Conversations with Activists III : Dean Baker, A Progressive Economist

Dean Baker, progressive, activist, economist, was kind enough to share some time for an interview. Readers following my blog from its earliest days will recall the extensive series of reviews of his book, The Conservative Nanny State, so scoring some time with Dean is indeed a coup.  For those who bear cynicism toward establishment economics, Dean’s star shines brightly, having predicted and warned of the 2008 housing crash as early as 2002.  Deeply committed to progressive causes, this powerhouse economist counters decisively the bipartisan consensus psychosis in Washington, dispensing easily with wrongheaded policy considerations such as Chicken Little on Social Security, or the commitment to endless, savage wars abroad.  He also is the type of dog lover who adopts the infirm and elderly, a true class act.  So without further delay, let us jump right into the discussion.

As with my previous interview, my cognitive difficulties of late slow my interaction, so bear with me; I’ve edited the discussion for ease of listening.

 

Celebrating an Activist Economist

What is an Economist?

Patents and Copyrights : Anti-Market Tools

Bank Bailouts : There’s No Such Thing as a (Totally) Free Market?

Economic Prognostication : Dean and the Housing Bubble

Economic Schism : Pragmatic Piketty and Elitist Theorists

Taxing the Rentiers : Makers of More Than $X

Origins of Dean : Chicago, Protests, Economics, and A Run for Office

Markets Follow Trade, and the Folly of Context-Free Numbers

The Liabilities of Limited Liability

The Price of Happiness

What is the CEPR?

A Money Scare : How Can We Pay for Saving the Planet?

Economy of Data

Doggy Sanctuary and Semiretirement

dean_baker

Celebrating an Activist Economist

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NP Slagle: Welcome to Scire Populum et Potentiam, to know the people and power. I’m very happy to have Dr. Dean Baker, economist at the Economic Policy Institute and co-founder and economist at the Center for Economic Policy Research, where he serves as a senior economist. He’s authored over 10 books in economics. One of which was my gateway drug into his works, The Conservative Nanny State. I wrote an extensive six-part review on this book as I found it in my own ignorance of economics a revelation. This is among a very short list of books I would recommend to every American. Dean regularly contributes op-eds to news journals such as the New York Times, the Washington Post, and Truthout. He’s an analyst that I believe should appear in every economic debate in the televised news media. Therefore, he’s not included in every economic debate. If I believe it should happen, it probably doesn’t. In any case, welcome Dean. I very much appreciate having you.

Dean Baker: Thanks for having me on.

NPS: Yeah. Absolutely. Just to give a little bit of background as I mentioned in the intro, your book, The Conservative Nanny State was my introduction to your works. I heard Noam Chomsky mention the “nanny state” a few times in different talks but it wasn’t until he mentioned your name that it occurred to me that the term might be more than just something that he had created. I looked it up and I found this book. The simplicity of the book, so therefore the reachability, the accessibility of it is incredible. Certainly, it jived with my own speculation about economics to begin with. Certainly makes it a lot clearer and coming from an expert like you, it’s pretty powerful stuff.

What is an Economist?

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NPS: So before we get into your origins, what do you think an economist is? What is it that you do versus what is it do most economist do? Where are the conflicts?

DB: Yeah. I think economics inevitably involves some fairly complex issues, studying data, analyze data, and knowing how to make sense of statistics. From my view though, as an economist and obviously there’s division of labor here: I do do some primary analysis myself, but first and foremost I see my responsibility as making this information available and as understandable to people as possible. It’s common for economists to throw up their hands and go, “Oh, this is complicated. People can’t understand it.” I think that is really being a cop out. Our responsibility is to talk about this in terms people can understand. At the end of the day, I believe in democracy. People can’t make intelligent choices unless they understand what’s at stake. The big economic issues have huge impact on people’s lives. If they don’t understand how those choices are being determined, how those policies are being determined, you don’t have a real democracy. I think first and foremost, my job is about looking at important economic issues and trying to present them in ways that are understandable to people. I mean I don’t mind saying that. I’m not going to deny I have a progressive bent. I think we have too much inequality. I think people should be able to count on the necessities of life, all that. But I think we will get there best by making the issues clear to people. I think most people basically agree with those things. Any case, the point is people have to understand first and foremost what’s at issue. It can be done. I just think a lot of economist, I sometimes joke about it. I think the economy is too simple for economists to understand.

NPS: Right, right. I like that.

DB: I make things simple, not complicated.

NPS: Certainly, the abridged education that I’ve had in economics has been built around laissez-faire market ideology, that the free market will be able to deliver the very best products and services for the best value, [while d]iscounting considerable obstacles to that kind of optimization. I think that what I’ve seen at least in the limited social media that I look at on this topic and this is looking at what fellow technologists are thinking about these things. They’re pretty well hung up on this notion that profits proxy for everything that’s good. To me that seems more a dogma than something that’s actually underwritten by the facts.

DB: Yeah. Well, profits … what I always like to say we should think of the market as a tool. It could be a very, very powerful tool. The point is we structure, we decided how the tool will be used. We’re don’t want people to make profits selling heroin. We banned that now. Obviously, you have a black market but we do ban. We’re better off if people made profits on legally selling heroin. It’s an arguable point. I think probably not but that’s an arguable point. In any case, for now, at least we don’t allow that. We don’t allow it legally. The whole point of certainly Conservative Nanny State really much of my writings, we structure markets to decide how profits are made.

Patents and Copyrights : Anti-Market Tools

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DB: My most obvious example here, patent and copyright monopolies. The idea somehow these are intrinsic; that Microsoft just has a copyright on Windows and they can make a huge amount of money on that. Well, you could argue that’s a good or bad thing. That’s not just the market. That was a government policy. We decide Microsoft can get a copyright and make a lot of money on it. We’re going to arrest people if they start mass producing copies of computers that contain Windows and they’re not paying Bill Gates’ money. Again, we could argue where there’s good or bad thing but that was something we designed. That was how we structured the market. What I do in Conservative Nanny State and other work is make a point: here’s how we’re structuring the market. Again, you could argue, someone could defend the copyright system and say the current system’s the best we could do and that’s an arguable proposition but we have to understand, that’s not simply a market that was given to us. That was how we chose to structure it.

NPS: Exactly. That there’s a legal framework underwriting all of that and that it’s not that somebody sat in a room and spent a long time working on some wonky optimization problem and said, “I know what will work best. We’ll just have a copyright system.” I always thought it was bananas that I would see popular songs that we might sing like Christmas carols and you’ll find that they have copyrights from one hundred and twenty years ago. At least whatever’s listed in the fake book. The fake book’s pretty old.

DB: Yeah. It gets pretty crazy and both copyrights and patents have bizarre applications. Some of the extreme ones I remember hearing that there’s… I’m forgetting the names of them [possibly General Patent and Web Defense Systems?]. Now, there’s two main services that are involved in enforcing copyrights. If a radio station plays copyright music, they have to pay a fee. If say you have a restaurant or a bar, and you’re playing copyrighted music, you’re supposed to pay. I’m sure most of them don’t but in principle, you’re supposed to pay. Anyhow, one of them was going after the campfire girls because they were singing copyrighted songs. You get some pretty wacky examples.

NPS: Right. That you have to have a powerful nanny state to enforce those kinds of things.

DB: Yeah, yeah. This is very far from a free market.

NPS: Absolutely.

DB: They’re all sitting around the campfire and they’re singing whatever songs. Now, we’re going to have the government come in there and say, “Oh, you have to pay whatever amount to so and so has the copyright on these.”

NPS: Right. I doubt seriously that my coworkers and bosses over at Microsoft would want me to say this but I’ll say it anyway. I don’t believe that the patenting and the copyright system has done justice to the software industry at all. I feel like Microsoft, Gates and Allen were able to exploit the open architecture, hardware architecture and so on in order to be able to build an operating system on top of that that they made proprietary. Because of the fact that it is proprietary and they’ve spent all of this time trying to ensure that those copyrights stay in place, we end up with products that frankly are subpar. I even told them that in my interview there. I told them that in my interview.

DB: They hired you anyhow.

NPS: Yeah. They called me back that day.

DB: They really wanted you.

NPS: Yeah, yeah. Either it speaks to their desperation or their desperation I guess, either or.

DB: Yeah. Or maybe they had admirable respect for freedom of thought. We’d like to be optimistic about that. I don’t know that’s the case but we could be optimistic that way. I’m not an expert on software. You clearly know much, much more about it but I’ve heard that from many others, that much of what when the original DOS, the pre-runner of Windows was taken from various forms of open software-

NPS: UNIX, yeah.

DB: On the government tab. Of course, it becomes proprietary and I don’t know anyone as a regular user of Windows computers, which I am that’s very happy with if you gave me the option of the computer 20 years ago and the computer I had today, you know, there’re some things clearly better but a lot of things are not. It’s not as though we could look back over the last two decades and go, “Wow! There’ve been all this great innovations, the software I have today in my computer is so much better than what I had two decades ago.” I for one would be able to say that.

NPS: And actually internally at Microsoft, this is pretty well the opinion that we get every year when we do the internal surveys. Of the pillar issues that they ask opinions on, the most troublesome for the company are the tools that we have to use internally. And though they are slightly better than what you see on the outside, just because, we’re constantly being guinea pigged, and they’re constantly trying to make sure that our systems are reliable, it’s not a good thing. The other tech companies I’ve worked at where they’re basing their systems more on open source software, much more reliability. I mean the difference is night and day. But it also raises another interesting point that I’ve brought up with some of my coworkers when they ask questions about these kinds of things. It’s one thing to patent, or copyright a complex algorithm that you can use to achieve some particular goal. And let’s say that an individual wants to benefit from that and see that others are not able to steal his work, that’s different from a company doing it. And it’s also different when we’re talking about the scale and the scope of these algorithms. I like to ask them, “How would you like to have to pay a fee every time you used the addition operator in your code?” I mean, it gets to a point where it’s just obscene. That’s like having a plumber install a toilet in your house and then you have to pay for every time you flush it.

DB: Yeah. With our intellectual property system in general, I think there’s been very little thought in the design as to, “Is this really optimal?” And you could argue for patents, you could argue for copyrights, but I think you’d be very hard pressed to look at the system we have today and say, “This is the best we could do.” And you have a lot of things that are almost like, paying for every time you flush the toilet. I mean, particularly when you get to research tools, this comes up more with patents I think than copyrights, but a lot of times you have research tools, but because their patented, they hugely raise the cost of research.

NPS: Right, absolutely. And to say nothing of medical equipment and then the pharmaceutical industry. So my father-in-law worked for Dial and for Pfizer and he let me in on a lot of the tricks that they use for evergreening, that I wrote about actually in the book review that I did for your book because I wanted to augment it with some of the information that he was giving me about how they are able to, by virtue of the way that they do the research, you end up with a mirror copy of drug molecules and usually there’s some utility to those. And it’s not necessarily the utility you’d planned, but you get to double dip and get two patents for the price of one. But I think the number that bothers me the most is the copycat drug share of the market, to me it’s obscene. So tell me a little bit about that.

