Assuming One's Conclusions

Greg Mankiw had a piece recently in the New York Times regarding the hot, hot topic of capital accumulation over time--the subject of Thomas Piketty's new book, Capital in the Twenty-First Century.
Mankiw's piece makes some good points, although I am biased (his text was the one we used in my macro class and it is brilliant).
I haven't read Piketty's book yet.  I will be finished my classes soon and I will have a month to knock it out.  I have been reading some of the reviews and saving others.  Few econ books engender the amount of discussion of Piketty's book, so I am looking forward to it, even if he is channeling Marx's spirit.
Shortly after Mankiw's piece runs, Paul Krugman weighs in on the topic.
First, I have to say that one of the things that truly distinguishes Paul Krugman from anyone that you would want to spend any time around is his astonishing arrogance.  Right off the bat, he is chiming in on the matter because "other people" have asked him to comment on it.  Because, you know, otherwise he's got other topics to exposit upon disingenuously.  So he indulges us for a few minutes on what Mankiw gets wrong.
Krugman takes two positions on Makiw's thesis.  The firs from an economics standpoint, the other from political economy.
Among other things, Mankiw makes the point that inherited wealth is typically saved/invested.  This helps everyone as a source of capital for things like bright, shiny object we like to be distracted by and the jobs necessary to make things happen.  It also makes the cost of borrowing cheaper as it expands the source for loanable funds.
Krugman "catches" Mankiw in not seeing the "opportunity cost" involved in letting people who earn their money pass it along to their heirs.  You see, there are alternatives.  Or at least one alternative.  And since it's Krugman, you can guess that the alternative is... the government.
Because the government can do things with the money that will be more beneficial to the common man who didn't earn someone else's money.  The government could take a wealthy decedent's money and pay down the deficit, but that wouldn't do anything further than what those greedy heirs would have done.
The government could also use the money to pay for "social insurance and/or social goods" and says that Mankiw "forgetting" about the alternative that Krugman favors is "assuming his conclusion;" that the so-called trickle-down benefit is the most desirable.
What Krugman doesn't see is that he is assuming his own conclusion: that the redistribution of wealth is a legitimate function of government.  He is free to believe in whatever he wants, but neither Greg Mankiw nor anyone else is obliged to share his belief.
He could try to use his considerable intellect and charm to try and persuade those who don't share his assumptions.  Or he could stick to ad hominem and mendacity.  I wonder which he will choose?

Verbiage Dervish

One of the greatest responsibilities speakers and writers have is to keep it short.  Words and the attention of the audience are sacred things.
This doesn't mean a lecture, speech, book, article, blog post, interview answer has to be short.  One of the greatest lectures I ever sat through was two hours long, with maybe five or six picture slides in the days before PowerPoint, and it left the entire audience wanting more.  The speaker respected his subject and his audience while also being confident enough in his material and himself that he didn't find it necessary to use fifty words to make a particular point when ten or twenty would do the trick.
The author/speaker is there to convey a story or information, not to attempt to impress.
I thought of this today as I heard a story this morning about John Kerry, Russia and the Ukraine on NPR's Morning Edition.
Regarding Russia's stance viz the Ukraine, Kerry had this to say:

"We will look to Russia for the choices that it makes in the next days for their confirmation of these statements.  Statements are statements, words are words; we have all learned that it's actions and the follow-on choices that make the greatest difference."

I am going to concentrate on the highlighted sentence.  The story played the tape of Mr. Kerry's remarks and the transcript is true to his words; there are no scrivener's errors.  The second clause is an affront to the English language and syntactically appalling.  But the major offense is that Kerry takes twenty-three words to say:

"Actions speak louder than words."

Five words.  Nice.  Pithy.  Apropos.  It conveys the exact same message without assaulting one's ears.

He could have stretched it a bit, gone biblical and said "You will know them by their fruits."  Seven words, but this would still get the message through in 1/3d the words and perhaps even challenged the listener (but in a good way).

