Why Everyone Is Related

by Will on December 10, 2012

Via a poster in a classroom, I learn that every US president so far has had King John Plantagenet of England as a direct ancestor*. This sounds crazy until you think about the math of ancestry. In the generation before you, you have two ancestors, in the generation before that, four, in the generation before that, eight, and so on. The further back you go, the more times the number will have doubled. But as you go back further into the past, the population of humans you’re looking at gets smaller and smaller. Between the scissor blades of these two dynamics, the chance that you are not related to another person is cut to zero.

*For a time I lived two blocks away from the Plantagenet kings’ residence, le Chateau Roi Rene, in the center of the city of Angers. The strange fact of English kings living in what was clearly France is explained by the fact that England held lands in the north of France for some time because of the Normans. King John lost these lands, which was why the barons lost patience with him and forced him to sign an agreement to respect their traditional rights. However, the English crown has never formally given these lands up, and their official title reflects this.

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A Short History of the Civil War

by Will on December 9, 2012

This is how I would put it.

Early in the conflict, president Abraham Lincoln met with the vocal and persuasive abolitionist Frederick Douglass. Douglass’s advice was simple: let black slaves from the south fight in the Union army for their freedom, alongside the northern conscripts. This tactic, he explained, would win manpower for the northern effort, and at the same time put the southern slaveholders in a bind.

Lincoln, at this time, was thinking very conservatively. He was under the delusion that he could convince the Slave Power to rejoin the Union by playing nice with them, and he wanted to preserve the Union at all costs. His early presidency was sullied with desperate offers to the south to eternally respect slavery in the states where it existed. This myopic approach did no good.

Lincoln was also stuck with a head general who did not really believe in the cause, General George McClellan. McClellan was a white supremacist who felt the “property rights” of the slaveholders had to be respected in any final settlement. McClellan had a sincere love for his troops, which often hindered him from putting them in harm’s way — which hindered him, in other words, from really fighting.

This sad picture went on for some time. Then, a revolution in legal thought was accomplished by a northern general named Benjamin Butler. Butler was a radical abolitionist from Massachusetts. He had no patience whatsoever for the “property rights” of slaveholders. Up to this point, the Union army had been leaving the slaves alone in the territory they took, because of the Fugitive Slave Law, which said that all northerners were bound to return slaves to their owners. Butler’s argument was this: the Confederate States of America had declared that they were not part of the United States of America, and therefore the Fugitive Slave Law was not in effect in their territory. Further, under the Law of War, the army had the right to seize all contraband that the enemy was using in its war effort. Slaves, Butler reasoned, were considered property under the CSA’s laws, and were as vital to the war effort as guns or cannon. Therefore, the Union army was duty-bound to seize slaves as contraband.

This was a pretty good argument, and it proved to be an effective military strategy. It was soon observed that the Union army could hold territory where they confiscated the slaves, even in the absence of troops. This is not how it usually works in war, so it was a tremendous advantage. The slaves were put to work as cooks, janitors, and nursing assistants for the Union army, which freed up more men to fight.

One general who saw the merit of Butler’s approach and eagerly embraced it was General Ulysses Grant. Grant knew the bitterness of failure quite intimately, and he hated bullies, and he also hated war. That slaveholders were the biggest bullies around, and that they had forced a war for no good reason, did not escape his attention. He was determined to do anything he had to do to win.

McClellan, on the other hand, was uncomfortable with Butler’s approach. Lincoln saw at this point that McClellan had to go. But it was a tricky thing to fire him, because he had a lot of supporters in congress, and the perception was that Lincoln was doing a bad job managing the war, so he didn’t have much political capital to spend.

Lincoln also saw at this point that he had no choice but to take Douglass’s advice: he had to free the slaves, let them fight, and wage vigorous war to take out the slaveholders as a class. He determined that he would issue an order emancipating all slaves in territory not controlled by the Union, which could be defended as a purely military measure, and which would not overly alienate the slave states that had kept with the Union. He reasoned that it was necessary to wait for a big Union victory to do this, and to fire McClellan. Finally, McClellan managed to win a very bloody and costly battle at Antietam. Lincoln fired him (the term they used was “relieved”), replaced him with Grant as head general, and issued the Emancipation Proclamation. Not only were slaves in Union-held territory freed, they were allowed to join the army, and many chose to do so. Grant wrote in his memoirs that he was pleased to see that the freedmen, untrained and illiterate volunteers, fought as well as the trained norther conscripts.

