The Zero Room

This week, I have been mostly researching for an essay, but when feeling naughty I've been reading:

• Why Some Students Are Ditching America for Medical School in Cuba — Sarah Zhang in WIRED: Consider Cuba’s medical system, which punches far above its weight. The country’s GDP per is just one-tenth of the US’s, and it lacks access to drugs and equipment thanks to the US trade embargo. But life expectancy in Cuba is actually just above that of its northern neighbor. How? By focusing on preventive medicine for everyone under a national healthcare system.
• How Gates' Billions Silences Criticism of His Development Agenda — Nick Dearden, Common Dreams: Initiatives that Gates funds push intensive farming methods involving plenty of chemicals and privatisation of seed distribution. Time and again, these ‘solutions’ have proved disastrous for small farmers, allowing big players to effectively control the whole food system. They also ramp up global carbon emissions and fuel global warming. But they are exactly what big business wants. In fact, Gates aid sometimes looks designed to help agribusiness develop new markets – like a project with agro-giant Cargill which helped it develop soya ‘value chains’ in Africa. It’s not a conspiracy, it’s simply how Gates, like so many of his fellow plutocrats, believe the world works. Big business invents useful stuff and drive growth. Let’s help them and everyone will be better off.
• The Mythology of Selfishness — Mary Midgley in The Philosophers Magazine: Our own thoughts and feelings – the constant flow of inner activity by which we respond to the life around us – also affect the world as well as our outward actions. This thought is so frightening that scholars will often go to any lengths to avoid it, which is why that ludicrous doctrine epiphenomenalism still has supporters, and why people spend so much more of their time on sociological statistics, neurological details and speculation about evolutionary function than on studying motive.
• The Death of Capitalism — Ian Welsh: If you were 30 in 1980, you are 66 today. If you were 40, you are 76. If you were in the decision making class, overwhelmingly allocated to those who were 50+ in 1980, you are 86 today. People who were in their prime and during their decision-making days, when we needed to act on climate change, were making a DEATH BET. They bet they would be dead before the worst results of climate change happened. They will win this bet. This was a RATIONAL thing for them to do. I want to repeat that, because too many people think “rational=good.” It does not. It was rational for them to discount a future they would not see. Also, What Is Capitalism?: The responses to my article The Death of Capitalism made something clear: Most people don’t know what Capitalism is. [The argument is a thoughtful one, but I have a simpler definition: Capitalism is a doctrine which frames all human activity in terms of investment and return.]
• The Volcanic Core Fueling the 2016 Election — Robert Reich: I’ve known Hillary Clinton since she was 19 years old, and have nothing but respect for her. In my view, she’s the most qualified candidate for president of the political system we now have. But Bernie Sanders is the most qualified candidate to create the political system we should have, because he’s leading a political movement for change.
• Consumer credit and mortgage finance in the 1920s — Matias Vernengo at Naked Keynesianism: The Great Depression put an end to the roaring 20s. The unsustainable expansion of consumer credit and mortgages seems to have played, as much as in the last crisis, a significant role.
• How Long Will Your Class Remain Yours? Academic Freedom and Control of the Classroom — Jonathan Rees in Hybrid Pedagogy: An LMS not only mediates and records all interactions between teachers and students in both the online classes and face-to-face classes that utilize it, but it also represents a teaching worldview all by itself. As Jim Groom and Brian Lamb explain, “[B]efore we even begin to encounter the software itself, we privilege a mindset that views learning not as a life-affirming adventure but instead as a technological problem, one that requires a ‘system’ to ‘manage’ it. This mindset and its resulting values result in online architectures that prioritize user management, rigidly defined and restricted user roles, automated assessments, and hierarchical, topdown administration.” Trying to control your own virtual classroom in this environment is like bringing a knife to a gunfight. You know you’re going to lose before the fighting starts, so why bother? And from the linkage therein:
• Critical Pedagogy in the Age of Learning Management (#moocmooc) — by Sean Michael Morris, who ordinarily would have lost me at the word "critical": The advent of online learning has introduced a new level of data and measurement (also, fucking absurdity) into education. With the learning management system (LMS) comes the ability to track all kinds of information about student performance, participation, and more. At the LMS company where I worked until recently, educational research often focused on the activity of learners on pages, watching videos, taking and passing quizzes, participating in or starting discussions in the forum, and other minutiae. It’s possible to track time on page, time in the course, and the “bounce rate” for learners in their courses. In effect, the research being done isn’t about learning, it’s about surveillance, about observing the learner in the way we might a rat in a maze.

