Monday, March 31, 2014

Bruegel and the "Dismal Science" in Detroit

There is a cool Bruegel, "The Wedding Dance" (1566) hanging in the Detroit Institute of Arts. For now, anyway.

 The museum paid $35,075 for the painting in 1930, or about $2.1 million in today's dollars. According to the auction house Christies, today it would fetch $200 million.  

As it happens, Detroit is bankrupt.  Creditors would dearly love to put their fingers on this Bruegel.  Should they? And to what lengths should the city go to avoid this fate?  Economist Robert Frank examines the question.  

This is offensive to some.  Here's an email I received from Sandy Zirulnik, one of my retired friends:  
The author is ROBERT H. FRANK, an economics professor at the Johnson Graduate School of Management at Cornell University.  Applying science in a stupid way to come to a ridiculous conclusion [sell art; build schools], in my humble opinion.....How many economists does it take to screw a light bulb?
 I’m not attacking science, I am disappointed that nonsensical thinking masquerades as science.  This article is embarrassingly idiotic.  Shame on the author, shame on the NY Times for printing this drivel, shame on Cornell for giving this guy a job title.

Should the museum () do a calculation and say “we can better spend the money on street lights”?  This misses the point.  The Breugel painting, which I have seen many times, was not acquired by anyone for $200 million.  It may be worth that on the open market, but it is not on the open market.  The museum is lucky it owns the work free and clear.  Just because someone might pay that kind of money for it does not mean that the “people”, who own the painting, should sell it. 
The theory that you can or should apply a cost/benefit analysis to artworks, especially publicly owned artwork makes no sense.  What is a ticket to a Barry Manilow concert worth?  Whatever someone will pay.  Should all art museums have "maximum high value" prices set for all of their artworks and sell when they hit that value?  That may apply to Dollar Stores, but not to cultural assets, which  are - as they say in the MasterCard commercials - "Priceless", which literally means no price.  Otherwise all such assets wind up belonging to the world's superrich because the people abdicated.

Visit the Dollar Store Museum of Art - Nothing over $0.99.
Well, they don't call it the dismal science for nothing!  But, of course, cost/benefit is one of the things economists spend their time thinking about.  It can be a pain in the ass because (bother) every time some economist raises a cost/benefit question like this, we've got to rack our brains about it.  It's like when GM did cost/benefit analysis on the Pinto gas tanks?  Really? Did they have to?  Some things in Detroit are just best left unexamined. 

I'm not offended by the question.   Although the city didn't pay $200,000,000 for this painting in 1930, the city is in bankruptcy and must consider shelling out—or someone must shell out on its behalf--$200 million today for the city to preserve the painting. [Or so I'm assuming for present purposes]

In light of that, it seems not inappropriate to ask whether this is the best use of $200 million for the city of Detroit right now.  The same question might be confronted by a philanthropist who wants to do some good.

I do like that Bruegel, and I would like to go see it some day.  It may not be sound cost/benefit analysis, but like my friend Sandy, I'm hoping Detroit gets to keep it's Bruegel. 

Thursday, March 27, 2014

The Depressing State of the ACA and Hobby Lobby Fish Vouchers

I haven't delved into the Hobby Lobby cases.  As they say, "it's complicated."  

But here is Sandy Zirulnik's satirical take: 
"In a close decision today, the US Supreme Court approved a plan by Hobby lobby to compensate employees with fish vouchers rather than cash.  The company owners claimed that their religious beliefs prevented them from giving employees monetary compensation which might allow individual employees to purchase items that violated the company owners religious convictions. 
The Supreme Court accepted the argument that company owners' religious beliefs can lead to a corporation's religious beliefs and can further lead to the religiously-based compensation that a company may pay employees.  Hobby lobby compensated employees with envelopes containing vouchers for flour, spaghetti and water as well as fish protein. Hobby lobby in their arguments said "we cannot have our employees buying, condoms, pork, Health insurance, or other religious items in conflict with our tenants"
I think this is funny because, duh!  It's good satire because it's right on the correct line and asks us to think about what the line means. But there is a difference, of course, between an employer paying workers with cash that might be used to purchase birth control, and an employer being forced to provide a health plan that provides birth control coverage.  It's true that in both cases the decision to use birth control is up to the employee; however, forcing the employer to purchase coverage for birth control is a bit like the employer being forced to purchase condoms and hand them out at staff meetings.  The condoms may, or may not be used, but it does clearly impinge on the employer's "birth control is immoral" stance.  