DB: Yeah. Well, again we get into a strange debate, at least I find often it gets very strange when we talk about parents and prescription drugs because of course, it costs a lot of money to do research and developing new drugs and someone has to pay for that. But the question, what is the best way to do that? And again, we’ve settled on the patent system where basically what we’re doing is we’re telling companies, “Go ahead, do research and then we’ll give you a patent,” and then you basically get a monopoly on it for 20 years. You were saying with evergreening, they often find ways to extend that for number of years. Another way it’s not quite evergreening, it’s kind of a variation, is that often times companies will have several patents on a drug, and the main one may expire, and then what they do is they have a very dubious patent that they claim to prevent competitors from marketing their drug, marketing as a generic. And even though it may not stand up in court, you have an incredible asymmetry: you’re looking to come in there as the generic entry, well, you’re looking to be able to sell it at a competitive market price, that might be a 10th, even a 20th, maybe even less of what the price Pfizer charges. So there’s an incredible asymmetry if you envision a lawsuit, Pfizer stands much more to lose than the generic does to gain, which means that they are prepared to spend a lot of money in the lawsuit. It doesn’t make sense for the generic spend anything remotely comparable, because they don’t stand to gain that much. So often, Pfizer could have a patent, but they know it’s very weak, but they’ll just tell a generic that’s trying to enter, “Well, we’re going to contest this and if we lose, we’re going to appeal it. We’ll appeal to the Supreme Court. You’re going to be buried in legal fees. It’s just not worth your while.” And that’s often a way to keep generics out of the market because for them it just doesn’t make sense. Getting back to the basic picture, this is one of the things I often say to people when I’m giving a talk. I often begin, “Drugs are cheap.” And they immediately think I’m nuts. And the point that I make with that is that almost invariably they’re cheap to produce. So if you just talked about manufacturing the drug profitably, in most cases that would be $10, $15, maybe $30 to outside per prescription, and we know this because there are generic drugs here and in other countries; India as a world class generic industry, they produce very high quality drugs and in almost all cases they’re very, very cheap, whereas if they’re patent protected, they could sell for thousands, even tens of thousands of dollars, and again, it’s because they have a monopoly on a drug people need for the health and need for their life. It’s an absurd situation where people are struggling in trying to get their insurer to pay [for] hepatitis C [drugs]. There’s been several drugs recently, but originally Sovaldi was the first breakthrough drug that could cure hepatitis C, which is a debilitating, sometimes deadly disease, for $80,000 per three month course of treatment, incredibly expensive. So insurers didn’t want to pay people who were on Medicaid, other government programs, government didn’t want to pay. And you had articles about this as a big moral dilemma. Should they pay it for everyone? A lot of people with hepatitis C have lived, they’re drug addicts, they’ve done things in their life that you might say weren’t very good, should we pay $84,000 for them to be treated? And I’ll just say, okay, that’s good question. I mean, I’d probably be inclined to pay it, but whatever, some people saying no. They go, “Well actually it doesn’t cost $84,000 to manufacture this drug. It costs $200 or $300.” Again, we know this because that’s what the generics in India could sell it for. And again, they make money. They’re not charities. Like $200 or $300, that’s really a no brainer. I mean, you’re only going to spent $300 to save someone’s life, to cure them of a debilitating disease? I mean, even if they got it because they were drug addicts or whatever, that’d be nuts. So we create this huge problem for ourselves with how are we going to pay for these expensive drugs, when they wouldn’t be expensive if we didn’t have the patent monopolies. As they say, it’s a very, very perverse way of financing drug research and again, we have to pay for it. So I don’t argue that, I talk about other ways to pay for it, mostly through direct pay for the funding research upfront. Pay for it upfront and have it be in the public domain. But the current system I just think is incredibly backward, and it’s a big deal economically, but even more so this is people’s health, people’s lives.

NPS: Right, yeah. Chomsky’s read on the history of technology has been something that’s similar, that in essence, the computers that we’re using right now to talk in the vast international and actually trans-national communications network, originally it was just going to be a coast to coast network for communication. All of it was developed in the public sector, and the public sector bore the risk and lots of things didn’t pan out that we don’t hear about, but nonetheless, it was not a free market that delivered computers to us or the internet or a lot of the R&D as you point out in your books, a lot of the R&D that goes into the development of these drugs.

DB: Yeah. And even as it stands, with the National Institutes of Health, they get $40 billion a year from the federal government. Again, most of that is more basic research, so it’s not common that they’re actually developing drugs, but there are cases, important cases, AZT, the first major AIDS drugs, that was actually developed by NIH money. It was developed as a cancer drug that turned out not to be an effective cancer drug. And then in the 80s, several, probably Burroughs Wellcome was the big one, they then tested it an AIDS drug where it turned out to be an effective treatment, but a very large chunk of the expense, certainly developing the drug originally and as I understand, even some of the research done by Burroughs Wellcome was financed by the federal government. So again, you look at drug after drug, someone did an analysis recently looking at drugs that were in the last, I forget how far back they went, like last decade. Every single one of them, had a major role for federal funding. That’s not to say the industry didn’t do something. In most cases they made substantial contributions, but the point was they were building on work done by the federal government.

NPS: Right. And probably like the big banks underwritten by the federal government at the same time. So you have this extremely skewed, loss function of no way to lose and every way to gain.

DB: Yeah. It often looks that way.

Bank Bailouts: There’s No Such Thing as a (Totally) Free Market?

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NPS: So somebody that I had discussed this with had made the comment that copycat drugs were good because therefore there was market competition, as though prescription drug development occurs in a free market or laissez-faire framework. There seems to be this pervasive belief amongst intelligentsia that not only is this the usual course, but that it ought to be that way, challenging earlier points in our discussion. How do we dispel the myth?

DB: I mean, I like patents and copyrights just because they are such blatant interferences in the market; I love to point out, we can get drugs in India for, in some cases, less than 1% of what it costs here and if people want to be strict, libertarians go, “Fine, let me go to India. Let me import the drug from India.” And just to say Pfizer would go nuts if we just said, “Oh, we could just import all these generics from India. “They would put them out of business in no time. So, that’s a very clear mechanism, but there are so many other ways. I mean, one of the things that was striking to me when we had the bailout of the banks in 2008, well the market outcome of course is Citi Group and Goldman Sachs and Bank of America, they were all out of business. They got themselves in trouble because it made a lot of bad loans, and they couldn’t cover their debts. And well, in a market economy they’re out of business. People couldn’t race fast enough to engineer the bailout, to keep them going and somehow-

NPS: Basically, in both parties.

DB: And in both parties. So it was totally bipartisan. I was on the hill talking to skeptics, they were Democrats, and also skeptics are Republicans, well I meeting skeptics on the democratic side. And there were a lot of people of course who did have questions, many who did vote against it, more Republicans voted against it than Democrats. But in any case, there were those who voted against it, but basically they scared all these people saying the economy will disappear. They were saying this and, just to be clear, I don’t mean to say there wouldn’t have been greater disruption had you not had the bailouts. There would have been, but the economy would just disappear? What do you mean? The physical banks aren’t going anywhere. So all the banks that, we have our deposits, there’s still going to be there the next day. Their records aren’t going to go anywhere, and we actually do have a mechanism, the Federal Deposit Insurance Corporation to keep operating, keep normal bank services going through a crisis, which isn’t to say everything would have been perfect. But there was just this idea. We have to rescue them. And of course here we are now ten years, a little more than ten years later, and those banks, Citi Group, Bank of America, they’re bigger than ever. But you can’t call that a free market.

NPS: No, not at all. And I think you’re right in Rigged that the IMF showed that these big banks are able to borrow at a much better rate than they would be under normal circumstances because of the government insurance policy.

DB: Yeah. So there was research that the IMF had done, this was a few years ago now, and it may not still hold up because risks have fallen. That was still kind of in the wake of the crisis. But what their research had found, I’ve done some too showing this, that their borrowing costs were less than smaller banks because the presumption was if Citi Group got itself in trouble, the government would come to its rescue. Just as of course it did do in 2008, 2009. So obviously if you think from the standpoint of someone, you’re looking to lend Citi Group $20 million or another bank $20 million, well you’re going to be thinking, “I really don’t have much risk with Citi Group. It’s obviously a big bank and not likely to go under, simply because big banks don’t typically go under, but even if it were to go under, I could still count on the government bailing it out and making the whole.” So that means you’d be willing to lend to a lower rate of interest and that’s certainly what the IMF found, though again this was a few years ago. It was a careful research. I don’t think people disputed that at the time.

Economic Prognostication : Dean and the Housing Bubble

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NPS: And you were credited as being one of the economists that actually was able to predict the housing bubble.

DB: Yeah. This is a source of incredible frustration because it started like you see a disaster coming, and you’re trying to warn about it and no one’s really listening. To my view, it was not hard to see for anyone looking at the data, because it was just very, very clear with this unprecedented run up in house prices. And I had data going back to the early 1950s, government Robert Shiller, economist at Yale, subsequently won the Nobel Prize. He constructed data using public data sets, but he had to construct himself, going back to the 1890s, and we had never seen a run up in house prices, anything like this. House prices generally nationwide, at least pretty much track the overall rate of inflation. But suddenly in the late 1990s, they began to diverge from the overall rate of inflation and in the next decade quite sharply. So 2002, ’03, ’04, ’05, they’re rising at double digit levels. There’s no corresponding increase in rents. Rents are pretty much tracking the rate of inflation. Vacancy rates are actually high and rising. That doesn’t make sense. It’s not consistent with the type of labor market. So I’m looking at this and go, “How could that not be a bubble?” And the reason bubbles were on my mind, and not some of those bubble bubble bubble, we just had a stock market bubble, which collapsed in 2000 or 2001 and gave us the recession that year. And that was a big deal. So the idea that we might get bubbles in asset markets shouldn’t have been crazy to people in 2002, ’03, ’04. We had just seen a really big one collapse and gave us a recession, so I saw this in the housing market, and the reason why I thought the impact was likely to be really big was housing had grown to be a very large share of the economy. Housing ordinarily is around 4% GDP. It hit a peak of, I think it was 6.8% in GDP in 2005, so it was way above its historic average. And on top of that, people were consuming based on their housing wealth. So people bought a home for $200,000, and suddenly worth $400,000. A lot of people were borrowing against their homes, none of this was secret, by the way. I mean, I didn’t need special insight about this, I had to have some special insight or debt. Alan Greenspan actually wrote papers on this.

NPS: Really?

DB: They actually go back, and he had equity … I’m forgetting the term he used, something like equity withdrawal or spending from equity withdrawal. He had some term for it. I mean, I don’t know if he invented it, but he’d used this several papers, so it wasn’t any sort of secret that (a) housing construction was soaring to record levels, and (b) that people were spending based on their housing wealth. It was widely reported, and the point being that when the wealth disappeared, so did the spending. That’s exactly what happened. Of course, the bubble peaks in ’06, begins to drop at the fall of ’06, drops more rapidly in ’07, because basically the story you had in the housing market was people buying homes where they look at the house and go, “Is this worth $400,000?” They might’ve said no, but because the price is rising 10 or 15 to 20% every year, it doesn’t matter. So, you might say to yourself, “Well, I wouldn’t pay $400,000 for this house, but on the other hand, since it’s going to be worth $500,000, two years, yeah, why not?” But suddenly when that reverses, when the price is falling rather than rising, well then you look at it and go, “Oh yeah, it’s probably not worth $400,000, maybe I shouldn’t pay $400,000 for it.” And of course the banks wouldn’t make the loans anymore. So you’ve got house prices falling in ’07 and then very rapidly by the latter part of the year because it feeds on itself. And that was the story of the crash. House prices plummeted. And then of course residential construction plummeted. So as I said, it ordinarily had been around 4% of GDP, it fell back to less than 2% of GDP. So we went from being close to seven, 6.8% to less than 2%. That’s four and a half percentage points of GDP, that’d be 900 billion a year in today’s economy. So how are you going to replace that? Then you had the big fall in consumption, because again, you had all these people, their house went from $200,000 to $400,000, they take out a home equity loan, buy a car, take a vacation, maybe they’re sending their kids to school. So it’s not that was a stupid thing to do. They thought the house would still be worth $400,000, but then it ends up being worth $200,000. Well, suddenly they can’t do that anymore.

