Buzzfeed for economics junkies

“Critiques of the foundations of economics are a dime a dozen,” I wrote last week. Coincidentally, but conveniently, the three posts shown below popped up within the next few days, offering guidance on how to know whether you’re getting fair value for your 10 cents.

• Chris Auld, “18 Signs You’re Reading Bad Criticism of Economics”
• Richard Lawson, “18 Signs Economists Haven’t the Foggiest”
• Jason Collins, “Six Signs You’re Reading Good Criticism of Economics”

Obviously, the posts disagree with each other, and there are distinct whiffs of "no true Scotsman" here and there, but I found them all worthwhile. 

Carnegie International artist Taryn Simon does not know her fencing weapons

I was in Pittsburgh last weekend, and one of the things I did was visit the Carnegie International, the big international art show that comes to the Carnegie Museum every few years. I hope to say more about the exhibition later on, but for now, I’d like to air one very specific, particular gripe.

A lot of people have been talking about the piece “Birds of the West Indies,” by artist Taryn Simon. It consists of 190 photos depicting the various women, cars and gear from the James Bond movies. "Using this inventory of individuals and props, Simon seeks to undermine the never-dying masculine ideal that is Bond by detailing how the film’s accessories have upheld the myth of the 'seductive, powerful, and invincible western male,'" writes Ashton Cooper in the blog In the Air. Well, quite. 

My complaint? One of the photos, cataloged as B.69, is captioned “Foil, 2002." (See this online list.) The photo isn't online, but I studied it carefully at the museum. The weapon depicted indeed appears to be the one Pierce Brosnan wields in this scene in Die Another Day:

As any fencer will tell you, that's no foil. That’s an epee.

                             

I'm not one of those people who gets bent out of shape if a soldier in a movie fires a Makarov PM when he should be using a Tokarev TT-33. But there are only three weapons in fencing, and they're really different! If you're going to be undermining a never-dying masculine ideal, this is the sort of thing you should get right.

Friday grab-bag

Busy tomorrow, so posting the Friday grab-bag on Thursday.

● The funniest sentence I read this week was in the Guardian’s article, “Why have young people in Japan stopped having sex?”

In her business pamphlet, she offers up the gloriously random confidence that she visited North Korea in the 1990s and squeezed the testicles of a top army general.

Later in the article, one learns that 90 percent of young Japanese women think staying single "is preferable to what they imagine marriage to be like."

● They’re both behind the paywall, but the New Yorker’s articles on Elizabeth Smart and Norman Mailer are fantastic. Smart is the young Salt Lake City woman who was abducted from her bedroom in 2002 and held captive by a rapist for nine months. She has since become an activist. I came away tremendously impressed by what the article accurately calls her “extraordinary resilience.” As for Mailer, I know there’s no reason why being brilliant should necessarily give you a better purchase on reality than anyone else, but still – that brilliant, yet that batshit crazy? It makes you wonder.

Video of the week: While doing a Google search for Woody Allen, I stumbled upon Allen Woody (1955-2000), bass player for the Allman Brothers and Gov’t Mule. How appropriate that a guy with the opposite of Woody Allen’s name, so to speak, would indeed be pretty much the opposite of a neurotic Jewish comedian and sometime jazz clarinet player from Brooklyn. So here they are, Woody Allen and Allen Woody, together at last. 

On the fourfold root of the principle of insufficient reason

Economist James Crotty has a guest post on the blog Triple Crisis titled “The Man Who Won a Nobel Prize for Helping Create a Financial Crisis.” (The man in question is Eugene Fama, he of “efficient markets hypothesis” fame.) Crotty accuses much of modern-day economics of being an intellectual con. He's hardly alone in that claim, but I think he makes a better case than usual.

Critiques of the foundations of economics are a dime a dozen. The normal procedure is to take issue with the field’s premises. Rational actors with perfect information, market equilibria, exogenous shocks – what crazy, unrealistic assumptions and simplifications! Who would ever think you could derive useful insights about human behavior from models based on such constructs? And so we declare economics a ridiculous pseudoscience, feel very smug and holier-than-thou, and get on with our lives.

Crotty, however, offers an augmented analysis. The bait-and-switch, as he describes it, has not one step, but four:

Step one: Formulate a theory based on assumptions that are “grossly unrealistic” and “patently false.” (Crotty’s characterizations)

Step two: When those assumptions are criticized, assert that their realism or lack thereof doesn’t matter, as long as they yield good predictions. (methodological positivism)

Step three: Test your theory, but do so using methods that can’t possibly falsify it.

Step four: Declare your theory validated. Use it to implement your ideologically preferred policies, and use its “scientific” status to trump any and all objections.  

To me, steps one and two are not necessarily objectionable. That’s not what Crotty argues – he vehemently criticizes all four steps. For him, unrealistic assumptions are bad assumptions, ipso facto. The thing is, though, “unrealistic” assumptions have often served science quite well. Consider physics. Reducing a thrown stick or a falling piano to a point mass is “grossly unrealistic” and “patently false,” but it’s a great way to calculate a trajectory using Newtonian mechanics – which happens to be a “patently false” approximation to relativity theory. Unrealistic ontology, but excellent predictive power.

