Fellow economists, we’re mostly to blame for this mess

Brexit, Trump. We built the world that let extremism thrive
This is on us

This is on us

Dear world, on behalf of economists I offer an apology. More than anything or anyone else, we are responsible for the clusterfuck that has been 2016.

Since the 1980s we said that inequality didn’t matter. That working and middle class people would be fine if their incomes didn’t worsen even as those in the top 10% (and especially 1%) saw their own income and wealth skyrocket to levels not seen since the Gilded Age. We did not see that people did not view their lot in absolute but in relative terms. We expected them to accept our logic, and acted dumbfounded when they didn’t express gratitude for the few tiny drops of prosperity that trickled down. We never imagined that they’d be rightfully pissed. Then we blamed them for living beyond their means to catch up with the Joneses, for being irresponsible for maxing their credit cards and taking out mortgages on houses they couldn’t afford. We never saw inequality as a psychological problem as much as an economic one.

We called anyone who disagreed a socialist.

Around that same time, we said that free markets were a panacea for growth. True, many countries did benefit heavily from globalization and certainly those countries that did not follow certain basic rules of market logic have fared terribly (Venezuela being a case in point). But globalization was not a panacea for the working and middle classes of the developed world. In our smugness, we said that the lost jobs either to China, Mexico, or technology were a necessary evil for continued productivity growth. We acted like it was their fault that they did not have the skills needed for the new economy, and that it was nobody’s responsibility to find them those skills either. In the dog eat dog world of neoliberal economics there are losers, and we could afford not to be those losers becomes economists are still not being outsourced to India or replaced by robots so we had little empathy for those who were less lucky. We applauded that unemployment fell and didn’t care that it was because people lost stable, salaried jobs and became self-employed with zero benefits. We cared more about the Dow Jones than the Gini index.

We called anyone who disagreed a socialist.

We also assumed that everyone was rational. We even had a name for this species of humanity that always took decisions based on all available information, weighed all options, and picked the one that maximized their utility: homo economicus. Since we thought psychology, sociology, and all the other social sciences were inferior disciplines because they could not prove their hypotheses with econometrics, so we never bothered to accept their insights into human behavior. The result is that we thought markets were self-correcting, industries were self-regulated, and markets punished those who took decisions against the public interest. We saw the “irrational exuberance” of the dot-com bubble and then did nothing when a bigger bubble, the subprime housing bubble, sprung up almost immediately after the first one popped.

We called anyone who disagreed a socialist.

And finally, we assumed we had all the answers. We took the view of Noble laureate Robert Lucas that the “central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades”. This was just five years before the global financial crisis. We also poisoned the minds of politicians, who adopted our elegant yet simplistic neoclassical view of how the world worked. We flooded bookstores with titles like Freakonomics and The Economic Naturalist: How Economics Explains Everything to educate the masses on why we knew better. We were conceited, arrogant, and frankly, fucking annoying.

We called anyone who disagreed a socialist.

Then on June 23rd we wondered how the British could be so stupid as to want to leave the EU. On November 8th we were even more perplexed on how Americans could be dumb enough to vote for someone like Trump. From our little intellectual ivory towers, the framework in which we understood the world was perfectly fine. We didn’t get that we didn’t get it.

And now with the twin shocks of a global crisis in 2008-09 and a political crisis in 2016, our world has been shattered. Probably irremediably. But we don’t know it yet. This will still be blamed on people (deplorable as they may be), rather than the structures that conditioned them to be that way. And we’ll be scratching our heads into oblivion by failing to understand why a laid off steelworker from Pennsylvania or miner from Yorkshire won’t be voting with rapturous joy for the man or woman who promises free trade agreements, minority rights, and open immigration in place of the only thing that really matters to them: dignity.

(The author wishes to note that he has stood against everything that has been criticized in this piece since his days as an undergrad. And if you think he is a socialist, well, you’re pretty much the type of person he wrote this for)

The Donald Trump fascist experiment

Think the Trump-Hitler comparisions are exaggerated? Think again
Look familiar?

Look familiar?

Is Donald Trump fascist?

