Arise, ye prisoners of barbeque and holiday traffic
At 5:36 on the Friday afternoon before Labor Day, it's hard to keep one's mind focused on substantive posts, and you wouldn't read them if I did. To judge by today's comments, it's all y'all can do to engage in a little desultory chitchat about music and giant grasshoppers. So here are a few fun1 links for your Labor Day delectation:
From The Atlantic's mighty archive, Jack London on scabs, in which our intrepid author battles with deadweight loss and competition:
It is for this reason that a laborer is so fiercely hostile to another laborer who offers to work for less pay or longer hours. To hold his place (which is to live), he must offset this offer by another equally liberal, which is equivalent to giving away somewhat from the food and shelter he enjoys. To sell his day's work for two dollars instead of two dollars and a half means that he, his wife, and his children will not have so good a roof over their heads, such warm clothes on their backs, such substantial food in their stomachs. Meat will be bought less frequently, and it will be tougher and less nutritious; stout new shoes will go less often on the children's feet; and disease and death will be more imminent in a cheaper house and neighborhood.
Thus, the generous laborer, giving more of a day's work for less return (measured in terms of food and shelter), threatens the life of his less generous brother laborer, and, at the best, if he does not destroy that life, he diminishes it. Whereupon the less generous laborer looks upon him as an enemy, and, as men are inclined to do in a tooth-and-nail society, he tries to kill the man who is trying to kill him.
When a striker kills with a brick the man who has taken his place, he has no sense of wrong-doing. In the deepest holds of his being, though he does not reason the impulse, he has an ethical sanction. He feels dimly that he has justification, just as the home-defending Boer felt, though more sharply, with each bullet he fired at the invading English. Behind every brick thrown by a striker is the selfish "will to live" of himself and the slightly altruistic will to live of his family. The family-group came into the world before the state-group, and society being still on the primitive basis of tooth and nail, the will to live of the state is not so compelling to the striker as the will to live of his family and himself.
In addition to the use of bricks, clubs, and bullets, the selfish laborer finds it necessary to express his feelings in speech. Just as the peaceful country-dweller calls the sea-rover a "pirate," and the stout burgher calls the man who breaks into his strong-box a "robber," so the selfish laborer applies the opprobrious epithet "scab" to the laborer who takes from him food and shelter by being more generous in the disposal of his labor-power. The sentimental connotation of scab is as terrific as that of " traitor" or "Judas," and a sentimental definition would be as deep and varied as the human heart. It is far easier to arrive at what may be called a technical definition, worded in commercial terms, as, for instance, that a scab is one who gives more value for the same price than another.
The laborer who gives more time, or strength, or skill, for the same wage, than another, or equal time, or strength, or skill, for a less wage, is a scab. This generousness on his part is hurtful to his fellow laborers, for it compels them to an equal generousness which is not to their liking, and which gives them less of food and shelter. But a word may be said for the scab. Just as his act makes his rivals compulsorily generous, so do they, by fortune of birth and training, make compulsory his act of generousness. He does not scab because he wants to scab. No whim of the spirit, no burgeoning of the heart, leads him to give more of his labor-power than they for a certain sum.
It is because he cannot get work on the same terms as they that he is a scab. There is less work than there are men to do work. This is patent, else the scab would not loom so large on the labor-market horizon. Because they are stronger than he, or more skilled, or more fortunate, or more energetic, it is impossible for him to take their places at the same wage. To take their places he must give more value, must work longer hours, or receive a smaller wage. He does so, and he cannot help it, for his will to live is driving him on as well as they are being driven on by theirs, and to live he must win food and shelter, which he can do only by receiving permission to work from some man who owns a bit of land or piece of machinery. And to receive permission from this man, he must make the transaction profitable for him.
Viewed in this light, the scab who gives more labor-power for a certain price than his fellows is not so generous after all. He is no more generous with his energy than the chattel slave and the convict laborer, who, by the way, are the almost perfect scabs. They give their labor-power for about the minimum possible price. But, within limits, they may loaf and malinger, and, as scabs, are exceeded by the machine, which never loafs and malingers, and which is the ideally perfect scab.
It is not nice to be a scab. Not only is it not in good social taste and comradeship, but, from the standpoint of food and shelter, it is bad business policy. Nobody desires to scab, to give most for least. The ambition of every individual is quite the opposite,—to give least for most; and as a result, living in a tooth-and-nail society, battle royal is waged by the ambitious individuals. But in its most salient aspect, that of the struggle over the division of a joint-product, it is no longer a battle between individuals, but between groups of individuals. Capital and labor apply themselves to raw material, make something useful out of it, add to its value, and then proceed to quarrel over the division of the added value. Neither cares to give most for least. Each is intent on giving less than the other and on receiving more.
Why don't we celebrate Labor Day on May 1st like everyone else, particularly since May 1st commemorates the Haymarket Riot, an American labor milestone? Slate's Explainer, er, explains.
Judging what history will think of a president is, in the popular vernacular of yesteryear, a mug's game. Harry Truman declined to run again with a pre-election approval rating of just 23%, but we regard him pretty well, thanks mostly to desegregating the military. On the other hand, Warren Harding was well thought of throughout his administration; the scandals only came to light after his death in the third year of his term.
That said, this strikes me as pretty unlikely. I'd be a prepared to take a little action at Longbets if Karl Rove is ready to put his money where his mouth is.
Most of my libertarian friends seem to love Ron Paul. Their descriptions of his presidential campaign have a wistful "If only . . . " quality to them that I haven't seen in a political discussion since the write-in campaign by the girl's field-hockey team to elect Christian Slater president of the student council.
After my much-regretted decision to vote for George W. Bush in 2004, I've kind of been sitting on the political sidelines. I'm pretty sure I'll hate whoever gets elected. Rudy might be funny just to see the ACLU get all misty and nostalgic about the current administration, but that probably won't make up for having to wear uniforms and go to bed at 10 o'clock every night. John McCain lost me at the execrable McCain-Feingold finance reform, and has not exactly covered himself in glory since. I'm not even sure what one calls his peculiar politics: popuwafflism? Mitt Romney's specialty seems to be a blandness so total that I have difficulty recalling what he looks like, broken by inexplicably revealing stories about, for example, his penchant for strapping dogs to the roofs of cars.