Moreover, it’s not necessarily clear before the fact whether a given theoretical construct will turn out to be realistic or not. Lamarkism looked plausible for awhile, as did the luminiferous ether. We’re accustomed to think of atoms and molecules as “real” because of what we’ve been taught in school, but imagine what atomic theory would sound like to an Amazonian tribesman or someone from 1500. “You mean to tell me solid objects are made out of infinitesimal particles that are mostly empty space? That’s realistic?!?" Well, yes it is, but we needed roughly a century of highly sophisticated physics research to know why.

So I’m OK with steps one and two. But I am absolutely not OK with step three. Scientific theories are supposed to be testable, dammit. According to Crotty, however, testing economic theories with econometrics is the ultimate grading on a curve – the theory always passes:  

                                               

[E]conometric tests can at best provide suggestive, not conclusive evidence in support of the empirical validity of predictions generated by economic theories. With today’s computing power, it is possible to run literally millions of regressions to test a theoretical proposition. … As a result, virtually any hypothesis can be shown to be statistically significant if enough different regressions are run. This is why both sides of every important debate in economics can provide econometric evidence in support of their positions.

Falsifiable in principle, unfalsifiable in practice. For an ideologue, the perfect science! Notice that Crotty doesn't accuse economists of ignoring empirical data – the standard complaint. They're checking their work, all right, he says – just not in a way that would ever be decisive. 

And so, ever since 2008, we’ve had step four ad nauseum. Our model works; if reality isn't cooperating, it must  be your problem.

Sounds like economists really need to read their Popper.

P.S.: For what it’s worth, Noah Smith makes Crotty’s point with less ire and more sympathy in section No. 10 of his long post on judgment calls and the philosophy of science:

[A]lthough I am not a strict “falsificationist”, I think that rejecting models is almost certain to be an essential feature of using evidence to select the best set of models to use in practice.
 And what I suspect is that macroeconomics went so long without any hope of matching any data that it developed bad habits. Internal consistency and the collective intuition of macroeconomists were overemphasized, and what little data there was was often ignored. Theoretical tolerance became the norm, and models that were essentially never useful remained prominent in the toolkits of economists and policymakers alike. And the large reliance on judgment seems (unsurprisingly) to have allowed some political bias to seep into the profession.

Barack Obama is not a leftist

A friend of mine recently took the “Political Compass” test and posted the results on Facebook. If you don't know the test, it's available at PoliticalCompass.org. The test's developers contend that political attitudes should be plotted, not on one axis, but two: a left-right economic axis and an up-down authoritarian-libertarian axis.

I took the test, and scored about where I thought I would. Then I noticed you could see a version of the chart showing the 2012 presidential candidates. Here it is:

Look at where all the minor candidates are, then look at Obama and Romney. Not much ideological space between them, is there? Is that really what we spent more than two years and $2 billion battling over? Yup.

I suspect a lot of people seeing this chart refuse to believe their eyes (and I do think I would move Obama and Romney a small amount farther apart), but fundamentally, it's accurate. In the fevered mind of the Republican Right, Obama is the Kenyan Muslim Socialist bent on destroying America. In actuality … well, here’s how Brad DeLong puts it:

I remember what policies Barack Obama has in fact pursued:

• George H.W. Bush's tax policy.
• Mitt Romney's health-care policy.
• John McCain's climate-change policy.
• George H.W. Bush's foreign policy.
• Bill Clinton's spending policy.
• Dwight Eisenhower's Federal Reserve policy.
•  George W. Bush's education policy.

The idea that we ought to be willing to raise taxes when we find, as a society, that we are not willing to cut spending – is there a more bedrock, conservative, Republican principle than that? ... We could all write the speeches for Obama policy initiatives as rooted in conservative, Republican principles and rhetoric – indeed, some of us have. 

Indeed. For a sharp contrast, take a look at Green Party candidate Jill Stein’s policies as outlined on her website. Here’s a sampling:

• Cut the bloated Pentagon budget by 50%.
• Rewrite the entire tax code to be truly progressive with tax cuts for working families the poor and middle class and higher taxes for the richest Americans.
• Ensure the right to accessible and affordable utilities – heat electricity phone internet and public transportation – through democratically run, publicly owned utilities that operate at cost, not for profit.
•  Establish a 90% tax on bonuses for bailed out bankers.
• Democratize monetary policy to bring about public control of the money supply and credit creation.
• Provide tuition-free education from kindergarten through college.
• Provide complete, affordable, quality health care for every American through an improved Medicare-for-all insurance program.
• Impose an immediate moratorium on foreclosures and evictions.
• Stop hydrofracking.
• Repeal the Patriot Act.
• Abolish the electoral college.

I can’t think of a Democrat now in office who wouldn’t run screaming in panic from that agenda. Can you?

Certainly, the Obama administration would have no part of it. Cut the Pentagon budget by 50%?! The Obama administration has wound down the wars in Iraq and Afghanistan wars, but has indicated no interest in cuts beyond that. Stop fracking?! Obama has embraced fracking, to environmentalists' dismay. Repeal the Patriot Act?! The NSA has hoovered up virtually every phone call made in this country for years. And so on.

Millions of Americans think President Obama is a leftist. They have forgotten what leftism even looks like.

Update: Commenter "Flatlander" very reasonably asks: 

Could you please indicate how the presidential candidates were plotted? Did they answer these same quiz questions?