The knee-jerk reaction by his opponents makes this an easy answer: yes. He has made borderline racist comments about Mexicans, black people, Muslims, and as the recently leaked 2005 Access Hollywood recordings have made all but clear, is an appalling sexist as well (although this was pretty obvious back when he said he would date his own daughter who by his own admission is “a piece of ass”). But his defenders would cringe at the idea that he is an American Hitler. Hitler, after all, killed 6 million Jews (among millions of others) and launched a world war. Yes, Trump is a bully, a sleazeball, and a demagogue and seems to not care much about institutions as evidenced by his wanting to jail Hillary Clinton. But there is a pretty big gap between that and genocide. It’s kick the foreigners out, not murder them (at least yet).

Furthermore, even many people who dislike Trump feel uneasy by the fascist/Nazi/Hitler comparison. Godwin’s Law, for example, famously affirms that “as an online discussion continues, the probability of a reference or comparison to Hitler or Nazis approaches 1”. Indeed, the left (and also the right) uses comparisons to fascism, Nazism, and genocide to such an extent that in many cases they have pretty much lost their value. It is an argumentative cop out for the simple reason that nobody in the history of humanity has been as bad as Hitler (except possibly Stalin or Mao but they mostly killed their own people which seemingly carries less of a stigma). Trump is not even in power yet, and he has not started a world war or a genocide.

Although Godwin’s Law has its merit, I feel in this particular case it is a very weak defense of what Trump would be willing to do and how far his supporters would be willing to follow. And there’s one very easy thought experiment to find that out. Just ask yourself the following two questions:

Would Trump have behaved any different to Hitler had he been in Hitler’s position in 1933-45?

Would Trump’s supporters have behaved any different to Hitler’s in 1933-45? Continue reading

Dear Brexiteer, answer me this one simple question

If this question provides unease, you should start rethinking your vote
Keep calm and vote with your head, not your arse

Keep calm and vote with your head, not your arse

Dear Brexiteer,

I am perhaps the most unlikely of persons to care about the upcoming Brexit referendum on June 23rd. First of all, I am a foreign national here by will rather than by need, which means that if a post-Brexit Britain doesn’t suit my fancy, I can flee this island in a heartbeat. I am also a UK resident, which means that I am not going to get kicked out in case your side wins. In other words, I’m pretty much immune and indifferent to the whole thing although I definitely side with the Remain camp for the simple reason that I prefer reason, logic, and facts over ignorant or self-deluded sentimentality.

Now, I am directing this little essay not to the vile, racist scum that conform part – but not all – of your ranks. Not all of you vote UKIP, or are members of the EDL or Britain First although the moral laxity which allows you to side with these people without feeling revulsion is frightening. It is not a feeling that I could possibly identify with since I cannot find a single political or ethical issue where I would be at ease in being on the same side of the fence as these people. It therefore makes me wonder whether the frustration and rage of a Remain win on Thursday will be the remaining trigger to cross the event horizon of fascism, an ideological black hole in which civility no longer can escape. You may loathe to be associated with these scumbags, but knowingly or not, you’re on the same track and riding in the same direction.

So you “moderate” Brexiteer, the kind who argues that he/she is 40% Remain and 60% Leave or some variation of this, I will only pose one single question for you to consider before heading to the polls on Thursday. No, it’s about any numbers or statistics; I know you have surrendered to emotion and no amount of facts will convince you otherwise. In fact, I find it cringe-worthy that at this stage some otherwise reasonable people still think that pointing out “the truth” and barraging their Facebook and Twitter feeds with fact-memes or Guardian articles serves any argumentative value (if anything it’s counterproductive and leading you to entrench your views further). Rather, It’s a very simple logical question and I venture to guess that you won’t have an answer for it. Name me a single EU-related grievance that you are using to justify your Leave vote that could not have been addressed and corrected by an appropriate British government policy.

Stop and think about this. Continue reading

How anti-political correctness is breeding a new style of asshole

The gateway drug for for smart people turning right-wing
Political correctness is not the root of all evil

Is political correctness really the root of all evil?

