The Politiconomist

Where Politics and Economics Hang Out

Line by Line: Why White People Will Always be Racist

leave a comment »

You may want to read this one sitting down. It’s pretty unbelievable.

Now that South Carolina has taken down the Confederate flag flying on statehouse grounds, MSNBC is drumming the five whose state flags incorporate “Confederate themes.”

Right. Because that is the next logical step. If we’re ever going to deal with systemic—oh no—

They continue to prove liberals are never satisfied. We fought the Civil War. We ratified the Fourteenth Amendment. We have the Civil Rights Act of 1964 and the Voting Rights Act of 1965. The civil-rights movement was a success. Now, we have South Carolina pulling down the Confederate flag. But it’s still not enough. And Hillary Clinton agrees.

I could do a full blog about how we’ve not done enough and not touch the depth of the problem. But I will present a single statistic: African Americans, on average, can expect to make 78 cents on the dollar compared to their white peers. Even if that turns out to be caused by something other than employment discrimination (and to an extent, it is) it reflects a deep gap between blacks and whites. It is almost like we’ve not solved racism!

Or I’m never satisfied. Whichever.

“Removing this symbol of our nation’s racist past is an important step towards equality and civil rights in America,” Clinton said in a written statement after the South Carolina legislature voted to remove the flag. “The flag may soon no longer fly at the State Capitol, but there is still unfinished business in confronting and acting on the inequalities that still exist in our country. We can’t hide from the hard truths about race and justice. We must do everything in our power to have the courage to name them and change them” (emphasis mine).

In saying this is a “step toward equality and civil rights,” Clinton is acting as if the civil-rights movement never happened. She is painting our nation with the brush of racism as if it were still 1950—or even 1860.

Is this author living under a rock? Has nothing about the last few years registered? Outcomes in formal, legal settings remain deeply divided along racial lines.

Shelby Steele, author of “White Guilt,” calls this “manipulating stigma.” With the victory of the civil-rights movement, whites lost their moral authority—something that inevitably happens when you admit you’ve done something wrong.

Right. And you get back when you right that wrong.

As a nation, we confessed our racist past, and we righted that wrong.

Someone inform the disproportionate number of black men on death row, the underrepresented black folks on college campuses, and every black person to have died in police custody in the last year. I’m sure they could use the good news.

That should have been the end of it, but with the loss of that moral authority came an increase in the moral authority of minorities—power they and the Democratic Party have twisted and used to advance one social-justice agenda after another. Steele says this happens because of white guilt, and the stigma of racism reinforces white guilt.

This at least would have the virtue of providing an explanation if the author bothered at some point to maybe show that racism was solved. She didn’t, so it’s an explanation in search of a phenomenon.

Clinton says we can’t hide “from the hard truths about race and justice.” Which hard truths is she talking about except that we must overcome our inherent racism?

No, you understand.

President Obama said it is “in our DNA” to be racist. With this statement, he stigmatizes our nation. Clinton’s call to do everything in our power to have the courage to name those truths and change them is another way of saying that whites are racists, so we must “stigmatize them” and force them to change—to comply.

Yes? Okay?

President Obama said it is “in our DNA” to be racist. With this statement, he stigmatizes our nation. Clinton’s call to do everything in our power to have the courage to name those truths and change them is another way of saying that whites are racists, so we must “stigmatize them” and force them to change—to comply.

This requires a historical illiteracy that makes me wonder if this woman has ever read a newspaper. The fight over displays of the confederate flag is decades old. If it were that easy, this piece would have been written a generation ago.

Since the civil-rights movement, which community organizers and Democratic elites capitalized on to increase their power, “whites, and particularly, institutions, have lived under threat of stigmatization,” says Steele. He explains that through this manipulation of white guilt, whites are continually put into the position of forever having to prove the negative, that they’re not racist. This is an impossible task, which is why we’ll never really be free of it. “If they don’t prove the negative, then the stigma sticks,” he writes.

This is terrible logic. You know it’s terrible because “You can’t prove a negative” is in fact a negative and thus unprovable. You can show that you’re not racist—or, at least making a good faith effort not to be—by not doing racist things. Like putting the Stars and Bars on your Statehouse.

