Political-Economy and Inflation

Paul Krugman devoted his column two weeks ago to the conduct of economic punditry as if the economy were a nineteenth century morality play: sermons about “debasing” the currency, longings for gold, fretting over inflation at the nadir of an economic crisis, a masochistic enthusiasm for “belt tightening” (“Misguided Monetary Mentalities,” The New York Times, 12 October 2009, p. A23). Taking off from this, Matthew Yglesias makes the point about the degree that class-parochial interests play in purportedly objective economic analysis (“The Monetary Hawks,” ThinkProgress, 12 October 2009):

… I would suggest that divergent analysis is in part driven by things that have relatively little to do with analysis. … if we have four or five years of near-zero inflation and 9-10 percent unemployment that will be fine for prosperous middle aged people and devastating to the interests of the poor and the young. Conversely, if we have four or five years of modest unemployment with four or five percent inflation, that will be fine for young people and poor people but potentially detrimental to the interests of wealthy people sitting on large piles of savings. Ultimately, I don’t think it helps the progressive cause to ignore the class / ideological elements to this dispute and just pretend to be engaging in a neutral technocratic dispute about the correct application of the Taylor Rule. What we’re talking about, after all, is decision-making under conditions of moderate uncertainty. What the hawks are proposing to do is to implement a policy that’s extremely attentive to minimizing downside risk to the currently wealthy whereas Krugman is proposing a policy that’s [attentive] to minimizing downside risk for people with below-average labor market prospects.

The problem is that we’ve adopted a manner of speaking about economic issues denuded of any mention of interest. The language of popular economics today is categorical: a strong dollar is good, a week dollar is bad; stable prices are good, inflation is bad; low unemployment is good, high unemployment is bad; rising house prices are good, stagnating or falling house prices are bad; et cetera. But none of these factors are categorically good or bad (few things in life are). What is omitted is the “for whom” of these characterizations of good and bad. Low employment may be good for job seekers, but high unemployment is good for employers: they have their pick of workers when hiring and they hold the majority of the bargaining power in wage negotiations. A strong dollar may be good for Wal Mart and their customers, but it’s bad for General Motors and their employees.

Real estate maintains some knowledge of contraposition with their talk of a buyers’ market versus a sellers’ market. We do not speak with a similar respect to the value of the dollar: of an investors’ dollar (strong) versus a producers’ dollar (weak) or an importers’ dollar (strong) versus an exporters’ dollar (weak). Or in employment, some people might think getting a raise or ease in finding a job are good, but these are what someone else might call labor price inflation (bad).

Economics isn’t free of the language of interest per se, so much as of one particular set of interests. The propaganda victory of the economic interests of Wall Street, the investing class, large business is so complete that their economic preferences have become de facto the whole language of economics. The awareness of the interests of all other economic actors has been totally expunged from the language of economics — well, not totally: there is the disciplinary ghetto referred to as heterodox economics, an exception that proves the rule.

To have asserted control over the linguistic territory is to have banished the political dispute; to have disappeared from the lexicon is to have ceded political legitimacy. Disputes over the political mixture of the interests of one economic class versus those of another are no longer about one set of economic relations versus another, but now take place in the frame of a rational economic order versus chaos, unreason and decline.

A firm separation between economics in its positivist, scientific role and economics in its normative, polemical and political role should be vigorously policed. Or perhaps economics is simply to value-laden, too embedded in the hurly-burley of human affairs for such a division to be tenable. Perhaps we should dispense with the notion of economics as a hard science in favor of a thoroughgoing political-economy. Even if we admit the possibility of a purely positivist economics, all that economics can do in our political deliberations is serve as a speculative tallyman of the opportunity costs of various policy options. The primacy of politics should come to the fore whenever economics crosses over from the academy to the public realm.

Target values for economic factors represent a political compromise between contending societal factions. The most well known of these is the NAIRU, the trade-off between inflation and unemployment codified in the statutory guidance of most of the world’s central banks. But inflation isn’t an unqualified evil. Its primary evils are that it has a tendency to run-away and, related, that it breeds uncertainty (a certain anticipatable regularity to the future is necessary to the function of capitalism). It used to be well known amidst the working (and indebted) classes that a certain amount of inflation served their interest and that “sound money” was merely the rallying cry of the investor class. The class conflict of easy versus sound money used to be a significant fault line separating progressive from conservative, populist from whig. Hence the advocacy of arch-populist William Jennings Bryan of an inflationary policy of bimetallism or “free silver” in the election of 1896.

