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Towards a modern “History of Republics”: a consideration of William Everdell’s “The End of Kings: A History of Republics and Republicans”

Towards a modern “History of Republics”: a consideration of William Everdell’s “The End of Kings: A History of Republics and Republicans”

In view of the horrific damage that the Trump Administration has done to the American Republic, during the past year I have done extensive reading of the histories of a number of the most successful or durable Republics over time. The reason has been to try to answer the question of whether there is an overarching narrative to the history of Republics: how they form and evolve over time, and whether they are ultimately doomed, as was Rome, to collapse into autocracy. As I briefly detail below, the answer to that last query, thankfully, appears to be a qualified and very hedged “no,” although maintaining one over the long term, as Benjamin Franklin quipped, is difficult. What has been missing is an overall “History of Republics.”

Americans generally are probably ignorant of the fact that Republics did not die during the 1800 years between Caesar crossing the Rubicon and the Declaration of Independence.  As I’ve written previously, Roman Emperors maintained many of the forms, if not the substance, of Rome’s republican offices, e.g., tribunes and consuls. After the Western Empire fell, a welter of small northern Italian city-states reconstituted Republics based more or less on the legacy Roman model. Subsequently the Swiss Cantons and the Netherlands also developed into republics, as did Great Britain briefly during its Commonwealth.

William R. Everdell’s “The End of Kings: A History of Republics and Republicans” is a decent introductory level text exploring this issue. Each chapter is devoted to leading figures in historical republics: the prophet Samuel, Solon of Athens, two Brutuses at the beginning and end of the Roman Republic, the mythical William Tell of the Swiss cantons and John Calvin of Geneva, Machiavelli and medieval Florence, John Milton and Cromwell’s English Commonwealth, Robespierre of the revolutionary French first republic, Leon Gambetta and the founding of a parliamentary third French Republic, the Weimar failure, and John Adams, Ben Franklin, Thaddeus Stevens and several Senators over time in the US.

 

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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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Prairie du Chien Selects Jill Karofsky Over David Kelly!

Prairie du Chien Selects Jill Karofsky Over David Kelly!

I have previously posted on the highly swingy politicsal nature of southwestern Wisconsin, symbolized by the town there at the mouth of the Wisconsin River, French-founded Prairie du Chien (named for an Indian cheif, it turns out, who was “Dog of the Prairie” in English).  It seems that how SW Wixsonsin goes, so goes the whole state, at least in 2012, 2016, and 2018.

Now we can add an election in 2020, that for a seat on the state Supreme Court, where liberal Dem Jill Karofsky from Madison clobbered incumbent super conservative Justic David Kelly by 11%.  And, yes, SW Wisconsin went for her, along with some areas not expected, such as traditionally conservative counties in the Northeast that contain Green Bay, Appleton, and Oshkosh.  Milwaukee suburbs still went for Kelly, bur Karofsky made gains there.

Of course this election was marked by major GOP efforts to suppress voting, restricting absentee ballots (a move backed 5-4 by the SCOTUS)  and with only 5 out of 180 polls open for voting in Milwaukee, source of the largest Dem voting base in the state.  But even with covid-19, long lines formed there, and many observers think the GOP shot itself in the foot with its restriictive moves, angering Dem-leaning voters who turned out indroves, despite the health danger.

An amusing tidbit is that now GOPs are saying it was all a plot by Dems (probably Obama in the background) urging Bernie Sanders to stay in the race through Wisconsin, something many observers had long predicted since his losses on Super Tuesday.  Maybe that made some difference, although personally I think it is the Prairie du Chien Effect.

Barkley Rosser

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Trump Defunds WHO and USPS: Will Motherhood and Apple Pie Be Next?

Trump Defunds WHO and USPS: Will Motherhood and Apple Pie Be Next?

Yes, Trump is out to cut the roughly half a billion $ US contribution to the $6 billion budget of the World Health Organization (WHO).  It seems that he now sees his path to reelection to be based on blaming China for the coronavirus and the WHO for supposedly supporting China in their supposedly nefarious conduct, alloeing hin to wallow in  fit of xenophobia as well as accusations against Joe Biden for being “soft on China.”  Certainly China was slow to act against the virus, although not as slow as Trump and his team here in the US, and the WHO may well have been too soliciitous of China and its interests. But the WHo remains the central organization for  coordination the global response to thie situation.  This is simply stupid in terms of fighting the virus.

And then we have him going out of his way to demand that funds for the nearly bankrupt US Postal Service (USPS) be removed from the recent stimulus bill. GOPs in Congress have burdened them with having to fund future pensions at a level no other entity in the nation has to do, and, of course their business is in long term decline.  But apparently the USPS is the single most popular federal agencyy there is, with a 90% popularity rating, putting it ahead of even NASA and the National Park Service.  But, hey, it delivers packages for Amazon, whose owner owns the Washington Post, which says bad things about him, not to mention if USPS can be shut  down, then all these Dem proposals to have people mail in their votes can be quashed, and as we have seen in Wisconsin, making it hard for people to submit ballots by mail is really popular.

Anyway, at this rate, I expect Trump’s next move to be to defund entities supporting motherhood and apple pie.

Barkley Rosser

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Consumer prices sharply decline in March: keep your eye on wages

Consumer prices sharply decline in March: keep your eye on wages

 

This morning we got some monthly economic data that will be actually valuable to watch throughout this Coronavirus Recession: consumer prices. That’s because during recessions, consumer price growth decelerates, as does wage growth, which continues to decelerate well after the recession bottoms out.

