Neville Chamberlain, the Hero

You would think in 70 years the world would "progress" and leaders would have incorporated the lessons of the past and we would have a better world.

But, as Brad DeLong points out, despite Chamberlain's horrible appeasement policy with Hitler, he did get one thing right which leaders today in the UK have got horribly wrong:

Neville Chamberlain is remembered today as the British prime minister who, as an avatar of appeasement of Nazi Germany in the late 1930’s, helped to usher Europe into World War II. But, earlier in that fateful decade, relatively soon after the start of the Great Depression, the British economy was rapidly returning to its previous level of output, thanks to Chancellor of the Exchequer Neville Chamberlain’s reliance on fiscal stimulus to restore the price level to its pre-depression trajectory.

Compare that approach to the expansion-through-austerity policy being pursued nowadays by British Prime Minister David Cameron’s government (with Chancellor of the Exchequer George Osborne leading the cheering squad). The country’s real GDP has flat-lined, and the odds are high that British real GDP is headed down again.

Indeed, in less than a year, if current forecasts are correct, Britain’s Cameron-Osborne Depression will not merely be the worst depression in Britain since the Great Depression, but probably the worst depression in Britain…ever.

DeLong on the Financial Sickness in America

The financial "industry" is a bloated, corrupt section of the economy that grows at the expense of everything else. Here is a bit from UC Berkeley economist Brad DeLong on the Project Syndicate blog:

In 1950, finance and insurance in the United States accounted for 2.8% of GDP, according to US Department of Commerce estimates. By 1960, that share had grown to 3.8% of GDP, and reached 6% of GDP in 1990. Today, it is 8.4% of GDP, and it is not shrinking. The Wall Street Journal’s Justin Lahart reports that the 2010 share was higher than the previous peak share in 2006.

...

But if the US were getting good value from the extra 5.6% of GDP that it is now spending on finance and insurance – the extra $750 billion diverted annually from paying people who make directly useful goods and provide directly useful services – it would be obvious in the statistics. At a typical 5% annual real interest rate for risky cash flows, diverting that large a share of resources away from goods and services directly useful this year is a good bargain only if it boosts overall annual economic growth by 0.3% – or 6% per 25-year generation.

There have been many shocks to the US economy over the past couple of generations, and many factors have added to or subtracted from economic growth. But it is not obvious that the US economy today would be 6% less productive if it had had the finance-insurance system of 1950 rather than the one that prevailed during the past 20 years.

There are five ways that an economy gains from a well-functioning finance-insurance system. First, people are no longer as vulnerable to the effects of fires, floods, medical disasters, unemployment, business collapses, sectoral shifts, and so forth, because a well-working finance-insurance system diversifies and thus dissipates some risks, and deals with others by matching those who fear risk with those who can comfortably bear it. While it might be true that America’s current finance-insurance system better distributes risk in some sense, it is hard to see how that could be the case, given the experience of investors in equities and housing over the past two decades.

Second, well-functioning financial systems match large, illiquid investment projects with the relatively small pools of money contributed by individual savers who value liquidity highly. There has been one important innovation over the past two generations: businesses can now issue high-yield bonds. But, given the costs of the bankruptcy process, it has never been clear why a business would rather issue high-yield bonds (besides gaming the tax system), or why investors would rather buy them than take an equity stake.

Third, improved opportunities to borrow allow one to spend more now, when one is poor, and save more later, when one is rich. Households are certainly much more able to borrow, thanks to home-equity loans, credit-card balances, and payday loans. But what are they really buying? Many are not buying the ability to spend when they are poor and save when they are rich, but instead appear to be buying postponement of the “unpleasant financial retrenchment” talk with the other members of their household. And that is not something you want to buy.

Fourth, we have seen major improvements in the ease of transactions. But, while electronic transactions have made a great deal of financial life much easier, this should have been accompanied by a decrease, not an increase, in the finance share of GDP, just as automated switching in telecommunications led to a decrease in the number of telephone switchboard operators per phone call. Indeed, the operations of those parts of the financial system most closely related to technological improvements have slimmed down markedly: consider what has happened to the checking operations of the regional Federal Reserve Banks.

Finally, better finance should mean better corporate governance. Since shareholder democracy does not provide effective control over entrenched, runaway, self-indulgent management, finance has a potentially powerful role to play in ensuring that corporate managers work in the interest of shareholders. And a substantial change has indeed occurred over the past two generations: CEOs focus much more attention than they used to on pleasing the stock market, and this is likely to be a good thing.

Overall, however, it remains disturbing that we do not see the obvious large benefits, at either the micro or macro level, in the US economy’s efficiency that would justify spending an extra 5.6% of GDP every year on finance and insurance. Lahart cites the conclusion of New York University’s Thomas Philippon that today’s US financial sector is outsized by two percentage points of GDP. And it is very possible that Philippon’s estimate of the size of the US financial sector’s hypertrophy is too small.

Why has the devotion of a great deal of skill and enterprise to finance and insurance sector not paid obvious economic dividends? There are two sustainable ways to make money in finance: find people with risks that need to be carried and match them with people with unused risk-bearing capacity, or find people with such risks and match them with people who are clueless but who have money. Are we sure that most of the growth in finance stems from a rising share of financial professionals who undertake the former rather than the latter?

This is a pretty astounding indictment of the sleaze, corruption, and fraud in America's financial industry that has let it grow huge despite providing no real benefits to justify its larger share of national GDP.

Sadly, no govenment has taken on this issue and tried to cut the financial industry down to size to make it more economically efficient. Exactly the opposite has occurred. Over the last 30 years great laudatory sermons have been given about "enterprise" and "unleashing business from regulation" when in fact this has proven to be catchwords for turning a blind eye to corruption and crime on an unimaginable scale. The American people have been hoodwinked and lied to and nobody has yet been held accountable because the rich and powerful have bought off the politiians.

Understanding the Great Recession

Here is a short summary of a proposed explanation of the current economic collapse. This is a bit from a post by UC Berkeley economist Brad DeLong:

As I understand the Greenwald-Stiglitz hypothesis--about the Great Depression as applied to agriculture and about today as applied to manufacturing--it goes like this:

1. Rapid technological progress in a very large economic sector (agriculture then, manufacturing now) leads to oversupply and steep declines in the sector's prices. Poorer producers have less income. They come under pressure to cut back their spending. Others--consumers--are now richer because they are paying less for their food (or their manufactures), but their propensity to spend is lower than that of the stressed farmers or ex-manufacturing workers.


