The world of economics suffered a sad loss a few days ago (July 15) with the death of Frank Ackerman.  Frank was a mainstay of the activist left within the profession; he was one of the founders of the magazine Dollars and Sense and could always be found at activities of the Union for Radical Political Economics.  He was notable for being one of the most exacting of critical economists, never substituting political passion for careful analysis and documentation of his evidence.  His “cool” personal style may have made him less prominent in the public eye, but those who knew him realized what an important role he served.

I crossed paths with him many times because of our mutual interest in, and horror at, benefit-cost analysis.  Frank coauthored his influential book Priceless: On Knowing The Price Of Everything And The Value Of Nothing to demonstrate that economic methodologies that promised to replace ideology with pragmatism were in fact riddled with ideology themselves.  His final book was Worst Case Economics, which argued sensibly for a prudential approach in finance and climate change.

I hope readers who have had a closer personal connection to Frank will use the comment thread or posts of their own to tell their stories.  This is an important transitional moment for dissident economics.

Greg Mankiw reads this story and writes:

Staffers in the Sanders campaign, who are working on salary, complain that they are paid less than the $15 per hour that Senator Sanders advocates for the minimum wage. So Sanders raises their hourly wage. Does that increase their income? No, because he raised the hourly wage by cutting the number of hours they work! Of course, if a President Sanders raised the federal minimum wage, I am sure he would be confident that the change would not have any adverse employment effects. Downward-sloping demand curves may describe socialist political campaigns, but back in the actual capitalist economy, the laws of supply and demand work completely differently.

OK – he started his post by saying it is a wonderful story, which is true. But as I read the story, I saw a very different tale than the one Mankiw suggested:

Field organizers say they make a salary of $36,000 annually but work 60 hours per week, which is an average of $13 per hour … Sanders’ 2020 campaign was the first to unionize in March 2019. The union then made an agreement with the campaign that field workers were to be paid $36,000 annually. The contract, which began on May 2, also provides platinum level health care, paid vacation, sick leave and other benefits. Shakir also told Newsweek that leadership at the campaign previously offered a pay increase for field organizers, but that the offer was rejected in a formal vote. According to the Post, Shakir offered organizer pay to be raised to $42,000 annually and extend the workweek to six days. The offer was reportedly rejected because it would have elevated staff to a pay level in which they’d be responsible to pay more of their own health care costs.

Let’s note what Mankiw did not. The negotiations also involved what appears to be a decent level of fringe benefits in addition to a $36,000 per year salary. These workers are apparently working 60 hours a week, which if they did so for 50 weeks would indeed translate into 3000 hours per year at $12 per hour. Does Harvard require its faculty to put in such an incredibly demanding schedule? I hope not as we know Mankiw loves to spend time with his children. Now if one worked 6 days a week and 8 hours a day for 50 weeks, then $36,000 per year translates into $15 an hour. How Mankiw interprets this story into evidence that we are seeing a competitive labor market moving along a downward sloping demand curve is beyond me. I’m sure he can explain this all to his students at Harvard.

OK, sorry if this is just over the top, but this evening Trump’s close pal, Sean Hannity, has gone over the top both predicting and clearly supporting a full blown attack on Iran, “take out all their nuclear facilities.”  Curiously a sign of how over the top this is was given by one of his guests, a colonel, warned that it would take nuclear weapons by the US to fully take out the most deeply buried  Iranian capabilities.

I am reasonably certain that part of why Hannity was sounding the war trumpet rather than his usual “investigate Hillary and the Steele dossier” baloney is that today Trump put himself into a difficult contradictory situation, having gone doubtful last night on his followers in NC chanting “Send her back” to supporting those chanters today. So, much easier to distract everybody with a possible war in the Persian Gulf (sorry, not “Arabian Gulf,” not yet), especially given that there has been an ongoing escalation of incidents in the Gulf over oil tankers, with Iran pushing back against the US withdrawing from the JCPOA nuclear deal.