Here's how the PoliticalCompass.org folks answer that in their FAQ:

We rely on reports, parliamentary voting records, manifestos … and actions that speak much louder than words. It takes us a great deal longer than simply having the politician take the test — but it's also a far more accurate assessment. In our early experience, politicians taking the test often responded in ways that conflicted with their actions but conformed to the prevailing mood of the electorate.

You can also read their specific comments on Obama and Romney on this page. They certainly sound upset with Obama!  

Yes, the Pa. Voter ID ad is misleading

So, here’s the Pennsylvania Department of State’s latest advertisement regarding Voter ID:

And here’s my transcript of it:

If you care about this election … (repeated 2x)
If you have an opinion …
If you want a voice ... (repeated 2x)
If you want to make a difference ...
Then show it!
Show it! (repeated 2x)

Voiceover: When voting this election day, you will be asked, but not required to show a photo ID. To learn more about how to get a free photo ID from PennDOT driver license centers, even if you were unable to get one in the past, call 1-877 VOTES PA or visit votesPA.com.

The ad has come in for criticism, but Department of State spokesman Ron Ruman insists it is neither false nor misleading:

"We're accurately reflecting what the law is, and the judge's ruling indicated the education should continue," he said.

Hm. The first part of the ad is structured as a conditional; that is, an “if-then” statement. Back when I took elementary logic in college, we learned the following rule for evaluating if-then's:

p	q	If p then q
True	True	True
True	False	False
False	True	True
False	False	True

In this case, for “p” we have “you care about this election … you have an opinion … you want a voice.” All true? In my case, absolutely. And presumably true of everyone who votes. (That's why they go to the trouble.) So “p” is true.

How about "q"? Well, "Show it!" must mean either "You must show it!" or "You should show it!" No other interpretation  makes sense, given the grammar and the way the actors read the line.

If "q" means, "You must show it!" then it's clearly false – the subsequent voice-over tells us so. So, "p" is true, "q" is false, and the conditional as a whole is false. 

How about if "q" just means "You should show it!"? Then the question immediately becomes, "Why?" As we just said, showing ID is completely irrelevant to voting, under current law. It changes nothing; it's pointless, strictly speaking. Why not hop three times on one foot or recite a few lines from Hamlet? 

The Commonwealth's position appears to be that practicing will help voters when Voter ID takes effect. I can see the point of preparing for that day (i.e., by getting a valid ID). But why practice, why rehearse? Shouldn't citizens in a democracy seek to know their rights and exercise them instead of engaging in kabuki compliance with a law that remains under injunction? 

Voter ID is a transparently partisan law that disproportionately burdens the poor and elderly to solve a problem that doesn't exist. The fact that the burden seems trivial to most middle-class voters is part and parcel of why proponents like it. Complying with Voter ID before you have to is like paying a poll tax you don’t have to or taking a literacy test you don’t have to. Getting comfortable with Voter ID is akin to getting comfortable with poll taxes and literacy tests, and thinking they're normal and reasonable. People clearly shouldn't do that. 

So, as before, "q" is false, making the conditional false as a whole.  

Now, this analysis is somewhat tongue-in-cheek. But this ad really does embody an appalling non-sequitur, exhorting people in the strongest moral terms to show ID before quietly muttering that they needn't. The ad's critics are perfectly correct: Pennsylvania is spending $1 million to mislead its citizens.

Friday grab-bag

The 2013 Nobel(ish) Prize in Economics was announced on Monday. It went to Eugene Fama, Robert Shiller and Lars Peter Hansen. I knew a little about Fama and Shiller, which pleased me, and I didn't feel too bad about never having heard of Hansen, given that he does fiendishly technical mathematics that even his fellow economists find abstruse.

Fama is best known for the Efficient Markets Hypothesis, the notion that financial markets incorporate all available information into their prices; while Shiller “did more than anyone else to codify the way the efficient market hypothesis fails in practice.” A lot of bloggers have commented on the ying-and-yang aspect of the duo's joint honor. Here are two links that I found illuminating:

● Noah Smith: “If Fama were Newton, would Shiller be Einstein?”

● Daniel Davies: “Sveriges Riksbank prize actually, blah, blah, blah”

Additionally, Fama’s Nobel has given several bloggers the opportunity to revisit his widely assailed comments about the stimulus and about bubbles in general from a few years ago. As a journalist, I think a lot about which experts to trust, and why, and I find it weird and disconcerting that a Nobelist could commit "one of the most basic fallacies in economics." Apparently, however, it can happen. 

Video of the week: WXPN has been running their “Top 885 Songs of the New Millennium” countdown this week, and it's been great. As of noon Friday, they were up to Fleet Foxes, “White Winter Hymnal”: 

The plural of anecdote is ideology

If you ever want to get a big, appreciative laugh at a chamber of commerce meeting, you can't go wrong by quoting Ronald Reagan’s famous quip: “The nine most terrifying words in the English language are, ‘I’m from the government, and I’m here to help.’”

I’m as keen a fan as anyone of clean air and child-labor laws and so on, but sometimes you can’t help but agree with the Gipper. Here are two anecdotes that have had Debbie and me shaking our heads in bewilderment:*

● One of Debbie’s uncles makes long-haul trucking runs for a company that sells leases MRI and CT imaging systems to health care facilities. Under U.S. Department of Transportation Hours of Service regulations, he is required to take a half-hour break within the first eight hours of his shift. If he doesn’t, he and his company face heavy fines. It's a hard-and-fast rule, with no exceptions.