2. Moreover, the oversupply of agricultural commodities (or manufactured goods) means that only an idiot would invest at their normal pace in those sectors. To the shortfall in consumption spending is added a shortfall in investment spending as well.


3. Thus we have systematic pressures pushing spending down below economy-wide income. These aren't going to go away until the declining sector (agriculture then, manufacturing now) is no longer large enough to be macroeconomically significant.


4. Macroeconomic balance requires that the economy generate offsetting pressures pushing spending up. What might they be?


5. For a while, those receiving the income that farmers (or ex-manufacturing workers) have lost and those who use to invest in the declining sectors can lend it to the farmers (or ex-manufacturing workers) so that they can keep up with the Joneses. But lending more and more to poorer and poorer debtors is, like lawn darts, only all fun-and-games until somebody loses an eye.


6. An alternative possibility is to switch investment away from the farm value-chain complex (or the manufacturing value-chain complex) to something else. But what? Nobody really knows. The future is uncertain. Other investments are clearly riskier then funneling money into the old channels of boosting the capital of the farm value-chain complex (or the manufacturing value-chain complex) had been. Given the extra risks, this pressure can only manifest itself if the cost of capital falls. But here we hit the zero lower bound on interest rates. And we are off to the secular liquidity-trap races. This won't work either.

A very readable presentation of the thesis is in a Vanity Fair article by Nobel prize-winning economist Joseph Stiglitz.

Brad DeLong has a Plan to Reflate the US Economy

From a post on UC Berkely professor economics Brad DeLong's blog Grasping Reality with Both Hands:

Helicopter Drops: Does the Treasury Have Authority to Lend $10,000 Interest-Free to Every 2011 Taxpayer?

by J. Bradford DeLong

Mint ten $1,000 platinum coins for each 2011 taxpayer. Lend them to each 2011 taxpayer--at zero percent nominal interest for a hundred year term, so that each taxpayer or their heirs and assigns will be liable for paying the money back in 2111.

Does the Treasury have authority to do this right now? I think it might--or that the same lawyers who say that what we did in Libya was not "hostilities" would be able to claim that the Treasury has such authority.

And if the Treasury doesn't, I am pretty confident that the Federal Reserve does. (Every taxpayer might have to first fill out a form incorporating him or herself as a bank holding company, however.)

I agree that the above would work. I agree that is is fully as legal an action as the Bush legal team's assertion that "enhanced interrogation" techniques like waterboarding were legal because they are not torture. I wish Ben Bernanke would act immediately on this. This is even better than John Maynard Keynes' prescription to cure the Great Depression:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

If only Bernanke of Obama had the guts to make a dramatic move like this to rescue the world from 10 years of a Japan-style "lost decade"...

Big Government

The political right in the US keeps repeating the lie that "big government" has gotten onerous in the US and is growing larger by the day. They want to cut taxes and shrink government.

But this graph shows that government has been shrinking for at least 15 years in the US:

Click to Enlarge
The above is from a post by Brad DeLong entitled "Atrios Tells Us That Paul Krugman Addresses David Brooks's Zombie Lies".

Here in the U.S. we had a tax-and-transfer stimulus--we put more cash into the hands of households (and banks!). But we did not try an expansionary spending stimulus. Put together localities, states, and the federal government, and our government did not purchase a larger share of the economy's productive potential in 2009 than it had in 2008, and in 2010 and 2011 we cut government purchases as a share of potential GDP--in 2011 sharply.

Sadly the political right is not interested in facts and they drown out the facts so almost nobody in the US understands that their "heavy hand" of government has been getting lighter all the time and that over the last 2 years spending by government has shrunk by 1% of GDP.

Brad DeLong Gives a Lesson in Logic, Language, History, and Economics in one Short Dialog

Here's the post from Brad DeLong's Grasping Reality with Both Hands blog:

Wikipedia:

Ponzi scheme: A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors…. The system is destined to collapse because the earnings, if any, are less than the payments to investors…

Matthew Yglesias adds:

Social Security Is No More A Ponzi Scheme Than Is Anything Else That Relies On Future Economic Growth: A certain class of “smart set” conservative and centrist types persist on believing that analogies between Social Security and a Ponzi scheme are, though perhaps politically unwise, fundamentally sound. This is nuts…. A Ponzi scheme is a fraud where in the end the whole pyramid goes bust a bunch of people wind up with no money at all…

Alex Tabarrok:

Marginal Revolution: Matt Yglesias says anyone who thinks social security is a Ponzi scheme is nuts. So let’s take a look at some of these nuts…. Paul Samuelson… Milton Friedman… Paul Krugman…

And Greg Mankiw:

Greg Mankiw's Blog: A friend calls to my attention this quotation from Paul Samuelson…. "Social Security is squarely based on what has been called the eighth wonder of the world -- compound interest. A growing nation is the greatest Ponzi game ever contrived…"

Adeimantos: I have been off in Europe for a while. Why are Alex Tabarrok and Greg Mankiw so eager this week to call Social Security a "Ponzi Scheme"?

Glaukon: Perhaps it is because they think Social Security is going to go spectacularly bankrupt?

Adeimantos: I hardly think that the Commissioner of Social Security will be hauled off to jail like Charles Ponzi was on August 12, 1920, with a general announcement that nobody is going to get any Social Security benefits.

Glaukon: But perhaps they believe it will?

Thrasymakhos: No. Neither Greg nor Alex believes that someday Social Security will have the sudden catastrophic collapse that ends a Ponzi Scheme.

Adeimantos: So they call it is a Ponzi Scheme. But Ponzi Schemes end in a sudden catastrophic collapse, and Social Security will not--that it is a different kind of Ponzi Scheme?

Thrasymakhos: Yes.

Glaukon: Are there any other aspects in which Cowen Tabarrok and Mankiw think that Social Security is different from your usual Ponzi Scheme?

Thrasymakhos: Yes. Because a Ponzi scheme is destined to end in a sudden catastrophic collapse it is fundamentally fraudulent. Since Alex Tabarrok and Greg Mankiw don't see it ending in a sudden catastrophic collapse thy don't see it as fundamentally fraudulent.

Kephalos: So they think that Social Security is a Ponzi Scheme--but that, unlike other Ponzi Schemes, it is not fundamentally fraudulent and, unlike other Ponzi Schemes, it is not destined to end in a sudden catastrophic collapse?

Thrasymakhos: Exactly.