Are you a causehead? For those of you have not seen the cult classic 90s college film P.C.U. (stop reading this NOW and go see it), causeheads are people who “find a world-threatening issue and stick with it… for about a week”. This was probably the precursor to the internet-era’s social justice warrior; people who act like progressives purely for self-gratification and do so with the minimum possible effort. Admittedly, a causehead had to a bit more work than simply barraging their Facebook profile with anti-austerity or pro-LGBT (I am probably missing a few letters in this ever-expanding acronym) internet memes; they actually had to make signs with catchy slogans that had to be written by hand and do a modicum of research on the political issue du jour rather copying stuff from someone else’s wall. And yet, as annoying as causeheads and SJWs are one has to reluctantly admit that their hearts are in the right place even if their brains are stuck a few feet up their ass. And if their biggest sin is being too politically correct for their own good, well, one has to weigh their damage to society besides that of their polar opposite, the anti-political correctness asshole.

I should start with the disclaimer that I’m not particularly a fan of political correctness for political correctness’ sake (that bit should have been pretty damn obvious for anyone who knows me personally); if there is no apparent benefit deriving from an act of political correctness, or the harm avoided is disproportionately low compared to the inconvenience or disruption caused by it, then what’s the point? Sometimes, the PC terminology is even more questionable than the non-PC, for example the recent attempts to use of the term “people with different abilities” to replace “disabled” people. Yeah, I can see how disabled can be taken the wrong way. Just because someone lost some abilities doesn’t mean they’ve lost them all which is what the dis- suffix could potentially imply. But “people with different abilities” describes every single human being that exists. Last time I checked, not everyone who still had their two legs could run like Usain Bolt, who in turn cannot play the guitar as good as Slash, the latter who can’t write as good a horror novel as Stephen King. And if “people with different abilities” isn’t bad enough, let’s not forget the even more patronizing “handi-capable”. Whenever I hear the word “handi-capable” I imagine some cheerfully smug American middle aged idiot saying it with a high-pitched voice and an ear-to-ear smile, the same kind of idiot for whom the phrase the road to hell is paved with good intentions was coined for. Continue reading

The economics of Mad Max

All societies need an economy, even post-apocalyptic ones
There are markets, even in the Wasteland

There are markets, even in the Wasteland

I am not exaggerating when I say that Mad Max: Fury Road is possibly one of the best movies I have seen in my adult life. The high-octane adrenaline-fueled frenzy of non-stop car chase action would be spectacular in itself; that it is also makes emotional, political and philosophical statements in its two amazing hours absolutely shatters the idea that action movies are necessarily mindless and superficial. Its overt feminist undertones have been well documented, and like all the previous Mad Max movies delivers a powerful message about humanity and redemption. What more can you ask for in a summer blockbuster?

Could Mad Max also be a sublime statement on economics? One of the key elements of any dystopian/post-apocalyptic film is that it has to be somewhat believable, and for this to be achieved, there needs to be a realistic depiction of the way society arranges its economic exchanges. After watching Fury Road and then re-watching the original trilogy, it has struck me that each film has a progressively complex economic structure that could well be a coincidence. But with George Miller coincidences rarely exist and perhaps the old man has put even deeper meaning into the franchise that most people have thought.

Here’s an analysis of the economics of each Mad Max film. Continue reading

To Trident or not to Trident

The dilemma of nuclear deterrence in the age of austerity
The last line of defense?

The last line of defense?

How does a middle power remain relevant? One of the most important aspects of global power in the post World War II period is the possession of nuclear weapons. Although only two nations on Earth – the US and Russia – possess nuclear arsenals capable of practically annihilating the planet, the nuclear arsenals of the UK, France and China are large enough to deter any potential adversary from daring to attack it with nuclear weapons itself. Such an exchange between the US and Russia was known as MAD: mutally assured destruction. Although a country like Britain could not conceivably assure the destruction of a country as vast as Russia or China, it could indeed wipe out most of their large cities and lay waste to a significant part of the country’s economic and military infrastructure…

…with just one submarine.

We’ve all heard of Trident but few people really understand the way it works. The Trident is a US-designed submarine-launched ballistic missile (SLBM) that is carried on the US Ohio-class subs as well as the UK Vanguard-class. Each sub carries various silos (16 on the Vanguard, 24 on the Ohio) that launch the missiles while submerged. The missiles the rise out into orbit like a rocket to the moon, at which point the tip of the missile opens and lets out a number of independently-targeted warheads (known as MIRVs) fall back to Earth. There are 8 British-designed MIRVs on each Trident carried on the Vanguard subs (the US Tridents carry up to 12) which means that each Vanguard sub armed with a full complement of 16 Tridents can theoretically destroy 128 targets from practically anywhere in the world. Continue reading

Freedom of speech and fundamentalism

A fictional exchange of ideas about a touchy subject
You get it or you don't

You get it or you don’t

So, this freedom of speech thing is pretty complicated, don’t you think?