There’s talk today about how vile it would be for the government to attempt to inflate away its debt (“debasing the currency” they call it), but the government doesn’t only inflate away its debt, it inflates away all dollar-denominated debts. A couple of years of higher than target inflation might be good for a country that has seen twenty years of galloping gains for the investor class, but racked up unsustainable amounts of debt among the middle and working classes. The investing class would scream bloody murder, but not because 3-5% inflation would be the end of economic reality as we know it, but because it would be a wealth transfer from creditor to debtor.

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A Hive Mind of One

My friend Mick alerted me that Carl Zimmer was featured in a recent episode of RadioLab dedicated to the subject of parasites (Abumrad, Jad and Robert Krulwich, “Parasites,” 7 September 2009). Despite being somewhat annoying in format and low-density in it’s information presentation, the show contains a number of points interesting to my project.

Hookworms

In the second part of the second segment (starting at 31:25), they deal with the symbiosis between hookworms and the human immune system. The segment consists of a profile of Jasper Lawrence, a man who had severe allergies and — having chased down a certain direction of research — decided to travel to Cameroon to infect himself with hookworms. The research in question is that of the hygiene hypothesis: the notion that many developed world afflictions, including allergies, result in part from the excessively sterile human environment. Asthma is 50 percent less likely in a person who has had a hookworm and in Africa allergies are almost entirely unknown. It is theorized that similar to the dependence of digestion upon a symbiotic relationship with non-human microflora of the digestive tract, the immune system is dependent on certain microorganisms for regulation and calibration of the immunoresponse. The complex chain of events that is the immunoresponse evolved in the constant presence of parasites, evolved around parasites; they have co-evolved to the point where their presence became necessary. “We function like rainforests; we’re ecosystems,” Mr. Lawrence says. This is the hypersea washing through humanity.

Toxoplasma Gondii

The final segment is on Toxoplasma Gondii (starting at 47:55), a parasite that lives in cats and makes their feces dangerous to pregnant women. Like many parasites, it has a multi-phase lifecycle that takes place in a multiple hosts. It only reproduces in members of the Felidae family (cats), but can live the remainder of its life in any warm-blooded creature. T. gondii is expelled by cats when they shit and the cat shit is ingested by other creatures (consumption of unwashed vegetables, inhaled while digging close to the ground — which is why pregnant women are advised against gardening). T. gondii needs to get back into the digestive tract of a cat to reproduce, so it wriggles its way to the amygdale, the part of the brain responsible for emotional reaction, and causes the host to become attracted to cats, thus, in the case of small mammals or birds, becoming easy prey for cats (it is Carl Zimmer’s argument in his book, Parasite Rex that in this way parasites are like ecological catalysts, spinning food webs ever more tightly together).

But then there is the question of humans. It is one thing to say that T. gondii might make a bird or a rat suicidal. But T. gondii infects humans too. What then?

The scientific interviewee for the segment is Robert Sapolsky, a professor of neurology at Stanford University. On the question of T. gondii altering human behavior, he declares it highly plausible:

Sapolsky: Pure speculation, but people who think about this stuff view it as not purely speculative. The notion that toxo can produce some sort of attraction to cats in humans: they don’t think it’s all that crazy.

That’s right: crazy cat lady is that way because she’s been body-snatched by toxoplasma gondii.

Less controversial than the idea that T. gondii might be making crazy cat people out of us is the idea that it can make people more prone to engage in risky behavior. Dr. Sapolsky mentions two independent studies that show that people infected with T. gondii are two to six times more likely to get in a car crash than those not infected. With this information in hand, host and guest make the larger point:

Ellen Horne: It might be possible — might be possible — that toxo is guiding our emotions, changing who we are in some basic way. And if you consider that toxo might just be one of thousands of tiny little parasites inside us, pulling our strings from the inside, well that thought is pretty creepy.

Sapolsky: Even if the entire lesson with toxo is that a small subset of infected people now have one half of one percent more likelihood of wanting to drive really recklessly, even lurking in that one half of one percent are some serious implications for thinking about free will. We haven’t a clue the biology lurking in the background that makes free will seem a little bit suspect.

I’m less concerned with that old philosophical saw of free will versus determinism, than with extending an idea from segment on the hookworms. Mr. Lawrence says, “We function like rainforests; we’re ecosystems.” Presumably he is referring to our bodies. But the implication of toxoplasma gondii is that we are ecosystems in out minds as well. To the naïve sort of homunculus, Herman’s Head notion of consciousness, we must now add a few animal spirits.

Update, 23 October 2009: For instance this woman must have a pretty severe infection of T. gondii.

Update no. 2, 5 June 2010: Parasitogenic felinophilia (Toxoplasma gondii) may be treatable with haloperidol, an antipsychotic (“A Game of Cat and Mouse,” The Economist, 3 June 2010). Repost from my twitter feed.

