Wednesday, March 4, 2015

The Abstinence Theory of Value

"Exactly a year before Nassau W. Senior discovered at Manchester, that the profit (including interest) of capital is the product of the last hour of the twelve, he had announced to the world another discovery. 'I substitute,' he proudly says, 'for the word capital, considered as an instrument of production, the word abstinence.' It has never occurred to the vulgar economist to make the simple reflexion, [Marx continued n a footnote:] that every human action may be viewed, as 'abstinence' from its opposite. Eating is abstinence from fasting, walking, abstinence from standing still, working, abstinence from idling, idling, abstinence from working, &c."
Some hundred and twenty years later, in The Anti-Capitalist Mentality, Ludwig von Mises was still beating that hollow "abstinence" drum, crediting what he termed "the three progressive classes" of savers, inventors and entrepreneurs with sole responsibility for driving social evolution from savage cave dwellers to modern industry. 

In what von Mises described as a monumental work, the wily Eugen von Böhm-Bawerk, concocter of the supposed "transformation problem," dispatched Senior's abstinence theory in 1884, albeit with abundant regard toward its supposed excellence and deep insight. I suppose some double counting is cleverer than others. After exposing the fallacy of Senior's abstinence theory, von Böhm-Bawerk risked being more than a little tedious in substituting an even neater sophism in which "pain cost" and "opportunity cost" perform a rather unlikely pas de deux:
If I lay out a sum of money, say £30, for any one useful end, my sacrifice is calculated simply by the gratification which I might have got by spending the £30 in other ways, and which I must now do without.

It is otherwise with the sacrifice of labour. Labour presents two sides to economical consideration. On the one hand it is, in the experience of most men, an effort connected with an amount of positive pain, and on the other, it is a mean to the attainment of many kinds of enjoyment. Therefore the man who expends labour for a definite useful end makes on the one hand the positive sacrifice of pain, and on the other, the negative sacrifice of the other kinds of enjoyment that might have been obtained as results of the same labour. The question now is, Which is the correct way, in this case, of calculating the sacrifice made for the concrete useful end?
Herr von Böhm-Bawerk solved his own transformation problem adeptly with an example in which the pain cost of work was 10, the opportunity cost of the fish that might have been caught was 15, but the opportunity cost of shooting three hares was only 12  And voila! Here is the rabbit (or hare? or fish?) that nimble Eugen pulled out of his sportsman's cap:
What our fish really cost us now is not the positive labour-pain expressed by the number 10—for this we should have undergone at any rate—but the negative loss of an enjoyment which we might have had, indicated by the number 12.
Ten units of what?, you may wonder. Don't ask. All one needs to keep in mind is the non-equivalence between the pain cost of the labour and the opportunity cost of the enjoyment of the results of the labour and therein lies the secret and source of the potentially infinite expansion over time of the opportunity cost of postponing consumption.

No double counting here! "But of course we must never calculate the want of enjoyment and the pain of labour cumulatively..." But of course! Who needs to double count if we can count labour in units of pain and the results of labour in a different number of different units?

I'll give you a million for that.

A million what?

Never mind what, a million is a big number.

Mankiw on Paying for Tax Cuts

Maybe I was too critical of Greg Mankiw:
Dynamic scoring requires the solution of a general equilibrium model. To solve a dynamic GE model, you need to specify how the government is going to satisfy its present-value budget constraint. You might be tempted to ask the model what happens if the government cuts taxes and never does anything else. But you won't get very far.
I’ll only note that the Reagan Administration never exactly got around to addressing the run-up in Federal deficits from its tax cut. And we know the Administration of George W. Bush not only cut taxes twice but also increased Federal spending both through two expensive wars and that Prescription Drug Benefit. As one of his economic advisers, what was Greg Mankiw telling President Bush about satisfying the present-value budget constraint?

Monday, March 2, 2015

He's Baaack! Karl Marx And The Transformation Problem

The annual Eastern Economic Association meetings ended yesterday in New York.  On Saturday a session on Marx's transformation problem drew an audience of roughly 70 people, with talks by Anwar Shaikh and Duncan Foley, both of the New School, Fred Moseley of Mount Holyoke, with comments by David Laibman, formerly of Brooklyn College and longtime editor of Science and Society, the longest running (since the 30s) scholarly Marxist journal in the US.  Besides the unexpectedly large crowd, there was news.

One piece of news coming from Moseley is that Karl Marx is about to have a fresh publication in the English language, his original manuscript for Volume III of Capital, which was only published in German in the 1990s.  I think it is coming from Routledge and has an introduction by Fred.  This is the volume in which the famous transformation problem from labor values to market prices first appeared, with many arguing that it was his inability to resolve this that kept Marx from publishing it in his lifetime, with the version posthumously published being edited by Friedrich Engels.  According to Moseley, most of the changes involve ordering of topics, but apparently Engels left some things out, incluidng at least one tableau.  It is not clear this new edition will resolve the transformation problem, although Fred, who has a new book on the subject himself coming out, thinks that it is solvable as a matter of definition.  As it is, perhaps this new publication will help Marx hold his lead as the all time most cited economist according to Google Scholar (which notes that he does not have an available email address) at 208,688, still ahead of Andrei Shleifer at 196,355,

Both Shaikh, who also has a book coming out on the subject, in his case from Oxford University Press, and Foley, do not seem to think the problem is so easily resolved, but that one must look at the role of money and monetary prices and accounts.  Shaikh seems to think that looking at financial transfers is the way to get at the problem through complicated financial system by tracking the distribution of the surplus values.  Foley emphasized the role of labor mobility in his remarks, as well as economies of scale, not the usual thrust, but also working through the monetary system.

Laibman seemed unhappy with all of them as well as with the temporal sequence system approach put forward some years ago by Ernst, Kliman, McGlone, Freeman, and others (not represented among the speakers), which he described as "mush."  That one involves prices simply constantly changing, which is how the problem gets resolved.   Both their approach and that of Foley stress complex dynamics.  Laibman hopes for a static theoretical model that somehow reconciles the whole thing, admitting he does not have the answer how to do this and not seeming to go along with Moseley's apparent solution.

So, why do we see two new books on this coming out now, well, three counting the English translation of Marx's old Volume III (which I have long thought was his most interesting and important work, and certainly the one most relevant to modern discussions, particularly of macroeconomics, although Moseley claims it is about microeconomics while the other two volumes are macoeconomics)?  The answer I suspect is the big splash made by Piketty with his Capital in the Twenty-First Century last year.  The title clearly genuflects to Marx and Piketty fully acknowledges that, even as his own analysis is not specifically Marxian and quite neoclassical in his theory at least, although he clearly takes Marx's concerns seriously.  In any case, the old boy seems to be back, even if the transformation problem may not yet be clearly resolved.