Yep, it is.

But as barbaric as the Charlie Hebdo attacks were, you don’t think the reaction in the West was a little hypocritical?

Yes. Perhaps the people on the street were being honest but certainly not the politicians. That (staged) picture of all of them walking together in support of the marches in Paris was a good photo op but a bunch of them have shoddy records in supporting freedom of speech in their own countries.

And even the ones who are democratic, tend to be allied to governments that are disgustingly repressive. Is there a major Western nation that does not make it national policy to kiss ass with the Saudis? The US and the UK are the most egregious example, but even Hollande was quick to fly to Riyadh when King Abdullah died.

And they seem to have no shame about it, which is the worst. It’s this in-your-face discarding of the very things they so passionately seem to defend that is the most insulting. And nobody seems to challenge them about it either, which is the worst part. All of this is done with the excuse of national security coming into play.

But now, back to the freedom of speech part, can we at least agree on a definition of what we should be permitted to say and we can’t? Because let’s be honest, some of those cartoons were blatantly insulting. Not just to Muslims but probably to most people of Arab descent, even if they were not religious.

Yes but they were equal opportunity offenders. They didn’t spare Jews, Catholics, anyone. And what we saw were some of the more outrageous covers, but the fact of the matter is that their primary targets were French politicians, not religions. Right-wing politicians to be precise. If we can’t ridicule a religious belief, why do we tolerate political insults? Discrimination on political grounds is as valid from an international legal perspective as religious grounds.

That would be the end of satire as we know it.

Indeed, which is why we agree that religion should be fair play too. And certainly we can agree that nobody, under any circumstance, should ever be killed for something he/she believes in. Continue reading

A foreigner’s view on Scottish independence

Not that anyone in Scotland should give a damn about it...

I’m not British so in theory there is no reason why I should be bothering giving an opinion on whether a foreign country splits into two or not. To my benefit, I am completely unbiased and ambivalent about the matter, not least because my own country (Mexico) thankfully does not have a simmering secessionist movement. On one hand, I sympathize with the desire of many Scots to see their country independent; they are, after all a distinct ethnicity and some of them (particularly the Glaswegian sort) speak in a language that at least to these Mexican ears sounds completely unlike English. On the other hand, I truly wonder whether the differences between Scots and Englishmen are truly irreconcilable, and that separation is the only solution to this 300 year Union which, to be fair, has mostly worked out quite well for both sides: England has benefited enormously from Scottish ingenuity and industriousness while Scotland has profited from its attachment to a former imperial power, which to this day remains one of the world’s largest, richest and most sophisticated economies.

I don’t have a particularly structured idea of how to proceed with this piece so I’ll just dish out some of my thoughts on the matter at random.

Passport checks at Hadrian's Wall?

Passport checks at Hadrian’s Wall?

The economic argument is pure fearmongering. The No campaign is fundamentally based on the economic arguments and these in turn, are based on fear. Fear that a newly independent Scotland will collapse like a deck of cards amid all the unanswered questions over its economic viability. What currency will it adopt? Will it turn into a fiscal disaster? How ill oil revenues be shared? How many companies will end up relocating? These are not questions to be taken lightly. But although Scotland’s economic problems are real, they are not at all insurmountable. Certainly the economic argument has not stopped any other recently independent country from taking the plunge, despite most of these countries having a fraction of the government efficiency and institutional strength that Scotland would boast. I mean seriously, if East Timor and Kosovo can pull it off, it is absolutely ludicrous to think that Scotland can’t, especially considering that this is a country with no shortage of capable economists, bureaucrats and thinkers. These people invented modern economics, for fuck’s sake. Continue reading

Israel’s denial of history

Why the Middle East's longest conflict won't be resolved anytime soon

“Everyone has their Jews. For the Israelis they are the Palestinians.”