NPS: Oh yeah. So, in my husband’s family’s neighborhood in Scottsdale, we saw housing prices rise to just astronomical numbers. It was remarkable. Houses that were previously like $400,000 up to one point $1.2 million. And then all of that just completely vanished. And we used to live in the Dallas Fort Worth Metroplex, and I can remember construction happening out the Wazoo, all over the place in the areas around the metropolitan area where there were, basically just open fields and some farmland. And I couldn’t believe that, that many people would be moving into those houses, especially with so many houses on the market. But yeah, we ended up buying high and selling low.

DB: So sorry to hear that.

NPS: Fortunately we didn’t lose a lot of money, and it was nothing to complain about compared to what other people had to endure through all of that, the humiliation and the bankruptcies, foreclosures, just dreadful stuff. And the fact that this is done, and it’s understood, it has to be understood at top levels of power. Would you say that, that’s the case or do they genuinely not understand how this stuff works?

DB: I think they genuinely did not understand. I mean, I knew some of these people. What happens is you get this groupthink story that people talk to each other. They only take the opinions into account of other people that they think are really important honchos. I mean obviously it helps I’m an economist as opposed to someone just off the street but still, I don’t have Nobel prize, they don’t have to listen to me. So they didn’t have to count what I’m saying. And I remember being on a panel once, and I was talking about the risk of a house price decline. And it was a fairly prominent economist, he was just totally dismissive. He just said, “Well, I’ve never seen anything like what you’re describing.” And my point was, “No, we’ve never seen a nationwide fall in house prices like this because we’ve never seen a nation run up in house prices like this.” That seemed fairly straightforward to me. He was just totally dismissive. Like I’m talking about something that’s just other worldly.

NPS: Right.

DB: For me that was very concrete.

Economic Schism : Pragmatic Piketty and Elitist Theorists

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NPS: I liked the way that you described it earlier, that economics is much simpler than people think because I was going to say something similar at the beginning of this discussion about how on the one hand it seems like economics is much simpler than what people think. But on the other hand, theoretical economists start delving into NP hard optimization problems and Nash equilibria, and all of these interesting things that don’t pay that much attention to the pragmatic. And I guess that brings me to Piketty. I know that you’ve written about him and talked about his works quite a bit now, particularly Capital in the 21st Century, which I’ve started, but I can’t say that I’ve finished yet. There’s a lot in there. But I guess, what is your take on this that there’s a schism in the field of economics?

DB: Yeah. Well, I think that a lot of economics, I was joking about this, but this is actually very serious. I think it’s about making simple things complicated.

NPS: Yeah.

DB: I mean, of course my analysis of the housing bubble was pretty simple, and people asked me, as this was going on did I consider getting it published anywhere and I kind of shrugged because I go, “You know, it’s too simple. I don’t where it can get published.” I mean, it was basically a very simple story. And I actually had exactly that because there was a similar issue, back in ’05, President Bush wanted to privatized social security.

NPS: Oh yeah.

DB: His big argument was that, “Oh, we’re going to give people individual accounts and will make way more money in private accounts. And that was based on their assumption stock returns and what I was arguing was that you can’t have the high stock returns that they’re talking about given that they’re projecting slow economic growth and their price to earnings ratios in the stock market were already quite high. If you had low price to earnings ratios, you could do it, but we didn’t have low, we had high. So I was saying that you cannot get the returns that they’re predicting. So a friend of mine, Brad Delong called me up and said, “Do you want to do this as a Brookings paper?” And he goes, “I can get it published.” And I said, “Well, this is really a Brookings paper. I mean, because it’s simple. It’s basically algebra. What are dividends, what are capital gains, it’s adding two numbers.” And he said, “Oh yeah, no, it could be a Brookings paper, so I won’t have to do my work on this.” So I wrote it up, gave the basic algebra. So Brad goes out, “Thank you very much.” He did the bulk of the work, Krugman did some too, I don’t mean to downgrade his role, but Brad was the main actor here. But anyhow, he totally rewrites it and basically makes two points. One was an intertemporal consumption optimization model and then the other was the point I was making, which was again, basically simple algebra. Brad rewrote it, but basically presented the argument. What made it, the Brookings paper of course was the optimization model, though not too complex, but it was certainly more complex than simple algebra. When we actually presented the paper, no one said a word about the optimization model. No one could care less, all they cared about was the simple algebra, but without having something with some calculus in there that you could wave your hand and would go, “Oh, yeah, this is complicated. We wouldn’t have gotten there as a Brookings paper.” So it was just as clear as day that, “Okay, you have to make this complicated, get through the door, even though, that has nothing to do with the issue at hand.”

NPS: I wish I could say I was surprised by that, but I’ve spent enough time, been in and out of academia enough times that yes, that’s definitely true, that oftentimes you can present something that is even novel and advances the science. I had a classmate at Georgia Tech who submitted a paper to one of the theoretical computer science symposia and they thought the result was momentous, but the proof was too simple. So therefore they didn’t want to accept it.

DB: Oh God-

NPS: And they actually outright said that. They weren’t hiding it. They weren’t saying, “Uh, this really wasn’t good work.” They were just saying, “We like the result, but the proof is elementary, so therefore we can’t publish it.”

DB: It’s amazing. They wouldn’t be embarrassed that … Are we trying to advance the science or are we just trying to spin our wheels and …

NPS: Or make ourselves look so complicated that we can … I don’t know, to achieve some dominance in the field, maybe. The more David Attenborough programs that I see, the more I realize that we’re just animals. That’s a little bit cynical.

Taxing the Rentiers : Makers of More Than $X

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NPS: One thing that is in the news right now, and then I want to get back to your background because I want to make sure that we cover that as much as we can. I noticed that the Alexandria Ocasio-Cortez mentioned in the news, the 70% tax rate on $10 million and above, and that Paul Krugman–actually I learned about her quote by reading one of Paul Krugman’s columns on this. And it looks like Piketty and I’ll never be able to say these names, [Stefanie] Stantcheva and [Emmanuel] Saez, I believe is the-

DB: Yeah, Saez, yeah.

NPS: Okay. That they say that it’s 83%, but through the last twenty years, since the Bush W. tax cuts were pushed through, I have told people repeatedly about the top marginal tax rates that we had at the end of World War II, when we had some of the greatest growth, if not the greatest amount of growth that we ever saw in American history, economic history. And so I wanted you to weigh in on that also, so how this 70% versus 83%, the numbers are sort of … they’re not immaterial, but the concept is important. How do we tax the wealthy in an optimal way?

DB: Yeah. Well, two issues. The more important one is this idea that if they effect the high tax rate that, “Oh we’d lose out, all these very highly talented people,”

NPS: Which is bullshit. They don’t, contribute that kind of work to the economy-

DB: Yeah, I guess I would divide those into groups. So when you get the people defending it, like Greg Mankiw was Bush’s, the head of his council of economic advisors, “Oh Taylor swift, don’t you like Taylor Swift’s music or whatever, and she wouldn’t perform if she’s going to be taxed at a really high rate.” (A) that’s not true. I mean the vast majority of people are not Taylor Swift, I mean, whether you like it or not, I am not a great Taylor Swift fan, but whatever. The vast majority of people who are in those income brackets are people on Wall Street who are shuffling money. Your corporate CEOs, the people who got a lot because they inherited their wealth-

NPS: The rentier culture.

DB: Yeah. So that’s who we’re generally talking about. But even the Taylor swifts, I mean, the example I like to use there’s Michael Jordan who maybe was the best basketball player ever. During the prime of his playing years, he took two years off to play baseball. Now suppose he had faced the 90% marginal tax rate. Would he have decided that he had so much money that he could spend two years playing baseball? Maybe he would have, I don’t know, but he may well not have, and certainly Jordan was a fantastic player and if you enjoy see Michael Jordan play, we actually might have gotten more of Michael Jordan with a higher tax rate than lower tax rate. But again, that’s not who we’re talking about for the most part. We’re talking about the corporate CEOs, the people shuffling paper, so I’m not worried about not giving them enough incentive to do what they do for the economy. In most cases they would probably do the same. And in the cases where he had the CEO said, “Well, if I have to pay a 70% or 80% tax rate, it’s not worth if it to me,” my view would be, “Well, fine, we’ll take the next person in line. It’s not as though,” I mean fair, there are some CEO who were extraordinary Steve Jobs, and though you can make complaints about what Apple’s done and everything, he was a visionary, so if Steve Jobs had said that, okay, we would have lost something, but the vast, vast majority of CEOs are not Steve Jobs. So if they said, “Hey, it’s not worth it for me,” it would not be a big loss to the economy. The part I do worry about, and you have to decide where this kicks in, is what they will do by way of evasion / avoidance because that is a loss to the economy. They both don’t get the revenue, but it also means it creates tax sheltering industry, and that’s what I worry about. So I would probably put a number, certainly below the 83%, probably some below the 70. Important point to remember here, we also have state and local taxes and in the case of say California, somebody who’s earning $10 million year is facing a 13% state income tax. So I’d probably be more comfortable with something close to the 50% because as you get to high tax rates, you’re giving people a lot of incentive to evade your tax, to avoid your tax and that’s just a loss to the economy. Again, I’m not worried that they’re going to say, “Oh, I don’t feel like working for that.” But it’s a loss lost the economy that they’re paying people to come up with various gimmicks so that, they don’t have to pay their taxes because that itself is a drain on the economy. I mean, if we have attached shelter industry where all these people are making their living by thinking of ways to gain the tax cut, well those people aren’t doing anything productive, so that’s what I worry about.

NPS: Well, it’s certainly be valuable to the economy to get rid of the tax lawyers.

DB: Exactly, exactly.

NPS: Most of them anyway.

DB: Well, no. I mean seriously, we want a system that involves as little as possible in terms of compliance and enforcement cost, so we have to ask not just about, “Oh, is that going to mean that this CEO or this Wall Street guy is going to work a little less if we have 70% tax rate?” That doesn’t concern me. It’s more, how many tax additional tax lawyers to the accounts are we going to have who instead of doing something productive in the world, they’re going to be coming up with games that. That’s what I worry about.

NPS: Right, right. I guess that I would be somewhat optimistic and hope that at least the good guy CEOs would be willing to reroute the money that they would be getting in salary back into the company for the profitability of the company. Good Lord, that’s something we haven’t even touched on, is simply the history of corporations and indefinite charters and all that.

Origins of Dean : Chicago, Protests, Economics, and A Run for Office

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NPS: But I want to rewind a little bit before we get onto that. Well, so I want to go back to the beginning for you, where you are from and what is it that interested you in economics and what is it that interested you in progressivism/activism? I know that you participated in sit in protest against the contras in Nicaragua and you had a very interesting advisor who was, I guess by all accounts, a Marxist economist.

DB: Yeah, [W. H.] Locke Anderson.

NPS: Yeah, Locke Anderson.