Barkley Rosser

Update:

Fred Moseley informs me that it will be probably another year before the Marx Volume III appears.  It and his book (sorry, no title) will be published by Brill.  One can get his quite long Introduction to it that lays out the differences between the two volumes, from him at fmoseley@mtholyoke.edu.

From Anwar Shaikh I have that the title of his book is Capitalism: Real Competition, Turbulent Dynamics, and Global Crises, and will be out this fall from Oxford University Press.

What In Hell Is Capital?

Dante condemned the merchant bankers of Florence to the seventh circle of Hell. Marx was more lenient -- attributing to monetary accumulation through usury only part of the responsibility for the dissolution of the old feudal relations of production.

"The idea of some socialists," observed Marx in his notebooks on Pre-Capitalist Economic Formations, "that we need capital but not capitalists, is completely false."

"The concept of capital implies the capitalist."

Let us consider the relationship of capital and wage labor not as something which has already reached decisive importance, and encroaches on production as a whole but as something which is still in the process of historical formation. We consider the original transformation of money into capital, the process of exchange between capital existing only potentially on one hand, and the free laborers existing potentially on the other. We then find ourselves naturally making the simple observation, with which the economists make great play — namely, that the side which appears as capital must possess raw materials, tools, and food enough to enable the worker to live before production is completed. Moreover, it would appear that accumulation — an accumulation prior to labor and not arising from labor — must have taken place on the part of the capitalist, which enables him to set the laborer to work and to maintain him in activity, as living labor power.
... 
Urban labor itself had created the means of production, for which the gilds became as great an embarrassment as were the old relations of landed property in an improved agriculture, which was in turn partly the consequence of the greater sale of agricultural products to the cities, etc.
Other circumstances assisted the dissolution of the old relations of production, accelerated the separation of the laborer or the non-laborer capable of work, from the objective conditions of his reproduction, and thus advanced the transformation of money into capital. Such were, e.g., the factors which in the 16th century increased the mass of commodities in circulation, the mass of currency in circulation, creating new needs and consequently raising the exchange value of native products, raising prices, etc. 
Nothing can therefore be more foolish than to conceive the original formation of capital as if it meant the accumulation and creation of the objective conditions of production — food, raw materials, instruments — which were then offered to the dispossessed workers. What happened was rather that monetary wealth partly helped to detach the labor power of the individuals capable of work from these conditions. The rest of this process of separation proceeded without the intervention of monetary wealth. Once the original formation of capital had reached a certain level, monetary wealth could insert itself as an intermediary between the objective conditions of life, now “liberated” and the equally liberated, but now also unfettered and footloose, living labor powers, buying the one with the other. As to the formation of monetary wealth itself, before its transformation into capital: this belongs to the prehistory of the bourgeois economy. Usury, trade, the cities and government finance which arise with them, play the chief parts in it.
In other words, capital is not money nor is it the "objective conditions of production -- food, raw materials, instruments." It is a relationship between the capitalist -- as proprietor of money and the objective conditions of production -- and the propertyless worker, both of whom have arrived at their present condition as a result of historical processes that were not (or not primarily) the effects of capitalist relations of production. Capital did not "pull itself up by its own bootstraps."
The original formations of capital does not, as is often supposed, proceed by the accumulation of food, tools, raw materials or in short, of the objective conditions of labor detached from the soil and already fused with human labor -- not by means of capital creating the objective conditions of labor. Its original formation occurs simply because the historic process of the dissolution of an old mode of production allows value, existing in the form of monetary wealth, to buy the objective conditions of labor on one hand, to exchange the living labor of the now free workers for money, on the other. All these elements are already in existence. What separates them out is a historical process, a process of dissolution, and it is this which enables money to turn into capital. Insofar as money itself plays a part here, it is only to the extent that it is itself an extremely powerful agent of dissolution which intervenes in the process, and hence contributes to the creation of the plucked, objectiveless, free laborers
Does the concept of "human capital" imply the human capitalist? From the perspective of Marx's analysis, such a concept would be a Bizzaro-world oxymoron:
The concept of capital implies that the objective conditions of labor — and these are its own product — acquire a personality as against labor, or what amounts to the same thing, that they are established as the property of a personality other than the worker’s.

Can Tax Cuts Lower Economic Growth?

Jonathan Chait has some fun with uber-supply-sider Lawrence Kudlow which we will come back to. But first – let me offer a complaint about the latest from Greg Mankiw. It is true that Mankiw called Dynamic Scoring a can of worms which is an incredible admission for someone on Team Republican. But in many ways, this does not go far enough:
Indeed, having an economic impact is a big part of why policy makers use the tools at their disposal, whether it is the tax cuts of Ronald Reagan and George W. Bush or the stimulus package of Mr. Obama … accurate dynamic scoring requires more information than congressional proposals typically provide. For example, if a member of Congress proposes a tax cut, a key issue in estimating its effect is how future Congresses will respond to the reduced revenue.
President Obama proposed fiscal stimulus when he first entered office because we were in a very deep recession with interest rates near zero, which is an incredibly different situation from where we were in 1981. It is well established that the Volcker FED was going to dictate the path of real GDP with his zeal to conquer inflation so all the Reagan tax cuts accomplished was to dramatically increase real interest rates lowering investment demand and hence long-term economic growth. Mankiw in fact noted this in one of the early editions of his macroeconomic text book but I guess drinking from the Bush43 Kool Aid has tempered his writings over the past 14 years. Which brings me to what Chait wrote about Kudlow:
He has argued continuously, since Bill Clinton raised taxes on the rich in 1993, that higher taxes on the rich must necessarily destroy economic growth, and that lower taxes on the rich must necessarily bring prosperity. As (perhaps owing largely to unfortunate coincidence) the exact opposite has happened instead, he has resorted to a series of frantic post-hoc revisions … Also, Kudlow “says Bush’s temporary and targeted 2001 and 2008 tax cuts failed, but that his big rate cuts in 2003 spurred a five-year ‘boom.’” So, to sum up, Bush’s supply-side tax cuts worked. But he also passed non-supply-side tax cuts (in 2001) that failed, and he spent too much.
Read the rest of Chait’s more accurate account of fiscal policy and the Bush economy. I will only note that there were almost as many conflicting explanations for the 2001 tax cut as there were for the invasion of Iraq. Greg Mankiw at the time argued we needed tax cuts to stimulate consumption and hence aggregate demand. Glenn Hubbard on the other hand was arguing that we needed tax cuts to encourage more savings. Of course these two rationales are mutual contradictions. My whole problem with Dynamic Scoring is that it may have the sign wrong. If we are in a situation where monetary policy can get us back to full employment, a tax cut that encourages consumption will lower national savings if it is not paid for by reductions in government purchases. As such, real interest rates rise lowering investment. Let me close by giving credit in two places starting with an interesting paper on real interest rates over history by James Hamilton et al,:
although it is often assumed in theoretical models that there is some long-run constant value toward which the real interest rate eventually returns, our long-run data lead us to reject that hypothesis
Note in particular the high real interest rates during the 1980’s which should cause anyone to question the supply-side claim that the Reagan tax cuts promoted growth. But let’s also give credit to John Oliver for noting the need for government infrastructure investment even if that requires a rise in gasoline taxes. Odd that an English comedian understands fiscal policy better than someone like Kudlow but then some claim that Kudlow is nothing more than a clown.