Vote Democrat, you say, then. John Edwards teeth sure are pretty, but his economic polices sure aren't. Hilary Clinton . . . even if I were disposed to vote for her vintage 1967 earnest technocratic policies, I'd be more than a mite uncomfortable with a political lineup that went Bush, Clinton, Bush, Clinton. Which means I'm probably going to end up voting for Obama just because I like his senior economic advisor, Austan Goolsbee . . . and then regretting it as soon as he actually starts doing things.
But I digress. The point being that, having pretty much opted out of paying attention to politics, I've just kind of assumed that I would like Ron Paul to be president, if only the thing weren't totally impossible.
But then every time I hear about his actual policies, I'm pretty thoroughly appalled. He voted against CAFTA and wants us to withdraw from the WTO. Perhaps unsurprisingly, he's also hardline on immigration. He favors the stupid Cuba travel ban even though the Communist Menace evaporated almost two decades ago. And last week, sitting with one of his supporters at a wedding, I found out that he wants to move America back onto the gold standard. I cannot, in good conscience, even entertain the hope of electing a man who wants to outsource our monetary policy to Anglo-American.
So my downloads have reset, and I managed to get 100 downloaded with six minutes to go until midnight. I thought I'd update you on what I managed to download between 5 o'clock yesterday, when I realized that I had, in the excitement of moving and switching computers, forgotten to download any music this month; and midnight, when the downloads reset. I should note that there was a three+ hour break for dinner.
The AffairYes Yes to You Amon TobinChaos Theory Arnold SchoenbergVerklarte Nacht/Chamber Symphony No 2 BeirutLon Gisland The DecemberistsCastaways and Cutouts godspeed you! black emperorLift Your Skinny Fists Like Antennas to Heaven Infected MushroomClassical Mushroom MoondogMoondog The NationalBoxer The New PornographersTwin Cinema Okkervil RiverThe Stage Names Quentin CrispAn Evening with Quentin Crisp Steve Reich/The Smith QuartetDifferent Trains Tokyo Police ClubSmith Georgie JamesThe Grizzly Jive Death Cab for CutieDream Scream
As you can see, I was in an Indie kind of mood, which is not to disparage any of the other genres that were suggested; I will explore some of them with this month's downloads. But when you're in a hurry, it's best to stick with one or two genres; it's easier to distinguish what you like. And so far, I like all of it, except that I'm kind of ambivalent about The Affair. For that matter, I should like all of it, since several of those selections were repeats of things I lost to a hard drive failure and my poor backup technique.
As you can also see, anyone who was hoping for Yglesias-quality music blogging will have to slide back over to his blog. Thanks for everyone who made suggestions, and keep them coming; I have a hundred downloads every month.
Incidentally, I should mention that if you don't have an eMusic subscription, you should totally get one; mine costs $25 a month, or 25 cents per fully transferrable MP3. However, I do want to complain about the fact that after you get to 100 downloads a month, there's no further discount; the 200 song package costs exactly twice as much, give or take a penny, as the 100 song package.
Not that this has kept me from toying with the idea . . .
I think it was Abraham Joshua Heschel — after he broke off with Reinhold Niebuhr and formed Jefferson Airplane — who observed that though the ancients counseled, “Know Thyself,” in 87 percent of actual cases, profound self-knowledge is not transforming. It’s just disappointing.
And this is never more true than when the beach self takes over. There is a boardwalk game near where we vacation where you roll balls into holes to try to get your mechanical horse across a track faster than your 11 opponents. You pay a dollar a game and if you win you get a stuffed horse worth 75 cents. My beach self has played that game for 15 years, and I have never once gotten up without secretly wishing I was playing again.
In my heart, I’d be happy to play that game 11 hours a day at the cost of several thousand dollars, and the only thing preventing me is that the Slovakian girl behind the counter might conclude that American men are pathetic.
I question the economics, there; I'd guess the horse is worth more like 2 cents. But it is certainly true that a life without funnel cakes and salt water taffy is not worth living.
Actually, I too had just noticed Brooks being exceptionally funny, in this review of Drew Westen's book:
Westen urges Democratic candidates to go for the gut, and includes a number of speeches that he wishes Democratic candidates had given. He wishes, for example, Al Gore had hit George Bush harder for being a drunk. He wishes Gore had interrupted a presidential debate and barked at Bush, “If someone is going to restore dignity to the Oval Office, it isn’t a man who drank his way through three decades of his life and got investigated by his father’s own Securities and Exchange Commission for swindling people out of their retirement savings.”
At another point, he imagines Gore exploding: “Why don’t you tell us how many times you got behind the wheel of a car with a few drinks under your belt, endangering your neighbors’ kids? Where I come from, we call that a drunk.” If Democrats would go for people’s primitive passions in this way, Westen argues, they’d win elections.
This thesis raises some interesting questions. First, why did someone with so little faith in rational inquiry go into academia, and what does he do to those who disagree with him at Emory faculty meetings, especially recovering alcoholics?
Of course, perhaps this is not fair: who couldn't write a funny review of a book by a man who thinks that the way to make an emotional connection with people is to make fun of recovering drunks? But it was rather wittier and more acerbic than I generally think of Brooks as being.
Update A reader argues that Westen's response makes this piece sound considerably less funny. I haven't read the book, but I have heard the good professor interviewed on NPR, and after listening to him for an hour, I have to say that he, and his thesis, came off as exactly the painfully parochial, self-unaware, thoroughly risible parody that David Brooks presents him as.
I am totally terrified of spiders, along with almost anything else that has more than four legs. (Grasshoppers are okay). Past boyfriends will attest that you don't really know fear until you hear the electrifying strangled screams that emit from my mouth at the sight of, say, a largish cockroach. Naturally, therefore, I was unable to resist clicking on a New York Times headline that read "Got Arachnophobia? Here’s Your Worst Nightmare"
Actually, however, the story turned out to be pretty cool:
Most spiders are solitary creatures. So the discovery of a vast web crawling with millions of spiders that is spreading across several acres of a North Texas park is causing a stir among scientists, and park visitors.
