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Who Is Really A Socialist?

Who Is Really A Socialist?

Here are some varieties of “socialism:” command socialism, market socialism, socialist market economy, social democracy, democratic socialism, right wing socialism, utopian socialism, corporate socialism, just plain vanilla socialism. Here are some people who have claimed to be socialist, some of them selecting one or another of these types, but some just keeping it plain vanilla generic: Kim Jong-Un, Xi Jinping, Stefan Lofven, Nicolas Maduro, Bernie Sanders, Alexandria Ocasio-Cortez (AOC). Who is really a socialist and can we make any sense of all this?

Among the strictly economic issues involved here, aside from the political ones, there are three that stick out prominently: ownership, allocation, and distribution. The first may be the most important, or at least the most fundamentally traditionally classical: who owns the means of production? This is bottom line Marx and Engels, and they were unequivocal: socialism is state ownership of the means of production, even though in the “higher stage of socialism” generally labeled “pure communism,” the state is supposed to “wither away.” Capitalism is private ownership of the means of production, although there are debates over some intermediate collective forms such as worker-owned collectives, something favored by anarchistic and utopian socialism and its offshoots and relatives.

Regarding allocation the issue is command versus market, with command in its socialist form coming from the state, although clearly a monopoly capitalist system may involve command coming from the large corporations, with this reaching an extreme form in corporatism and classical fascism, sometimes called corporate socialism. Needless to say, it is possible to have state ownership of the means of production, classical socialism, but some degree of markets dominating allocative decisions.

Then we have distribution. In the Critique of the Gotha Program, Marx said the goal of communism was “from each according to his ability, to each according to his need.” Emphasizing if not precisely that at least a focus on minimizing poverty and supporting those in need as well as increasing the overall level of income and wealth equality is another element of many forms of socialism. This focus has been especially strongly emphasized by social democracy and its relatives, although most forms of socialism have at least officially supported this, if not always in practice.

Regarding our list of socialisms, where do they stand on these three, adding in the big political issue of democracy and free rights versus dictatorship, well: command socialism involves as its name suggests both command in terms of allocation combined with state ownership of the means of production, with no clear outcome on distributional view. Historically permanent command as a system has coincided fully with dictatorship, including when this occurs with capitalism as in fascism, especially in its German Nazi form, a nearly pure form of command capitalism. The classic model of this form was the USSR under Stalin, with its leading current example being the Democratic Peoples’ Republic of Korea (DPRK), aka North Korea, which pretty much tells us what kind of socialist Kim Jong-Un is.

Market socialism combines state (or collective) ownership of the means of production with market forces driving allocation decisions. The old example of this that also had that holdover from utopian socialism of workers’ management, was Tito’s not-so democratic Yugoslavia, which blew up, although its former province of Slovenia eventually was the highest real per capita income of all the former officially socialist nations. According to Janos Kornai, market socialism, including his home of Hungary, suffered from the problem of the soft budget constraint, although we have seen that in many mostly market capitalist economies with rent seeking powerful corporations.

There is no clear difference between market socialism and the “socialist market economy,” but the Peoples’ Republic of China (PRC) has gone out of its way to officially label itself this latter term, perhaps due to the collapse of Yugoslavia. Many, including the late Ronald Coase, claim China is really capitalist, but in fact while there is now much private ownership, state ownership remains very strong, and while there is no longer organized central planning, command elements remain important, and the ownership situation is very complicated, with many firms having substantial while partial state ownership. In principle this form could be democratic, but it is not at all that in Xi’s current PRC, which has had a largely successful economic system for the last four decades, despite high inequality and other problems. In any case, this is the system Xi Jinping is identified with.

Social democracy now is the form that emphasizes distributional equality and support for the poor over the ownership and allocation elements. This is now, most dramatically in the Nordic nations, although it has had a weaker version in Germany in the form of the social market economy. The name “social democracy” comes from the now century and a half old German Social Democratic Party, within which at the end of the 19th century several of these forms debated with each other, although in the end what came out, inspired by the original “revisionist” Eduard Bernstein, was what we now call social democracy, which is indeed politically democratic and supporting an expansive welfare state, while not pushing either state ownership or command. Stefan Lofven is the current prime minister of Sweden and also leader of the Social Democratic Party of Sweden. A welder and union leader, Lofven just managed to get reelected and form another government last month, although his new government is “moving to the center,” and while he is certainly a social democrat, he has also described himself as being a “right wing socialist,” and Sweden has pulled back somewhat from its strongly social democratic model over the last quarter of a century.

