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

Conspiracy Theories: How to Pick Out the Plausible Ones

Conspiracy Theories: How to Pick Out the Plausible Ones

This is an age of rampant conspiratorialism.  Bill Gates is behind the pandemic because he wants to shoot you full of vaccines.  No wait, it’s all those 5G cell towers.  Or maybe it’s bioterrorism from China.  Or just a hoax perpetrated by international capital to undermine Donald Trump, the people’s tribune.  The right wing disinformation machine cranks out this stuff constantly, but paranoid fantasies also emanate from the left/alternative world.

So to counter the conspiracy pandemic, mainstream experts have come forward to advise us on how to detect and puncture unfounded rumors.  The problem I see is that sometimes there really are conspiracies, and it isn’t immediately obvious how to separate the ones that might be true from the purely crazy.

In the public interest, I offer the following rule of thumb.  A conspiracy, of course, is an agreement by a group of insiders to keep something important secret from the public.  If the group is tightly organized, motivated and able to operate separately from those on the outside, it is capable of waging a conspiracy.  If you relax these assumptions, however, you need additional groups to hide the initial conspiracy—in other words, secondary conspiracies.  And if the secondary conspirators aren’t tight enough a third ring of conspiracies is required.  As soon as you find yourself imagining lots of interlocking conspiracies to keep the central one secret you’ve wandered over the line.

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A Compromise on Liability

A Compromise on Liability

So Mitch McConnell and the senate Republicans want blanket employer liability protection as the price of another round of economic support.  They have this leverage because Democrats kept postponing their agenda until they were the only ones with a list of things they wanted to spend money on.

(This illustrates classic bargaining theory to a T.  Bargaining power depends on how much you think you will lose if the agreement is delayed [Rubinstein] or fails completely.  Democrats feared economic damage to the public if bailout bills weren’t approved immediately.  Once the financial markets were backstopped Republicans considered the rest to be low stakes.  Hence the strong tilt to McConnell et al.)

So here is a possible Democratic counter:

OK, you want liability protection.  Let’s give it to any employer, large or small, that sets up a health and safety committee to oversee protections on the job, elected by the whole workforce, one person one vote.  If protections are consensual, liability is waived.  Otherwise proceed at your own risk.

This would be good policy, and it has the political advantage of placing liability within a larger, readily communicable frame about participation and consent.

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Woke Is Reactionary: The Small Business Lending Edition

Woke Is Reactionary: The Small Business Lending Edition

We live in a drastically unequal society.  Everywhere you look you will find injustice, constraint and exploitation.  Being a member of a racial or other minority increases the odds you will end up on the short end, so what should we do about it?  There’s a progressive solution, to change the system so injustice, constraint and exploitation are minimized.  And then there’s the woke solution, to demand benefits targeted to minorities (and women) that will more evenly distribute the injustice, constraint and exploitation that remains.

You can support the woke solution, but please don’t confuse it with progressive social change.

For a current example, look at this recent op-ed in the New York Times by Pamela Shifman and Salamishah Tillet, “How We Spend Tells Us Whose Lives Matter”.  They point out, “only 12 percent of the black and Latino [small business] owners in a survey who applied for aid reported receiving what they had asked for.”  I don’t know how that compares to white/Anglo owners, and no link is provided to the source they relied on.  But let’s assume with them this means minority SB owners have been disadvantaged in the expanded lending program to counter the effects of the coronavirus.  Knowing this country, I wouldn’t be surprised if this were true.

Two reasons are given for the disparity.  First, minority-owned businesses are less likely to have an existing loan relationship with a bank, and private banks are being used to funnel loans authorized by Congress.  Second, these businesses have slimmer reserves and are less able to survive the process of application, review and disbursement.  Again, let’s assume this analysis is correct.

The progressive solution would be to either impose greater obligations on the private banking system or bypass it altogether in administering the program.  If commercial banks are to be deputized to distribute public funds they should be required to do so not just for their existing clients but their share of the applicant pool, and streamlined procedures should be in place to get the money out the door as quickly as possible.  Or perhaps it would have been possible to forego using commercial banks altogether (or in part) and to quickly ramp up a dedicated lending facility operating in conjunction with the Fed or a specialized government agency.  (How much easier all of this would have been if we had a nationwide public banking system already in place.)

And then there’s the woke solution: “providing dedicated funding opportunities for minority and women-owned businesses, and within that funding pool, for women of color-owned businesses.”  So the inadequacies and unfairness of the lending arrangement are OK as long as they don’t disproportionately fall on these groups.  I suppose white business owners locked out of the deal can console themselves with their privilege.

Again, the woke program is a choice some may make; it’s goal is to take the racism and sexism out of exploitation.  Just don’t confuse social justice with a more equally distributed injustice.

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Reopening Isn’t Reopening—It’s Cutting Off Unemployment

Reopening Isn’t Reopening—It’s Cutting Off Unemployment

Donald Trump, cheering on his “warriors” who demand that states lift their lockdown and distancing orders (where they have them), would have you believe this is about bringing the economy back to life so ordinary people can get their jobs and normal lives back.  Elitist liberals who work from home and have country estates to retreat to don’t care, but “real” people do.

The reality is different.  The shuttering of stores, restaurants, hotels and workplaces didn’t begin with government orders and won’t end with them.  If the rate of new infection and death is too high, a lot of people won’t go along.  Not everyone, but enough to make a huge economic difference.  Ask any small business owner what it would mean for demand to drop by 25-50%.  Lifting government orders won’t magically restore the economic conditions of mid-winter.