Saturday, February 28, 2015

Labour Defended Against the Claims of "Human Capital"

According to Guang-Zhen Sun, "Xenophon discussed in somewhat [sic] details the sexual division of labor within a family, a topic that was to be picked up by Thomas Hodgskin (1827) and Marxists in the 19th century and nicely integrated into a neoclassical theory of human capital in the 20th century (e.g., Becker 1985)." Except that Hodgskin's analysis of the topic was not "nicely integrated into a neoclassical theory of human capital." It was adamantly ignored because the point of human capital theory is to naturalize ideological claims about the utility maximizing motives of individuals and returns to factors of production attributable to their marginal contribution to production.

In Labour Defended Against the Claims of Capital, Hodgskin stated explicitly that the purpose of his essay was to refute the arguments of John Ramsay McCulloch and James Mill to show that: "the effects attributed [by them] to a stock of commodities, under the name of circulating capital, are caused by co-existing labour." In a prefatory note, Hodgskin wrote:
In all the debates on the law passed during the late session of Parliament, on account of the combinations of workmen, much stress is laid on the necessity of protecting capital. What capital performs is therefore a question of considerable importance, which the author was, on this account, induced to examine. As a result of this examination, it is his opinion that all the benefits attributed to capital arise from co-existing and skilled labour. He feels himself, on this account, called on to deny that capital has any just claim to the large share of the national produce now bestowed on it. This large share he has endeavoured to show is the cause of the poverty of the labourer; and he ventures to assert that the condition of the labourer can never be permanently improved till he can refute the theory, and is determined to oppose the practice of giving nearly everything to capital.
In Marx's discussion, in Capital, of the division of labour, he cites a passage from Hodgskin's "admirable work" in support of "The fact that the detail labourer produces no commodities." It is worthwhile quoting Hodgskin in full, here, with the passage cited by Marx highlighted in bold:
Whatever division of labour exists, and the further it is carried the more evident does this truth become, scarcely any individual completes of himself any species of produce. Almost any product of art and skill is the result of joint and combined labour. So dependent is man on man, and so much does this dependence increase as society advances, that hardly any labour of any single individual, however much it may contribute to the whole produce of society, is of the least value but as forming a part of the great social task. In the manufacture of a piece of cloth, the spinner, the weaver, the bleacher and the dyer are all different persons. All of them except the first is dependent for his supply of materials on him, and of what use would his thread be unless the others took it from him, and each performed that part of the task which is necessary to complete the cloth? Wherever the spinner purchases the cotton or wool, the price which he can obtain for his thread, over and above what he paid for the raw material, is the reward of his labour. But it is quite plain that the sum the weaver will be disposed to give for the thread will depend on his view of its utility. Wherever the division of labour is introduced, therefore, the judgment of other men intervenes before the labourer can realise his earnings, and there is no longer any thing which we can call the natural reward of individual labour. Each labourer produces only some part of a whole, and each part having no value or utility of itself, there is nothing on which the labourer can seize, and say: “This is my product, this will I keep to myself.” Between the commencement of any joint operation, such as that of making cloth, and the division of its product among the different persons whose combined exertions have produced it, the judgment of men must intervene several times, and the question is, how much of this joint product should go to each of the individuals whose united labourers produce it?
Hodgskin was defending labor against the (illegitimate) claims of capital. Becker was extending the claims of capital into the household. One of these things is not like the other.

Thursday, February 26, 2015

Hume & Kapp, et al.