The Confederate flag controversy has never been about being sensitive to minorities in the aftermath of the dreadful mass murder in South Carolina. It has been about stigma and the Democratic Party using it to delegitimize anyone who doesn’t bend to its will. Steele explains that if an individual or institution in America is stigmatized as racist, then they are delegitimized. They lose all power and authority and influence. They are marginalized and ostracized. When that happens, they can be easily defeated or manipulated.

This is not an unfair point. The Democratic Party as a formal institution uses these events to that purpose. Of course, pointing out that people have sketchy motives doesn’t make them wrong. I’d prefer better means of addressing racism than waiting for the next shooting, but I’ll take what I can get.

When this occurs at an institutional level, that institution can no longer really function effectively. The institution wants to function, to be legitimate, so it disassociates from any appearance of racism by showing how inclusive and tolerant it is, bowing to the will of the totalitarians who want to exert their power and have complete allegiance. This is what the Great Society was built on. It’s not about compassion or equality; it’s about wanting to be able to function, to be valued, and to be legitimate.


Get a grip.

When Clinton says inequalities still exist in our country, this is a play at white guilt. Blacks and whites are both equal before the law, so her statement is a glaring falsehood. But Clinton, in true totalitarian form, isn’t concerned about inequality. She’s concerned about power.

You know this is on point because the author doesn’t know what a “totalitarian” actually is.

As Tom Nichols writes at The Federalist about totalitarians like Clinton, “They are not really trying to capture something as pedestrian as political equality, nor are they satisfied if they get it. They are not really seeking a win in the courts, or a legal solution, or a negotiated settlement. Those are all just merit badges to be collected along the way to a more important goal: what they really want, and what they in fact demand, is that you agree with them. They want you to believe.”

Yeah? First off, trying to change minds is part of free exchange, as is putting economic and political pressure on people. Be very suspicious of those who call it totalitarianism as these are the tools of popular resistance. And again, that Clinton is being opportunistic doesn’t make her wrong inasmuch as political.

While Nichols calls these people the “new totalitarians,” they’re not all that new. They’ve been with us for decades. The difference is they have now accumulated a significant amount of power, and the Silent Majority has now become the Silenced Majority. They don’t want to be stigmatized. They don’t want to lose their legitimacy in society. So they remain silent and they conform.

Wait, wait, wait. What exactly is being silenced here? You have the right to raise the Confederate Flag; I have the right to point out that that is a racist thing to do. What this is, is sour grapes about no longer being able to deflect this. Do note, even if its not racist (!!!) this is still true. People have a right to be wrong when they criticize you.

“White guilt is a powerful, powerful force,” Steele says. “Not because people feel guilty, but because people are stigmatized, and again have to prove the negative all the time, and living forever under threat of being stigmatized.”

I have no problem with a stigma being attached to proud racism.

Stigma is a club in the hand of the totalitarian to increase power. Clinton, Obama, Loretta Lynch, and others will use it over and over again, as long as people allow the stigma to stick. As long as individuals and institutions fear delegitimization because of stigma and refuse to pay the high price of dissent, the power of the totalitarians will grow.

Dissent against whom? For what purpose? The author doesn’t have clear proof racism is solved, nor does she have a clear enemy nor any real course of action. And of course she doesn’t. She is advocating for the continued, subtle oppression of African Americans without social consequence.

And that is patently abhorrent.

Written by R. A. Stark

July 20, 2015 at 12:00 PM

Posted in Uncategorized

Gun-Violence-Fatigue OR How Two Uppity Twentysomethings Couldn’t Bring Themselves to Be Outraged Anymore

leave a comment »

In Chattanooga yesterday, 5 individuals were killed when a man, Mohammad Youssef Abdulazeez (himself one of the five), opened fire on two military installations.

On June 17th, Dylann Roof killed 9 black men and women in an historic church in South Carolina because they were black and he is a goddamned racist.

Last May, Elliot Rodger killed 6 and injured an additional 14 people on or near the UCSB campus because he couldn’t get a date and that’s ladies’ fault somehow.

Each and every one of these is a fucking tragedy.  And this is the text thread our beloved Politiconomist and I exchanged when I first heard about this most recent attack:


Pretty glib, no?