Recently, he completed a delivery and was on his way home, when the tracking system in his cab started flashing. He was at the 7 hour, 30 minute time limit, and he was still technically on his shift. So, even though he had just five minutes to go, he had to pull into a shopping center parking lot and cool his heels for half an hour before he could drive the last couple of miles and end his day.

● Debbie’s landlord has just installed a deck behind the house she rents, with a beautiful view of the woods surrounding the property. Right now, she can sit in an Adirondack chair back there and enjoy an unobstructed vista. Building codes, however, stipulate the deck has to have a railing – one at least 36 inches high, with rails no more than 4 inches apart. Adirondack chairs are low; when you sit in one, your eyeline is maybe three feet above floor level. So any view Debbie has from her chairs will be obscured as soon as the rails are put in. Never mind that the deck is only two to three feet above a pillow-soft lawn. Rules are rules, so a railing there must be.

Oh, and let’s not forget how enthusiastically colleges and universities embrace the regulatory mindset:

● The York College of Pennsylvania resident assistants conducted dorm room inspections this week and found Debbie's daughter, Monica, to be in violation. Contraband was confiscated, hearings and fines were threatened. The offending items? Two five-pound hand weights. According to the student handbook (which the website says “is comprised (sic) and updated each year”):

Any threat to the health and safety of residents or damage to property will not be tolerated. The presence, possession, and/or usage of the following items is prohibited. … D) waterbeds, pools, weightlifting equipment.

Fortunately, the RA supervisor saw reason, and Monica got her weights back. Score one for common sense. Which, coincidentally, just offsets the point the RA scored for maniacal literal-mindedness by confiscating the weights in the first place.

Advocates of government activism sometimes write as if there were no justice whatsoever to Reagan’s gibe, as if government regulators (and college administrations) were invariably fair-minded and sensible, and would never make anyone’s life harder unless they deserved it. If only it were so!

Addendum: James Brown makes good points playing devil's advocate in his comment on this post. Yes, one backward fall of a child or elderly person off an open deck, even a two-foot fall, could easily lead to a lifetime of guilt and regret. Better safe than sorry, to be sure. Still, there might be different ways to be safe – rails 6 inches apart instead of 4 inches? Crossbars? Temporary barriers? But the mandate isn't "be safe," it's "be safe in this particular fashion." There's a good reason for that – if regulations aren't specific, bad actors will find loopholes – but still, specificity creates burdens for people acting in good faith. They have to follow the letter of a law rather than the spirit. Even if there's no better alternative (apart from all of us turning into saints overnight) it's still a shame. 

__________ 

*I had forgotten this until I looked it up just now, but deck railings and hours-of-service regs both figured prominently among business owners' gripes in a story of mine from last year, “Regulations we love to hate.” They seem to be hardy perennials. 

The emperor's new art

The graffiti artist Banksy had some fun over the weekend, getting a stand-in to sell his art in a streetside kiosk:

When collectors buy Bansky art from dealers, they can pay several hundred thousand dollars. But when a nondescript guy hawks the same stuff for $60, passersby knock the price down to $30 before taking it off his hands.

“Sooo … does this mean we’re in a Banksy bubble?” asks blogger Jodi Beggs: 

It’s a bit shocking how context, expectations and perceived social preferences affect how much value we place on things.

Alex Tabarrock offers this analysis:

Maximizing revenue for non-reproducible art is a matching process[;] the artist must find the handful of buyers in the world willing to pay the most (see An Economic Theory of Avant-Garde and Popular Art) so perhaps one can explain this as a failure of marketing. 

An alternative explanation is that modern art is a bubble[;] people buy only because they expect to sell to others–take away this expectation and the art doesn’t sell.

Today, a set of paints, brushes and some canvas can be had for a few dollars, and raw artistic talent - the ability to draw, paint or sculpt with facility - is more or less a commodity as well. (Nor is artistic talent needed any longer for a career as an artist, as a visit to any post-modern exhibit will readily show.) In such a world, is there anything to artistic “value” apart from social one-upmanship, marketing, and maybe some luck? If not, is Banksy’s schtick a refreshing demystification, or an exceptionally canny way of playing the game by seeming not to?

Is a person who pays $300,000 for a Banksy a connoisseur or a fool? What about a Van Gogh?  A Jackson Pollock? A Picasso? A competent copy of a Picasso? A Warhol?

And here's my conjecture about why this is interesting: I think the world as a whole is coming to resemble the art market more and more. 

The economist John Maynard Keynes once likened the stock market to a beauty contest in which judges tried to pick the girls they thought the other judges would like - a funhouse world of opinions about opinions. Yet most of us prefer to think we’re participating in a real economy, exchanging real goods and services that have intrinsic value. Art may be in the eye of the beholder, but bread is food, a coat is clothing and a house is shelter no matter what other people think. 

But we live in an economy where a $3.40 box of cereal contains $1.02 of marketing but only 14 cents of actual food. Fashion drives clothing styles and prices every which way. The price of your house can rise or fall by tens of thousands of dollars depending on whether quants working for Goldman Sachs think thousands of people you’ve never met will be able to pay their mortgages. 

We live in a world in which the opinions of people we've never met about things we don't understand have a profound and direct effect on our lives. It's weird and disorienting, like the same picture selling for $30 and $300,000 for no real reason. 