Over at MaxSpeak, Sandwichman didn't get any response to his provocation that "human capital" was cooked up by the Chicago boys as a way of side-stepping the fundamental methodological critique posed by the institutional analysis in the tradition of John R. Commons and J. M. Clark, which dominated American labor economics -- and presumably labor economics journals -- in the 1940s and 50s. I particularly wanted to mention cost-shifting as an issue that "human capital" evades. This passage from  The Foundations of Institutional Economics by K. William Kapp highlights some of the central motifs of institutionalism's critique of conventional theory. It also has the merit of mentioning the contribution of David Hume, among others and thus enabling the pun in the title.
Institutional economists have raised some very specific objections to the dominant conventional theory; and while it is not necessary to analyze in minute detail all the well-known aspects of this critique, it will be useful to review some of the exceptions taken by representative institutionalists to certain methodological procedures of conventional economics, if for no other reason than to make clear the distinct perspective and mode of thought which have guided them from the beginning. These exceptions will illustrate clearly and fundamentally how institutionalism conceives the task of economic analysis in a radically different manner than the traditional, pure theory of valuation, value, and price.  
Starting with a brief outline of the evolution of the theory of value from its classical origins, we shall illustrate our thesis by brief references to the institutional critique, with particular emphasis on those elements of the critique that demonstrate the alternative perspective of the institutional approach. Both Adam Smith and David Hume made deliberate use of inherited concepts of natural order and natural law to show that the system of private enterprise, or "natural liberty," was not only theoretically conceivable and practically workable, but at the same time morally superior and more efficient in the use of given resources to the preceding mercantile system. Not only did this system tend to regulate itself, it also produced terms of exchange that possessed many, if not all, of the characteristics of a "just price," as the term was conceived and propagated by medieval thinkers; it guided labor, resources, and capital into the occupations and lines of production which corresponded to the wishes and preferences of the consumer. The labor theory of value, together with the hypothesis of maximizing behavior -- both major and central hypotheses of classical political economy -- asserted that market prices would gravitate around natural prices of goods and services at their normal level, or the level at which they covered their costs of production. Prices and wages could thus be considered just and equitable, and as such did not need to be controlled. If the labor theory of value, understood as an equilibrium, seemed to guarantee the theory of distribution, the maintenance of some form of macroeconomic balance or equilibrium was shown to be guaranteed by the principle of the conservation of purchasing power, which both Adam Smith and Jean-Baptiste Say considered self-evident. 
The classical theory of Smith and his successors borrowed the equilibrium concept from mechanics and supplemented its notion of natural order, natural liberty, and natural law with an increasing dependence on the quantitative, utilitarian psychology of Jeremy Bentham as a basis for its explanation of human behavior, and particularly of economic behavior. By measuring and aggregating all input and output magnitudes in terms of prices (at equilibrium levels), and by identifying the social output as the sum total of these values at market prices, the theory and system supposedly provided their own quantitative yardsticks for measuring the performance and growth of the economy over time. The economy was also said to produce the greatest sum of pleasure possible to the greatest number of people, by allowing every individual economic unit to choose goods, occupations, and investment outlets according to its own preferences. Thus, what began as an exercise in objective analysis ended in a system of normative and political conclusions, formulated without apparent or explicit value premises. This unprecedented achievement, unparalleled in any other discipline, is the outcome of a specific procedure. By first defining the scope of the analysis and postulating specific behavior patterns, the position of equilibrium is endowed with characteristics that give it the appearance of an objective optimum. Used in this fashion, the concept of equilibrium lends itself to a superficially convincing defense of the laissez-faire system of natural liberty. Philosophers, aware of the presupposition of classical and neoclassical analysis, have shown the logical limitations and weaknesses of the concept of natural order and natural law; they have demonstrated that such doctrines have been used repeatedly to support open and hidden valuations of the greatest variety and mutual incompatibility and shown that the ideology does not exist that cannot be defended by an appeal to the laws of nature. 
Institutional economists have developed their own analysis of the philosophical premises of classical and neoclassical economic theory into a thorough critique of their preconceptions. Veblen criticized the non-causal teleological character of the analysis in contrast to the viewpoint of modem science, and Gunnar Myrdal showed that conventional equilibrium analysis has continued a long tradition of normative (political) thinking while professing a commitment to a positive (value-free) and objective account of the natural world. In fact, both radical and conservative economists have been inclined to shape and use their economic analysis to support their political objectives and perform the logically untenable feat of arriving at normative political conclusions without explicit political premises. The political objectives of classical and neoclassical economists were those of anti-mercantilism, anti-regulation, and non-intervention. Theoretical economists appealed to natural order and natural law, based on a theory of man later reinforced by the utilitarian calculus. Aided also by the analogy to mechanics and stable equilibrium (i.e., under static conditions where no new “forces" produced changes in motion), they have developed a system of conclusions that make economic and political processes appear to work towards common goals and a maximization of "social welfare." Levels of equilibrium are so defined that processes of production and distribution, under the impulse of the forces of self-interest, tend automatically and in a self-correcting manner towards a socially desirable and optimal outcome. What was initially introduced as a simplifying assumption for the abstract representation of reality for purely analytical purposes is thus subtly converted into the idealized norm of a perfectly competitive market, providing direct criteria for economic policies without further diagnosis of the specific situation, and without explicit normative or moral value premises. This logically untenable feat of arriving at political conclusions without political premises is, however, achieved with the aid of logical fallacies, the norms and teleology derived from pre-analytical visions and ideologies have forced upon economics specious concepts, definitions, and assumptions. Thus, normative and ideological elements have shaped the concepts, language, distinctions, and modes of thinking of conventional economics. Institutional economics has made major contributions to identifying these fallacies, and in doing so has produced both a critique of conventional economic theory and a clear picture of the modern character of institutionalism itself, as a distinct approach to economic analysis. The most notable points of the institutional critique are the fallacies of the utilitarian foundations of economic theory, the fallacy of the doctrine of the sovereignty of the consumer, and the fallacy of the means-ends dichotomy.

Tuesday, February 24, 2015

Larry Summers Tells It Like It Is

From the unedited transcript, "Future of Work in the Machine Age" policy forum:
Third, when I was an undergraduate at MIT in the 1960s there as a whole round of concern about this -- will automation displace all the employment? And what I was taught as an undergraduate was that basically the people who thought it would were a bunch of idiot Luddites and that obviously there would eventually be enough demand and it would all sort of work itself out, and if people got more productive they'd be richer and they'd spend and maybe we needed some transition assistance, but that it was all basically going to be okay. That was what I was taught. That's what Bob Solow thought; he was a hero and the other people were all a bunch of a goofballs was kind of what I learned. (Laughter)
I actually believed that for many years and actually repeated it often. It has occurred to me that when I was being taught that about six percent of the men in the United States between the age of 25 and 54 were not working. And that today 16 percent of the men in the United States between the age of 25 and 54 are not working, and it won't be very different even when the economy is at full employment by any definition. And so something very serious has happened with respect to the general availability of quality jobs in our society and we can debate whether it's due to technology or whether it is not due to technology. 
We can debate whether it's the cause of dependence or whether it is caused by policies that promote dependence. But I think it is very hard to believe that a society in which the fraction of people in -- choose whatever your most prime demographic group is that should be working, whatever that group is, a society in which the fraction of them who are not working is doubling in a generation and seems to be on an upward trend is going to be a society that is going to function well, or at least function well without major social innovations.

And I would want to leave you with that concern as there whether you think it's due to technology or whether you think it's due to globalization, or whether you think it's due to the maldistribution of political power, something very serious is happening in our society.

"The Future of Work" has a Chequered Past

The Hamilton Project had an event to discuss the Future of Work in the Age of the Machine. Lawrence Summers was there, along with Robert Rubin, Erik Brynjolfsson and Andrew McAfee, Laura D. Tyson and David Autor. Round up the usual suspects. They didn't invite the Sandwichman. No one ever invites the Sandwichman to these events.

The Hamilton Project's "framing paper" on the future of work takes its historical bearings from a fable about events that happened two centuries ago. Wouldn't it make sense to rely instead on documents from within our own lifetime? How credible are predictions about the future based on fictions about the past?

Writing in Fortune magazine 61 years ago, Daniel Seligman predicted achievement of the four-day week by 1980. He based that prediction on projection of historical trends. It didn't happen. Apparently a lump of labor got in the way -- the same fixed amount of fiction that the Hamilton Project framing paper frames the Luddites of 200 years ago with.

"Prediction is very difficult, especially about the future." Attribution is even harder. Niels Bohr? Yogi Berra?

At least Larry Summers got it right.

Fortune and the Four-day Workweek

What economists of the 1950s and 60s disparaged with the "lump-of-labor" hand, they typically celebrated with the "inevitable", "productivity gains", "income-leisure choice" hand. Based on past trends, the four-day week could be expected to arrive by 1980 -- presumably without legislative or collective bargaining "coercion." By now, 2015, workers would be enjoying the three-day, 21-hour week or, alternatively, three-month annual vacations. Didn't happen. But what's odd is how little thought is given to why it didn't happen and to what happened instead. The dots do connect. Rising inequality, financialization, economic instability and precarious employment -- all these cannot be entirely unrelated to the euthanasia of union arguments for shorter hours.

The Four-day week: How soon?

Daniel Seligman
Fortune -- July 1954

How far off is the four-day week? The standard five-day week has been lodged in American life for only a decade or so. Yet for some reason it is widely regarded today as something natural and immutable. Recently, Fortune mailed a questionnaire about the feasibility of a four-day week to fifty large industrial firms (more than 30,000 employees) and fifty medium-sized companies (300 to 3,000 employees). If there is a single U. S. company whose spokesmen are willing to affirm that a four-day week is possible and desirable in the fairly near future, it has not been found.