Kephalos: So it's like saying that something is salt--although without the sodium and the chlorine.

Adeimantos: Wait a minute. They also claim that Paul Samuelson and Paul Krugman call Social Security a Ponzi Scheme…

Thrasymakhos: Look at the first sentence Alex Tabarrok quotes from Samuelson: "Social Security is a Ponzi Scheme that Works". Samuelson is trying to grab his readers' attention with the arresting claim that there is a key difference between Social Security and a Ponzi Scheme: Ponzi Schemes don't work, while Social Security does.

Glaukon: Oh.

Thrasymakhos: And go look at the actual article from Paul Krugman that Alex Tabarrok quotes. Paul doesn't say that Social Security is a Ponzi Scheme. He said that over its first seventy-five years it:

turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics…

Thus, Paul says, Social Security had a "Ponzi game aspect"--a non-fraudulent, sustainable one--as America's population aged, but that it no longer has a Ponzi game aspect. To claim that this article shows Paul Krugman "recognizes the Ponzi-like nature of Social Security" would seem to me to be a no-no.

Adeimantos: And Milton Friedman?

Glaukon: You will note that Milton Friedman says that it is a pay-as-you-go system, which "supporters call 'a compact between the generations' and opponents call a Ponzi scheme". If I had to characterize Friedman, I would say that Friedman thinks Social Security is a pay-as-you-go system, and that the Social Security Trust Fund is a "confidence game to convince the public that what the Social Security Administration calls a social insurance program is equivalent to private insurance". He doesn't want to be out there calling it a Ponzi Scheme: that's something that "opponents say".

Kephalos: So the impression I get is that Alex Tabarrok and Greg Mankiw--and Milton Friedman, Paul Krugman, and Paul Samuelson for that matter--think that Social Security is a pay-as-you-go social insurance system, which is not a Ponzi Scheme.

Thrasymakhos: Or, rather, a Ponzi Scheme that is neither fraudulent nor unsustainable.

Glaukon: So then why do they call it a Ponzi Scheme?

Thrasymakhos: Because Texas Governor Rick Perry calls it a Ponzi Scheme.

Glaukon: Why does Rick Perry call it a Ponzi Scheme?

Thrasymakhos: Because he thinks hat it is fundamentally fraudulent and catastrophically unsustainable.

Glaukon: So when Rick Perry says "Social Security is a Ponzi Scheme" he means the normal old-fashioned fraudulent kind destined to collapse. And when Cohen and Mankiw say "Social Security is a Ponzi Scheme" they mean that it is some new kind of Ponzi Scheme that is not fraudulent and not destined to collapse?

Thrasymakhos: Exactly.

Adeimantos: But they convey the impression that they agree with Perry. Why?

Thrasymakhos: That's because they want to back Rick Perry up.

Glaukon: Why? Is it just because they are playing for Team Republican?

Funny how people who are ideologically motivated can play Three-card Monty with ideas in service of their ideological aims. Honesty out the window, cynical abuse of people's gullibility, ignorance, or credulity are used to hammer home the desired "lesson".

The only lesson I "learned" is that if you want pathological liars and cheats for politicians, vote Republican. If you want cynical manipulators and nihilists to control your future, vote Republican. If you want markets in everything, including selling your mother of into slavery, then vote Republican. The Republicans have a vision for America where governments go away and the "honest" market reigns supreme, the same one that Andrew Carnegie, John D. Rockefeller, and Bernie Madoff used to make off with scads of other people's money.

Go read the original to get the embedded links.

And you can get the official US government's affirmation that Social Security is not a Ponzi scheme. Learn some history and read the official statement:

The first modern social insurance program began in Germany in 1889 and has been in continuous operation for more than 100 years. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi's scheme lasted barely 200 days.

Oh... and sneak a peek at the arch villian Charles Ponzi eyeballing you from his mug shot.

DeLong Throws in the Towel: Washington is Run by Idiots

Here is UC Berkeley economist admitting that his worst nightmare has come true. He was wrong in thinking that Washington had some integrity and some interest in ruling America in the interest of the bottom 90%. He now admits he was wrong:

Macro Outlook: We Are, Once Again, Defeated...

When the S&P collapsed and bond yields headed way down over the past two month I read it as a financial market misreading Washington and panicking. I thought: the financial markets have noticed that Washington is dysfunctional; thus they now fear that nobody in Washington is going to do anything to restore nominal spending to its appropriate track.

And I thought: they are probably wrong; in response to this people will react, and then we will find the S&P 500 bouncing a good chunk of the way back to 1350.

After Bernanke's speech, it is clear that I was wrong. The S&P is not going to bounce back. Nobody is offering anything for the economy.

The Lesser Depression drags on...

It is amazing that American voters have elected "leaders" who are intent on keeping the country in a rut with trillions of potential economic output lost, tens of millions unnecessarily unemployed, and with millions losing their homes because of fraud and crime on Wall Street. You would think that people would rise up and toss out these deceivers and "traitors". Nope. They are avidly listening to and following right wing idiot Rick Perry who lambasts Ben Bernanke as a "traitor" while offering up anti-reality Kool-Aid as the panacea for America's problems. Incredible!

Brad DeLong Castigates Rampant Social Darwinism

Here is a bit from a post by UC Berkeley economist Brad DeLong in his Grasping Reality with Both Hands blog. He notes the social Darwinism of Tyler Cowen:

Tyler Cowen writes:

More rooftop-ready results on reservation wages: I conclude that some people aren’t very good at looking for jobs and further some people are not very good at accepting job offers…

It seems to me that this is one of the steps in what I have sometimes called the Social-Darwinist Waltz. It goes like this:

1. People are skilled decision-makers and rational judges of their own interests.


2. Markets are very good ways of coordinating social activity among skilled decision-makers who are rational judges of their own interest.


3. Markets are the best way to organize pretty much everything.


4. When markets go wrong and produce bad outcomes, it is almost always because the government has interfered and has mucked things up with command and bureaucracy.


5. You say government has not intervened, and yet the market outcome still sucks?


6. Well, it must be because some people are not skilled decision-makers and are not rational judges of their own interests.


7. But their lack of skill and foresight is non-adaptive.


8. Their lack of skill and foresight is blameworthy.


9. And they should be punished.


10. And in punishing them, the market outcome is good after all.


11. It improves the breed.

It is, I think, very important for rational policy to halt the Social-Darwinist Waltz where Tyler is, at step 7, and not go on to step 8.