At this point it was generally recognized that the war was not just a dispute over territory or trade policy or whatever, it was a war to end slavery. There was a moral element to it that is not present in most conflicts. Grant was very clear about this later on when he met with the German leader Otto von Bismarck. Bismarck said that the war had been a tragedy, to which Grant replied that it had been necessary nonetheless. Bismarck then allowed, “Yes. You had to save the Union just as we had to save Germany” (by which he meant, unify it). Grant answered, “Not only save the union, but destroy slavery.” Later in the conversation, Grant reiterated this opinion: “There had to be an end of slavery. Then we were fighting an enemy with whom we could not make a peace. We had to destroy him. No convention, no treaty was possible – only destruction.”

The north started making big gains. Now a very talented northern general named William Sherman came forward with an idea. He would lead his men through the heart of the Confederacy, and would bring the suffering of war home to the southern people who supported slavery and supported the confederacy. His men would “live off the land”, meaning they would confiscate food and other valuables from people in the areas they took, and feed themselves that way. This would dampen southern enthusiasm for the war, he thought, and also throw their supply chains into disarray. “Living off the land” meant that the Union army wouldn’t have to maintain supply lines to feed Sherman’s men. Normally, in war, supply lines are half the game. If you cut out the enemy’s supply lines, you can soon beat his soldiers. So Sherman’s plan promised another huge advantage to the Union. This plan for “total war” was not strictly legal under the Law of War, but Sherman felt the stakes were too high not to do it.  Grant and Lincoln both initially balked at the idea, only to later give Sherman the nod.

Sherman’s march to the sea had the anticipated effect. At this time, people began to lose confidence in the south’s ability to win. People who held confederate currency traded it for anything else they could get, and the currency’s value went into free fall. The confederate government had no choice but to print more money in response, which just aggravated the problem. The southern soldiers didn’t like being paid in worthless currency any more than the slaves liked being not paid at all.

At this point, a Union victory was only a matter of time. Robert E. Lee managed to drag it out much longer than it otherwise would have gone, but eventually Grant pinned his forces down and made him agree to an unconditional surrender. “Unconditional” meant that Lee had no guarantee that he, his men, and the entire government of the CSA would not be tried for treason and hanged for punishment, or even that they would be recognized as having the rights of citizens (rights, ironically, that were now enjoyed by millions of former slaves, as a direct result of southern intransigence). But he had to agree to it. The war was now over, and slavery was finished. The slaves had not just “been freed,” but had played a crucial role in winning and securing their freedom. The slaveholders were ruined as a class and destined to be remembered as vicious scoundrels. The war fundamentally changed the meaning of American citizenship and the relationship between the federal government and the states, and committed the country to principles more high-minded and less mercenary than the mere security of property rights. It is for this reason that some people, like myself, consider it to have been not just a war, but a revolution. Unfortunately, this wasn’t the end of the story.

I’m not sure that that came out as short as I intended. Oh well!

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John Boehner is Highly Unconstitutional

by Will on December 3, 2012

Paul Krugman:

John Boehner has just declared that he’s going to hold the full faith and credit of the United States hostage every time we hit the debt limit.

The 14th Amendment to the constitution of the United States, section 4:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

What are these stupid showdowns over the debt ceiling, if not instances of “questioning” the debt? Unconstitutional!

I thank Robert Waldmann for alerting me to this little-known but very interesting provision of the 14th Amendment.

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Nobody Actually Cares About the Deficit

by Will on December 2, 2012

Exhibit A: the very existence of the (stupid) term “fiscal cliff.” If anyone actually cared about the deficit, they would be all for letting the automatic spending cuts and tax increases kick in. But nobody is enthusiastically supporting that. Because nobody actually cares. Even people who are employed to be professional fussbudgets.

Exhibit B: Walter Mondale’s electoral map included exactly one state, his own, and the District of Columbia. His campaign’s promise to replace Reagan’s deficit spending with a balanced budget clearly didn’t win too many hearts and minds.

Exhibit C: Dick Cheney: “Reagan proved that deficits don’t matter.”