Which brings us to democratic socialism, currently highly faddish in the US given that both Bernie Sanders and AOC have identified themselves as followers of this ideology. The problem is that of all the others mentioned, this one is the least well defined, and Bernie and AOC themselves seem to disagree. Thus, when pushed Bernie posed Denmark as his model, which is a leading example of social democracy, arguably more so even than Sweden now, although its current prime minister is not a Social Democrat (party) and argues that Denmark is “not socialist” (noting its lack of command state ownership). But AOC has at times said that democratic socialism is not social democracy, while exactly what it is remains not well defined.

One source might be the platform of the Democratic Socialists of America (DSA), which AOC officially belongs to. This supports a democratic and decentralized form that emphasizes worker control, if not clearly ownership, with this harking to utopian socialism, with an ultimate goal of state or some other form of collective ownership, but not in this document command. AOC herself has now pushed forward the Green New Deal, (GND) which should perhaps be labeled “Green Socialism,” yet another form. I do not wish to get into a discussion in this post of the details of the GND, regarding which there has been some confusion (retracted FAQ versus 14-page Resolution) about which there remain some uncertainties. DSA has at times nodded to the British Labour Party, which after 1945 under Clement Atlee, both nationalized many industries while expanding the social safety net, while avoiding command central planning. However, the GND seems to avoid nationalizations, while emphasizing a major expansion of r
the social safety net, along with some fairly strong command elements largely tied to its Green environmental part, arguing that mere market forces will be insufficient to move the US economy off its current fossil fuel base soon enough.

Which brings us to generic socialism and the still not described Nicolas Maduro, President of Venezuela. He is loudly describing himself a socialist, but what form, if any, is unclear. But his economy is the biggest current economic disaster on the planet, so his ongoing claims of being a socialist are damaging the label, as seen in the eagerness of conservatives to identify socialism with him and denounce people like Bernie and AOC and all the Dem prez candidates signing onto the GND even before they knew what was in it, with this exemplified by Trump ranting loudly on this theme during his SOTU.

Looking closely it seems that indeed Maduro and Chavez before him, who preferred labeling the system “Bolivarianismo” rather than “socialism,” did carry out portions of various of the forms of socialism. Many firms were nationalized, with currently the number of privately-owned firms about half of what there were 20 years ago (when Chavez was elected), although many of those original firms have simply disappeared. About 20% of farmland was nationalized, mostly large-scale latifundia, supposedly to be turned over to landless peasants. But much of it has simply come to be uncultivated by anybody. In any case, there remain large portions of the economy privately owned, with still wealthy owners living in gated communities and not suffering.

Perhaps the most damaging of the socialist policies have been scattered efforts at command, not based on any central plan, especially using price control. In agriculture this has been a complete disaster, especially once hyperinflation hit. Food production has collapsed, and lack of food has driven 3 million out of the country, with many still behind having lost much weight. OTOH, the regime is supposedly being green by emphasizing traditional local crops. But this is not even a joke. Bolivarianismo’s main positive was its popular redistribution policy, which increased real incomes in poor areas, especially while Chavez was in power, borrowing from the social democracy model.

The problem here is that all of these things, even many of them together, have been recently tried in neighboring nations, such as Bolivia, without similarly disastrous results. Somehow Venezuela has just completely blown apart, with reportedly 86% of the population now opposed to Maduro and people in the poor neighborhoods of Caracas who were the Chavismo base now out demonstrating in large numbers (and being violently suppressed) after Maduro got reelected in a clearly fraudulent election, with most of his neighbors calling for his removal.

I think two things not related specifically to socialism have played crucial roles here: corruption and hyperinflation. The most important agent in the Venezuelan economy is the state-owned oil company, which was nationalized long before Chavez came to power. But he, with Maduro made this worse later, firing the competent technocratic managers of that company and replacing them with political cronies, with the outcome being a serious decline in oil production, this in the nation with the world’s largest oil reserves. Which leads to the other problem, massive corruption, with the incompetent cronies at the top of the state-owned oil company the worst. The other killer item has been the hyperinflation, whose source I do not really know, although Venezuelan tax rates are lower than those in the US. Certainly, part of it is massive budget deficits, and as the MMT people note, they were borrowing from abroad. I do not fully understand all involved in the hyperinflation, although that is not a standard phenomenon in a full-blown command socialist economy, but the hyperinflation has clearly been the final killer of the economy, collapsing support for Maduro. Apparently about a third of the population still supports “socialism,” while many of those people reject Maduro, claiming he has blown what Chavez implemented, which Maduro certainly has.