P.S.: If you haven't seen Banksy's documentary Exit Through the Gift Shop, you really should. It's brilliant.

. 

Ways to look at the debt

People seemed to like my previous post about budgetary pie charts, so I thought I would follow up with some basic charts on U.S. debt. (A deficit is a shortfall in a single budget year; the debt is the total accumulated shortfall over time.) 

First, here is a graph of the U.S. debt in nominal dollars.(Source here.) Pretty scary, isn’t it?

Scary indeed ... but also virtually meaningless. In fact, it’s hard to overstate what a wrongheaded way of looking at the debt this is. 

For one thing, a dollar in 1940 is not the same as a dollar in 2010 – there are 60 years of inflation separating them. According to the Bureau of Economic Analysis, $1 in 2010 had the purchasing power of 6.4 cents in 1940. So doing this in nominal dollars makes no sense. 

Also, we’ve had a lot of GDP growth since 1940. That’s important. If your income is $100, a $50 debt is a burden; if your income is $10,000, it’s trivial. So even if you track debt in inflation-adjusted dollars, you’re missing the “compared to what?” part.

Here’s a much better way of looking at debt since 1940, courtesy of the Congressional Budget Office.

Here, we’re measuring accumulated debt as a percentage of GDP. Notice the long gentle decline from 1946 to about 1970, the run-up in the 1980s (Reagan's tax cuts), the decline in the mid-1990s (Clinton's tax hikes, plus the dot-com boom) and the sharp recent increase (the Great Recession and the stimulus). Our debt burden hasn't constantly increased, it has ebbed and flowed. 

And though it has flowed quite a lot since 2008, it's still well short of the heights it attained the mid-1940s, when it exceeded 100 percent of GDP, thanks to that mother of all stimulus programs, World War II. For four years, we engaged a large fraction of our population in the most economically pointless of all activities – a total war* – and we ran up a huge bill doing so. 

I have no idea if deficit scolds were shrieking about a bankrupt government in the 1940s. If they were, they were wrong. Our massive war debt did not cause an economic collapse or a crisis in investor confidence. Instead, as everyone knows, we shifted successfully to a peacetime footing, and from 1945 to 1975 we enjoyed the greatest period of sustained economic growth in our history. We built the suburbs and the middle class, held off the Russians, explored space – all while steadily reducing our debt burden.

That history should give us some perspective on today's debt and deficit scare-mongering. Our recent debt explosion is temporary, not structural. We spent the money, not on Social Security or Medicare increases, but in an effort to offset the effects of the worst economic collapse since the Great Depression.** Because it's temporary, it's analogous to our WWII debt; if we paid that down gradually, we can pay down this. 

Now, we do face structural challenges in the medium term: The Baby Boomers will be retiring over the next few decades, and their entitlements will strain Social Security a little and Medicare a lot. We'll need to "bend the health care cost curve" (we pay outrageously more for health care than other countries) and make adjustments to ensure revenues stay in line with expenses. 

To give some perspective on that, here's a third and final chart: 

The Tea Party crowd insists the U.S. is Taxed Enough Already; as a result of their influence, the GOP refuses to consider any additional tax revenue as part of a plan to stabilize entitlement programs. Yet, as you can see above, the U.S. is fairly lightly taxed by developed-country standards.† 

But isn't that good for our economy? It depends. While it appears to be true that, all else being equal, higher taxes are associated with lower growth, in the real world many other factors come into play. As a result, the correlation between tax rates and strong or weak economic growth is far from straightforward. (Interestingly, higher top marginal tax rates are associated with more growth, not less.) Likewise, though there may be a modest negative relationship between government size and growth, "the size of government does not seem to matter much [for rich countries]." The quality of governance matters much more.  

I'm not insisting that we should raise taxes to help the Baby Boomers through retirement. That's an ethical and political question as well as an economic one. Nevertheless, Chart No. 3 is pretty good evidence against the notion that doing so would bring our economy to a screeching halt. 

Addendum: Here's much more on whether the GOP fixation on tax rates makes economic sense. 

________

*Say what you will about the stimulus, it didn't involve sending thousands of able-bodied men off to die in Europe and the Pacific, or building thousands of expensive tanks, ships and planes only to have them blown up by the enemy. 

**For what it's worth, every one of the half-dozen economists whose presentations I covered during that period concluded the stimulus was effective. So did the majority of the studies analyzed here.

†The 24.1 percent includes federal, state and local taxes. Considered alone, federal tax receipts account for about 18 percent of GDP. 

Serve plenty of pie

Economist Dean Baker has an interesting proposal. He observes that dollar figures related to government budgets are invariably mind-bogglingly big, and suggests that journalists should become much more conscientious about always putting them in context:  

[According to a 2011 poll,] a typical person thought funding for the Corporation for Public Broadcasting (CPB) took up 5.0 percent of the budget. The correct number is 0.012 percent.  … Telling readers that spending on CPB takes up 0.012 percent of the budget immediately tells them how important this spending is to the government. Telling readers that we're spending $400 million on CPB tells the overwhelming majority of readers almost nothing.

I’ve generally tried to abide by Baker’s dictum in my reporting work. One of my all-time favorite graphics is the “By the numbers” pie chart at the right, which accompanied a piece I wrote in 2012 on Pennsylvania’s exemption of farms from the state inheritance tax. 