Because, frankly, we’ve seen this same scenario play out probably a dozen times in our relatively short lives (we’re both 25 if anyone cares).  Starting in 1999 with the Columbine massacre, it seems like we’ve heard about at least one new mass shooting every year.  Hell, lately, it’s been as many as three or four a year.  You could say it’s because of a bias in media toward reporting the most sensational stories, and you wouldn’t be totally wrong, but that does nothing to hide the fact that there are a fuck-ton of mass shootings in America.  And every time there is one, we get the same rigmarole: if the shooter is a white dude (and most of the time, he is), the media will try to blame nearly EVERYTHING for his crime other than his nearly unfettered-access to guns.  Unsavory messages in music and video games!  Mental illness!  Absentee parents!  If the shooter has any other demographic info, he’ll either be a thug or a terrorist and we’ll get a lot of blatantly racist commentary about how black, Latino, or Muslim men are inherently violent.  Note that, to date, there have been no high profile mass shooting cases where a woman did the shooting.  Whatever that means *coughtoxicmasculinitycough*.

And the thing is, I’m so fucking tired of it.  I’m so tired of it that I was making gallows-humor jokes about the deaths of 5 people.  And about the whole shitshow that is bound to be unleashed as details about the attack come out.  Even writing this post feels trite.  I’m bored with expressing my own opinions about this, and expressing my opinions is one of my absolute favorite things to do.


It’s because, time and again, I’ve been shown that my opinion, which is that average citizens should have extremely limited access to functional firearms, if they have access at all, is meaningless.  Gun culture in America will never change.  Wanna know how I know?  Because in 2012, America decided that we were willing to sacrifice 20 children for the fucking 2nd amendment…or at least, how some people like to read the second amendment (pro-gun fucks love to conveniently forget that “well organized militia” detail).  Sandy Hook was literally the nightmare scenario that liberals might have dreamed up as a scare tactic for debates about gun control.  I would have even thought it was dramatic.  But then it happened, and not a fucking thing changed.  Gun culture is simply too ingrained in American culture, and the NRA is simply too rich and powerful.  At this point, I find it insulting that anyone still acts shocked by gun violence.  Apparently, as a nation, we’ve all agreed that the deaths of hundreds of people a year is a worthy sacrifice in return for getting to hang on to our guns.

So, since the NRA has all that money to protect the ability of literally any schmuck with a grudge to bump off whomever they feel like bumping off, I have a proposal:

The NRA should have to pay for the funeral of every American who dies from being shot with a gun legally owned by a civilian.  They should have to pay for the medical expenses of every American wounded by a gun legally owned by a civilian.  And they should have to pay a monthly, lifetime stipend to the loved ones of people who are killed by legally owned guns.

Written by Kelly

July 17, 2015 at 12:00 PM

Posted in Uncategorized

How My Friend Taversia Got Objectified out of a Job

leave a comment »

My friend Taversia* was kicked out of her academic fraternity for behavior that was deemed unbecoming. She has since been reinstated, but the incident highlights troubling tendencies towards objectification and double standards that are all too common in our society. It is worth exploring, not to pick at scabs, but rather to highlight opportunities we all have to avoid these damaging pattern. As we’ll see, the center of the controversy was a complaint about boundaries that against Tav which Tav herself feels was not addressed as adequately as should have been.

And that is a shame.

There is no point pretending I don’t see Tav as a personal friend. We routinely snark at each other online, have worked together on a drag show, and I am inclined to trust her account of things. Still, I did my best to be level-handed here. She is aware, I think, that she did not handle the situation with flying colors at every turn. I would have backed out of this post if things looked messier to me than they do.

As near as I can tell, are that there were three issues that got Tav brought up in front of a hearing.

The first issue was that of a group photograph where she posed ‘sexually’. It is hard for me to read it that way:


I am at something of a loss here. The picture, even if it was intended to be sexual is—I hope I can say this without any hurt feelings—more unflattering than anything. And even then, only in the way that group photos always seem to take people unaware than any kind of terrible likeness of Tav. Tav provided me with a sensible explanation for her spread legs:

I was just crouching low because I was told that someone needed to be down in front to catch everyone else in the image.

And I didn’t want to go on my knees, because, white dress.

white. full-length. dress.