So, for a summary. Command socialism a la the DPRK is an awful disaster, famine plus dictatorship. Market socialism/socialist market economy a la China has been good at rapid economic growth and much else, although suffering many ills on the environment and income distribution, not to mention also being dictatorial. Social democracy a la Sweden and Denmark has done as well as any economic system on the planet and is democratic and free, but has also suffered from various problems. The “democratic socialism” of certain American politicians remains poorly defined and is in danger of being tied to the disastrous and vaguer form of “socialism” happening in Venezuela, with the danger for US politics being that conservatives may actually succeed in tying this poorly defined democratic socialism with the barely socialist disaster in Venezuela.

Personally, I wish that Maduro would stop calling himself a socialist. Then he should also resign and get lost for the good of his people ASAP, although I do not support overdone US efforts by sanctions or possible invasion to bring this about. Let it be the Venezuelan people who remove him, however.

Barkley Rosser

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The Usual Suspect Bashes Social Security

It Is Monday And Usual Suspect Bashes Social Security

 That would be Robert J. Samuelson at the Washington Post, and, yes, he has done it yet again, actually for the first time in a while.  Dean Baker has already done a good job of cutting him up over on CEPR, but I can’t help piling on as well.

That would be Robert J. Samuelson at the Washington Post, and, yes, he has done it yet again, actually for the first time in a while. Dean Baker has already done a good job of cutting him up over on CEPR, but I can’t help piling on as well.

Samuelson presents his case as opposition to Social Security being expanded as proposed by Cong. John Larson (D-Conn). Samuelson also cites a recent study Andrew Biggs at AEI supposedly showing that old people have been doing better in income terms than previously reported.

Dean notes several points. One is that the current setup of Social Security is that is going to be reducing benefits over the next few years as retirement ages get raised as a result of long past agreements, actually dating to 1983. The supposed expansion by Larson is quite minor and mostly just offsets this planned reduction, although not precisely.

Another point is that while it is true that while some older people have been doing better than previously reported, although not the poorest recipients, the main source of this better performance is due to something that will be disappearing in the near future. It is due to income from defined pensions, which have nearly all disappeared. Such income will be less and less important for older people as time proceeds.

I shall add to these valid points one other. It is a par for the course nearly all times RJS gets off onto this topic. Early in his column he sets up as how disastrous for future budget balances all these awful “entitlements” will be is to cite projections for Social Security, Medicare, and Medicaid all lumped together. So, according to the CBO, while federal transfers to over 65s in 2005 was 35% of federal outlays, and those rose to 40% in 2018, these are projected to be 50% in 2029. Now while this might happen if no changes happen, the overwhelming majority of this increase is due to to expected further increases in medical care prices, not due to an increase in use, much less an increase in Social Security spending. It is only a couple of those projected percent increases.

He does this all the time, citing these kinds of scary looking aggregate numbers and then jumping to focus on Social Security and how we need to cut benefits (and certainly block any proposed increases in benefits). He never talks about how maybe we should make serious reforms in our health care system that would really put a serious dent in those projected increases. I recognize that this is a lot harder than it may seem (see all the battles over Obamacare). But RJS simply shreds his own credibility by failing to make this point before he jumps right in to wildly exaggerate the fiscal issues related to Social Security.

OTOH, given how much just totally weirdly wacko things that have been going on, having Robert J. Samuelson back on his old Monday morning schtick bashing Social Security is almost a nostalgic relief, a return to older and simpler times.

Barkley Rosser

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Ruminations On Virginia’s Difficult Situation

Ruminations On Virginia’s Difficult Situation

A week ago, I posted here supporting VA Gov Ralph Northam, comparing him favorably to the late Robert C. Byrd of WV. A day later I joined the call for him to resign after his bizarre press conference that has still left unpleasant unresolved issues such as who put that awful photo in his yearbook and why. Since then much else has come forth, and this continues. In any case it looks like Northam may hang in for at least awhile, although the situation is complicated and constantly changing, to put it mildly. What I intend to add in this post beyond the latest news is a combination of inside local information as well as, hopefully, a deeper historical perspective.