Sheets of web have encased several mature oak trees and are thick enough in places to block out the sun along a nature trail at Lake Tawakoni State Park, near this town about 50 miles east of Dallas.
. . .
Allen Dean, a spider expert at Texas A&M University, has seen a lot of webs, but even he described this one as “rather spooky, kind of like Halloween.”
Mr. Dean and several other scientists said they had never seen a web of this size outside of the tropics, where the relatively few species of “social” spiders that build communal webs are most active.
The administration has announced a plan to help borrowers in danger of default. Broadly, the terms seem to be:
1) Increasing the number of homeowners the FHA can insure, which will help them refinance at lower rates. The FHA (Federal Housing Administration) doesn't offer loans itself; it just helps people with shaky credit or financials qualify for mortgages by guaranteeing to pick up the tab in case of default.
2) Suspending the tax penalty for people who get their loan values reduced. Normally, the IRS taxes any such reduction, in order to prevent companies from giving their employees "loans" which they then "forgive" as a way of evading taxes on salaries. I wouldn't be precisely shocked if some valued employees with employer-sponsored loans, but without financial problems, see their debt reduced during the tax holiday.
3) A joint initiative between Treasury and HUD to offer as-yet-unspecified help to people in danger of defaulting.
Overall, this seems to me like a pretty good package. It doesn't, as many of the more generous plans do, offer irresponsible borrowers free home equity at the expense of either the lender or the taxpayer. But it does give them a chance to get some breathing space by working out terms with their lender. And it stops the rather horrid practice of taxing people who've had to sell their house for less than the value of the mortgage.
Of course, one wonders how much help the Treasury/HUD initiative will really be--it may just consist of Federal employees saying, in stentorian tones, "You sure do have more house than you can afford, there." But overall, it seems like a pretty good package, and the expense to the taxpayer seems admirably minimized.
A survey by the Mortgage Bankers Association found that mortgages on properties that aren't occupied by the owner -- mostly investment homes -- account for between 21% and 32% of the defaults on prime-quality home loans in Arizona, California, Florida and Nevada, states where overdue payments are mounting fast.
Wow! Those investors are a bunch of deadbeats. But wait:
In Nevada, Arizona and Florida, loans for properties that weren't owner-occupied accounted for nearly a third of all home mortgages issued in 2005.
So only in California is that number at all surprising. And it may simply be an outlier; no word on states where defaults by investors are abnormally low.
Last night at dinner, I was asked a question: why do Irish-Americans still care so much about Northern Ireland? Why do people two or more generations removed from Ireland still give money to the IRA?
My family never has given money to the IRA--in fact, we may be the only Irish Americans who donate to the SDLP. Nonetheless, I offered an opinion.
For Americans, I said, the Troubles never ended. Their families never experienced building their own, Irish state; they never lived in an Ireland that wasn't ruled by the British. And so the last thing they had of Ireland was the terrible memories of whatever forced them to leave. And in many cases, the memories were terrible; I have met people who had relatives killed at Croke Park or were otherwise terribly victimised by the Black and Tans. Their other memories were of being terribly poor--a friend's grandmother actually grew up cooking on an open fire that vented through a hole in the ceiling--and rightly or wrongly, they blamed the British for this.
Moreover, the ones who stayed on the coasts, in Boston and New York and Philadelphia, felt herded into ghettoes by Protestants only marginally less bigoted than the ones they'd left behind in Ireland. I'm not sure that my friends who have rechristened themselves progressives understand just how much of that movement was an explicit revulsion against Catholic immigrants, and the political power and structures that they had built.
My great-grandfather's generation was economically, politically, and socially quite constrained by this discrimination; my father's generation experienced it regularly; and even I occasionally stumble into its echos. The St. Patrick's Day party I attended in the Main Line, where the expert eye of the fifty-something hostess immediately picked me out as the only Irish person present, and introduced me to the guests accordingly. Or the seventy-something woman at a hotel I worked at who rechristened me "Millie" after some Irish maid they'd had in the twenties, and when her companion corrected her, grandly declared (I swear, I'm not making this up) that "The Irish don't care about things like that." Obviously, I do not feel that my life has been in any way affected, much less blighted, by anti-Irish discrimination. But when I run into things like that, I think I can understand how I would feel, if that sort of thing were a feature of my everday life, rather than a thrillingly anachronistic hint of a forgotten past.
All of this is true, but I think it is too kind. There is another reason that Irish Americans give to Gerry Adams and his merry band of Marxist maniacs, which is that it is all very far away. Irish Americans can, at relatively cheap monetary cost, purchase social status, solidarity, and the exciting feeling of striking a blow for Ireland! They suffer not one whit from the cycle of violence that they help sustain.
I've got 76 downloads remaining on my eMusic account, and two days to download. Normally, I like to spread my downloads at a leisurely pace throughout the month, but I'm afraid I've been busy, so now it's time for a binge. What should I grab?
Update I thought you should know that this thread caused one of my friends to IM me last night with the opinion "Wow, your commenters DO have good taste". Keep up the good work, guys.
Here are the things most people would happily pay for at an international transit airport: – a shower – clean underwear (for those of us who habitually forget to pack it) – daylight – an exercise facility to help with the jetlag and minimise DVT – nutritious but not too heavy food – a nap, lying flat, somewhere quiet.
And here’s what is generally available: – Gucci – Chanel – l’Occitane – Bodyshop – Lacoste – Nike – a few plastic seats – McDonalds, dougnuts, and the local variety of fried, sugary dross to add a sugar hangover to your jetlag.
. . .
So why the complete mismatch of trapped and exhausted consumers to luxury goods? Surely the airports have woken up to the fact that travelling is mass market. Or are travellers such a captive market that airports can completely ignore what they actually want…?
My answer: in an airport, foot traffic is very high, and space is at a premium. So you should expect to see things that go at a very high volume (McDonalds) or things that are very expensive per-inch-of-display-space, such as Gucci. Showers and napping capsules do not meet either criteria.
Now I am over here . . . now I am over there . . .
Perhaps what the economy needs is not a Fed chief, but a psychiatrist. It seems like it might need some lithium more than a rate cut.
