voluntaryXchange

In Memorium

One hundred years since “the war to end all wars” ended.

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My paternal grandfather served in combat in France, and got a purple heart.

He ran away from a farm in Iowa when he was 20 and enlisted in the army.

They sent him to Texas, and then Mexico, to chase Pancho Villa.

When the U.S. entered World War I, he was 22, with experience, and was promoted and became an NCO.

He had two buddies on either side of him sometime in 1918: Gilbert and Russell. Last names no longer remembered. When the gas hit (family lore says it was phosgene, since he smelled hay), my grandfather got his mask on. Russell and Gilbert did not.

My grandfather has some breathing difficulty for the rest of his life. He named his second son (my uncle) Russell Gilbert.

They all passed away before I was born.

As late as 2009 there was an album of photos showing some of this. Believe my mother threw it away; my grandfather was not a good man.

Why Is Macro So Hard: Tribalism and Identity

Macroeconomics is hard because we define some things tribally first, then do the economics second … and wonder why it doesn’t make sense.

I was discussing this just this morning in response to a student’s question about whether or not (international) trade agreements are beneficial or not.

That’s a really hard thing to assess because most people presuppose that trade can’t take place without governments. But that has it backwards. Trade is between pairs of people and firms. Then the government decides that some of those trades are different from others.

Don’t believe me? Think about these questions.

• If an American trades with an American, is it (international) trade?
• If an American trades with a Mexican, is it (international) trade?
• If an American trades with an American who happens to be in Mexico, is it (international) trade?
• If an American trades with an American and they both happens to be in Mexico, is it (international) trade?
• If an American trades with a Mexican who happens to be in America, is it (international) trade?
• If an American trades with a Mexican who happens to be in America illegally, is it (international) trade?

If you can answer all those questions correctly, and do it rapid fire, you may have a chance of understanding the arbitrariness of international trade policy. But, if like most people, you can’t … you’ll probably fall for a lot of tribalistic mumbo-jumbo about trade.

The mere fact that I had to add the word “illegally” because that distinction makes a difference should give you pause. It gets worse. Consider these:

• If an American trades with a Mexican who happens to be in Mexico, is it (international) trade?
• If an American trades with a Mexican who happens to be in America legally, is it (international) trade?
• If an American trades with a Mexican who happens to be in America legally but can’t find their visa, is it (international) trade?
• If an American trades with a Mexican who happens to be in Mexico (which is obviously legal, but whether or not they could find their visa would be unimportant), is it (international) trade?

All of these distinctions emphasize the tribalism of international trade policy.

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On PRI’s “The World” this afternoon, I heard two clergyman discussing justice in Northern Ireland.

"It's Jonathan Sachs who says peace causes a crisis of identity," Farren said, quoting the prominent British rabbi.

"When we're fighting, we know who we're not. We might [not] know who we are, but we certainly know who we're not. And we're not the other crowd."

"We create differences to shore up our insecurity," he added. "The tribal way we're living in our world, it's everywhere.

I love that.

A lot of the problems in understanding economics is that the economics is actually way down our list. We don’t even know who we are, so we focus on what we’re not. And then later on, after organizing our world through the circular hole of that world view, we try and pound a square peg of economics into the hole.

(Somewhat) Lost to History

Given the inglorious end to apartheid, it isn’t surprising that parts of it are forgotten or surpressed.

Forty or so years back, the creation of predominantly black “homelands” was in the news.†

From the CIA’s achives, here’s a map of that plan.

Some of you may remember when Sun City was a destination resort, and there were controversies over entertainers that played there. The issue was that Sun City was in Bophutatswana (just about in the center of the map).

I get why apartheid was worse than comparable systems like Jim Crow, but I can’t say I was ever sure why these homelands were worse than, say, Indian reservations in the U.S.

FWIW: And what dimbulb thought the portmanteau “Bantustan” was a good name for these things?

† I’m not that comfortable calling them black. But native won’t work either, since there have been non-black emigrants living in South Africa for a few hundred years now.

Technorati Tags: south,africa,apartheid,homelands,bantustans

Just Wondering … Berlin Wall Edition

Has anyone else noticed that the wall has now been down for as long at it was up: 1961 to 1989 to 2017?

(The wall didn’t go up or come down in a day, so depending on how you count the time, there are a number of breakeven days over the next several months). I was only musing about the calendar years when I hit upon this bit of trivia.

Technorati Tags: berlin,wall

American Exceptionalism

I had not heard this story; perhaps it’s apocryphal:

The troops in the first Iraq war wore T-shirts saying “who you gonna call? 001.” It’s still the only number.

From John Cochrane’s contribution to a gathering on American exceptionalism.

FYI: for those in flyover states, 001 is the prefix you dial to call the U.S. when you’re in a foreign country.