Two Recluses on Cosmos and Psyche

Two things fill the mind with ever new and increasing admiration and reverence, the more often and more steadily one reflects on them: the starry heavens above and the moral law within.

~ Immanuel Kant, Critique of Practical Reason (1788)

The Brain — is wider than the Sky—
For — put them side by side—
The one the other will contain
With ease — and You — beside—

~ Emily Dickinson, 632

Fractals: It’s What’s for Dinner

Romanesco broccoli from the Mt. Pleasant farmers' market, Washington, D.C., 10 October 2009

Ever since I read that romanesco broccoli was a fractal I’ve been on the lookout for it. It finally turned up along with all the varieties of cauliflower at the Mt. Pleasant farmer’s market, so I snatched it up and tonight I broke that fractal down into-a little-a tiny cubes and fried it in olive oil, salt and pepper and white wine.

(My picture is nowhere as cool as this New York Times picture of the day from 7 October 2009)

Cap and Trade and Rightward Drift

It is, as always, both amazing and dispiriting to see how well orchestrated the right wing noise machine is, this time with regard to what to a man pundits and politicians on the right now refer to as “cap and tax.” One of the amazing things on display here is the amount of rightward drift the country’s political class has experienced over even the last twenty years.

Cap and trade got its start as a market-oriented Republican counterproposal to Democrats’ more standard-issue regulatory approach to controlling pollution. When cap and trade was introduced to the mainstream political discourse as part of the 1990 Clean Air Act as a means to control SO2 emissions and the resultant acid rain, and then first discussed as a means to control greenhouse gasses as well, the reaction among Democrats and the left was revulsion and rejection. If pollution is so bad, then we should just outlaw or limit it, rather than allow corporations to purchase pollution vouchers.

Republicans countered with the usual critique of the regulatory approach: that broad mandates of bureaucrats lacking the expertise of managers on sight will result in the variable plants of the country having to adopt means from a relatively small menu, which in many instances would not be the best one for that plant or corporation’s circumstance. On the affirmative, they argued that a market-based solution would allow managers and experts close to the problem to determine what the most cost-effective means of adaptation to a lower overall emissions economy would be. Plants or corporations with a substantial retooling burden would be able to purchase time to alter their consumption pattern. High-pollution, but high-value activities would have a kind of exemption in the market means of greater expense. Where the burden of both the new cost structure and adaptation was too great, the creative destruction of the market would naturally select the best alternatives.

(I am generally very amenable to this sort of systems-type solution to problems.)

It’s no surprise that there is not a universal embrace among Republicans of a Bush, Sr. administration policy proposal. The right was never all on-board with cap and trade in the early 1990s. The sector of the polity opposed to action on climate change spans a variety of factions and epistemologies. And the right has always been skeptical of George H.W. Bush, Sr. The “Read my lips: No new taxes” pledge and the selection of Dan Quayle as a running mate were maneuvers meant to claim the mantle of Ronald Reagan by the politician who in the 1980 primaries had coined the term “voodoo economics.” But that the contemporary right now disavows George H.W. Bush, Sr. — along with Dwight Eisenhower, Richard Nixon, Gerald Ford and increasingly George W. Bush, Jr. — as not true conservatives, or Republicans In Name Only, while a proposal of the Bush, Sr. administration, roundly rejected by Democrats at the time, has become the policy preference of the Democrats today, should be telling as to the direction of party drift.

As Clinton said early on in his presidency (Woodward, Bob, The Agenda [New York: Simon & Schuster, 1994] p. 161),

I hope you’re all aware we’re all Eisenhower Republicans. We’re Eisenhower Republicans here, and we are fighting the Reagan Republicans.

This is a very astute observation and testimony to the enduring power of the Reagan revolution in U.S. politics. Today there is only one president that Republicans admire. Meanwhile, that old tradition of Republicanism represented by the rest of the Republican presidents has been taken over by the Democratic party — no longer the party of Franklin Roosevelt or Lyndon Johnson, now the party of Eisenhower and George H.W. Bush, Sr.

The Last Days of Nature

In reaction to last week’s The New Yorker article on synthetic biology (Specter, Michael, “A Life Of Its Own,” 28 September 2009, pp. 56-65):

The objective of synthetic biology is the final subsumption of the logic of nature into the logic of capitalism. Capitalism being the logic of human desire, the objective of synthetic biology is — as with the whole of the technological endeavor — the elimination of all intercession between desire and its fulfillment. It is the attempt to return to the purity of the hallucination of the breast, to do away with despised reality testing, the creation of a world of pure subjectivity.

For a cyberpunk rereading of Hegel: Freud as the last of the Young Hegelians.