The second issue is, at least, a bit more serious. In Tav’s words again:

“As it turns out, more allegations surfaced to where my roommate had reported finding myself and my significant other under the covers in bed together. My excuse was simple; we were presentably clothed, and my roommates like the temperature low as shit. We were cold, and studying.

This merits some consideration. The roommate was uncomfortable with the situation and reported it. At face, that means Tav was acting inappropriately. We will add a fair amount of nuance to this appraisal, but I don’t think her fraternity was wrong to strike up a conversation.

A third issue that was raised was Tav’s less than conventional professional life. From a blog post about the incident:

“It soon became clear that the organization had discovered details of her private life with which they took exception. In considering her source of income, admittedly not for the faint of heart, I see an entrepreneur and a savvy business-woman; they see a deviant. In considering her artistic endeavors, I see a satirical observer of the absurdities of society; they see pornography.”

Let me be more blunt: if you Google Tav, you will find erotic and sexualized photos. Most have a satirical or fantasy (in the dungeons and dragons sense) bent, but hardly all. Tav described them as “Actually sexual”. No one is contesting that Tav does work with sexual tones—here’s the image search, which straddles the edge of SFW.

The honor code that Tav signed had the clauses, “I will conduct myself at all times in a manner that reflects positively on myself, my chapter, my region, and the Society at all times”, “I will dress in a manner that is appropriate for all occasions”, and “I will not engage in any conduct, which might bring shame or disrepute to myself or diminish the reputation of my region or Phi Theta Kappa”. If we agree to play by their rules, a discussion of these ideas is in order.

Tav provided me with this honor code before it was clear she would be receiving an appeal, hence the highlighted section.

Tav provided me with this honor code before it was clear she would be receiving an appeal, hence the highlighted section. My attention is focused elsewhere.

But in raising these questions, we have done something to Tav. Did you catch it? To decide if she is being sexual, we must first scan her body as a thing. In the Google search, many are pictures in which Tav is more than aware that she is offering such objectification. Tav draws the distinction with better precision than I could have:

In addition to being entitled to their space, women are entitled to their own expression of sexuality as part of their human experience; again, so long as it does not infringe on the autonomy of others. To determine whether something is objectifying is not as straight-forward as design, because there is a power scale that must be observed. When I am modeling or acting, I am taking charge of my body and my sexuality. It only becomes objectifying when those individuals who sexualize me do so without my consent, and invade my space. In other words; I am responsible for my own actions. They are responsible for theirs.

We evidently disagree on what exactly “objectification” is, but the issue is one of semantics, not substance. Tav is limiting the word to its negative, unwelcome connotations. I am taking the broader view that objectification can be welcomed and planned, but is then of a different flavor. Both paradigms get to the heart of the matter: when we read unwelcome sexuality onto people—and especially women—we take from them their power and agency. The photo in the white dress is case and point on this:

women in American culture are socialized to make themselves as small as possible; it is evident by our popular culture which covets svelte physiques, and we are taught at an early age to keep our legs closed, or crossed, or some variation of that. It is not enough to be small in stature, either; we must be small in voice. I would say that we perpetuate a damaging and gendered ideal unique to women in suggesting that she should be shamed if she takes up space. Women are entitled to their space, so long as it does not infringe on the autonomy of others, and I feel like my autonomy is infringed upon if I am to be sexualized and then made to be held accountable for that, which is what I believe to be the case.

The issue of sexualization then becomes an issue with those who raised concerns about a woman who spread her legs. Critics who find women’s open legs objectionable are often reading sexuality onto women without their consent. That to me is far more shameful—and that’s without even mentioning how modest Tav’s dress was otherwise. And by reducing Tav down to simply her modeling work, by saying she was sexual then so she must be now, is to deny her agency or ability to act and “dress in a manner that is appropriate for all occasions” when she is at a conference.

At long last we arrive back at the issue of being in bed with her significant other. This is thornier because her roommate was made uncomfortable by the situation. It is not fair to make Tav wholly responsible for that, but when I asked Tav if she had any thoughts before we ended the interview, this is what she gave me:

To those I may have genuinely offended with my actions, I still extend my heartfelt apologies for the discomfort you felt, and had I known sooner, I would have done my best to be accommodating.