DB: Yeah. Well, I grew up in Chicago, under the Daley machine. I always had a sense, politics was corrupt and it needed to be cleaned up and this was back in the days of the Vietnam War. I had the sense the Vietnam war was at least a very serious mistake. It’s easy to see that a lot of things that our government was saying weren’t true. I remember I read a book [The Arrogance of Power] by [J. William] Fulbright, who was the head of the Foreign Service Committee and a big critic of the Vietnam War. And it gave the history, which I hadn’t heard. I was a casual reader, at this point I’m like twelve or eleven year old reader of the newspaper. But it was certainly an account I hadn’t heard and then realized, “Oh my God, this makes no sense our involvement in the war.” Anyhow, so I had a sense things were really not going as they should. And I actually came into economics just my last year in college because I felt economics was important, but I didn’t like the mainstream of the field. I had a professor in my last year there, David Weiman, and I got to talking with him, I was very interested in the economics he was doing and decided my senior year that I take economics with him. I decided to go to grad school in econ. You probably couldn’t do that today because I didn’t have big background, but I was lucky to do well on tests, so I was able to do well on my GREs and everything. I always had been good at math, so I was able to get in. In economics, I was always interested in like, “Okay, how can I learn this stuff to be a voice to criticize the mainstream of the profession.” That was what I was thinking about in grad school. You mentioned the sit ins at our congressman’s office. This was the 1980s, the US was actively involved, it was the Reagan years, so trying to undermine the Nicaraguan revolution, which I thought was just incredibly pernicious. I mean, people don’t know, the background I realize it’s ancient history now, it was forty years ago. There was a very corrupt dictatorship that had been installed by the United States. That’s not a euphemism. It had literally been installed by the United States back in the 1930s. We put in Anastasio Somoza’s father who passed it onto his kid. Anyhow he was very corrupt and needless to say they didn’t care at all about the needs of the people. There was no money going for healthcare and education; they were pocketing money left and right within a poor country in any case, but they weren’t sharing what they did have. And they were overthrown in a revolution in 1979 by the Sandinista’s armed revolution, they managed to overthrow them. And Carter was still president at that time. He didn’t want the Sandinistas to come to power. He was trying to keep them from coming to power. He wasn’t able to work out a deal. He was doing his best to try to work out something and basically kept them out of power while getting rid of Somoza. He wasn’t able to do that. They came to power, and they were very much committed towards providing healthcare, education, meeting basic needs of the people. Under Reagan, he very quickly got remnants of the National Guard, which is the army that does supports Somoza, and he began arming them, and they basically did a terror war–they would do attacks on villages. They’d come over the border from Honduras, there was also a group in Costa Rica. They’d come over the border, and they’d attack whatever they could, which often was hospitals or schools. As I said, terrorism is the right word. And that continued through the 1980s and our Congress person who had been a moderate Republican, they redistricted in 1980, for the 1982 election, made it a much more conservative district. He suddenly became a very conservative Republican following the district, and he supported Reagan on that. That was the basis I was in any number of protests. Actually I challenged him for the seat in 1986, it wasn’t my intention, but we couldn’t get anyone else to do it. We got the Democratic nomination and got 41%; it was not close, but it was way more than anyone expected. But anyhow, I felt that was the important thing to do. I mean, I don’t regret at all having tried to oppose the US actions there. I think we see it again today. The US, it’s involvement in Venezuela again; again I’m no fan [Nicolás] Maduro government. They are corrupt. They’ve done really horrible things in terms of what’s happened with their economy and its impact on the people. I mean these aren’t just numbers, people aren’t getting food, they’re not getting medicines, it’s a really bad story. But our concerned there, the concern of the US government is not that Venezuelan people are suffering, because that’s never been a concern of our government. It’s an anti-US government, and they want to see it overthrown.

NPS: Our presence in Latin America has been brutal and horrendous since the founding of the colonies.

DB: Yeah. And it doesn’t seem to change. I mean, you keep hoping, you know.

NPS: Every single president promises not to be an interventionist like the previous one.

DB: Yeah.

NPS: And then they say we must look forward and not backward, which I think was one of the most disillusioning things I heard Obama say.

Markets Follow Trade Policy, and the Folly of Context-Free Numbers

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NPS: Not that I want to talk about Trump necessarily because we hear enough about him, but we’ve been controlling their economies using trade agreements, which are anti-market forces. And I can’t believe that self-described free marketeers in the Republican Party believe promoting democracy or free market ideology.

DB: My guess is that’s ascribing a level of thought of planning that I think really is not true.

NPS: Institutional independence or free mindedness. Yeah, I agree with you.

DB: Yeah. So I think they’re going, “Okay, NAFTA, the transpacific partnership is coming up, how do I vote?” They’re getting the lobbyists calling them, they’re hearing the party leadership saying, and I think that’s 99% of the time, what determines how they vote. Well, what does this actually do? I think most of them have very little idea what it actually does.

NPS: I don’t know if you’re familiar with the works of George Monbiot, he’s a naturalist journalist over in Britain. He has some interesting things to say about, the narrative that people have been fed, that it is this neoliberal narrative, even though you would ask them what neoliberal means. They wouldn’t know what you’re talking about, but he thinks that we need some cohesive narrative to be able to explain to people, how our economy actually works, how we’re told it works, and what the differences are. But I think people are pretty smart when it comes to these things. They may be ignorant of the facts, but it’s not as though they don’t understand them when the facts are expressed.

DB: Yeah. Again, I think of my job as an economist is about making these things clear to people. My blog Beat the Press and what that’s about is criticizing reporting because, I think the biggest problem, of course, most people aren’t going to be reading government documents; a more informed person reads through the Washington Post, New York Times and major papers. Most people don’t, I’m saying, the more informed person and I focus on those papers, and they are not giving people information in a way that’s understandable. That’s a real big problem. I’ll just give you my pet one, [as] it just drives me nuts because there literally is no other side to it. When you see a budget number that’s expressed and in millions or billions or tens of billions, it’s giving no information.

NPS: Yes. I read that on one of your blog posts about the lack of context.

DB: Yeah. And no one, literally, no one disagrees on that. I mean, I’ve never found a reporter who tries to tell me that when they write down the transportation budget is $180 billion over the next six years, that any substantial segment of their readers, and I’m talking about New York Times readers, I don’t mean the New York Post and most of the people aren’t that educated. I mean, New York Times readers, all of them have college degrees, many have advanced degrees, law degrees, whatever. They don’t know what the budget is. So if you tell them $180 billion over six years, you could have added a zero, taken away a zero, it’s a lot of money and that’s all they know. Of course, what’s relevant is how large is that relative to the total budget? Is this big thing in terms of the total budget? A small thing? And most people have no idea. So haranguing them, it’s really not that hard to just put it in some context. The most obvious one to me is put it in percentage terms, but there are different ways you could do it. So if you said $180 million over six years, that’s $30 billion a year. It’s about seven tenths of 1% of the budget. So if you told people seven tenths of 1%, most people that gives them a reasonably good idea. It’s not a huge share of the budget. It’s not altogether trivial, but if you cut it by 20% it’s not like you have a lot of money in your pocket. If you raised it by 20%, that’s going to be a huge increase in the deficit or a big tax increase. Anyhow, if you put it as a percentage of the budget, it would hugely help in terms of informing people. Where I think this issue comes up most clearly is when you talk about a lot of social spending on the poor, that is almost very, very, very small in terms of the whole budget.

NPS: Yeah. It’s dirty pennies in the couch cushions. I mean, it’s nothing compared to the overall budget.

DB: So if you take TANF, the temporary assistance for needy families, the main welfare program-

NPS: The food stamps, yeah.

DB: It’s less than one half of 1% of the budget. The big argument, is this money well spent, is poorly spent? But it’s important, you go, “Okay, it’s a horrible program. I want it zeroed out.” Okay, we get your wish: you’re not going to have much more money in your pocket because we lowered your taxes. It’s half of 1%, less than one half of 1% of the federal budget. So it’s not all your money is going to these people you don’t like. You might not like the people. Maybe I don’t think they should get the money, but it’s really not going to affect your tax burden in any big way and people don’t understand that.

NPS: Yeah. I feel like institutionally, not just the government, the various agencies and branches of the government, but also the media don’t have much of an incentive to make things clear. An example is I’ve been staying down here in Tucson the last couple months, because of the short term that I’m on; I’ve been staying with my aunt and uncle and my uncle watches CNN almost incessantly, which means that all I ever hear about is Trump and screaming. And that literally is about it. There’s almost no content that is provided. I’ll switch on Democracy Now, and my aunt and uncle are amazed at how much stuff is out there that people aren’t hearing about. And having experts on that can spend fifteen minutes explaining something to you instead of 30 seconds screaming at other painted up people.

DB: It’s one of the things I will say I really don’t understand because I think, New York Times, which is clearly the country’s preeminent newspaper. I had this argument with reporters there for decades now. And I remember about five years ago, maybe a little longer, Margaret Sullivan who at that time was the public editor. She wrote a piece on this, my haranguing, I and others had, really pushed on this, the issue about putting budget numbers in context. She agreed completely. She said, “Yes, no one knows.” And she brought in David Leonhardt who at that time was their Washington editor, so important person there who controlled or had a lot of say I should say, I don’t know exactly who controls, but he has a lot of say about how things appear in print. And he goes, “Yeah, we might as well just write a really big number.” That was exactly the line I said, he’s welcome to take it, but whatever, we might as well just write a really big number because no one knows what these are. So here you have the public editor, the Washington editor both agreeing with me completely saying, “Look, it’s irresponsible to put these big numbers and there was no content because no one has any idea what they mean.” So I actually went out, I remember I celebrated, I go, “Holy Shit, if the New York Times does this. Well then probably Washington Post will follow, National Public Radio will follow, and if picked up, it’s a good standard.” I was going, “This is fantastic.” Nothing changed. You just go, “What is this?” I mean, I’m not asking them to do any big thing. It’s not like I’m asking them to go research some boring topic. The numbers are right there. I don’t believe their reporters are stupid. If you wrote down $20 billion, come on, you can put it on an Excel spreadsheet, a hand calculator. Probably most of them could do it in their head. This is really simple stuff.

NPS: Yeah, apparently the Brookings did a survey a few years ago. They probably done more surveys along this type since of the tea partiers and the surveys demonstrated a thorough ignorance on how much spending goes towards TANF and foreign aid. It’s interesting that they believe that more money should go to it than actually is going to it, and they also believe that more money is going to it than they think the numbers should be.

DB: Yeah, I’ve seen those stats. I don’t know if I saw that specific Brookings one. But you know, I often say if I thought as much money was going to these programs as those people thought, I’d be opposed to them too. I mean if I thought 30% of budget, people think that TANF is getting 30% of the budget they would be looking and going, “We’re spending 30% of the budget, $1.5 trillion a year, and we still have all these poor people? That doesn’t look like a really good program.” Again, and I understand some of it goes the other way. Some of them are racist, and they want to believe really bad things about these people. But you have people that aren’t racist, they actually think we want to help poor people. They just say, “Oh, we’re spending too much,” because they think we’re spending, ten or twenty times as much as we’re actually spending.

NPS: Right. And that was the case with a lot of them. They wanted there to be aid for single mothers with children, with minor children but they were opposed to welfare or food stamps. When they heard the terms that have been racially charged, then suddenly they’re opposed to it. So yeah, it makes for a very interesting lot of people in the United States. I guess there were a couple more questions I wanted to ask you-

DB: You go ahead.