This week, I have been mostly going to pieces, so only reading this much:

• The Optimism Error — Robert Skidelsky proposes a British Investment Bank to fend off hysteresis: So we now have a situation in which the main tools available to government to bring about a robust recovery are out of action. In addition, sole reliance on monetary policy for stimulus creates a highly unbalanced recovery. The money the government pours into the economy either sits idle or simply pumps up house prices, threatening to re-create the asset bubble that produced the crisis in the first place. We already have the highest rate of post-crash increase in house prices of all OECD countries. This suggests that the next crash may not be far off. [Though I disagree vehemently with the view that "printing money to pay for public spending should only be a remedy of the last resort". Money creation through central-bank-funded fiscal deficits should be the norm for any government that does not want to hand responsibility for money supply to commercial banks, who are responsible for channeling money into the very bubbles Skidelsky is worried about.]
• Australian copyright reform stuck in an infinite loop — Kathy Bowrey in The Conversation: For example, section 113M allows libraries and archives to make “preservation copies” of original material that is of historical or cultural significance to Australia, but they are not allowed to make these copies available to patrons except through a terminal on site. As a researcher I am not allowed to make an electronic copy of the material so I can use it in writing up my research. As is common practice in libraries I would probably be allowed to transcribe a document by hand. However transcribing by hand is, as a matter by law, no different to a digital reproduction. Why does this law require me to spend public research money to physically attend the institution, perhaps also requiring an airfare and accommodation expenses, so I can take out my quill?
• Paul Krugman, Bernie Sanders, and Medicare for All — Dean Baker, CEPR via Econospeak: Ordinarily economists treat it as an absolute article of faith that we want all goods and services to sell at their marginal cost without interference from the government, like a trade tariff or quota. However in the case of prescription drugs, economists seem content to ignore the patent monopolies granted to the industry, which allow it to charge prices that are often ten or even a hundred times the free market price. (The hepatitis C drug Sovaldi has a list price in the United States of $84,000. High quality generic versions are available in India for a few hundred dollars per treatment.) In this case, we are effectively looking at a tariff that is not the 10-20 percent that we might see in trade policy, but rather 1,000 percent or even 10,000 percent.
• SWEET HOLY F---!!!! — exclaims Brad DeLong:
  
• Neoliberalism, public and private goods and the digital revolution: Part one — Nicholas Gruen at Club Troppo: […] if knowledge and digital artefacts are always and everywhere a potential public good, you’d expect that expressing the collective interest in that fact would lead to a role for collective institutions (not necessarily government) representing the public interest as a countervailing force against private interests. As Robert Kuttner argues, an identifying idea of progressives since the turn of the 20th century if not before that capital needs a counterweight – in the state and other collective institutions. An obvious agenda is IP, which is becoming progressively more unbalanced towards the interests of private IP holders (Will Mickey ever go free?). Likewise arrangements for the creation of knowledge about drugs is a big mess, incredibly poorly suited to the interests of lower income countries but also to economic efficiency more broadly.
• The Citadel Is Breached: Congress Taps the Fed for Infrastructure Funding — Ellen Brown: Rep. Peter DeFazio (D-Oregon), ranking member on the House Transportation Committee, retorted [to Ben Bernanke], “For the Federal Reserve to be saying [deficit spending] impinges upon their integrity, etc., etc. — you know, it’s absurd. This is a body that creates money out of nothing. [I]f the Fed can bail out the banks and give them preferred interest rates, they can do something for the greater economy and for average Americans.”
• The Remarkable Bernie Sanders Journey That Will Overcome the Crowning of Clinton — RoseAnn DeMoro of National Nurses United at Common Dreams:
  
  Enthusiasm for the Sanders campaign, the transformative program that he presents, which is really the program NNU and grassroots activists have long championed, is off the charts, and continuing to grow.

This week, (actually posted a day late, but back-dated) I have been mostly reading:

• Older Students Learn for the Sake of Learning — Harriet Edleson at the "Well, d'uh!" desk of the New York Times: For lifelong learners the focus is outward. At Osher, classes are not specifically skill-based, like learning a language or weaving. Instead, students generally delve into subjects they may have been interested in for years but simply didn’t have time to study.
• Report From the Student Privacy Frontlines: 2015 in Review — Annelyse Gelman, Electronic Frontier Foundation: This year the fight to protect student privacy hit a boiling point with our Spying on Students campaign, an effort to help students, parents, teachers, and school administrators learn more about the privacy issues surrounding school-issued devices and cloud services. We're also working to push vendors like Google to put students and their parents back in control of students’ private information.
• Japanification Revisited — Ian Welsh: In choosing the method we chose to do the bailouts, we also made the choice to have a shitty economy. Employment has never recovered, in terms of the percentage of the population, and will not (we’re about to hit a recession), wages are down for much of the population, and all the gains of the last economic cycle have gone to the top three to five percent. Mind you, there was an historic stock bubble. The rich are even richer than they were in 2007. Obama and Bernanke’s policy has done what it was intended to: It has preserved, and then increased, the wealth of the rich.
• The corporate university and its threat to academic freedom — Sean Phelan in openDemocracy: It would be simplistic to suggest that the corporate university represents an ideological vision spontaneously brought into being by a managerial class. As recent changes to the governance of New Zealand university councils – rescinding the guaranteed representation of both students and staff – suggests, the desire for a corporate university is often a state-led political project, pushed by governments who want to reduce public funding to universities, and reconfigure the university as little more than an engine of economic growth.
• Neoliberalism and its forgotten alternative — David Ridley, openDemocracy: Sociologists and social scientists need to be a part of an active process of giving back social inquiry to the public, emancipating this deeply human and social activity first and foremost from the elitism, specialisation and instrumentalism of academia. We may need to reduce the working week even further to enable people to have time for community activities and public research. We certainly need to prevent education from being turned towards a class-based, narrowly vocational process of training people to be profit-making machines.
• Because you can never have too many charts on the economics of credit cards — Harold Pollack in The Reality-Based Community: [P]rofit margins are really high for the small group of borrowers with low FICO scores in the range of about 550. Amazingly, the industry made about $0 in cumulative profits on the top 80% of accounts that have FICO scores exceeding 630. The bottom 10% of accounts account for the majority of total industry profits. It’s also striking that the industry actually seems to lose money on consumers near the median of the distribution with FICO scores around 700, and then makes profit again on the best credit risks.
• Why Minsky Matters: An Introduction to the Work of a Maverick Economist — Victoria Bateman reviews Randy Wray's new book about the work of his mentor: As 2008 so clearly showed, we simply cannot have our cake and eat it. Financial crises are not just events that happened a long time ago in history – or far, far away in distant and much poorer lands. They are hard-wired into the capitalist system. Minsky was one of the valiant few who tried to draw attention to this fact, and one of the few to predict the global financial crisis decades before it actually hit. Unfortunately, his warnings fell on deaf ears. Like many a great artist, his popularity soared only after his death and only once the crisis hit – in what came to be known as a “Minsky moment”.
• #ResistCapitalism — Cameron K. Murray: [S]ome kind of welfare state is essential for maintaining the dynamism of the capitalist part of the economy. Without this cushion against failure, who would risk their life savings on inventing and investing in new products and innovations? Essentially we all want a mixed economy, a level of safety net that reflects the wealth of the country, and basic services provided in an equitable manner. […] But when the political power of a select few capitalists overwhelms the system to the extent that the other non-capitalist parts of the mixed economic suffer, there are obvious and genuinely satisfying moral grounds for protest.
• Facebook is no charity, and the ‘free’ in Free Basics comes at a price — Mark Graham in The Conversation isn't keen on Zuckerberg's reboot of Compuserve: In much the same way that Nestlé offered free baby formula in the 1970s as development assistance to low-income countries – leaving nursing mothers unable to produce sufficient milk themselves – Free Basics is likely to impede commercial alternatives.
• The Procrustean Economy — Neil Wilson: The data collected from [neoliberal] economies will resemble the data you would expect from the [neoliberal] model. It really can't do much else - since the policies are there to prevent deviation from the norm. Therefore when you do empirical studies what you are actually using as data is the output from a system rammed into an inappropriate model. The data is tainted and what the taint means has to be understood.
• The Fed Doesn’t Work For You — J. W. Mason in Jacobin: A rising wage share supposedly indicates an overheating economy — a macroeconomic problem that requires a central bank response. But a falling wage share is the result of deep structural forces — unrelated to aggregate demand and certainly not something with which the central bank should be concerned. An increasing wage share is viewed by elites as a sign that policy is too loose, but no one ever blames a declining wage share on policy that is too tight. Instead we’re told it’s the result of technological change, Chinese competition, etc. Logically, central bankers shouldn’t be able to have it both ways. In practice they can and do.
• Globalisation and currency arrangements — Bill Mitchell: The thesis advanced by many analysts is that globalisation has reduced the capacity of the nation-state and forced governments to adopt free market policies at the microeconomic level and austerity at the macroeconomic level, for fear that capital flight will destroy their economies. It is a neatly packaged thesis that the political Left has imbibed, and, in doing so, has undermined the progressive basis of these institutions and left voters with little choice between right-wing parties and the social democratic parties who formally represented the interests of workers and acted as mediators in the class conflict between labour and capital. The major distinguishing feature these days between these two types of parties, who were previously poles apart in approach and mandate sought, is that the so-called progressive side of politics now claims it will implement austerity in a fairer way. These austerity-lite parties, buying into the myth that globalisation has undermined the capacity of the state to pursue full employment policies with equitable income distribution, do not challenge the basis of austerity, but just quibble over who should pay for it.
• In 2016, let's hope for better trade agreements - and the death of TPP — Joe Stiglitz via the Guardian: In place of global trade talks, the US and Europe have mounted a divide-and-conquer strategy, based on overlapping trade blocs and agreements. As a result, what was intended to be a global free trade regime has given way to a discordant managed trade regime. Trade for much of the Pacific and Atlantic regions will be governed by agreements, thousands of pages in length and replete with complex rules of origin that contradict basic principles of efficiency and the free flow of goods. […] Obama has sought to perpetuate business as usual, whereby the rules governing global trade and investment are written by US corporations for US corporations. This should be unacceptable to anyone committed to democratic principles.
• ObamaCare’s Neoliberal Intellectual Foundations Continue to Crumble — Lambert Strether via Naked Capitalism: Obama gives an operational definition of a functioning [health insurance] market that assumes two things: (1) That health insurance, as a product, is like flat-screen TVs, and (2) as when buying flat-screen TVs, people will comparison shop for health insurance, and that will drive health insurers to compete to satisfy them. As it turns out, scholars have been studying both assumptions, and both assumptions are false. […] the population studied reduces costs, not by comparison shopping, but by self-denial of care. […] it looks like ObamaCare has replaced a system where insurance companies deny people needed care with a system where people deny themselves needed care; which is genius, in a way.
• Mainstream macro and Minsky the maverick — Diane Coyle reviews, perhaps too briefly, Randy Wray's new book: The second chapter was to me the most interesting. It’s called ‘The Road Not taken’ and sets out the broad mainstream approach against which Minsky developed his arguments. This is the neoclassical synthesis, whose foundations were laid by John Hicks and Alvin ‘Secular Stagnation’ Hansen in the early years after Keynes’s death, then by both ‘Keynesians’ like Patinkin and Tobin and ‘Monetarists’ such as Friedman. Wray argues that these camps disagreed largely over parameter values, and that they essentially bowdlerised Keynes by ignoring his emphasis on investment, finance and uncertainty. [I admit to some satisfaction, bordering on relief, at finding somebody confirming that new Keynesians and neoliberals "disagreed largely over parameter values", having just this morning confidently asserted on a uni discussion board that there has long been "broad agreement within mainstream economics over what the appropriate policy levers are, but disagreement about where these levers should be set".]