Professional harassment standards put a burden on the person experiencing the harassment to ask it to stop. This system is imperfect, but it serves to separate genuine misunderstandings from harassment. The roommate involved or the fraternity, rather than launch a speculative search into Tav’s personal life and intentions**, should have started by speaking with Tav. One can feel comfortable with the sexuality of others but hate PDA; one can have no problem sharing a bed with their significant other in front of others but respect those who feel otherwise. By going directly to formal, punitive channels, they deprived Tav the chance to show she was that sort of person.

We do this to people, especially women, far too often. Objectification in its worst form is something done to people. It takes their thoughts, feelings, and actions and reduces them down to the assumptions of those doing the objectification. By reducing Tav to the worst assumptions about her spread legs and professional modeling, it hurt not only her, but the person who needed to work out an uncomfortable rooming situation with her.

The organization has reversed its decision to remove her from her position. But more than that, they need to come up with better, clearer policies about harassment, rooming, and right conduct.

Fortunately, I happen to know a women who would be excellent for the job.

*Taversia asked me not to use her last name since it was resolved favorably. The interview, and indeed the bulk of this, was completed prior to the fraternity reversing their position. I am delighted, and have changed my piece accordingly. I am not—and it seems Tav isn’t either—interested in dragging anyone through the mud. I have revised this to reflect the mistakes that were made, but to also focus more on what we can learn about objectification. Except where quoted, these are my opinions and not hers.

**It does not appear that the roommate was behind the digging. I can’t stress enough that since she was uncomfortable, her concerns were 100% legitimate and deserved to be resolved.

Written by R. A. Stark

July 16, 2015 at 9:07 PM

Posted in Uncategorized

Tagged with

Wild Election Speculation: Chapter 2

leave a comment »

Everybody’s a Winner!

I have a confession: I’ve brought you here under false pretenses. This is going to be not so much wild nor speculation, so much as me being a statistics curmudgeon. I’m not the one engaging in wild, unfounded speculation. News outlets uncritically citing polls are.

The Many-Way GOP Tie

Without boring you too much with the statistical details, when you do a survey, there is some fuzziness. If you ask even hundreds of people a question, the exact proportion who answer a certain way is liable to be a bit off of what you would get if you asked everyone. Through witchcraft—statistics, rather—you can determine exactly how far off that is. I’ve done the work for us.

In this first chart, I have given the rather optimistic take on the most recent Economist/YouGov Poll. If the confidence intervals overlap, you have a tie.

Lindsay Graham has it rough.

Lindsay Graham has it rough.

Note that ties are non-transitive. Fiorina is tied with Bush who is tied with Trump, but Fiorina is not tied with Trump. This is a consequence of fuzzy edges. We could define a high enough confidence interval to make Fiorina and Trump tie, after all.

Walker, Huckabee, Bush, Paul, and Rubio are tied for first. This should help explain why other recent polls are finding any of them could be the next president. Add in the issues that they are conducted at slightly different times, and you have a recipe for an apparent horse race. If this WES is wild, it’s because I’m declaring a 6-way tie for first. YOU’RE ALL WINNERS!

These confidence intervals make some pretty strong assumptions about comparing any two. But what if we want to be confident about all our findings containing no errors? This makes the confidence intervals larger:

Lindsay Graham's lot in life does not improve.

Lindsay Graham’s lot in life does not improve.

Now the tie for first includes Christie and Carson. Yes that’s right: there is an 8-way tie for frontrunner. Yes, it has been that kind of election cycle. Rubio is literally tied with anyone who can draw a response on a survey.

The point is, polls about a dozen people are simple too many to give the kind of clear frontrunner that makes for a sexy news story. Sorry my blog isn’t sexy enough to pretend otherwise.

Wilder Fun with Democrats

But you came for some unfounded waving at statistics—and I’ll deliver!

Bernie Sanders is doing better in the polls…now that Elizabeth Warren is getting removed from them. If you browse the Wikipedia Summary, Warren’s inclusion on a poll tends to damage Sander’s position by around ten or twelve points. I like to imagine this was prophesied—NEITHER CAN LIVE WHILE THE OTHER SURVIVES. It makes a certain kind of sense; they are similar candidates in terms of issues, but Warren is probably more electable.

