Author Archives: rdmyers75@hotmail.com

Nate Silver weighs in

Nate Silver has launched his general election forecast page. He gives Hillary about an 80-20 chance of winning. He has a long discussion post about it here. I found this last paragraph interesting, where he relates a 20% chance of winning to a baseball game:

A 20 percent or 25 percent chance of Trump winning is an awfully long way from 2 percent, or 0.02 percent. It’s a real chance: about the same chancethat the visiting team has when it trails by a run in the top of the eighth inning in a Major League Baseball game. If you’ve been following politics or sports over the past couple of years, I hope it’s been imprinted onto your brain that those purported long shots — sometimes much longer shots than Trump — sometimes come through.

It’s an interesting way of thinking about risk. Let’s say your favorite team is in game 7 of the World Series, down by a run in the top of the eighth. The game is insanely late on the east coast as they always are, and you have to do something important early the next morning, like interview for a job or operate heavy machinery. Do you turn the TV off? No, of course not, you stay tuned.

June 2016 in Review

3 most frightening stories

  • Coral reefs are in pretty sad shape, perhaps the first natural ecosystem type to be devastated beyond repair by climate change.
  • Echoes of the Cold War are rearing their ugly heads in Western Europe.
  • Trump may very well have organized crime links. And Moody’s says that if he gets elected and manages to do the things he says, it could crash the economy.

3 most hopeful stories

  • China has a new(ish) sustainability plan called “ecological civilization” that weaves together urban and regional planning, environmental quality, sustainable agriculture, habitat and biodiversity concepts. This is good because a rapidly developing country the size of China has the ability to sink the rest of civilization if they let their ecological footprint explode, regardless of what the rest of us do. Maybe they can set a good example for the rest of the developing world to follow.
  • Genetic technology is appearing to provide some hope of real breakthroughs in cancer treatment.
  • There is still some hope for a technology-driven pick-up in productivity growth.

3 most interesting stories

Brexit

Well, I suppose I have to write a Brexit post. The main argument seems to be that the combined UK-EU economy, with free trade and movement of people and money, was larger than either the UK or EU will be separately, and that is going to hurt both while also emboldening Russia. It seems to me that they could just negotiate some treaties to keep most of that in place, at least free movement of trade and capital if not people, but it sounds like politics may get in the way of that because some in the EU will think if they do that, it will embolden others to leave. But there is at least an argument that it could strengthen the EU in the long term.

In the immediate future, the EU will face a serious dilemma. If it allows Great Britain to withdraw from common structures only to a limited extent, it would signal to all Euroskeptics that they can do as they please. But if EU leaders impose high costs on the UK – namely, by restricting its access to the single market – Europe could end up cutting off its nose to spite its face.

The tragedy of today’s situation is that the EU could still save itself and come to its senses. It could compensate for the losses caused by Brexit by transforming the current crisis into an opportunity for true integration – something that up until now had been blocked by the UK. Such an exercise in renewal would demand that EU institutions be granted real authority to create common fiscal, defense, and energy policies, while at the same time pursuing democratization (along the lines of “one citizen, one vote”).

Under this scenario, Europe could finally emerge as a strong actor in international affairs. It could be the world’s third-largest country, with English, ironically, as its administrative language – the United States of Europe. But, sadly, the political will to achieve such an outcome is unlikely to emerge – if it ever does – until conditions in Europe become considerably worse than they are now.

inequality and mobility

The Federal Reserve Bank of Cleveland has an interesting study of income mobility in the U.S. It appears to be true that the poorest families tend to stay poor (between 2003 and 2013, 64% of families in the poorest 20% stayed in the poorest 20%), while the richest tend to stay rich (72% of families in the richest 20% stayed in the richest 20%). Looking at the table if you are in one of the middle quintiles, (between the 20th and 80th percentiles, your chances of moving up or down to the adjacent quintile look to be about even. This measure of mobility increased somewhat in the 80s and 90s, but appears to be on the decline since then. Mobility is harder to measure across generations, but it does appear to be much higher than within a single generation, which you would expect. Mobility in the U.S. is lower than in other developed countries, both the northern European socialist ones where you might expect it, but also the Anglo-American peers like Canada, Australia, and New Zealand, although the UK, France, Italy are in the same ballpark as the U.S. If you’re interested in this, stop reading my wordy description and go look at the data!

prime age males

Here’s an interesting report from the President’s Council of Economic Advisers on the long-term decline in labor force participation by “prime age males”, defined as between the ages of 25 and 54 (this seems like a pretty broad definition, I’m glad to know I’m still in my prime!).

