This edition is heavy on wonkish economics issues, but it is stuff that is important for the general public to be aware of. So hang on tight!
“Gregory Mankiw is Confused About Reselling”
Markets are great if they’re for thousand-dollar scalped tickets. Economics textbooks, on the other hand…
By Jack Meserve (Democracy Journal)
Even for a conservative economist, it’s mind boggling how cynical Mankiw is. He once suggested that scalpers played a useful role in the economics of ticket sales, but spent an enormous amount of effort to prevent efforts to lower the price of his required textbook through reselling. It is a good encapsulation of the economic policy over the last half-century: support policy that lowers prices for wealthy people and oppose any effort to reduce income for wealthy people. A lifelong Republican, he recently suggested in the New York Times that because he is abandoning the Republican party, Democrats should listen to a few of his regressive policy suggestions. His party affiliation may have changed, but his policy ideas are exactly the same. His article’s suggestion is basically that the Democrats should become the old Republicans. Once again, mind-boggling logic.
“Automation and the Future of Work—1”
by Aaron Benanav
This is an important article about automation. It’s fairly technical, but makes some persuasive arguments about why automation is less important of an issue than pundits make it out to be.
“Automation worry,” let’s call it, recurs throughout the ages, from the Luddites on, always with the same tone:
“Automation theory may be described as a spontaneous discourse of capitalist societies, which … reappears in those societies time and again as a way of thinking through their limits. What summons the automation discourse … is a deep anxiety about the functioning of the labour market: there are simply too few jobs for too many people.”
I’m inclined to agree. Fear of automation is historically persistent, and often fails to explain change:
“What automation theorists describe as the result of rising technological dynamism is actually the consequence of worsening economic stagnation.”
So another thesis is that, since the 1970s, global manufacturing overcapacity (too many goods seeking too few buyers) explains our current economic status better than increased automation does:
“Global manufacturing overcapacity explains why the countries that have succeeded in attaining a high degree of robotization are not those that have seen the worst degree of deindustrialization. In the context of intense global competition, high degrees of robotization have given firms competitive advantages, allowing them to take market share from firms in other countries. Thus Germany, Japan and South Korea have some of the highest levels of robotization; they also have the largest trade surpluses in the world.”
“The decline in the demand for labour is due not to an unprecedented leap in technological innovation, but to ongoing technical change in an environment of deepening economic stagnation.”
So what are we to do?
“We should be reaching towards a post-scarcity world, which advanced technologies will certainly help us realize, even if full automation is not achievable—or even desirable.”
“Impoverished economics? Unpacking the economics Nobel Prize”
When the world is facing large systemic crises, why is the economics profession celebrating small technical fixes?
by Ingrid Harvold Kvangraven (Open Democracy)
The most recent Nobel prize in economics indicates that randomized controlled trials are the future of economics, a microscopic focus on symptoms instead of massive structural problems. It is a turn away from sweeping, totalizing theories (read: neoliberalism), a movement to focus on “manageable problems” as the Nobel committee cheered. But humble thinking isn’t exactly atonement for fifty years of disastrous consensus.
“What Happens Next Will Amaze You”
By Maciej Cegłowski (Idle Words)
(This is the text version of a talk from September 14, 2015, at the FREMTIDENS INTERNET conference in Copenhagen, Denmark.)
Are venture capitalists really just wealthy, private central planners? This presentation compares VC first to landed gentry and then to Poland’s failed central planning of the 1980s.
“There’s something very fishy about California capitalism.
Investing has become the genteel occupation of our gentry, like having a country estate used to be in England. It’s a class marker and a socially acceptable way for rich techies to pass their time. Gentlemen investors decide what ideas are worth pursuing, and the people pitching to them tailor their proposals accordingly.
The companies that come out of this are no longer pursuing profit, or even revenue. Instead, the measure of their success is valuation—how much money they’ve convinced people to tell them they’re worth.
We had people like this back in Poland, except instead of venture capitalists we called them central planners. They too were in charge of allocating vast amounts of money that didn’t belong to them.
They too honestly believed they were changing the world, and offered the same kinds of excuses about why our day-to-day life bore no relation to the shiny, beautiful world that was supposed to lie just around the corner.
Even those crusty, old-fashioned companies that still believe in profit are not really behaving like capitalists. Microsoft, Cisco and Apple are making a fortune that just sits offshore. Apple alone has nearly $200 billion in cash that is doing nothing .
We’d be better off if Apple bought every employee a fur coat and Bentley, or even just burned the money in a bonfire. At least that would create some jobs for money shovelers and security guards.
So what kinds of ideas do California central planners think are going to change the world?
Well, right now, they want to build space rockets and make themselves immortal. I wish I was kidding.”
One of the main tenets of capitalism is that owners reinvest their profits, which owners basically stopped doing almost 100 years ago. What this means is that we are not experiencing a time of extreme capitalism, but something else. Capitalism had a theory for profits (which a person could no doubt contest) but what are they doing with their profits? Finding the answer is a big political question, because where capital is invested determines what we manifest as a society. Do we work together to figure out where profits get allocated, or continue to leave it up to a small group of wealthy venture capitalists?
by David Graeber (The New York Review of Books)
David Graeber reviews a heterodox book on economics by Robert Skidlesky and finds some extremely fundamental problems with economics scholarship, not least of which is that the field still doesn’t understand how loans are made:
“Economists … have spent much of the twentieth century arguing about what actually happens when someone applies for a loan.
The one thing it never seemed to occur to anyone to do was to get a job at a bank, and find out what actually happens when someone asks to borrow money. In 2014 a German economist named Richard Werner did exactly that, and discovered that, in fact, loan officers do not check their existing funds, reserves, or anything else. They simply create money out of thin air, or, as he preferred to put it, “fairy dust.””
Graeber finds Robert Skidelsky’s book to a useful retort about how markets come to be:
“Skidelsky is providing us with a worthy extension of a history Karl Polanyi first began to map out in the 1940s: the story of how supposedly self-regulating national markets were the product of careful social engineering.”
Another idea Graeber suggests, which I find intoxicating, is that income tax is designed to be intrusive and exasperating. It makes us hate the government and demand a smaller state, when really corporate, wealth, capital gains, and other non-individual taxes could work extremely well.
“The Art of Dying”
I always said that when my time came I’d want to go fast. But where’s the fun in that?
By Peter Schjeldahl
“I had a moment, while anticipating my diagnosis, of feeling special. But what’s as commonplace as dying? Everybody does it. I also had an instant of fancying that I could drink again. That evanesced in a flash. Fellow-alcoholics know that the beast, though out of mind, survives. My thought was a foul little burp from a cave.”
“The Smartest Guys in the Clubhouse”
How the McKinsey-fied Astros cheated their way to a championship—and became a parable of American success
By David Roth (The New Republic)
McKinsey & Co. analyzed the Astros and found they could win by cheating.
An Unquiet Mind: A Memoir of Mood and Madness by Kay Redfield Jamison
I’ve been reading about bipolar disorder, and it was suggested I read this memoir by Kay Redfield Jamison. I had me thinking about how addictive high energy is, in general, and how it seduces people with bipolar disorder to abandon their treatment.