Last morning’s (Friday, 2/8), Washington Post top headline was that Northam would not resign soon, and late this afternoon I as an employee of the Commonwealth of VA received an email message saying he hoped we would all support him continuing to lead the state, while carefully not being too out there too much on that he would stay in office for his full term.

One reason why he was not going to resign immediately, even without the recent collapse of his most immediate successors, is that until Feb. 23 the VA legislature is debating a serious budget issue. The Trump tax law has resulted in a revenue windfall for Virginia. This involves technical details I know but will not bore any readers with this. So, there is an ongoing debate in the VA legislature on what to do with this extra money, with the barely majority GOP in the legislature saying give it all to upper middle-income persons, while Northam and the Dems have proposed giving half of it to lower income people while using the other half to fund various state initiatives. If this current scandal had not appeared, I think Northam would have gotten an agreement not too far from what he wanted. Now in his weakened state, the ultimate compromise will be closer to the GOP version.

For any not following the news since a week ago, both of Northam’s immediate successors have themselves come under unpleasant scrutiny. Lt. Gov. Justin Fairfax has now been seriously accused of two sexual assaults. When accused of the first he denied it and hired an attorney. The second accusation coming a few hours ago is of rape, and while earlier many were supporting him to replace Northam, this now seems to have become unlikely. I note that I never liked Fairfax. I know all these people personally, and the African American I would like to see as governor is Levar Stoney, currently Mayor of Richmond and a grad of JMU where I teach.

And now the second in line to the governorship of VA, assuming that both Northam and Fairfax resign (neither of which at this point has so far remotely come close to doing so), is Attorney General Mark Herring, now in his second term, having stepped aside from running for Lt Gov to let the now seriously damaged J. Fairfax run for that. Last Thursday AG Herring revealed that he also had performed in blackface in 1980 at UVa at age 19.

If Northam, Fairfax, and Herring all resign or forced out of office, then the acting governor will be the Speaker of the House, Kirk Cox, not only a Republican, but one how just gave an impassioned anti-abortion speech full of ridiculously irrelevant Biblical passages, given that there is nothing in the Bible that directly forbids abortion.

As it is, it appears that all of this blew up because Northam is a pediatric neurologist, who only recently became a politician. So when Dems in the VA legislature attempted to loosen rules on late abortions, Dr. Northam got into rare and weird cases I was not aware of involving treatment of deformed fetuses and whether one born should be “revived.” Personally, I do not know how to deal with such extremely rare cases, although basically siding with mothers and their physicians. But Republicans cherry picking this overly specific discussion by Dr. Northam turned it into “infanticide,” with Trump making this charge in his SOTU.

More immediately and seriously the rumor I have heard is that what triggered the revelation of that embarrassing photo in Northam’s yearbook came as a result of his professional testimony about this odd and rare case, which his opponents seized on, blocking any expansion of abortion rights in VA and providing fodder for Trump’s ranting in his SOTU about “infanticide,” a false charge.
But back in VA, reportedly a roommate from med school of Northam got ticked off by this medical testimony by Northam, and then leaked the story to whatever media about the yearbook photos. This set off the call that he should resign, leading us to the now unacceptable (although I read, he has hired lawyers, puke), and then the now damaged AG Herring. While so far Speaker Cox is “clean,” aside from being a far-right winger, the GOP majority leader of the state senate, Norman Tennant, has been accused of a half century ago being an editor of a yearbook containing racist photos.

I have lived in VA for 42 years and have deep south ancestry including VA. But this matter has made me realize that for all my deep family background going back to the 1600s in VA, I was and am a “damned yankee” to all those born and raised here. My parents were born and raised in Deep South northern Florida, and when young I spent serious time there. This made me think I knew the South, but I now know that ultimately I was an outsider, especially given that I went not only to high school in liberal/progressive Madison, Wisconsin, where the state capitol building has a museum for the Grand Army of the Republic, the ultimate hard core of the northern Union that won the Civil War (“War of Northern Aggression according to a cousin of my father that my wife from USSR/Russia met in 1987).

So, a big revelation to me in the last week is how widespread this “blackfacing” and related racist manifestations were even into recent times. The yearbook where Northam’s photo appeared (Eastern Medical School of Virginia) had racist photos as recently as 2013, when the then dean just shut down the yearbooks. I have never seen a black faced performance, but now old very liberal and local friends have been surfacing with old past incidents of racist conduct. This sort of resembles post-WW II France, where many collaborated with the Nazi Vichy regime, but then later joined the anti-Nazi Resistance. Eventually this became a matter of when one turned from one side to the other, and good liberal close friends have been essentially playing postwar French fessing up to just exactly when they stopped using the “n-word,” much less blackfacing.

