Re: Re: Re: Re: Coase, the myth; was, RE: Re: on howeconomistspubl
It is so typical of economists to analyse problems without recourse to actual empirical evidence. Many firms use market mechanisms for internal allocation - I'm sure Coase could have found some. Anyone who has worked in such firms can attest that the problem is not transactions costs. It's capturing profits for the owners of the firm, maintaining control over employees, etc. I never get it when people talk about how important this work on transaction costs is, how brilliant and insightful. I find, like Rod that it's mostly meaningless handwaving. It reminds me of Marx's comment on John Stuart Mill - in the barren plain of political economy even a minor plateau looks like a mountain. Ellen [EMAIL PROTECTED] writes: For those who are not in the know, the Coase article referred ask a simple question. If the market is the most efficient mechanism for allocation, why do firms not use the market to allocate resources internally? The answer is that using the market costs. These costs are called transactions costs. Allocation will then be done by the method that is cheapest. I.e., by the market or by command. Transactions cost then determine what is allocated by the market and what is internal to the firm. The problem is that the reasoning is circular. It is a tautology. The problem has been given a name, but no demonstration, either logical or empirical, has been given. It sounds nice, "Oh yeah, transactions costs, that makes sense." But it means nothing. [EMAIL PROTECTED] wrote: In a message dated 00-02-01 00:04:31 EST, you write: sn't that what you academics are for? Hell I work two jobs, do I have to solve the theory of the firm problem too...don't tell me to unionize the folks where I work; already tried that and the owner of my company went to Congress, shelled out 863K$ in one day and got the law changed to kill the drive [which was succeeding quite well, thank you]. I'm a practicing lawyer, Ian, I do this stuff in my spare time, too. Realize I talk a bit like professor and used to be one, but that was years ago. --jks -- Rod Hay [EMAIL PROTECTED] The History of Economic Thought Archive http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/index.html Batoche Books http://home.golden.net/~rodhay 52 Eby Street South Kitchener, Ontario N2G 3L1 Canada
Re: commies in New Hampshire
K Content-type: text/plain; charset="US-ASCII" Content-transfer-encoding: 7bit on 1/2/00 2:05 am, Louis Proyect at [EMAIL PROTECTED] wrote: Trotsky himself seems like not an entirely bad sort, but Trots are another story entirely, except maybe for the Mpls general strike. I can't imagine their net contribution to human betterment to have been positive, but I'm willing to hear arguments to the contrary. Doug Without the "Trots", there never would have been an antiwar movement. After LBJ began escalating the war, the only group on the left that pressed for independent mass actions in the street as opposed to electing "peace" candidates was the SWP. You will find this detailed in Tom Wells' excellent "The War at Home". Try to find some room in your busy reading schedule for some history, Doug. It will improve your mind. Without questioning the participation of Trotskyist activists, it might be something of an exaggeration to say that without them there would not have been an antiwar movement. They were as caught up in the flux of the times as anyone else, and their activism was matched by those of other backgrounds in organisations like SDS and SNCC. Symbiotically linked to this was the campaign for civil rights, which gave subsequent antiwar street protest an impetus it would probably not have had otherwise. The books by Doug Dowd, Staughton Lynd and James Miller covering this period are most instructive. Michael
dumb question
Dear Penners - I have two questions I hope someone can answer quickly. (1) In what year did Milton Friedman become president of the AEA? (2) In what year did Lucas publish the first of his articles laying out the theory of rational expectations? Thanks, Ellen
Coase
Ellen Frank wrote: I never get it when people talk about how important this work on transaction costs is, how brilliant and insightful. And as Coase himself noted, his paper was "much cited and little used," at least in 1970 when he said that. It also begins from premises so ridiculous that only an economist could hold them. He quoted Sir Arthur Salter as saying "The normal economic system works itself." Why the insight that it doesn't "work itself" should be seen as profound is further proof of the banality of so much economics. Doug
Re: Re: Re: Re: Coase, the myth; was, RE: Re: on howeconomistspublish
At 01:14 AM 2/1/00 -0500, you wrote: For those who are not in the know, the Coase article referred ask a simple question. If the market is the most efficient mechanism for allocation, why do firms not use the market to allocate resources internally? The answer is that using the market costs. These costs are called transactions costs. Allocation will then be done by the method that is cheapest. I.e., by the market or by command. Transactions cost then determine what is allocated by the market and what is internal to the firm. The problem is that the reasoning is circular. It is a tautology. The problem has been given a name, but no demonstration, either logical or empirical, has been given. It sounds nice, "Oh yeah, transactions costs, that makes sense." But it means nothing. I don't think this is a sufficient criticism. There's nothing wrong with tautology if one can use it to help with the understanding of something, going beyond tautology. The physics equation Force = mass x acceleration is tautological in that each two of the terms define the third. Somehow physicists use it to get a lot of mileage. The neoclassical concept of "economic rationality" is tautologically true, but it seems productive for them. In my interpretation, Marx's "law of value" (a.k.a., "labor theory of value") is tautologically true. But it helps us understand capitalism better. Even Coasian transactions costs can help us understand the world better, as shown by some of the later work of Douglass North. The key thing is to avoid excessive reliance on tautology. That, however, is what the Chicago-school does best, usually hiding it in a welter of math and/or econometrics. The biggest logical circle is that of the MF. His "positive economics" says that it doesn't matter how unrealistic one's assumptions are as long as they predict well. So he assumes perfect competition in markets (unless the gov't meddles). But then his empirical work is poor, not really testing the assumption against alternative ones. He then uses the "success" of his econometrics to validate his unrealistic assumption and argues that the government shouldn't "meddle." BTW, the transactions costs emphasized by Coase and the Coasoids are nothing new. Classical economists were aware of them, as were Robinson and Chamberlain when they developed theories of monopolistic competition. As Doug points out, they are only important if one's theoretical base-line is the silly Walrasian general equilibrium model (or hallucinogenic visions of the Invisible Hand). Maybe the role of transactions costs have moved some economists away from such silliness. But usually it doesn't do so unless other "imperfections" (i.e., deviations of the real world from the ideal forms) are brought in. Douglass North produces more interesting and revealing results because he assumes "bounded rationality" and the like along with transactions costs. He also is an economic historian, so that the concern with the actual history of the US economy slowly pushed him away from his Chicago-school economics. Of course, weakening two or more of the hegemonic assumptions and inductively bringing in reference to the real world gets one beyond the journal article form. Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine
Re: Coase, the myth
Coase always struck me as a mediocre figure. His so-called theorem -- which he himself denied to be his intention -- was useful because it denied paying the need for regulation, which was his basic theme. His theory of the firm was interesting in so far as it pointed out a problem with the market. However he refused to extend his logic to argue for the transcendence of the market into socialism, by arguing that the status quo was the optimum. This made him useful because the existence of the corporate sector as we know it was ruled out by the simplistic, textbook version of economic theory. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: dumb question
(2) In what year did Lucas publish the first of his articles laying out the theory of rational expectations? It was John Muth who thought up the theory of ratex. Lucas applied it to macro. Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine
Re: Re: Re: Re: commies in New Hampshire
Trotsky himself seems like not an entirely bad sort, but Trots are another story entirely, except maybe for the Mpls general strike. I can't imagine their net contribution to human betterment to have been positive, but I'm willing to hear arguments to the contrary. Doug I've a hunch that some anarchists and left social revolutionaries at Konstradt would disagree with your initial comment (although what 'not an entirely bad sort' means is, well...) and I know some folks who would point out their importance to anti-Vietnam War movement in responding to your second comment. Other sentence of your post is 'kinder, gentler' disparagement and likely disingenuous. Such discussion on pen seems remote (listers finding it tangential) and it is kind of topic that you generally discourage on lbo. Michael Hoover
Re: Coase, the myth; was, RE: Re: on howeconomistspubl
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Ellen Frank It is so typical of economists to analyse problems without recourse to actual empirical evidence. Many firms use market mechanisms for internal allocation - I'm sure Coase could have found some. Anyone who has worked in such firms can attest that the problem is not transactions costs. It's capturing profits for the owners of the firm, maintaining control over employees, etc. But maintaining control over employees is a transaction cost under the Coasian theory and its modern elaborations. It's usually called "monitoring costs" or preventing "opportunism" (i.e. workers doing what makes their lives bearable rather than what they are told to do). Oliver Williamson is the strongest elaboration on this theme in regard to workers and employers, but the key issue of employee control or other power relations pervades transaction cost analysis. One reason I like transaction cost analysis is that it gives a very specific set of analytic tools to discuss power within the framework of economic analysis. Conservatives use it for their purposes, but it is quite possible (and has been used) to argue for quite different arguments of why workers inability to absorb risk and employers greater ability to engage in opportunism gives them disproportionate power to enforce the bargains they wish. Transaction cost analysis demystifies "freely made contracts" by making clear why some actors have no real contractual choice in the matter once certain sunk investments are made -- firm-specific skills in the case of workers as one example. The competing uses of market versus authority relationships and the role of transaction costs (or various names given to it and its relations) has been a fruitful area of analysis ranging from left-leaning "New Institutionalists" in economic sociology to law and economics types in legal research. It has always struck me as a much more convincing analysis than neoclassical simulation of markets in all sorts of situations where nothing that resembles a market is operating. -- Nathan Newman
Re: Re: dumb question
[EMAIL PROTECTED] writes: (2) In what year did Lucas publish the first of his articles laying out the theory of rational expectations? It was John Muth who thought up the theory of ratex. Lucas applied it to macro. Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine Do you know what year Lucas's article appeared? (I think it was co-authored with Leonard Rapping, who later atoned for his sins). Ellen
on how economists publish: loose canons on deck
Thanks to Jim Devine for the nice Thomas Palley quote: "scholarship that proceeds within the convention is free of these burdens, since the underlying assumptions and framework are taken for granted." It seems to me though that length is not the biggest part of the problem. Daniel Ellsberg's 1959 paper on the systematic utility violating behaviour that results from ambiguity couldn't have been much shorter or clearer in its challenge of the conventional underlying assumptions and framework. Short or long, von Mises' article on socialist calculation relied on a "social welfare function" that was already obsolete when Barone concocted it. I wouldn't give two cents for the argument. The generous reception given to von Mises testifies to the insatiable desire of economists to shut out well-established arguments and observations that make it difficult for them to cling to their copiously disproven "underlying assumptions and framework." Feldstein's 1967 "Specification of the Labour Input in the Aggregate Production Function," is stupid in many ways, but most importantly it is several orders of magnitude less deserving than Denison's 1961 "Measurement of Labor Input: Some Questions of Definition and the Adequacy of Data." Guess which of the two has been received as a "standard treatment" of the issues? Tom Walker
Re: Airplanes falling out of the sky
There has been an epidemic of airliners falling "mysteriously" from the sky in recent years... All these problems are related to "deregulation", a policy that has been applied across the board to the trucking, railroad and airline industry. It has produced harried operator and maintenance crews. In exchange for profit returns that Wall Street brokerage houses can smile on, we get smack-ups on Amtrak and airplanes falling out of the sky. Deregulation is not a right-wing plot. One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. Meanwhile, as the body count mounts in accidents of these kinds, the two party system responsible for forcing deregulation down the throat of the American people share equal blame. And we have gone from having one serious commercial aviation accident per 140 million miles flown in 1970 to having one serious commercial aviation accident per 1.4 billion miles flown today. You can indict capitalism for many reasons, but an increased likelihood of dying in an airliner crash is not one of them... Brad DeLong