This week, I have been mostly driving between home and the hospital as my dear lady wife waited (and waited, and waited…) for surgery, so the few most interesting things I've read are:

• Intellectual property and the decline of the U.S. labor share — Nick Bunker, Wahington Center for Equitable Growth: According to the paper, the decline [in the US labor share] starts in 1947, which would mean the labor share was declining throughout the period it was famously stated to be constant. But not only does the decline start earlier than previously thought—it’s also much larger. It’s actually twice as large. And the increase in intellectual property products explains the entirety of the decline.
• George Obsorne says its austerity, whether it busts us or not — Richard Murphy: At the precise moment when the economy needs investment more than anything else, in flood defences and onwards, and at a time when we do as a nation not only have the capacity to deliver that investment because there is a shortfall in demand for other goods and services, but also have the means to fund that investment because borrowing costs are, for the government, little above zero per cent in real terms right now, George Osborne is saying he will not make any effort to help the UK economy by undertaking that essential investment programme. He is instead saying that when demand is weak he will make it weaker. And that when investment is needed he will not undertake it.
• The mass consumption era and the rise of neo-liberalism — Bill Mitchell: The research I have been doing in the last few days continues the theme that globalisation has not rendered the nation state impotent. The thesis, as outlined in the introduction, is that the nation state has just changed its role and now uses its power to advance more narrow interests than previously.
• The Best Paid People in Our Societies Are the Worst People — Ian Welsh: Private bankers and financial execs make almost all of the investment decisions in our society. They decide what will be built, what jobs will be created, etc. They are the people who decide if something will happen and they make terrible decisions–even based on their own valuation system. […] Do not speak of “salary” and “merit” in the same sentence except with scorn. When the CEO doesn’t show up, so what? When the janitor doesn’t show up, though, hey! We find out who really matters.
• Who Are The Prominent Academics Who Advocate A Different Type of QE? — Frank Van Lerven, Positive Money: In a recent post Positive Money showed that there is a strong intellectual body of history behind the various alternative proposals for QE. Both John Maynard Keynes and Milton Friedman proposed a style of Quantitative Easing (QE) that was aimed at the real economy. Today, these types of proposals are commonly referred to as “QE for People”, “Sovereign Money Creation”, “Strategic QE” and “Helicopter Money” amongst others.