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Who Called Economics the "Dismal Science" and Why?

The Disaffected Lib - Mon, 04/18/2016 - 14:43

It's a phrase I won't be using again and, after reading this, I expect you won't either. The "dismal science" phrase was coined by a Scot, Thomas Carlyle, in the mid-19th century. Carlyle was a prominent polymath of the Victoria era - a philospher, historian, satirist, mathematician and an all round bastard of sorts.

The "dismal science" reference traces back to an article Carlyle wrote, "Occasional Discourse on the Negro Question" published in Fraser's Magazine, December, 1849.

It deals with the labour situation in the West Indies where the white planters were complaining that following the emancipation of the slaves they were unable to obtain enough labour (at the prevailing wages and conditions of work) to carry on their business. Carlyle puts the view that 'work' is morally good and that if a "Black man" will not voluntarily work for the wages then prevailing he should be forced to work.
Carlyle was an unrepentant racist to the end. He believed that white and black were bound by their "mutual duties" - i.e. master and servant.
In Carlyle's opinion: "declaring that Negro and White are unrelated, loose from one another, on a footing of perfect equality, and subject to no law but that of supply and demand according to the Dismal Science", "is clearly no solution" to the problem.
Which is why this is probably as opportune a moment as any to retire "dismal science" from our conversation. Enough said.

Maybe a Lot of What We Believe, Just Isn't So.

The Disaffected Lib - Mon, 04/18/2016 - 14:15

Imagine reading a murder mystery that has three heroes, each of them a legendary sleuth, working independently to solve the same series of murders. At the conclusion, each detective comes up with an utterly convincing case only each fingers a different suspect. It's hard to imagine that sort of thing would sell very well because it's deeply unsatisfying for the reader to realize he/she could have been persuaded to believe any of the three accounts.

Which, quite naturally, brings us to a discussion of economics. This brings to mind the line about how, when you find yourself in a room with 12 individuals each of whom has a markedly different idea of reality, you're either in a lunatic asylum or a conference of economists. There's a lot of truth to that.

Economic theory seems to be knowledge in pursuit of fashion. It both comports with circumstance and tries to restate it in its own lexicon. It has certainly played a major role in the rise of modern neoliberalism that has, in a brief few decades, gone from humankind's great hope to a global civilizational scourge, our world's Jekyll and Hyde economic operating system.

I abhor economics. It's dry and boring and demands a degree of intellectual effort that is almost never rewarded in the result. Still, it lies at the root of the modern contagion and, hence, must be explored as one might the oily bilge to find the leak in the hull.

I've become fond of the writings of economist James Galbraith, son of legendary economic seer, John Kenneth Galbraith. James Galbraith's endearing quality is his trait of taking existing, "settled" theory and peeling off one or two extra layers to discover what does, or more often doesn't, lie beneath.

In 2009, Galbraith wrote "The Predator State, How Conservatives Abandoned the Free Market and Why Liberals Should Too." In it he sets about to identify economic myths that both liberals and conservatives have come to accept as gospel. One subset deals with pay inequality. Galbraith explores the problem by focusing on Denmark.

Denmark is a small country, nestled in the north of Europe. Unlike its near neighbours Norway, Great Britain, and Holland, it is not floating on seas of oil or gas. Unlike Belgium, which grew rich on the rape of the Congo, Denmark never had major colonies; St. Croix was a minor enterprise, and Greenland is a dud. Unlike Switzerland, Denmark was occupied in World War II; it did not prosper by laundering German money. Denmark also lacks major industry, and apart from fundamental contributions to twentieth-century theoretical physics and lately a strong position in wind generators, it is not a major technological power.

And yet Denmark today is the third wealthiest country of Europe, evidence of strong, consistent, stable economic growth over the decades. It is also roughlky the most equal country in Europe and perhaps in the world. And it enjoys roughly the lowest unemployment rate in Europe, alongside one of the highest ratios of employment to active population. If Denmark's celebrated egalitarianism has forced it to sacrifice prosperity, the evidence for this is quite hard to find. Instead, in this one small case, we seem to observe the opposite: an egalitarian country that is also quite rich by European standards and exceptionally rich by the standards of the wider world.