Re: Re: Re: Re: Re: commies in New Hampshire
Michael Hoover wrote: Trotsky himself seems like not an entirely bad sort, but Trots are another story entirely, except maybe for the Mpls general strike. I can't imagine their net contribution to human betterment to have been positive, but I'm willing to hear arguments to the contrary. Doug I've a hunch that some anarchists and left social revolutionaries at Konstradt would disagree with your initial comment (although what 'not an entirely bad sort' means is, well...) and I know some folks who would point out their importance to anti-Vietnam War movement in responding to your second comment. Other sentence of your post is 'kinder, gentler' disparagement and likely disingenuous. Such discussion on pen seems remote (listers finding it tangential) and it is kind of topic that you generally discourage on lbo. Not disingenous at all. The older I get, the less certain I feel about nearly everything, and the more I want to hear contrary opinions. So I was grateful to hear about the role of the SWP in the antiwar movement. I'd never discourage a conversation about the political contributions of Trotskyism, as long as it didn't degenerate into the 4,732nd rerun of the Stalin-Trotsky debate. As for tangency, I'd have thought that unlike their mainstream colleagues, "progressive" economists wouldn't be uninterested in politics, but maybe I'm wrong. Doug
Re: Airplanes falling out of the sky
Yes, de-regulation leads to cutting costs, then cutting corners, and then crashes. Value Jet into the Everglades is one example. It is happening in the electric power industry, where regional and local black-outs are more frequent, and forest fires start because tree trimming budgets have been diverted into other pockets. And we've only seen the beginning. Work forces have already been cut severely. The IBEW has a strangely mixed record on the issue. On the one hand they oppose deregulation for job losses, but on the other they strongly support the same utilities which are laying off workers. Let's hope we are up-wind when the downsizing at the nuclear plants results in the inevitable. There was an interesting journalistic decision made when the US Air crash near Pittsburgh PA occured a few years ago. The New York Times that morning ran a story (BY Mathew Wald if my memory is reliable.) It was about de-regulation, and it quoted an attorney from the Environmental Defense Fund defending deregulation of electricity. The remark quoted was an attack on those who predicted electric blackouts and nuclear accidents, and the guy said something to the effect that " the airlines were deregulated and we don't see airplanes falling out of the skies." Just then, of course, the plane fell out of the sky near Pittsburgh. But here's the journalistic decision: The quote was removed from the story in later editions! Gene Coyle Louis Proyect wrote: There has been an epidemic of airliners falling "mysteriously" from the sky in recent years. The best known incidents were TWA 800 which went down over Long Island Sound and the Egyptian plane that supposedly was brought down through the suicidal act of a pilot. Yesterday Alaskan Airlines Flight 261 fell 17,000 feet into the Pacific Ocean, 20 miles from Los Angeles. The crew had reported a problem with the stabilizer trim before it crashed. I don't like air travel very much. Went I went out to Los Angeles a week ago, the American Airlines plane I had a seat on was delayed for an hour because of mechanical difficulties. The explanation for this rash of airline accidents can be found in the Marxist analysis of the declining rate of profit, which affects heavy industry with high fixed capital costs most of all. When fixed capital can not be reduced, variable capital--ie., working people--must be squeezed. There was an excellent series of articles in the New Yorker Magazine in the 1960s about these problems, which was forcing competitors to invest billions in "air-buses" without any assurance that their investments would be profitable. Like many articles in the classic New Yorker, it was an indictment of capitalism without using the word. Excerpts from an article in today's NY Times spells out some of the shortcuts Alaskan Airline has taken in order to satisfy Wall Street investors anxious for upbeat quarterly returns: The airline, a subsidiary of Alaska Air, based in Seattle, carried 13.1 million passengers in 1998 and now serves 41 cities in the United States, Mexico and Canada. The airline has more than 9,200 employees and its 1999 sales were $2.08 billion. While it has faced criticism and sanctions from the Federal Aviation Administration for maintenance practices, the airline had not had a fatal crash in more than 25 years until yesterday and is a perennial favorite among customers. Alaska Airlines is owned by the Alaska Air Group, a holding company that also owns Horizon Air, a smaller carrier. According to the company's history, Alaska Airlines traces its roots to McGee Airways, which started service between Anchorage and Bristol Bay, Alaska, in 1932. The airline took the name Alaska Airlines in 1944 and grew through mergers and acquisitions, including that of Jet America Airlines, a carrier based in California, in 1987. The only two fatal incidents in its history were in 1971, when faulty instrument readings caused an Alaska Boeing 727 to crash into a mountain outside Juneau, killing 111 people, and in 1976, when a plane overran a runway in Ketchikan and a passenger died of a heart attack. The airline has occasionally run afoul of the federal authorities. Last August, The Seattle Times reported that Federal Aviation Administration records showed that Alaska Airlines flew two of its MD-80's more than 840 times in 1998 and 1999 without having done proper maintenance on them. The planes were allowed to fly despite falsified maintenance checks that included work by an Alaska Airlines supervisor who was "not appropriately certified, properly trained or qualified to do so," the paper quoted the agency as saying. According to the agency, the airline released a an MD-80 for service in October 1998 despite 10 occasions in which maintenance work was performed out of sequence and with incomplete final checks. In a separate proceeding, the F.A.A. proposed a $44,000 fine against the airline last
Re: Airplanes falling out of the sky
Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. Greg Tarpinian of the Labor Research Association, in a rare act of lese majeste against a liberal Democrat, once theorized that the reason Kennedy was such a passionate promoter of dereg was that he came from merchant capital (i.e., bootlegging), and merchants always want to minimize transportation costs. Doug
Re: Re: Re: Coase, the myth
Peter Dorman wrote: I've gotten flamed in the past for defending the value of Coase's article on external costs, but I still believe it, for two reasons. First, it clarified the definition of an externality: a missing market. Peter, I considere you to be a very careful thinker. Why should can do externality be a missing market? Doesn't the suggest that we need to think about the world in terms of markets or that markets are some help a natural phenomena? To me it seems simpler to think in a pre-Coasean fashion that markets create enormous damage -- period. (Why does it matter, other than for the distribution of income, whether the mugger has the right to mug or the muggee has the right to not be mugged, if they can bargain over whether there will be a mugging? If there is only one night and one mugging opportunity, Coase is right.) Peter, why is he right? Let's turn to another example rather than mugging -- environmental racism. Surely it makes a difference whether I have to pay the polluter not to pollute or whether he has to pay me to accept the pollution. Or am I misunderstanding you? -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Re: Airplanes falling out of the sky
Kennedy may have been influeced by Stephen Bryer, now on the Supreme Court, who wrote a 1982 book called "Regulation and Its Reform." I think Bryer was a staffer for a Kennedy Senate Committe on de-regulation back then. The book is dumbed-down Alfred Kahn, which was just MC applied to anything. Bryer's book is really weak. Bryer's bias against regulation and for free mkt. leaps off the pages. But, hey, anything that gets you a job at the Supreme Court is worth doing. Gene Coyle Doug Henwood wrote: Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. Greg Tarpinian of the Labor Research Association, in a rare act of lese majeste against a liberal Democrat, once theorized that the reason Kennedy was such a passionate promoter of dereg was that he came from merchant capital (i.e., bootlegging), and merchants always want to minimize transportation costs. Doug
Re: dumb question
journal of political economy, 1969. friedman gave his presidential speech in 1967. Ellen Frank wrote: Dear Penners - I have two questions I hope someone can answer quickly. (1) In what year did Milton Friedman become president of the AEA? (2) In what year did Lucas publish the first of his articles laying out the theory of rational expectations? Thanks, Ellen -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
is our text project dead?
Nobody has yet volunteered to write any of the subsections. Is our project dead? I think we would need only a page or two for an initial draft just to get things started. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Coase, the myth
Peter, I considere you to be a very careful thinker. Why should can do externality be a missing market? Doesn't the suggest that we need to think about the world in terms of markets or that markets are some help a natural phenomena? To me it seems simpler to think in a pre-Coasean fashion that markets create enormous damage -- period. From the Financial Times, April 5, 1993: THE small and misunderstood sale of pollution rights by the US Environmental Protection Agency and the Chicago Board of Trade last week was the latest step in the evolution of a market. Pricing pollution is no different from pricing bonds, according to Nobel laureate Professor Ronald Coase of the University of Chicago. His work on determining economic costs of social problems forms the basis of the EPA's market-based pollution reduction programme. 'People basically think they need something physical to trade. The point is you never, ever trade in physicals. You always only trade the rights to something. Once that's understood, it becomes much easier to see trading in intangibles,' Prof Coase says. He says the great advantage of a market-based system for allocating pollution is that it achieves a set level of pollution reduction at the lowest possible cost. Eventually, information from that market can become a valuable public-policy tool. 'Over the long run, it allows us to determine what the costs of pollution are, and will allow the EPA to balance better the costs and benefits of pollution control.' Louis Proyect (The Marxism mailing list: http://www.marxmail.org)
Are we doing something right?
I'm doing a book review of Cyber-Marx: Cycles and Circuits of Struggle in High-Technology Capitalism by Nick Dyer-Witheford. I'm only a third of the way finished, but it is an excellent book so far. Much to my delight, he even mentioned pen-l as an example of cyber activism. I wish that I could believe that we really do have an effect. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Re: Re: Airplanes falling out of the sky
Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. But Joe Sixpack *was* getting cheated out of affordable air travel. Our current pricing configuration--low prices for vacationers who plan in advance and stay over Saturday night, high prices for business travelers who complete round trips within the week--and our current hub-and-spoke system (which provides greater capacity at the price of more hassle) are products of deregulation. Don't any of you fly anywhere on vacation? Brad DeLong
Re: Re: Airplanes falling out of the sky
G'day Brad, And we have gone from having one serious commercial aviation accident per 140 million miles flown in 1970 to having one serious commercial aviation accident per 1.4 billion miles flown today. You can indict capitalism for many reasons, but an increased likelihood of dying in an airliner crash is not one of them... I don't question your figures, but would point out that capitalism is not a static thing. We haven't had a fatal Qantas crash yet (as the Dustin the Rainman told Tom the Wally), but we seem to be recording an amazing increase in 'technical problems' and 'near-misses' (who was it said a near miss must mean a hit? But I digress) in Australia of late. And capitalism's dynamics have lately contributed to corporatisation, privatisation and merger in an industry marked by some real world-wide profit problems over the last decade and a bit. Planes are getting better, sure - capitalism should be about market-selected innovations. But the quality of the newly built plane ain't the only determinant in the equation. You use a 1970 v. 1999 comparison, but for much of the world, airlines were publicly owned / tightly regulated for most of that time (during which a fair bit of that improvement must have manifested), and the consequences of the great transformation might be some time in imposing themselves statistically. It might be that we have some hairy moments to look forward to (I notice the almost coincidental Cote d'Ivoire crash, with twice the LA crash body-count, hasn't rated much of a mention) as the deregulatory/privateering moment gradually works away at all those wires, welds, pilots and ground crews. It eventually happened with Yorkshire water, Auckland electricity, Melbourne gas, Sydney trains and outback telephones - or so it seems to me. Waddyareckon? Cheers, Rob.