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Planet of the Humans: A De-Growth Manifesto

(Dan here…Great comments for this post at Econospeak)

Planet of the Humans: A De-Growth Manifesto

Planet of the Humans, directed by Jeff Gibbs but featuring Michael Moore as its “presenter”, has been viewed by almost five and a half million people since it popped up on YouTube last month.  In case you haven’t heard, it’s quite a provocation, and the response from almost every quarter of the environmental movement has been outrage.  It traffics in disinformation and scurrilous personal attacks, they say, and I can’t argue.  Two big problems: it falsely claims that more carbon is emitted over the lifespan of a photovoltaic cell than by generating the same energy through fossil fuels, and it uses dishonest editing techniques to portray activist Bill McKibben as having sold out to billionaire ecological exploiters.  You can read about the misrepresentations elsewhere; my point is that, whatever else it is, the film is a logically consistent statement of the de-growth position.

Alas, much of the “left” has concluded that the chief obstacle to meeting our climate and other environmental challenges is the “capitalist” faith in economic growth.  Capitalism requires growth, they say, and growth is destroying the earth, therefore we must abolish capitalism and embrace de-growth.  Anything less is a sellout.

This philosophy is central to Planet; twice (at least) Gibbs proclaims, “You can’t have endless growth on a finite planet.”  He shows charts depicting human population and consumption growth that portray us as a metastasizing cancer.  Early in the film, when he’s setting the tone for what’s to come, he asks, “Is it possible for machines made by industrial civilization to save us from industrial civilization?”

But movies are not just words; they make their arguments visually as well.  Planet has horrific scenes of mining and logging, as well as speeded up, frenzied shots of manufacturing, warehousing and shipping.  It ends with heartbreaking footage of doomed orangutans amid a wasteland of deforestation.  The message is clear: human use of nature is a travesty, and any activity that imposes a cost on Mother Earth is immoral.

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An Update on Shadow Government

An Update on Shadow Government

Not only is the current level of testing for the coronavirus insufficient, the tests themselves are flawed.  Read this summary by infectious disease specialist Michael Osterholm and a coauthor for particulars.  Their key policy conclusion is

A blue-ribbon panel of public health, laboratory and medical experts, ethicists, legal scholars and elected officials should be convened immediately to set out a road map with realistic goals for testing and contact-tracing.

If we had a reliable government, it would get this done, but we don’t.  Concretely, one of the main jobs of a shadow government organized by Democrats would be to assemble this group and give it a regular, high profile platform.

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We Need a Shadow Government

We Need a Shadow Government

Republican rule in the US is a horror show.  We get incoherent ramblings from our president on injecting bleach into our veins, calls for the states to file for bankruptcy from the Senate majority leader, a veto of modest IMF support for developing countries hammered financially by the virus, and a complete absence of guidance on the most crucial aspects of public health.

We already know this.

The greater tragedy is that the Democrats are barely better.  Their program, to the extent it makes sense to speak of one, is protecting the immediate interests of their key constituents.  This begins with the financial sector, and since the Republicans share the same commitment, their multi-trillion dollar bailout zipped right through.  Small business is also important to both parties, if not quite as much, and upwards of a billion will wend its way to them—via the banks, of course.  Lots of health sector money flows to the Democrats, and Pelosi and Schumer found a way to bail them out too.  Beyond this it has been hit or miss.  The unemployed will get greater wage replacement, even above 100% for the bottom end of the labor market.  There may be future money for the states.  A few billion for testing, and that’s about it.

What all this adds up to is top-heavy interest group protection.  It’s not a plan.

The irony is that informed opinion has largely converged in the two key areas of public policy.  To overcome the pandemic we need four things:

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Does Google’s Search Algorithm Protect the New York Times?

Does Google’s Search Algorithm Protect the New York Times?

Yesterday morning, after reading the Sunday New York Times, I posted two pieces on EconoSpeak within a few minutes of each other.  One was a short, cute little item (a visual grab from the paper) entitled “The Art of Juxtaposition”; the other was a longer, more substantial takedown of a deficit hysteria “analysis” I called “The Usual Deficit Blather from the New York Times”.

As usual, I monitored the posts through the day to see if they were being picked up anywhere.  This has become largely an exercise in nostalgia, since with the fading of the economics blogosphere there isn’t much to track.  What happened next was interesting, however.

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The Usual Deficit Blather from the New York Times

The Usual Deficit Blather from the New York Times

The Times today ran a truly execrable article warning us that, once the virus has passed, we will suffer dire consequences from the runup of government debt.  As most readers know, this argument is theoretically illiterate, derived from the false comparison between household and government debt.  We’ve been through this many times before, and I have nothing to add.

I do want to focus on one sentence, however, to illustrate how intellectual blinders can lead to absurd conclusions.

To quote the author, Carl Hulse, “In other words, the bill will come due, as it always does.”

Does it?  Check out total Federal debt measured as a percent of GDP:

As you can see, it skyrocketed during the 1940s, when the US went to war against Germany, Italy and Japan.  By the time the war was over it was at an all-time high.  Yes, we had to borrow to produce all the war materiel and send millions of troops around the world; no one doubts that.  But after V-E and V-J, how were public finances affected?

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