If you want to read more, here is Eugene Volokh 
describing the lay of the land.  Volokh is a right winger, but sober 1st Am expert at UCLA,  

Marty Lederman at Balkanization,  a Yale liberal law blog, did a whole bunch of posts on Hobby Lobby a while ago.  

Finally, here is Gerrard Magliocca in a very pessimistic mood about the state of ACA in toto.  

Tuesday, March 25, 2014

Pouring Olympic Billions into the Black Sea Like so Much Snow Melt, and Other Irrationalities.

Russia just spent $51 billion on the Sochi Olympics.  Considering the U.S. economy is six and one half times larger than the Russian economy, this is like the U.S. having spent $300 billion on the Salt Lake City Olympics, the equivalent of 3,750 $80 million hospitals, or 40 new San Francisco Bay bridges ($7.5 billion each), or employing 3.75 million teachers for a year!
  • Salt Lake City Olympics $2 billion
  • Vancouver Olympics  $6.4 billion
  • Sochi Olympics $51 billion
Annexing Crimea is not designed to make the most of this investment.  For starters, Sochi was to be the destination for a G-8 Summit this summer. This now won't happen; Russia is no longer in the G8. No, annexing Crimea will not help develop Sochi as an international resort spot.

What Kimberly Marten Fears

Kimberly Marten is a political scientist with Russian expertise at Barnard College.  She spoke with Terry Gross.  Here's her fear.  Putin seems to be throwing his lot in with the ethnic nationalists. This is not a reasonable, or rational, or trivial thing to be doing. It means Russia's actions may not be predicated on rational self-interest in the near future.  Marten fears it is possible Russia will invade Eastern Ukraine and march to Moldova to "protect" the Russian population there, and to occupy Odessa while they are there. Marten does not think this would necessarily provoke a NATO response, but she fears it might result in a Ukrainian insurgency, supported by Poland.  A Ukrainian insurgency supported by Poland, a NATO member, might eventually drag in NATO.

How much deterrence is required to dissuade an irrational, ethnic nationalist power from acting against its own self-interest? Let's not ask John McCain or Mitt Romney.

Russia is Not an Economic Superpower

Today, the economic Superpowers are the EU (~$17 trillion), the U.S. (~$16 trillion/year), China (~$8 trillion/year), and Japan (~$6 trillion).  Russia is not in that club.  When you think Russia, think California, or Canada with four times the population. Russia cannot easily afford to pour $51 billion into the Black Sea like so much snow melt. 
  • Russia GDP  2.55 trillion/142 million pop.
  • California      1.8 trillion/38 million pop
  • Canada         1.5 trillion/35 million pop
  • USA             16.8 trillion/313 million pop
  • China             8 trillion/1.35 billion pop
Russia’s economy is barely growing, inflation is rising, and capital is pouring out of the country. It is the only major country to have lost population the last few years. Annexing other countries, they just acquired ~2.3 million with Crimea, is no way to fight that trend. Inflation is expected to reach 6.9-7.0 per cent in March, up from 6.2 per cent in February. 

Economists predict that Crimea will be a drag on Russia's economy for the foreseeable future, to the tune of  $3 billion per year, which is not an insignificant number in light of the fact that Russia's annual budget is approximately $500 billion, about 15 percent of the U.S. Budget of $3.4 trillion.
  • Russian Budget  $500 billion/2013
  • US Budget        $3.4 trillion/2013

Russia is Not a Military Superpower 

The U.S. annual military budget is $680 billion, the EU military budget is about $274 billion, China's military budget is $166 billion (and growing), ....Russia's military expenditures are ~$91 billion. This is not paltry but no match for NATO's military expenditures which are more than 40 percent of Russia's budget!  

How Much Deterrence?

NATO is not treaty bound to defend Ukraine. Neither the U.S. nor the EU have substantial economic interests that would justify going to war over Ukraine, notwithstanding the fact that Russia is not a match to NATO militarily.  However, any signs that Russia might move into Eastern Ukraine, not to mention moving towards Moldova and Odessa, would put tremendous pressure on NATO and U.S. decision makers to intervene. Such pressure might cause them to intervene in ways that are not, strictly speaking, in the EU or U.S. best interest.