Re: Re: Re: Re: Airplanes falling out of the sky
Don't fly to Chico from San Francisco. Going to New York is cheaper. It wasn't before dereg. So it was not beneficial to all consumers. Brad De Long wrote: Don't any of you fly anywhere on vacation? -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Re: Coase, the myth; was, RE: Re: on howeconomistspubl
I am not denying that transactions are costly. Or there are other costs associated with different institutions of allocation, including the market. What I am objecting to is logic of this sort. Transactions costs imply firms Therefore firms imply transactions costs. How do we measure transactions cost? Why do we assume that what exists is optimal? And any number of other questions that would have to be answered before this becomes even a useful hypothesis. By the way Carrol, I don't think that this is the same problem that you indicate in psychology. Classification is a useful prescientific exercise. But substitution a name for an explanation is of no intellectual significance. It remains a mystery. Rod Nathan Newman wrote: But maintaining control over employees is a transaction cost under the Coasian theory and its modern elaborations. It's usually called "monitoring costs" or preventing "opportunism" (i.e. workers doing what makes their lives bearable rather than what they are told to do). Oliver Williamson is the strongest elaboration on this theme in regard to workers and employers, but the key issue of employee control or other power relations pervades transaction cost analysis. One reason I like transaction cost analysis is that it gives a very specific set of analytic tools to discuss power within the framework of economic analysis. Conservatives use it for their purposes, but it is quite possible (and has been used) to argue for quite different arguments of why workers inability to absorb risk and employers greater ability to engage in opportunism gives them disproportionate power to enforce the bargains they wish. Transaction cost analysis demystifies "freely made contracts" by making clear why some actors have no real contractual choice in the matter once certain sunk investments are made -- firm-specific skills in the case of workers as one example. The competing uses of market versus authority relationships and the role of transaction costs (or various names given to it and its relations) has been a fruitful area of analysis ranging from left-leaning "New Institutionalists" in economic sociology to law and economics types in legal research. It has always struck me as a much more convincing analysis than neoclassical simulation of markets in all sorts of situations where nothing that resembles a market is operating. -- Nathan Newman -- Rod Hay [EMAIL PROTECTED] The History of Economic Thought Archive http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/index.html Batoche Books http://home.golden.net/~rodhay 52 Eby Street South Kitchener, Ontario N2G 3L1 Canada
Re: Re: Coase, the myth; was, RE: Re: on howeconomistspubl
[EMAIL PROTECTED] writes: But maintaining control over employees is a transaction cost under the Coasian theory and its modern elaborations. It's usually called "monitoring costs" or preventing "opportunism" (i.e. workers doing what makes their lives bearable rather than what they are told to do). Oliver Williamson is the strongest elaboration on this theme in regard to workers and employers, but the key issue of employee control or other power relations pervades transaction cost analysis. It is true that "maintaining control" can be framed (sort of) within the language of transactions cost, but it's not quite the same thing as talking about power and control. There is a difference between saying "workers tend to shirk, causing hourly output to fall, therefore employers need to incur costs to monitor and measure performance" and saying "workers tend not to share information about productivity and quality with owners who will use it against them by laying people off, therefore employers have to..." or saying "workers will work harder if owners empower them, but will also have higher expectations about job security, profit-sharing, etc, therefore employers have to" These are not all the same thing. Only the first statement is a statement about transaction costs. One reason I like transaction cost analysis is that it gives a very specific set of analytic tools to discuss power within the framework of economic analysis. Conservatives use it for their purposes, but it is quite possible (and has been used) to argue for quite different arguments of why workers inability to absorb risk and employers greater ability to engage in opportunism gives them disproportionate power to enforce the bargains they wish. Transaction cost analysis demystifies "freely made contracts" by making clear why some actors have no real contractual choice in the matter once certain sunk investments are made -- firm-specific skills in the case of workers as one example. The idea that some actors have no real choice is self-evident to most people. The transaction cost framework allows non-NC economists to talk a lingo accepted by NC- economists and make points accepted by non-NC economists. That's all. It's only enlightening in the context of NC economics. In the context of intellectual history, it's a watered-down, half-baked language.
Airplanes falling out of the sky
And we have gone from having one serious commercial aviation accident per 140 million miles flown in 1970 to having one serious commercial aviation accident per 1.4 billion miles flown today. You can indict capitalism for many reasons, but an increased likelihood of dying in an airliner crash is not one of them... Brad DeLong The little society, one and all, entered into this laudable design and set themselves to exert their different talents. The little piece of ground yielded them a plentiful crop. Cunegund indeed was very ugly, but she became an excellent hand at pastrywork: Pacquette embroidered; the old woman had the care of the linen. There was none, down to Brother Giroflee, but did some service; he was a very good carpenter, and became an honest man. Pangloss used now and then to say to Candide: "There is a concatenation of all events in the best of possible worlds; for, in short, had you not been kicked out of a fine castle for the love of Miss Cunegund; had you not been put into the Inquisition; had you not traveled over America on foot; had you not run the Baron through the body; and had you not lost all your sheep, which you brought from the good country of El Dorado, you would not have been here to eat preserved citrons and pistachio nuts." "Excellently observed," answered Candide; "but let us cultivate our garden." Louis Proyect (The Marxism mailing list: http://www.marxmail.org)
Re: Re: Re: Re: Coase, the myth
Michael Perelman wrote: Peter Dorman wrote: I've gotten flamed in the past for defending the value of Coase's article on external costs, but I still believe it, for two reasons. First, it clarified the definition of an externality: a missing market. Peter, I considere you to be a very careful thinker. Why should can do externality be a missing market? Doesn't the suggest that we need to think about the world in terms of markets or that markets are some help a natural phenomena? To me it seems simpler to think in a pre-Coasean fashion that markets create enormous damage -- period. In a sense, this is exactly my point. An externality is a market phenomenon, and it applies within that context. It doesn't make sense to speak of an externality in a non-market situation. But pollution, for instance, can certainly occur and be a problem with or without markets. (Example: I would not use the concept of externalities to explain the failure of the USSR to cope with its environmental problems.) And once we are within a market context, it is important to distinguish between problems due to market organization (like externalities) and problems due to other factors (like interaction effects/nonconvexities, as I've argued elsewhere). Finally, I still think it is useful to be very precise about exactly how and why markets have the effects they have. I don't think we are going to leap into a marketless world any time soon, and so we have to figure out how to cope with the downsides of markets. (Why does it matter, other than for the distribution of income, whether the mugger has the right to mug or the muggee has the right to not be mugged, if they can bargain over whether there will be a mugging? If there is only one night and one mugging opportunity, Coase is right.) Peter, why is he right? Let's turn to another example rather than mugging -- environmental racism. Surely it makes a difference whether I have to pay the polluter not to pollute or whether he has to pay me to accept the pollution. Or am I misunderstanding you? Whenever people disagree with me it's because they don't understand... All I'm saying is that more is at stake besides income distribution. Coase said: whether you pay the polluter or the polluter pays you, either way there will be the same amount of pollution, and it will be efficient. Then Posner said: since the law should be neutral with respect to income distribution, the allocation of rights should be determined by the degree to which they create efficient markets through which erstwhile externalities can be negotiated. (The goal is to achieve efficient pollution along with efficient everything else -- "wealth creation".) I'm saying: wrong -- the negotiated agreement based on the polluter having the right to pollute will be different from the agreement based on my right not be polluted. They can't both be efficient, can they? Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901 Peter
Re: Re: Re: Coase, the myth
You are, of course, referring to a different article by Coase, than I referred to. The Coase theorem of 1960 which you refer to here is a different fish altogether. Here Coase assumes that transactions costs are zero. But he also assumes that all income effects are zero. It is this article that lead to such wonders as the government selling transferable permits for firms to pollute. "Your plant polluting too much, no worry, buy a permit from a plant that is polluting too little." By extension, we have neo-classical economists arguing that the inefficiencies that are evident even to them could be cleared up if only we were able to supply those "missing markets" because we all know that the market is the most efficient allocation institution that god ever gave to man. Rod Peter Dorman wrote: I've gotten flamed in the past for defending the value of Coase's article on external costs, but I still believe it, for two reasons. First, it clarified the definition of an externality: a missing market. This seems obvious, but my experience is that most economists still don't get it. They think externalities are "natural", having to do with unintended byproducts, waste streams, intangible spillovers, etc. All of these things can exist, but, without the necessary social arrangement -- a system of markets minus one (or more) -- no externality. (This has impeded the analysis of "natural" variations in cost and benefit relationships by confusing them with externalities.) And there are many externalities that exist for strictly social and political reasons. Coase, with his residue of economic naturalism (we would have created a market were it not for this messy feature, transaction costs) still obscures this somewhat, but the point is there for anyone who reads carefully. Second, his claim that the allocation of property rights does not alter the bargaining outcome in a transaction costless world is false, but we learned a lot by proving it false. (Reminds me of Lakatos' "Logic of Proofs and Refutations".) What I for one learned was the relevance of repeated game analysis as a critique of one-shot supply-and-demand logic; this is the ultimate refutation of Coase and, for that matter, almost the entire corpus of neoclassical microtheory. (Why does it matter, other than for the distribution of income, whether the mugger has the right to mug or the muggee has the right to not be mugged, if they can bargain over whether there will be a mugging? If there is only one night and one mugging opportunity, Coase is right. If there are many nights, he is wrong.) Peter Michael Perelman wrote: Coase always struck me as a mediocre figure. His so-called theorem -- which he himself denied to be his intention -- was useful because it denied paying the need for regulation, which was his basic theme. His theory of the firm was interesting in so far as it pointed out a problem with the market. However he refused to extend his logic to argue for the transcendence of the market into socialism, by arguing that the status quo was the optimum. This made him useful because the existence of the corporate sector as we know it was ruled out by the simplistic, textbook version of economic theory. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901 -- Rod Hay [EMAIL PROTECTED] The History of Economic Thought Archive http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/index.html Batoche Books http://home.golden.net/~rodhay 52 Eby Street South Kitchener, Ontario N2G 3L1 Canada
Re: Re: Re: Coase, the myth; was,RE: Re: on howeconomistspubl
Rod Hay wrote: Classification is a useful prescientific exercise. Yes. It is also a highly useful heuristic gimmick (which is perhaps part of what you mean) and a good (essential) aid to memory, as well as to convenient storage of information (in a computer or a card file, what have you). I think the problems arise when this usefulness of classification as a *pre-scientific* exercise gets confused with science. (By science I mean any systematic and progressive study; by "progressive" I mean holds on to and builds on past results.) There is a famous case of this in literary criticism: Northrop Frye's *Anatomy of Criticism*. He seriously thought, it seems, that he had turned literary criticism into a science simply by inventing a magnificent multi-layered classification system. What he had produced (I think) is an extraordinarily beautiful pile of of useful and useless gadgets. Carrol
Re: Re: Re: Airplanes falling out of the sky
G'day Brad, And we have gone from having one serious commercial aviation accident per 140 million miles flown in 1970 to having one serious commercial aviation accident per 1.4 billion miles flown today. You can indict capitalism for many reasons, but an increased likelihood of dying in an airliner crash is not one of them... I don't question your figures, but would point out that capitalism is not a static thing. We haven't had a fatal Qantas crash yet (as the Dustin the Rainman told Tom the Wally), but we seem to be recording an amazing increase in 'technical problems' and 'near-misses' (who was it said a near miss must mean a hit? But I digress) in Australia of late. And capitalism's dynamics have lately contributed to corporatisation, privatisation and merger in an industry marked by some real world-wide profit problems over the last decade and a bit. Planes are getting better, sure - capitalism should be about market-selected innovations. But the quality of the newly built plane ain't the only determinant in the equation. You use a 1970 v. 1999 comparison, but for much of the world, airlines were publicly owned / tightly regulated for most of that time (during which a fair bit of that improvement must have manifested), and the consequences of the great transformation might be some time in imposing themselves statistically. It might be that we have some hairy moments to look forward to (I notice the almost coincidental Cote d'Ivoire crash, with twice the LA crash body-count, hasn't rated much of a mention) as the deregulatory/privateering moment gradually works away at all those wires, welds, pilots and ground crews. It eventually happened with Yorkshire water, Auckland electricity, Melbourne gas, Sydney trains and outback telephones - or so it seems to me. Waddyareckon? Cheers, Rob. Seems to me that air safety is one place where the market gives airline executives and airplane manufacturing and maintenance executives exactly the right incentives: people aren't going to fly airplanes or airlines that crash regularly... Brad DeLong
Re: Re: Re: Re: Re: Airplanes falling out of the sky
Don't fly to Chico from San Francisco. Going to New York is cheaper. It wasn't before dereg. So it was not beneficial to all consumers. But there are a lot more of us who want to fly from San Francisco to New York. Bentham would approve... Brad DeLong
Re: is our text project dead?