This morning the Bureau of Economic Analysis, which calculates GDP, released its new estimates for the second quarter. Much to my personal surprise, it was a big upward revision. According to the BEA, the economy grew at an annualized pace of 4% in the second quarter, up from an earlier estimate of 3.4%. That estimate was itself a big upward surprise, after a very disappointing first quarter during which the economy grew at a tepid 0.6% annualised rate.
Whatever manic high we hit in the second quarter, needless to say, has now worn off. Economists are talking about something in the 1.5-2.5% range for the current quarter, with a projected downtrend heading into years end.
Peter Suderman questions whether Japan's broadband is really 8-to-30 times faster than ours.
The article he references is a little misleading; it compares the best broadband available in Japan (100 mbps) to the average in America. But America has fiber to the home to, and the comparison is considerably less invidious; we just have less of it, because it takes longer to build out a fiber network for a country with an average population density of less than 3000 people per square mile, than it does in a country where the population density hovers around 12,500 people per square mile. The article spends a lot of time focused on telecoms policy, when awesome telecoms policy is not going to give us better geographical conditions, or a newer copper network.
That said, better telecoms policy would give us competition for services, something sorely needed. Forget high speed internet; how come the government protects Comcast's right to be my sole provider of surly, desultory cable service? These days, it seems like the only hope is that the cable companies and the baby bells will meet on some windy plain, like Mothra and Godzilla, and destroy each other.
Update I grabbed the density figures off an internet site, and either read them wrong, or used a bad site. Commenter Internet Ronin says:
For the record, according to the United Nations, the correct numbers for population density for the United States and Japan in 2005: 31 people per square kilometer in the United States and 343 people per square kilometer in Japan. Japan ranks #30 out of 230 nations/territories while the United States ranks #172.
That doesn't change the point, of course; in fact, it rather augments it. But accuracy counts.
I very much enjoyed Jerome Groopman's book, How Doctors Think. I love his writing at the New Yorker. But I am afraid I didn't think very much of the book's thesis, which is that doctors need to improve their clinical judgement rather than relying on evidence based medicines and statistics. "People are not statistics" is sloppy thinking; most of the time, we are. And there's substantial evidence that doctors do best when they treat their patients by the numbers.
Groopman tells us he is troubled that new doctors seem to be trained to “think like computers,” that they rely on diagnostic decision aids and some seductive “boiler-plate scheme” called evidence-based medicine. Groopman’s position, when his various arguments are gathered and assembled, becomes untenable. He admits doctors suffer from innumerable biases that diminish the accuracy of diagnosis, reducing many diagnoses to idiosyncratic responses fueled by mood, whether the patient is liked or disliked, advertisements recently seen, etc. Thus Groopman agrees with decision scientists’ diagnosis of doctor decision making; but then he goes on to wantonly dismiss what many of the very same researchers claim is the best (and perhaps only) remedy, the way to “debias” diagnosis: evidence-based medicine and the use of decision aids. In place of statistics what does Groopman suggest doctors rely on? Clinical intuition of course, the very source of the cognitive biases he pays lip service to throughout his book.
. . .
Most doctors do not like decision aids. They rob them of much of their power and prestige. Why go through medical school and accrue a six-figure debt if you’re simply going to use a computer to make diagnoses? One study famously showed that a successful predictive instrument for acute ischemic heart disease (which reduced the false positive rate from 71% to 0) was, after its use in randomized trials, all but discarded by doctors (only 2.8% of the sample continued to use it). It is no secret many doctors despise evidence-based medicine. It is impersonal “cookbook medicine.” It is “dehumanizing,” treating people like statistics. Patients do not like it either. They think less of doctors’ abilities who rely on such aids.
The problem is that it is usually in patients’ best interest to be treated like a “statistic.” Doctors cannot outperform mechanical diagnoses because their own diagnoses are inconsistent. An algorithm guarantees the same input results in the same output, and whether one likes this or not, this maximizes accuracy. If the exact same information results in variable and individual output, error will increase. However, the psychological baggage associated with the use of statistics in medicine (doctors’ pride and patients’ insistence on “certainty”) makes this a difficult issue to overcome.
The statistics vs. clinical intuition debate has ensued for decades in psychology. Where one sides in the debate is largely determined by what one makes of a single phrase: “Group statistics don’t apply to individuals.” This claim, widely believed, ignores many of the most basic concepts of probability and statistics, such as error. Yes, individuals possess unique qualities, but they also share many features that allow for predictive power.8 If 95% of a sample with quality X has quality Y, insisting that someone with quality X may not have Y because “statistics don’t apply to individuals” will only decrease accuracy. Insistence on certainty decreases accuracy. As Groopman himself says, the perfect is the enemy of the good.
. . .
Physicians who allow themselves to think in such discretionary ways can find “exceptions” everywhere they look, and, augmenting a decision aid as they see fit, will only end up lowering its overall diagnostic accuracy. Why? Because human beings do not apply rules consistently. Mechanical procedures always lead to the same conclusion from the same input. Doctors are subject to random fluctuations in diagnosis caused by judgmentally-irrelevant factors including availability, priming, recency effects, inconsistent weighting of information, fatigue, etc., all of which reduce accuracy. What leads to a correct decision for one case may not for another, and variables that contribute to the diagnosis made may actually be uncorrelated with it.
This is hardly restricted to doctors. Every profession resists being told that there is a standard way to do things, that a cookie cutter can cut better than their skilled hand. Journalists famously hate the "inverted U" style of writing a news story, even though it really does seem to work better than anything else; it's boring to write, and leaves no room for individual style. Teachers don't like "teaching to the test" or rigidly programmed phonics curricula, even though the latter produces measurably better results than all but the very best teachers. Unfortunately, for many of us, it may be time to welcome our new robot overlords.
I don't watch 24, both because I have no interest in looking long into the abyss, and because I find it just kinda tiresome. But it looks like next season, it may be my duty, as an eco-friendly urban type, to start:
int. CTU - day
JACK BAUER talks to JANIS GOLD.
JANIS GOLD
Our source tells us that the terrorists' plan is blow up Broward Dam. [should we make this a real dam? anything'd do] This would create mass flooding, cut power to the entire state, and destroy the habitat of the tidewater goby.