Twenty-three words to take a simple message and make it almost incomprehensible.

Kerry isn't the only politician afflicted with maddening logorrhea, nor is this limited to liberals or Democrats.  It is entirely too symptomatic of people who either don't know what they are saying or attempting to appear more thoughtful that they really are or perhaps are capable of being.

A Conversation Somewhere in Philadelphia

circa 1787, near 3d Street.


Hamilton: what's up, JimBob?  How's it coming?

Madison: Hey, Al.  Just dotted the i's and crossed the t's on habeas corpus clause just to make certain that no one ever thinks that the government has the authority to detain anyone without due process.  I think it's pretty solid.  But I keep getting hung up on the preamble.

Hamilton: What part?

Madison: So far I have, "We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defence of all of humanity..."

Hamilton: Whhhooooaaaa there, little man.  What was that last bit?

Madison:  We are establishing a federal government that is to defend the sanctity and dignity of all humans everywhere, except where we don't, for all of time regardless of the threat or consequences, no?  That's the note Gouverneur slipped me.

Hamilton (chuckling): Gouverneur.

Madison: I know, right?

Hamilton (snapping to): That's biting off a little more than we can chew, don't you think?

Madison: Absolutely not.  We have a continent rich with natural resources and more than our share of industrious, entrepreneurial people.  We will tax those people to the point of breaking their spirit while running up unfathomable debt.  We can then establish a military larger than our needs or our means and make sure that nobody ever does anything we don't like.  And none of that will be a problem, right Mr. National Bank?

Hamilton: Watch it.  Where are you going with this?

Madison: With our resources and the fact that we know what's best for everyone else, we can't possibly confine ourselves to protecting, um, ourselves.

Hamilton: Is your stammering the result of your redundancy, your imbecility or you coming to your senses?

Madison: No need to insult.  That's a nasty habit of yours that you'd be wise to mind.

Hamilton (waving off Madison): Listen, let's keep things simple.  Keep it at "provide for the common defense."  You still have that bit in there about being able to change things, right?

Madison: Article V, just where we left it.

Hamilton: Good stuff.  We don't want people to forget that if they don't like what we "old white guys" put in there, they can just change it and not resort to having the courts or congress or the president bastardize all of the work we put in here and ignore what we've plainly written rendering the entire enterprise a sham.

Madison (snaps his fingers):  You're drifting.

Hamilton (starts): Sorry.  Anyway, if the people decide later that they want to become the world's policeman, they can just amend the constitution.  It will spell the end of the republic, but you know what they say about all good things.

Madison: What?

Hamilton: You're an idiot.  What's next?

Madison: Huh?  Oh, OK, so we'll keep it to "provide the common defence."

Hamilton: That should be an "s" there.  We're Americans.

Madison: Fuck off, foreigner.

Hamilton: Next...

Madison: ...Ok...here we are, "provide the common defence," and then "provide welfare to everybody for any reason..."

Hamilton (rubbing his forehead): I'll be back.

Madison: Were are you going?

Hamilton: I'm getting Franklin.  It's going to be a long night.

The Best Analogy

Peter Beinert wrote a hit-peice on Marco Rubio for something called the Daily Beast.  He starts off swimmingly by calling the reading of two books, one an autobiography by Rubio, the other a biography about him, an act of "literary masochism."  So we get how hip and funny Beinert is right off the bat.

The second paragraph cuts right to the heart of things, starting "It’s not that Rubio is as smart and perceptive as Obama."  I was e-mailing a friend of mine tonight along these lines.  What evidence has there been of Obama's intelligence and perspicacity?  But I digress.

Rubio might be sharp as a tack, he may be another Sarah Palin.  I don't know.  I do know that political autobiographies are about as useful for finding out about a person as dropping an anvil on your foot, as both are completely untethered to any useful information about the subject.  My point being that I don't know enough about Rubio to have an opinion one way or the other about him.  I've heard he is a "Tea Party" guy, but I've heard that about both Palin (possibly) and Ron Paul (no), so I don't know exactly what that means.

