Monday, February 20, 2017

The Legacy of David Palmer

Searching Amazon Prime for some show to watch last night, I found 24 and watched the first episode of Day (Season) 2.  IMDB reports that the episode first aired on October 29, 2002, and clearly 9/11 had an impact on the story line.  While terrorist threats are part and parcel of each of the seasons of 24 (the hero of the story, Jack Bauer, works for CTU - Counter Terrorist Unit) in Day 1 the terrorists were from Serbia, with hired guns from the U.S.  In Day 2 the terrorists are Islamic, operating with accomplices from the U.S.  

Day 2 also features a returning character from Day 1, David Palmer, who is now President of the United States.  (In Day 1 he was a Senator running for President.)   Palmer is played by Dennis Haysbert.  David Palmer is a good guy, rational and tough, though his character has blind spots about others who are his confidants, some of whom totally betray him.  In a recent post I criticized some more recent TV shows about plots that weren't really tight because they depended on highly intelligent characters making bonehead plays.  Are David Palmer's blind spots more of the same?

I'm not really sure.  I know I got hooked on 24, so if I did find some of this a stretch it didn't bother me much when I viewed it the first time through.  One possible story to explain this lack of perception in people is that they changed due to the pressure they were under.  A second is that major politicians have to cordon off parts of their lives, both personally and professionally, to address the overwhelming demands that are placed on them.  This is enough for me to give them the benefit of the doubt.

Another big deal aspect of the David Palmer character is that he is black. Apparently this is not the first example of a black President in movies or TV.  Morgan Freeman played President Beck in Deep Impact.  But 24 was an incredibly popular TV show and the David Palmer character appears in each of the first four seasons, 81 episodes in total.  Further, David Palmer's brother Wayne subsequently becomes President.  He too is a good guy, though not quite to the standard of his older brother.

On the theme that ideas from TV prepare the audience for the parallel idea in real life, I found the piece linked and excerpted below, where Haysbert ties his role in 24 to the Obama candidacy.  This piece came out in January 2008.  It seems even more plausible now, in light of how Obama's successor got chosen.


The irony, of course, is that 24 appeared on Fox.  The entertainment division and the news division of Fox probably don't communicate much.  I know that I treated 24 like science fiction, but set in the present.  I don't believe it made me any more or less prepared for an Obama candidacy.  The speech at the 2004 Democratic Convention is what made Obama appealing to me as a candidate.  But for those who missed the speech, maybe 24 mattered.

In Days 7 and 8  of 24 the President is a women, played by Cherry Jones.  I guess with popular TV series like 24, it's the first couple of years that really make the impression on the audience. 

Friday, February 17, 2017

Gaming It Out - Part 2

On why the Republicans in Congress are not pursuing an investigation agenda into the President's ties to Russia, Paul Krugman in his column today produced this quote:

Well, Senator Rand Paul explained it all: “We’ll never even get started with doing the things we need to do, like repealing Obamacare, if we’re spending our whole time having Republicans investigate Republicans.” Does anyone doubt that he was speaking for his whole party?

The thing is, in Congress it is now apparently all facade.   The rules of the Senate require a 60 vote majority to overcome the filibuster.  The Republicans do have a majority, but they are not close to 60 votes, and if the confirmation votes on the Presidential appointments are any indication (those now require only a simple majority given the change in rules instituted when Harry Reid was leading the Democrats) the Republicans might see a couple of defections from their ranks, while the Democrats will hold firm.

Surely Rand Paul knows this.  So he either believes: (a) chest pounding is sufficient and what he and fellow Republicans were meant to do or (b) it is too early to depart from what they said they would do but it may be reasonable to depart from it eventually when it is apparent to all that they can't deliver on their promises.  This leaves also (c) what about the potential liability from not pursuing an investigation agenda if information comes out that the President was part of a conspiracy with the Russians?

