is of accord with this group and opposes an abortion ban exception for rape victims (though Romney’s campaign on Sunday claims that the Romney-Ryan ticket would not opposed abortions after a rape–as though we have any reason to believe that will still be Romney’s position a few days from now…..).

As a commenter noted, Akin really just said what he believes out loud, betraying to everyone what he really has in mind.  I hope Missourians recognize this snake in congressman garb for what he is–someone who shouldn’t be allowed to touch a Senate seat with a 10-foot pole.

cross posted with ataxingmatter

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The Luddite Fallacy Fallacy

I’ve spent a lot of time considering (here, here, here, and here) the notions of technological unemployment and the Luddite Fallacy: the idea that technologically driven productivity — machines — will replace, are replacing, human labor. I’d like to revisit that here.

My basic conclusion: the Luddites were obviously wrong at the time. But they’re right now — at least in the U.S. Even a stopped clock is right eventually.

I think the Luddite Fallacy argument ignores two things:

1. The limits to human capabilities. By definition, 50% of people have an IQ below 100. I don’t think anyone who’s reading (or writing) these words can begin to imagine how hard it would be to make a go of it in modern America with an IQ of 90 — to build a prosperous and secure life, raise a stable, happy family, or ensure that you can be self-sufficient in your waning years. Even getting through high school would be really hard.

The original Luddites weren’t hitting that cognitive limit — not even close. Today, tens of millions of people are slamming right into it (over time, hundreds of millions). Increasingly, only those at the right end of the bell curve are able to claim a decent (or any) share of the American pie. As the American economy is constituted (in its global context), diligence and hard work are not sufficient to give you that claim.

2. The declining marginal utility of innovation and consumption. As I pointed out in a post a while back:

Pretty much every important invention of the modern world – trains, planes, automobiles, air conditioning, antibiotics, painkillers, telephones, radio/television, computers – had already been invented and was in at-least-fairly widespread use when I was growing up in the sixties. The only thing since then has been the internet.

Post-’70 it’s just been distribution, improvements (i.e. cell phones over land lines), and price reductions — important stuff, no doubt, but compared to the germ theory of disease or the electric motor? (Arguably even the internet is just a distribution thing.)

The innovations that the Luddites were facing all delivered massive increases in human utility (via increasingly inexpensive and higher-quality goods and services). So while the losses to particular groups — and their required readjustments — were painful (sometimes horribly so), in the big picture they were overwhelmed by the overall increase in utility.

You just can’t say the same thing about Twitter, or inexpensive heated car seats. The human essentials that early innovations delivered (food, clothing, shelter, medicine, transportation, communication) were massively more valuable than the improvements we’ve seen in my lifetime.

Yes, the utility pie is still getting larger (far more slowly than it was in the past), but the slice that machines can’t provide — especially at the margin — is getting smaller, faster.

Combine these two realities to perceive a world in which:

1. A great (and increasing) proportion of human utility is, can be, delivered by machines.

2. Humans who do not (don’t have the wherewithal to) control those machines can only compete among each other to deliver an ever-decreasing slice of lower-utility goods and services. And they are compensated — given a slice of the pie — based on the steadily smaller amount of utility they can deliver. Left to itself, the market will provide many with a sub-subsistence level of compensation.

In the great log-rolling exercise that is our economy, an increasing number of people over the decades are falling off the log, and finding it hard or impossible to climb back on. Many — millions — are drowning.

And that magical log — which miraculously grows as more people climb on and have the sustenance to run faster — is not growing as fast.

Have I mentioned the Earned Income Tax Credit lately?

Cross-posted at Asymptosis.

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The NY Times Is Misleading. And Who Is Correct? Eurostat or China Customs?

The NY Times Is Misleading. And Who Is Correct? Eurostat or China Customs?

by Rebecca Wilder

The NY Times reports quite a dire situation as regards the slump in the value of Chinese exports to the European Union in July:

Data published this month showed that China’s exports to the European Union had sunk 16.2 percent in July to $29.4 billion, compared with July 2011.

This statistic (bolded by yours truly) is misleading.

First, China Customs measures exports in nominal dollars. If you look at Chinese exports measured in, let’s say euros, it doesn’t look quite as bad. In July, exports to the European Union (EU 27) dropped -3.6% over the year measured in euros versus a -16.2% annual decline measured in dollars. The dollar appreciated against the euro over the measurement period so the drop in China’s exports to the EU 27 is much lower in euros.