The article quotes a Revenue Department spokeswoman's estimate that the exemption would cost the state about $5.5 million a year. I don’t know how big or small $5.5 million sounds to you in the context of a state budget, but the graphic makes it clear how very, very small it is: just 0.7 percent of 2.9 percent of total revenues, or roughly two hundredths of a percent.

As for the federal budget, a chart like the one below (Source: Wikipedia) is a good starting point for understanding the stakes. It simply shows the major categories of federal spending (it happens to be from 2010, but the current spending breakdown is broadly similar).

The takeaway should be, as Paul Krugman has said, “The U.S. government is basically an insurance company with an army.” As you can see, defense, Social Security, Medicare, Medicaid and unemployment/welfare programs were the top 5 spending categories in 2010, accounting for three quarters of the budget. Everything else the government does – food safety, air safety, road and dam building, the federal court system, you name it – is crammed into that remaining 25 percent. 

State spending, similarly, is dominated by a few major categories. Pennsylvania spends 73 percent of its budget on K-12 education and welfare and 7 percent on corrections, leaving just 20 percent for everything else. (Source: Pennsylvania Budget and Policy Center)

So there’s a very good reason deficit hawks always come back to entitlement programs in D.C., and why education spending is so contentious at the state level. It's amazing, but pretty much everything else – including, for the record, legislative salaries and benefits – is a rounding error. 

Friday grab-bag

● Brad DeLong wrote the best sentence I read on the Internet this week:

“Last April, by a strange chance, the internet led me to a passage from the lost Biographies of third-century B.C.E. philosopher Hermippos of Smyrna.”

That must have been a strange chance indeed! I also really like his catalog (in the same post) of the principal topics of “our collective public conversation":

1. The personal doings of the beautiful, the powerful, and the rich—and how to become more like them.
2. The weather.
3. Local threats and dangers, especially to children.
4. Amusements—usually gossip about the past or about our imaginary friends, frenemies, etc. (it is amazing how many people I know who have strong opinions about Daenerys Stormborn of House Targaryen--many more than have any opinions at all about her creator George R.R. Martin).
5. How to best procure necessities and conveniences.
6. Large scale dangers (and, rarely, opportunities): plagues, wars, the fall and rise of dynasties. 
7. “The economy”: unemployment, spending, inflation, construction, stock market values, and bond market interest rates.

As DeLong points out, the first six have been principal topics of human discourse since time immemorial; the seventh, on the other hand, is comparatively new.

● According to ThinkProgress, “[I]n an increasing number of markets around the country, solar is at or very close to grid parity.” Which is good, because we really, really need to get ourselves off carbon energy ASAP.

● Not all of these are funny, but a decent proportion are. One I liked: “Is it solipsistic in here, or is it just me?”

Video clip of the week: I mentioned Keith Moon earlier this week, so I thought I would put up my favorite clip of the Who, the “See Me, Feel Me” sequence from Woodstock. Hardly a non-obvious choice, but to me it’s just a transcendent performance, one of the greatest moments in rock. (YouTube "top commenter" on this clip, someone named Kevin Zachary, apparently agrees with me.)

Elites great and small

Here are two articles that I think illuminate each other when read in conjunction:

Tea Party radicalism is misunderstood: Meet the ‘Newest Right’

The Washington Post sale and the end of local power

The first article argues that the Tea Party’s social base “consists of what, in other countries, are called the ‘local notables’ … the lords of the local car dealership, country club and chamber of commerce”:

These are not the super-rich of Silicon Valley or Wall Street (although they have Wall Street allies). The Koch dynasty rooted in Texas notwithstanding, those who make up the backbone of the Newest Right are more likely to be millionaires than billionaires, more likely to run low-wage construction or auto supply businesses than multinational corporations. They are second-tier people on a national level but first-tier people in their states and counties and cities.

The second, on the other hand, as its title implies, argues that local notables no longer exist:

Today’s ruling class exercises its power from a much greater geographic distance than its predecessors ever did. Political and economic power were once concentrated at the local level. Every city and town had, for better or worse, its own distinctive elite. Now power is concentrated at the national level. … The hometown economic elite—rich local families or individuals whom people used to praise or revile, read about in the society pages, and gossip about incessantly—disappeared from most American cities decades ago.

Hang on, you might say – aren't these two articles contradictory? Surely both can’t be correct. Actually, they can be; just insert the word “big” between “most” and “American” in that last sentence. That is to say, local notables aren’t a big deal in big cities, which have largely been absorbed into an international corporatist system, but they’re still the folks who matter in places like Lancaster and Williamsport, the two places I’ve lived over the past decade. 

This is a key difference between Red America and Blue America and a big reason Red and Blue politics are so different. Blue America’s corporate elite feel fairly secure in their position (as they should; pretty much everything has flowed their way over the past decade or so). Red America’s small business owners (the sort of folks depicted in The Millionaire Next Door) do not, and as the "Newest  Right" article points out, they’re reacting accordingly. 