NPS: Oh, thank you so much. This is awesome. I mean to actually be able to ask you questions. It’s fantastic.

The Liabilities of Limited Liability

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So limited liability, recently I had a back and forth with somebody on LinkedIn and much to my surprise what I said actually won him over–I wasn’t expecting that to be the case, but he was signing on, piling onto this notion that corporations are these magical unicorns that have been given from on high that are able to come to these optimal strategies, which of course if you know anything about high dimensional, even convex optimization, but non-convex optimization is ridiculously hard, but they somehow get in their mind that these corporations are given from on high and are able to do this all on their own and that it’s just government regulation that’s impeding them.

NPS: So I raised the concept of limited liability and how that’s actually an anti-market, which I pulled this straight from your book, so this information came from you. So I’d like for you to discuss limited liability a little bit and how it does not follow any kind of free market ideology.

DB: Yeah. I’ve often had fun with libertarians, who want to say they won’t get the government of the economy. So I go, “You want to get rid of corporations.” And they look at me like, what are you talking about?

NPS: Exactly.

DB: You and I can form a partnership, but a corporation has legal status because of the government, and specifically legal liability, limited liability. And there’s other benefits as well, but first and foremost. And what that means of course is, you could have a corporation that they do bad things to people, and we sued them and guess what, they don’t have enough money, and we’re out of luck. And if you and I had ownership and we did that, well we’d lose everything we had. In the case of cooperation, I had $50,000 in stock or whatever or I could lose that, but I could still have millions of dollars, they can’t touch that. Okay, that’s arguably, that was a good thing for us to create corporations grant them limited liability. I think it was. Well, we have to understand that is a government action. That was a policy. We’re not, free marketeers if we believe that the government should be able to grant corporations limited liability. The point I make on this, and I think this is tremendously under appreciated. Go ahead.

NPS: Oh, I was just going to say that in reading your book and then reading some on the History of the Corporation, I can’t think of the author’s name. It’ll come back to me, but I think you site in your book, that these corporate charters issued were predicated on some temporary service. So they needed to raise capital to build a bridge or pave a road with the exception of shipping and railroads and interstate commerce kinds of things because that made sense to have more of a lasting requirement for raising capital. So how is it that we have these charters issued that last indefinitely now and what was the justification for it?

DB: Yeah, so if you go back to English common law, the corporation, as you said, it was designed for specific public service, building a canal or South China, South Sea Trading Company or the East India Trading Company. So there were very specific purposes that it was started to serve a public purpose to allow, the special status of a limited liability. In England that continued to be the case well into the 19th century. They didn’t have a general incorporation law until 1867 if I remember correctly. In the US, we had it earlier, it was actually in, I think it was 1817 when we adopted general incorporation. And the basic idea there was, we have a general interest in promoting the creation of wealth. So this was a way to create wealth so companies can incorporate and have limited liability. That was the rationale. And again, you could argue whether that was a good or bad thing, but it clearly was explicit policy at the time, everyone understood that this was a government policy to promote wealth. It wasn’t just something that was out there in the world. We were going to do this as a way to promote wealth. The other point I was going to make is that, we also set rules of corporate governance, and those are actually very extensive. Most of the rules are designed to protect basically protect minority rights. So, “I own shares in Microsoft, I own,” I’m going to say 1000 shares of Microsoft or something. Well we want to make it, or I should say we either want to or not, the rules make it so that you can’t have a situation where some group gets control of 50.1% of Microsoft and then tells me and everyone else that are in the minority, “I’m just taking all your shares.” That’s what most of the rules of corporate governance are around. But the point is that there’s nothing intrinsic to the corporation that sets those rules. We could set those rules in different ways. And one of the points that I’ve been trying to make in some of my work recently is that the rules are very much skewed now to give management an enormous say. So I’m actually, people think is weird. I actually argue for more shareholder rights because what I would say is where you have these CEOs that are getting $20, $30, $40 million salaries, they’re ripping off the shareholders. And it’s not necessarily that I have so much sympathy for the shareholders. I mean most of the shares are held by very rich people, but some of them aren’t rich middle class people 401ks, pensioners also have shares. So not all of them are rich. All the CEOs are rich that we know. In that sense, I’d rather see the money go to the shareholders. But what’s a more important point to me is that this affects pay structures throughout the economy. If the CEO’s getting $30 million, the CFO, the other top people, they’re probably getting $10 or $15 million and even the third echelon you get to people who are senior, but below these people in standing they’re probably getting one or $2 million, and just stands to reason that more money is going in those people less for everyone else. So I would actually like to see shareholders have more say because I want to see them be in a position to reign in CEO pay, because the CEOs are not doing them a favor when they basically charge the shareholders $30 million for their service. You can sure get plenty of people who’ll do the job just fine for two or $3 million and this gets to a point about progressive taxation. It’s very rare that you have a CEO like Steve Jobs, the real visionary. Those people are very few and far between. The vast majority, I’m sure they’re smart. I’m sure they’re hard working, but the next in line is just as hard working. So you aren’t going to lose anything if they go, “Oh, it’s not worth it to me for two or $3 million.”

The Price of Happiness

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NPS: Yeah. And even then is anyone worth having billions and billions of dollars, no matter how talented they are.

DB: Well, that I think is at least a debatable point, because, I mean, I never met Steve Jobs, and I don’t know, he might well have been very creative even for a tenth the money he got, maybe than a hundredth of the money, there’s certainly, were you have … Getting back to Greg Mankiw who was talking, I don’t know, Taylor Swift. I mean, many of the people we think of as great artists, great musicians, they’re committed to their work, they probably would do it for our tenth of pay. You go back in time, I won’t advocate this, but how much did Vincent van Gogh ever get for his paintings? I don’t think he sold one in his lifetime. I think he was poor.

NPS: He died poor, yeah.

DB: But he was maybe the best artist in all history. And you think of Charlie Parker, the fantastic jazz musician. He died in poverty. Again, I’m not advocating that these people should be poor, but the idea that they have to get enormous sums to be creative.

NPS: To be motivated and that greed, that money is the only thing that motivates them. That sounds more like something a rentier would say is that money is the only thing that motivates him. People will do creative work, especially if their basic needs are being met. So my husband is a psychiatrist and so he’s read a lot of these reports and is and is fascinated by these reports on what amount of money it would require to make people happy. And it turns out that it’s not a lot. It’s basic necessities, healthcare, shelter, being able to provide for your kids’ college, and those sorts of things that make people tremendously happy. And if you have those things you’re going to work on what’s interesting to you. I know it’s speculation, and I’m a humanist optimist in that sense. I believe that, that’s what people will do.

DB: Yeah. Well, I’m inclined to agree with that. Of course, the key thing is not just the money that they have, but they’re secure so they want to know that they have care insurance today but aren’t going lose it tomorrow, that’s a really important thing because obviously it’s a big fear that people have today. They might think, “Oh, I have a decent job, and I could afford my mortgage, my rent, pay for my healthcare insurance, but I can lose the job tomorrow.” That realistic fear.

NPS: Yeah. What I’ve been through in the last year and a half, pretty bad health crisis, and I have nothing but gratitude for the good healthcare that I have through Microsoft that most people this country don’t have healthcare that’s that good because we have sort of Cadillac insurance policy with Premera, but most people don’t have anything like that kind of security. And it’s astonishing to me that there hasn’t been more of an organized uprising in this regard. Hopefully there will be.

DB: Yeah. No, I’m hopeful that in the next election we’ll see some real movement towards establishing a genuine universal system. I mean, I thought the affordable care act was a big step forward, but obviously that’s not go nearly far enough, but I think it was a step in the right direction.

What is the CEPR?

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NPS: Yeah, definitely. So the formulation of the CEPR, what motivated you to co-found this organization and what do they do and what are you continuing to do with them these days?

DB: Well, you know, I had been at the Economic Policy Institute, and I appreciate the time I worked there and everything. But I felt that it was overly bureaucratic because they were very cautious in everything and a lot of layers of bureaucracy. I used to joke with someone, they’d say, how long does something take? I’d say, “Well, imagine it taking it as you could possibly envision, double that and add six months.” That was obviously being somewhat facetious, but what I felt was there’re a lot of issues that, we could have an impact on, but we often had to act quickly, and I didn’t think that the Economic Policy Institute gave me that room. So I formed Center for Economic and Policy Research with an old friend of mine from grad School, Mark Weisbrot and we felt that was basically what want to. There was a lot of policy issues that we could have an impact but we just have to move quickly. And one of the big ones at that time, we had a book come out literally as we were starting it, Social Security: The Phony Crisis and everything were taking issue with the view that was held really across the political spectrum in Washington, I should say. Social security faced a crisis because I had any number of Democrats, democratic pollsters, I remember once one of them just telling me, basically, “You have to acknowledge there’s a crisis or people just won’t take you seriously.” It was based on his polling, his focus groups. And we didn’t accept that, we felt (A) the data, it wasn’t true and (B) if you talk, people would listen.

NPS: It was absurd rallying point. I had college teachers that actually would say in class that social security was going to be bankrupt in a couple of decades and that none of us could rely on it. And it just seemed ridiculous to me that something like that could ever come to pass when we have more money in this country than we know what to do with.

DB: Yeah, I remember I spoke of course around the country many times on this, and I remember, at that time I knew the social security trustees projections pretty much inside out, and I’d just go, “Okay, let’s say they’re all exactly right. Here’s what it looks like. And it doesn’t go away, you face a short fall. But literally the idea there’d be no money, that’s literally … I mean, again, assuming you never did anything, and they’re exactly right in all their projection, but when I couldn’t convince, I’d say speaking to a college class, the line it’d always go, “Okay, so we have some point in the future, is it ten years as twenty,” I’d have them give me a year, at some point. “Okay. So we’re not paying social security benefits.” So then I’d go, “Okay, so in this year …” This was back in the 1990s. “So in this year, 2015, are we still going to have an army?” Looking at me like, “Of course. ‘Okay. Are we still going to have our court system?’ Yeah. ‘Are people in Congress still going to be …'”

NPS: Get paid, right.

DB: I go, “Okay. So we’re going to be paying for the army, paying for our courts, congress people. So we’re going to have 30 million people who are over 65, and we’re going to tell them that there’s no money for their benefits?” You just go, “Okay, that makes zero sense. That is not going to happen.” So anyhow, obviously we didn’t do it. You can’t do anything alone as a small think tank. But we helped I think change the tide on that, and by 2005. Yeah. When Bush tried to privatize, the Democrats are no longer saying there’s a crisis. And of course more recently many, if not most Democrats had been calling for increasing benefits, which I think would be a good thing.

NPS: It definitely would be. My aunt and uncle rely on it critically. Obviously it’s a necessary thing to have and I don’t like part of the narrative about social security, that it is money you paid into it so therefore you’re entitled to it later, because it was set up originally paying benefits to people who had not paid into it. And that has always been the way it’s worked, that the current working force is subsidizing the retirees, which makes sense. I mean, ideologically it’s progressive, and it’s comforting, but that’s not the way that it’s spun usually.

DB: Yeah. Well, I sure like the idea that people think they have a right to it, so in that sense, I think that part of it is good because it makes it much, much harder to-

NPS: Oh yeah, definitely a human, right.

DB: Yeah.

NPS: Yeah. But healthcare also should be a human right, and it should be something that is available to everyone.