Note: This is only an approximation since I use the average monthly exchange rate, which is unlikely to align perfectly with China Customs’ measurement period.

An interesting corollary to the FX impact on ‘value’ statistics is the various statistical agencies that report presumably the same statistic. Eurostat publishes import data by partner and in euros. Using the average exchange rate over the month, I calculate the value of EU 27 imports from China reported in dollars for comparison to the China Customs data. Eurostat data is available only through June.
In June, Eurostat reports that EU 27 imports from China dropped -11.1% measured in dollars compared to the reported -1.1% annual reduction in exports from China to the EU 27 by China Customs. Clearly the trend is downward; but the Eurostat data only loosely matches the China Customs data. Balance of payments statistics are subject to large ”errors and omissions”.

Note: In the chart below, Eurostat data is illustrated in the series “EU imports from China”, while China Customs data is illustrated in the series “Exports to EU”.

So who’s right? Eurostat or China Customs? Part of the differentiation involves the timing of the FX moves (remember I use the monthly averages); but that is unlikely the full story here. I’d err on the side of Eurostat, and notice the trend looks pretty bad no matter who’s estimating the trade data.

Rebecca Wilder

cross posted with  The Wilder View…Economonitors

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Health Care Thoughts: Hospitals Rising

by Tom aka Rusty Rustbelt

Health Care Thoughts: Hospitals Rising
One of the key operational themes of PPACA (Obamacare) is integration. Almost all models of integration have a hospitals or hospital networks as the hub. Some networks are already highly integrated, others are headed in that direction. (There was a big push for integration at the time of the Clinton-care proposals, some of the integration stuck and some of it unwound as a result of operational disasters.)

This gives hospitals and hospital networks an immense amount of new power, whether it is used for good or ill is yet to be seen (I have often encountered a “not-for-profits give better care and are more ethical” theme, but as NFP merge into networks with billions of dollars this does not appear to me to be correct).
In regions with competing networks there are stampedes for “market share,” with a great deal of money often thrown into new facilities and new services. There are also bidding wars for employed physicians and battles for favorable affiliations with practice groups.
This also creates a “talent war” for quick and nimble executives, and I fear the ascendency of “slick-and-useless” MBAs in the hospital industry.
This is a little “inside baseball” but beyond politicals, law and economics there are details with consequences.

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Laffer: Laughable As Always

R Davis spends a whole lot of words (and numbers) explaining why Arthur Laffer’s latest WSJ editorial is false and ridiculous, but those who think about data — at all — really only need to read one line. Laffer’s key error — which a high-school statistics student could spot — is to:

compare growth in GDP rates with government spending as a percent of GDP. He is testing for a relationship between two variables but expressing one of them (spending) in terms of the other (GDP).

So when Estonia or Ireland’s GDP drops, its government spending/GDP increases.

This is obvious proof that higher government spending causes lower GDP.

It’s hard to imagine that a well-educated person could not be aware of how specious this argument is. But I’m guessing that he really and truly does not realize it.

Cross-posted at Asymptosis.

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No, Conservatives Aren’t Happier — Any More

My small effort to ameliorate the disparity in Andrew Gelman’s headline:

1.5 million people were told that extreme conservatives are happier than political moderates. Approximately .0001 million Americans learned that the opposite is true.

Andrew is commenting on a Jay Livingston’s great takedown of David Arthur Brooks’ recent column asking “Who is happier about life — liberals or conservatives?”

First, the latest data from the go-to source — the General Social Survey (GSS) – courtesy of Livingston:

extreme conservatives are nearly three times as likely as others to be “not too happy.”

(Andrew helps us by calculating a measure of the statistical significance: very high. “…the standard error for that green bar on the right is approx sqrt(0.3*0.7/80)=0.05.”)

This hasn’t been true until recently. Here’s the cumulative measure since ’72 (essentially averaging all the surveys over all those years):

Extreme conservatives have lost their happiness advantage, and their unhappiness has skyrocketed. (Brooks is citing a 2006 Pew study (PDF) showing higher “very happy” numbers among Republicans.)