The fact that most American businessmen regard any future four-day week with misgivings and even hostility does not, of course, mean it is never coming. A quarter of a century ago there was a great debate about the five-day week. Speaking for the affirmative, but almost alone among businessmen, was Henry Ford. He had introduced the five-day week, he said shortly after the event, “because without leisure the working men— who are the largest buyers in the country—cannot have the time to cultivate a higher standard of living and, therefore, to increase their purchasing power.” Virtually all the businessmen who addressed themselves to the subject found differently. In general, they had three major objections to the five-day week: the cost would be prohibitive; the workers would not know what to do with their leisure time; and there was Biblical sanction for the six-day week.

An important reason for the cautiously noncommittal attitude of business men today is that their employees have been unionized. To declare that a four-day week might soon be feasible would be to give, gratis, a large bargaining counter to the union. On the other hand, to suggest that employees cannot look for any more leisure time would be inept public relations.

Labor leaders also appear to he preoccupied elsewhere. It is true that both the major labor federations have clearly defined ideas about affording more leisure for the American worker. But these do not include the four-day week—yet.

If both labor and management are uninterested in the four-day week, what good reasons are there for talking about it? Briefly, two kinds of reasons might be adduced: The four day week would be desirable, both for business and employees; and it would almost certainly be attainable.

The major reason for thinking a four-day week feasible is, of course, the continually increasing productivity of U. S. industry. Productivity—i.e., output per man-hour—has been rising by 2 or 3 per cent a year, taking the economy as a whole, for more than fifty years now. And, barring a war or a prolonged depression, Americans clearly have some further benefits in store. The question is whether they will take these benefits in the form of increased income, increased leisure time, or in a combination of both.

A calculation made by Fortune for the years since 1929 suggests that in the past quarter-century U. S. workers have been taking about 60 per cent of the productivity pie in the form of income, about 40 per cent as leisure. Assuming that the four-day week for non-agricultural employees will be attained when the total work week is in the vicinity of 32 hours, that productivity continues to increase at an average of 2 or 3 per cent a year, and that something on the order of the recent 60-40 ratio for income and leisure continues in effect, the 32-hour week should be spread throughout the whole non-farm economy in about 25 years.

If the four-day week seemed sufficiently appealing, of course, it could be achieved much sooner. A lot of Americans might, in other words, he willing to work nine hours a day. That, theoretically, would enable them to enjoy the four-day week when total hours of work were down to 36. If they made such a decision—if they traded the eight-hour day for the three-day weekend—then the great event would he scheduled to arrive, not around 1980, but in the 1960’s.

A large number of business men maintain that the four-day week has no applicability to their own operations. The following problems are suggestive of the wide variety of “insurmountable” obstacles that would he encountered:
Manufacturing companies with three-shift operations would run into formidable scheduling difficulties if the nine-hour day were introduced.  
Companies whose total hours of operation could not be reduced would have to hire more employees.
Retailing provides a peculiarly difficult situation. To remain open six days and give their employees a four-day week, department stores would have to hire 25 per cent more workers than they now employ. 
A final question must be considered. Do workers really want more leisure? Many employers are still convinced they do not. Now there is no doubt that, given more time off, some workers might drink too much, or beat their wives, or go insane watching daytime television. Others might work themselves to death on second jobs. But the $30-billion leisure market, the remarkable emergence, almost from nowhere, of a huge, new do-it-yourself market, and even the familiar Sunday-afternoon sight of cars crawling along bumper to bumper, suggest strongly that most American workers have a pretty good idea of what to do with their time off.

Meanwhile, in the income-leisure choice for the years ahead, there will be one strong pressure for leisure: The workers who have been energetically pushing their way into the middle-income class have, naturally, become increasingly preoccupied with federal tax demands. "If we get more dough," said one AFL man recently, "the government can take back part of it. But they haven’t yet figured out a way to tax your day off."

Monday, February 23, 2015

"Unemployment and Shorter Hours" -- Howard G. Foster

The excerpt below presents a hypothetical example of how reducing the hours of work can create jobs without assuming a fixed amount of work. It was developed by Howard G. Foster -- then a teaching assistant at the New York State School of Industrial and Labor Relations at Cornell -- and published in the April, 1966 Labor Law Journal. It can best be understood as a direct reply to arguments in the pamphlet, The Shorter Workweek by Marcia L. Greenbaum, published three years earlier by Cornell ILR. Both Foster and Greenbaum went on to distinguished careers as labor arbitrators.


from "Unemployment and Shorter Hours"

Howard G. Foster

A common reason given by economists who reject the proposal of a shorter workweek is based on what they call the "lump of labor" fallacy. Labor's analysis, they suggest, assumes that an employer has a fixed amount of work that must be done. If hours are reduced with no cut in weekly pay, the employer will react just as he would to any wage increase —that is, cut back output until marginal cost (which has risen) again equals marginal revenue. To suppose that the employer will maintain production in the face of a substantial cost hike is said to be clearly fallacious. ...

But does it follow that a rise in cost is a necessary concomitant of a cut in the workweek? A moment's reflection leads one to answer "no." The key to such a conclusion is the assumption that productivity is continually moving upward. This means either that a firm can produce more goods and/or services with the same amount of input than it could before the productivity increase, or that it can produce the same amount with less input. ...consider the following hypothetical situation.

Suppose a company employs 100 men who work 40 hours a week. Suppose further that average hourly pay is $1.00. Thus the average worker grosses $40 a week and the employer's total weekly payroll is equal to $4,000 (ignoring, for the moment, other employment costs such as social security payments, fringe benefits, etc.). Now let us assume that the union contract is about to expire, and during the course of the contract— two years—the company's productivity has risen by 5 per cent. This is not an unreasonable assumption, as the average annual productivity increase in American industry is estimated to be about 3.2 per cent. Now what might happen at the negotiations for a new contract?

Since productivity has risen by 5 per cent, the union will demand a share of the gains. If returns to all factors of production are to remain constant, labor would call for a 5 per cent increase in hourly wages. This is the same as saying that labor will receive the same amount relative to sales as before. Let us assume, however, that product demand has not changed. Total payroll, therefore, will have to remain at $4,000. Since hourly wages should be boosted by 5 per cent, then weekly pay can be maintained with a 5 per cent drop in weekly hours. This works out nicely, since the workers can still produce as much as before because of the productivity increase. To illustrate:


One might wish to interject at this point, "So what? You haven't improved the employment situation at all. The work force still numbers 100." This is all very true indeed, but it might be useful to reflect on just what would have happened had this particular sequence of events not occurred. Whether or not the union demands an hourly wage increase, the employer finds himself in a position where he can meet his production needs with 5 per cent fewer man-hours. So what are his alternatives? He can either cut back hours by 5 per cent or cut back men by 5 per cent—in other words, lay off five men. In the first instance he did the former. He can just as easily do the latter, as illustrated in row (b) of the table below:


In this situation, there are fewer men working at a higher weekly wage. Since we have proceeded from the premise that a certain number of men working at, for example, 38 hours is better than fewer men working at 40 hours, we must conclude that situation (a) above is preferable to (b). 