JACK BAUER
Dammit! Without that goby, what will our local heron population eat?
JANIS GOLD
Try not to think about that.
JACK BAUER
I can't help it! Every link in the food chain matters!
Over at Felix Salmon's place, guest-blogger Yves Smith chastises Alan Greenspan:
Remember, a central banker actually has very few policy tools, and monetary policy is a blunt instrument. Moral suasion is one of their powerful but often not effectively used instruments. Greenspan, unfortunately, was an enabler, fond of impenetrable statements that left everyone perplexed but not worried since in the end he'd open the money tap in times of trouble. It was a hollowing out of the role of the central banker who, as William McChesney Martin famously remarked, was supposed to take the punch bowl away just when the party was getting good. Greenspan didn't merely help create widespread asset inflation via overly aggressive rate cuts in 1998 and 2002, but also set a tone that makes it hard for his successor Bernanke to deliver tough messages.
If there were ever any doubts about Greenspan's willingness to rock the boat, they were dispelled, irrevocably, on December 6, 1996. Greenspan, the evening before, had used the now famous phrase, "irrational exuberance," as a question rather than a statement about a recent runup in the equity markets. The Nikkei fell 3% overnight. European markets traded down 2-3%. The Dow dropped 145 points before rallying late in the day.
And Greenspan took the trouble to clarify his remarks and retreat from any implication that stocks were too high.
Now readers might think this confirms Greenspan's power, but actually it shows the reverse. The stock markets are not the Fed's job. And worse, a Fed chairman should not try to talk the markets up. This revealed how Greenspan was hostage to the markets, and that attitude may have taken root at the Fed.
I'm not sure I'd cite William McChesney Martin as an example of a fellow who took the punchbowl away when the party got going; during the last five years of his twenty-year fed term, he allowed inflation to spike from 1.6% in 1965 to 5.7% in 1970, rather higher than is thought fitting by today's central bankers.
I think it's justified to fault Mr Greenspan for concern with the stock market . . . only most of the people mad that he worried about falling prices were also mad that he didn't pop the stock bubble by raising rates. As a friend reports, he once saw Greenspan heckled by one Punchbowl Paul, who demanded to know why he hadn't done something about the speculative bubble.
Greenspan blinked, then said "If you're asking whether we know how to use the tools of the central bank to deflate a stock market bubble, the answer is yes." He then stood silently while the various financial types in the room pondered just how high he would have had to raise rates, and margin requirements, in order to pop that particular bubble, and the fairly hideous economic effects that would have resulted from such an action.
But I don't think that the world would have been a happier place if Greenspan had kept the lid on the punchbowl in 1998 and 2002. We haven't had a really bad, deep recession in 26 years, and it seems reasonable to think that the Fed's willingness to control inflation, while releasing liquidity as necessary, are very much responsible for that change. Had Greenspan not opened the taps when times got tough and markets were unhappy, we might well have had some really nasty fallout.
The problem really is that central bankers, like most government institutions, are equipped to fight the last war. Alan Greenspan (and now Ben Bernanke) had excellent tools to deal with price inflation and liquidity problems. But our central bankers don't have much on tap to deal with asset price inflation, i.e. speculative bubbles. Nor do they have any way to keep a flood of capital from flowing into our markets and lifting all boats, so to speak . . . nor from flowing back out and leaving us to deal with the mess. In the latter case, I don't think that they should have those tools. But that means they can't protect us from all bad financial events.
This is the second piece that I've read on Charles Karelis' new book, The Persistence of Poverty. Steven Pearlstein describes it thus:
The reason the poor are poor is that they are more likely to not finish school, not work, not save, and get hooked on drugs and alcohol and run afoul of the law. Liberals tend to blame it on history (slavery) or lack of opportunity (poor schools, discrimination), while conservatives blame government (welfare) and personal failings (lack of discipline), but both sides agree that these behaviors are so contrary to self-interest that they must be irrational.
After all, the reason we study, work, save and generally behave ourselves is that these behaviors allow us to earn more money, and more money will improve our lives. And, by logic, that must be particularly true of the poor, for whom each extra dollar to be earned or saved for a rainy day is surely more valuable than it is for, say, Bill Gates.
In economics, this insight -- that the fifth ice cream sundae is less valuable than the first one -- is enshrined in the law of diminishing marginal utility.
But what if this iron law of economics is wrong? What if it doesn't apply at every point along the income scale? If you and everyone around you are desperately poor, maybe it's perfectly rational to think that an extra dollar or two won't make much of a difference in reducing your misery. Or that you won't be able to "study" your way out of the ghetto. Or that if you find a $100 bill on the street, maybe it's logical to blow it on one great night on the town rather than portion it out a dollar a day for 100 days.
If your car has lots of scratches and dents, getting rid of just one doesn't help much either.
There's a lot of interesting literature on the bad incentives faced by the poor. They often have punitively high marginal tax rates, because of the lost benefits; they also face a high personal "tax" in the form of poor relatives and friends, since earning additional money makes it very likely that they will be tapped for loans and other forms of financial help. This already explains a lot of the behavior that Pearlstein describes, as do various sociological phenomena.
But I find this thesis intriguing. One way to think about it is that the poor face a lot of problems with threshold effects. If I need an apartment and a car, and I have the down payment for a Hyundai and a basement efficiency, each additional dollar improves my lot. If I need an apartment and a car, and I have $30, I might as well spend that $30 on dinner and a movie, because I'm going to end up on Mom's couch tonight either way. Once you reach the threshhold, it's easy to make a straight tradeoff between two forms of utility. But if it's going to take you nine months to save the cash you need, your choice right now becomes fun, or none.
Another way to think about it is that if you are living on the edge, this lowers, rather than raises, the returns to planning. If there's a 50% chance that an unforeseen expense will force you into bankruptcy, why not load up on some credit card debt and have fun while you can?
I'm not convinced . . . but I've added it to my Amazon queue.