Michael Perelman wrote: Nobody has yet volunteered to write any of the subsections. Is our project dead? I think we would need only a page or two for an initial draft just to get things started. -- I would be willing to write something on Mexico or Latin America generally, if noone else will. I think a text should have a section on 'development theory', just a general overview of the major theories and a decent bibliography. I wrote a long post on development theory which I sent a few months ago. If you feel it is good enough, you can use some of that or modify it or whatever. There's also an good bibliography for beginners which might be useful.Didn't the URPE publish a macro text with Monthly Review some time ago? Sam Pawlett
Alternative Budget (Canada)
Here is the web address for the CCPA alternative budget etc. Cheers, Ken Hanly Subject: CCPA Update: Alternative Federal Budget 2000 Date: Tue, 01 Feb 2000 12:30:27 -0500 From: "ccpa" [EMAIL PROTECTED] To: [EMAIL PROTECTED] February 1, 2000 Canadian Centre for Policy Alternatives Update: Healthy Families: First Things First Alternative Federal Budget 2000 Each year since 1995, the Alternative Federal Budget has outlined a better way, a strategy that would have reduced and eliminated the deficit, but also generated higher economic growth, created more jobs, and achieved greater social equality and justice. This year again, in the face of the clamour for tax cuts from the corporate sector and its political, academic and media allies, the Alternative Federal Budget sets out a clear strategy to achieve the greater good for the majority of Canadians. The goal of the 2000 Alternative Federal Budget is to enhance the health of Canadian families and communities through major public reinvestment in housing, early childhood education, health care, environmental protection and income security. This fiscally sound plan will benefit all Canadians, but especially those with lower and medium incomes, who bore the brunt of the harsh market conditions and regressive government policies of the 1990s. As always, all of the Alternative Federal Budget materials (including the budget document, the budget in brief and the media release in both english and french) are available for free from the CCPA web page at http://www.policyalternatives.ca Hard copies of the budget document are available for $10.00 from the CCPA (price includes shipping within North America, handling and GST #124146473RT). Discounts are available for bulk orders. You can order your copy of the Alternative Federal Budget by filling out the secure on-line order form on our web page at http://www.policyalternatives.ca You can also phone (613-563-1341) or fax (613-233-1458) your order in to us along with your mailing address and credit card (Visa/MasterCard) information. Or, if you prefer, send a cheque or money order to us at 410-75 Albert Street, Ottawa, ON K1P 5E7. - Recently Released: THE MISSING NEWS: Filters and Blind Spots in Canada's Press, by Robert Hackett and Richard Gruneau (January 2000) The Missing News documents and analyzes recurring blind spots in news coverage by Canada's print media. These blind spots are related to institutional filters and corporate pressures on journalists' working conditions. This report identifies categories of political stories that have been systematically underreported and makes several policy recommendations to improve the quality, diversity and independence of print journalism. Copies of The Missing News can be obtained from the CCPA for $21.95 each (price includes shipping within North America, handling and GST #124146473RT). (Discounts available for bulk orders) You can order your copy of The Missing News by filling out the secure on-line order form on our web page at http://www.policyalternatives.ca You can also phone (613-563-1341) or fax (613-233-1458) your order in to us along with your mailing address and credit card (Visa/MasterCard) information. Or, if you prefer, send a cheque or money order to us at 410-75 Albert Street, Ottawa, ON K1P 5E7. - CCPA Updates are sent on a request-only basis (you have to ask to be put on the list). If you feel you have received this email in error and/or wish to be taken off the list, please email us at [EMAIL PROTECTED] -- Canadian Centre for Policy Alternatives Please note our new address: Suite 410, 75 Albert St., Ottawa, ON K1P 5E7 tel: 613-563-1341 fax: 613-233-1458 www.policyalternatives.ca caw567
Re: Re: Re: Re: Airplanes falling out of the sky
Hi again, Brad, Seems to me that air safety is one place where the market gives airline executives and airplane manufacturing and maintenance executives exactly the right incentives: people aren't going to fly airplanes or airlines that crash regularly... They only have to make sure they don't crash more often than the dwindling array of competitors, Brad. Even if numbers do fall off (and I took the 1970 odds myself, so the odds have a way to fall - does anyone know the demand elasticity on air-crash-death-expectation differentials?) - there's profit to be had at the new post-attrition equilibrium, no? Shit, it got light while I wasn't looking, which means I'm officially a day behind schedule. Still, as Steven Wright says, 'fall behind early - it gives you longer to catch up'. Cheers, Rob.
Re: Airplanes falling out of the sky
Brad De Long [EMAIL PROTECTED] 02/01/00 12:47PM You can indict capitalism for many reasons, but an increased likelihood of dying in an airliner crash is not one of them... CB: What are some of the many reasons for which you would indict capitalism ? CB
Re: Re: Airplanes falling out of the sky
At 09:59 AM 2/1/00 -0800, you wrote: Yes, de-regulation leads to cutting costs, then cutting corners, and then crashes. Value Jet into the Everglades is one example. ... I think it's a mistake to think of deregulation as a simple one-dimensional phenomenon (a movement toward greater freedom for the seller). 1. It's my hypothesis that the two US aviation-regulation agencies, the CAB and the FAA, ended up being complementary. The CAB (Civil Aeronautics Board) was a government-sponsored cartel which fixed prices and limited entry, originally to encourage the creation of an airline industry. The FAA (Federal Aviation Administration) focuses on safety issues. The CAB meant that the competitive pressure on US airlines was limited, so that they could afford to spend some of the resulting monopoly rents on the safety fixes that the FAA insisted on. The FAA made people more willing to accept the CAB. In the 1970s, the rising neoliberal movement -- at this point led by Democrats -- said: let's get rid of the CAB and similar institutions (like the ICC, the Interstate Commerce Commission). So "deregulation" hit, getting rid of these agencies -- but not the FAA. Similarly, the ICC went, but the traffic cops and safety agencies remained. When people talk about deregulation of transportation, they mean the abolition of the CAB and the ICC, not of the safety guys. This type of dereg. led to more intense competition and corner-cutting on safety, which led to a spate of airline accidents and much faster-driving trucks (and wage cuts, BTW). The safety concerns led to the beefing up of the FAA and traffic laws, resulting in a rise of safety standards. But without the CAB and ICC, the direct cost of safety enforcement rose. Under the CAB, some of the cost was paid in the form of higher airline tickets. Does this make sense to everyone? (to anyone?) 2. A key aspect of the kind of deregulation I discuss above was the end of "cross-subsidization" (the charging of high prices on long-distance flights (from LA to NYC, etc.) to subsidize flights to the boondocks, i.e., places like Chico, CA). Economists see this cross-subsidization as inefficient, because they don't like to talk about the external costs (shrinkage of small towns, growth of megalopoli) which might be avoided by cross-subsidization. It did not lead to a "free market" in airline tickets: those airlines with established computer systems for ticketing were caught using their systems to emulate Microsoft (i.e. to engage in unfair competition). It was federal efforts to end this practice tht led to a freer ticket market, along with the rise of the Internet. I read some stats in LBO awhile back that indicated that price-deregulation didn't really lead to lower airline ticket prices. Doug? One part of the story here is that a lot of the new airlines that joined the battle of competition were driven out (like People Express) along with some of the old standards, so that monopolization of the market reemerged, now in a privatized form. (Each major airline monopolizes a "hub" city's airport, like Northwest dominating Minneapolis.) 3. BTW, you see uneven "deregulation" in many cases: in the US savings loan "industry," the regulations on the bankers were weakened, but the safety net for depositors (deposit insurance) was strengthened. This led to excessively risky loaning by the SLs. Which in turn led to tighter regulations on the entire banking system (combined with a massive bail-out, of which the surviving bankers were the main beneficiaries and taxpayers were the main losers). 4. I think that in general there are two dimensions to government regulation of industry: (a) industry self-regulation, like my Dad's old organization (the Audit Bureau of Circulations), which makes sure that newspapers don't lie about how many folks read them in order to be able to charge top dollar for advertising space. None of the newspapers wants others to cheat, so they're willing to chip in to be regulated. They also want to avoid "fly-by-night" companies that "make the whole industry look bad." (b) regulation to help consumers and workers. In practice, these are combined but are not the same. It's useful to separate them as part of the analysis before bringing them together again. Please correct any errors you can find above. Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine
Re: Re: Re: Re: Re: Airplanes falling out of the sky
Hi again, Brad, Seems to me that air safety is one place where the market gives airline executives and airplane manufacturing and maintenance executives exactly the right incentives: people aren't going to fly airplanes or airlines that crash regularly... They only have to make sure they don't crash more often than the dwindling array of competitors, Brad. Touche...