Is Denmark a special case, somehow blessed with unusually gifted or efficient or altruistic people? No. It is, rather, the end point of a continuum that covers most of the countries of Europe. The rules of this continuum are straightforward. First, lower employment means higher income. The high-income countries of Northern Europe systematically enjoy lower rates of unemployment, most of the time, than their less wealthy Southern cousins. Second, lower inequality means lower unemployment. The strong welfare states of North Europe have higher employment rates and lower unemployment rates than the relatively unequal countries of the South. These rules apply across all of Europe. Denmark, which is about the most equal and one of the richest of them all,  merely sets the standard from which other countries of Europe may be judged.

...The Danish example merely shows that a low degree of inequality can be reconciled with an efficient, advanced, and wealthy system. But how do we explain this? Is the relationship between equality and efficiency we observe here accidental? Is it a fluke? Or is it actually a feature of the way well-run economies actually function in the real world?

Part of the answer to this puzzle is not complicated. Inefficiency in many countries arises from unemployment; people who are not working do not produce, and the loss of their goods and services makes everyone else poorer than they would otherwise be. Moreover, unemployment is in part an expression of discontent with one's existing station in life: people are unemployed when they are looking for a better job. The unemployment rates that we actually measure reflect, in part, the desire, and the ability, of people who would otherwise be peasants or on the dole to seek better employment at better pay.

...But in a fairly equal society, those relatively low-skill, low-productivity workers are already paid pretty well. They are within economic shouting range of their more productive compatriots. They therefore have much less incentive to leave their job, even to migrate, and join the search for a better one. Furthermore, highly equal societies subsidize many of the amenities of life, from education to health care to housing: they indulge in the efficient provision of public goods. That being so, who cares to leave? In a more equal society, more people stay employed where they are. The resulting society may lack excitement. Pushed too far, it can completely lack dynamism: again the Soviet example comes to mind. But if the right balance is struck, it is capable of producing high levels of output and economic well-being simply because the full use of human resources is efficient. This is the Scandinavian principle, and it is not an accident that Denmark is both egalitarian and rich.

...In the United States, unemployment and pay inequality rise and fall together, month by monthly and year by year. (This relationship holds monthly as far back as January 1947 and annually as far back as 1920).

Studies of the minimum wage echo the law. If the iron trade-off between efficiency and equity held, rising minimum wages would cause unemployment. But as economists David Card and Alan Krueger demonstrated, they do not. California and New Jersey raised minimum wages in the 1980s, and unemployment fell; the same happened when the national minimum wage was raised in the 1990s. Why did unemployment fall? With better pay, quit rates declines, hence job tenure increased and vacancies fell. foir the firm, there were also efficiency gains, since less had to be waited on training.

...Inequality produces unemployment. Unemployment produces inequality. Measures that reduce inequality also reduce unemployment, and measures that reduce unemployment also reduce inequality.  ...Reductions in both inequality and unemployment reduce waste and therefore increase economic efficiency and improve general living standards. 

I'm Just A Poor Boy, Nobody Loves Me

Politics and its Discontents - Mon, 04/18/2016 - 13:48
That famous line from Queen's Bohemian Rhapsody might have been the inspiration, and is certainly the subtext, for James Forcillo and his lawyer's pleas that poor baby James be allowed to serve whatever sentence is passed down to the killer of Sammy Yatim as house arrest.

The officer’s acquittal on a charge of second-degree murder means his use of lethal force was justified and the mandatory minimum penalty he faces is grossly disproportionate to his conduct, his lawyers argue in written submissions filed in Ontario Superior Court.