For more than sixty years, the share of American men between the ages of 25 and 54, or “primeage men,” in the labor force has been declining. This fall in the prime-age male labor force participation rate, from a peak of 98 percent in 1954 to 88 percent today, is particularly troubling since workers at this age are at their most productive; because of this, the long-run decline has outsized implications for individual well-being as well as for broader economic growth. A large body of evidence has linked joblessness to worse economic prospects in the future, lower overall well-being and happiness, and higher mortality, as well as negative consequences for families and communities…

• Participation has fallen particularly steeply for less-educated men at the same time as their wages have dropped relative to more-educated men, consistent with a decline in demand. o In recent decades, less-educated Americans have suffered a reduction in their wages relative to other groups. From 1975 until 2014, relative wages for those with a high school degree fell from over 80 percent of the amount earned by workers with at least a college degree to less than 60 percent. • CEA analysis using State-level wage data suggests that when the returns to work for those at the bottom of the wage distribution are particularly low, more prime-age men choose not to participate in the labor force: o The correlation is strongest at the bottom of the wage distribution: at the 10th percentile, a $1,000 increase in annual wages, or a roughly $0.50 increase in hourly wages for a full-time, full-year worker, is associated with a 0.13 percentage-point increase in the State participation rate for prime-age men. • This reduction in demand, as reflected in lower wages, could reflect the broader evolution of technology, automation, and globalization in the U.S. economy…

Conventional economic theory posits that more “flexible” labor markets—where it is easier to hire and fire workers—facilitate matches between employers and individuals who want to work. Yet despite having among the most flexible labor markets in the OECD—with low levels of labor market regulation and employment protections, a low minimum cost of labor, and low rates of collective bargaining coverage—the United States has one of the lowest primeage male labor force participation rates of OECD member countries. • U.S. labor markets are much less “supportive” than those in other OECD countries. The United States spends 0.1 percent of GDP on so-called “active labor market policies” such as jobsearch assistance and job training that help keep unemployed workers connected to the labor force, much less than the OECD average of 0.6 percent of GDP, and less than nearly every other OECD country. The contrast in participation rates reveals a flaw in the standard view about the tradeoffs between flexibility and supportive labor policies. • Another unique feature of the U.S. experience has been the rapid rise in incarceration, especially affecting low-skilled men. o By one estimate, between 6 and 7 percent of the prime-age male population in 2008 was incarcerated at some point in their lives. o These men are substantially more likely to experience joblessness after they are released from prison and in many States are legally barred from a significant number of jobs.

So if you are going to let companies hire and fire at will, which overall is a good thing in my view, you need to have programs to education and train workers, not just as children but to retrain and upgrade their skills throughout their adult lives. Globalization and accelerating technological change make this need even more urgent.

Trumponomics

Moody Analytics has tried to take what Trump says and predict what would happen to the economy if he could actually do what he says.

Broadly, Mr. Trump’s economic proposals will result in a more isolated U.S. economy.
Cross-border trade and immigration will be significantly diminished, and with less trade and immigration, foreign direct investment will also be reduced. While globalization has created winners and losers in the U.S. economy in recent decades, it contributes substantially to the ongoing growth of the U.S. economy. Pulling back from globalization, as Mr. Trump is proposing, will thus diminish the nation’s growth prospects.

Mr. Trump’s economic proposals will also result in larger federal government deficits and a heavier debt load. His personal and corporate tax cuts are massive and his proposals to expand spending on veterans and the military are significant. Given his stated opposition to changing entitlement programs such as Social Security and Medicare, this mix of much lower tax revenues and few cuts in spending can only be financed by substantially more government borrowing.

Driven largely by these factors, the economy will be significantly weaker if Mr. Trump’s economic proposals are adopted. Under the scenario in which all his stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office (see Chart). By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7%, compared with below 5% today. During Mr. Trump’s presidency, the average American household’s after-inflation income will stagnate, and stock prices and real house values will decline.

disgust and morality

This article claims that our natural disgust at parasites and other gross things is the origin of morality.