What is the significance of this? It is true that employment has not been increased in situation (a), but obviously the hours reduction has forestalled a decrease in employment. If hours were not cut, then five more men might be out of work. In policy terms there is little difference between steps to decrease unemployment and steps to prevent it from increasing. Furthermore, it should be noted that it appears to make little difference to the employer whether he cuts man-hours through cutting men or hours. It might be argued that in situation (a) the company is obliged to incur some extra cost over situation (b) in the form of fringe benefits, social security and unemployment compensation payments, and other costs which are dependent on the number of workers employed rather than the number of hours worked. It should be added, however, that the employer has the advantage in situation (a) of retaining men who are experienced and whom he could use in case of a spurt in demand without going to the trouble of hiring and training additional workers. At any rate, both of these factors would seem to be relatively minor cost considerations, since only 5 per cent of the work force is involved. Now let us expand the argument a bit. In the foregoing, it was assumed that demand for our employer's product had remained constant. It is not unreasonable to assume that in some cases demand will have risen. For the sake of simplicity, let us assume that sales have increased by 5 per cent, the same amount as the productivity increment. In such a situation, the employer will want to retain the same number of man-hours as before, since by definition the same input can turn out 5 per cent more output. Thus the company might simply raise hourly wages by 5 per cent, and everything would be fine. The situation would look like this (assuming that in 1963 8,000 units had been sold at $1.00 apiece, and that in 1965 the market will take 8.400 units at the same price):


Now suppose the union forces the company to cut the standard workweek to 38 hours. In such a case total payroll will have remained the same. Since the employer was willing to pay out an additional $200 in wages in the first place, he should have no objection to using that money in order to hire the extra workers he needs to meet the demand for his product. Thus we have the following situation:


At this point a critic might protest that the marginal cost of hiring five additional workers is greater than simply the total of their wages. There are administrative costs, benefit and tax costs, and training costs. This, of course, is a valid objection, but the problem is not insuperable. One way the difficulty could be circumvented might be to allow the employer sufficient leeway in the hours reduction to meet the extra costs. In other words, the union might agree to cut weekly hours by only 4 per cent, with no increase in weekly wages, allowing the employer 1 per cent of total payroll with which to pay the expenses of hiring new workers. Thus, again, it should make little difference to the employer how the complement of man-hours is composed— of 100 men and 40 hours, or 105 men and 38.4 hours (that is, a 4 per cent reduction of hours). Two possible situations have been examined, and with each two alternative ways of facing them have been suggested. First it was hypothesized that weekly sales had remained the same, and second, that sales had increased. It should be obvious that any other possibility can be reasoned out in the same manner. If, for example, sales should increase by, say, only 2.5 per cent, then the alternatives would look like this:


Tables representing situations in which sales are held to be any other amount may be similarly devised. Two points might be noted and emphasized here. First, it is evident that any increase in sales concurrent with a productivity increase opens the possibility of creating jobs. The more that sales rise, the more jobs can be found. Secondly, in all the above examples, the standard workweek was reduced without a rise in unit labor costs. This should at least suggest that in principle hours reduction might indeed be an instrument by which to alleviate the unemployment problem and is worth further study.

Finally, the hypothetical situations described above assumed that the employer's annual rate of productivity increase was 2.5 per cent. To be sure, all companies do not enjoy such good fortune. Since the average rate has been estimated at 3.2 per cent, however, some industries must have a rate of increase that is even higher; and in these areas of the economy, hours reduction should have its greatest effect. In industries with low rates of productivity gains, the proposal will be less effective. It seems reasonable to suggest, however, that any company willing to grant a wage increase in the first place, for any reason, can do it just as easily by cutting hours as by raising weekly wages. As stated above, productivity is the key to the shorter-hours proposal in that productivity is the principal factor which enables wage increases in any form to be granted. So long as productivity in American industry continues to rise, hours of work can be cut without inflating unit costs and in this way labor may indeed be able to "create jobs" at the bargaining-table.

UPDATE: Addendum to Foster

A small wrinkle that Foster left out is the observation that, within a certain range of hours, a reduction in working time may often be expected to contribute to productivity by reducing fatigue, etc."The days are gone," wrote Lionel Robbins in 1929, "when it was necessary to combat the naïve assumption that the connection between hours and output is one of direct variation, that it is necessarily true that a lengthening of the working day increases output and a curtailment diminishes it." Below is the hours and output table presented by Sydney Chapman in his 1909 "Hours of Labour" paper:


Assuming that this table is an educated guess, the productivity "rebound" from reducing the daily hours of labor works out to be around one-third. It takes time to realize that productivity gain so it would be safer to say that over a two-year period, a two percent reduction in working time would add an additional one percent to productivity growth (or half a percent per year). With Foster's baseline productivity gain of 2.5% per year, this adds up to a productivity gain --  in the second two-year period -- of 6%. Assuming again that sales grow at the same rate as productivity produces the following table:


The work force continues to grow. Wages increase modestly and so do weekly earnings but per unit costs remain unchanged to slightly lower. Not a lump in a carload!

*************************************
Five years after Foster's article was published, H. D. and N. J. Marshall wrote in their textbook, Collective Bargaining:
The arithmetic of the theory is simple. lf there are 50 million people presently working forty hours per week, let them now work for only thirty-five hours. The resulting reduction of 250 million hours of labor will create openings for more than 7 million (250 divided by 35) additional workers.  
Few businessmen or economists have been convinced of the validity of this reasoning...
The arithmetic IS indeed simple, just not so stupid. The Marshalls' argument is even simpler: ignore the argument that is made; substitute a flimsy straw man; knock down the straw man. Few businessmen or economists are not convinced of the validity of their reasoning. Witness the Hamilton Project's February 2015 framing paper, The Future of Work in the Age of the Machine.