Technorati Tags: cochrane,quote,american,exceptionalism,who,you,going,to,call

Bar Brawl History of World War I

From Quora:

Germany, Austria and Italy are standing together in the middle of a pub when Serbia bumps into Austria and spills Austria's pint. Austria demands Serbia buy it a complete new suit because there are splashes on its trouser leg. Germany expresses its support for Austria's point of view. Britain recommends that everyone calm down a bit.

Serbia points out that it can't afford a whole suit, but offers to pay for the cleaning of Austria's trousers. Russia and Serbia look at Austria. Austria asks Serbia who it's looking at. Russia suggests that Austria should leave its little brother alone. Austria inquires as to whose army will assist Russia in compelling it to do so. Germany appeals to Britain that France has been looking at it, and that this is sufficiently out of order that Britain should not intervene. Britain replies that France can look at who it wants to, that Britain is looking at Germany too, and what is Germany going to do about it?

Germany tells Russia to stop looking at Austria, or Germany will render Russia incapable of such action. Britain and France ask Germany whether it's looking at Belgium. Turkey and Germany go off into a corner and whisper.

When they come back, Turkey makes a show of not looking at anyone. Germany rolls up its sleeves, looks at France, and punches Belgium. France and Britain punch Germany. Austria punches Russia. Germany punches Britain and France with one hand and Russia with the other. Russia throws a punch at Germany, but misses and nearly falls over. Japan calls over from the other side of the room that it's on Britain's side, but stays there. Italy surprises everyone by punching Austria.

Australia punches Turkey, and gets punched back. There are no hard feelings because Britain made Australia do it. France gets thrown through a plate glass window, but gets back up and carries on fighting. Russia gets thrown through another one, gets knocked out, suffers brain damage, and wakes up with a complete personality change. Italy throws a punch at Austria and misses, but Austria falls over anyway.

Italy raises both fists in the air and runs round the room chanting. America waits till Germany is about to fall over from sustained punching from Britain and France, then walks over and smashes it with a barstool, then pretends it won the fight all by itself. By now all the chairs are broken and the big mirror over the bar is shattered. Britain, France and America agree that Germany threw the first punch, so the whole thing is Germany's fault. While Germany is still unconscious, they go through its pockets, steal its wallet, and buy drinks for all their friends.

Technorati Tags: world,war,i,bar,brawl

Interesting Lefty Trump Speculation: OMFG, What If Trump Is Like Carter?

Take a gander at "What Time Is It? Here’s What the 2016 Election Tells Us About Obama, Trump, and What Comes Next". It's an interview with political scientist Stephen Skowronek about his theory of why we have Trump.

It’s from The Nation, so it’s too rosy about Democratic/Progressives, and too un-understanding about Republican/Conservatives for my taste. Nonetheless, I found it insightful.

Skowronek argues that there are long cycles in presidential politics.*

He claims all of presidential history follows a distinct pattern: “Reconstructive” presidents like Franklin Roosevelt and Ronald Reagan (to take only the last two cycles) transform American politics in their own image, clearing the field of viable competition and setting the terms of political debate. They are followed by hand-picked successors (Harry S. Truman and George H.W. Bush) who continue their predecessors’ policies and do little more than articulate an updated version of their ideas. They are usually succeeded in turn by presidents whom Skowronek calls “pre-emptive”—Dwight D. Eisenhower, Bill Clinton—who represent the opposite party but adopt the basic framework of the reigning orthodoxy. Next comes another faithful servant of that orthodoxy (John F. Kennedy/Lyndon Johnson; George W. Bush), followed by another preemptive opposition leader (Richard Nixon, Barack Obama) who again fails to overturn it. The final step in the sequence is a “disjunctive” president—usually somebody with little allegiance to the orthodoxy who is unable to hold it together in the face of the escalating crises it created and to which it has no response. The last disjunctive president, in Skowronek’s schema, was Jimmy Carter.

Like I said, it’s The Nation. So the implicit vision here is that Trump will screw things up so badly (like Carter), that the electorate will shoo-in a reconstructive progressive president who will define American politics until after I’m dead and gone:

The obvious answer would be somebody like Bernie Sanders or Elizabeth Warren.

In his defense, he hedges:

But I’m not so sure. If the opportunity is not simply to oppose conservatism but to build something different and new, then something much broader than the current left alternative—something that mixes things up—might be more attractive.

I’m all for Trump going down in flames, but I’m not sure I like that alternative.

* As soon as you see long cycles in a discussion, you should be very suspicious. Think about two points. How do we know there are cycles? Because we return back to where we started. How do we know there are long cycles? Because we have a huge amount of data. Skowronek’s theory is based on observing 2, maybe 3, long cycles. At the absolute limit, possibly six. Solid scientists are exceptionally skeptical of that sort of argument.

Via Marginal Revolution.