Sanders has probably shaved 5 to 7% off of Clinton’s position. That’s nothing to scoff at, and certainly more than margin of error, but it’s also not a meteoric threat to Clinton’s nomination. There’s a lot of time still to cover before the convention, but Sander’s hasn’t made a splash near as much as Warren has stopped siphoning votes off him.

Interestingly enough, Biden and Clinton seem to be in a similar boat. Biden’s non-inclusion seems to be worth a few percentage points to her standing. The point being, polling is very sensitive to who else is on there, so much of the horse race may be differing options on the survey.

Lincoln Chafee, however, basically only has his family voting for him.


Bush v Clinton.

What else could it be? Don’t be fooled by journalists (willfully?) misinterpreting statistics to make a better story. We’re looking at a massive tie on the right, and the candidate with good organization and good connections will prevail. On the left, Clinton maintains a solid lead largely untouched by Sander’s rise.

Written by R. A. Stark

July 13, 2015 at 9:22 AM

The Sophistry of War Debts

leave a comment »

Greece is Complicated. Piketty’s Suggestion is Simply Ludicrous

Thomas Piketty is completely, totally, utterly off base.

Whatever your political leanings, you should be able to get behind this: Piketty’s argument is a complete non-sequitor. He would struggle to pick an example less suited to prove his point than the sovereign debts of European wars. There is a fundamental difference between war debts and peacetime debts—and that is why we have moved away from issuing war time debts.

War debts are, essentially, money owed for property crimes. The victor demands repayment for the lost assets from the war. It has a certain consistency to it—a metaphorical resonance. If I were to destroy my neighbor’s car, I’d be liable for its worth and then some in a court of law. Why not countries?

The answer is that it never seems to work out. The crushing, German debts of each war prove the point. The country, whatever philosophical merits you might see in war debts, cannot get out from under them. They too have recently lost their productive capacity, but that never seems to get factored in during the rage that follows a war. Gallingly, Piketty gets this right in the piece. (My apologies for the Google Translate clumsiness; I cannot make sense of German.)

Nonsense! [Forgiving German debt] had nothing to do with moral insights, but was a rational economic decision. It was recognized at the time correctly: According to major crises which have a high debt burden result, there comes a time when you have to turn to the future.

Sure. But here’s the complete difference: Germany had nothing to show for its war debts, except perhaps their wreckage from the war.

When Greece took out debt, it got money. It didn’t smash up Germany’s stuff, it got money. And it spent that on social programs which were, evidently, a net loss*. That is not an irrelevant distinction. Germany wanted out of debts that didn’t represent value to anyone; Greece wants out of debts that represent a good deal of Greek gain based, at present, on German labor. Piketty owes us more than his evasion on why we should conflate the two. He points at some numerical similarities, but never really engages with the fact that no money was lent in the first place.

Arguably, he sidesteps the problem by immediately expanding on that notion of turning to the future. I’d ask why bring up the historical cases if only to brush off their immediacy, but let’s just move forward with him:

We can not expect to pay for decades for their parents’ mistakes of new generations. Now the Greeks have undoubtedly made ​​great mistakes. By 2009, the government in Athens have forged their budgets. Why not the younger generation of Greeks now bears more responsibility for the mistakes of their parents as the young generation of Germans in the 1950s and 1960s. We must now look forward. Europe was founded on forgetting the debt and investing in the future. And it is not on the idea of eternal penance. We need to remember.

The interviewer eventually asks the obvious follow-up question about current Greek spending—these are obviously not “sins of the past”. Piketty again evades by saying Germany got out of its debts. For one eager to look to the future, he is now oddly interested in the past. There is no acknowledgement that this is a fundamental, present-tense problem. German questions about how Greece will use further lending if they take on some of the cost of Greece’s mistakes are legitimate concerns. Coming to a sustainable solution that builds strong European institutions is the responsible, forward looking thing to do. That Piketty suddenly wants to look at past debt speaks volumes.

He grazes over the concerns a bit later when he talks about sustainable, democratic institutions for controlling debt. This is sophistry. Greece has been at immense pains to avoid all controls to their debt—that was the point of the vote. I struggle to even read Piketty’s suggestion charitably. All the conferencing, negotiations, and deals have amounted to Greece implementing the policies its people want, the rest of Europe be damned. I cannot envision how someone could suggest in good faith they would cut entitlement programs at this point.