A quarter of American households in 1900 had boarders or lodgers (compared to two percent today). Half of American households in 1900 had fewer rooms than persons (compared to five percent today). A quarter of American households in 1900 had running water (compared to ninety-nine percent today). An eighth of American households in 1900 had flush toilets (compared to ninety-eight percent today). Less than a fifth had refrigerators, less than one-twelfth had gas or electric lights, less than one-twentieth had telephones or washing machines, and of course there were no radios or televisions or vacuum cleaners or central heating, to list just those major appliances that have greater than ninety percent coverage today.
And even if you did have a four room house, could you afford to heat more than one room of it? Many Homestead four-room houses became two-room houses--the kitchen and the bedroom--in the depths of the western Pennsylvania winter.
The diets of workers in Homestead, Pennsylvania at the turn of the century were composed primarily of meat of widely variable quality, bread, butter, potatoes, oatmeal, and tea and milk–with luxuries such as sweets added in more or less regularly. We would find the diet somewhat monotonous (however, a lot of time and effort went into Þnding different ways to make potatoes). Almost always the first luxury that a working-class family moving up would purchase would be the services of a laundress: since laundry was expensive and difficult, few working-class families could maintain upper-middle-class standards of cleanliness. How often would you take baths if the water had to brought in from an outside pump, and then heated on the stove? How often would you wash your clothes if everything had to be washed out in the sink, if the fabrics were three times as heavy and the detergents one-third as powerful as the ones available today, and if as a result the laundry was a full day’s chore? Hand laundry was not a two hour a week task. Those who could afford the resources to maintain bourgeois styles of cleanliness flaunted it. White shirts, white dresses, white gloves are all powerful indications of wealth in turn of the century America. They said "I don't have to do my own laundry and ," and they said it loudly.
As a rule married women did not work outside the home–unless they were African-American, in which case they might well do their own family’s housework and be paid for doing a share of some white family’s housework as well. Meal preparation was not a one-hour-a-day but a four-hour-a-day task. Barring a shift toward larger-scale communal or cooperative living–a shift which simply did not happen even though anticipated, hoped for, and worked for by many feminists–within-the-household production and maintenance soaked up one-third the potential adult work hours. It made it next to impossible for married women (unless they were quite rich, or quite poor) to have independent careers and still fulfill the social expectations of household maintenance.
Infant mortality at the turn of the century was high. One in five babies in Homestead, Pennsylvania died before reaching his or her Þrst birthday. Adult men died, too, like flies (and adult women faced substantial risks in childbirth). Accident rates in the factory were such as to leave 260 injured per year–30 dead–out of a total population of 25,000 and a steel mill working population of 5,000. Each year, five percent were injured enough to miss work for some time (although only one percent per year were permanently disabled), and 1/2 percent per year were killed in factory accidents.
You can do the math. Start to work for U.S. Steel when you are 20. There is one chance in seven that the factory will kill you before you reach 50, and almost one chance in three that the factory will disable you. Is it any wonder that life insurance–disability insurance--group lodges that provide benefits (because the company provides few)--loom so large in American working class consciousness at the turn of the century? And is it any wonder that the Þrst component of the welfare state put into place, in many parts of the United States, was workmen’s compensation? Of course, in 1910 Homestead (or in 1930 Detroit, or in Los Angeles today) the most arduous and difficult jobs were done by minorities and immigrants: in 1910 Homestead by Slavs, in 1930 Detroit by Blacks, and in 2000 Los Angeles by Hispanics. At the micro level, such groups are concentrated in the most arduous and lowest-paid jobs because they are poor, because they have limited other options.
Most of the Homestead workforce only worked six days a week: for four out of five workers, the mill was shut on Sundays. U.S. Steel viewed this--shutting most of the mill on Sundays–as a major concession on their part, a concession that they hoped would produce large public relations benefits. From U.S. Steel’s perspective, each hour that a modern plant like Homestead stood idle was tremendously expensive. Variable costs--wages, raw materials, and transportation--made up perhaps 2/3 of total costs. The remainder were fixed: capital costs on the construction of the plant, and maintenance that had to be performed whether the plant was operating intensively or not.
Were U.S. Steel to move from two 12-hour shifts a day to one 12-hour shift, its output would be halved but its costs would be reduced by only 1/3, so total costs per ton of steel made would rise by 1/3. This was not a margin that U.S. Steel could afford. As long as it could Þnd workers willing to work the night shift, the Homestead mill (depressions and recessions apart) stayed open 24 hours a day on weekdays. And when things did change, they changed all at once-from two 12-hour shifts before and during World War I, to two 8-hour shifts (or three 8-hour shifts) during the 1920s, and during and after World War II. Yet Homestead jobs--at least Homestead jobs taken by native-born Americans--were good jobs by the standards of the United States. As historian Ray Ginger put it:
their expectations were not ours. A man who grew up on a Southern farm did not think it cruel that his sons had to work as bobbin boys [collecting spun thread in a textile mill]. An immigrant living in a tenement and working in a sweatshop yet knew that for the Þrst time in his life he was wearing shoes seven days a week...
And Homestead, Pennsylvania jobs paid well both by the standards of the United States and much more so by the standards of the world economy of the time. White households could make around $900 (of 1910 value) a year, placing them well the upper third of the U.S. population in terms of income per household in 1910. Relative to what could be earned by people of similar skill levels anywhere else in the world, a job in the Homestead mill was a very attractive job. Even the unequal America at the turn of the century was a very attractive place compared to the rest of the world. America was exceptional. In spite of the hours, in spite of the risk of death or injury, in spite of the working conditions, these were very good jobs by international standards: jobs worth moving 7,000 miles for, from Hungary or Lithuania to suburban Pittsburgh. For the economy of the late nineteeth century was for the first time in human history a truly global economy, filled with long-distance trade and migration, so people could take advantage of the opportunities opened up by industrialization.
My former co-blogger, Winterspeak, muses on the problem with un-swelling the housing bubble:
Now that the air has gone out of the too-cheap credit that helped inflate the housing bubble, the question becomes how to undo the bubble with as little damage as possible.
When the internet bubble popped, this happened fairly rapidly: failed dot-coms closed down, their investors took a beating, and their employees moved onto other jobs, some of them still internet related but at better firms. Some went back to grad school. The end result was that the economy overall was fine, people who had invested in internet firms lost money, and the internet overall continued to grow apace, but now focused on better companies.