It is tempting to consider irrational decision making as a possible explanation, so let's review some alternative possibilities.  (1)  Habit formation.  The Republicans have been the majority in the House since 2011.  They had to face a veto from President Obama that the knew might be coming.  Yet that pursued (a) above throughout this period.  They may have gotten used to "governing" in this manner.  The Senate Republicans have a shorter period where they've been the majority.  They used the filibuster themselves, however, when they were in the minority.  So they should understand that getting things through is extremely difficult now and might find (a) appealing simply for the pr value with their own constituencies.  (2)  The deer in the headlights look.  Shock at the events since the election may not just be with Democratic voters.  If, indeed, this is a real explanation, one wonders when sensibility might return.  (3) Grief.  The first stage, we should recall, is denial.  The question here is: grief about what?  Two candidates are first that the Libertarian strand in the Republican party has died entirely replaced by a populist strand.  Second, on the thought that a house divided cannot stand, the party itself may have died or is in the process of dying.

Some of these explanations offer hope that eventually rationality will return and that (b) remains possible, even if that is not evident now.  We should ask: what will expedite that?

In the previous post, I argued that Republicans might tolerate incompetence in the President if malfeasance can be ruled out.  That is true as long as the incompetence doesn't cut against Republican priorities.  If it did seem damaging, that would be a different matter.  In his column today, David Brooks makes a case for the Bannon-is-in-charge hypothesis.  For the sake of argument, let's say that hypothesis is true.  How do Republicans in Congress view that?  I don't know.  If they are appalled, or become appalled, that would change their approach. 

Does jawboning about a conspiracy with Russia matter here?  Or is that all "cheap talk" and preaching to the choir (meaning it won't move Congressional Republicans)?  There is an Op-Ed in today's NY Times by Evan McMullin, a former C.I.A. officer, who was the chief policy director of the House Republican Conference from January 2015 until August 2016, when he left to run as an independent candidate in the presidential election. You might think the message is credible, given his former position.  But really, there is no news in it for members of Congress.  They made their deal with the devil last summer, having the information in McMullin's piece in hand at the time.  Why would they change now?

Trump supporters, in contrast, didn't have this information.  If they become disillusioned in large numbers, that would be an alternative force that could restore option (b).  In a segment on the Charlie Rose Show earlier in the week about the Flynn resignation, David Ignatius said this investigation will be long and laborious.  The press will stay at it even if Congress does not.  Potentially that could move the segment of public opinion that appears to matter here - Trump supporters.  How long this might take is anyone's guess.

To reiterate the message from the previous post, absent a smoking gun revelation, don't expect dramatic changes to the status quo.  It may not be a situation that we're comfortable with, but we're not in a position to change it.

Thursday, February 16, 2017

Gaming It Out

You're all in playing Texas hold 'em.  Your opponent is Johnny Chan.  Your hole cards are a bust.  What are you thinking as your chances for glory seem to be disappearing in the moment?

* * * * *

Like many of my friends I am obsessing about our federal government now and its chaos and dysfunction.  Unlike them, however, I have a rigorous understanding of game theory from the days when I did formal economics.  I am going to try to bring that to bear in this post, absent any jargon that readers might find off putting.

Let me begin with E. J. Dionne's piece today, Admit it: Trump is unfit to serve.  I agree with the analysis there.  If everyone else also agreed, then the puzzle would be why the Republicans in Congress seem to be soft pedaling the issue, hoping the ship might right its course.   In his column yesterday, Greg Sargent mainly argued that Trump now looks like a weak autocrat, but then articulated this alternative:

To be sure, Trump is getting a lot of his Cabinet nominees confirmed. It’s likely that Trump and Republicans will win a lot of victories before long, ones that will be very demoralizing to Democrats. It is also true that the White House has at its disposal a tremendous range of tools to take control of events and news cycles, thus turning things around. So all of this might change soon enough. A doubling-down on Trump’s worst policies, perhaps in the form of a newly implemented and then expanded “Muslim ban,” or in the form of stepped-up deportations, remain real possibilities. A terrorist attack could empower Trump and lead to far worse.

The question is whether the above scenario is realistic, where here realistic means there is a significant likelihood of it coming about.  Black Swans (highly unlikely events) do happen.  Some might say that Trump getting elected was a black swan, especially given how the pollsters didn't forecast it.  Even after experiencing a black swan, however, the laws of probability aren't changed.  A game player choosing a strategy will still make the same sort of calculations on what is the right play.   The hole cards (this is a metaphor for any information that the player knows but nobody else knows) matter.