– Primo Levi (author and Auschwitz survivor)

History seems to have been forgotten in the rubble of the latest Gaza assault

History (and common sense) seems to have been forgotten in the rubble of the latest Gaza assault

It’s been a while since social media exploded with such fury as I have witnessed over the past month regarding the outbreak of conflict in Gaza. Perhaps what has been new (to me at least) has been the vitriolic response by the pro-Israel crowd, which in the past has appeared more muted and drowned out by the voices of Palestinian supporters. For as long as I can remember, the Palestinian cause has been one of the calling cards of the left, be it because leftists typically gravitate towards the underdogs but also because Israel has been able to count on the unconditional support of the US: the perennial enemy of the Chomsky-worshipping, capitalism-hating crowd. Turning the old adage around, the friend of my enemy is also my enemy.

I am a bit uneasy about taking sides myself. As I will explain below, the conflict is fundamentally religious in nature and being an antitheist (that’s one step above atheism btw), both sides are equally “wrong” to me in the grander scheme of things. I also find it hard not to feel considerable sympathy and admiration for a nation (Israel) surrounded by mortal enemies that decided to build a liberal democratic state, educate its people, become a technological powerhouse, and achieve a level of prosperity that puts it well within developed nation status. In those same 70 years, Israel’s Arab neighbors have remained as monarchies, dictatorships or unstable factionalism-ridden democracies, squandered their resources on inept militaries and corrupt regimes and in the most extreme of cases (Syria) have made a total mess of their existence. A cynical (and ignorant) leftist will say that Israel did this thanks to US support which is partly true, but during the Cold War the Arabs received an equal amount of Soviet aid and did little to show for it. Israel has made the desert bloom; the Arabs have made it bleed.

Despite this, ultimately I am disgusted by the way that the pro-Israel crowd has ignored history to support an absolutely appalling and unjustified military operation in Gaza. My Facebook feed has seen a non-stop flow of disinformation that appears far more fitting for a Stalinist propaganda machine that from educated people that should have the common sense of knowing when their government has crossed a line. After all, when practically the entire Israeli (and Jewish abroad) population supports an unprovoked war with the death toll consisting mostly to innocent civilians, you get a feeling that some tiny bit of humanity has been lost to modern Israeli society, all the more sad considering they know better than any other people on earth what it is to be the oppressed.

So here goes my attempt at debunking some of the “arguments” (I say this very loosely because the bar has been set quite low by both sides) of the pro-Israel crowd, in the hopes that they can see the responsibility that their leaders have had in creating this mess, and that blindly supporting their military actions will not make Israel safer in the long run. Continue reading

Putin’s new Crimean War

The penninsula is Russia's for the taking if it wants to
The Crimea: a 21st century Sudetenland

The Crimea: a 21st century Sudetenland

Leave it to Vladimir Putin to spoil what had otherwise been one of the few truly positive developments in global politics of the past few months. It’s not often that you get a corrupt power-hungry goon like Viktor Yanukovych out of power through the most democratic means possible: mass protests. But when it happens in a nation that borders Putin’s increasingly assertive and imperialistic Russia there’s bound to be trouble, especially when the guy who got ousted was the guy who was pushing for closer links between his country and his former overlords. Add when said nation holds one of the most coveted pieces of geo-strategic real estate in the Black Sea area, the Crimean peninsula, then things start getting ugly. Add to this the West’s inability to deal with Putin, then you have the potential for disaster.

The Crimea in history

A little history first. The Crimean peninsula has been throughout human history, one of the most important cross-roads of empires from East and West. The Greeks had founded settlements there, and it became a Roman province during the Empire’s heyday. Subsequently, the Byzantines maintained a presence on the peninsula but this gradually gave way as the Italian city states grew more powerful, and their commercial interests began spreading far from the Mediterranean. First it was the Venetians, later the Genovese, who controlled numerous coastal cities, although by this time most of the peninsula was ruled by the Golden Horde (the Mongol Khanate that ruled over much of present-day European Russia). It is here where an interesting nugget of history took place: the outbreak of plague in the 14th century while the Horde was laying siege to the Genovese city of Kaffa. The Genovese sailors who escaped the siege would bring the plague back to Italy where it spread like wildfire over the next few years, killing a third of Europe’s population and altering the continent’s history forever. Continue reading