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

RIP Tonu Puu

RIP Tonu Puu

Seems like more people I know are dying.  In this case it is a good friend of mine and occasional co-author, the Swedish economist, Tonu Puu, who was born in Estonia of an Estonian father and a mother of German ancestry.  As it was, he ended up speaking a very large number of languages, as well as being very cosmopolitan in many other ways. He was 83 years old and had cancer for some time, which is what I presume he did of, although the announcement did not specify a cause, but it happened this past Saturday in Umea in northern Sweden, where he was at the university there for most of his career.

Before talking about his work in economics, I want to note that probably more important for him was music.  He made baroque instruments such as viols and harpsichords and was so good at it that professional musicians had him make such instruments for them.  For many years he ran an annual Baroque music festival that attracted fine musicians from all over the world to Umea. I shall note here that an important characteristic of Tonu, which some of you may not like, was that he was deeply conservative in many ways. A sign of this in music is that he considered Beethoven to be the “worst thing that ever happened to music,” at least I heard him say that.  He saw Beethoven as being ultimately responsible for there being rock concerts in Venice that knocked off parts of the roof of the opera house.  I happen to disagree with that, seeing that as a pretty shaky link, but this was the sort of long-run perspective that he took to many things, full of his own integrity that ignored popular and transient trends, even if those were centuries long.

 

Truth Is The Daughter Of Time

Truth Is The Daughter Of Time

This is a frontispiece to a 1951 mystery novel by Josephine Tey (real name: Elizabeth Makintosh) named _The Daughter of Time_It is about the question of whether or not King Richard III ordered the murder of the “Little Princes in the Tower,” his nephews Edward and Richard, as has  long been alleged, and for a long time was simply accepted as historical fact.  This bestselling and very well and wittily written novel makes the case that Richard was framed by his successor, Henry (Tudor) VII, who usurped him after defeating and killing him in the Battle of Bosworth Field in 1485.  Tey manages to build up through the novel a very convincing case for this view, which I shall not get into the details of, although I highly recommend the novel, which I just finished reading. In any case, if she is right, or even partly right (because  have been many other accusations against Richard made as well), then this is one of those cases where “the victor gets to write the history.”

I note a few points.  The usual argument, still put accepted by many, is that Richard did the little princes in because they were threats to his having succeeded their father, his brother, Edward IV.  But in fact it is now accepted (documents surfaced centuries later on this apparently suppressed by Henry VII) that showed that they were illegitimate and thus not possible heirs to the throne. Richard had no reason to kill them.  He was invited to assume the throne by both houses of parliament and was thus completely legal and legitimate. And after his death, Henry had a Bill of Attainder brought against him in parliament listing all sorts of terrible things he supposedly did that justified the completely illegitimate Henry usurping Richard’s throne.  But murdering the princes was somehow not included in this Bill, which would obviously have been the top charge against Richard if it were true.  Furthermore, given Henry’s lack of any legitimacy, there was a large group of individuals, including the little princes if they were still alive, who had more claim to the throne than Henry.  He  was the British monarch who initially instituted Star Chambers that brought charges against each of these in turn allowing them to be “judicially murdered.” The grounds for these in some cases were as vague as “for certain reasons” (unnamed).  OTOH, a major reform Richard introduced was the right to bail.  There is much more, but this gives some idea of what Tey puts forth, most of which I have verified from other sources.

More Likely Bad Economic Forecasting: This Time From OECD And CBO

More Likely Bad Economic Forecasting: This Time From OECD And CBO

That would be the quintessential establishment and boringly conventional Organization of Economic Cooperation and Development, the Paris-based “rich nations'” entity that grew out of the Marshall Plan and has a reputation for excellent data, and also the Congressional Budget Office, generally regarded as bipartisan and highly professional.