Re: Re: Re: Airplanes falling out of the sky
I wrote: 4. I think that in general there are two dimensions to government regulation of industry: (a) industry self-regulation, like my Dad's old organization (the Audit Bureau of Circulations), which makes sure that newspapers don't lie about how many folks read them in order to be able to charge top dollar for advertising space. None of the newspapers wants others to cheat, so they're willing to chip in to be regulated. They also want to avoid "fly-by-night" companies that "make the whole industry look bad." (b) regulation to help consumers and workers. In practice, these are combined but are not the same. It's useful to separate them as part of the analysis before bringing them together again. there's a third dimension to regulation: (c) inter-industry competition: the ICC originally sided with the trains against trucking. Then the trucking industry took over the ICC, which ended up being biased against trains. Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine
Re: Re: Re: Re: Airplanes falling out of the sky
What has been the effect of deregulation on service to smaller centers? Is travel to low traffic areas much more expensive, or non-existent. When we had more regulation in Canada permission to serve lucrative routes was contingent upon service on other routes or centers that were not as profitable or produced no profit at all. While the incidence of crashes may be less now than much earlier surely the proper comparison should be of rates just prior to deregulation and now. Cheers, Ken Hanly Brad De Long wrote: Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. But Joe Sixpack *was* getting cheated out of affordable air travel. Our current pricing configuration--low prices for vacationers who plan in advance and stay over Saturday night, high prices for business travelers who complete round trips within the week--and our current hub-and-spoke system (which provides greater capacity at the price of more hassle) are products of deregulation. Don't any of you fly anywhere on vacation? Brad DeLong
Re: Re: Re: Re: Airplanes falling out of the sky
See Robert Kuttner's EVERYTHING FOR SALE for an interesting long-view inspection of the rate of price declines in the airline industry. His data shows dramatic decrease in the rate of price drop before the onset of deregulation in the 1980s airline industry. He essentially argues that pre deregulation oligopoly pricing generated higher profits which in turn generated sufficient R D to revolutionize tech far faster resulting in significantly faster price drops He shows a significant price drop, especially for Joe Six-pack, initially, but then a relative plateauing afterwards. The gist of his argument being that following the rapid rate of price decline during the industry's regulated period, had that rate of decline continued in a regulated environment, airfares would have been substantially lower than at present. Again, this being dependent upon significant advances in air transport having been introduced, instead of the deregulated environment which only encouraged minor tinkering with the technology rather than radical change of it. You economists can tell me if this counter-factual makes any sense Best, Jeff Sommers Brad De Long wrote: Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. But Joe Sixpack *was* getting cheated out of affordable air travel. Our current pricing configuration--low prices for vacationers who plan in advance and stay over Saturday night, high prices for business travelers who complete round trips within the week--and our current hub-and-spoke system (which provides greater capacity at the price of more hassle) are products of deregulation. Don't any of you fly anywhere on vacation? Brad DeLong -- Jeffrey Sommers World History Center Boston/Riga www.whc.neu.edu "Adam Smith started with a view of the forest but his followers lost themselves in the woods." --John R. Commons, 1934--
Airplanes falling out of the sky
Jeff Sommers: airline industry. He essentially argues that pre deregulation oligopoly pricing generated higher profits which in turn generated sufficient R D to revolutionize tech far faster resulting in significantly faster price drops This squares with the analysis made by Pat Devine and alluded to in a talk by Dave Kotz at a recent Socialist Scholars Conference, namely that competition such as the kind that exists in the Adam Smith model is HOSTILE to technical innovation. Capitalist firms would under-invest normally because their competitors can easily mimic the new improvements without undergoing the same expenditures. In reality, monopolistic firms are generally the ones that promote RD, especially those that receive tax subsidies or have ties to the military. Bell Labs was a major innovator for many decades, but as soon as the phone companies were broken up, Bell Labs switched to market research from pure science or engineering. The implication for socialists is clear. Socialism, rather than capitalism, is potentially a source of rapid modernization and progress rather than capitalism. Louis Proyect Marxism mailing list: http://www.marxmail.org/
Re: Re: Re: Airplanes falling out of the sky
Try reading Breyer's "Closing the Vicious Circle", which we're using in class this year. It's pretty scary to think that this guy is one of the "leftwing" supremes. Peter Eugene Coyle wrote: Kennedy may have been influeced by Stephen Bryer, now on the Supreme Court, who wrote a 1982 book called "Regulation and Its Reform." I think Bryer was a staffer for a Kennedy Senate Committe on de-regulation back then. The book is dumbed-down Alfred Kahn, which was just MC applied to anything. Bryer's book is really weak. Bryer's bias against regulation and for free mkt. leaps off the pages. But, hey, anything that gets you a job at the Supreme Court is worth doing. Gene Coyle Doug Henwood wrote: Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. Greg Tarpinian of the Labor Research Association, in a rare act of lese majeste against a liberal Democrat, once theorized that the reason Kennedy was such a passionate promoter of dereg was that he came from merchant capital (i.e., bootlegging), and merchants always want to minimize transportation costs. Doug
Re: Re: Re: Re: Airplanes falling out of the sky
The airlines MUST discriminate -- i. e. must screw business flyers. That's the only reason for "A Saturday Night Stay is required." If the airlines couldn't enforce that profits would drop sharply, followed by a shrinkage of capacity, and then a cut-back of the discounted tickets. The hub-and-spoke preceded deregulation and doesn't add to capacity but does add to trip times. The Brookings study touting billions of dollars of savings from deregulation was a cocked up story with the results built into the assumptions -- two of which were that business flyers loved the more frequent departures, hence very valuable, and that business flyers hardly minded at all the longer travel times. Nonsense, but it got them the result they wanted. And if you love the fact that vacationers benefit from price discrimination on the airlines, hold onto your wallet when PGE sends the bill, because the small users will be the victims of similar discrimination. Brad De Long wrote: Louis Proyect wrote: One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. But Joe Sixpack *was* getting cheated out of affordable air travel. Our current pricing configuration--low prices for vacationers who plan in advance and stay over Saturday night, high prices for business travelers who complete round trips within the week--and our current hub-and-spoke system (which provides greater capacity at the price of more hassle) are products of deregulation. Don't any of you fly anywhere on vacation? Brad DeLong
Re: Re: Re: Re: Airplanes falling out of the sky
Yes, Brad, the airline execs don't want to have an accident, and they hope they won't if they cut corners, but they are sure profits will benefit if they do cut corners. gene Coyle Brad De Long wrote: G'day Brad, And we have gone from having one serious commercial aviation accident per 140 million miles flown in 1970 to having one serious commercial aviation accident per 1.4 billion miles flown today. You can indict capitalism for many reasons, but an increased likelihood of dying in an airliner crash is not one of them... I don't question your figures, but would point out that capitalism is not a static thing. We haven't had a fatal Qantas crash yet (as the Dustin the Rainman told Tom the Wally), but we seem to be recording an amazing increase in 'technical problems' and 'near-misses' (who was it said a near miss must mean a hit? But I digress) in Australia of late. And capitalism's dynamics have lately contributed to corporatisation, privatisation and merger in an industry marked by some real world-wide profit problems over the last decade and a bit. Planes are getting better, sure - capitalism should be about market-selected innovations. But the quality of the newly built plane ain't the only determinant in the equation. You use a 1970 v. 1999 comparison, but for much of the world, airlines were publicly owned / tightly regulated for most of that time (during which a fair bit of that improvement must have manifested), and the consequences of the great transformation might be some time in imposing themselves statistically. It might be that we have some hairy moments to look forward to (I notice the almost coincidental Cote d'Ivoire crash, with twice the LA crash body-count, hasn't rated much of a mention) as the deregulatory/privateering moment gradually works away at all those wires, welds, pilots and ground crews. It eventually happened with Yorkshire water, Auckland electricity, Melbourne gas, Sydney trains and outback telephones - or so it seems to me. Waddyareckon? Cheers, Rob. Seems to me that air safety is one place where the market gives airline executives and airplane manufacturing and maintenance executives exactly the right incentives: people aren't going to fly airplanes or airlines that crash regularly... Brad DeLong
RE: Are we doing something right?
You do! Ian -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Michael Perelman Sent: Tuesday, February 01, 2000 10:38 AM To: [EMAIL PROTECTED] Subject: [PEN-L:15908] Are we doing something right? I'm doing a book review of Cyber-Marx: Cycles and Circuits of Struggle in High-Technology Capitalism by Nick Dyer-Witheford. I'm only a third of the way finished, but it is an excellent book so far. Much to my delight, he even mentioned pen-l as an example of cyber activism. I wish that I could believe that we really do have an effect. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Airplanes falling out of the sky
Date sent: Tue, 01 Feb 2000 16:50:27 -0500 To: [EMAIL PROTECTED] From: Louis Proyect [EMAIL PROTECTED] Subject:[PEN-L:15929] Airplanes falling out of the sky Send reply to: [EMAIL PROTECTED] It may in interesting to look at the recent history of the Canadian Airline industry for the destructive effects of deregulation on the airlines. Under the regulated system we had two national airlines which competed only on higher density domestic runs and then rates and schedules were regulated. With deregulation we had the gradual bankrupting of Canadian Airlines, the growth of the hub system which means huge congestion at Toronto (with major delays and safety problems), the decline of direct service from places like Winnipeg, particularly overseas, very poor service south having to rely on Northwester with its Minneapolis hub, the rise of identical schedules (Air Canada would fly to Toronto at 0800, Canadian at 0810) and rising fares to non-trunk destinations. (It costs a little more than half as much to fly from Winnipeg to London, England than to fly 500 miles north of Winnipeg to Thompson.) Service to the mainline hubs from smaller centres was largely provided by 'partners' of the two national carriers which relied on lower wages and benefits from workers. I don't know what their safety records were like, but I do know that those of the small independents were not very impressive. Because of unregulated competition, Canadian was taken over by Air Canada as it approached bankrupcy though there was an attempt by American Airways to take it over indirectly but this was not allowed under Canadian law. My understanding is that in both Canada and the US, the _average_ price of tickets rose after deregulation though this was largely due to increased price discrimination with rising business and regular fare rates (paid in part by government as fares are deductable as a business cost) somewhat offset by competitive seat-sales to fill the extra seats. It was the competitive seat-sales that ultimately brought economic ruin to the industry. Reminiscent of the railway competition in the late 19th C before consolidation and regulation. It would appear, by the way, the deregulation of the trucking industry in Canada has been much more detrimental in both the bankruptcy of numberous trucking companies and a major decline in road safety, particularly with low-wage competition with Mexican truckers. At least the reputation, as well, is that the Mexican trucks don't meet Canadian safety regulations but that, given the cutback in inspectors, etc., they are not being caught. Is that the case in the US? Paul Phillips, Economics, University of Manitoba
Re: Re: Re: Re: Re: Re: Airplanes falling out of the sky
I have a simple question about safety. There have been quite a few accidents among the commuter lines, which replaced the majors, which used to serve places, such as Chico. Has the safety record really improved that much when the commuters are factored in? I don't know. Brad De Long wrote: Hi again, Brad, Seems to me that air safety is one place where the market gives airline executives and airplane manufacturing and maintenance executives exactly the right incentives: people aren't going to fly airplanes or airlines that crash regularly... They only have to make sure they don't crash more often than the dwindling array of competitors, Brad. Touche... -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Re: Airplanes falling out of the sky
At 04:35 PM 2/1/00 -0600, you wrote: It would appear, by the way, the deregulation of the trucking industry in Canada has been much more detrimental in both the bankruptcy of numberous trucking companies and a major decline in road safety, particularly with low-wage competition with Mexican truckers. At least the reputation, as well, is that the Mexican trucks don't meet Canadian safety regulations but that, given the cutback in inspectors, etc., they are not being caught. Is that the case in the US? This is confusing. As far as I know, Mexican truckers haven't gotten on US roads in a significant way yet. So they couldn't get to Canada unless they flew! Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine
Journal of Economic Perspectives
A while ago the _JEP_ had a short symposium on "Austrian" economics: Harvey Rosen wrote a sympathetic critique of the Austrian school, and Leland Yeager responded. This seemed to work: communication was accomplished. The selection of Harvey as someone definitely in the establishment but not unsympathetic to the Austrian point of view proved a good way to get Austrian concerns and views in front of the _JEP's_ readership. The selection of Leland to comment prevented the symposium from collapsing into being just Harvey Rosen's view of Austrian economics. Should the powers-that-be at the _JEP_ decide that it is time to do the same thing for "Radical" economics, who should play the role of Harvey Rosen? Who should play the role of Leland Yeager? Brad DeLong
apology
That post on teenage Trotskyist was accidentally sent to this list. Sorry about that. Louis Proyect Marxism mailing list: http://www.marxmail.org/
TINAF Special on Irving-Lipstadt Libel Trial -- 4:09 (#383)
Special Issue On the Irving-Lipstadt Libel Trial __ The Internet Anti-Fascist: Saturday, 29 January 2000 Vol. 4, Number 9 (#383) __ [Introduction to the Dispute] Jennifer Rosenberg (Holocaust Newsletter) 27 Jan 00 The Holocaust Libel Trial Some believe it will end the controversy; others believe it will legitimize Holocaust denial. On Tuesday, January 11, 2000, one of the most important trials regarding the Holocaust began. In this landmark case, an alleged Holocaust denier, David Irving, is suing historian Deborah Lipstadt and her publisher, Penguin Books Ltd., for libel. After years of research on a subject many of her colleagues didn't think should be taken seriously, Deborah Lipstadt published her book, Denying the Holocaust: The Growing Assault on Truth and Memory in 1993 through Plume, a subsidiary of Penguin Books. In her book, Lipstadt detailed the history and growth of Holocaust denial from the end of World War II to the present and included information about the Institute for Historical Review, the gas chamber controversy, and the recent prevalence, via ads, of Holocaust denial on college campuses. Lipstadt also dealt with specific people, including David Irving, whom she called "Holocaust deniers" - an accusation that Irving denies. Though Lipstadt's book Denying the Holocaust was published in the United States in 1993, it was its printing in the United Kingdom (where the trial is being held) in July 1994 that made these proceedings possible. The suit began in 1996 when Irving named Deborah Lipstadt, Penguin Books Ltd., and four Waterstone's bookstore employees (David Crank, Alistair Babb, Stanley Bromley, and Colin Orr) as defendants. Irving explained in 1996 why he was suing the bookstore employees: When I published my book on Goebbels, I visited 900 shops in England. These four gentlemen were particularly offensive, saying, "We have given instructions that our store will never stock your book." That's why they have found themselves singled out in this way. These particular gentlemen took the decision to sell her book.* The booksellers have since settled out of court; thus the defendants in the current suit are Deborah Lipstadt and Penguin Books Ltd. The case is being heard at the High Court in London, in Court 73. On the first day of the trial, there was standing room only as the judge, without a jury, prepared to hear the case. The trial began with opening statements from both sides: from David Irving, who is representing himself, and from Richard Rampton, QC (Queen's Counsel), who is representing the defendants. In a British libel suit, the plaintiff, David Irving, will be responsible for proving that his reputation has been harmed by the alleged libelous words in Lipstadt's book. On the other hand, the defendants, Deborah Lipstadt and Penguin Books Ltd., will have to prove the accuracy of the statements in the book. David Irving has enumerated the specific sections of Lipstadt's book that he argues are libelous in his "Statement of Claim" (Irving's site). A few selections include: Page 181: "Irving is one of the most dangerous spokespersons for Holocaust denial. Familiar with historical evidence, he bends it until it conforms with his ideological leanings and political agenda. A man who is convinced that Britain's great decline was accelerated by its decision to go to war with Germany, he is most facile at taking accurate information and shaping it to confirm his conclusions." Page 179: "In his foreword to his publication of the Leuchter Report, Irving wrote that there was no doubt as to Leuchter's 'integrity' and 'scrupulous methods.' He made no mention of Leuchter's lack of technical expertise or of the many holes that had been poked in his findings. Most important, Irving wrote, 'Nobody likes to be swindled, still less where considerable sums of money are involved.' Irving identified Israel as the swindler, claiming that West Germany had given it more than ninety billion deutsche marks in voluntary reparations, 'essentially in atonement for the 'gas chambers of Auschwitz.'' According to Irving the problem was that the latter was a myth that would 'not die easily.'" Page 161: "Scholars have described Irving as a 'Hitler partisan wearing blinkers' and have accused him of distorting evidence and manipulating documents to serve his own purposes. He is best known for his thesis that Hitler did not know about the Final Solution, an idea that scholars have dismissed. The prominent British historian Hugh Trevor-Roper depicted Irving as a man who 'seizes on a small and dubious particle of 'evidence,'' using it to dismiss far-more-substantial evidence that may not support his thesis. His work has been described as 'closer to theology or mythology than to history,' and he has
Haider/Bradley
For them it is as important to criticise Bradley as it is to criticise Haider, in fact even more so. The proof of this dogmatist distortion of marxism will be an inability to discuss any developing concrete moves that link theory with practice. Chris Burford Washington Post, February 1, 1987 "Bradley also sets his own course on matters of substance, sometimes to the dismay of fellow Democrats. For example, he voted last year for military aid to the contra rebels, astonishing liberal colleagues by calling this the path of caution: Better to contain the Marxist government of Nicaragua by aiding rebels, he said, than to leave it unchecked and later be forced to send in troops. The vote brought unaccustomed criticism from within his party, but he has not backed down." === The Toronto Star, January 21, 1987 Amnesty urges U.S. to stop Contra 'abuses' LONDON (Reuter) - Amnesty International has asked U.S. Secretary of State George Shultz for assurances that any American assistance to the rebels fighting the Nicaraguan government will not lead to further human rights abuses. "Amnesty International believes that the United States has not acted consistently with its assurances that it is seriously concerned to prevent (human rights abuses)," the London-based human rights organization said in a letter to Shultz made public yesterday. The U.S. government "must be considered to have helped shield the forces responsible for them and thereby to have increased the likelihood that abuses continue to be committed," it added. The seven-page letter details alleged torture and execution of civilians and military personnel by the Contra rebels. . . Louis Proyect Marxism mailing list: http://www.marxmail.org/
Re: Re: Re: Re: Re: Airplanes falling out of the sky
Michael Perelman wrote: Don't fly to Chico from San Francisco. Going to New York is cheaper. It wasn't before dereg. So it was not beneficial to all consumers. The airfare index of the CPI has risen at roughly twice the rate of the overall CPI since dereg - almost 11% in the last year, vs. 2.7% overall. The reason has mainly been quality decreases - more stops, more restrictions, fewer meals. When I interviewed Alfred Kahn about this about 10 years ago he refused to believe it. Doug
Fwd: 2000-02-01 Statement by the Vice President on AlaskaAirlines Flight 261
[Gore has the answer to airplane safety - prayer!] THE WHITE HOUSE Office of the Vice President For Immediate Release February 1, 2000 STATEMENT BY THE VICE PRESIDENT I ask the American people to join Tipper and me in praying for those who were traveling on Alaska Airlines Flight 261. To the families, friends and loved ones of the passengers and crew, I want you to know that we will do everything within our power to find the cause of yesterday's crash and take any and all steps to prevent any such future tragedies. Our nation's prayers, our thoughts, and our hopes are with you during this difficult time. ###
Re: Re: Re: Airplanes falling out of the sky
Jim Devine wrote: I read some stats in LBO awhile back that indicated that price-deregulation didn't really lead to lower airline ticket prices. Doug? Yup, this is a long-standing LBO obsession. See other post. The dereg partisans like to quote real fares per seat-mile, which are down since dereg. Problem is people aren't seats. They have to fly longer now - one or two stops have become the norm. Flying from NYC to Virginia? Change planes in Chicago. If you wanted to fly from NY to Seattle tomorrow, it'd probably cost you around $1,800 round trip. You could save $1,200 on that by buying 3 or more weeks in advance, but long gone are the days of $200 cross-country flights. But that's because demand is strong. It'll be very interesting to see what happens in the next recession. In the early 1990s, the cumulative losses of the airline industry exceeded its cumulative profits starting from the days of the Wright Bros. first flight. When demand is weak, the temptation to sell otherwise empty seats below cost is enormous. Doug
Airplanes falling out of the sky
The airline industry is strange. Wild price fluctuations, bucket shop seats, open jaws, student fares, standby etc. I once bought an open ended ticket from Vancouver to LA return for $C50. Another flight over from Asuncion Paraguay to Leticia in Colombia was $US800 even though it is a shorter flight [Aero-Paraguay, look out below!] I think the idea of sunk costs and the low marginal costs of adding more customers may have something to do with it. I once read something about planned obsolescence in the airline industry but don't believe it, they have to crash a certain amount of planes to be profitable. SP
[PEN-L:15947 2000-02-01 Statement by the Vice President on AlaskaAirlines Flight 261
Doug Henwood wrote: [Gore has the answer to airplane safety - prayer!] Look Tinkerbell! We Can Fly! Thinking will make it so! SP
Re: Journal of Economic Perspectives
It seems to me that "radical economics" does not denote a coherent entity the way "Austrian economics" does. There are too many perspectives and methodologies. Radicals tend to agree on objectives (loosely) and they share a dislike for the status quo in both the economics profession and the wider universe, but that's about it. Just for fun, you might try making a list of 20 prominent radicals and ask yourself how many could be addressed in the same critique. Not that I'm trying to undermine the case for more exposure to radical thinking in the JEP, of course... Peter Brad De Long wrote: A while ago the _JEP_ had a short symposium on "Austrian" economics: Harvey Rosen wrote a sympathetic critique of the Austrian school, and Leland Yeager responded. This seemed to work: communication was accomplished. The selection of Harvey as someone definitely in the establishment but not unsympathetic to the Austrian point of view proved a good way to get Austrian concerns and views in front of the _JEP's_ readership. The selection of Leland to comment prevented the symposium from collapsing into being just Harvey Rosen's view of Austrian economics. Should the powers-that-be at the _JEP_ decide that it is time to do the same thing for "Radical" economics, who should play the role of Harvey Rosen? Who should play the role of Leland Yeager? Brad DeLong
Re: Re: Re: Re: Re: Re: Airplanes falling out of the sky
Yes, and de-regulated airfare has gone up much faster than electric power in the CPI.\ Gene Doug Henwood wrote: Michael Perelman wrote: Don't fly to Chico from San Francisco. Going to New York is cheaper. It wasn't before dereg. So it was not beneficial to all consumers. The airfare index of the CPI has risen at roughly twice the rate of the overall CPI since dereg - almost 11% in the last year, vs. 2.7% overall. The reason has mainly been quality decreases - more stops, more restrictions, fewer meals. When I interviewed Alfred Kahn about this about 10 years ago he refused to believe it. Doug
Re: Fwd: 2000-02-01 Statement by the Vice President on Alaska Airlines Flight 261
If only they'd de-regulate prayer! (Or is it schools they need to deregulate so we can pray in them?) Doug Henwood wrote: [Gore has the answer to airplane safety - prayer!] THE WHITE HOUSE Office of the Vice President For Immediate Release February 1, 2000 STATEMENT BY THE VICE PRESIDENT I ask the American people to join Tipper and me in praying for those who were traveling on Alaska Airlines Flight 261. To the families, friends and loved ones of the passengers and crew, I want you to know that we will do everything within our power to find the cause of yesterday's crash and take any and all steps to prevent any such future tragedies. Our nation's prayers, our thoughts, and our hopes are with you during this difficult time. ###
Re: Re: Journal of Economic Perspectives
It seems to me that "radical economics" does not denote a coherent entity the way "Austrian economics" does. There are too many perspectives and methodologies. "Post-Marxist economics" then? Brad DeLong
Re: Re: Re: Re: Airplanes falling out of the sky
Jim Devine wrote: I read some stats in LBO awhile back that indicated that price-deregulation didn't really lead to lower airline ticket prices. Doug? Yup, this is a long-standing LBO obsession. See other post. The dereg partisans like to quote real fares per seat-mile, which are down since dereg. Problem is people aren't seats. They have to fly longer now - one or two stops have become the norm. Flying from NYC to Virginia? Change planes in Chicago. If you wanted to fly from NY to Seattle tomorrow, it'd probably cost you around $1,800 round trip. You could save $1,200 on that by buying 3 or more weeks in advance, but long gone are the days of $200 cross-country flights. But that's because demand is strong. It'll be very interesting to see what happens in the next recession. In the early 1990s, the cumulative losses of the airline industry exceeded its cumulative profits starting from the days of the Wright Bros. first flight. When demand is weak, the temptation to sell otherwise empty seats below cost is enormous. Doug $200 round trip or $200 one way? Brad DeLong, thinking of flying to Paris for $486 roundtrip in late march...