First, it is not likely that a society in which people were "better" in Tyler's sense at looking for jobs would produce better macroeconomic outcomes. People were much "better" at volunteering to work for lower wages during the Great Depression, and that did not help the situation. What we have now is bad. Active destabilizing deflation is worse. To assume that more individual "rationality" will make for a more "rational" collective outcome is often false--think Prisoner's Dilemma--and in this case is probably false.

Second, a system that for good outcomes requires that people act in ways people do not do is not a good system--and to blame the people rather than the system is to commit a major intellectual error.

I think it is funny that the very people who think markets are rational and efficient are the ones to blame governments and people when things go wrong. But governments are just another expression of collective enterprise, just like markets, and this philosophy of market perfection rests on thinking humans are infinite computers able to calculate returns centuries in advance over a neaer infinity of goods and choices. But then to complain that people are "not adaptive" in their skills and decisions is laughable. It is far more likely that humans make relatively sound decisions about everyday issues than that they make economic decisions about the distant future, e.g. how much to save for a pension when retirement is 40 years away or whether it is better for your "lifetime savings" to take advantage of a tax break offered by government or to forego it. Nutty.

Sadly, it is these ideologues of "rational" and "efficient" who have been driving economics and affecting politics for the last 30 years. What a mess they have gotten everybody into. So much for their "rational" approach to economics.

Debt Ceiling Debate

Here is one of my favourite economists, Brad Delong, explaining the debt ceiling and the disaster in Washington that passes for "politics"...



If you take the time -- an hour -- to watch the full video, you will learn a great deal that isn't discussed in "the news" and doesn't show up in much of the "news analysis" that surrounds all the Washington hoopla.

Brink Lindsey is a conservative moderate Republican.

Brink Lindsey was the Cato Institute's vice president for research. He was also editor of Cato Unbound, a monthly web magazine. From 1998 to 2004, he was director of Cato's Center for Trade Policy Studies, helping to make it a leading voice for free trade. An attorney with extensive experience in international trade regulation, Lindsey was formerly director of regulatory studies at Cato and senior editor of Regulation magazine.

He is a contributing editor at Reason magazine, where he was a leading voice in support of the Iraq war, and a frequent discussion guest on BloggingHeads.tv.

Brad DeLong is a liberal and progressive Democrat.

Brad DeLong, is a professor of Economics and chair of the Political Economy major at the University of California, Berkeley. He served as Deputy Assistant Secretary of the United States Department of the Treasury in the Clinton Administration under Lawrence Summers. He is also a research associate of the National Bureau of Economic Research, and is a visiting scholar at the Federal Reserve Bank of San Francisco.

Along with Joseph Stiglitz and Aaron Edlin, DeLong is co-editor of The Economists' Voice, and has been co-editor of the widely read Journal of Economic Perspectives. He is also the author of a textbook, Macroeconomics, the second edition of which he coauthored with Martha Olney. He writes a monthly syndicated op-ed column for Project Syndicate.

As an official in the Treasury Department in the Clinton administration, he worked on the 1993 budget, on the Uruguay Round of the General Agreement on Tariffs and Trade, on the North American Free Trade Agreement, on the unsuccessful health care reform effort, and on other policies.[citation needed]

DeLong is a prolific blogger. His main blog is Grasping Reality with Both Hands, which covers political, technical, and economic issues as well as criticism of their coverage in the media.

DeLong is both a liberal in the modern American political sense and a free trade neo-liberal. He has cited Adam Smith, John Maynard Keynes, Lawrence Summers, Andrei Shleifer, and Milton Friedman as the economists who have had the greatest influence on his views. In fact, his dozen most important papers have been co-authored with Summers, and several of the best papers of Summers are those co-authored with DeLong.

Behind the Debt Ceiling Fight

Here is a picture from an excellent post on Barry Ritholtz's The Big Picture blog:

Click to Enlarge
For all the heated rhetoric about "runaway deficits" the graph shows no such thing. It shows expenditures as flat over the last two years as the recession has ended. It was the recession that drove expenditures higher. Meanwhile, government revenues fell during the recession. The gap is "the deficit". But now that the recession is over, the gap is closing because revenues are growing.

But not a single politician in Washington bothered to look at these facts and see that deficits are normal in recessions and the deficits disappear if you let the economy grow.

Instead, the politicians have decided to put the economy in shackles during this period of recovery from a recession. Here is what University of California Berkeley economics professor Brad DeLong sees as the consequence of this "deal":

A first guess: -0.4% off of fiscal 2012 real GDP growth, with an unemployment rate in November 2012 0.2% above the baseline.

A hideous waste of opportunity. There is nothing in there to boost employment and capacity utilization. Absolutely nothing.

The idiocy of this "deal" is spelled out by the author of the post on The Big Picture blog:

I’d like to go on the record to state that I think any politician — Democrat or Republican — who signs a pledge (any pledge) is making a huge mistake, for the simple reason that there are only two ways to deal with having made such a commitment: either one abides by it, or one reneges on it. It forecloses on the notion of compromise, the key ingredient to getting things done in Washington. Beyond that, it’s fairly juvenile, and I look forward to the day when our politicians will bind themselves via pinky swears and/or double-dares. Really, it’s all so third grade.

Second, let’s talk about whether we have a “spending” problem or a “revenue” problem. Since politicians — up to and including President Obama — like to equate the federal government to the average family (a truly pathetic comparison), let’s look at it in that light: Say your household is spending $70,000/year on a $100,000/year gross (pre-tax) household income. Well, it’s easy to say you have a “spending” problem that would be solved if you took your spending down to, say, $40,000/year. Conversely, though, you might also solve the “problem” by getting a new job for $140,000/year (not saying that’s easy, of course, but certainly possible). The notion — espoused by countless politicians — that the problem resides solely on spending and not also on revenues is absurd on its face. Catherine Rampell has a very nice piece about this over at the NY Times website: “But there is, in theory, a happy solution to our debt troubles. It’s called economic growth. No need to raise taxes or cut programs. Just get the economy growing the way it used to.” Indeed.

Sadly, no politician felt that the medicine of "growth" was appropriate for what ails America. Instead, they were all like medieval doctors proscribing leeches and bleeding, and more bleeding, and more bleeding for an economy that is already exhausted and bloodless.

Go read the full post -- and carefully look at and think about all those pictures in this post -- from The Big Picture blog. It is well worth your time and will reward you with real insights that you won't get from "the media" or any "journalism" that supposedly covered the last few week's high drama in Washington.