People who pretend to care about the deficit frequently can’t even explain the mechanisms of how debt financing works. They often make statements that reveal a complete lack of understanding of how markets work. They often also repeat the false claim that most of our debt is held by China. They don’t actually give a shit about the deficit. What they don’t like is government spending. Now, they usually have no problem with government spending that they receive as income. And they usually have no problem with government spending that goes to their friends and family members. And they usually have no problem with government spending that goes to their customers, if they’re in business. But they don’t care at all for spending that goes to certain other people they don’t know, particularly people of the wrong sort, who evidently deserve immediate and eternal misery as punition for their lazy, shiftless ways. That’s about all there is to all the anxious talk we hear about “the deficit.”

There is one group of people who actually could care: investors. If investors stop believing that government debts will be repaid in full–as has happened to Greece, Spain, and Italy–they will not want to hold them. The index of whether they are worried or not is the interest rate that prevails on the debt. The interest rate on government debt has not gone up since 2009. It has come down. So although investors could in theory care about the deficit, they don’t at present.

It’s a non-issue!

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I probably just shouldn’t listen to NPR’s “Marketplace” program. It infuriates me. Given that it’s a show nominally devoted to economic and financial reporting, the superficiality of its analyses is unbelievable.*

Yesterday Marketplace’s Kay Ryssdal reported on Britain’s selection of Canadian central banker Mark Carney to be the new head of the Bank of England. Ryssdal ended with the punchline, “But the Loony fell today… relative to the pound.” Ryssdal clearly thinks that there is egg on someone’s face here — Carney’s currency declined! But unless you are either, A) a currency speculator with an investment in Loonies, or B) a Canadian traveler abroad, you should not view a fall in the currency as a bad thing from the Canadians’ perspective. Ryssdal could equally well say, “The Loony today became more trade-competitive… relative to the pound.” If the Loony is cheaper, Canadian goods are cheaper for consumers in other countries to buy, so they will buy more, but the Canadians get paid in no fewer Loonies. Imports become more expensive for Canadian consumers, who will also shift consumption to Canadian goods. This is a good thing for Canadians in general, be they workers, capitalists, landlords, whatever.

Why does Ryssdal — or the segment’s writer — identify with the interests of the speculator and the frequent traveler? And moreover, why does he assume that his audience will too?

 

*It strikes me as somewhat similar to how bad the history in popular history magazines tends to be. So maybe the problem is that the producers interpret “popular” as “really dumbed down”, and hire stupid people to produce the content, to make sure it comes out accessible. That’s unfortunate, since high-quality historians like Barbara Tuchman and Eric Foner have written popular works that lots of lay readers enjoy, and high-quality economists like Ken Galbraith, Paul Samuelson, and Paul Krugman have as well. However, I also am suspicious of the sponsors of Marketplace, one of which has as its mission the promotion of “free markets and entrepreneurship”, or some similar code language for “right-wing bias”.

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Does “Outside Money” Backfire?

by Will on November 25, 2012

We’ve all heard countless times about how, in the wake of the supreme court’s ruling in Citizens United, political campaigns are awash in funding from shadowy “outside donors,” who don’t face any limitations or disclosure requirements. The properly cynical interpretation from most people has been: it’s now much easier to buy an election, so we can expect political corruption to ratchet up to Silvio Berlusconi levels. And that would suck! But I’m now wondering if the fundamental logic of campaign funding might be badly mistaken.

I’ve always hated having to watch political ads. They tend to be insulting and misleading. And negative ads that just slam someone and don’t even mention who they’re for are especially bad. And then they air over, and over, and over! It’s worse than the Geico spots with that awful lizard. One of the nice things about California ceasing to be a swing state is that I don’t have to see too many ads anymore (though the Republicans still mail me a ton of crap — thanks guys!). Maybe I’m unusual to react this way, but I bet I’m not. Maybe the net effect of bombarding people with ads of this sort is to make them dislike the campaign associated with the bulk of the advertising. Maybe selling politicians is not quite the same as selling insurance and video games, and the marketing people are not as smart as they’ve made us think. Also, maybe the very knowledge that billionaires see it as their God-given right to buy elections — which the outside ads are palpable evidence of — is itself an influence on some people’s voting.

After all, we keep hearing about how Karl Rove raised a ton of billionaire donations this cycle and came back with nothing to show for it:

Karl Rove’s SuperPAC American Crossroads spent $104,710,427 this election to support 0 winning candidates… Rove-backed American Crossroads had a tail-end ROI [return on investment] of 1.29%.