But after reading these books, Peter Beinert knows Marco Rubio.  I have a sneaking suspicion that he already had a pretty good bead on Marco Rubio before he picked up either book, but that is another matter.

The point of the post is to share what is the best analogy I've ever read. In describing what drove young Rubio into politics, Beinert writes "[w]hat he fell in love with on the streets of Miami’s raucous Cuban ghetto was the political game."  Rubio's parents were Cuban immigrants, and he was raised in Miami.  Beinert then writes the best analogy I've ever read, immediately following the previous sentence, "The best analogy might be John F. Kennedy, who also learned the art of politics in a parochial ethnic community but through personal skill and generational change was able to transcend it."

John F. Kennedy learned the art of politics in a "parochial ethnic community?"  His maternal grandfather was the mayor of Boston and served three terms in congress.  His father, a fabulously lecherous human being, went to Harvard, made money through investing and was hob-nobbing with FDR at the dawn of WWI, three years before JFK was born.  JFK lived from birth to the age of ten in Brookline, MA, then moved to the Riverdale section of the Bronx.  He attended private elementary schools, summered in Hyannisport, MA, went to The Choate School, then on to Harvard.  You get the idea.  I won't disagree that the Kennedy family was ethnic.  I pretty sure there were several pair of Irish sunglasses donned by all of the kids at one point or another, and certainly some of the boys' spouses on more than one occasion.  But to describe his upbringing as happening in a "parochial ethnic community" is patently absurd.  And, further, to depict Kennedy's political ascendency as something that had to be attained through some Herculean transcendence in spite of the parochial ethnic community has somehow managed to escape is an insult to anyone who can spend 35 seconds on wikipedia finding out exactly how unparochially ethnic JFK's upbringing was.

I would go further, but once I got to the best analogy I've ever read, I stopped reading.

Yoo's Back

John Yoo, Chief architect for the George W. Bush administration's more novel views on the constitution and presidentialauthority not found written down anywhere, is sharing his thoughts on the National Security Agency and revelations that the agency, via the Foreign Intelligence Surveillance Court, can collect information on whomever it wants, whenever it wants, regardless of whatever medium humans can communicate through.

Mr. Yoo is against putting the NSA in an "impossible position", because "we are placing these kinds of domestic law-enforcement standards on a foreign intelligence function. With domestic law enforcement, we want the Justice Department to monitor one identified target (identified because other evidence gives probable cause that he or she has already committed a crime) and to carefully minimize any surveillance so as not to intrude on privacy interests.

Once we impose those standards on the military and intelligence agencies, however, we are either guaranteeing failure or we must accept a certain level of error. If the military and intelligence agencies had to follow law-enforcement standards, their mission would fail because they would not give us any improvement over what the FBI could achieve anyway."

What Mr. Yoo fails to grasp is that the government, whether domestic law enforcement, the military or intelligence agencies, is covered by the same standard.  Namely that the government does not have the right to search a person, his house or his "effects" without a warrant and that warrants may only be issued upon probable cause.  The "reasonable suspicion" standard that allows police to detain a suspect temporarily doesn't cut the mustard here.  There are no hidden, secret codicils that say the president gets to do whatever he wants under certain circumstances.  And if the government, all in the name of protecting us, gets to pick and choose what authority it has and what what rights the people get to enjoy under specific circumstances, the whole system has failed.

It is a point I have made before and feel obligated to repeat: in our system, the people are the sovereign, the government is the servant.  Executives, legislators and bureaucrats do not have the authority to decide what powers they have.  This is kind of important.

Don't Call it That

I like language.  I'm not an expert, rather a hobbyist.  I like to play with words in order to convey meaning, tone, emotion and I enjoy writers who do well what I attempt futilely.