If you have trouble following the argument, here is a picture that summarizes the "accomplishments" of the debt ceiling debate:

Lament for a Failed US

This bit from an article by Brad DeLong and published by Project Syndicate should be meditated upon:

During the run-up to World War II, Winston Churchill, speaking in Parliament, lamented “the years that the locusts hath eaten” – the period during which preparatory action to face the great crisis of his day (the rise of Continental fascism) could have been taken, but was not. Over the past century – with the notable exception of the Great Depression – the US political system has been remarkably good at foreseeing crises long before they have happened, and at least setting the foundation for dealing with them when they have occurred.

But so far in the third millennium, this skill – or simply run of luck – has deserted the US. My view is that the problem would fix itself easily if only the Republican Party of Dwight D. Eisenhower could stage a comeback (though without Richard Nixon and Joseph McCarthy).

It is becoming increasingly clear, however, that the problem is one not only for the US, but for the rest of the world as well. Since December 7, 1941, the world has in large part been able to rely on global governance by a somewhat-competent hyper-power. That America may be gone for good. If it is, the world needs to develop other institutions for global management – and quickly.

I see more failures in US policy than Brad DeLong:

• The idiotic colonial war in the Philippines


• Gunboat policy in China followed by wasted support for the corrupt Chiang Kai-Shek regime


• Failure to act in concert with Western Europe to in founding the League of Nations


• Failure to support a Republican Spain


• Viciously repressive policies in Latin America


• An anti-democratic policy in Iran that overthrew a popular democratic leader


• A failed policy in Vietnam based on a an idiotic "Domino Theory"


• A criminal policy to support vicious dictators in the Middle East


• A failure to have an industrial policy and progressive policies for the US population

Yes, having more Eisenhower-like Republicans would be nice, but the ills of the US go much, much deeper. The achingly slow rejection of Jim Crow and segregation, the ineffective "War on Poverty" that was turned about by the Reagan policies to enrich the already fabulously wealthy, and the radical culture wars unleashed by the Republican fanatics at the end of the 20th century are only part of a long legacy of bad politics.

Restructuring the US Two-Party System

For over a year I've been hypothesizing that the Republican party has doomed itself to disappear and that the Democrats would split to form a new, more reasonable, two-party system for the US with the "blue dog" and centrist Democrats forming a centre-right party and the progressives forming a left wing party.

Here is a bit from a post by Brad DeLong that echos this viewpoint:

Well, the big bourgeoisie--the bankers--are really annoyed at Boehner. Interestingly, they are not so annoyed at Obama: they understand that he has not created this mess.

With any luck they will draw the lesson that, as Clive Crook put it in one of his few moments of courage, "the Republican Party… deserve[s] political annihilation" for this clown show, and shift their political weight over to supporting the Rubin wing of the Democratic Party.

I don't expect this to happen overnight, but I do expect the Republicans to be punished in 2012. It may take a new third party rising in the interim that lures the right wing of the Democrats to form the new opposition and recreate a workable two party system for the US.

Of course Obama would move to this new right wing party because "Mr. Change You Can Believe In" didn't bother to mention that he wanted to bring the right wing Republican revolution to the Democratic party. He needs to be leading a party that actually wants to follow him with his centre-right views.

Barack the Viking

Here's a funny bit from a post by Brad DeLong on his blog Grasping Reality with Both Hands:

When you capture a monastery, do you?

a. First loot, then burn.

b. First burn, then loot.

The correct answer, of course, is (a). Only Aethelraed Unraed says (b). A similar logic applies to jobs and the deficit. Do you (a) fix the short-run jobs crisis first and then tackle the long-run deficit problem, or do you (b) tackle the long-run deficit problem first and leave the short-run jobs crisis to wither on the vine until you get to it?

Barack Unraed appears to say (b).

It is utterly amazing that stupidity passes for "wisdom" in Washington. The Republicans have created a mirror world in which down is up and bad is good. They have diagnosed the "moral illness" of America and decided it is deficits and debts and have now prescribed the standard treatment: blood-letting, and lots and lots of it. So what if you kill the patient by draining him of blood, it is necessary in the eyes of God to make America a more "pure" place.

What I can't understand is why so many people are following the Pied Pipers of Republicanism over this particular cliff. Just 8 months ago these very same Republicans were assuring everybody that deficits don't matter, what really matters was the extension of the Bush tax cuts to create jobs even if that would add $4 trillion in debt over the coming decade. Now 8 months later, jobs are not important, what is really critical is to cut down the deficits and the debt.

Why can't people see the cynical political manipulation of the right wing nuts who run the "base" of the Republican party?

The most surprising thing to me is that Barack Obama would play along with this insanity. But I'm slowly learning that Obama, despite his Ivy League education and gold-plated credentials, is a fellow traveler of the centre-right craziness. Apparently he has always been a fiscal conservative. How can a "community organizer" ever decide that satisfying bond holders and antediluvian gold bugs is more important than growing the economy and creating jobs for the unemployed?

The Political Right Thumping on the Constitution

I love the political right in the US. They are certain about their facts even when they have no facts. They know their Constitution even when they have no clue what is in it. These people know they are right. Well they are. They are politically "right" but they are not right in the sense of being factually correct.

Here is a wonderful example from Brad DeLong in a post on his Grasping Reality with Both Hands blog:

Ian Millhiser and Scott Keyes:

ThinkProgress: GINGRICH: In the American system, if you read the Constitution correctly — this is why I wrote “A Nation Like No Other” — if you read the Federalist Papers correctly, the fact is the Congress can pass a law and can limit the Court’s jurisdiction. It’s written directly in the Constitution. The Federalist Papers, Alexander Hamilton promises, I think it’s Number 78, that the judiciary branch is the weakest of the three branches. There is no Supreme Court in the American Constitution. There’s the court which is the Supreme of the judicial branch, but it’s not supreme over the legislative and executive branch. We now have this entire national elite that wants us to believe that any five lawyers are a Constitutional convention. That is profoundly un-American and profoundly wrong...

What the United States Constitution says:

Article III:

§1. The judicial power of the United States, shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish. The judges, both of the supreme and inferior courts, shall hold their offices during good behaviour, and shall, at stated times, receive for their services, a compensation, which shall not be diminished during their continuance in office.