The deeper history of all this is in Virginia 400 hundred years ago in 1619 when on the one hand the oldest continuing English-speaking legislative body in North America was founded, the same one (with some modifications over the centuries), that I noted above is trying to resolve the Trump tax “reform” with VA tax law. The other is the first arrival in what is now the USA of African slaves. Needless to say, this latter matter is on many minds and relevant to this current controversy.

To make things even worse, it was in Virginia in 1705 that the crucial laws were passed fully establishing that slavery was to be of people of African descent and that those people could not marry anyone of European descent. So since then in 1860 the state had more slaves than any other, its capitol became the that of the Confederate States of America, with half the battles of the succeeding Civil War (or “War of Northern Aggression” according to some of my cousins of earlier generations), and then its state capital became the capital of the Confederacy. This led to half the battles of the Civil War being fought in Virginia.

More recently we had the Byrd Machine supporting resistance against racial integration of public schools after Brown vs Board of Education in 1954. Eventually this was all over come. But in the private places, including many frats on many campuses until very recently, racist practices such as “blackfacing” persisted. And although the worst violence came from outsiders, in Charlottesville in August, 2017, we saw overt racist violence in Virginia.

Eventually this has become personal. With all these revelations, very liberal friends of mine have now outed themselves as having been varying degrees of racist in the past. I now realize that while I have deep southern ancestry including high officers in the Confederate army, I was born and raised in the North. I did not see all this stuff, and I did not personally have to go through this process of personally ‘deracializing’ myself, which I now realize my deep southern parents went through, my father moving from deep south racist Democratic Party affiliation when he went to math grad school in Princeton in the 30s to being a Republican, When he took us in 1963 to uber-progressive Madison, Wisconsin, well, no wonder I did not do blackface.

A final bottom line is that Gov. Northam’s still unresolved yearbook photo has the absurd idea of possibility of a racial reconciliation to all this. I do not know why he continues to claim no knowledge of the origin or handling of this old photo of black faced white person standing next to someone wearing a KKK hooded outfit that is in his medical school yearbook. But while whatever relation it had to Gov. Northam personally, it could be interpreted in its superficial stupidity as also showing a possible racial reconciliation for the long and troubled racial history of Virginia. This now shocking photo shows a black faced man standing peacefully next to somebody wearing a KKK outfit. While indeed the obvious interpretation of those photo supports racism, another interpretation is of harmony among the races, even including the old southern racists of the KKK.

Observing old Virginia friends of mine now confessing their past racist behavior and views, it seems that for them this looks sort of like the post-WW II French. After the war they were supposedly all anti-Nazi and supporters of the anti-Nazi Resistance. But, of course, many did work for the pro-Nazi Vichy regime after the German conquest of France in 1940. But then, as the Allies increased their obviously ultimate victory over that regime, more and more former collaborators with the Vichy regime would quit and join the Resistance. Eventually this game became a matter of timing one’s switch from working for a ruling Vichy to an anti-Vichy/Nazi Resistance.

Several of my good friends now confessing their past racist conduct have put it in these terms: it has become a matter of timing, just when did one finally stop doing these bad old behaviors? Reportedly Ralph Northam only learned two years ago that “blackfacing” was not socially acceptable. Whatever comes out of the current crisis in Virginia, hopefully in the future we shall have better informed and more deeply understanding leaders in Virginia and more broadly.

Addendum: 2:30 PM, 2/9/19: The VA legislature has reportedly come to an agreement on its budget dispute. Apparently, the agreement tilts strongly towards what the GOP members favored due to the weakness of the Dems arising from these scandals involving their elected leaders in the state. Not surprising.

Barkley Rosser

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Will INSTEX Replace SWIFT Bank Exchange?

Will INSTEX Replace SWIFT Bank Exchange?

Probably not, but reportedly a “White House insider” is afraid it might.

Instex is the new exchange created by UK, France, and Germany, to be based i Paris and run by a German banker, to get around US sanctions against Iran.  Apparently it will sell Iran humaanitarian goods such as pharmacueticaals and food not subject to the sanctions, with those being paid for with Iranian petroleum that will then get sold elsewhere, none of this involving any US dollars.  It is probably too small to threaten the dominance of the international SWIFT bank exchange system, but this does open up the possibility for nations to avoid US limits on their international financial transactions, with the US having used the SWIFT system in the past to crack down on unfavored nations.