A Money Scare : How Can We Pay for Saving the Planet?

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NPS: Just as a funny aside, I try not to get on LinkedIn or any other social media and get into debates very often because my husband yells at me about doing because, it’s such a time drain. I’m not even on Facebook anymore, and I wouldn’t be anyway after the revelations of how they’re using data. But there was this man on LinkedIn that was arguing that so many of us are complaining about how we’re running out of water, we’re running out of coral reefs, we’re running out of fish, temperature is changing and there’s scarcity of oil and all these things. And he said, “But what about the real problem that there’s scarcity of money?” And I just wrote back and said, “In a certain respect, money is a number in a spreadsheet.” I mean, it’s more complicated than that, but I thought that was astonishing that people have this mindset of a gold standard, that money intrinsically is of value when it really is just supposed to be a proxy for value. I don’t know if it was a funny interaction.

DB: A lot of people have strange views. I was once debating some libertarian guy, forget the exact topic, but it was something related to the Federal Reserve Board. And I remember this woman came up to me afterwards because we’re at a reception, and she said, “Do you …” I forget exactly how she put it, but basically, “Do you think gold has intrinsic value? ‘Well, if you wanted the jewelry or something, but no.'”

NPS: Yeah, that’s what I said to a coworker … actually, my tech lead at Microsoft, he made a comment about that, that if money were underwritten by gold, then I said, “Well, the problem is gold and precious jewels and precious stones, all this stuff, it doesn’t really have value if you think about it.”

DB: But, it’s amazing. It’s actually one of the most basic social conventions, but it is just a social convention.

NPS: Yeah, it’s other otherwise nonsense that we just take for granted. And I had never really thought about that seriously until this past year, because if somebody asks you about gold, you say, “Oh yeah, it’s valuable.” Should I buy some bricks of gold and bury them under my house? Yeah. Let’s see. Well, here’s an interesting question about an actual market system. At what scale do you think market economies can exist? Obviously it doesn’t seem to work, as an overarching theme, but are there macrocosms where it does work and work well?

DB: I mean, I think we’ve gotten a huge amount out of a market economy, so I won’t deride it. I mean it just that you have to set the rules, and it’s interesting, and I won’t claim expertise on the platform economy, but it’s totally noncontroversial among economists, where you have a natural monopoly say electric companies, just to be clear when I’m saying, electric companies, I mean people who actually laid the lines to your house. So I understand we could have competing generators but no one was going to lay duplicate electric lines to my house, that they have to be regulated because, here it is, it’s a central service, and there is no competitor, so it’s totally noncontroversial among economists. I mean, maybe you could find one libertarian somewhere who has some story why you don’t have to regulate it. It’s basically noncontroversial, and it seems that we have something similar with things like Facebook, things like Google that they have for practical purposes, monopolies people, and that’s a story just like, “Well, you then have to regulate them because then they could obviously exploit them endlessly and they seem to be doing that.” That seems to cry out for regulation, both in terms of what they could do with your information because I’m sure, Facebook in particular is probably doing all sorts of things with information about us that we wouldn’t want them doing, but–

NPS: Absolutely, yeah.

DB: –but also what they could charge because again, you can’t have it … No one’s going to lay the second electric wire, no one’s going to have the serious competitor to Google. So, those are clear cases where, we need to reign them in. I mean, other aspects … To me, it’s problematic, people talk about putting up … With greenhouse gas emissions that somehow we have to restrict the market, in my view again, it’s defining the market. I mean, we know greenhouse gas emissions are causing global warming. So, the analogy I make, it’s not an interference in the market if I tell my neighbor that he can’t dump his sewage on my lawn, that’s what we’re saying with greenhouse gas emissions, that we have to restrict them because it’s not just something you’re doing pride, you’re throwing this into the atmosphere. If you have a way to … You’re going to burn oil, and you have a way to suck in all the carbon emissions so that … That’s fine, it wouldn’t bother me and there’s still issues with the extraction, but in terms of the greenhouse gas emissions. All right, fine. If you can deal with that, you can’t, I mean just to be clear. But I mean if someone came up with some brilliant way to do that. All right, well then I guess we don’t have to worry about burning oil. I don’t know, I mean it’s just, you have to think clearly about what you want the market for, what it’s doing in specific circumstances.

NPS: You said as the tool rather than overarching philosophy, but more just one of the many tools that you have. It’s interesting you mentioned the greenhouse gas regulation because it brings to mind the notion of the externality, which I heard when I was at Georgia Tech, Ken Arrow came to give a talk, and he mentioned externalities extensively and how much complexity that adds into any kind of market economy and that a lot of these things are things that we have to consider and regulate, just like what you said.

DB: Yeah, he was a very good economist. Very thoughtful.

Economy of Data

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NPS: Yeah. I happen to work in data science. I’m a statistician working at Bing Ads, although I’m not working on the actual ad space, so unfortunately you can say that I’m in that bemoaned financial sector, and I can’t believe that I found my way into it and decrying it the whole time. But I continued to derogate it. I think also there is this problem of data and regulation of data. Facebook can keep tabs on what you’re doing and then exploit that using machine learning to figure out exactly how to target you with ads. And I wonder to what extent … I was thinking aloud about this, and ended up writing a pretty long blog post about it on my other blog [Algo-Stats], some of the complexities that come up in this and that I feel like a tighter regulation is coming. But what is your take on, data and the way that it’s appropriated for profits? I get a sense, even though I know this would be hard to regulate, I feel like people whose data is used to generate money should either be told very clearly that’s going to happen or be in on a cut of the profits.

DB: Yeah, I think we have to do one or both. Again, these get into issues that I’ve just looked at very, very cursorily. But the idea that, Facebook and Google can get all this data on people, compile it. First and foremost, I think very few people appreciate how much data they could actually get on you and then be sharing it with what they’re doing with it. I mean it’s … I don’t know, what I should say. I definitely would know that I don’t want every search I’ve ever done on Google to the public.

NPS: Oh yeah. No, absolutely not.

DB: Presumably they won’t do that. They’d have no reason to do it, at least that I know. But, in principle, they have access to it, they could, I don’t think there’s any … So, I think there have to be clear restrictions on how this data can be used, say if they’re profiting from it, it seems reasonable in different directions. One, you restrict how much they can profit. You could say that, “Okay. You have to share that with the people you got it from.” I’ve not stayed closely, so I really can’t speak with expertise, but I will say, I don’t think the current system is working, meaning I don’t think the people who are basically giving them the money or happy with it.

NPS: Right. I’ll send you the article that I wrote.

DB: Okay. Yeah, I’ll be interested in reading it.

NPS: Noam Chomsky was kind enough to read an earlier draft of it and thought that it raised some interesting points. So, I think you might find it interesting because it touches on some arenas where data is being used in shocking ways. Ways that I didn’t know going into writing the article, I would not have believed that data was used in this particular capacity, for instance, it’s used to sentence criminals, and it’s used to do dispatch, police patrols in various cities so that the data can reinforce racist stereotypes because they, originally would be patrolling, say black neighborhoods and harassing black people. And if the data confirms that, that’s where they’ve been and that’s where they found, either vagrancy or under age drinking or whatever. I mean, the things that you have everywhere, across obviously all races, all features. But they don’t send the police into white communities as much, so the data tells you to go to the black communities and then they can say the data is the justification for it, and not own up to the actual racism, the systemic racism that promotes that.

DB: Yeah, it’s classic.

Doggy Sanctuary and Semiretirement

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NPS: You said that you said that you’re semi retired now to work on a sanctuary for a puppy dogs. So tell me about that a little bit and what’s next for you?

DB: Well, you know, basically I have to say it was kind of wearing on me being in DC; I got up at 4:30 AM every morning and after a while, it does take a toll on you. My wife and I both decided we wanted a change, so we’d been coming out here, Best Friends Animal Sanctuary. We’ve been volunteering here since probably about ten years ago, I’m not sure when exactly our first year out here was. And we love doing that, and it’s a beautiful area here. We’re halfway between Zion and Grand Canyon national parks, so it’s a beautiful area. I just felt that I wanted change of pace, work somewhat less, play with the dogs, love dogs. We have our own but also the dogs there, help them out and basically be able to work on a more measured schedule. What’s nice here is I work on things that I think are important. I don’t have to worry about funders, what they think is important. So I could work on the things I want to do, so my goal is to put in twenty, I’d probably put in thirty, forty hours a week but in any case, much less than I had been doing and yeah, so I think I could still make a contribution, still get involved in the debates I’ve been doing and just avoid a lot of what I considered often a waste the time getting pulled into things in DC. We’ve been here a little over six months now, and we’re both very happy with it.

NPS: I would imagine. So I feel like DC would be a hard city to live in irrespective of the fact that you have all these corrupt people.

DB: Yeah, well there’re nice aspects to DC, they have a very nice park right in the middle of the city Rock Creek Park that we actually lived close to, like the whole time [inaudible 01:33:30] in two different neighborhoods, but both were very close to Rock Creek Park. So there are aspects of it that are very nice, but we could walk literally to anywhere in the city here. It’s the tiny town, it’s 4,500 people so-

NPS: Wow. Yeah, just a final word on this. Your book, The Conservative Nanny State to me is … I mean, there may be better books that you’ve written as far as the points that you make, or the data you presented. I’m not sure, but I found it to be a revelation. I think that it … like Piketty’s work. I think that it’s … it could be as important to the lay person in understanding contemporary economics as Chomsky is in the history of technology or Zinn is in the history of the United States. So thank you so much.

DB: Thanks, that’s really quite a compliment.

NPS: So thank you very much, and you enjoy the rest of your Friday.

DB: You too, I enjoyed the interview.

NPS: Yeah, thanks. Bye-bye

DB: Bye.

On The Third Day of Chomsky

chomsky_booksToday is the ninetieth birthday of Noam Chomsky! Though impossible to summarize such an incredible life with a few short articles, I hope that our conclusion of commemorations is icing on the cake for the Chomsky aficionado while a pique to the interest for newcomers.  Today’s selection of videos glimpses his many discussions on geopolitics, activism, and history.  And I conclude with a very special gift for Noam, so please read on.

Manufacturing Consent : C-SPAN

Noam appeared on C-SPAN some years ago to discuss Manufacturing Consent, a media critique, his seminal media critique co-authored with the late Edward Herman.  Central to the book, the propaganda model identifies means through which corporate media must serve power in contravention to the stated purpose of a free press.  The book itself is a good deal more technical than most of his later analytic books, so it might serve just to watch the documentary.   Here, we present the book review.

Noam and Howard

Chomsky’s very close friend Howard Zinn was a titanic American historian who, to his professional peril, articulated the appropriately named A People’s History of the United States.  Having met in the 1960s while working within the civil rights movements, Noam and Howard appeared in many interviews over the years, and here’s a great one from April of 2007 appearing on Democracy Now.

In September of 2004, Chomsky and Zinn together in Boston discussed whether there was “Hope in These Times” for Spare Change street paper and the Homeless Empowerment Project.

Chomsky chatted about Zinn not long after his passing.  His reflections evoke heart-wrench, as Howard was a close personal friend.  The world is lesser without him.

1995 : Contract with America, NAFTA, and Other Idiocies

Noam spoke on campus in 1995 to Doug Morris for an hour on contemporary American politics; NAFTA, Gingrich, and other topics of the day dominated the discussion.