Maybe the huge ad buys are not helpful, and are actually counterproductive in many cases. Elections are much less frequent than business days, so it’s possible that the science of electioneering is still in a primitive state relative to the science of marketing. So maybe candidates would actually benefit from a return to public funding. That the public would benefit seems indisputable.

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Do People Respond to Tax Incentives? No.

by Will on November 20, 2012

Every so often, it makes the news that many people don’t understand the concept of marginal tax rates:

Kristina Collins, a chiropractor in McLean, Va., said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000 for individuals and $250,000 for couples.

Pundits usually make fun of people for making this error. But I think it’s probably the rule, not the exception. Two observations would seem to support this.

First, talk radio hosts routinely talk about top marginal tax rates — say, the Clinton-era 39 percent rate — as applying to “your whole income”. That is doubly false. The top marginal rate applies to your income above $250 thousand, and after deductions. Few of these hosts’ listeners will ever be subject to the top marginal rate. But no listener ever calls in to protest this apparent insult to their intelligence.

Second, every year the IRS reports that many people who would have been eligible for the Earned Income Tax Credit — a straight cash transfer to low-end wage-earners — did not file a return, and so did not get the money. And the people who do receive it tend to be people who are in touch with schools or other institutions where friendly advisers can let them know about it. This suggests that most people avoid thinking about taxes at all unless they have to.

If the majority of people do not even understand the concept of marginal rates or know about tax credits available to them, this has significant implications. The labyrinthine tax code is loaded with rules that attempt to effect social engineering through tax incentives: credits for education, deductions for mortgage interest, &c, on the theory that these rules will steer individuals’ behavior. It seems probable that this whole enterprise is largely ineffective, steering the behavior only of educated people with accountants. And not necessarily all of them…

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Mister President: Do NOT Balance the Budget!!!

by Will on November 14, 2012

In 1937, Franklin Roosevelt resolved that he would balance the budget. This is what happened:

 

Roosevelt was swift to discover that this was a mistake. In 1938 he resumed deficit spending, saying the following:

We have heard much about a balanced budget, and it is interesting to note that many of those who have pleaded for a balanced budget as the sole need now come to me to plead for additional government expenditures at the expense of unbalancing the budget…

To many who have pleaded with me for an immediate balancing of the budget, by a sharp curtailment or even elimination of government functions, I have asked the question: “What present expenditures would you reduce or eliminate?” And the invariable answer has been “that is not my business — I know nothing of the details, but I am sure that it could be done.” That is not what you or I would call helpful citizenship.

President Obama said in his victory speech that he planned to try to cut the deficit. Republican leaders have yelled about the need to cut the deficit until they’re blue in the face. I dearly hope that they are all bluffing. Far from being a social evil, the deficit is a Good Thing, and we urgently need not less debt but more.

The prominent place of fussbudgetry in our public life represents an elaborate exercise in projection. From the fact that a majority of businesses and individuals must, on average, run balanced budgets in order for prosperity to maintain, we infer that the government must as well*. It’s a bad analogy. Most individuals do not have the ability to print currency to pay their debts, and individuals — unlike the public at large — are not also the recipient of the money they spend when acquiring debt. For society at large, Income = Expenditure. Every dollar spent is necessarily income for someone else. When you as an individual “save” money, that represents a loss of income to someone else. So, too, when the government cuts net spending, total income must fall unless the cut is offset equally by an increase in private spending. Barring  a really swift recovery this winter, the prospect of the latter occurring is small.

Obama: please resist the siren song of the budget balancers, professional and amateur alike! Theirs is the way to ruin.

*This is already a dubious belief. Many businesses lose money, year after year, but are still able to snooker capital out of investors to keep running. See the US air-travel industry for proof. There are also many money-losing businesses that exist as tax write-offs for individuals, or pet projects of large companies that re-invest internally to avoid the Corporate Tax. Bankruptcy proceedings are more common in the business world than most people would expect — it is a codified legal process precisely because it occurs with such frequency. And it is not so uncommon for individuals to default. The very existence of credit markets reflects the difficulty of assessing the risk that a borrower won’t pay. It is a mistake to think that there is anything moral at play here. Debt represents a relationship, and as with all relationships, there is some give and take.