Michael Shear and Peter Baker in the NYT today remind us of some of that pressure:
Mitt Romney, Mr. Obama’s 2012 presidential challenger, made clear his own assessment during the campaign, saying repeatedly that Russia was America’s “No. 1 geopolitical foe” and arguing that Mr. Putin’s aggressive stance demanded a similar response from the American president.
.... In recent weeks, as Mr. Putin’s forces rolled through Crimea with little regard to warnings by Mr. Obama, Republicans have said Mr. Romney has been vindicated, and Mr. Obama proved wrong. In February, Senator John McCain of Arizona, Mr. Obama’s 2008 rival, called him “the most naïve president in history.” 
After Russian troops began taking control of Crimea, Sarah Palin, the Republican Party’s 2008 vice-presidential nominee, took credit for predicting it. “Yes, I could see this one from Alaska,” she wrote on her Facebook page. “I’m usually not one to Told-Ya-So, but I did, despite my accurate prediction being derided as ‘an extremely far-fetched scenario’ by the ‘high-brow’ Foreign Policy magazine.”
And Sunday, on CBS’s “Face the Nation,” Mr. Romney echoed Mr. McCain’s assertion that the president had been naïve about Russia. “His faulty judgment about Russia’s intentions and objectives has led to a number of foreign policy challenges that we face,” Mr. Romney said. “This is not fantasy land. They are not our enemy but an adversary on the world stage.”
So far, Obama is holding his cool and it's a good thing.
“My response then continues to be what I believe today,” he said, referring to his answer to Mr. Romney in 2012. “Which is: Russia’s actions are a problem. They don’t pose the No. 1 national security threat to the United States. I continue to be much more concerned when it comes to our security with the prospect of a nuclear weapon going off in Manhattan.” 
.... In the weeks ahead, Mr. Obama may face more criticism as the confrontation between Mr. Putin and the Western nations continues with no end in sight. But Mr. Obama’s aides have made clear that they have no intention of letting Mr. Romney or Mr. McCain succeed in painting the president as doe-eyed in the face of a harsh reality.
Benjamin J. Rhodes, a deputy national security adviser to the president, said, “Well, look, we’ve been very clear-eyed about our Russia policy from when we came into office, which is that we will cooperate when we have common interests and we can form common positions, but we’ll be very clear when we have differences.” 
Let's hope that scenarios of escalating irrationality remain a poltergeist of wars past, and that Russia will regain its footing to act in its rational self-interest. Let's hope the Russian oligarchs who want to make money win out over the Nationalist Russ spoiling for a self-destructive fight with ethnic minorities and the West. Let's hope the U.S. and NATO continue to act in their rational self-interest and reject those who would counsel to take Putin at his irrational worst and raise the ante with F-16s in Poland, an aircraft carrier battle group in the Black Sea, and red lines that threaten war.

Give those boys a Trombone

Sunday, March 23, 2014

Finding Shards of Light in the San Francisco Arts Scene

Friday night we discovered a new (to us) San Francisco arts venue: Intersection for the Arts. Established in 1965, ITA pioneers the intersection of art, community, and development, and they attempt to bring people together across boundaries.  Through April 6, they are presenting Aaron Davidman's one man show "Wrestling Jerusalem." For 82 minutes Davidman, a Berkeley native, captivatingly relates his personal quest to come to terms with Zionism as well as the perspectives of diverse characters he's met on all the familiar flash points in the Israel/Palestine conflict.   The ITA's intimate performance space in the San Francisco Chronicle building at 5th and Folsom seats about 75 as configured for this show.

Davidman wraps his play around a Kabbalist story found in the Zohar of the divine light that breaks the  bowls wherein it was contained in the void, scattering shards throughout the world.  