Addendum:

There is a long, front page story in the Washington Post this morning about this matter Griff White and Erin Cunningham. For starters, I can relay that “Instex,” which should probably be INSTEX, stands for “Instrument in Support of Trade Exchanges.”  Second is that the Trump’c campaign to get European, and especially German, companies to obey the anti-Iran US sanctions has beeen very agrressive and largly run out of the US Embassy in Berlin, with US Ambassador ro Germany, Richard Grenell, the point man on this.  He had received press attention and criticism by some German business people when he arrived in Berlin last May and publicly called for German businesses to withdraw from Iran.  That criticism did not slow him down one bit, and his efforts have led to some major German companies to withdraw, notably Siemans, VW, and Daimler-Benz, all of which have large-scale operations in the US.

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How To Go After The US Wealthy Reagan Style

How To Go After The US Wealthy Reagan Style

Ah yes, this is going to be another one of those ironic posts about what a big leftist liberal Ronald Reagan was compared to the current GOP gang in charge of so many of our policies, especially our tax policies. Certainly, the image of Reagan is one who cut taxes for the high-income wealthy, and in general that is the case. But there were a few items going the other way, and again, compared to current policies some combination of what came out of the two major Reagan tax cuts looks downright progressive by comparison.

Let us start with taxing wealth, with the Elizabeth Warren proposal to put a 2 to 3% annual wealth tax on those holding over $50 million. I am not opposed to this in principle, but worry that it faces very serious practical problems of implementation due to the high costs involved in simply determining the wealth of these large and complicated portfolios, especially given the hollowing out and reductions at the IRS, which would have to do all of it. As it is, whereas not too long ago 20 nations taxes wealth, that is now down to three: Norway, Spain, and Switzerland, with the latter lacking either a property tax or a capital gains tax. What have those other 17 nations done? Well, going in the opposite direction from where the US has gone under Trump with his tax “reform.” Indeed, a model might well be what we saw in the Reagan tax laws. So, one of the most important both as a redistribution mechanism taxing wealth while also raising revenue would be to return to the Reagan 1986 tax law’s taxing capital gains at the same rates as income is. The other one is also to undo the cuts in estate taxes Trump has put it and move back to what Reagan had in place after his 1981 tax law, a much more redistributive system than we see now. Both of these, especially the capital gains tax change, would be easily to implement and enforce.

On income taxes, the proposal by AOC for a top marginal income tax rate of 70% does not face the implementation problems the straight wealth tax faces. As noted, putting this only on those earning over $10 million per year should not be too damaging on various fronts, although it would probably not raise all that much revenue. It might be better to go with what came in with the 1981 Reagan tax law of a top marginal rate of 50%, but having it on a broader set of upper income people. This would arguably both raise more money than the AOC proposal while also arguably having fewer disincentive effects. So, returning to a combination of the Reagan 1981 and 1986 tax laws might be something that can be adopted, implemented, and enforced, which would both raise more revenues, and engage in wealth and income redistribution.

Barkley Rosser

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The End Of The End Of The Cold War

The End Of The End Of The Cold War

It is a sign of how wacko things have gotten that the truly most important event of the past week has simply been buried in the news by all the huffing and puffing over Trump’s shutdown ending and these revelations about VA Governor Northam. This would be decision by the US on Feb. 1 to withdraw from the Intermediate Nuclear Force (INF) treaty with Russia, followed by Russia’s doing so as well shortly thereafter. This is both historic and very serious, far more so than Trump’s wall or Northam’s photographs.

The treaty was signed in 1987 between then US President Reagan and then Soviet President Gorbachev, culminating several years of negotiations. It led to the destruction of around 3600 short and intermediate range nuclear missiles, including most importantly all of those in Europe that threatened the potential outbreak of a war on that continent between NATO and the USSR. It was one of the most important moments on the way to bringing about the end of the Cold War, and indeed it is unfortunately accurate to describe the ending of this treaty as the end of that end.