What’s changed? Maybe the demographic tidal wave is hitting the beach. (Don’t believe me? Ask Pat Buchanan.) And the self-described “extreme conservatives” — who are at least 89% white (more) — with their backs against the seawall, really, really don’t like it. I mean goddamitalltohell, there’s a black man in the oval office!

I can’t leave without including Livingston’s comments on Brooks’ slimily implicit and unsubstantiated accusation of confirmation bias among social scientists.

“…there is an entire academic literature in the social sciences dedicated to showing conservatives as naturally authoritarian, dogmatic, intolerant of ambiguity, fearful of threat and loss, low in self-esteem and uncomfortable with complex modes of thinking.”

(Note that Brooks is careful not to say that the research actually shows this, though it does. Instead, the research – most of it by those unhappy liberals – is “dedicated to showing” conservatives in a bad light. Sort of like the research “dedicated to showing” that planet Earth is getting warmer – another liberal conspiracy.)

Cross-posted at Asymptosis.

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It’s the Exchange Rate, Stupid

by Rebecca Wilder

It’s the Exchange Rate, Stupid

Eurostat released trade figures today, where the trade balance (exports less imports) surged €3.7 bn in the month of June (link to the .pdf release). The current figures imply a 2012 annualized trade balance of €66.9 bn, which is a meaningful boost to the -€7.4 bn deficit in 2011.

Eurostat breaks down the regional figures further into intra-Euro area (intra-EA) trade and extra-Euro area (extra-EA) trade.

Out of the EA 16, June intra-EA figures are available for just a few countries. Of those countries, the intra-EA trade balance improved in Portugal only, increasing by 0.26 ppt as a share of GDP on the month. From June 2011 to June 2012, where available, otherwise June 2011 to May 2012 (see Table above), the intra-EA rebalancing – i.e., roughly raising the balance of the net-importers and reducing the surplus of the net-exporters – has occurred to a certain degree. Net trade as a share of country GDP fell in Germany, and rose in Italy, Spain, Greece, and Portugal. France and Ireland worsened their positions, while the Netherlands increased its large trade surplus of 25.1% of GDP over the year.

Except in Portugal and Greece, the intra-EA ‘rebalancing’ is either not necessarily required due to the relatively low imbalances, Spain or Germany, or moving in the wrong direction, France or the Netherlands.
June extra-EA figures are available for all countries. With the help of the real depreciation of the trade-weighted euro over the month, the extra-EA trade balance improved in June across all EA 16 countries except for Ireland, where it fell by 0.2 ppt of GDP. Over the year through June, all countries except the Netherlands saw an improvement in the trade balance as a share of GDP (see Table above).

Given the strong positive momentum in extra-EA net trade and the sluggish shift in intra-EA net trade, I conclude that it’s the depreciation of the real exchange – the 12.7% nominal depreciation of the euro against the dollar, for example, and/or falling relative price levels with extra-EA economies – that’s the primary driver of the improving trade balances in key periphery markets. With the strong exception of Portugal, where the intra-EA balance improved by 2.6 ppt of GDP over the year, the internal (infernal) devaluation of repressing wages through high unemployment has mixed results at best.

Rebecca Wilder

Note: I understand the imbalances lie in the financial accounts as well but this post is dedicated to trade only.
A point on the data: all numbers are seasonally adjusted.

cross posted with The Wilder View…Economonitors

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Economists don’t endorse candidates, because elections don’t matter…a note from Italy

Lifted from Robert’s Stochaistic thoughts is a post that comments on Italian political/economists and government policy.  There are some ‘in the know’ names for US readers:

Simon Wren-Lewis asks. I answer. In real authentic East of the English Channel Europe, economists don’t endorse candidates, because elections don’t matter.
Neither do they endorse gymnasts, because our Democracy is about as decorative as the Olympics.

Quick pop quiz explain the policy differences between the Berlusconi government and the Center left governments ? If your answer is that Berlusconi’s governments try to eliminate the independence of the magistratura (judiciary plus prosecutors) I say “Bicamerale.” If your answer is that Berlusconi will ignore any law and any court rather than take frequencies from Berlusconi I say “La Sette.” If you argue that Seniore Bunga Bunga has no respect for fiscal restraint or rectitude, I say Tremonti.