Technorati Tags: trump,carter,reconstructive,disjunctive,president

A Point to Ponder

Brian Wesbury:

The Trump administration is shaping up to look like an immensely qualified group of adjunct professors — the kind of leaders most parents would want their children to learn from.

Wha wha what?

It’s actually a serious point that I hadn’t considered before. Here goes:

As a rule, the Obama administration is staffed by the crème de la crème of academically trained policy and legal scholars. … Law schools and schools of public administration are the majority. A vast … portion of the current administration’s work experience has been in politics and government. In other words, they are professional bureaucrats, trained by academics in the process of government.

The Trump administration is virtually the opposite. Military, medical, and business backgrounds are the norm. These individuals went to school all over the country … the type of people you would see as adjunct professors — the ones who come into a classroom to help bridge the gap between theory and the real world.

I’m still dubious about how this is going to turn out.

Even so, I’d like to see what would happen to my employer if all our administrators were replaced by adjuncts from outside our academic cocoon.

Via Newmark’s Door.

Technorati Tags: wesbury,quote,trump,adjunct,professor

Fidel Castro Is Dead

King Fidel died the other day.

What? You didn’t know he was a king? What do you call someone that ruled since 1959 without reasonable elections until they chose to retire, then abdicates in favor of a younger family member (i.e., King Raúl)? Oh, and there’s a son-in-law in the mix to succeed him; we’ll call him Prince Alberto. Oh, and somehow he’s worth a fortune, just like a king.

People call King Fidel a revolutionary. As if kings could not lead revolutions … hmmm … what was that bit in English history about a minor nobleman William of Orange being the military leader on the winning side of the Glorious Revolution and becoming King William III of England?

I’m going to pull rank here. King Fidel took over a country. The way to measure a country is with GDP. So, if you’re not getting information from a macroeconomist about Cuba and Fidel … you pretty much shouldn’t bother.

The thing is, it appears to be a huge mission of many people in the developed world to present Fidel as something that he was not, and this mostly begins with ignoring the GDP data.

From a macroeconomic perspective, Fidel is one of the worst humanitarian disasters in human history.

Data is not hard to come by on this. For all its faults, there is no competition for assessing economic conditions at the individual level than real GDP per capita. More on that later.

In the U.S., we are somewhat unsure of how we feel about Obama because the economy has struggled to grow real GDP at 2.0 to 2.5% per year. Even Obama’s supporters will typically admit that the economy doesn’t feel that great because we need to take away 1.5% to 2.0% population growth from the U.S. figure. Yet, from 1959 to 1999 Cuba’s real GDP per capita grew at 0.3% per year. Even in rather weak times, the U.S. has pulled away from Cuba.

Going further though, Cuba’s growth has lagged behind most of the world. It’s closest analogs in the Americas of 1959 were Jamaica, Panama, and Ecuador. All three have pulled away from Cuba, in terms of real GDP per capita.

One of the tightest arguments we make in science is to compare matched pairs. Try to find the closest analog, and then compare their differences with the passage of time. This is how we know North Korea is so bad — because it used to be comparable to South Korea. The same goes for the old West and East Germany. For Cuba, the closest analog is Puerto Rico. Both were Spanish colonies for 400 years. Both were occupied and dominated by the U.S. for the next 60 years. And Puerto Rico has quadrupled its real per capita GDP since 1959. The data on all this is solid, accepted, and widely used.

Fair enough. But supporters extoll the availability of free and effective healthcare and education in Cuba.

Let’s be very clear about this. If you don’t start with real GDP per capita, it’s easier to find claims about healthcare and education to be more convincing. But, if you do start with weak real GDP performance, then it should be clear that any claim that healthcare and educaton have gotten better in Cuba must be accompanied by a statement that everything else is even worse than we thought. Have you ever heard a statement like that? I didn’t think so.

Oh, and it’s very easy to find articles detailing how Cuba’s healthcare and education systems in 1959 were … already pretty good by international standards. Go ahead, dig into that on your own. Cuba only looks good on these counts if you forget the “compared to what” aspect.

Don’t believe me? Here’s a personal viewpoint from George Borjas. He’s a professor at Harvard, one of the top labor economists in the world, and a refugee from Cuba.

Technorati Tags: fidel,castro,cuba

Were Trump Voters Just Shy?

Harry Enten* of FiveThirtyEight argues that Trump voters were not shy about admitting their intentions. He gives 4 reasons:

• Social Desirability Bias suggests that Trump’s performance should have been most surprising in blue states. It wasn’t.
• Other Republicans, who were not that controversial, outperformed too.
• Potential voters who were actually shy in October didn’t show a particular tendency to vote for Trump.
• Trump’s team did have polls showing potential voters weren’t shy at all.

* For another project I went back through The Guardian’s live blogging of the election results. Enten’s comments were the most useful in assessing Clinton’s unraveling in real time.

Technorati Tags: trump,shy,voters,2016,enten,fivethirtyeight