Re: apology
I think a number of us found it interesting. Louis Proyect wrote: That post on teenage Trotskyist was accidentally sent to this list. Sorry about that. Louis Proyect Marxism mailing list: http://www.marxmail.org/ -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Journal of Economic Perspectives
sounds like Peter Dorman should play the role of Harvey Rosen At 05:48 PM 02/01/2000 -0800, you wrote: It seems to me that "radical economics" does not denote a coherent entity the way "Austrian economics" does. There are too many perspectives and methodologies. Radicals tend to agree on objectives (loosely) and they share a dislike for the status quo in both the economics profession and the wider universe, but that's about it. Just for fun, you might try making a list of 20 prominent radicals and ask yourself how many could be addressed in the same critique. Not that I'm trying to undermine the case for more exposure to radical thinking in the JEP, of course... Peter Brad De Long wrote: A while ago the _JEP_ had a short symposium on "Austrian" economics: Harvey Rosen wrote a sympathetic critique of the Austrian school, and Leland Yeager responded. This seemed to work: communication was accomplished. The selection of Harvey as someone definitely in the establishment but not unsympathetic to the Austrian point of view proved a good way to get Austrian concerns and views in front of the _JEP's_ readership. The selection of Leland to comment prevented the symposium from collapsing into being just Harvey Rosen's view of Austrian economics. Should the powers-that-be at the _JEP_ decide that it is time to do the same thing for "Radical" economics, who should play the role of Harvey Rosen? Who should play the role of Leland Yeager? Brad DeLong Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/Faculty/JDevine/JDevine.html
Re: Journal of Economic Perspectives
Some time ago, I spoke with Tim Taylor, editor of the Journal of Economic Perspectives, about the possibility of a survey of radical economic. Don't tell Brad DeLong about it, but Tim seemed receptive. My intention was to make it some sort of collective project. I was hoping that our text project would get off the ground before I mentioned this project to the list, but nobody besides Sam seems willing to take on any of the sections. Maybe this project would get our juices flowing. Tim wanted some sort of formulation of where we would go before he would present the proposal to his board. I think that the text project is more important, but perhaps association with this project might be useful for some untenured members. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Journal of Economic Perspectives
I think Brad De Long's idea of a JEP mini-symposium on "radical economics" is an excellent one, which I appreciate. One possibility to consider: I edited a book published in 1995 entitled *Heterodox Economic Theories: True or False* (the title was a take-off on one of Mark Blaug's books). One of the sections was on "radical economics." Michael Reich (one of Brad's colleagues at Cal-Berkeley) wrote a response to a previous "methodological appraisal" of "radical economics" by Blaug, Blaug responded, and a comment on this exchange was made by economic methodologist Wade Hands. I think the debate was interesting. Perhaps these individuals could adapt and "update" their appraisals for the JEP. Also, Brad, how about a similar mini-symposium on "Marxian economics" (as distinct from "radical economics")? My edited book also includes a section on "Marxian economics", in which I responded to a similar "methodological appraisal" of "Marxian economics" by Blaug, Blaug responded again, and this exchange was commented on my Bruce Caldwell. Maybe something along these lines could be adapted for the JEP? These papers were originally presented at a session sponsored by the History of Economic Society at one of the ASSA meetings (in Annaheim, as I remember). Thanks again for your suggestion. Fred Moseley On Tue, 1 Feb 2000, Brad De Long wrote: Date: Tue, 1 Feb 2000 15:14:10 -0800 From: Brad De Long [EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: [PEN-L:15935] Journal of Economic Perspectives A while ago the _JEP_ had a short symposium on "Austrian" economics: Harvey Rosen wrote a sympathetic critique of the Austrian school, and Leland Yeager responded. This seemed to work: communication was accomplished. The selection of Harvey as someone definitely in the establishment but not unsympathetic to the Austrian point of view proved a good way to get Austrian concerns and views in front of the _JEP's_ readership. The selection of Leland to comment prevented the symposium from collapsing into being just Harvey Rosen's view of Austrian economics. Should the powers-that-be at the _JEP_ decide that it is time to do the same thing for "Radical" economics, who should play the role of Harvey Rosen? Who should play the role of Leland Yeager? Brad DeLong
Re: Haider/Bradley
At 20:08 01/02/00 -0500, you wrote: For them it is as important to criticise Bradley as it is to criticise Haider, in fact even more so. The proof of this dogmatist distortion of marxism will be an inability to discuss any developing concrete moves that link theory with practice. Chris Burford Washington Post, February 1, 1987 "Bradley also sets his own course on matters of substance, sometimes to the dismay of fellow Democrats. For example, he voted last year for military aid to the contra rebels, astonishing liberal colleagues by calling this the path of caution: Better to contain the Marxist government of Nicaragua by aiding rebels, he said, than to leave it unchecked and later be forced to send in troops. The vote brought unaccustomed criticism from within his party, but he has not backed down." I think this post illustrates the point I was making about it appearing more important currently to criticise Bradley than Haider. I do appreciate the empirical reference, which I do not doubt. I do allow for the fact that a "correct" marxist line on what to do about Haider entering the Austrian government will not be easy to arrive at. I do allow also that none of the various marxism lists, or marxism sites, that have emerged can on their own be expected to have the answer to everything. This is a *process* we are involved in. Nevertheless I hope that the various marxist sites will forward material on this crisis in the direction bourgeois democracy is going. I think Louis Proyect's post implies an explanation for the difference of perspectives. I agree even at this stage when Bradley looks much more progressive on the class question of campaign finance reform, it is correct to be vigilant about his weaknesses. This avoids the error of tailism and crass parliamentarism. But I find the news about Bradley quite unsurprising. Of course US subscribers will know more about him, but do we not assume from the start that he has a dual nature, concretely progressive in some contexts and reactionary in others. (The same incidentally is true philosophically no doubt of Joerg Haider - and it will be useful in undermining the support he has if we can be analyse this correctly). But in this *concrete* conjunction of contradictions, Haider is reactionary, and Hillary Clinton criticising Haider is progressive. That is dialectics for you if they really are materialist. There is no royal road to science. So I would ask the list generally, what can progressives do to resist the rise of Joerg Haider? I do think this is more important on a global scale than criticising Bradley at the moment. Oddly to concentrate attention on Bradley's weaknesses accepts the agenda of bourgeois elections that it is about whether you like or dislike a particular person. That is easily absorbed and neutralised by the bourgeois electoral system. Chris Burford London
Airplanes falling out of the sky
There has been an epidemic of airliners falling "mysteriously" from the sky in recent years. The best known incidents were TWA 800 which went down over Long Island Sound and the Egyptian plane that supposedly was brought down through the suicidal act of a pilot. Yesterday Alaskan Airlines Flight 261 fell 17,000 feet into the Pacific Ocean, 20 miles from Los Angeles. The crew had reported a problem with the stabilizer trim before it crashed. I don't like air travel very much. Went I went out to Los Angeles a week ago, the American Airlines plane I had a seat on was delayed for an hour because of mechanical difficulties. The explanation for this rash of airline accidents can be found in the Marxist analysis of the declining rate of profit, which affects heavy industry with high fixed capital costs most of all. When fixed capital can not be reduced, variable capital--ie., working people--must be squeezed. There was an excellent series of articles in the New Yorker Magazine in the 1960s about these problems, which was forcing competitors to invest billions in "air-buses" without any assurance that their investments would be profitable. Like many articles in the classic New Yorker, it was an indictment of capitalism without using the word. Excerpts from an article in today's NY Times spells out some of the shortcuts Alaskan Airline has taken in order to satisfy Wall Street investors anxious for upbeat quarterly returns: The airline, a subsidiary of Alaska Air, based in Seattle, carried 13.1 million passengers in 1998 and now serves 41 cities in the United States, Mexico and Canada. The airline has more than 9,200 employees and its 1999 sales were $2.08 billion. While it has faced criticism and sanctions from the Federal Aviation Administration for maintenance practices, the airline had not had a fatal crash in more than 25 years until yesterday and is a perennial favorite among customers. Alaska Airlines is owned by the Alaska Air Group, a holding company that also owns Horizon Air, a smaller carrier. According to the company's history, Alaska Airlines traces its roots to McGee Airways, which started service between Anchorage and Bristol Bay, Alaska, in 1932. The airline took the name Alaska Airlines in 1944 and grew through mergers and acquisitions, including that of Jet America Airlines, a carrier based in California, in 1987. The only two fatal incidents in its history were in 1971, when faulty instrument readings caused an Alaska Boeing 727 to crash into a mountain outside Juneau, killing 111 people, and in 1976, when a plane overran a runway in Ketchikan and a passenger died of a heart attack. The airline has occasionally run afoul of the federal authorities. Last August, The Seattle Times reported that Federal Aviation Administration records showed that Alaska Airlines flew two of its MD-80's more than 840 times in 1998 and 1999 without having done proper maintenance on them. The planes were allowed to fly despite falsified maintenance checks that included work by an Alaska Airlines supervisor who was "not appropriately certified, properly trained or qualified to do so," the paper quoted the agency as saying. According to the agency, the airline released a an MD-80 for service in October 1998 despite 10 occasions in which maintenance work was performed out of sequence and with incomplete final checks. In a separate proceeding, the F.A.A. proposed a $44,000 fine against the airline last June for violating maintenance procedures. The fine has been suspended while the agency awaits the outcome of a grand jury investigation into charges that managers at Alaska's maintenance base in Oakland approved heavy-maintenance checks that were never performed, according to the Seattle Times. In 1985, the airline paid a $300,000 fine for violating federal safety rules. All these problems are related to "deregulation", a policy that has been applied across the board to the trucking, railroad and airline industry. It has produced harried operator and maintenance crews. In exchange for profit returns that Wall Street brokerage houses can smile on, we get smack-ups on Amtrak and airplanes falling out of the sky. Deregulation is not a right-wing plot. One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. Meanwhile, as the body count mounts in accidents of these kinds, the two party system responsible for forcing deregulation down the throat of the American people share equal blame. I doubt if the families who lost loved ones will ever be adequately recompensed (how could they, no matter the cash award), but the real justice would be a sentences of life imprisonment for the scum running American industry and finance and their puppets inside the beltway. Louis Proyect (The Marxism mailing list: http://www.marxmail.org)
Re: Airplanes falling out of the sky