§2. The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--to all cases affecting ambassadors, other public ministers and consuls;--to all cases of admiralty and maritime jurisdiction;--to controversies to which the United States shall be a party;--to controversies between two or more states;--between a state and citizens of another state;--between citizens of different states;--between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects. In all cases affecting ambassadors, other public ministers and consuls, and those in which a state shall be party, the Supreme Court shall have original jurisdiction. In all the other cases before mentioned, the Supreme Court shall have appellate jurisdiction, both as to law and fact, with such exceptions, and under such regulations as the Congress shall make. The trial of all crimes, except in cases of impeachment, shall be by jury; and such trial shall be held in the state where the said crimes shall have been committed; but when not committed within any state, the trial shall be at such place or places as the Congress may by law have directed.

§3. Treason against the United States, shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort. No person shall be convicted of treason unless on the testimony of two witnesses to the same overt act, or on confession in open court. The Congress shall have power to declare the punishment of treason, but no attainder of treason shall work corruption of blood, or forfeiture except during the life of the person attainted.

What Alexander Hamilton wrote:

The Federalist #78: The complete independence of the courts of justice is peculiarly essential in a... Constitution... which... [limits] legislative authority; such, for instance, as that it shall pass no bills of attainder, no ex post facto laws, and the like. Limitations of this kind can be preserved in practice no other way than through the medium of courts... whose duty it must be to declare all acts contrary to the manifest tenor of the Constitution void.... Some perplexity... has arisen from an imagination that the doctrine would imply a superiority of the judiciary to the legislative power.... [E]very act of a delegated authority, contrary to the tenor of the commission under which it is exercised, is void. No legislative act, therefore, contrary to the Constitution, can be valid. To deny this, would be to affirm, that the deputy is greater than his principal; that the servant is above his master; that the representatives of the people are superior to the people themselves; that men acting by virtue of powers, may do not only what their powers do not authorize, but what they forbid.... [T]he courts were designed to be an intermediate body between the people and the legislature, in order, among other things, to keep the latter within the limits assigned to their authority. The interpretation of the laws is the proper and peculiar province of the courts. A constitution is, in fact, and must be regarded by the judges, as a fundamental law. It therefore belongs to them to ascertain its meaning, as well as the meaning of any particular act proceeding from the legislative body.... [T]he Constitution ought to be preferred to the statute, the intention of the people to the intention of their agents.

Nor does this conclusion by any means suppose a superiority of the judicial to the legislative power. It only supposes that the power of the people is superior to both; and that where the will of the legislature, declared in its statutes, stands in opposition to that of the people, declared in the Constitution, the judges ought to be governed by the latter rather than the former...

I get a chuckle out of the political right in the US gloating over being "strict Constitutionalists". Yeah, sure. They don't even know what is in the Constitution. That doesn't stop them from being self-assured in their ignorance. They know what they think should be in the Constitution. And when they get elected they run roughshod over the Constitution because they "channel" what the Constitution should be saying and ignore the actual historical document.

That people are fooled by this idiocy is mind-boggling. The political right in the US is simply a bunch of hucksters who know they can treat the American people like rubes and get away with it. They know that by selling "family values" they can get elected and then they deliver tax cut after tax cut to the billionaires and millionaires, who then make sure bribes --- excuse me, "political contributions" -- flow generously to the political right.

Obama is Determined to Re-Create FDR's Mistake

The likelihood of a repeat of the 1937 recession within a depression grows day by day. Obama, like FDR, is convinced that balancing the budget is a sure cure for what ails the economy. But history shows that was a mistake. FDR didn't have the benefit if history, but Obama does. Sadly, Obama is willfully ignoring the lessons of history.

Here are some bits from an excellent post by Brad DeLong on Obama's fixation with the deficit and debt:

Barack Obama:

Transcripts: There are a lot of folks out there who are still struggling with the effects of the recession. Many people are still looking for work or looking for a job that pays more. Families are wondering how they deal with a broken refrigerator or a busted transmission or how they're going to finance their kids' college education, and they're also worrying about the possibility of layoffs. The struggles of middle-class families were a big problem before the recession hit in 2007. They weren't created overnight, and the truth is our economic challenges are not going to be solved overnight.

But there are more steps that we can take right now that would help businesses create jobs here in America. Today, our administration is trying to take those steps....

[T]here are also a number of steps that Congress could be taking right now on items that historically have had bipartisan support, and that would help put more Americans back to work. Many of these ideas have been tied up in Congress for some time. But, as I said, all of them enjoy bipartisan support, and all of them could help grow the economy. So I urge Congress to act on these ideas now.

Of course, one of the most important and urgent things we can do for the economy is something that both parties are working on right now, and that's reducing our nation's deficit...

No. No. No. No. No. No. NO. NO!!!!!!!!!

Absolutely the last thing, the last thing, the country needs is to cut federal spending or raise taxes in fiscal 2011, 2012, and it is now looking like fiscal 2013 as well.

Absolutely the last thing the country needs.

I always thought that smart people surrounded themselves with experts with a diverse range of perspectives so that they can weigh the alternatives and pick the best option. But Obama is deaf to Keynesian economics, the only economics that historically has been shown to get you out of a depression. It is becoming more and more clear that Obama will recapitulate every mistake of the Hoover/FDR administrations before he decides to address the real issue: the dearth of private spending caused by people being savaged by the Main Street effects of the Wall Street crash, the consequent widespread unemployment, and the loss of wealth by the house price collapse that makes them feel vulnerable.

Getting Perspective on the Little Depression

Brad DeLong had a debate with Jim Grant on a Wall Street Journal. You can see the video here.

DeLong has some comments on the debate which he has posted to his blog Grasping Reality with Both Hands. Here are the key points:

I must say I found spending six minutes with Jim Grant rather depressing...

I found it depressing because the major unfairness Grant focused on is that, because of the Federal Reserve, investors in money market funds can get only one basis point of interest. The 9% unemployed: they are not the victims. Those who cannot sell their houses because of the foreclosure overhang: they are not the victims. Those whose businesses crash because of slack aggregate demand call they are not the victims. The real victims are the rentiers who have a right to a nice solid well above inflation safe return, and from whom the Federal Reserve is stealing that right.

...

And I found what I could gauge of Jim Grant's worldview depressing as well. He seemed to be selling rentier-populist ressentiment. Grant's world is full of "takers"--and the Federal Reserve is helping them. And the biggest takers in Jim Grant's mind are the hedge fund operators of Greenwich, Connecticut. Why are they the biggest takers? Because they can borrow cheap, at low interest rates, and put the money they borrow to work making fortunes. If only the Federal Reserve would shrink the money stock and raise interest rates! Then the hedge funds would have to pay healthy interest rates for their cash! Then the profits would flow to the truly worthy: the rentier coupon-clippers now suffering with their one basis point yields.