One can agree with Piketty that we should look towards debt remittance and find his path there to be exceedingly disingenuous. He first glosses over the moral and practical differences between reparations and lent money. On the moral field, reparations represent an abstract idea of valuation; lent money represents German labor and production. It follows fairly closely that erasing that value is a significant burden on the Germans. One could conceivably overcome these concerns, but Piketty sidesteps them by invoking the future.

And that gambit is no less weaselly—and the interviewer gets at the problem. The issue is the present, unsustainable spending by Greece. The debt is merely making things worse. Again, Piketty might overcome these concerns, but again he doesn’t even try.

Perhaps I am missing something in the clunky Google translation. Perhaps if I’d read Capital in the 21st Century (it’s on my to-do list) I’d have more insight into what Piketty was getting out.

But all in all, there is little to be gained by mixing talk of Germany’s war debt history with selective amnesia of the recent past.

I myself am prevaricating now. It is conceivable that the Greek programs were a net positive for the country, but failed to yield enough growth to cancel out the other economic problems. I have little issue speculating that they were not especially effective programs because from a creditor’s standpoint, that is completely irrelevant if its not enough to break even.

Written by R. A. Stark

July 7, 2015 at 8:57 PM

Posted in Uncategorized

Tagged with , ,

The Best Advice I Have for Greece

leave a comment »

I never post on Sundays. I know, from long experience, that people don’t click on news-related posts on the weekend. And why should you? It’s the weekend!

But Greece is voting on a major referendum today, and I’m hoping you’re reading something about it. (Frankly, it doesn’t have to be this blog; just something.) After all, if Greece leaves the Euro—I will not type the word “Grexit” except to scorn it—it will be a major blow to Europe’s fragile economy. It will likely cause a global slowdown, if not an outright recession. Basically, from a selfish, international perspective, you should be against Greece defaulting and leaving the Euro.

But the more interesting question is will Greece be better off for leaving the Euro?

The Question of Paying Down Debt

Debt is tricky. Right now, the Greek government is paying about 5% of GDP (it bounces up and down a bit) to make its obligations. That works out to be about 10% of government revenue going back out to service the debt. This is a bit high, but scarcely Earth-shattering. For reference, the US is at 6% of its revenue or 1.2% of GDP. Greece is staring down an uncomfortable but manageable debt in-and-of-itself.

The issue lies in the dynamics of the situation. It is one thing to for a government to have a stable debt, but Greece is running a deficit. Greece must effectively borrow more money to pay its debts*. Debt begets debt in Greece, and at a much faster rate than the United States.

A Simple Country

Let’s imagine the country of Helena. Helena has a GDP of 1T Trojans. It has over the years accumulated 1.5T in debts. This year it expects to owe 50B on its debts. Its government has 500B in obligations—including the debt service—but only expects to make 400B in revenue.

You can see where this ends up. It borrows 100B to make ends meet. It now owes 1.1T Trojans. If interest rates stay constant, which is not a trivial assumption, it might expect to owe 55B in debts. If everything else remains constant, it will have to borrow 105B to cover the budget. This will keep growing year over year at an exponential rate until it crushes the economy.

Of course, Helena is weirdly stable. There are all sorts of changes we have to look at: changing government obligations, growth or contraction of the tax base, and irregularities in when previous loans come due. But Helena illustrates a major problem for Greece: in the absence of growth, a tax hike, or cuts to government outlays, their debt is unsustainable.

You can see the logic for austerity making a cold, mathematical appearance.

Default is Austere

The other way out is to just not pay debts.

This has an immediate, 5% boost to Greek growth. They can start pocketing the money they owe. It would be immediately assailed by the humungous firestorm that followed. Greece has approximately a 30% deficit. New lending would leave Greece in a flurry. Argentina, a popular comparison, lost a huge chunk of borrowing following its default. As a direct consequence, it saw a sharp decline in government expenditures following the default. Tax revenues grew faster than GDP—basically, a tax hike. These are the marks of austerity, albeit coupled with a default. Finally, the Argentine recovery was driven by a real agricultural boom that Greece is unlikely to duplicate.