Since monthly changes in inflation are closely correlated with the gas prices, let’s start by comparing the two:

Figyre one

Gas prices declined -8.5% during March. Unsurprisingly, consumer prices followed suit, declining by -0.4%.

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The Climate Crisis and the Green New Deal

The Climate Crisis and the Green New Deal

The Covid-19 pandemic won’t last forever, and at some point we will have to return to figuring out how to respond to the climate crisis.  (What a depressing opening line.  No, I have no desire to live in a world of permanent crisis.)  Is the answer a Green New Deal?  Challenge has just published my analysis of this; you can find the link here.

Abstract: The Green New Deal, an attractive agenda of increased investment in energy efficiency and renewable energy sources, is not remotely sufficient to stabilize global warming at a non-catastrophic level. Such a policy needs to be accompanied by direct measures to curtail the use of fossil fuels, although this may complicate the intended messaging.

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Remdesivir and Transfer Pricing Part II

Remdesivir and Transfer Pricing Part II

Now that I sketched out the transfer pricing for Gilead Sciences with respect to their successful HIV and Hep C products (as much as I can say based on publicly available information), it is time to speculate a bit on how Remdesivir may play out. There is a lot we do not know including whether this treatment receives regulatory approval and how it will be priced if it does. Note for example this story:

More than 150 organisations and individuals on Monday urged US biotechnology firm Gilead not to enforce exclusivity over a drug that might be used to treat COVID-19 patients. In an open letter, 145 non-governmental organisations, including Doctors Without Borders (MSF) and Oxfam, and 12 individuals claimed Gilead Sciences held primary patents of remdesivir in more than 70 countries. That meant they could block generic development of the drug until 2031. The open letter to Gilead chief executive Daniel O’Day was circulated by MSF. “We write to request that Gilead take immediate actions to ensure rapid availability, affordability and accessibility of its experimental therapy remdesivir for the treatment of COVID-19, pending the results of the clinical trials demonstrating its efficacy,” it said.

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The D Word

The D Word

Yes, depression, and not the psychological type, although the economic type leads to the psychological type, whether ot not it is the other  way around (see Keynes’ “animal spirits).

I often make fun of Robert J. Samuelson in the Washington Post, but in Washington Post today he raised the possibility that we are going into a depression, not just a bad recession.  On TV this evening I heard Austen Goolsby throw it out as well.  I suspect we are going to hear it a lot more.

The problem is not just that we have seen the highest increase in joblessness ever, but the increasing prospect that there will not be a quick recovery once the virus is under control. This is partly due to the global nature of this pandemic and the economic decline that has come with it.

A sign of what may be coming is what is going on in China.  The virus seems to be under control, despite some doubts about their numbers and new cases happening due to people arriving there.  But they have been to get their economy started up again, even in Wuhan. Supposedly 98% of firms have restarted.  But there are problems.  One is that many such places are missing crucial workers still under quarantine somewhere  or other.  Then there is the other side of this, the demand side.  China expects to sell goods through exports, but other countries are not buying.  And also domestic consumers are not buying either out of fear and low income.  Apparently there are factories running machines and using power even though they are not producing anything just to please the government that is making these claims of 98% of firms operating, but this seems to be an exaggeration.

Clearly at least on the demand side getting money to people and businesses through easy credit and a large fiscal stimulus are the obvious things to try to avoud this D outcome.  But Samuelson fears that they may be insufficient to this current situation, with no obvious alternative.  I fear he might be right on this one

Barkley Rosser

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The Mankiw CV Plan

The Mankiw CV Plan

Greg Mankiw has posted a suggestion for delivering money to people that targets the benefit to those who need it the most.  The idea is clever:

1. Pay people the benefit B.  (This could be spread over many weeks or months.)  Everyone gets the same B.

2. Next year at tax time, compute the ratio r Y(2020)/Y(2019), the ratio of each filer’s 2020 income, net of B, to their 2019 income and capped at 1.  Impose a surcharge of rB on tax liability.  This way people would pay back a proportion of B based on how much they needed it.  If their 2020 income was greater than or equal to 2019, r = 1 and they would repay B in its entirety.  If their 2020 income was zero, r = 0 and there is no surcharge.  (And no tax at all for that matter.)  Partial income losses would lie in between.

Clever and well-intended, but there are problems.

First, what’s income?  Does it include capital gains and losses?  If so, everyone who has a substantial chunk of financial assets will be able to claim zero income in 2020.  What about business losses?  Clearly, if income is defined expansively, as it should be for tax purposes, those who derive income from capital will come out ahead of those who rely on labor.

Second, how will repayment work?  For low to moderate income people who keep their jobs, tax liability for 2020 may be immense—a large proportion of their annual income.  Yes, if such people save all their B they can just apply it to next year’s payment, but how likely is that?  In practical terms, if the country is facing a wave of enforcement actions and bankruptcies a year from now, the repayment mechanism is likely to be abandoned.

Third, what are the incentives?  Mankiw predictably worries about labor supply, but I think the bigger problem is the immense incentive to work off the books.  Instead of saving only your fractional tax rate when you transact in cash, now you will add the savings on your surcharge.  No one who can escape official scrutiny will report any payments or receipts.  If your goal was to drive as much of the economy underground as quickly as possible, you would have succeeded.

I appreciate Mankiw’s attempt to tie provision of government support to the level of need.  One of the virtues of universal, untargeted social insurance, however, is that it requires a smaller enforcement apparatus and doesn’t turn people who play by the rules into suckers.

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