Hard to know what to add to this example of serious attitude by serious money. But I should not be so surprised; after all, writers have been on about this for a long time, Charles Dickens for one — an example of how to handle it without becoming moralistic and caught up in the process. Without having to say so, Paul Krugman makes it clear that economics cannot be entirely separated from moral philosophy, even as he warns that economics is not a morality play. That is to say, it is supposed to be based on reason and evidence. Curiously, all the evidence is that nature is asymmetric, and thereby hang a tale—
Labs for Testing Fiscal Policy Positions by Owen Zidar
And Paul Krugman wonders, “Will it make any difference that Ben Bernanke has now joined the ranks of the hippies?”
Earlier this week, Mr. Bernanke delivered testimony that should have made everyone in Washington sit up and take notice.
First of all, he pointed out that the budget picture just isn’t very scary, even over the medium run: “The federal debt held by the public … is projected to remain roughly 75 percent of G.D.P. through much of the current decade.”
He then argued that given the state of the economy, we’re currently spending too little, not too much …
Finally, he suggested that austerity in a depressed economy may well be self-defeating even in purely fiscal terms: “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.”
So the deficit is not a clear and present danger, spending cuts in a depressed economy are a terrible idea and premature austerity doesn’t make sense even in budgetary terms …
Mr. Bernanke is a fine economist, but no more so than, say, Columbia’s Joseph Stiglitz, a Nobel laureate and legendary economic theorist whose vocal criticism of our deficit obsession has nonetheless been ignored. No, the point is that Mr. Bernanke’s apostasy may help undermine the argument from authority — nobody who matters disagrees! — that has made the elite obsession with deficits so hard to dislodge.
Asymmetrically perhaps, lawmakers who actively promote extreme ideas should be held responsible for the human suffering caused by their economics and its philosophy, especially when they consciously deny the facts and reasons. When data accumulate over time it provides history. Here is a good example (going into the “sequester”) of how history can focus the record and the mind, from Brad DeLong and via Project Syndicate.
But let’s back up historically, to the founding of what we might call modern conservatism in early nineteenth-century Britain and France. There were some – Frédéric Bastiat and Jean-Baptiste Say come to mind – who believed that government should put the unemployed to work building infrastructure when markets or production were temporarily disrupted. But they were balanced by those like Nassau Senior, who spoke out against even famine relief: Although a million people would die in the Irish Potato Famine, “that would scarcely be enough.”
Read where we went from there, here. And note the morality; without keeping track of what has been thought, let alone the data, how can we identify extremes? Easy to see how philosophy as a rational discipline gets so easily on the defensive. When you hear that philosophy is just an opinion or that it isn’t relevant or that economics (basically the study of survival) is boring, check your purse or wallet!
Update:
Here’s the article we’ve been waiting for: How Austerity Kills (NYT). And here’s the book! The Body Economic: Why Austerity Kills by David Stuckler, a senior research leader in sociology at Oxford, and Sanjay Basu, an assistant professor of medicine and an epidemiologist in the Prevention Research Center at Stanford.
More: Austerity: The History of a Pernicious Idea, Mark Blyth’s History of a Dangerous Idea, reviewed by Ruy Teixeira in The New Republic.
Yet more evidence of the incredible unwisdom of European economic policy
Paul Krugman presents: Paul De Grauwe and the Rehn of Terror
“Nobody has taught me as much about the euro crisis as Paul De Grauwe, who brought to the fore a crucial point almost everyone was overlooking: the importance of self-fulfilling debt panics in countries that no longer have their own currencies. Now he has a new paper with Yuemei Ji following up on that insight, and offering yet more evidence of the incredible unwisdom of European economic policy.” –Paul Krugman
Jonathan Chait in New York magazine outlines more cases of “BipartisanThink” as defined by Matthew Yglesias in “BipartisanThink and the Principle of Seriousness.” Here’s the definition in MoneyBox at Slate, with more on how it works:
A certain strand of Beltway political thought has a problem with the budget deficit. By definition the failure of the parties to agree to a balanced deficit reduction package is equally the fault of both Democrats and Republicans. That’s a core element of BipartisanThink. At the same time, deficit hawks actively want to get politicans to agree with their prescriptions. So the risk always exists that the hawks will get what they want and someone will agree with them. That’s what’s happened with Barack Obama and most of the Democratic congressional leadership. At that point, a paradox occurs since again, by definition both parties are equally to blame.