Scalia and Paglia: Intellectual affinities

Scalia

You should definitely take the time to read Jennifer Senior’s interview with Antonin Scalia and Dalia Lithwick’s reaction to it. Regarding the former, to paraphrase Art Linkletter, Supreme Court justices say the darnedest things. A sampling (Senior’s words are in bold):

• "[I]f a state enacted a law permitting flogging, it is immensely stupid, but it is not unconstitutional."
• "I’m a damn good poker player." … Do you have a tell? "What?" A tell. "What’s a tell?" What’s a tell? Are you joking? "No."
• "I even believe in the Devil." You do? "Of course! Yeah, he’s a real person. Hey, c’mon, that’s standard Catholic doctrine! Every Catholic believes that. … My God! Are you so out of touch with most of America, most of which believes in the Devil? I mean, Jesus Christ believed in the Devil! It’s in the Gospels! You travel in circles that are so, so removed from mainstream America that you are appalled that anybody would believe in the Devil!"

Lithwick highlights a part of the interview in which Scalia says he suspects he has gay friends, but that none have come out. “Stop and consider,” she writes, “for a moment, how difficult it would be in a major American city in 2013 to construct a social world in which you might not know anybody who’s openly gay.” (I wonder, by the way, if this aspect of Scalia’s world has changed as a result of his comments.) 

Lithwick quotes Senior as saying of the interview:

“It's embarrassing, but the overlap between our worlds is almost nonexistent. It explains why the left and the right both responded so enthusiastically to this piece. Each side sees its own view, affirmed. One sees a monster and the other sees a hero. It's extraordinary, actually. The O'Reilly constituents think he's speaking sense; the Jon Stewart vote thinks virtually everything the guy says is nuts.”

Paglia

I commented on Facebook yesterday that Scalia’s interview style reminded me of Camille Paglia. I was not entirely joking. There’s the commonality of style: Both of them dogmatically assert preposterous notions with great brio – Paglia, that there is a worthwhile distinction to be made between Madonna’s Great Art and Miley Cyrus’ debased juvenility; Scalia, that voting rights are a “racial entitlement.” Both clearly enjoy twitting conventional wisdom, both relish their iconoclasm.

I think there is also a commonality of substance. Both are fundamentally anti-Enlightenment thinkers, whose views strike at key contemporary assumptions about civil society. Scalia believes Catholic dogma is literally true, and that anyone who doesn’t realize this is misguided and a danger to social order. Paglia believes the Enlightenment-inspired projects of present times (e.g., liberalism and feminism) stifle thinking and prevent people from seeing clearly the roiling storms of sex and violence that percolate through Western art and, in her view, largely define what we are. Both, in short, believe the Enlightenment dramatically misjudges and shortchanges the passions.

After that, to be sure, they diverge; Scalia believes passions must be channeled by religion, while Paglia believes they'll find expression in art and culture, whether you want them to or not. 

I happen to think they push their premises far past the point of plausibility. (Camille, do you really believe the Marquis de Sade understood human nature more deeply than Hume and Locke? You want "argle bargle," Antonin, try parsing the doctrine of the Trinity.) But those are the premises they have, and they're the reason they say what they do. 

My generation

One of life’s pleasant illusions is the notion that certain cultural references will never go stale. Sure, anyone over 30 has seen his or her favorite music recede in pop-culture’s rear view mirror. Sure, name-checking Camper van Beethoven or remembering that professional buffoon Flavor Flav once mattered marks you as someone of a certain age. But that's not true of the undisputed classics, right?

So, I was in Pittsburgh last week, and to save money, I used Airbnb to book two nights in the spare room of a Pitt grad student, Nathan, and his wife, Karli. We were making some small talk the first night, and I asked how their experiences participating in the “room-sharing economy” had turned out so far.

“It’s been pretty good,” Nathan said. “One thing is, everyone who’s stayed with us has been great. We haven’t had any problem guests so far.”

“Hmmm. Have I mentioned that Keith Moon is my uncle?” I said.

Keith Moon (1946-1978)

Silence. Blank looks. Urk. So I explained somewhat awkwardly that Keith Moon was the drummer for the Who back in the 1960s and 1970s, and was legendary for wrecking hotel rooms. So naturally it would be funny if he had a nephew dedicated to the family hobby, ha ha …

Moon died in 1978, a good decade before my hosts were born. 

“I’ve heard of the Who,” Karli said doubtfully. Nathan brought up Alice Cooper, rather in the manner one affects enthusiasm for Doris Day to humor an aging aunt. I mentioned, to be on the safe side, that Keith Moon is not in fact my uncle (although one of my uncles did know Alice Cooper, as it happens). We moved on to other topics, and the moment passed. 

The next day I met up with my father. His pop-music tastes have never moved past the era of the Andrews Sisters and Bing Crosby, though thanks to the "Standing in the Shadows of ..." documentary of a couple years back, he now knows about Motown. He and I have engaged in a certain amount of generation-gap sparring over the years, so I relished telling him that I was now as much an old fogey vis-à-vis the under-25 crowd as I’d considered him to be back in the day. 

I’m not sure he believed it – to my father, anything from the Beatles onward qualifies as young people’s music – but it certainly amused him to hear it. 

Friday grab-bag

● Among my readings on the government shutdown this week were these pieces by Jonathan Chait and Paul Krugman, who are both appalled by GOP brinkmanship; this interview with Grover Norquist, who thinks his long game is playing out beautifully; and lastly, Marc Thiessen, who thinks risking U.S. default for partisan ends is every bit as cool and normal as torture.

Oh, and Martin Wolf.

● Researchers found significantly elevated radiation levels in water downstream from a Marcellus Shale wastewater treatment plant.