Never mind what a policy of monetary restraint to "normalize" interest rates would do to the unemployed--and the employed--to the underwater homeowners--and the above-water homeowners--and to the bankrupt businessmen--and to the businessmen not yet bankrupt.

Other things I had prepared, but did not say:

A depressed economy with a slack labor market, low wages, and very low interest rates can be consistent with high asset values and ample corporate profits. But policies that produce such an outcome aren't policies for economic recovery. They are policies for class war. They are not in the public interest...

A too-strong dollar is not in the public interest: a too-strong dollar greatly increases the future chances of a major, major dollar crash that will produce a depression that makes today look like a day on the beach at Malibu. When the dollar is at a level where U.S. net foreign debt is growing unsustainably fast it is time to think about lowering it, not keeping it where it is or raising it...

Funny, the thinkers I pay attention to understand the on-going tragedy of the lack of response to the Little Depression. But they are shouted down by those who argue for the status quo, or worse, for an even harder turn to the political right with more tax cuts for the rich and more taxes on the bottom 90% along with the removal of pensions and government services, of entitlements and any effective measures to boost the economy. It is a great tragedy.

The Sorry State of the Economy

Brad DeLong has written an excellent article on the current economic situation -- the liquidity trap -- that the US finds itself in. It is written in a style accessible to everyone and everyone should read it. The conclusion is simple: the US needs more stimulus to get out of this current depression. Here is just a bit from that article:

But when rates become so low that there’s little difference between cash and short-term government bonds, open-market operations cease having an effect; they simply swap one zero- yielding government asset for another, with their hunger to hold more safe, liquid assets unsatisfied.

This is the liquidity trap.

In this situation we need deficit spending. The government spends and borrows, creating more of the safe, cashlike assets that private investors want. As these bonds hit the market, people who otherwise would have socked their money away in cash -- diminishing monetary velocity and slowing spending -- buy bonds instead. A large, timely government deficit thus short- circuits the adjustment mechanism, avoiding the collapse in monetary velocity.

Hicks’s conclusion: As long as output remains depressed and there is slack in the economy, printing more bonds will have negligible effect in increasing interest rates.

I had read Hicks. I even knew Hicks. But I thought that his era, the Great Depression, had passed. Sitting in my first graduate economics class in 1980, I listened to Marty Feldstein and Olivier Blanchard -- two of the smartest humans I am ever likely to see -- assure me that Hicks’s liquidity trap was a very special case, into which the economy was unlikely to wedge itself again. Yet it did.

On my shelf is a slim, turn-of-the-millennium volume by Paul Krugman titled “The Return of Depression Economics.” In it he argued that we mainstream economists had been too quick to ditch the insights of Hicks -- and of economists Walter Bagehot and Hyman Minsky. Krugman warned that their analysis was still relevant, and that if we dismissed it we would be sorry.

I am sorry.

Go read the whole article.

The great tragedy of today is that politicians around the world have turned a deaf ear to the lessons of the Great Depression and are busy recreating the same mistakes that turned the panic of 1929 into the Great Depression of 1929-1941, a lost decade (and in the case of Japan in 1989, the lost decades).

What I find despicable is that economists who should know better, but whose political views are right wing, are purposefully confusing policy makers by throwing out misleading and fundamentally wrong statements that simply muddies the water and allows the Andrew Mellons of today to call for:

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.

Guess what? Mellon's hopes were fulfilled. The American people went through the hell of the 1930s and of course the country became morally stronger for the experience. It was all worthwhile, right?

Funny how people with piles of money can be so "moral" about issues like high unemployment and people being thrown out of their houses. I think Jesus had some similar economic commentary, something about finding a mote in the other guy's eye while ignoring the beam in your own eye. Moral hypocrisy and bad economics have always been with us from time immemorial and getting a rich man into heaven is harder than getting a camel through the eye of a needle. Why? Because they are too busy lecturing us on the high moral value of "austerity". That and cornflakes are guaranteed to give you a sound constitution.

Understanding the Times You Live In

I find it hysterical that politicians in Washington beat each other up over "waffling" on their views. I always thought the John Maynard Keynes riposte was best: "When the facts change, I change my mind. What do you do, sir?"

Here is a post by Brad DeLong on his blog where he changes his mind:

Back in late 2008 people asked me: is this a recession or a depression? I said that I would call it a depression if the unemployment rate kissed 12%. I said that I would call it a depression if the unemployment rate stayed above 10% for a year.

Neither of those has come to pass. But the unemployment rate has kissed 10%, and has stayed at or above 9% for two years now.

So I am moving the goalposts. I am adopting a suggestion in comments of Full Employment Hawk. Henceforth, I will call the current unpleasantness not "The Great Recession," but rather "The Little Depression."

That is tragic. The "Great Recession" has become "The Little Recession" mainly because Obama is a fiscal conservative unwilling to do the kinds of fiscally stimulative acts -- like a WPA, big infrastructure projects, and standing up to the Republican party -- that were required to change the arc of history.

The current US situation is bad. Here is Obama's former Chairman of the Council of Economic Advisors, Christina Romer:

The past two and a half years have been simply wretched for many American families. At its worst, employment was down some 8½ million from its peak. Unemployment hit 10.1%. This truly has been the worst recession in the United States since the Great Depression.

...

The unemployment rate is still 8.8%. More than 13 million Americans are without a job. Six million of them have been out of work for more than six months.

There is a lot of talk about whether this is a jobless recovery. The truth is, this has been a somewhat “growthless” recovery. Job growth is weak because GDP growth is weak. Aside from just a few quarters, GDP growth has been at or below its trend rate of growth of about 2½ percent. We just learned last week that GDP grew at only 1.8% in the first quarter of this year.

In brief, this is The Little Depression.