Jonathan Chait notes that the Washington Post editorial page has seized the bull by the horns today, blaming both sides equally for the sequester standoff, even though the Post’s editorial board dislikes the GOP’s proposed sequester offsets—deep cuts in programs to poor people—and favors the Democrats’ proposed sequester offsets—cuts in farm subsidies and the “Buffett rule.” But where Chait sees illogic, I see the exploitation of an important principle. It involves the use of the word “serious,” as in, “neither party has staked out anything like a serious negotiating position.” By invoking the Principle of Seriousness, a way is provided out of the box …
Once you embrace the Principle of Seriousness, the way is clear for rigorous BipartisanThink.
Yglesias provides further scenarios in BipartisanThink Takes a Counterfactual Turn.
In David Brooks, Obama Plan Birther, Repents! Chait shows us how the paradox of bipartisan symmetry winds up with absolutist extremes.
As a general rule, the craziest, most rabid, most provably false political ideas come from the political extremes. They flourish within small ideological subcultures that lock out opposing viewpoints. But occasionally such weird myths can be found not on the fringes but in the center.
A virulent example of this has emerged during the latest iteration of the fiscal debate. Advocates of what Matthew Yglesias calls “BipartisanThink” have found themselves trapped between two impulses. On the one hand, they fervently believe that the country’s most vital priority is to pass a plan to reduce the deficit through a mix of cuts to retirement programs and reduced tax deductions. On the other hand, they believe with equal fervor that the two parties are equally to blame for the country’s problems in general, and the failure to pass such a plan in particular.
Their problem is that one party agrees with them completely, and the other rejects them. This creates a paradox between the two mental tentpoles of BipartisanThink. The solution is to simply wish away the facts, thus bringing them into line with reality.
Life is asymmetric; so is balance. The nuanced positions and shades of meaning that David Brooks and the BipartisanThink cohort perhaps aspire to are not to be found in trying to close the circle with pure symmetry. They will only wind up increasingly excluding the reality of what is needed. They become the cold opposite of moderation, opening the back door to fanaticism. The responsibility is almost scary, because without these “moderates,” how would the mad Tea Party (including its so-called regular folks) ever get any traction?
For another example of this unfunny phenomenon of myth and denial of reason, here is Paul Krugman via Mark Thoma, where the various terms like “Principle of Seriousness” and “BipartisanThink” are added to “symmetry”:
As always, many pundits want to portray the deadlock … as a situation in which both sides are at fault, and in which both should give ground. But there’s really no symmetry here. A middle-of-the-road solution would presumably involve a mix of spending cuts and tax increases; well, that’s what Democrats are proposing, while Republicans are adamant that it should be cuts only.
Words almost fail to describe the paradox. New ones most welcome! within reason, or not. Time for a break.
This is it. If we can’t fix this, nothing else will work, certainly not the romance of hierarchy.
Equal Opportunity, Our National Myth By JOSEPH STIGLITZ
President Obama’s second Inaugural Address used soaring language to reaffirm America’s commitment to the dream of equality of opportunity: “We are true to our creed when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American; she is free, and she is equal, not just in the eyes of God but also in our own.”
The gap between aspiration and reality could hardly be wider. Today, the United States has less equality of opportunity than almost any other advanced industrial country. Study after study has exposed the myth that America is a land of opportunity. This is especially tragic: While Americans may differ on the desirability of equality of outcomes, there is near-universal consensus that inequality of opportunity is indefensible. The Pew Research Center has found that some 90 percent of Americans believe that the government should do everything it can to ensure equality of opportunity.