A ballooning body of research by Pizarro and others shows that moral judgments are not always the product of careful deliberation. Sometimes we feel an action is wrong even if we can’t point to an injured party. We make snap decisions and then – in the words of Jonathan Haidt, a social psychologist at New York University – ‘construct post-hoc justifications for those feelings’. This intuition, converging lines of research reveal, is informed by disgust, an emotion that most scientists believe evolved to keep us safe from parasites. Marked by cries of ‘Yuck!’ and ‘Ew!’, disgust makes us recoil in horror from faeces, bed bugs, leeches and anything else that might sicken us. Yet sometime deep in our past the same feeling that makes us cringe at touching a dead animal or gag at a rancid odour became embroiled in our most deeply held convictions – from ethics and religious values to political views…

These and related studies raise an obvious question: how have parasites managed to insinuate themselves into our moral code? The wiring scheme of the brain, some scientists believe, holds the key to this mystery. Visceral disgust – that part of you that wants to scream ‘Yuck!’ when you see an overflowing toilet or think about eating cockroaches – typically engages the anterior insula, an ancient part of the brain that governs the vomiting response. Yet the very same part of the brain also fires up in revulsion when subjects are outraged by the cruel or unjust treatment of others. That’s not to say that visceral and moral disgust perfectly overlap in the brain, but they use enough of the same circuitry that the feelings they evoke may sometimes bleed together, warping judgment…

From this point in human social development, it took a bit more rejiggering of the same circuitry to bring our species to a momentous place: we became disgusted by people who behaved immorally. This development, Curtis argues, is central to understanding how we became an extraordinarily social and cooperative species, capable of putting our minds together to solve problems, create new inventions, exploit natural resources with unprecedented efficiency and, ultimately, lay the foundations for civilisation.

This has interesting implications for the idea that there might be a “common morality”, akin to “common sense”, that just naturally applies to all rational people, although rational people might disagree about exactly what is included, just as scientists argue about the nature of reality but agree there is a single reality that can eventually be discovered. This is powerful because we can’t rely on reason alone as a guide to morality – there are sometimes things we could do that would be rational, but almost everyone would agree are wrong. Obvious examples would be if you could benefit yourself by lying, cheating, stealing, or killing, and be sure you could get away with it. In this case your gut tells you this is wrong even though it might be strictly rational, and that will be enough to deter most people. But if that gut sense of common morality is based partly on biological impulses shaped by past conditions that no longer apply, then maybe we should rely more on reason and less on our gut impulses of what is right and wrong.

Trump and organized crime

Here’s a long article on BillMoyers.com, with links to a lot of other articles, about Donald Trump’s alleged mob links.

While there are some financial subjects on which the media has dared to grill the billionaire — ABC’s George Stephanopoulos last month got Trump to deliver a blunt “no” when he asked about the Republican nominee-apparent’s repeated refusal to release his recent tax returns, something every other recent presidential candidate has done — there has been remarkably little interest shown in some of Trump’s less-than-savory connections.

One of the exceptions is Johnston, who, over the course of 27 years, has had ample occasion to pay attention to Trump’s finances and mob ties. He was not the first investigative reporter to do so. In 1992, Johnston favorably reviewed the longtime Village Voice reporter Wayne Barrett’s highly unauthorized biography, Trump: The Deals and the Downfall, which, in Johnston’s words, “asserts that throughout his adult life, Donald Trump has done business with major organized-crime figures and performed favors for their associates.” As Barrett said not long after Trump declared for the presidency last year, Trump’s life “intertwines with the underworld.” Barrett updates his treatment of Trump in a new digital edition calledTrump, The Greatest Show on Earth: The Deals, the Downfall, the Reinvention…

Beyond ABC News’ Ross, TV has been even less eager to press inquires about Trump’s history of relations with organized crime. Nor have questions of Trump’s mob ties been much explored in other major news outlets. A notable exception: Johnston, who, in Politico last month, raised yet more questions. One was why Trump relied on ready-mix reinforced concrete construction (mob-controlled) to build his eponymous Fifth Avenue tower and subsequent New York buildings, although steel girders were the usual choice. Another was why, when seeking a license to build casinos in Atlantic City, Trump received special treatment from New Jersey gaming investigators, “Thanks in part to the laxity of New Jersey gaming investigators,” Johnston wrote, “Trump has never had to address his dealings with mobsters and swindlers head-on.” Wayne Barrett calls Trump Tower “a monument to the mob.” He writes of the “sweetheart deals” that delivered the concrete, and the special tax abatements that have continued to roll in for Trump. There, so far as the public is concerned, the matter has rested. Why do the major media, ordinarily eager to fight for their own angles on big stories, lag? Why do the dogs not bark and the chambers not echo?

more cold war redux

Here are some more disturbing rumblings of U.S.-Russia confrontation in western Europe. But I also like the quote below by a German foreign minister.

More than 31,000 troops from 24 nations took part in Nato’s Anaconda-16 exercises in Poland, from 7 to 17 June.

The day after they ended, German Foreign Minister Frank-Walter Steinmeier warned Nato against “sabre-rattling and warmongering”, calling for exercises to be replaced with more dialogue and co-operation with Russia. “Whoever believes that symbolic tank parades in Eastern Europe bring more security, is mistaken,” he told Bild newspaper.