“The moral culpability of the applicant [Constable Forcillo] is at the lowest end that can be reasonably contemplated for an attempted murder conviction and there was no attendant harm to Mr. Yatim,” writes lead defence lawyer Peter Brauti.In analyzing the verdict and the actions of Constable Forcillo, his lawyers maintain that it is not appropriate to impose a prison sentence. “The logical and legal effect of the jury’s verdict is that they accepted it was reasonable and necessary to kill Mr. Yatim,” states Mr. Brauti. “The second volley did not accelerate death in any way; it had no meaningful impact on Mr. Yatim’s health and it was incapable of causing Mr. Yatim any pain,” he adds.

Constable Forcillo’s lawyers also intend to appeal the actual verdict, but can not do so until after the sentencing.Incidentally, unless he goes to jail, I assume Forcillo will continue drawing his police salary, as he is now.

Since I started with Queen lyrics, I'll end with them too, again from Bohemian Rhapsody:

Essy come, easy go, will you let me go?
Bismillah! No, we will not let you go. (Let him go!)
Bismillah! We will not let you go. (Let him go!)
Bismillah! We will not let you go. (Let me go!)
Will not let you go. (Let me go!)
Never, never let you go
Never let me go, oh.
No, no, no, no, no, no, no.
Oh, mama mia, mama mia (Mama mia, let me go.)

Come to think of it, the entire song seems applicable to Forcillo:

Recommend this Post

Violence against women: the Camrose incident

Dawg's Blawg - Mon, 04/18/2016 - 10:07
Readers may or may not remember my account in 2013 of a dentist in Camrose, Alberta, Dr. Simona Tibu, who was beaten to a pulp by a brave local cop, Sgt. Oscar Rob Behiels, after he stopped her on the... Dr.Dawg

Dirty Little Secrets - the Panama Papers

The Disaffected Lib - Mon, 04/18/2016 - 09:53
From the Fusion news organization, perhaps the best documentary yet on the Panama Papers.

Fusion was one of the 100 news outlets entrusted with the Panama Papers. This documentary has obviously been a work in progress for some time.

Monday Morning Links

accidentaldeliberations - Mon, 04/18/2016 - 07:38
Miscellaneous material to start your week.

- Robert Frank discusses the essential role of luck in determining the opportunities we have - and how the advantages of a strong social fabric are too often ignored by the people who benefit the most from them:
(C)hance plays a far larger role in life outcomes than most people realize. And yet, the luckiest among us appear especially unlikely to appreciate our good fortune. According to the Pew Research Center, people in higher income brackets are much more likely than those with lower incomes to say that individuals get rich primarily because they work hard. Other surveys bear this out: Wealthy people overwhelmingly attribute their own success to hard work rather than to factors like luck or being in the right place at the right time.

That’s troubling, because a growing body of evidence suggests that seeing ourselves as self-made—rather than as talented, hardworking, and lucky—leads us to be less generous and public-spirited. It may even make the lucky less likely to support the conditions (such as high-quality public infrastructure and education) that made their own success possible.
Being born in a favorable environment is an enormous stroke of luck. But maintaining such an environment requires high levels of public investment in everything from infrastructure to education—something Americans have lately been unwilling to support. Many factors have contributed to this reticence, but one in particular stands out: budget deficits resulting from a long-term decline in the United States’ top marginal tax rate.

A recent study by the political scientists Benjamin Page, Larry Bartels, and Jason Seawright found that the top 1 percent of U.S. wealth-holders are “extremely active politically” and are much more likely than the rest of the American public to resist taxation, regulation, and government spending. Given that the wealthiest Americans believe their prosperity is due, above all else, to their own talent and hard work, is this any wonder? Surely it’s a short hop from overlooking luck’s role in success to feeling entitled to keep the lion’s share of your income—and to being reluctant to sustain the public investments that let you succeed in the first place.- Brennan Leffler exposes how employers are all too often able to brazenly flout legal protection for workers due to a lack of enforcement. Sara Mojtehedzadeh and Geoffrey Vendeville report on the multiple disadvantages facing women in the retail sector, while Mary Cornish studies the broader gender gap. And Teuila Fuatai surveys how some workers have been fighting for a fair minimum wage across Canada.