I like the utility of words and appreciate the development of contemporary communication, save the text lingo and obsessiveness with acronyms, but that is a fight for another day.

But sometimes, I find, that we don't have words to describe certain things or events.  Neologisms come and go, but it's weird to stumble upon needing a word to describe a thing or event that has been around since civilization dawned.

Take, for instance, when the military in Egypt overthrew the popularly elected government of Mohammed Morsi and suspended the constitution a few weeks ago.  I could have sworn that there was a phrase that we had, of French origin, that described perfectly what that is ("overthrow" is too prosaic).  I scanned wikipedia, I flipped through dusty old books, I meandered through the local library and I couldn't find the words that I was certain existed.

Someone foolishly suggested that the words I was looking for were "coup d'etat," the definition of which is (from dictionary.com):

a sudden and decisive action in politics, especially one resulting in a change of government illegally or by force.

But that can't be it, because the United State Department of State says unequivocally that what happened in Egypt is not a coup d'etat.  Because if it was, according to the law that authorizes the disbursement of financial and military aid to Egypt if the military overthrows the government, then the more than $1.2 billion dollars that our government takes from current and future taxpayers and sends to Egypt each year would automatically be cut.

So my search continues to find out what to call what happened in Egypt.  Any help would be appreciated.

Head Slap Special

President Obama is "pivoting" again, trying to bring attention to the economy.  Which might night be such a hot idea because, in this arena, he's an idiot.

And I don't say that because he's a socialist who like to "spread around" other people's wealth, though that does not help his score here.  I say that because he doesn't know how markets work.  And if you don't know how markets work, you shouldn't try to focus attention on the fact that markets aren't working very well and that the reason they aren't working as well as they ought is directly related to policies promulgated by like-minded intellectual pygmies.

The best part is that he thinks his speeches will help his cause, and if his cause is helped, more of the policies he supports will be put in place and then the economy will perform better.  Let's never mind that this is the heighth of hubris that Hayek addresses in the quote cited on the banner, but just mind that liberal policies are the worst thing you can do to an economy.

But if we put aside the trade-off between the costs versus benefits of wealth-transfer schemes, avoid the discussion of whether the distribution of income is even a concern of the federal government and shy away from rhetoric such as (from the president's speech yesterday at Knox College, emphasis added):

"In the period after World War II, a growing middle class was the engine of our prosperity.  Whether you owned a company, or swept its floors, or worked anywhere in between, this country offered you a basic bargain -- a sense that your hard work would be rewarded with fair wages and decent benefits, the chance to buy a home, to save for retirement, and most of all, a chance to hand down a better life for your kids.

But over time, that engine began to stall -- and a lot of folks here saw it -- that bargain began to fray.  Technology made some jobs obsolete.  Global competition sent a lot of jobs overseas.  It became harder for unions to fight for the middle class.  Washington doled out bigger tax cuts to the very wealthy and smaller minimum wage increases for the working poor."***

And

"So in many ways, the trends that I spoke about here in 2005 -- eight years ago -- the trend of a winner-take-all economy where a few are doing better and better and better, while everybody else just treads water -- those trends have been made worse by the recession.  And that's a problem.

This growing inequality not just of result, inequality of opportunity -- this growing inequality is not just morally wrong, it’s bad economics.  Because when middle-class families have less to spend, guess what, businesses have fewer consumers.  When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy.  When the rungs on the ladder of opportunity grow farther and farther apart, it undermines the very essence of America -- that idea that if you work hard you can make it here."

You can look at actual facts, like:

    (source)

Yes, the president and his supporters are correct.  The middle class is shrinking.  More people are becoming wealthy and slightly fewer people are as poor as they were.  But why let facts get in the way of dulcet, but fatuous, rhetoric.


***Please see here for a partial antidote to this paragraph.  There is so much wrong in his speech and this paragraph is the lodestar for its sophistry.