The US Debt Ceiling

Here are some bits from a post by Brad DeLong on his blog. They give some insight into the "situation" that will arise when the US government hits the debt limit:

Tim Geithner begins to disinvest the Social Security Trust Fund. As FICA taxes come in, the Managing Trustee of the Social Security Trust Fund (Tim Geithner) asks the Secretary of the Treasury (Tim Geithner) to sell him some government bonds in exchange for the cash, and the Secretary of the Treasury (Tim Geithner) says: "No. I can't." The Secretary of the Treasury (Tim Geithner) takes the cash and uses it to cover the U.S. government's other obligations. The Secretary of the Treasury (Tim Geithner) tells the Managing Trustee (Tim Geithner) that because congress has not raised the debt ceiling he cannot sell the Social Security system any bonds. The Secretary of the Treasury (Tim Geithner) then puts a sign on the front of the Treasury lawn with a continuously-updated number on it: "Because congress has not raised the debt ceiling the Social Security Trust Fund has lost $x billion dollars."

All this "Tim talks to Tim" shows that the legal niceties are completely obscure and ridiculous.

And this bit shows that the whole thing may be just a charade:

Tim Geithner announces that by law he is required to spend money on appropriations and entitlements--that he is not allowed to impound--and that there is not enough coming in in tax payments to both do all the spending he is legally required to do and to pay back the debt of the United States as it matures. In the absence of the 14th Amendment, he says, he would be required by law to default on the maturing debt. But, he says, the 14th Amendment forbids him to default. In order to take care that the laws be faithfully executed, therefore, even without explicit congressional authority to do so, he must borrow on the full faith and credit of the United States in order to completely (a) meet his spending obligations, and (b) honor the debt of the United States of America. He begins selling more bonds...

DeLong concludes that Constitutional amendments will override the law setting a public debt limit:

The Treasury Secretary's argument would be that the debt in excess of limit issued is required in order for him to faithfully execute the appropriations bills, and that the 14th Amendment makes the debt in excess of limit full faith and credit obligations of the U.S. government in spite of the limit in §3101(b). The excess bonds are not authorized by §3101 and §3102. But they are authorized by the 14th Amendment.

My personal view is that the US government will go through a "shutdown" with monies stopped and lots of wailing and gnashing of teeth. But before that circus really gets going, the financial markets will have gone ballistic with institutions (forced by their mandates and "fiduciary responsibilities") dumping US government bonds by the boatload sending financial markets into a free fall and bond rates soaring up to the 30% rate that Greece is now paying on its newly issued bonds.

What will be interesting is when the Republicans back off and say "we were just joking around, here, we'll sign the new debt limit" and watch to see if the financial markets (1) quickly recover to conditions before the panic or (2) whether they continue in shell shocked territory and the US goes into Great Depression 2. I'm guessing that the truth with lie somewhere between these two extremes.

What I find completely unacceptable is that any major political party would flirt with the idea of destroying their own national economy to make a "political point". To me that is grounds for arresting them all as traitors and stringing them up on the first available lamppost. It is complete idiocy.

For those who do not think that governments can commit suicide by idiotic political stands, I have some Confederate Bonds I'm willing to see you... cheap!

Click to Enlarge

Brad DeLong Offers a Religious Lesson

Funny. Brad DeLong is a University of California Berkeley economics professor, but here in his blog he is giving a religious lesson. And, he does an excellent job!

It really looks as though originally the God YHWH had a wife: Asherah, Queen of Heaven, She Who Treads the Sea. We see her as late as the time of Jeremiah:

Seest thou not what they do in the cities of Judah and in the streets of Jerusalem? The children gather wood, and the fathers kindle the fire, and the women knead their dough, to make cakes to the Queen of Heaven!

Jeremiah does not like this.

He and his theological allies changed Judaism, ripping YHWH's wife out of the religion: no more Queen of Heaven. (Later on the Yeshuan Heresy was to bring the Queen of Heaven back, kinda-sorta, but that is another story...)

Now comes Jeffrey Goldberg continuing his snitfest against Alison Benedikt, this time for daring to alter the Haggadah:

Who is the Wicked Son?: Benedikt linked, in this repellent rebuttal, to an Amazon page featuring all manner of Haggadot, ostensibly to prove that all sorts of people write their own seder service. This, of course, is true, but what people generally don't do is "delete" the unpleasant bits. They explain and analyze them, but they don't delete. I wanted to make sure I was correct in thinking that Benedikt was doing something un-Jewish by deleting sections of the Haggadah...

Seems to me that it is the essence of all religions to change over time. It is what they do...

Sadly, religious traditionalists (and even more strenuously religious fundamentalists) don't understand the very nature of their own religions, i.e. they are an expression of a people's understanding cast into a religious experience, i.e. text, services, traditions, pageantry. And as such, they are bound to change as the community of religious believers change and as the society around them changes and as the world around that changes. What evolutionary theory teaches is that to be static is to die. Life is a dynamic process. A living religion is a dynamic process.

I'm 100% behind Allison Benedikt when she stands her ground and affirms her shaping of her own religion: "I am Jewish, you mother fucker. And I'm not unique." That is the perfect reply to somebody "standing on authority" and trying to define her. She will define herself. That is what people and communities have done throughout history!

I like the viewpoint of Rabbi Andy Bachman. Here are the key bits:

The cyber-argument that is taking place at Goldblog, between Jeffrey Goldberg of the Atlantic (and soon Tablet) and Village Voice editor Allison Benedikt, presents two classic symptoms of the current problem about American Jews talking about Israel.

Allison's original piece, "Life After Zionist Summer Camp," appeared in Awl and you can read it here.

Jeffrey responded to the piece with his own take, calling it "Giving Up on the Zionist Dream." You can read it here.

...

The Sages have another teaching on the number 4 that is worth remembering. At Sukkot, the holiday that commemorates our Exodus from Egypt and journey to Freedom in the Land of Israel, we are commanded to hold in our hands 4 species--a lulav (which produces sweet dates), myrtle (a sweet fragrance), an etrog (fragrance and taste) and willow (which has neither taste nor fragrance.) One represents the Jew who learns; another is the Jew who does good deeds; a third is one who learns and does good deeds. And the 4th -- the willow -- does neither. But we hold all 4 together because we are diverse and most strong when we are united.

I see Bachman's view as that of a healthy dynamic that stresses unity within the community in accepting divergent viewpoints. That makes for the strongest community and it means they are more likely to already incorporate the variants which most successfully will adapt to the future.

By the way, for those not in the know: the "Yeshuan Heresy" is Christianity and DeLong is hinting that the Queen of Heaven has been resurrected in the image of the Holy Mother, Mary.

My only complaint about DeLong is that he doesn't always take time to make sure everybody can understand his arguments. As a "prof" he is given to erudite statements that fly over the heads of the unwashed. But how will the unwashed become washed if nobody stops to lend them a towel and a basin of water?