- The Economist examines the plunging cost of solar energy which figures to radically reshape our energy choices based on comparative costs alone, while Rebecca Penty reports that tar sands operators are well past believing it's worth developing new megaprojects. Daniel Oberhaus notes that with a political push, we could end our reliance on fossil fuels within a decade. And Chris D'Angelo writes that the oil industry has gone far out of its way to make sure decisions about our energy options aren't based on facts.

- Finally, Michael Butler weighs in on the Libs' failure to move ahead with a national pharmacare plan. And the McMaster Health Forum looks to the UK's experience to argue for pharmacare in Canada.

Not An Obsession

Politics and its Discontents - Mon, 04/18/2016 - 07:14

Looking at the sidebar that lists the tags on my blog posts, I see I have written well over 100 entries on the police, most of them dealing with their abuse of authority; some of those abuses include the murder of unarmed or barely armed people, others the senseless beating of people. All of them attest to a constabulary, whether Canadian or American, out of control and contemptuous of any efforts to bring them to accountability of justice.

Some might say I am obsessed with the topic, but they would be wrong. What I think I am obsessed with is the desire for fairness and justice and an utter and complete contempt for those who abuse their power and authority.

Here in Ontario, that abuse is rampant, and true accountability is rare. The responsibility for such a sad state of affairs resides largely with the provincial government.

Governments seem loathe to incur the ill-will of those sworn to protect and serve us. With their 'us against them mentality,' the police have proven to be formidable forces to fear when politicians and other prominent people incur their wrath.

Legislators are failing us, and it has to change.

Consider, for example, the secrecy that surrounds SIU investigations of police actions. When their investigations are complete and they exonerate, as they almost always do, police officers who have either beaten, shot or killed a person, the public is not allowed to know the basis for exoneration, the names of the officers involved, or anything else that might provide an inkling of how the investigatory body reached its conclusion. What I didn't know until the other day is that such secrecy is not mandated under the Police Services Act.

As revealed in The Star,
the report prepared by the director of the SIU, the agency that probes deaths, serious injuries and allegations of sexual assault involving police in Ontario, goes straight to the desk of the Attorney General — and nowhere else.

The Police Services Act, the law that governs the SIU, says the watchdog’s director must report the results of investigations to the Attorney General. It doesn’t state the reports cannot be sent elsewhere or made public.So what is stopping a wider release of SIU reports?
The spokesperson for Attorney General Madeleine Meilleur [says] the reports contain information protected under the Freedom of Information and Protection of Privacy Act, “including information relating to affected persons (e.g. persons seriously injured), witnesses and officers under investigation.”According to Brian Beamish, Ontario’s Information and Privacy Commissioner, this is a bit of an evasion:
“While the name of a police officer who has been the subject of an investigation by the Special Investigations Unit (SIU) would likely be personal information, there may be circumstances of significant public interest where the SIU may disclose the name or other information associated with its completed investigations for the purposes of fostering accountability and public confidence in police services, and ensuring transparency in its operations,” Beamish told the Star in a statement.While public consultations will soon be announced by the Wynne government into Ontario's police oversight mechanisms, there really is nothing that exists in current legislation to either encourage or prevent much greater public accountability and scrutiny right now.

The bright light of public scrutiny is something the police themselves seem to fear, and while our political 'leaders' allow themselves to be bullied by our public 'protectors,' horrible situations like the killing of Rodrigo Gonzalez at the hands of police will continue:

Clearly, the dire situation demands strong, unambiguous and immediate remediation.Recommend this Post

In Praise Of The Supreme Court

Northern Reflections - Mon, 04/18/2016 - 05:34

Last week, The Supreme Court issued three more landmark decisions. The first two decisions struck down more of Stephen Harper's tough on crime agenda. Tom Walkom writes:

On Friday, the court unanimously swept aside provisions of the former Conservative government’s Truth in Sentencing Act that limited a judge’s ability to give credit for time served in pretrial detention.In a second decision that same day, the majority struck down another Conservative law that required a minimum sentence of at least one year for previously convicted drug traffickers.In both cases, the top court said, restrictions on judicial discretion were so broad as to be unconstitutional.
Mr. Harper ordered his Ministry of Justice to stop asking whether his legislation could pass constitutional muster. The result has been an array of decisions that should have reminded Harper -- and all Canadians -- that a prime minister is not above the law. Since Mr. Harper has all but disappeared, it's hard to know if the lesson has sunk in.

