Michael Kennedy

The Transformation of Economics.

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A great piece in the Wall Street Journal today about what has happened to Economics and Economics education.

I took an Economics class in college in 1957 and it changed me to a Republican. My first vote was for Richard Nixon in 1960. My family was furious as they thought we were related to the Boston Kennedys and they had always been Democrats. I wonder if an Economics class would have that effect today?

And that political economy and my assessment of it has changed over a career spanning more than half a century. Here are five developments I would emphasize:

I agree with his appraisal.

1. Diminishing returns to research. A core economic principle is the Law of Diminishing Returns. If you add more resources, such as labor, to fixed quantities of another resource, such as land, output eventually rises by smaller and smaller amounts. That applies—with a vengeance—to academic research. Teaching loads have fallen dramatically (although the Education Department, which probably can tell you how many Hispanic female anthropologists there are teaching in Arkansas, does not publish regular teaching-load statistics), ostensibly to allow more research. But the 50th paper on a topic seldom adds as much understanding as the first or second.

This has been characteristic of Medicine, as well as other academic subjects.

Emory University’s Mark Bauerlein once showed that scholarly papers on Shakespeare averaged about 1,000 a year—three a day. Who reads them? How much does a typical paper add at the margin to the insights that Shakespeare gave us 400 years ago?

That isn’t all he has shown.

The attitude touches the President’s favorite pastime. Tevi Troy reported in Commentary how much Obama enjoys television, particularly SportsCenter and the middlebrow series Homeland and Mad Men. The New York Times added Breaking Bad and The Wire in its article “Obama’s TV Picks: Anything Edgy, with Hints of Reality,” and while it warned of the foolishness of “psychoanalyzing” a president based on “the books he reads or the music he listens to or the television shows he watches,” the story mentions not a single book. One would expect Marxists, feminists, queer theorists, post-colonialists, anti-imperialists, and media theorists to chide Obama for his bourgeois, masculinist taste, but as far as I know they have remained silent.

Obama’s taste runs more to sports and rap music.

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A Preference Cascade is Forming.

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trump

Glenn Reynolds has known about this for a long time.

“This illustrates, in a mild way, the reason why totalitarian regimes collapse so suddenly. (Click here for a more complex analysis of this and related
issues). Such regimes have little legitimacy, but they spend a lot of effort making sure that citizens don’t realize the extent to which their fellow-citizens dislike the regime. If the secret police and the censors are doing their job, 99% of the populace can hate the regime and be ready to revolt against it – but no revolt will occur because no one realizes that everyone else feels the same way.

Peggy Noonan has written about it several times.

But in my experience any nonpolitical person on the street, when asked who will win, not only knows but gets a look as if you’re teasing him. Trump, they say.

I had such a conversation again Tuesday with a friend who repairs shoes in a shop on Lexington Avenue. Jimmy asked me, conversationally, what was going to happen. I deflected and asked who he thinks is going to win. “Troomp!” He’s a very nice man, an elderly, old-school Italian-American, but I saw impatience flick across his face: Aren’t you supposed to know these things?

In America now only normal people are capable of seeing the obvious.

This is something I have been looking at for a while.

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What should the next President be like ?

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trumpmugger

This is not the same as who the President should be. Richard Fernandez has some ideas on what he (or she) should be like.

let me suggest that only four things matter in selecting a man (or woman) to face a challenge whose present dimensions cannot be predicted. For purposes of debate, let these four qualities in descending order of importance be:

1.An ability to face the facts, however unpleasant they may be.

Yes, this is critical and we have had enough of liars and careerists. Is Trump a liar ? I don’t know.

2. An unswerving patriotism. This is not the same as a sincere feeling of love or empathy for America, though that is good. In this context it means the willingness to share the fate of the principals of which he is an agent.

Yes, we are ruled these days by elites who do not plan to share any pain. This is unrealistic but they have been raised to believe they can avoid unpleasant reality. What do we do about this ?

3. Nerve. This is the quality of grace under pressure who no one, unless he has the misfortune to be tested, can be sure he possesses.

Yes, the only real test is the reality and then it is too late. A few have tried to analyze this, and it is not easy.

some individuals did not panic because their body naturally protected them.
Unlike the majority of people who were flooded with a stress hormone, they had much lower levels and also showed signs of another hormone that actually calmed them down.

He referred to Chesley Sullenberger, the pilot of the aeroplane that was successfully landed on the Hudson River in New York last month, as an example.

“There are some individuals who when confronted with extreme stress their hormone profile is rather unique,” he said.

“It doesn’t reach the same peak as the rest of us. So we’re all ready to scream in our chairs, but there are certain individuals who just don’t get as stressed.

“Their stress hormones are lower and the peptides that down-regulate that stress are higher, so you can see in action the hormonal regular system really hitting overdrive.

“Certain people are cooler under pressure and they perform very, very well during these periods of time.”

In his novel, Once an Eagle by Anton Myrer, the author was critical of men in combat who had no fear. They are abnormal and dangerous. Still, Hemingway defined courage as “Grace under Pressure,” and that implied that fear was still present.

In the movie “Patton” an incident was described in which George S Patton Jr attacked three men who he believed to be kidnapping a woman.

patton

Does Trump look like the young Patton ? They seem to have similar expressions.