● Heard this interview with songwriter Billy Bragg while I was in Pittsburgh this week. A few minutes in, the interviewer asks Bragg for his opinion on the Obamacare defunding fight, and Bragg gives a cogent and eloquent answer, not only getting the essentials right (America has the most expensive, least effective healthcare system in the developed world) but also making a larger ethical point about societal compassion.

Video of the week: Billy Bragg doesn’t get to sing in this, he just strums a guitar, but Natalie Merchant and Michael Stipe both have better voices than he does anyway. Quite a lovely take on a John Prine song:

By popular demand

And "by popular demand" I mean, "I thought it would be fun to finally do this;" namely, record my paean to the wonders of love and creative accounting:



Enjoy! (If that's the word I want.)

Bad Analogy Theater: Global warming edition

One of the most reliable tropes for the global warming denialist crowd is the notion that belief in climate change is a kind of religion. Michael Barone recently provided a particularly piquant example of the genre:

Events have failed to fulfill the prophecy. Preachers have suddenly been struck dumb by uncertainty. Believers are understandably nervous and some, under their breath, are abandoning the dogma. 

These sentences could have been written at the end of the day on October 22, 1844, about the Millerites, a religious sect started in upstate New York. Preachers had told their followers that Jesus would return to earth that day. He failed to show. 

But the subject here is not Millerism, but another kind of religious faith: the faith of the global-warming alarmists.

Temperature data is noisy. Pauses or dips
lasting decades can occur in the context
of an overall upward trend. 

Barone goes on to quote a Wall Street Journal column by science writer Matt Ridley, in which Ridley makes much of a recent “pause” in surface temperature increases, as detailed in the latest International Panel on Climate Change report. Though the pause is real, Ridley’s inferences are just plain wrong. But his word is gospel for Barone, who argues glibly that global warming activists’ concerns are exaggerated and that their beliefs represent a form of cult thinking:

The religious analogy is appropriate because belief in global warming has taken on the trappings of traditional religion. Alarmists like to say the science is settled — which is nonsense, since science is a series of theories that can be tested by observations.

When Einstein presented his theory of relativity, he showed how it could be tested during astronomical events in the next decade. The theory passed. Saying the science is settled is like demanding what religions demand — that you have faith.

Religion has ritual. Global-warming alarmism has recycling and Earth Day celebrations. Some religions persecute heretics. Some global-warming alarmists identify “denialists” and liken them to Holocaust deniers. Religions build grand places of worship. Global-warming alarmists promote the construction of windmills and solar farms that uneconomically produce intermittent electricity. Global-warming alarmism even has indulgences like the ones Martin Luther protested. You can buy carbon offsets to gain forgiveness for travel on carbon-emitting private jet aircraft.

Let’s take this point by point.

“The science is settled”: You know what? A lot of the science is settled. The greenhouse effect has been understood for more than 100 years. Climate modeling is good and its predictions are proving accurate. Measurements are getting better. There’s a reason the IPCC’s confidence in anthropogenic warming has risen to 95 percent.  

Moreover, the IPCC is handling the surface temperature "pause" in exactly the scientific manner for which Barone lauds Einstein. Climate scientists aren’t running away from the data; rather, they are revising their theories in light of it. Keep in mind, surface temperatures are just one data set of many; there’s also atmospheric warming, ocean warming and so on. It looks as though a lot of the “missing” heat may be getting absorbed by the Earth’s oceans; read this Economist blog post for the details.

It’s not the scientists who are unscientifically fitting cherry-picked data to their preconceptions. That would be Barone and his ilk.

Comparing warming denialists to Holocaust deniers: Michael Shermer’s book Why People Believe Weird Things explores the intellectual bad habits required to take creationism or Holocaust revisionism seriously. They’re pretty much the same ones required to tune out climate scientists. And given that far more than 6 million lives (the standard Holocaust death tally) are at risk from future warming-induced floods, droughts and hurricanes, I’d say the analogy isn’t the most far-fetched ever proffered. Want a really insulting and inapt analogy? Compare climate scientists to Millerites.

Building solar farms, carbon offsets, and so on: According to Barone’s way of thinking, a farmer who builds a dike to guard against floods is just the same as one who knocks on wood, or builds a small shrine, or sacrifices a goat. Um, no, practical responses to real threats are rational. The responses may be inadequate – I agree solar farms aren’t ready for prime time, and solar offsets seem more feel-good than anything else – but surely that implies we should redouble our efforts, not call them off.

The strangest thing about Barone’s column is that he concedes game, set and match to the climate scientists halfway through:

Ridley admits that the change is small. And he does not deny that increased carbon emissions could increase global temperatures by some significant amount. They would certainly do so if carbon emissions were the only thing affecting climate.

Talk about your straw men! No one believes carbon emissions are the only thing affecting climate. No one. And just the lowball amount of warming that Ridley "does not deny" might occur would have massively damaging effects. 

Which means Barone’s column basically amounts to, “Nyah, nyah, nyah, climate scientists are just like God-addled cultists,* and we shouldn’t listen to them, even though I don’t have a good criticism of them, and I admit they’re basically right.” 

Sadly, for a lot of people that will count as a watertight display of logic.

__________

*Which reminds me, aren’t conservatives supposed to approve of religious enthusiasm? Aren’t they always bemoaning secularism, and exhorting us to heed religion when it comes to marriage and abortion and social issues? Yet Barone seems to think the Millerites were quite … misguided. Curious, that.