Understanding this, an outside observer can then try to invert the process - by observing the play the observer makes some inference about what the hole cards are likely to be.  In actual poker bluffing is possible, for this very reason.  But theory says the player must be completely inscrutable, so it is the play only that determines the inference, not some affect in the person that provides an additional clue.  (The movie Rounders refers to that additional clue as the tell.)

In the case at hand, there is really no way that a bluffing approach can work with the Democrats in Congress, the mainstream press, and the various spy agencies.  Republicans in Congress surely understand that.  Given that observation, if you make inferences based on their behavior they must feel it somewhat likely that the damage can be contained.  For them it may be important to distinguish malfeasance, which is impeachable, from mere incompetence, which is not. If the President is guilty of the latter only, they may then be able to wait out the storm.

At issue, then, is what do the spy agencies know that has not yet come out in public and what do members of Congress know about that?  Of course, we don't know that.  What we might conclude, however, is that the information is murky.

The Republicans do have incentive to keep it that way rather than admitting to any smoking gun information that can be verified, because they already have their sights on the 2018 midterm elections.  However, if such information came out anyway, they may then quickly change their approach.

We should observe that Watergate offers an imperfect parallel.  The Democrats had majorities in both houses of Congress then, while the President was Republican.  Now they are each Republican and the majority in the House is fairly substantial.

It is surely impossible to query a Republican House member to ask what it would take for them to vote for impeachment.   I won't try to answer that question for them.  I will say, however, that as long as we're not over that bar, the situation will linger pretty much as is.

What should happen and what will happen are two distinct things and we shouldn't confound the one for the other.  So as much as I agree with E.J. Dionne's analysis today, I treat it as normative only, not as predictive.  On the predictive front, the national nightmare will likely be ongoing.

Having it end suddenly would be a black swan.  We can hope for that, but it's not the right way to bet.


Sunday, February 12, 2017

Socialism Reconsidered - Part 2

This is the second post in an occasional series.  I should note at the outset that I have Rousseau's The Social Contract on my to do list for reading, but I haven't made much progress in it yet.  In lieu of that, here is the relevant paragraph from near the end of Part 1.

Another point, a bit more indirect, is to ask whether up-scale liberals can get out of the mindset of voting their pocketbook and instead take more of a perspective based on Rawls' Veil of Ignorance when determining what they want economic issue-wise.  I would call this shifting to a Rawlsian perspective being socially responsible.  Socialism, as I meant it in the title of this post, is an approach that takes a shared responsibility for every member of society. 

This is the focus in Part 2.   I view these posts as think alouds, formative thinking where the posing of questions is more important than the delivery of answers, but where information that is relevant is brought in to help bring perspective on the question.  Invariably in doing this, there will be a political dimension to consider.  If you asked which of the major parties might embrace a Veil of Ignorance or Social Contract view, at this point I think it safe to rule out the Republicans.  So the operative question on this is would the Democrats embrace these ideas and, if so, how will that come about?

On Friday, Timothy Egan had a column that speaks to this question.  It is called Democratic Party Sugar High.  The piece is scolding of the Democrats, because they are failing miserably politically even as they demonstrate solidarity, such as through the recent Women's March.  Here is a relevant paragraph.

Reliance on identity politics and media-cushioned affirmation, and a blind spot to the genuine pain of the white working class, is precisely what produced a President Trump. For the next year, Democrats should filter their policy initiatives through the eyes of the person Trump claims to speak for — the forgotten American.

I am pretty sure that most of the time scolding doesn't work for the recipient.  (I don't deny that it may very well be cathartic for those doing the scolding.)  I believe a gentler message is required, but it is a message that needs to be repeated sufficiently that the point does eventually come across.  Frank Bruni has a milder piece today, though I thought it more about message than about fundamentals.  In my view the messaging issues can't be addressed till the fundamentals are fully taken into account.  Below, I try to do this by looking at the household income distribution.

The Census Bureau provides a variety of tables to consider household income distribution.   Below is a snip from table H-1 for All Races.  I've massaged it some to compute the differences between consecutive entries in the table, which I believe helps to get the full impact of the information provided.  This is done for the years 2010 - 2015.  (I am not sure why there are two different lines for 2013 and what those numbers in parentheses convey, but I included them both so didn't throw away any information that was originally included in the table.)