So I saw their forecasts of US economic performance in terms of GDP and unemployment rates for the end of this year, and I find both to be highly unlikely, probably way too pessimistic.  I get these from a column in today’s Washington Post by the often execrable Robert J. Samuelson, but here he is playing it straight and just reporting.  Indeed, the main thrust of his column is to note an apparent disjuncture between the hot stock market and the not-so-obviously hot economy, suggesting either the stock market is overvalued or the economy is being under forecast.  I suspect actually that both are true, although I am not going to attempt to forecast the stock market.

Anyway, RJS reports two forecasts coming out of the OECD, one “pessimistic” and one “more pessimistic” for the US.  The first is sort of a baseline one that assumes the coronavirus is gotten to be more or less under control. The second one assumes a second wave of the virus this fall.  The first forecast sees a GDP decline for 2020 of -7.3%  with an unemployment rate at the end of the year of 11.3%.  The second more pessimistic one has GDP declining -8.5% with a resulting end-of-year unemployment rate of 12.5%.

Being Targeted

Being Targeted

Arguably this is paranoia, but the mayor and police chief of my city do not think so and have officially reacted with a formal response.  What a sign that I am an old whatever, praising local law enforcement, but, well….

So the issue is that late last evening a truck full of masked white men, and no, we are not talking health masks but ones that cover ID, with flags waving including the Confederate battle flag, were going up and down our block taking photos of certain houses, including ours.  What did these objects of this photographic effort find consistent?  We all had posters on our property declaring “Black Live Matters.” Many on our block became upset over this, including my wife, and now the City of Harrisonburg, VA  police are especially watching our block. I note that both the mayor and police chief of our city happen to be Black, for which at this time I am grateful.

Background here is that I have been living where I am for 32 years with my wife, Marina, in a block in Old Town of Harrisonburg, VA, where most of the houses are somewhat over a century old, and we are five minutes from the central square, as well as being 20 minutes from offices at James Madison University.  Where we are is given by the 2004 prez election.  There are 5 precincts in Harrisonburg, but ours, closest to JMU, was the only precinct in the entire Shenandoah Valley that went for Kerry over Bush. Yes, we are an island of “liberalism,” with Harrisonburg later in 16 going strongly for Bernie.

Death Comes To My Old Economics Department

Death Comes To My Old Economics Department

That would be the one at my alma mater, the University of Wisconsin-Madison.  I have learned that on July 6 one of its current members died, Bill Sandholm, an excellent evolutionary game theorist who was about 50 years old.  It is a sign of my age that he always seemed quite young to me, barely older than my oldest daughter, and now he is dead.  He was a very nice guy, aside from being a very capable economist who was the Richard Stockwell Professor of Economics and once helped me out with a paper that was in a Revise and Resubmit condition.

I bring this up because there is an unconfirmed rumor that he died of complications of Covid-19, with for the moment nobody that I know, including members of the department, knowing what he died of.  If the rumor is correct, he will be the first person I knew personally to die of this dreadful pandemic.  It does bring it rather home.

It also does so because it probably puts the final nail into any plan to visit Madison this summer, which I have done almost every summer if for no other reason than having family members there I wish to see, not to mention some friends still, and it being a very pleasant place to visit in the summer, cooler than Virginia where i live. Indeed, Plan A had been to be there last weekend, but that got put off due to the pandemic.  I had still thought of possibly going maybe at the beginning of August or thereabouts for a quick pop-in.  But now apparently there has been a new spike of cases there and in Wisconsin more broadly, something my daughter who lives there had informed us of just in the last couple of days accompanied by discouraging noises about trying to go there.  And now I have learned about this new development, although it may be that the rumor is false.  But it does seem to be a final hammer hit on any plans to visit that fair city I am so much attached to for now.