I have found Alaska airlines to be the most comfortable that I had experienced. I don't get the impression that they are cutting corners. That doesn't mean they're not -- only that is far too obvious with some of the others. One of the major corners has been the treatment of airline mechanics, especially with the contracting out of some work. I am surprised that far more accidents do not happen. Louis Proyect wrote: There has been an epidemic of airliners falling "mysteriously" from the sky in recent years. The best known incidents were TWA 800 which went down over Long Island Sound and the Egyptian plane that supposedly was brought down through the suicidal act of a pilot. Yesterday Alaskan Airlines Flight 261 fell 17,000 feet into the Pacific Ocean, 20 miles from Los Angeles. The crew had reported a problem with the stabilizer trim before it crashed. I don't like air travel very much. Went I went out to Los Angeles a week ago, the American Airlines plane I had a seat on was delayed for an hour because of mechanical difficulties. The explanation for this rash of airline accidents can be found in the Marxist analysis of the declining rate of profit, which affects heavy industry with high fixed capital costs most of all. When fixed capital can not be reduced, variable capital--ie., working people--must be squeezed. There was an excellent series of articles in the New Yorker Magazine in the 1960s about these problems, which was forcing competitors to invest billions in "air-buses" without any assurance that their investments would be profitable. Like many articles in the classic New Yorker, it was an indictment of capitalism without using the word. Excerpts from an article in today's NY Times spells out some of the shortcuts Alaskan Airline has taken in order to satisfy Wall Street investors anxious for upbeat quarterly returns: The airline, a subsidiary of Alaska Air, based in Seattle, carried 13.1 million passengers in 1998 and now serves 41 cities in the United States, Mexico and Canada. The airline has more than 9,200 employees and its 1999 sales were $2.08 billion. While it has faced criticism and sanctions from the Federal Aviation Administration for maintenance practices, the airline had not had a fatal crash in more than 25 years until yesterday and is a perennial favorite among customers. Alaska Airlines is owned by the Alaska Air Group, a holding company that also owns Horizon Air, a smaller carrier. According to the company's history, Alaska Airlines traces its roots to McGee Airways, which started service between Anchorage and Bristol Bay, Alaska, in 1932. The airline took the name Alaska Airlines in 1944 and grew through mergers and acquisitions, including that of Jet America Airlines, a carrier based in California, in 1987. The only two fatal incidents in its history were in 1971, when faulty instrument readings caused an Alaska Boeing 727 to crash into a mountain outside Juneau, killing 111 people, and in 1976, when a plane overran a runway in Ketchikan and a passenger died of a heart attack. The airline has occasionally run afoul of the federal authorities. Last August, The Seattle Times reported that Federal Aviation Administration records showed that Alaska Airlines flew two of its MD-80's more than 840 times in 1998 and 1999 without having done proper maintenance on them. The planes were allowed to fly despite falsified maintenance checks that included work by an Alaska Airlines supervisor who was "not appropriately certified, properly trained or qualified to do so," the paper quoted the agency as saying. According to the agency, the airline released a an MD-80 for service in October 1998 despite 10 occasions in which maintenance work was performed out of sequence and with incomplete final checks. In a separate proceeding, the F.A.A. proposed a $44,000 fine against the airline last June for violating maintenance procedures. The fine has been suspended while the agency awaits the outcome of a grand jury investigation into charges that managers at Alaska's maintenance base in Oakland approved heavy-maintenance checks that were never performed, according to the Seattle Times. In 1985, the airline paid a $300,000 fine for violating federal safety rules. All these problems are related to "deregulation", a policy that has been applied across the board to the trucking, railroad and airline industry. It has produced harried operator and maintenance crews. In exchange for profit returns that Wall Street brokerage houses can smile on, we get smack-ups on Amtrak and airplanes falling out of the sky. Deregulation is not a right-wing plot. One of the most forceful advocates is Ted Kennedy, who believed that Joe Six-Pack was getting cheated out of affordable air travel. I guess neglect and stupidity about air travel runs in the Kennedy family. Meanwhile, as the body count mounts in accidents of these kinds, the
[Fwd: The SuperBowl]
Sunday's Superbowl was one of the best I've seen...in terms of its raw drama the last quarter of play. Today, Monday, a good many of your students will return from watching it and thinking about it only in terms of that raw drama...with maybe a bit of enthusiasm for the home team... There are much more sociological ways to understand football and major sports in their 21st century incarnation. There are two mini-lectures and one article on the Red Feather website to which you may want to refer your students if you want to add critical dimensions to their understanding. The first mini-lecture looks at the Superbowl in terms of five different theoretical approaches: Structural functional, Freud, Marx, psychological renewal for stressed-out workers and, as well, a postmodern sociology of Religion approach which sees the deep interest in sports in terms of their mythic answers to fundamental problems of life. It is at: http://www.tryoung.com/lectures/043suprbowl.htm The second reference looks at the wages of sports figures in terms of the Davis/Moore thesis and in terms of a Cultural Marxist perspective...one in which players are paid not for their great functional contribution to society as a whole but one in which their wages are understood in terms of the usefulness of their grace, skill and endurance to the colonization of consciousness of the sports fan. A structural marxist analysis understands the wages paid to such players as central to the re-unification of production and distribution...that is, it helps capitalists get rid of production surplus to the basic needs of buyers. The mini-lecture on Michael Jordan and Wage Theory is at: http://www.tryoung.com/lectures/054wages.html Then there is an full length article for your more dedicated students which expand on the first mini-lecture above. It is at: http://www.tryoung.com/archives/108sports.html The first mini-lecture is fun...Freud always plays well in the class room but it is the marxist approach which yeilds the most profound insights, I believe. have fun, don't buy too much, TR TR Young, 8085 Essex Weidman, Mi., 48893 Email: [EMAIL PROTECTED] Visit the Red Feather website: http://www.tryoung.com
Newish Book on Mexico
The History of Mexico is the History of Class Struggle. Mexico's Hope. James Cockroft. MR Press.1999.435 pgs. This is the best general introduction to Mexican history and political economy available in English. Cockroft's book is a sweeping history of Mexico from the pre-colonial era to the present. Clearly written, the book does not suffer from the immense time span that it covers as Cockroft displays masterful knowledge of all aspects and periods of Mexican history, weaving them together in a highly coherent narrative. He proves adept at showing the continuity of Mexican history as well as the processes involved in the making and growth of Mexican capitalism and the Mexican state. The central thesis is that the history of Mexico has been one of class struggle and subsequent co-optation of the working class and peasantry by the party/state or PRI , repression of working class and peasants struggles and organizations and in some cases ,outright intervention of U.S. imperialism. The power of imperialism is discussed for the seminal role it plays in all aspects of Mexico. The book will be useful to activists and others working in and around Mexico as Cockroft details the many front organizations of the PRI and the tactics used in co-optation. The author places special emphasis on political economy, chapter 5 titled the State, Foreign Capital and Monopoly Capitalism being the heart of the book, explaining the structures of Mexican political economy as they have evolved over the last century. Further, the author displays an excellent working knowledge of Marxian historiography and political economy though sometimes he uses Marxist concepts like "relative surplus population" and "constant and variable capital" which may baffle newcomer to the genre. Cockroft supplies statistics and data where necessary. Most of the book (the latter 2/3) is devoted to contemporary post-1982 (debt crisis) political and economic developments in Mexico emphasizing the ups and downs of the labor movement as well as the re-emergence of militant indigenous movements. He goes through the myriad of Communist, anarchist and Trotskyist groups, detailing the sometimes periodic influence they have had on various strikes, organizations and demonstrations. Newer gay and feminist groups as well as NGO's, environmental groups and anti-nuclear groups are also discussed. Cockroft argues that through the struggles of the labor movement, the women's and student movements and armed guerrilla movements have created openings in Mexican society as well as the Mexican state. Openings through which people can act collectively to change their lives for the better and better effect the international forces, especially from the U.S., which play an enormous role in the direction of Mexican politics, economy and society. These various struggles have caused a breakdown in the hegemony of the PRI machine as it is no longer able to control all aspects of Mexican society like it used to through fraud, repression and co-optation. Accompanying this opening of Mexican society has been the catastrophic decline of the economy which has seen purchasing power sink to the level of 1960 leading to an estimated 50% living below the official poverty line and a real unemployment rate of 25%. Mexico in August 1982 announced it could longer make the interest payments on its foreign debt. This signaled the end of import substitution in Mexico and brought in the new era of neo-liberalism and privatization. Mexico joined GATT(now the WTO) in 1986 and amended its foreign investment laws making legal for foreign interests to own more than 50% of Mexican companies. In exchange for financial bailout, Mexico was forced to adopt the monetarist austerity package forced on it by the World Bank, IMF and U.S. Government. Cockroft goes into the details surrounding the 1982 crisis as well as the later and equally catastrophic 1994 crisis where the government was forced into a massive devaluation of the currency and accepted a huge 45$ billion bailout package arranged by Bill Clinton (who bypassed the U.S. Congress to pass it) cutting purchasing power once again for the masses. The post-1982 Mexican economy has been marked by a drive for foreign investment. While some foreign investment has taken place in the low wage environmentally destructive maquila sector, a good deal of the investment has been portfolio investment. The pulling out of this investment by foreign owners caused the 1995 crisis and arguably the 1982 one as well. Cockroft details some of the massive and disgusting corruption that the Mexican ruling class has engaged in since 1982. Shunning the grand conspiracism, favored among many Mexicans, he shows - in class terms- how corruption has grown into the political economy. Some of the more serious corruption has come through privatization, President Salinas giving companies to friends and to win influence. Further, many of the elite Mexican
1950s teenage Trotskyist
Threepenny Review, Winter 2000 MEMOIR The Revolutionary as Bon Vivant by Irene Oppenheim "Do what you wiIl, this Lifes a Fiction And is made up of Contradiction" William Blake, "The Everlasting Glory" WHEN I WAS eleven, I began spending my summers at a New Jersey retreat run by a small Trotskyite group, the Socialist Workers Party, in which my mother played a prominent role. This country place, named "Mountain Spring Camp" by its previous, presumably more bucolic tenants, had all the physical accoutrementslarge dining hall, spartan wooden cabins, bunk houses for the stafftypical of a 1950s eastern resort. Many of the activities were equally commonplace. Guests would swim in the murky pond. Games of Ping-Pong and badminton were played. An occasional marshmallow may have even been toasted over an occasional campfire. But Mountain Spring also had its differences. All camp guests were SWP-related and called each other "Comrade." And since the ultimate goal of the mostly serious-minded comrades was to facilitate a speedy world revolution, recreational interludes were punctuated by a rigorous schedule of classes and seminars. There werent many children at Mountain Spring. These dedicated revolutionaries tended to regard children as an avoidable distraction, so most SWP couples remained childless. Given this policy, the majority of SWP-attached children came into the Party, as in my case, as extant appendages when our parents joined up; others, defiantly born to current SWP members, were tolerated if not welcomed. One or two children my age might show up at Mountain Spring on week-ends, but during the week only a handful of preschoolers remained. In that I was to be at Mountain Spring for the entire two months of the summer, I decided, to ally myself with the adults and begin my socialist education. On the Mountain Spring property there was a large main house that must have been the home of those who originally built the country estate. Two or three evenings a week, SWP seminars or lectures were held in the solarium of this building. The topics tended to be wide-ranging. I remember an evening devoted to the German socialist poet Henrich Heine, where I first learned the meaning of the word "syphilis." Another lecturer, drawn from the SWPs impressively erudite ranks, discussed Plato and his theories of appearance and deception, while a third speaker covered the life and writings of Frederick Douglass. The day classes were more solemn, ongoing affairs which often focused on basic works by the SWP icons Trotsky. Lenin. Engels. and Marx. I joined a group that was tackling the first volume of Marxs Capital. Just before my birthday in late July, one of my fellow students wrote a poem for me from which I recall only the last few lines: "as deeper into Capital she delves She thinks of the time shes been wasting Tomorrows her birthday, shes twelve." The next year became the most political one of my life. On my return to New York City, I spent my weekends and holidays sweeping the hallways at the SWP headquarters at 13th Street and University Place, reorganizing the small book collection (my own system) and delivering the SWP newspaper, the Militant, to newsstands on 42nd Street. I wrote a short article for the Militant about crawling under my desk for the bomb drills in my sixth grade classroom and, as was SWP practice, I adopted a pseudonym, "Susan Jeffers," for its publication. I used some of the money I earned babysitting and walking dogs to visit the well-stocked Communist bookstore near Broadway, and put the poster I bought thererosy Chinese peasants driving a shiny tractor through a field of golden wheatover my desk. (I knew the SWP hated Stalinists, but Mao had somehow avoided condemnation, so I thought the peasants would be all right.) I read Jack London, and after seeing the film All Quiet on the Western Front, I presented an essay about the wickedness of war to my discomfited grade school teacher. I looked forward to SWP parties, quaintly called "socials," and attended many meetings in many halls, where I positioned chairs in front of a well-traveled bronze bust of Trotsky that would gaze out at the audience from its requisite position near the podium. I sang the Marxist anthem, "Arise, you prisoners of starvation / Arise, you wretched of the earth," so often it remains one of the few songs learned in childhood I can still recite verbatim. But it was a lonely crusade, and as spring approached, my socialist loyalties began to be challenged by the younger, more gregarious groups of folk musicians who gathered on weekends in Washington Square Park. Since folk music tends to be about the oppressed, poor, or unhappy, many of the songs were SWP favorites that I already knew, so I felt I hadnt strayed too far from my plebian allegiances. Late in the spring I bought myself a twenty-five-dollar guitar, and by the time I returned to Mountain Spring I could simultaneously strum and sing "It Takes a