Kudlow’s Deficit Dance

I was not invited to the private dinner with Scott Walker but Paul Krugman notes who was on the guest list:
Scott Walker, the governor of Wisconsin, is said to be a rising contender for the Republican presidential nomination. So, on Wednesday, he did what, these days, any ambitious Republican must, and pledged allegiance to charlatans and cranks … the three most prominent supply-siders: Art Laffer (he of the curve); Larry Kudlow of CNBC; and Stephen Moore, chief economist of the Heritage Foundation.
Paul notes some of the recent ramblings from this trio including their predictions that the use of expansionary monetary policy to combat the Great Recession would lead to runaway inflation and high interest rates. But let’s turn back the clock to the first term of the Bush43 Administration when Kudlow writing for the National Review was all in defending Bush’s fiscal stimulus and arguing at several points how the labor market was booming even when it was not. Kudlow was infamous for claiming the household survey was a better measure of employment when it showed that employment was rising while the payroll survey said the opposite. Of course there were months when the payroll survey showed better job growth than the household survey showed – to which Kudlow declared the payroll survey was more reliable. And during those months when the unemployment rate fell even though the employment-population ratio fell, Kudlow was all aglow that labor force participation rates were falling. After all, spinning for the Bush-Cheney 2004 campaign was more important than actual improvement in the labor market: My favorite Kudlow spin had to be what he wrote on November 22, 2002:
The federal budget deficit was $158 billion for fiscal year 2002. Democratic politicians blame this shortfall on the Bush tax cut of 2001. But how can they? The bulk of the reduction in personal tax rates designated in that cut do not occur until the 2004 to 2006 period. Thus far, only about 10% of the tax cut has even taken place. The real blame for the deficit can be placed on sub-par economic growth over the past two years .. As a result, actual economic performance has fallen below the long-term 3.5% historical trend line, which reflects the economy’s indisputable potential to grow. If that trend line were extended through 2002, as though no slowdown had occurred, then the potential third-quarter gross domestic product would have been $9.829 trillion. Instead, actual GDP fell $364 billion short of the mark. Cumulatively, over the past two years, the loss of potential GDP comes to $1.95 trillion — a considerable amount. If you apply the 18% economy-wide tax rate of recent years to the nearly $2 trillion loss of potential output, you get a $351 billion shortfall in tax revenues — which we’d be counting now if the economy had been running at full steam.
I used to watch The Capital Gang until I could not take Robert “That’s Class Warfare” Novak lecturing to everybody that only he knew anything about economics, which he tended to get by reading Kudlow. One Saturday night in November of 2002, he claimed that if the economy were only at full employment – we would have a $190 billion surplus. OK, I knew that despite all the Bush cheerleader from the National Review, we did have a considerable GDP gap. But this claim sounded extreme so I found Kudlow’s Deficit Dance which is where Novak got this bizarre claim. Where to begin with this? One could point out that Kudlow is using the unified budget deficit as the starting point which pulls the Social Security Trust Fund into the discussion as an offset to the larger General Fund deficit. Our first graph shows, however, that not only did total debt (TD) grow relative to GDP after both the 1981 tax cut and the 2001 tax cut but debt held by the public (DHP) also grew relative to GDP. One could also point out that potential GDP does not always grow at 3.5% per year especially when fiscal stimulus reduces national savings and investment (a topic for another post). But the real problem is that this implicit assertion that the GDP gap was $2 trillion per year is based on summing 8 observations when one should be taking the average. OK Kudlow said this $2 trillion was a gap over 2 years so we can blame Novak by not dividing these figures by two. But Kudlow was also using annual flow information as if it were quarterly flow information. So to correct even what he wrote – we needed to further divide his figures by four. Our second graph shows the GDP gap on an annual basis using the CBO estimate of potential GDP and they were nowhere near $1 trillion per year. Could Kudlow really be this incredibly stupid or did he know he was trying to deceive stupid readers? I guess he did because Robert Novak certainly fell for this incredibly misleading and incorrect assertion.

Saturday, February 21, 2015

Economic Wisdom in Germany

The negotiations between Greece and the rest of the Eurogroup were largely about how far, if at all, Germany could be pulled toward compromise.  German thinking about the economics of the currency zone is decisive: they set the boundaries and, to a large extent, the discourse.  The most prestigious group of economists in Germany is the Sachverständigenrat, the Council of Experts commonly referred to as the Five Wise Men.  (They currently have a single female member.)

This body released a statement about the Greek negotiations which you can read here.  Simon Wren-Lewis went after it here, but I want to say a bit more.  First, read the words of the Wise.

Now that you’re done, consider this.  Only once in this document is there even a passing reference to unemployment.  There is no mention of output gaps, nor of living standards.  Governments are seen strictly as borrowing and lending entities with no particular obligation other than paying their bills.  In other words, macroeconomics as the rest of the world understands it is essentially absent from beginning to end.  The message is: your government borrowed too much, we gave you some relief, and now you have to pay the rest.  There is nothing more to discuss.

The topic of reforms appears on occasion.  There isn't much discussion of their content other than that they are to be “market-oriented”.  Ireland, Portugal, Spain and Italy are held up as examples of the success of such reforms, although what success means in this context isn't specified.  (I think it means, the governments are continuing to pay on their debts.  Spain and Portugal in particular are no one’s idea of successful economies.)

Meanwhile, the document is studded with truly outlandish statements.  Try this one: “For an economy in the dismal Greek situation, it essentially made no difference that it remained a member of the Eurozone – in any case, adjustment was unavoidable, and it would be painful and accompanied by strong social tensions. The adjustment process of countries that experienced debt and currency crises follows a very similar pattern. This is irrespective of whether they successfully defended a fixed exchange rate or allowed their exchange rate to devalue in order to support external economic adjustment.”  This is followed by a pair of charts, the second of which compares Greece’s GDP growth (decline) to that of the Baltics, along with Korea and Thailand in the late 90s.  But: (1) The Baltics were defending a fixed exchange rate and they did, and are doing, terrible.  (2) The East Asian countries, which had scope for devaluation, were back in growth territory within two years, unlike Greece.  (3) It’s a selective list!  Where’s Argentina, for instance?  Or Iceland.  Oh, but right: “success” means paying your bills, and Argentina and Iceland didn't do this.

About debt relief: “A debt relief of public creditors could not substantially improve the comfortable state of the Greek government, let alone be justified easily vis-à-vis its lenders.”  Read that one over a few times to let it sink in.

The wrap-up: “Greece is suffering very hard times. But the real tragedy is that it elected a government that threatens to exacerbate the situation and spoil the looming economic recovery, on the basis of a thoroughly wrong assessment of its current bargaining situation and the policy alternatives available for achieving sustainable growth in Greece and the Eurozone.”  In short: we will be happy to see you leave the Eurozone, so we don’t have to give an inch.  And there is no alternative to the current policies which, as anyone can see, have been blazingly successful at restoring growth.

And these are the supreme experts.  Imagine what the reasoning must look like down in the second and third tiers.