Barkley Rosser

Worrying About November 3, 2020

Worrying About November 3, 2020

Sigh.  So the US election is now just four days less than being four months from now, and, really, anything can happen. After all, four days less than four months ago was March 11, just before the US fully recognized that we were in a pandemic, with everything closing, and “the economy falling off a cliff,” as it is now put, but was not obvious on 3/11 at all, even though it was only about two days away.  And the murder of George Floyd was still some time off.  So, the world can turn completely upside down before the election, and nobody should forget that what really matters is what happens in the two weeks before the election, the period of short-term memory, and that really cannot be foreseen.  I mean, those who hate Hillary a lot say it was not a big deal, but most of us realize that if James Comey had not made his big announcement about new nothing investigations of her emails 11 days prior to the election in 2016, she almost certainly would be running for reelection right now.

So, we are in this obviously ironic position: many Dems are hoping things go badly in the next four months while many GOPs are hoping just the opposite just so each gets the electoral outcome they want.  This is nothing new, but it does put forward ironies in an unprecedented situation with many bad things happening and general uncertainty simply super high.  Thus we have the oddity that in Congress it is Dems who are pushing for more and more expansive fiscal stimulus, which would presumably help the economy and thus Trump’s reelection chances, while it is GOPs, especially in the Senate where they are in control, who are being the most negative about such a package, especially because of its aid to states and localities, whom they view as Dem interests.  I see out of the White House that Trump himself understands this and would like to see more fiscal stimulus, if perhaps with some limits and conditions.  But, heck, things are indeed fully topsy-turvy.

Wildly Off Forecasts?

Wildly Off Forecasts?

The macroeconomic forecasting business has become quite unhinged in the current situation, with existing models seeming to have their wheels coming off as old relationships simply do not hold and reported data seems unreliable and going in all sorts of directions.  We have already seen this happen regarding forecasts that were made for the May employment numbers, with most forecasters projecting employment declines that would have been more than 10%, some of them by a lot more than that, although none more than 20%. But in the end employment was estimated to have grown by over 2%, a situation of the forecasters simply being wildly wrong.

As it is, with the month of June now over and thus the second quarter over, it looks increasingly to me like most of the forecasters have not learned their lessons from that May employment fiasco.  I suspect that in many organizations they find it hard to revise their models, especially on short notice, even when it is clear their models are not working.  We see a lot of the forecasters making predictions of a large second quarter decline in GDP, but more numbers have come out for May, and most of them have been positive, some of them very positive, and if June continues to be positive, even if at a lesser rate than May given renewed shutdowns occurring due to the uptick in Covid-19 infections as June proceeded, this may further make some of these strongly negative forecasts even further off.

So what are some of these forecasts and what do the latest reported numbers look like?  First, we must note the first quarter outcome.  It seems that GDP declined by -4.8% or 5.0% for the first quarter at an annualized rate.  All of the decline occurred in March, more than offsetting modest growth in both January and February.

Going Too Far

Going Too Far

Unfortunately, it was going to happen, and we who support the movement need to call out those instances where it goes too far.  I am talking about the justified Black Lives Matter (BLM) movement, mostly characterized by widespread peaceful protests even in small rural towns that never see such things, and with a solid majority of the American people currently supporting both the BLM and its main demands.  As it is, one should probably not tie the BLM to some of these recent unacceptable events, although those engaged in them will justify their actions as being part of the movement. This should not be accepted.

OK, the one that has really put me off happened last night at sometime after 10:30 PM in Madison, Wisconsin.  A statue I know well was not only pulled down, but it was decapitated with both parts thrown in a nearby lake, although apparently since recovered. This statue stood on the east corner of the Capitol Square downtown.  It is of Hans Christian Heg (1829-1863).  An immigrant from Norway, he was an active anti-slavery abolitionist and member of the Free Soil Party who led the 15th Scandinavian American regiment in the Union army.  He died fighting against the Confederacy in the Battle of Chickamauga, which it says on the base of his statue.  There is absolutely no justification for this event.

This was accompanied by other pretty unacceptable nonsense. The “Forward” statue at the opposite end of the square was also pulled down and dragged down State Street.  This is of a generic woman representing the state motto of “Forward,” not quite as completely insane as pulling down Heg, but also without any obvious justification. The Forward motto and idea has long been associated with the Progressive tradition in the state, although I suppose one could drag in bad stuff about some of those folks, such as that some supported eugenics. But I do not think this crowd was thinking about that.