It is conceivable that the Argentine case is not instructive; perhaps international investors will forget that Greece voted to not pay them. But to seriously entertain that the country will have to do less than forgo a good chunk of international investment is laughable.

At any rate, that raises the question of which austere plan is better for Greece.

My Advice

The bottom line is this: to stabilize the debt under the status quo, Greece will have to close a 30% gap between revenues and outlays. No matter how you split the difference, that’s at least a huge tax hike or benefit cut and likely both. Because you get to pocket that 10% you owe abroad in default, it’s only 20% if you default. One of the easiest ways to approach this problem, therefore, is to figure out if the effects of a default will hurt GDP by 5% or less.

This is not an easy question to answer. Most of the effects slide both ways. For example, even getting cut off from most international lending (-10% GDP) helps by cutting down on imports in the current account (+10% GDP). It’s not always a wash. It’s hard to guess by how much exports will fall as the effects of the default roil through the wider economy. It is unlikely Europe will simply stop importing from Greece, but it’s also hard to imagine that Greece will be unaffected.

My advice to Greece, therefore, would be to hang onto the one asset they have and can’t scuttle. Don’t leave the Euro. Returning to the Drachma will cut off all ability to negotiate down the road, leave Greece facing financial isolation and austerity, and inflict more harm abroad for virtually no gains over staying. Negotiating for modest write-downs on the condition of restrained debt—and following through on those promises—is probably no harder a path than being unable to borrow. It certainly allows for more choice.

*When I’ve raised this point before, multiple people have suggested that they could pay their debts with primary revenue and their other fiscal obligations with new debt. This is true, but doesn’t change the bottom line: to get the finances to work, you must end up with more debt than you started with.

Written by R. A. Stark

July 5, 2015 at 8:00 AM

Posted in Uncategorized

Tagged with ,

Memes I Hate: Ye Olde Tyme Clinton

leave a comment »

I’ve seen a veritable pack of memes digging out Clinton’s past:


The latter is easier to dispatch. I wrote—in defense of Sanders, no less—that we shouldn’t even give much weight to what candidates do before approximately a third of their life ago. For Sanders, that knocks out anything before 1990 and for Clinton that takes us back to 1992. These are, of course, rules of thumb and with a good case I’d be persuaded to move them backwards or forwards within reason. You’ll even see me do that in a moment. But I think even a cursory examination of the facts will reveal that Clinton probably views her support of Goldwater as a mistake she made as a high schooler. If you really need a citation, here’s what a moment’s worth of Googling will get you.

The first one is at least within Clinton’s statute of limitations. But I have to say, my heart’s not in going after people who didn’t support gay marriage in 2000. It’s easy to forget, but that quote is pre-9/11. N*SYNC was on the radio. Y2K had just fizzled out. People were earnestly suggesting bell bottoms might be coming back into style. More importantly, not a single state had legalized same-sex marriage and polls put the popularity of that at around a third—record highs. Since then, another full third of the country has come around on the issue; Clinton was one of them. At face, the meme implicates Clinton in doing what most moderates did in this country in recent years. I simply know too many people like her to disqualify her from being president now that she and Sanders are on the same page about that.

Except, Clinton really is a Johnny-come-lately. Sure, 2000 was ancient history in terms of same-sex marriage, but 2013 was not. I leave the full analysis to The Atlantic—it is quite able and predicts the meme. The general thrust of the meme has some teeth, even if I think the date and evidence are absurdly distant on this issue. That is to say, there is a version of this meme I don’t hate.

Ultimately these memes irritate me because they fail to focus on the present points of clash between Sanders and Clinton. Neither Sanders nor Clinton (to my knowledge) have particularly good records on race recently. Both seem to have the kind of milquetoast but positive records that come out of the Senate largely ignoring policy based on race in recent years. I’m a lot more willing to hear criticism against Clinton on same-sex marriage, but not if its framed across the zeitgeist we’ve seen on the issue. Clinton and Sanders have deep, important disagreements, especially on issues concerning the financial sector.

And because pulling decades old factoids hides the present election, these are memes I hate.

Written by R. A. Stark

July 2, 2015 at 12:00 PM

Posted in Meme I Hate

Tagged with , ,


Get every new post delivered to your Inbox.

Join 734 other followers