 

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A Supposition on the Effect of Taxation

by Will on November 12, 2012

Andy Harless writes:

The positive correlation between income tax rates and subsequent growth in the US is enough of a stylized fact to need an explanation.

Noah Smith offers one theory:

Easy possibly silly explanation: policymakers anticipate growth and raise taxes.

I think that there is another plausible explanation. Perhaps the mercantilists were correct, and taxes don’t discourage production at all.

What was the mercantilist theory? David Hume sums it up here (referring the Colbert, the French minister of finance):

THERE is a prevailing maxim, among some reasoners, that every new tax creates a new ability in the subject to bear it, and that each encrease of public burdens encreases proportionably the industry of the people.

In other words, people produce however much they’re going to produce to provide for themselves, and then produce however much they need to pay taxes on top of that. The taxes, rather than discouraging labor as Hume, Adam Smith, Alfred Marshall, Art Laffer, and hosts of other economists taught, actually encourage more labor. More labor means more growth. This seems just as plausible to me as the prevailing theory.

And this brings me to a digression: there is a great deal of reification in economics. That is, we talk of impersonal, abstract laws and dynamics, when what we are really discussing is how people choose to behave in dealing with one another. There is no reason to think that it is an impersonal law that a greater amount of taxation will produce a lower amount of labor, or vice versa: it depends entirely on how people choose to respond. It may well be that for some groups of people, Smith is right, and for others, Colbert is. (I think I am just restating, rather broadly, the so-called “Lucas Critique”).

If this is true, the only consideration in setting tax rates should be whether the revenue will be adequate to service the debt without interest rates going up. Taxes should go higher when interest rates go higher.

There is also the possibility that the Marginal Propensity to Consume of people who get tax money is higher than the MPC of the taxpayers, which increases the size of the multiplier. This was the explanation offered by James Steuart, several years before Smith’s Wealth of Nations:

From these principles, I conclude, that taxes promote industry; not in consequence of their being raised upon individuals, but in consequence of their being expended by the state; that is, by increasing demand and circulation.

It is even possible that both these theories are true. Unfortunately it’s difficult to test, and there is also the question of behavioral differences between cohorts that I mentioned above.

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Memo to the Right: You Do It to Yourself

by Will on November 10, 2012

There seems to be a strange amount of confusion about why Romney and the senate candidates got routed. This is weird. I did not have these kinds of freak-outs over Gore losing in 2000 or Kerry losing in 2004, and I don’t think that others did either.

Guys: It’s not that complicated.

First: Let’s just remember that the Confederacy lost the war. Sherman crippled the productive powers and morale of the South with his march to the sea, and then Grant pinned down Lee and surrounded his forces at Appomattox, and secured the Unconditional Surrender he’d been insisting on. Most of us are happy that it went down that way, and think that it sucks that people were such assholes that we had to have a war at all.

Second: Mitt Romney was a lousy candidate! He was stronger than the other clowns in the primary, but come on! As a socially awkward person, I feel for him, and am glad he’s gotten so far in the world, but he was really, really socially awkward for a major-party candidate! He said dumb shit that presidential candidates should know not to say. He had spent most of his life being a conspicuous robber baron, lacking only the villainous mustache and the propensity to tie women to the train tracks (preferring, instead, to keep them in binders). He declined even to try to get re-elected governor of Massachusetts in 2006, because he wasn’t that popular a governor, and he had no chance of winning that state (I think he lost it by over 20 percent!). This was amateur hour stuff.

Third: You might think that Akin, Mourdock, and Allen were just lousy candidates like Romney, but in these cases it goes deeper. These guys are the kinds of guys you get when you reject science and try to appeal to every crank and bigot in the country. When you spend forty years railing against “welfare queens” and courting neo-Confederate groups, and then one of your candidates has a meltdown where he calls a native-born American “Macaca” and welcomes him to “the real Virginia,” this is no accident. This is the kind of party you’ve chosen to be. And then when you go and nominate him again!? Come on. When you spend forty years taking extreme, unreal positions on social questions, positions you never expect to actually impose, and engage in brinksmanship to be more extreme than one another, and categorically reject science as a means of inquiry, it is no accident when you have candidates who on camera wander into pontifications on the metaphysical categories and theodicy of rape. This sort of thing is a feature of your party, not a bug.

Given that, you did miraculously, miraculously well this cycle.

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