I have seen a number of people speculating that this action somehow shows Trump “standing up” to V.V. Putin, being a tough guy and all that. But the nearly immediate acceptance with virtually no complaint by Putin of this move suggests otherwise. US and also western European officials have argued that Russia has been in effective violation of the INF since 2014 when it developed a new cruise missile, 97M925, that can be easily modified to make it fly in the forbidden distance ranges. Russian leaders have argued that they were not in violation given that this missile also had as its main range adjusted and therefore are not in violation and none violating the limits had been deployed. Putting such missiles with the violating ranges in deployment would directly threaten western Europe. As it is, Putin is in a position now to rapidly deploy them in a way to threaten western Europe while the US has nothing to put in place to reply to this. So, Putin gets to gain a major military edge and threaten the western Europeans while getting to blame Trump for having ended the treaty by withdrawing and allowing him to do this. The Europeans in question had opposed Trump ending the treaty, with indeed this probably being one of those things Merkel was trying to maintain influence with Trump over by not complaining too loudly about the US pressuring German companies to stop dealing with Iran.

Another factor in this matter emphasized by US leaders is that China was never a part of the agreement, and I gather has been developing such intermediate range missiles. But those were unlikely to be deployed in Europe, where the removal of such missiles 32 years ago was a triumphant movement towards the reduction of mutual tensions and towards peace.

All the way around, there is nothing good at all about this development, and it most definitely doesn’t show Trump doing something that is against the interests or desires of V.V. Putin. The outcome may well be a new arms race, which will please the military-industrial complexes in both the US and Russia, and maybe China as well. No, this is not a good development at all

Barkley Rosser

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I Support Virginia Governor, Ralph Northam

I Support Virginia Governor, Ralph Northam

Current media is denouncing VA Gov Ralph Northam with many demanding he resign now over an unfortunate incident in his youth.

I note that that the final crucial person who gave us Obamacare was the late Robert C. Byrd of West Virginia. He was in his youth a member of the Klu Klux Klan, indeed held some office in it. In the end when the ultimate votes in the Senate came, which had Republicans denouncing him over his 1940s support of the KKK, and some of them openly hoping he would die as he was in bad health and did die thereafter, Robert Byrd did show up for the ultimately crucial vote, wheeled in in a wheelchair, to cast the ultimately final crucial vote that gave us ACA/Obamacare, which despite its many flaws has improved the health of many people in America.

Regarding Ralph Northam, an extremely excellent and super competent governor of Virginia, a few days ago, affirmed the right of women to make the ultimate decisions regarding their bodies with the support of just one doctor (three are now needed), he has just been denounced on alt-right and even Hannity outlets for his defense of a woman’s right to choose. The attacks on him from the organized right on this matter have been horrendous. They have accused him of supporting “infanticide.” This charge is disgusting and false. But the GOP is trying to make his supremely responsible and medically wise view a crime. They are just hypocrites.

I will not call those now demanding Northam’s resignation over his unfortunate photo from 35 years ago hypocrites. Indeed, I sympathize, especially with African Americans, who have had to face all kinds of racism here in Virginia as in the awful violence in Charlottesville in 2017 as well as the ongoing refusal at the state level to allow local governments to remove Confederate statues and monuments. It may well be that Northam will feel in the end that he must resign for his youthful mistake. But I think it will be unfortunate as he really has been a good governor and is personally a nice guy (I have met him). The photo certainly does not represent his current views at all.

Addendum, 3:25 PM, 2/2/19

I fear that I am increasingly leaning to Northam needing to resign, despite my generally high regard for him. He has just made a public statement that has really confused things, and I fear he may simply have fatally damaged his governorship with how he has messed this story up. He is now claiming that he is not in the photo, but says he did blacken his face once in 1984 to pretend to be Michael Jackson for a dance or skit, where he even won a prize (ugh). He also says he is not the person now he was then and is begging for forgiveness. I guess he deserves the latter, but he made a real botch of this, and I fear it will not get better. Ironically the lt. gov who would replace him if he were to resign, Justin Fairfax, is African American. Anyway, I am sorry about this whole situation, but now fear Northam simply cannot clean up the mess he has made of it.

Barkley Rosser

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Robert H. Nelson Dies: Religion And Economics

Robert H. Nelson Dies: Religion And Economics

Robert H. Nelson of the University of Maryland Public Policy Department died at age 74 on Dec. 15 while attending a conference in Helsinki, Finland.  He was the leading economist writing about the relationship between religion and economics, notably in three books: Reaching for Heaven on Earth: The Theological Meaning of Economics (1991), Economics as Religion: From Samuelson to Chicago and Beyond (2001), and The New Holy Wars: Economic Religion vs. Enviornmental Religion  (2010).  I spent several days with him some years ago at a conference on forestry issues where he was presenting his views on environmentalism as religion.  In any case, his death has me thinking about the broader issues he wrote about.  I shall note the arguments in these books along with some further observations.