Here are a variety of caveats to consider before getting to the analysis.
  • The average sized household has 2.6 people.  If you'd like to see where you match up, this should be accounted for.  Single people who will marry in the not too distant future to somebody with approximately the same earnings as themselves will see their household income double, according to this metric, while regarding material well being they may perceive little to no change, as their expenses are also apt to double.   
  • The data makes no allowance for location and cost of living adjustments based on place.  Much has been made recently of urban and rural income differences.  That is not in this table.  
  • Similarly, there is nothing on the age of household members.  Earnings normally do vary over the life cycle.  
  • One other rather important point to recognize is that this is income, not wealth.  For people whose income doesn't vary much over time, the two will likely correlate substantially.  But some people might bounce in their income from one year to the next.  That sort of variation matters to their well being, but isn't accounted for here.  
  • The last point I'll make here is that there is no consideration of publicly provided goods, schools and health insurance for example, and how valuable those are.   For the recipients, those are a kind of income.  Variations in publicly provided goods are not accounted for in this table.



The key message here is found by looking at a row of differences, say the row for the year 2015.  The differences themselves looks like an income distribution.  Each successive difference is larger than its predecessor.  Indeed, the growth in the differences accelerates.  The width of the middle quintile, $28,490 is larger than the maximum of the lowest quintile, $22,000.  The width of the fourth quintile, $45,001 is larger than the maximum of the second quintile, $43,511.  And the width of the ninth decile (each quintile is comprised of 2 deciles), $97,480, is substantially above the maximum of the middle quintile, $72,001.  The upshot is that as you move to the right in the income distribution you get further away from the rest of the population that has less income.

Wikipedia offers a more granular look at this information just for the year 2014.  Here the income bands are of constant width ($5,000) up to $200,000 of income.  Thereafter there is one band with width $50,000 and then all above $250,000 are lumped into a single income band.   In this look, starting at $160,000, which is close to the the lower boundary of the 90th percentile, the fraction of the population within each band declines with income. 

A Veil of Ignorance policy on income would argue for a Robin Hood approach - rob from the rich and give to the poor, except that (a) maybe it shouldn't be considered robbery for the rich to pay more in taxes but rather social obligation, (b) perhaps a good chunk of the rich will embrace this as they come to understand that it is needed to hold the entire system together, and (c) we take a broader look at what it means to be rich.  Occupy Wall Street gave us the rhetoric of the 99% versus the 1% and thus considered the issue entirely in terms of relative income.   We might embrace an alternative where we consider multiples of median household income.  Are you rich if your household has double the median income? triple the median income? quadruple the median income?  etc.?

I use some non-standard language to describe this issue.  I consider myself as belonging to "the professional class" whose members are highly educated and have household income in the top quintile of the distribution.  My sensibilities are distinctly the middle class sensibilities that I was raised on.  My parents came of age during the Great Depression and were poor growing up.  While that was a living memory for them, they have both passed on.  We moved to Bayside when I was a very young kid and lived a middle class lifestyle thereafter.  Further, now my household is able to save a decent chunk of income each year.  People in the professional class can do that.  Those with less income require much more discipline to save.  Before the housing bubble burst many in this category were actually accumulating debt (dissaving).  People in the professional class may describe their situation as comfortable.  For the most part their material wants are satisfied and they feel reasonably secure financially.  They may not consider themselves rich in an absolute sense.  Yet they are clearly much better off than households who are at the median in the income distribution.

I believe that people in the professional class have been co-opted by the Bush Tax Cuts and have come to be selfish, income-wise.  I wrote about this here, demonstrating how tax rates for people in the professional class were much higher under Clinton than they are now.  Those rates were higher still in 1985 under Reagan.  There needs to be leadership on this point.  Right now, I don't see such leadership.

It is easy enough to argue for increased benefits for those in the bottom 4 quintiles of the income distribution, such as making college tuition zero for those people.  Telling potential beneficiaries that their benefits will go up is not hard.  It is also easy to make the argument that the entire additional burden belongs on the uber rich.  In that case the members of the professional class are exempt and can focus on other things.