Alexander Gorlin, an architect, looked to this story for inspiration when he was commissioned to design a  Synagogue in King's Point, New York.  He collected his efforts in a book: Kabbalah in Art and Architecture.  Here is Gorlin elaborating on the story in Architizer, a web site that highlights architectural projects from around the world:
In an effort to explain the apparent disorder and chaos of the world, great Kabbalist Rabbi Isaac Luria of Safed, Israel, … in 1570 [spoke of ]… “breaking of the vessels.” The ten glowing vessels in the void eventually cannot contain the Divine light flowing into them, so they explode, breaking into myriad shards. 
In the Kabbalah, the shattering of the vessels is part of the cycle of creation and destruction that began long before this universe. … In Judaism there is a long history of broken things, such as Moses breaking the first set of Ten Commandments and the destruction of the first and second Temples. In the Book of Isaiah, it was written: “And he shall break it as the breaking of the potter’s vessel that is broken in pieces; he shall not spare: so that there shall not be found in the bursting of it a shard to take fire from the hearth, or to take water with out of the pit.” 
 Like the Big Bang theory of the beginning of the universe, these containers shattered, and their contents spilled helter-skelter into the void. One Kabbalistic theory is that the light of the vessels was unstable, combining good and evil in a volatile mixture that blew up. This idea contends that the first emanation of the Divine light was a means for God to purify himself of the evil that was mixed in with the good. Evil is therefore construed to be an original part of the Divine, and was released when the vessels broke. In the Book of Isaiah 45:7. God says: “I form the light, and create darkness: I make peace, and create evil: I the Lord do all these things.” 
 As with everything in the Kabbalah, nothing is simple, so of the ten vessels of light, which correspond to the ten Sefirot, the upper three, being stronger, did not break. The lower seven bowls were completely shattered. Clinging to the broken shards, klipot, are sparks of the light left over from inside the bowls. These precious sparks are to be gathered and restored to their original place, higher in the cosmos. A broken world that must be repaired, or tikkun, is a Kabbalistic theme that that has reverberated throughout the centuries. And it is especially current today.
The shattered shards of light are an appropriate metaphor for Davidman's tale of fractured peace.  On the next two Thursdays there will be a discussion with the playwright following the performance; following the Sunday matinees, The New Israel Fund hosts a post play "Peace Cafe."

Check out Davidman's show if you can, or keep on the lookout for an upcoming event at Intersection for the Arts.

Thursday, March 20, 2014

Reflections on Charging Paul Ryan with Racism

Paul Ryan, Romney’s pick for vice president in 2012, has been castigated in my Facebook feed today.  The charge is racism.  Ryan spoke of how there’s a problem with “inner city culture:” people there lack the Protestant work ethic; if they would only apply themselves!  He was called out for this because “inner city culture” was an obvious reference to inner city Blacks.  His defense is, basically, “It’s a serious point, I’ve been making it for years, and it’s not race based.”

Is it racism? 

Ira Katznelson has a review in the current NYR of Gavin Wright’s book: Sharing the Prize: The Economics of the Civil Rights Revolution in the South.  Apparently in the late 1940’s and 1950’s prominent liberal economic scholars believed that racism in the South would decrease as the economy prospered. They did not think major federal legislation was needed to bring about change, or that it would help. They thought change had to come at the local level and that people in the South would follow their economic self-interest and liberalize. 

In hindsight, these liberal economists were correct about the economics:  the end of segregation, improvements in Black education, and improved economic opportunities resulted in economic improvement across the board—for Blacks, poor Whites, economic and social elites alike.  It’s clear in hindsight that broadening economic opportunities, wage equality, and social equality did not work to anyone’s disadvantage.  But these liberal economists were wrong about human nature.  The South Politicians and the poor White Man (Dylan) did not correctly perceive, nor follow their economic self-interest.

Southern Whites in the 50’s did not believe that desegregation, social justice, and giving up on racism would lift all boats.  Also, they truly were united in their racism.   They believed and preached, as Dylan put it: “You’re better than them, you’ve been born with white skin.” And they thought equality would hurt them economically.  Prejudice was morally justified, and prejudice trumped reason. They actively worked to keep Blacks in a subservient, segregated position, without opportunity or rights.  The civil rights revolution was imposed on the South top down, with Federal legislation, the courts, the Army, and Freedom Riders.  The result has been good for the South; they just didn’t know it.  And, of course, from a civil rights standpoint, we didn’t care. The point of Wright’s book is that without this outside pressure, nothing would have changed, ever.