Self-Destruction of the Species?  Institutions versus People

Chomsky spoke in April of 2001 at MIT on the question of species self-destruction, arguing the crucial role of institutional stupidity.  See the section below on Daniel Ellsberg for more.

What is Anarchism?

At a philosophy forum at the Czech Palacký University Olomouc, elder Chomsky discusses his take on anarcho-syndicalism and possible latter forms.  One uppity whippersnapper argues that he’d prefer to be told what to do, with Noam’s response a rather clever one.

Chomsky on Dershowitz : “Just A Comic Figure”

Alan Dershowitz has recently indebted jingoists everywhere in his zany legal defenses of Donald Trump on Fox.  Chomsky  has debated Dershowitz several times through the years, describing him to me as “just a comic figure, desperate to defend his two clients, himself and the State of Israel, but smart enough to know that both are guilty as sin.”  This was a reference to particular points of contention he and I were discussing regarding Israel’s illegal occupation of the West Bank and Dershowitz’ often ludicrous defense of it.  “All this smoke that was blown…” is a great derogation Chomsky uses in the following debate in 2005 at Harvard’s John Kennedy School of Government.

Dan and Noam

Daniel Ellsberg was a government analyst working within the RAND corporation during the Eisenhower, Kennedy, Johnson, and Nixon administrations.  He met Noam while working within the peace movement in the late 1960s.  Here’s a picture of Noam, Dan, and Howard together in the 1970s.

ellsberg_zinn_chomsky

In 1971, Noam defended his friend Daniel Ellsberg publicly after Ellsberg released the Pentagon Papers, the hidden, vicious history of the Vietnam War.  This release significantly contributed to the growing public discontent with the negligent, criminal actions of the Eisenhower, Kennedy, Johnson, and Nixon administrations.  Be prepared to be annoyed as hell at the Buckley-esque cross-examiner, clearly more interested in hearing his own voice.  I don’t even care enough to look up his name.

Noam and Daniel met at the University of Arizona this past spring to discuss Dan’s latest book, The Doomsday Machine, a book I hope to review here soon.  These icons don’t pull punches in their scathing condemnation of nuclear proliferation.  Don’t be depressed.  This is a call to action!

9/11 and the “Rebel Without a Pause”

In 2005, filmmaker Will Pascoe produced Rebel Without a Pause, a documentary detailing the sharp uptick in Chomsky’s speaking requests after the September 11, 2001 attacks in New York (not to be confused with the September 11, 1973 terror attack in Allende’s Chile.)  Chomsky discussed his book on the former attack at the fifteenth anniversary of the Fairness in Accuracy and Reporting (FAIR).  Almost overnight, institutions, agencies, citizens spanning America and beyond expressed desperation in understanding what would motivate a group of criminals to murder thousands of civilians, killing themselves in the process.  Listen for the most plausible explanation available, a summary and analysis of intelligence data and the historical, documentary record.

Bernie and Noam

Bernie Sanders is the most favorable political figure today, according to the far right news media Fox.  Though Bernie’s 2016 campaign for president didn’t reach out to Noam for analysis, commentary, and so on (Noam told me this himself), they’ve crossed paths throughout the years; in 1985, Chomsky delivered a talk called “Deciphering Foreign Policy Jargon” at Burlington City Hall.  Millennials will cheer when Bernie introduces Noam.

Noam and Gore

Noam and gay hero and activist Gore Vidal only occasionally appeared together; on the passing of Gore, Noam told me,

We were on similar paths,
but they didn’t cross 
much.  Moved in different 
circles.  We did have a 
long videotaped 
discussion once, arranged 
by Jay Parini, a novelist 
who’s a common friend.  
Don’t know what happened to it.
A fine person, in my view.  
And outstanding novelist, and 
honest and often discerning 
analyst.

Well, it just so happens I found that video for him.  Yesterday, we included Gore later recounting how no American media organization would release the video, not even in “San Francisco on a Sunday morning at four a.m.”  In other words, not even the most “liberal” district featured mainstream media brave enough to challenge the recently deceased George H.W. Bush’s criminal aggression in Iraq.

Requiem for the American Dream

A very recent work of Noam’s called Requiem for the American Dream  considers principles of wealth concentration in the post-industrial, neoliberal era.  Documented in the same-named compilation of interviews with him, the instant classic was quite hard to find in theaters, even in the tolerant urban sprawl of Seattle.  My husband and I could find only one venue, somewhat distant, and a cash-only operation.  So much for the bastion of liberalism.  One can find the full-length documentary here.

Randall Wallace and Chomsky Speaks

Randall Wallace, grandson of former vice president Henry Wallace, believes Chomsky to be perhaps the most important intellectual of the past century.  To that end, he founded Chomsky Speaks, a project aimed at capturing as much of this incredible man on film as we can in Noam’s time with us.  I’d invite you to take a look for yourself.

My Friendship with Noam

nps_anc_2_cutWhile studying computer science and the Georgia Institute of Technology, I came across Noam’s work repeatedly in courses on the theory of computation.  In a purely academic pursuit, I searched the internet for discussions of his professional work; I then stumbled on his activist work, finding for the first time an author and thinker who spoke my language.   Encyclopedic, diligent, and driven by integrity, his powerhouse talks became a significant time drain on me.  I began ordering his books by the satchel, eager to consume every detail-packed tidbit he had to offer on geopolitics, critical analysis of foreign policy, and prescriptions for a better future.  We began corresponding in 2012, remaining pen pals for these years since.  I believe there isn’t a man I respect more, past or present.  And it isn’t hero worship, as I, like Noam, stringently object to gladiators and saviors.  Noam’s role as activist has been, and continues to be, an analyst, a curator of history, and a staunch defender of victims everywhere.  Though he’d never admit it, it actually gratifies him to hear how his works have inspired generation after generation of activists.  It isn’t immodesty.  Each of us need validation that what we’re doing is meaningful, however minor or however impactful.

nps_anc_cutHere was my eager first meeting with the man himself.

So as Noam enters his tenth decade, let me close these three days of celebration with a song I composed and performed just for him; here are the lyrics.  And the recording is below.

 

 

Happy birthday, dearest Noam!!!

 

War No More : A Book Review

The Chalice of  War

Recent events with respect to our so-called enemies abroad, including Donald Trump’s

  • fruitless, impeachable knee-jerk bombing of Syria earlier this year, an act whose legal justifications rival the effectiveness and stated objectives in vacuousness,
  • inflammatory posturing toward Iran in an incredibly dangerous perpetuation of Washington’s Iranian foreign policy over the past thirty years, and
  • saber-rattling against North Korea as tensions escalate, virtually ignoring long proposed nuclear freeze proposals articulated by Noam Chomsky, proposals requiring the impossible act of American military retreat in that piece of the world,

underscore the precarious position in which we find ourselves in our 200,000 year run on this planet.  In the midst of these tumultuous times, there exists a specter looming over virtually all mainstream discussion, so far out of mind as to conjure moronic climate change denialism, differing in that most Americans, whether convinced of the overwhelming scientific evidence or not, are at least aware of the debate.  The bias should seem clear, as Trump’s illegal attack on Syria should indicate : articulate opinion virtually fell into lockstep admiration of Trump, for example,  the New York Times remarked,

in launching a military strike
just 77 days into his
administration, President
Trump has the opportunity, but
hardly a guarantee, to change
the perception of disarray in
his administration.

Glenn Greenwald of The Intercept pointed out this and many other instances of elite media reversal on Trump the instant bombs begin falling.  There exists a chalice of war, and Americans have been drinking deeply of it since the second world war; the mindset is pervasive, infiltrating our holidays, movies, video games, and most state-sanctioned celebrations of patriotism, whatever that actually happens to be.  Believe it or not, it hasn’t always been this way.  And there are a few voices rising above the rest to remind us.

David Swanson : Today’s Eugene Debs

I first encountered David Swanson’s works in the early days of George W. Bush’s warring administration. I had learned in college about the myriad military misadventures of American presidents, including

  • Harry S Truman’s illegal war of aggression in Korea, events out of which the brutal North Korean regime emerged,
  • Dwight D. Eisenhower’s acts of aggression in Guatemala to combat nationalism,
  • John F. Kennedy’s raving mad stance toward Cuba (to be discussed in an upcoming article in The Spanish Pearl series), and aggressive war against South Vietnam,
  • Lyndon Johnson’s lying about the Gulf of Tonkin incident to promote war in Vietnam and support of Israel’s illegal invasion of Lebanon,
  • Richard M. Nixon’s aggressive wars in Cambodia, Laos, and Vietnam, as well as the overthrow of Salvator Allende in Chile on September 11, 1973, the first so-called “9/11”,
  • James E. Carter’s support of Indonesian dictator Suharto in committing genocide against the East Timorese,
  • Ronald M. Reagan’s invasions of Grenada (a tiny defenseless island nation), bombing of Libya, drug runs in Columbia, war-making in El Salvador and Nicaragua, and propping up of Iraqi tyrant Saddam Hussein as a shield against Soviet influence in Iran,
  • George H.W. Bush’s invasion of Panama and escalation of the Gulf War,
  • William J. Clinton’s bombing of Serbia in 1999 despite warnings of heavy casualties among fleeing refugees,
  • George W. Bush’s invasion of Afghanistan and Iraq, the latter of which Chomsky labels the supreme crime of the 21st century, and
  • Barack Obama’s international drone assassination campaign, killing perhaps thousands of civilians in Yemen, Somalia, Pakistan, and Libya,

and the list could include crimes committed before 1945, though we’d require another article.  Suffice it to say that George Washington’s extermination of the Iroquois, Andrew Jackson’s mass murder of natives, destruction of native food sources by Ulysses S Grant, and the invasion and occupation of the northern half of Mexico by James K. Polk are but a few instances in the legacy of bloodlust the Europeans bore and continue to bear in conquering the western hemisphere.  We’ve mentioned the Spanish American War more recently as a light case study, and with this large body of historical evidence, it seems pretty clear another approach is warranted, especially when considered with respect to the forecast of virtually every credible intelligence agency in the world : violence generates rather than diminishes the threat of what we like to think of as terrorism.

David Swanson has long argued that not only is there an alternative to war, there is no alternative to peace.  A modern day Eugene Debs, this philosopher and activist has traveled the nation and the world to promote an ideology and dialog badly lacking in elite support.  Of interest in this article is his 2013 book War No More : The Case for Abolition.  In it, Swanson adeptly confronts many of the persistent myths, including the inevitability of perpetual war, the humanitarian war, the defensive war, the stabilizing war, and the like.  He also explains, quite effectively, the post-war shift of American culture in his earlier work War Is A Lie.

A Culture Drunk on War

Long before the Japanese bombing of Pearl Harbor in December 1941, Americans often were only very reluctantly conscripted into battle to fight for elite interests, as discussed earlier in the case of the Spanish American War.  We know now that desertion and reluctance to fire weapons at other human beings resulted in colossal ammunition waste in most of the wars through the twentieth century.  The psychology is simple, Swanson explains :

[m]ost human or primate
or mammalian conflicts
within a species involve
threats and bluffs and
restraint.

War is unnatural, he argues, citing further evidence that the grooves left in early human skeletal remains are bite marks from the large land dwelling predators we’ve since extinguished rather than battle scars from tribal skirmishes.  This in fact echoes earlier commentary on the most native violence experienced by Columbus in his expedition : light sparring with sticks and the like, only very rarely resulting in serious injury.  The conquistadors’ violence wrought upon the natives was something else entirely.