The fact is that Italian public policy has been based on the twin principles that the very rich are above the law and that budgets must be (roughly) balanced, since I arrived here in 1989 (or at least since 1992). There was, in theory, an historic election (the second in a row) in 1996 when the new majority included the Communists (not just the ex Communists but the proudly still Communists). It was so radical that the budget was communicated to the cabinet responsible to this majority a few days before they made it public. It was written by civil servants at the Treasury Ministry and included no significant changes.

Wren-Lewis knows how to identify the policy making establishment in Europe (also including the UK). He notes that the establishment is New Keynesian because central banks use New Keynesian models. Note that he doesn’t claim that candidates for elective office use such models. Because they don’t matter much.
OK. over there (West of the Channel) the last election made a difference. Also maybe maybe it will matter that for the first time in human history that French Socialists have a President and an absolute majority in both houses of Parliament (not that the Communists held Mitterand back much — but that was long ago).
I think that over in the USA the very serious villager consensus is powerful. But over here it is just about everything. Sacrificing one’s reputation in order to have a tiny possible effect on an election is absurd here. European economists don’t do anything that disreputable, because policy influence is based on reputation and not anything done by vulgar voters.

This has its advantages. Europe doesn’t dive into huge unnecessary deficits because of an election. Policy doesn’t depend on butterfly ballots and hanging chads.

But the second recession in 4 years hitting before 2008 real GDP is surpassed has no noticeable effect on the policy debate either.

It was decided in the 1990s that reducing budget deficits was, is, and always will be the paramount aim of public policy.

Democracy is messy, but a sober, disciplined well ordered march over a cliff isn’t ideal either.

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It is in the interests of bankers and landlords to masquerade as capitalists

An comment worth noting on an  interesting post Where Are You in the Economic Strata? by Barry Ritholtz is the following (hat tip Mike K.):

In my opinion, aspirational voting is the consequence of a rational
dedication to ethics based upon false assumptions of what is ethical.
As I see it, there are two forms of income. The first type of income
is generated through productive achievement that benefits others and
grows the economic pie – this is the symbiotic relationship between
labor and capital. The second type of income is generated through
rent-seeking behavior that simply alters the flow of money, but does
not grow the economic pie – examples of this include
fractional-reserve banking and the land increment of rent. It is in
the interests of bankers and landlords to masquerade as capitalists,
but they are not capitalists (since they don’t grow the capital stock)
– they are rent-seekers.

Republicans are people who correctly see the benefits of capitalism
(the expansion of the capital stock that adds value to labor), but
they are fooled into thinking bankers and landlords are capitalists.
Democrats are people who correctly see the evils of wealthy
rent-seeking individuals, but they incorrectly attribute rent-seeking
to capitalism. In my opinion, Democrats would be wise to change their
target from “the 1%”, which may include capitalists that help others
(Apple is not the problem), and focus their attention specifically on
the rent-seekers (banking is the problem). By using this strategy,
Democrats can align themselves with Republican voters who support
productive capitalist activities, while at the same time exposing the
rent-seekers who masquerade as capitalists. In my experience,
Republicans are increasingly skeptical of banking. They are starting
to get that banking is different from other capitalist activities.
There is a real opportunity for Democrats, but they’ve got to be sure
they select the correct bogeyman.

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Biden…"I flat guarantee you"

Mark Thoma takes a poke at Joe Biden’s guarantees on SS  in  No Changes in Social Security:

I wish I could believe this.

Biden guarantees: ‘There will be no changes in Social Security’, by Michael O’Brien, NBC News: …”Hey, by the way, let’s talk about Social Security,” Biden said…”Number one, I guarantee you, flat guarantee you, there will be no changes in Social Security,” … “I flat guarantee you.” 

But the first time Republicans offer a trade (“tell you what, if you cut Social Security, we’ll stop cutting taxes”), will the administration take it? I’m afraid they will.

Here are several of Dale Coberly’s and Bruce Webb’s earlier posts on some of the matters and myths, somewhat at random from the dozens of informative posts on SS:

Social Security: Trust Funds, Actuarial Balance, Sustainable Solvency Posted by Bruce Webb 7/22/2012

Social Security: Simple story vs. myth busting Posted by Bruce Webb 2/18/2009

Reframing the Trust Fund  Posted by Bruce Webb  6/15/2008

Social Security For The Young  Posted by Dale Coberly  10/04/2011

DAMNED LIARS AND SOCIAL SECURITY Posted by Dale Coberly 4/11/2012

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