I think one inevitable requirement of unwinding the housing bubble market is that housing prices have to come down to fall in line with historic trends. In some areas this means very dramatic decreases -- maybe 40%+ in real terms? I'm not sure what a "deflated housing bubble" would look like if it did not bring prices back to historic norms. We are not going to see price declines of this magnitude unless we have very very motivated sellers, which means banks for older properties (which have been foreclosed on), and builders for newer properties. If prices do not fall, then transactions will dry up. I can see the government stepping in and helping owners (and their lenders) but I'd be surprised if builders will be helped that much. This means that areas that have had the most new construction should see the most dramatic price corrections.
That's good news for me, since Washington, DC was one of the most bubblicious areas. My new neighborhood is crowded with just-completed and partially finished condos.
But so far, prices have remained remarkably sticky. People are putting condos onto the rental market rather than take a loss. On a typical (non-August) day, the Craigslist real estate section is filled with ads touting "Brand new construction!" alongside demands that the renter accept a one-year lease with no smoking or pets.
There's no way to know, of course, but I've long wondered whether these rentals make financial sense. Are they covering their carry, much less the opportunity cost of the capital? Prices won't collapse until investors come to terms with the fact that their prior investment is a sunk cost, and pouring more money down the rathole won't make the problem go away.
That may take a long time . . . long enough that prices may never fall as far as they "should". Faced with selling their home at a loss, most people choose to stay put and pray. Instead, what we're likely to see is a very long period of stagnant prices. Inflation may have to do the work of bringing those prices back in line with historical values. In which case, I'd be better off taking advantage of those great rental deals . . .
From Dorothy Parker's "Little Curtis", written in 1927:
Slowly Mrs. Matson made her way down Maple Street. The morning sunshine that flooded the town's main throughfare caused her neither to squint nor to lower her face. She held her head high, looking about her as one who says, "Our good people, we are pleased with you."
She stopped occasionally by a shop-window, to inspect thoroughly the premature autumn costumes there displayed. But her heart was unfluttered by the envy which attacked the lesser women around her. Though her long black coat, of that vintage when coas were puffed of sleeve and cut sharply in at the waist, was stained and shiny, and her hat had the general air of indecision and lack of spirit that comes iwth age, and her elderly black gloves were worn in patches of rough gray, Mrs. Matson had no yearnings for the fresh, trim costumes set temptingly before her. Snug in her was the though of the rows of recent garments, each one in its flowered cretonne casing, occupying the varnished hangers along the poles of her bedroom closet.
She had her unalterable ideas about such people as gave or threw away garments that might still be worn, for warmth and modesty, if not for style. She found it distinctly lower-class to wear one's new clothes "for every day"; there was an unpleasant suggestion of extravagence and riotous living in the practice. The working classes, who, as Mrs. Matson often explained to her friends, went and bought themselves electric ice-boxes and radios the minute they got a little money, did such things.
The next question about higher Chinese wages is, what does it mean for us?
There's a lovely psychic benefit to thinking of Chinese workers getting wealthier, happier and healthier, all while supplying us affordable HDTVs. Some analysts, however, are worried that this benefit will come at a stiff cost to us: inflationary pressure from Chinese exports. For some years now, the falling price of goods from China has helped hold down inflationary pressure in industrialised nations. But with wage and commodity bottlenecks appearing, Mervyn King, the governor of the Bank of England, fretted publicly last year that rising Chinese export prices would reverse that pressure upward. As Chinese inflation has gotten stronger, other analysts have joined him.
This would be a particularly bad time for that to happen, as the central bankers, particularly America's, would like some room to cut rates if there are liquidity or other economic problems. If Chinese goods are getting more expensive, that will be harder.
But as my former employer wrote earlier this month, these fears are overblown. Much of the inflation is in local goods such as prepared food. And while wages are rising, productivity is rising even faster, holding down the price of the goods shipped. To the extent that export prices are rising, this is more a result of China's looser yuan policy than an outflow of domestic inflation.
Of course, to Americans shopping for electronics and other China-made gear, the difference is theoretical; price pressure is still up. But we could fight that by backing off the Congressional obsession with a weak-dollar policy. As the article concludes: "The real threat to America's inflation is not that Chinese export prices start to rise modestly, but that Congress is short-sighted enough to impose protectionist measures which prevent American consumers from continuing to buy cheap Chinese imports."
I'm always bemused by globalisation doomsday scenarios in which all of our jobs move to China (or India) in order to take advantage of low-wage workers. If we really do lose all of our high-productivity jobs, and no longer make anything worth having, why would the Indians and Chinese continue to ship us software programs and flat screen televisions? Obviously, for individuals this may be traumatic, but in aggregate, if our economy really gets less productive, we won't have to worry about a flood of cheap Chinese goods. Although if the Chinese and Indians do want to ship us their products in exchange for absolutely nothing, I'm willing to talk.
The other reason this doesn't work, of course, is that as these economies expand, demand for workers pushes up their wages. That's why we no longer buy cheap gimcrackery from Japan. According to the New York Times today, this is already happening:
For decades, many labor economists said that China’s vast population would supply a nearly bottomless pool of workers. So many people would be seeking jobs at any given time, this reasoning went, that wages in this country would be stuck just above subsistence levels. As recently as four years ago, some experts estimated that most of the perhaps 150 million underemployed workers in the countryside would be heading to cities.
Instead, sporadic labor shortages started to appear in 2003 at factories in the Pearl River delta of southeastern China. Now those shortages have spread to factories up and down the Chinese coast, specialists say.
This summer, Mary Gallagher, a Chinese labor specialist at the University of Michigan, visited five sportswear factories near Shanghai and Guangzhou. She found them all struggling to hire and retain workers. One had shut one of its two main production lines because it had nobody to sew shirts and other garments.
“Basically half the factory was shut down and one dormitory was empty,” Ms. Gallagher said.
In interviews, factory executives across the country complained of being forced to give double-digit raises in order to find and keep young workers at all skill levels. Three or four years ago, said Zhong Yi, vice general manager of a leather-jacket manufacturer in Hangzhou in east-central China, 800 to 1,100 yuan a month ($105 to $145) “was a good salary.”
“Now,” he said, “1,500 is the bottom” ($198).