His first book was essentially a history of economic thought that put a certain theological perspectve on thnkers mostly from the fairly distant past. A basic theme in all of his books is that economics is a form of secular religion that posits a material salvation in some distant future as a result of economic  growth and redistribution, a material heaven on earth.  In that book he posed two competing theological strands in the history of economic thought: a Roman (Catholic) “rationalism” and a Protestant “revelationism.”  The former started with Aristotle and included such figures as Aquinas, Adam Smith, Saint-Simon, and Keynes.  The latter started with Plato and Augustine, Calvin, Darwin, Spencer, and Marx.  A number of observers criticized this pair of categories, noting particularly that virtually the only economist in the second list is Marx (although Spencer did write on economics somewhat).  I happen to share the criticisms that it is not clear how useful or meaningful this pair of lists is, although the tradition of lining up historiccal intellectual figures as being Aristotelian or Platonic has a long history in philosophy.

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The Nobel Economists Petitiion on Carbon Tax And Dividend Plan

The Nobel Economists Petitiion on Carbon Tax And Dividend Plan

As many now know, a large group of prominent economists, led by a large group of Nobel Prize winners, has published a petition in the Wall Street Journal.  This petition declares the idea of putting a tax on carbon and then returning the receipts from it to the population on an even per capita basis to be the best and most efficient plan for dealing with global warming.  This group continues to encourage more professional economists to sign this petition.  I had previously received an invitation from Janet Yellen to do so, and today one came from Larry Summers.  I kind of doubt that either specifically directed that I receive the invitation or, less likely, actually sent the message, although I could be wrong as I do know both of them.  This petition shows how powerful this revenue neutral carbon tax fad has become.

As it is, I have not signed it, and my use of the word “fad” indicates my attitude.  I really do not get why so many proiment and clearly highly intelligent economists have signed onto this proposal as being the one and only way to deal with this problem.  Why are these people not mentioning cap and trade as an alternative (formerly known as “tradeable emissions permits”).  There are multiple reasons to believe that cap and trade is at least as good if not better than this tax dividend proposal, both in terms of effectiveness and also in terms of the politics of getting something done.

The most famous cap and trade plan was that enacted in the US in 1990 for SO2 emissions.  This plan eventually got superceded, but until that point it was universally viewed as a successful program, substantially reducing such emissions in a manner that did not trigger noticeable economic pain.  There are now a substnatial number of carbon cap and trade systems in place, with the first one out the door being that of the EU, put in place to obey the Kyoto Protocol, which actually favored such systems.  That system has faced criticism and had a major decline in its price in 2006, but has since stabilized, a fact not widely reported. Very recently the system has been put in place by the world’s largest emitter, China.  Other nations or major sub-national units adopting cap and trade for carbon include South Korea, California, and Ontario,  The closest we came ot having a national program to deal wiith carbone emissions in the US was early in Obama’s first term when he  got a cap and trade plan passed by the House of Representatives, only to have it blocked by Republicans in the Senate.

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Weirdly Non-Monotonic Yield Curves

Weirdly Non-Monotonic Yield Curves

This is a situation that may be on the verge of disappearing and more or less normalizing, but over the last couple of months US bond markets have exhibited a weird phenomenon of non-monotonicity. It has been even weirder than what we saw during the period of negative nominal interest rates, when what we saw was interest rates on US treasury securities fell from the shortest time horizon to a low usually around the two-year time horizon, with the pattern then reverting to its usual upward slope. What has been going on recently has been a pattern of rates initially rising with the time horizon in the normal pattern, then turning around and declining, then turning around yet again and rising again. I do not know what to make of any of this. I exhibit it in a table below for the three days, January 2, January 10, and January 18 of this year.
3 mo.     1 yr.     2 yr.     3 yr.     5 yr.    10 yr.     30 yr.

1/2/19         2.42       2.60     2.50      2.47    2.49      2.66       2.97

1/10/19       2.43        2.59     2.56      2.54    2.56      2.74       3.06

1/18/19        2.41       2.60     2.62      2.60    2.62      2.79       3.09

So, at the beginning of the year the rates rose from 3 months to 1 year, with rates declining to 3 years, and then rising after that. The same pattern was still holding on January 10. On January 18 things were somewhat more normalized with the mid-range decline being a decline from the 2 year to 3 year range, but then reversing to rise in the normal way after that.

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