But things have changed. Ryan and his Tea Party constituency are not racist in this old way.  For one, and this is important, they don’t attempt to justify holding “lazy inner city moochers” in their place based on racist arguments.  The argument is reversed:  these people are just like us, and they have no excuse not to apply themselves, pull themselves up by their bootstraps. Ryan and his cohorts are not actively working to keep Blacks, Hispanics, or any other minority from advancing with racist policies or arguments.  Nor do they seem to begrudge inner city Blacks success.  Ryan genuinely wants them to do better.   

So what accounts for the refusal to help?  Ryan and a broad constituency on the Right are against raising the minimum wage, against expanding early childhood education, against encouraging union power, against expanding healthcare rights, against doing something meaningful to make healthcare affordable, making a College Education universally affordable, and they want to cut food stamps, welfare, unemployment, and other social welfare programs. 

What’s that about?  They make arguments that we can’t afford it, and that it enables loafing and slacking, discourages work and moral fiber.  These arguments appear factually mistaken, just like the fear of the old White guard in the South that providing opportunities for Blacks would hurt them economically.  They were wrong then, and I think the Right is wrong about the effect of raising the minimum wage, making health care affordable, making a quality education free, and the rest.  But those are factual arguments and one should keep an open mind. 

The danger of yelling “racist” when Ryan says there is a problem with inner city culture, is that we stop listening to the arguments made.   We stop engaging. When we cease to engage, we are apt to misunderstand each other.  It’s true that we all have proclivities, preconceptions, inclinations, and prejudices we may not be fully aware of, and that we create and make arguments to fit those proclivities, preconceptions, inclinations, and prejudices.  But when someone is making an argument, it’s the quality of the argument that matters, it’s the evidence that matters…it’s not the proclivities, preconceptions, inclinations, and prejudices that matter. 

Friday, March 14, 2014

"[I]n the gilded mirrors of the Kremlin, Putin glimpses his reflection and struggles to avert his eyes: a small man with six-pack abs...."

Roger Cohen in the NYT.

Cohen continues to beat the war drums.  And I wish he'd stop it.  The abs of steel metaphor serves to highlight how far wrong Cohen is on this.  Although Putin may see abs of steel when he looks in the Kremlin mirror...he is, in fact, flabby like a typical 61-year-old ex-jock.  And he sits on a horse like a sack of potatoes.

This much is useful:
The Russian president’s vision of a revived imperium developed around four pillars. The first was military (the liquidation of Grozny, Abkhazia and South Ossetia in Georgia, and now the drive to annex Crimea). The second was political (drawing the countries of the former Soviet Union into an autocratic Eurasian Union). The third was economic (Russian gas as a tool of coercion and oligarchs’ money as suasion from Berlin’s Kurfürstendamm to London’s Knightsbridge). The fourth was cultural (a heady blend of Orthodoxy and autocracy as expressions of Russian purity and strength against the nihilistic decadence of Europe and the United States).
 This bit, not:
The culmination of this process sees Putin the bare-chested muscleman of the Siberian outback pitted against America’s languid leg-crossing law professor and the pastor’s methodical daughter in Berlin. Neither of these leaders of the West (whose feelings for each other are cool) will utter of Crimea those four resonant words: “This will not stand.” 
Putin notices this unuttered sentence. He notes the flaccid body language in the White House, the post-modern man’s teleprompter, the bloodlessness of the liberal realism emanating from the Oval Office. He hears the Kremlin phone ring and mutters, no, not Angela again, with her reasonable pleas. Germany, unified by America but nullified by it too, was far better when there were two of them.
The vision of revived imperium, Putin attempting to salvage what he can from the Soviet Empire, seems right. That Putin has always been thus, also seems right.  Which just means to say it has nothing to do with weakness of the West.  The West will not go to war over Crimea, or the eastern Russian speaking parts of Ukraine, even if George W. Bush and Dick Chaney were still in the White House, and everyone knows it. So I wish Cohen would stop implying that we should.

This is not like Hitler's Anschluss of Austria--which was precursor to an invasion of the Sudetenland, Poland, France, Africa, and Russia in pursuit of mad ideology.

This is more like the U.S. annexation of Texas in 1845.  Russia has to fight for its soul, but that fight will not be determined by what happens in Ukraine, and we will not help Russia to liberalize and respect the rule of law by goading our leaders to man up and fight.

Thus far Obama and Merkle are playing this exactly right.