Is The Possible V-Shaped Recovery Flattening As The Second Quarter Comes To An End?

Is The Possible V-Shaped Recovery Flattening As The Second Quarter Comes To An End?

Probably,  although it is unclear whether or not we are having a V-shaped recovery (see most recent post here). However, whatever it is, it looks like the revived spread of the coronavirus is probably slowing it somewhat.  New cases are up by 15% nationally from a low point several weeks ago, and there are reports of businesses of various sorts of closing, if not whole communities.

The pattern of the increase has various aspects:

1) It seems to be now more in red states than blue states, with the trend having been toward this since the early days of the pandemic when it first started in major Dem cities in major Dem states, such as Seattle, WA, the Bay Area of CA, and the New York metro area.  Of the states with the most rapid recent increase, we have only three that are predominantly Dem: CA, OR, and NV, with one purplish, NC, and the rest GOP: SC, GA, FL, AL, MS, AR, OK, TX, AZ, UT.

2) While now it is predominantly rising in GOP states where governors have not strongly encouraged social distancing or mask-wearing while rushing to fully reopen, and in some cases even banning local communities from requiring mask-wearing in public places, although some of those are now backing off that, such as Abbott in Texas, if one looks at this at the county level it remains that Dem counties are still outnumbering GOP ones, although the trend is strong toward GOP ones, and the line on this one will probably be crossed soon (these designations are based on how they voted in the presidential election in 2016). The obvious explanation for this apparent discrepancy is that in the red states cases tend to be increasing more in densely populated areas, which are more likely to be urban areas in Dem counties in those states, such as the Houston metro area in Texas.

3)  There is not a clear pattern of these either being spread across states or concentrated in particular areas.  Some states with increases scattered widely include the Carolinas, Florida, and Alabama.  Somewhere they are more isolated/concentrated in particular locales include the two largest on this list: California and Texas.

4) Certain sectors seem to be especially hit be reclosings, notably restaurants and bars as well as some sports facilities.

5) A possible offset to all this is that certain communities are still reopening, despite this new round of new cases.  An example is Washington, D.C., which just got going today with its second stage of reopening, following its suburbs in MD and VA that have already done so.

Barkley Rosser

Do BLM Protests Prove No More Pandemic?

Do BLM Protests Prove No More Pandemic?

It has become a widespread meme that the many protests over the murder of George Floyd and other racially based police brutality will show that it is fine to end all shutdowns related to the pandemic and end all rules about social distancing and wearing face masks.  Here we are reaching two weeks since these protests with thousands of people involved, supposedly all violating those rules, and we are not seeing a surge of Covid-19 cases coming out of the locations where these big protests have happened.

Well, it turns out, that while the reports are scattered, apparently at many of the protests many people wear face masks, not only that, there is apparently a lot of trying to keep some distance from each other as well, although based on the performance of nations in East Asia, it is pretty clear that the wearing of face masks is the most useful.  Among other cities with large protests where this has been observed is Philadelphia. But in many places there has been much urging of this.

It is a mere anecdote, but I can report that I attended one such protest, admittedly in peaceful Harrisonburg, VA where I live where we have a black mayor and a black police chief.  But I attended a peaceful protest with over 1000 people.  Almost everybody was wearing a mask, and most people were keeping distance from each other.  There has been a lot of this.

So, this meme widely spouted with great arrogance by many observers is just misleading.  It is quite likely we shall see no spike of cases following most of these protests, although possibly in some locations.  But that does not mean this will hold for places where reopenings coincide with lots of people imitating our president and not wearing face masks or maintaining social distancing.  And indeed, we are seeing surges of cases in many such states, with the vast majority of those being where we have seen such attitudes and policies.

Barkley Rosser