In any case, Swanson remarks that since the second world war, the military has become increasingly efficient in indoctrinating soldiers to kill.  A parallel public relations program has glorified war in film, print, and now video games, often with heavy consultation from weapon manufacturers and military personnel.  One need only look at the preponderance of blockbuster films these days to experience the influence.  Further still, military recruiters routinely lie and glorify the military way of life, enticing the poor with a phony carrot rather than the stick of the draft in earlier wars.  As before, the poor fight and die while elites shield themselves from the draft, such as

None of this should come as a surprise, as only a small percentage of human beings can truly stomach killing others.  It’s large enough that in our population we routinely hear of such violence, but, as Swanson often suggests with rhetorically surgical precision, imagine if the news stations spent as much time on nonviolence as they do violence.

Swanson helped me begin to identify the tremendous propaganda toward state violence after I read his comprehensive 2010 book War is a Lie; I had noticed in recent years, something he systematically demonstrates in his works, that a large fraction of cinema previews included a vast array of military tools, soldiers, and their deployment to the “battlefield,” a term Swanson very cleverly disabuses as an archaicism.  He points out that virtually every popular video game on the market features extreme amounts of gun violence and murder; though I am indeed a great fan of the game Skyrimvirtually anyone paying attention to the gameplay mechanics should notice that both men and mer would face imminent extinction with the pervasive, unremitting violence everywhere.  Skyrim isn’t alone, as the most popular video games these days exalt wholesale violence, enabling a broad range of sociopathic choices.  If a player kills virtually all citizens of the realm, who would grow the food, tend the livestock, write the books, etc.?  More broadly, one can note that almost all the holidays we observe in America are tied to violent acts, including, ironically, Easter, Thanksgiving, and the whole of Armistice Day, Memorial Day, Independence Day, and the like.  Our national anthem celebrates the violence of the Revolutionary War as a boon for freedom, despite the fact that life for 95% of colonists and virtually all natives, slaves, and women changed or worsened under the new management.

In any case, Swanson points out that dissidents are labeled derisively “anti-American” unless they blindly support ongoing wars under the mantra “support the troops,” even after elite sectors themselves disavow wars as unwinnable, strategic blunders.  Chomsky correctly points out that America is the only non-totalitarian state where such a notion of “anti-state” exists; Germans opposing Angela Merkel would never be described idiotically as “anti-German”.

Moreover, Swanson strongly argues the malignant effects of war on troops, rendering the catechismic “support our troops” phrase all the more ridiculous : we must continue the killing to honor the dead, lest we savage their memory.  I’ve witnessed dear friends and family thank troops publicly for their service, despite our military being the basis for human sacrifice : eighteen year-old boys must go die in some foreign land so we can ward off the undefinable, largely imaginary evil forces of tyranny, much like ancient cultures sacrificed humans to appease the gods of harvest.

I’m familiar with many mental health professionals who can confirm the extremely harmful effect of war service on human beings; post-traumatic stress disorder, coupled with loss of limbs, eyes, hearing, and the like mar not just our own soldiers, the only people elite sectors depict as “people,” but wreck nation after nation, killing millions and driving millions more into exile, prostitution, and violence.

The drone strikes themselves have raised a new generation of terrorists; case in point is Farea al-Muslimi, a young Yemeni student who spread good tidings about America back to his village until it was attacked by drones to kill an unarmed man accused of terrorism.  Instantly, a village hates the United States, despite the ease of placing the suspect in custody rather than destroying parts of their village and killing civilians.  This story isn’t unique, and it takes genius not to recognize how these policies further imperil both innocents and ourselves.

Even the non-partisan Brookings Institute recently warned that Trump may have the means, militarily or otherwise, (but not necessarily the mind) to finally

think seriously about
ending North Korea’s
nuclear ambitions by
creating a new order
in Northeast Asia.

Consider this in light of Chomsky’s aforementioned comments from a Democracy Now interview in April :

no matter what attack it
is, even a nuclear attack,
would unleash massive
artillery bombardment of
Seoul, which is the biggest
city in South Korea, right
near the border, which
would wipe it out, including
plenty of American troops.
That doesn’t—I mean, I’m no
technical expert, but as far
as I can—as I read and can
see, there’s no defense
against that.

In other words, stray too far into that dark place in which Kim Jung Un feels no escape, and the human cost could be tremendous.  Is there an alternative?  One need only read history, a sample of which I’ve written here, to know that America typically preaches peace and diplomacy, yet we maintain self-proclaimed nuclear first strike power, occupy over 800 military bases in 80 foreign countries as reported by The Nation in 2015, and have committed the supreme crime of aggressive war innumerable times just since the second world war, generally arguing publicly the desire to sue for peace, to supplicate the needy in humanitarian crises, or, earlier on, simply saying nothing.

Freedom isn’t Free, But War Won’t Buy It

It turns out that war fails to improve our freedom, as we’ve argued repeatedly here echoing the writings of Howard Zinn, Noam Chomsky, Glenn Greenwald, and Amy Goodman : dedicated resistance and a cohesive, powerful labor movement have so far proved to be sufficient, if not essential to the civility and freedom we enjoy in the modern era.  Swanson argues, alongside them, that war historically always has the opposite effect, reducing freedom while fomenting unrest and division.  One need only look at the various wars to discover that many dissenters have gone to jail, including Swanson’s historical doppelganger Eugene Debs; Debs encouraged antiwar speech during World War I.  War resisters during the Revolutionary War faced violence, confiscation of property, murder, and expulsion to Canada.

During World War II, the government imprisoned Japanese and German Americans.  My grandparents worked at Camp Howze, a POW camp near my hometown of Gainesville, Texas.  Woodrow Wilson argued during World War I that “disloyal” dissidents

had sacrificed their
right to civil liberties.

We can certainly recall suppression of resistance to Vietnam, and the immediate passage of the fascist PATRIOT Act upon the second 9/11.  The point is, not only does freedom not flourish under war, Swanson argues that it cannot flourish.  Learning the former must precede the latter, and Swanson articulates a very strong argument for both.  So what of the good wars?

Apologists for War

Most rational Americans have come to believe that war is primarily a tool for control.  During the Vietnam and Korean Wars, Americans were conscripted to fight for what the Pentagon Papers revealed to be control of the “tin, oil, and rubber“, among other economic objectives. The Project for a New American Century (PNAC), mentioned in earlier posts, was a late twentieth century neo-conservative think tank whose manifesto stumps for conquering Iraq, Afghanistan, Libya, Syria, and Iran in order to secure American interests in the region.  Swanson raises the intriguing coincidences of both Iraqi and Libyan leadership electing to deny the dollar preeminence in oil purchases, Hussein opting for the euro and Gaddafi the gold dinar, both immediately preceding our violent intervention; certainly intelligence agencies in America and elsewhere knew very well Saddam had no weapons of mass destruction remaining.  Lost in this is that Saddam offered to exile himself, handing Iraq over to NATO provided he could abscond with one billion dollars; considering the trillion dollars the war has cost, wouldn’t that have made more sense?

Swanson reminds us of Eisenhower’s admonishment of the rise of the military industrial complex, a largely unaccountable cadre of business and military interests hell-bent on self-sustainment in the face of an increasingly peaceful world.  Ironically, as Swanson points out, war doesn’t make market sense, as it would be more efficient to spend the money on renewable energy, infrastructure, education, health, and the like, even aside from the pesky problem of human life.

In any case, PNAC’s manifesto laments that we must

fight and decisively
win multiple, simultaneous
major-theater wars

to preserve the so-called “Pax Americana”, conceding that the American public no longer will tolerate protracted wars.  Despite years of carefully composed propaganda and rhetoric, the political elites have yet to convince the public that war with Iran is necessary.  Trump’s wild approach may prove fatal in this instance, as he, like power-mad elites preceding him, fumes when “enemy” nations comply with sanctions.  Nonetheless this reluctance speaks to the increased civility of society.

On the other hand, Americans continue to support war mythology with the firm belief that at least in the Revolutionary War, the Civil War, and World War II, we defeated tyranny, slavery, and fascism, respectively.  We’ve already addressed the farce that is the first of the three above.  The Civil War was easily preventable through diplomatic means, though the times were different.  Rather obviously, however, the union states simply could have attempted to purchase the slaves, perhaps to the tune of one billion dollars, as opposed to spending three billion to destroy countless cities and leave a buyer cultural resentment still harming us today (in an upcoming article, I’ll try to address the notion of white privilege and the legacy of slavery.)  If the north had really wanted a peaceful settlement, it could have permitted secession and encouraged slaves to flee into the free states.  The dirty secret is that the north no more wanted freed slaves than did the south.  In any case, Swanson debunks these wars with ease, leaving us with the last ace of the warmonger : the second world war.

Swanson Takes Down the “Good War”

For brevity, I’ll leave most of Swanson’s arguments about the so-called “good war” to the reader.  But suffice it to say that America was already in the war long before the Japanese bombed Pearl Harbor, actively cutting off supply lines and providing weapons and equipment to the European allies.  Truman famously quipped on the Senate floor that we should

help the Russians when
the Germans are winning
and the Germans when
the Russians are
winning[... s]o each
may kill off as many
as possible of the other.

Are these the words of a man pursuing peace and freedom?

Swanson further argues means of preventing Hitler’s rise through a less ridiculous settlement than the Treaty of Versailles at the conclusion of the first world war, deescalation of his militarism through discussion and diplomacy, and rescue of the Jewish refugees initially expelled from Hitler’s caustic, totalitarian empire.  Instead, we, along with Britain and France, isolated Germany, refused to aid the refugees, and in our case sold weapons to Britain and France while strengthening the Pacific navy, cutting off Japanese supplies in Manchuria, and conducting military exercises off the coast of Japan.  Americans actually held a rather favorable view of Hitler, as anti-Semitism was rampant among elite sectors here; both Joseph Kennedy and Prescott Bush, fathers of presidents-to-be, either held business dealings with or openly supported the Nazis even after America officially entered the war.  Fanta became Coca-Cola’s means of remaining in Germany, and Henry Ford placed a portrait of Hitler on his desk.  In fact, when Confessions of a Nazi Spy, a thriller starring Edward G. Robinson, premiered in Milwaukee, pro-Nazis burned the theater to the ground; even the far right Senators of the day wished to investigate Robinson and the film as Jewish propaganda angling for American entry into the war.

Enshrining the Holocaust only became important to the American political class with Israel’s invasion of Lebanon in 1967, an unsolicited but helpful gesture in advancing American hegemony.  Though there’s much to add, suffice to say the one good war killed over seventy million people, or equivalently twenty percent of our current population.  Was that really necessary?  We touched on the atomic bombs dropped in 1945 at the conclusion of the war.  Are we better off for creating them?

A Great Read

Like all of David Swanson’s books and articles I’ve read, he powerfully confronts the folly of pro-war propaganda and the arguments, lofty or low-brow, for the perpetuation of war.  He eloquently rearranges the pieces of the puzzle to expose the idiocy of the arguments advanced by the state in support of violence, such as this gem with respect to our government offering protection to people facing chemical warfare :

[k]illing people to
prevent their being
killed with the wrong
kind of weapons is a
policy that must come
out of some sickness
[... c]all it Pre-
Traumatic Stress 
Disorder.

I highly recommend this and his other works, as he, like the great activists before him, tells the truth.  His words are more prescient than ever before as we confront the problems of the twenty-first century.