Saturday, March 8, 2014

Putin, Crimea, David Michaels, and John Searle in Moscow

David Michaels has produced the Olympic figure skating program for NBC television for many years.  In his capacity as a sports producer he has visited Russia since the waning days of the Soviet Empire.  He has a fondness for the people.

He shared his observations during the Sochi Olympics on a personal blog.  He's a warmhearted guy, and he's optimistic, depending on the Olympic moment, that Putin will be a passing phase; that the people will overcome, leave Putin behind, and Russia will rise as a modern democratic republic.  

Paul Mason (British journalist) is not so sure
Where we are right now [in the wake of the Crimean Occupation] is the result of a huge failure of diplomacy. If we attribute that failure to the west – Nato, the UN, the EU – it is because Putin’s diplomacy is transparently based on force and injustice. The jailing and later tactical pardoning of political opponents; the use of polonium to poison dissidents; the assassination of troublesome journalists – Putin has made no pretense of observing the rule of law.
Mason, alludes to the lead up to World War I.  He's not alone.  Military occupations by strong opponents are apt to make people lose perspective and say stupid things.  He seems to agree with Roger Cohen of the New York Times, usually a reliable and cool-headed analyst, but not here, that the West showed weakness towards Russia on Syria, gave a green light to Putin to invade Ukraine, and that it's all apt to lead to another global armed conflict.  Well, that's nuts .... as is their innuendo that "We should have bombed Syria", or "We should be ready to send troops to Ukraine."  

Cohen is looking at this through the lens of the holocaust, which can lead to distorted thinking; I don't know where Mason is coming from. 
I just finished reading Christopher Clarke's nuanced and wonderful book, The Sleepwalkers, How Europe Went to War in 1914, about the 30-year or so lead up to World War I.  It's depressing.  Such a huge tragedy; you see the train wreck coming from miles away...if only the engineers had known  (16 million dead, another 20 million injured--and likely, if World War I didn't happen, World War II and it's 60 million dead would not have happened either).  The Russian occupation doesn't feel anything like the lead up to World War I (or III). 

Frankly, Crimea is simply nothing to get that excited about.  Ukraine, like Russia, is run by Oligarchs who (like Oligarchs everywhere) did not acquire their economic empires through long hard work.  In this case they were in the right place at the right time, and had the right mix of criminality, venality, ambition, and skill to collect the spoils of the Soviet Empire as it was dismantled.  Whether Crimea is nominally a part of Ukraine, or Russia, is not so momentous. 

It does matter, a lot, to discourage this armed occupation because nationalist states expanding their territory through force is dangerous stuff.   The Chinese are paying close attention, and would be happy to follow suit in annexing minor islets and rocks in the South China Sea, along with their fishing and mining rights.  Not to mention Taiwan.  It's no way to behave.  

We have tools to discourage such behavior.  I found Peter Beinart's analysis, and others (no originality here), persuasive:  Oligarchs in a world economy are vulnerable to economic sanctions.  They are vulnerable to having their assets frozen. They do want and need to travel.  Human rights does play a mitigating role.  Russia has a stock market, and oligarchs do not like plunging stock markets.  These are tempering influences. 

Putin may not be "presidential", as we might say about Rick Perry, but he's less naive and innocent than Kaiser Wilhelm and his cousins in 1914.  

I'm an optimist, along with David Michaels.  This morning I watched an interesting interview with John Searle, a philosopher of mind at UC Berkeley.  It's not clear when this interview happened, looks like sometime in 2013.  It takes place at the Moscow Center for Consciousness Studies.  The Center flew him to Moscow, set him up in a room with a couple I-phone cameras, and two Russian philosophers asking knowledgeable and respectful questions.  Searle is loving it.  This shows off the Russians in their best light.  Non-commercial, earnest, engaged with the world and its problems in a non-political, non-confrontational manner.  

With people like that and a good bottle of vodka there is hope.   The pictures from Kiev, the interviews with people on the street in Sevastopol, they show that these people have interests we can recognize.  Like us, they have their oligarchs and political divisions to deal with.  There is no reason to bomb anyone, or to get too emotional in our responses.  There is lots of reason to help out, continue to engage, and strive to make the world a better place as best we can.  It's approximately what the West is trying to do with its muted response.