But the bottom line is that what Hannity spouts often ends up being what his close pal Trump ends up doing.  I take this spout from Hannity all too seriously.  We may well be in more serious war with Iran soon, with such an effort accompanied by far more massive lies than the Bush admin gave us when he stupidly invaded Iraq on false pretenses, although Hannity is assuring us that “It will be all over very soon, with no boots on the ground.”  Yeah, we have heard that one before.

Barkley Rosser

Several days ago in WaPo, Catherine Rampell published a highly reasonable column calling for eliminating the century-old US debt ceiling, something no other nation has ever had, a position supported by a wide array of economists including such a conservative GOP stalwart as the recently deceased Martin Feldstein, a former CEA Chair for Reagan.  I have made numerous posts here on this in the past, but the issue is hot again as once again the debt ceiling is being rapidly approached.

The latest story is that the “adults in the room,” Treasury Secretary Steven Mnuchin and Speaker of the House Nancy Pelosi, may be very near an agreement to raise the debt ceiling, Reportedly Pelosi has been open to eliminating the ceiling, but in the current circumstances I certainly understand why she might be wanting to secure a two year agreement to preserve funding for social safety programs crazy right wingers want to use the debt ceiling issue to trash as well as holding off any shutdowns this fall.  This is what used to be known as “good government,” but in the current environment, even this apparently reasonable deal, which also has no non-economic sideshows involving abortion or whatever, may yet not pass.  Pelosi says it must be agreed to by tomorrow evening if it will get passed properly by Congress before they all go on leave and the government might run out of money in early September (corporate tax payments have been way down due to Trump tax law).  Eliminating the ceiling would avoid all this bs, but this is not the moment for that.

This is definitely a weird and unprecedented situation.  For over a century we have had this completely indefensible debt ceiling, which has been raised so many times it is not worth counting, and when the WH and Congress have been controlled by the same party, it has been no big deal, although obviously that is what we need to get rid of the damned thing.  However, historically, when there has been split partisan control the game has been the WH pushing raising the ceiling while the opposition party in Congress has made lots of complaining noises and often made demands for raising it.  The problem this time is that the major power broker of the administration, Acting Chief of Staff Mulvaney, was part of the tea party fanatics in the House who when Obama was prez tried to block raising the ceiling.  Apparently at times he and Trump have indulged in fantasies that if there is a default he could personally control which agencies get funded and which do not.  This is not true, and maybe they are figuring it out, but Mulvaney has said nothing, and Trump must pass on this.

If he messes up the deal, it will be all his fault, as his own Treasury Secretary has cut it with the Congressional leader of the opposition party in the House, with reportedly the toadish GOP-controlled Senate ready to go along.  He may or may not have figured out that triggering a shutdown did not help him, but if he thinks triggering a default will not be worse, this will be a big mistake, to put it mildly.

Barkley Rosser

Yes.  For centuries throughout the entire world that crucial body of water has been called “the Persian Gulf,” even though in 1935 the nation of Persia changed its named to “Iran.”  I became aware several decades ago when I was in Saudi Arabia that they have a really big fuss that it should be called “the Arabian Gulf.”  I think maybe their fellow Arab GCC members have been supporting this nonsense as well, but nobody else did, certainly not the US.

But now here it is, and I had noticed in some other US media outlets recently. Is this yet another payoff to the murderous Saudi Crown Prince Mohammed bin Salman (MbS) for funneling piles of money to Jared Kushner and the Trump Organization?  I mean, Fox News does what Trump and his flunkies want.  So, not only are we not punishing MbS for his awful war in Yemen, which even the UAE is now getting out of, not only are we not punishing him for ordering the assassination of a US-based journalist, Jamal Khashoggi, but, heck, Trump through Fox News and I am not sure who is trying to change the name of this body of water from its historical origin to kiss the ass of this disgusting murderer.

Oh, there is also the matter that Trump has gotten himself off into a totally anti-Iran schtick, with his withdrawal from the JCPOA and his imposition of massive sanctions on Iran.  But this looks like an attempted permanent punishment.  Frankly, I hope the rest of the world does not go along with this bs, but in the US, I fear he may have succeeded, so many people are so ignorant.

Barkley Rosser