Bizarre Russian Propaganda

Yesterday I learned that blogs in Moscow, at least one called Energy-Life, are posting a supposed report put out by the RAND Corporation on July 3, 2014 that contains a supposed plan for the Ukrainian government to reconquer eastern Ukraine by Sept. 1, impose martial law, set up internment camps, and then lift it by January 1.  I shall quote from it below, detailing some horrific things  that were supposed to be done according to this plan.  I found it by googling "RAND report Ukraine Novorossiya, and there was a link at the second hit, a site called oped news and a post by David William Pear, who provided a link to the actual report (the link here only goes to the general site but not his report; you will have to google it as I described above to see it, sorry).  His post went up on Feb. 4, 2015, and he posted another round the next day without the link, but referring to it and taking strongly pro-Russian positions.  It would seem that this posting by him has received no attention here, but it is now hot stuff in Russia, and from what I hear, lots of people believe its contents.  I note that while Pear mostly praised the releasing of this report, he did say, "The authenticity of this report is yet to be verified."

So, I am 99.9% certain that this is something cooked up by somebody in Russia.  The actual Memorandum is two pages long and addressed to nobody in particular, nor does it have a date or any names on it, although the link claimed it was issued on July 13 last year.  It has an opening section and then three sections, one on "Isolation," then one on "Mop-up," then one on "Return to Normal."  The flavor of it is best given by simply providing a few quotes.  Its two pages do have a RAND logo on their lower right corners, although I must say that I have never seen official paper of any entity, government, corporate, academic, non-profit, whatever, that had its logo in that location on its official paper, although who knows, maybe that is how they do it at RAND.

From the opening section, which describes the supposed advantages of this plan: "Activists of a pro-Russian political movement get decimated, pro-Russian voters get disorganized."

This is followed by a plan to shut down both the "coal industries" and also "the Donbass industries," with this being praised as a good idea  because it  will  reduce eastern Ukraine's dependence on natural gas (they use gas in the coal mines?).

In the "Isolation" section imposing martial law is proposed and detailed.  Near the end of this section it states that "use of non-conventional weapons shall not be ruled out."

In the second section, description of the takeovers of individual towns contains the following tidbit: "Infantry shall move in next to relocate male adults [ages 13-60] into internment camps."  Apparently all of them, no testing them for ideology or views before doing so.

In the third section it says that these camps will be guarded by people with approved ideology, and then in discussing refugees returning to the area it says, "However, men aged 18-60 shall be checked for possible support of separatists in internment camps."  Yes, that is sic.  Why for this bunch the 13-17 year olds get off is unclear.  In any case, all of these people are supposed to be released from the camps after two months.Or maybe those returnees are not to be tested in the camps but to be tested for whether or not they support those in the camps ("Hey, do you support these people in these camps, with it clear that if you say so we shall put you there?")

There is more, but you get the idea and the tone, including the rather clunky English (nothing in the future is ever "will" but "shall").

Probably the most telling detail of all that convinces me that this was indeed written by somebody in Russia (or somebody very pro-Russian, not pro-Ukrainian) is that twice it refers to "the Lugansk region."  Now quite some time ago, I posted here about whether that city and its region should be spelled as "Luhansk" or "Lugansk."  The former is the Ukrainian spelling, while the latter is the Russian spelling.  I noted on May 1 here that the Washington Post had for a short time switched from calling it "Luhansk" in the Ukrainian way to calling it "Lugansk"in the Russian way, but only for a short while and just before May 1 it switched back to using the Ukrainian spelling of "Luhansk," which it has used ever since as has virtually every media source I have seen in the US.  I seriously doubt that a report written by the RAND Corporation in early July that was supposed to be sent to the Ukrainian president would have used the Russian spelling as this one does. 

I think this pretty much settles it, but I shall simply add that back in July there was in fact a fairly successful campaign by the Ukrainian government to reconquer territory held by the separatists. The cities of Slovyansk and Mariupol were reconquered, the latter a port.  In August, some of this territory was reconquered by the separatists, who have more recently gained more territory, and are near the port of Mariupul, which many fear they may retake.  In any case, if there was anything to this plan we might have seen some of these proposals put into action.  But, I am unaware of any "decimation" of activists,any use of "non-conventional weapons," any setting up of internment camps with the male adults of Slovyansk and Mariupol being put into them, and certainly no shutting down of coal mines or any other "Donbass industries."  Maybe it has been going on, but nothing of the sort has been reported that I have seen, and amusingly enough even the Russian propagandists are not claiming that any of this has occurred in those areas, even as they are now touting to their population this purported plan that was to be activated last summer that urges all this awful stuff to be done.

About all I can say is that it is a sign of how brainwashed current Russians are that so many apparently are believing this tripe.  This is not a good sign.

Barkley Rosser

Friday, February 20, 2015

Homage to Max

I have not asked the permission of Max of Maxspeak to post this, but I think there is a matter of public record that needs to be stated officially.  So, the issue is that from time to time, here and there (sorry, no links), I have complained in the econoblogosphere about how one cannot access the old files of the old MaxSpeak. In its heyday the old MaxSpeak was a borderline top ten econoblog, mostly due to Max's regular, witty, and insightful posts.  I was kind of the second player, with Sandwichman of this blog and others from time to time on board, including Gar Lipow, and even briefly Jason Furman, currently the Chair of the CEA, our brief nod to establishmentarianism, not to mention that even good old Dean Baker was on board for awhile before he started Beat the Press.

Those were the good old days, but Max shut the show down and this blog, Econospeak, became its successor, which was 40-70 on the old Gongol rankings, which I miss, and I do not know what has replaced that. Anyway, after Max shut down the shop I complained from time to time that one could not access the old MaxSpeak files.  There were a few posts of mine, with followups, that I particularly was unhappy about not being able to access or link to, and I kvetched here and there. The one that I most regretted the loss of was my post about the problems of some Kurds in Harrisonburg, VA where I live, who were being persecuted by the FBI, and due to my post on MaxSpeak, at least partly, we (a lot of other people besides me were involved with this), we managed to help save some of these guys from jail.  I shoot off my mouth a lot, but saving somebody from jail is one of those few things that I can say that I am unequivocally proud of.  Given the disappearance of the original posts, the only public record of any of this is at Juan Cole's site, where I provided a guest post discussing the matter (I just tried to link to the post at Informed Comment, but it did not work, but if you google, "Juan Cole Rosser Kurds," you will get it as the top hit).  It is there, really.

So, what happened? Max's wife had cancer, suffered, and died.  This prettty much explains it.  Her illness was why he shut down the old MaxSpeak. Recently he sent me an email explaining what happened to the old files of the old MaxSpeak.  They existed ultimately as physical discs, and he finally told me that what happened is that he has simply lost them in all the confusion of his life assoicated with what I mentioned above. I hope that he finds them, but in the meantime, I can only say that I am sorry and sympathize.

So, MaxSpeak was great, and Max is a great guy.  I must say that I underatand and appreciate what has happened.  I wish him the best.  This is life.


Barkley Rosser