My own life has been lived as a surgeon and there are surgeons who take beta blockers to deal with tremors caused by high levels of stress hormones. I have never had a problem with anxiety during surgery but, of course, I am not the one under the knife.

4. Intelligence. This is important, because it determines basic competence. But it surprisingly the least important attribute in this list. Intelligence, though rare, is not nearly as hard to find as the 3 characteristics above. You can find staffers who can give you intelligent advice. You cannot find staff to give you a character that you do not possess.

This is so obvious that it should not need to be said but we are ruled by staffers.

What do we make of all this ? I don’t know. Trump is an interesting character and I have no idea how he would function as president. I do think we might get a chance to find out. We should know more in a few weeks.

Trump and China

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Trump has, famously, gone after China on its trade policy.

In January 2000, President Bill Clinton boldly promised China’s inclusion in the World Trade Organization (WTO) “is a good deal for America. Our products will gain better access to China’s market, and every sector from agriculture, to telecommunications, to automobiles. But China gains no new market access to the United States.” None of what President Clinton promised came true. Since China joined the WTO, Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs. It was not a good deal for America then and it’s a bad deal now. It is a typical example of how politicians in Washington have failed our country.

There is an interesting analysis of China’s stumbling economy in the Observer today.

Here is a top ten guide for the perplexed.

Central Planning: Central planning, central planning. The history of the abject failure the Soviet Union’s five-year plans should tell you everything. Command and control economies that report to one man (in a nation of 1.3 billion people) are doomed from the start. Top down economic decisions often look bold and start out highly stimulative, but then degenerate into inefficiency, waste, politics and fraud.

Political Corruption: As the command and control economy generates liquidity, the demand and direction of the distributed capital becomes a political tussle. Decisions on how much steel, cement, coal, glass solar panels, high speed trains and shopping malls—in short everything—are not done in China as a cost benefit analysis by risk capital, a job difficult enough in itself. (Witness the capitalist economies’ booms and busts.) In China, this liquidity was allocated by political muscle, massive bribery and kickbacks, rather than economic justifications.

Basic Gangsterism: Counterfeiting, knockoffs, copyright infringement, theft of intellectual property these were a part of the booster rockets of China’s economic rise. It was all supposed to go away after China joined the WTO in 2001. It didn’t. It just became more institutionalized. Foreign companies needed Chinese “partners” in auto production, healthcare and technology. These “partners” crippled the potential productivity of the investments and led to frequent disputes and even more corruption… as in the GlaxoSmithKline scandals.

There are a total of nine reasons, many addressed in Trump’s piece above.

Now, the economy of China may be in free fall.

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Trump Rampant.

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I have been thinking about the Donald Trump Phenomenon for a while.

I have been mulling Revolution since last summer.

UPDATE: I am amazed but Peggy Noonan gets it !

I have thought for some time that there’s a kind of soft French Revolution going on in America, with the angry and blocked beginning to push hard against an oblivious elite. It is not only political. Yes, it is about the Democratic National Committee, that house of hacks, and about a Republican establishment owned by the donor class. But establishment journalism, which for eight months has been simultaneously at Donald Trump’s feet (“Of course you can call us on your cell from the bathtub for your Sunday show interview!”) and at his throat (“Trump supporters, many of whom are nativists and nationalists . . .”) is being rebelled against too. Their old standing as guides and gatekeepers? Gone, and not only because of multiplying platforms. Gloria Steinem thought she owned feminism, thought she was feminism. She doesn’t and isn’t. The Clintons thought they owned the party—they don’t. Hedge-funders thought they owned the GOP. Too bad they forgot to buy the base!

Read the whole column if you have access.

The GOP Congress has been a huge disappointment.

At this this time in history the Left may be correct about what truly matters. The institutional Republicans are still playing the game of administration. By contrast Obama is playing the game of revolution. By slow degrees the entire political system is coming around to Obama’s point of view. Perhaps this is no ordinary time. When Hillary calls Republicans “terrorists” and Obama calls them “crazies”; when Sanders and Trump are outflanking the established wings of their respective parties, each of these in its own way suggests the emphasis of the next ten years will not be on public administration but on determining the power relationships within America and among the countries of the world.

The Constitution says that Spending bills originate in the House of Representatives and the Ways and Means Committee is supposed to write those bills. It has not been happening even as the GOP has taken Congress.

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

So, we now have Donald Trump, who has almost no supporters known to GOP officials in New Hampshire where he just won the primary with 35% of the vote in a large field.

During that state GOP meeting a couple of weeks ago, I asked former Gov. John Sununu, a man with a lifetime of knowledge about New Hampshire politics, if he knew any Trump supporters. Sununu pondered the question for a minute and said he thought a man who lived down the street from him might be for Trump.

Immediately after the story was published, I got an email from a real estate executive and former member of the New Hampshire House of Representatives named Lou Gargiulo, who happens to live down the street from Sununu. “I’m the guy!” Gargiulo told me. “Not only do I support Mr. Trump, I am the Rockingham County chairman of his campaign. The governor would be shocked to know that many of his other neighbors are Trump supporters as well.”

What a surprise ! Pauline Kael would be shocked.

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