Chinese officials are quick to say that there is no overall shortage of labor — rather, there is a shortage of young workers willing to accept the low wages that prevailed in the 1990s. Factories in cities like Guangzhou advertise heavily for young workers, even while employment offices consider it a success if someone over 40 can find any job in less than a year.
“Now they’re taking workers into their early 30s,” said Jonathan Unger, director of the Contemporary China Center at Australian National University in Canberra, “but anything older than that and they think they can’t take the conditions, the 11-hour days,” as well as work on weekends, and a tedious life in factory-owned dormitories.
Plant owners’ refusal to hire blue-collar workers over 35 or 40 is colliding with the demographic reality of China’s one-child policy. The number of workers in the 20-to-24-year-old range is already shrinking as more of them go to universities instead of entering the work force after high school, and the International Labor Organization projects that workers in this age range will edge slowly downward through at least 2020.
Stand by for Chinese politicians complaining that America is exporting its high wages and labor standards to countries that don't want them.
One wants to know, of course, how much this is affected by inflation in China. The Chinese government has not been able to perfectly sterilize its interventions in the global currency markets. All else equal, buying foreign currency in order to push down the relative value of your money should translate into domestic inflation; so in order to un-paribus the ceteris, the Chinese government has been taking a number of measures to soak up the extra liquidity, notably selling bonds. But there is a limit to the effectiveness of these techniques, not least because the fragile banking system cannot absorb an infinite supply of government bonds. As it is, the government has jammed more bonds into the system than the bankers want. Moreover, its rather primitive financial system makes monetary intervention less effective than it might be. The result of the currency interventions, and China's rocketing growth rate, has been steadily rising prices. The government is now exploring alternative anti-inflation measures, like price controls, to battle it.
I just deleted a bunch of comments. On each, I left a note explaining why it was deleted.
I've tried to edit with a light hand; we'll see how that goes, and if it's insufficient, I'll get more aggressive. My object is to make this a relatively pleasant place to be. If you take a thread off topic, and it's funny, and people are enjoying it, I'll let it go; if you take a thread off topic, and we have to have seventy comments debating whether or not I should be stricken with a chronic disease in punishment for my health care apostasy, I'll shut that down pretty fast.
By the way, to everyone who thinks I need a little dose of chronic disease . . . well, thanks, I have several, notably chronic asthma and an autoimmune condition. I, like most other asthmatics, have come close to dying from my condition, so you don't need to waste any energy wishing that I could "learn what it's like". I was uninsured for two years with both conditions, and if anything, my opinions about health care were stronger than they are now. My opinions may be wrong, but they are not due to my ignorance of the "real world". So please, no more lectures on how I'd feel if I'd "been there" from people who do not appear to have been "there", or indeed anywhere in its close neighbourhood.
A number of my old commenters have written in to complain that it is impossible to have a discussion here because of the new commenters hurling verbal brickbats.
I'm very happy to have more left wing commenters these days; on any blog, there's danger of things turning into an echo chamber. I'm not happy to have commenters, left and right, derail threads with escalating name-calling.
Hence, for the first time, I'm going to start aggressively moderating the comments.
The rules:
1) No name calling. You may make fun of your opponents ideas as vigorously as you like. Be funny, sarcastic, bombastic, whatever. Call him a "Moron", "Fascist", or a four-letter word, however, and I will delete you. Likewise if you accuse people of secretly longing to [see the poor starve/impose their quasi-communofascist philosophy on freedom-loving people everywhere].
2) No derailing threads. This post was meant to be a bit of fun, reminiscent of the famous 2003 Thomas Friedman essay contest. Several commenters, however, are apparently unable to recognize fun . . . or else they don't think other people are entitled to have any. I'm deleting the off-topic comments, and future such.
3) No posting copyrighted content. I make my living by IP; and this blog belongs to a big media company that could get sued. Fair use is fine, but reproducing an entire article from behind some pay barrier is not.
4) No profanity. This is a family blog. Specifically, my family. When launching your nasty attacks, try not to say anything that you wouldn't want your mother and father to see written about you.
5) No referring to anything as "Fascist" or "Communist" unless the people involved are actually adherents of the 19th- and 20th- century political ideologies thus described. These words are not synonyms for "mean people" or "people who disagree with me".
I will not delete people for any other sort of content. There are blogs out there who delete reasonable comments in order to make the blogger look as if there is no good opposition to their ideas. This will not be one of those blogs. If you disagree with me, please stay and argue. Just do it respectfully.
One more note: if you put links into your comments, the spam filter will catch them. I'm trying to make those comments live as quickly as possible, but I've been rather busy.
Update Obviously, I'm not perfect. If you see something you think I've missed, email meganmcardle@theatlantic.com to let me know.
Last night I was trying to explain the relative intellectual standings of various presidential economic advisors to a former philosophy student. This led me to try to compare various CEA heads to their equivalents in philosophic eminence, which didn't go very well since I don't actually know anything about philosophy.
It did, however, lead to a hilarious session in which we tried to imagine a Presidential Philosophy Advisor . . . and then a whole series of other advisors from disciplines not usually invited into the oval office.
Chairman of the Council of Philosophical Advisors Mr President, let's imagine a universe composed of two identical blue spheres . . .
Chief Literary Advisor I think the first thing we need to establish is whether we are going to take a synchronic or diachronic approach to constructing our ways of knowing.
Art Historian General Do we have a withdrawal strategy for the artifacts in the Baghdad museum?
Presidential Sociology Liason Wasn't there supposed to be coffee at this meeting?
I invite readers and other bloggers to offer advice to the president in the jargon of their academic field. And remember: if it's on point, it's not funny.
Megan at From the Archives makes an interesting point about the warring incentives of legislators and bureaucrats:
This doesn’t surprise me either, that the work was done in a state agency, then lingered for years. The work of the state is huge and sprawling and only barely managed. People at the top, the political appointees and the legislators, give instructions and change them with the new exciting trend. Mid-level civil servants finish their reports (perhaps even a nice thorough job) and the person who commissioned the work is long gone for another job. Or the legislator is swamped with exciting new problems. Flood! Climate change! Relentless plodding is the mark