. . .
Economic mobility in the United States is lower than in most of Europe and lower than in all of Scandinavia.
. . .
How do we explain this? Some of it has to do with persistent discrimination. Latinos and African-Americans still get paid less than whites, and women still get paid less than men, even though they recently surpassed men in the number of advanced degrees they obtain. Though gender disparities in the workplace are less than they once were, there is still a glass ceiling: women are sorely underrepresented in top corporate positions and constitute a minuscule fraction of C.E.O.’s.
. . .
The life prospects of an American are more dependent on the income and education of his parents than in almost any other advanced country for which there is data.
After World War II, Europe made a major effort to democratize its education systems. We did, too, with the G.I. Bill, which extended higher education to Americans across the economic spectrum.But then we changed, in several ways. While racial segregation decreased, economic segregation increased. After 1980, the poor grew poorer, the middle stagnated, and the top did better and better.
Americans are coming to realize that their cherished narrative of social and economic mobility is a myth. Grand deceptions of this magnitude are hard to maintain for long — and the country has already been through a couple of decades of self-deception.
Without substantial policy changes, our self-image, and the image we project to the world, will diminish — and so will our economic standing and stability. Inequality of outcomes and inequality of opportunity reinforce each other — and contribute to economic weakness, as Alan B. Krueger, a Princeton economist and the chairman of the White House Council of Economic Advisers, has emphasized. We have an economic, and not only moral, interest in saving the American dream.
A cosmic coincidence, but the Chelyabinsk meteor and 2012 DA14 are reminders of the deadly power of small asteroids. Perhaps mother nature is telling us to take this threat a little more seriously — Alan Fitzsimmons, London Independent
Thinking asymmetrically, pure coincidence is an absolute symmetry, which according to the Transformation Proof does not exist, so there are many and various connections between asteroid 2012 DA14 and the Chelyabinsk meteor, even though these connections can become extremely attenuated. The lack of pure coincidence anywhere means that significance is never entirely absent.
A concise analysis by Robert Reich of what we can hope may be a turning point in history. “The GOP Crackup: How Obama is Unraveling Reagan Republicanism”
Obama’s focus in his second inaugural — and, by inference, in his second term — on equal opportunity is hardly a radical agenda. But it aggravates all the tensions inside the GOP. And it leaves the GOP without an overriding target to maintain its fragile coalition.
In hammering home the need for the rich to contribute a fair share in order to ensure equal opportunity, and for anyone in America — be they poor, black, gay, immigrant, women, or average working person — to be able to make the most of themselves, Obama advances the founding ideals of America in such way that the Republican Party is incapable of opposing yet also incapable of uniting behind.
History and demographics are on the side of the Democrats, but history and demography have been on the Democrats’ side for decades. What’s new is the Republican crackup — opening the way for a new Democratic coalition of socially-liberal young people, women, minorities, middle-class professionals, and what’s left of the anti-corporate working class.
The historic Second Inaugural, with photos, via Maine Insights:
Each time we gather to inaugurate a President we bear witness to the enduring strength of our Constitution. We affirm the promise of our democracy. We recall that what binds this nation together is not the colors of our skin or the tenets of our faith or the origins of our names. What makes us exceptional — what makes us American — is our allegiance to an idea articulated in a declaration made more than two centuries ago: “We hold these truths to be self-evident, that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness.”
Today we continue a never-ending journey to bridge the meaning of those words with the realities of our time. For history tells us that while these truths may be self-evident, they’ve never been self-executing . . .
Ramona du Houx just happened to be at the right place at the right time, but it was no coincidence that this photographer and editor of Maine Insights news magazine had her camera with her. So here, via Maine Insights, are my two favorite photos of President Obama and the First Lady in that car nicknamed “the Beast.”
River of Asymmetry 