The far more important court decision came Thursday. That’s when the Supreme Court ruled unanimously that Métis and non-status Indians are Ottawa’s responsibility and must be treated as “Indians” under the constitution.
Among other things, that makes members of the two groups eligible for certain kinds of health care and tax exemptions available now only to the Inuit and residents of First Nations communities.
But the court also confirmed, in an almost casual manner, that Ottawa has a constitutional duty to consult meaningfully with representatives of the Métis and non-status Indians before doing anything that might impinge on their rights.
The justices said they didn’t have to formally restate that obligation in their decision because it was already settled law.But it will act at the very least as a reminder to Ottawa, which has not always been anxious to include Métis and non-status Indians in its talks.
Canada's Metis peoples have lived in limbo since 1867. The Court reminded us that all God's children have a place in the choir -- and that it is a source of wisdom.


How Justin Trudeau Disarmed and Conquered His Enemies

Montreal Simon - Mon, 04/18/2016 - 05:18

It's a strange world. Yesterday I wrote about how the Con media had underestimated Justin Trudeau.

Only to end up badly, or end up looking ridiculous.

Now one of those Harper spear chuckers, Michael Den Tandt, has been forced to admit   that they weren't the only ones to underestimate Trudeau.
Read more »

Brian Pallister is Caught Stretching the Truth. Again.

Montreal Simon - Sun, 04/17/2016 - 17:47

Two days ago I told you how Brian Pallister, the PC leader of Manitoba, had been found to be spending a LOT of time in sunny Costa Rica.

And had lied about where he was during the height of the 2014 flood.

Well now it turns out that he wasn't entirely honest about his holdings in that Central American country.

And sadly for him, he appears to have been caught stretching the truth. Again.
Read more »

#YEG2016 Followup Links

accidentaldeliberations - Sun, 04/17/2016 - 16:53
While there's been plenty of ill-informed commentary since the NDP's convention last weekend, I'll take a moment to highlight a few of the followup points which deserve a read.

- Joshua Keep rightly recognizes the new leadership election as an opportunity for renewal, but no guarantee of improvement. Gerard Di Trolio focuses particularly on the prospects of an unabashedly left-wing leadership campaign. And Selina Chignall offers a look at what the NDP may be looking for in its next leader, while Samantha Power examines some of the competing forces within the party (though we shouldn't overstate the differences, particularly given that there was little apparent problem keeping all sides of any of the issues in the fold just an election cycle earlier).

- Gerald Caplan asks the question of whether the NDP's main problem has to do with its ability to be seen as a viable government. But I'd note in response that at least over the last two elections, the issue has been one of winning first-choice support rather than being in the consideration set of enough voters to contend for power.

- Nicholas Ellan offers a look at some of the tactics which worked for the Leap and Renewal movements at the NDP's convention - while discussing how they should inform the party's own work in the time to come. 

- Finally, Crawford Kilian points out that the most extreme response to the Leap Manifesto resolution amounts to an attempt to deny the glaringly obvious. And lest anybody think the issue is at all new based on the development of the Leap Manifesto itself, see my earlier discussion in this post and column.

Speaking About the Panama Papers...

The Disaffected Lib - Sun, 04/17/2016 - 16:32

Never doubt that most Western governments are in the bag for their most affluent citizens.

George w. Bush didn't even attempt to avoid it when he acknowledged the richest of the rich, calling them, "my base."

Some things, as they say, never change.


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