There are two reasons why this seems wrong to me.  First, we all need to have skin in the game.  This means we have a sense of social obligation.  We need to be talking about obligations more, a lot more.  Paying taxes is one way that we deliver on our social obligation.  This first reason, then, gives the ethical justification for why members of the professional class should be asked to bear a larger burden.

Second, there is the matter of efficacy.  If only the uber rich should pay more in taxes, so they face no pressure to do so from the professional class, won't they be able to avoid the additional taxes altogether say by bribing their elected representatives?  Indeed, isn't that what has been happening over the past several decades?  For efficacy, the number of households that bear a larger tax burden must be substantial.  There can be much progessivity in tax rates within the upper quintile.  In that sense the burden need not be equally shared within the group.  But that each bear some of the burden is crucial.  In other words, individual reluctance to contribute more can be countered when everyone else is making a contribution.

Being outspoken on such views regarding taxation might be political suicide.  I leave that for others to determine.  I want to consider something else here, which gets back at the issue of public goods.  Making modifications to the federal tax system in a Robin Hood manner is not sufficient.  A different idea is articulated in the Brown v. Board of Education Supreme Court Decision.  Separate but equal does not work.  A Veil of Ignorance approach to social justice would be wary of clustering of people, by race as much as by wealth. 

A full treatment of this issue is beyond me now, but I can tie some of it to matters of taxation and in that way relate the one issue to the other.  We live in the world of overlapping jurisdictions for taxation - federal, state, and local and have different types of taxes at each level.  Property taxes, which are a big deal in Illinois typically require the money to be spent in the same jurisdiction as where there the tax revenues are generated.   The result is something like - rich neighborhoods pay a lot in property taxes and thus have good public schools while for poor neighborhoods the reverse is true.  There is no sense of social obligation in this type of system.  There is selfishness built in. 

When I was in graduate school I took a course in Public Finance.  One of the things we studied was the Tiebout Model of local public goods, where different communities offer different packages of public good offerings and taxes and people opt for their preferred bundle by voting with their feet.   Presumably, this is an efficient way to allocate local public goods.  For example, you may prefer a community with beautiful parks, while I prefer a community that has very efficient snow removal.  To the extent that the Tiebout Model is about horizontal quality differences it makes sense to me.

But the quality of the schools issue is about vertical quality differences (good or bad) and using local property taxes to fund schools is a de facto way to violate the spirit of the Brown decision.

When my parents were retired they lived in community called Century Village, in the western part of Boca Raton, Florida.  It was a huge condominium complex.  While my parents did pay property taxes, they paid much more in condo fees - one for their little cluster of buildings called Ainslie, which had its own swimming pool, and one for the larger Century Village community.  The condo fees were an alternative to property taxes.  Those monies were devoted to the upkeep of the community for the benefit of residents and their guests.  Low tax states are apt to have local public goods privately provide in some other way than by the government, such as at Century Village.

We are so used to that approach that we don't question it from an ethical dimension.  If we did talk about it we might find the conversation rather unpleasant, for it would challenge many of our implicit assumptions.  Indeed, I'm finding it difficult to write about here.  It is easy enough to give lip service to increasing responsibility.  It is much harder to operationalize that notion into concrete actions that could be implemented with regard to local public goods.

Maybe this is why the politicians won't touch the stuff.  It is too volatile.  But that is why we should try to do it ourselves, finding where we can challenge our own prior beliefs and where we need to back off because we can't sustain our commitment to the ideal.  I don't know where such a conversation will end up.  But I'm convinced it is a conversation we need to be having.

Wednesday, February 08, 2017

Red Sox Fans

This post is not about baseball, the title notwithstanding.  But there is some biographic information about me that is relevant here, which explains the title.  I'm a lifelong fan of the New York Yankees, which started for real in the Thurman Munson glory years, with significant overlap to my time in graduate school at Northwestern.  Then, this displaced New Yorker was looking for some way to maintain his affinity for New York.  Baseball proved to be it.

During that time the traditional rivalry between the Yankees and the Red Sox was exceptionally fierce. Fans got caught up in this and, of course, each of these teams had their loyal following.  The Yankees were a team that many others learned to hate, ergo the show and then the movie Damn Yankees! Fans of the Yankees learned to reciprocate, but in a somewhat different way. Since the Yankees won with high frequency in those years, it was not possible to hate other teams that were less successful in quite the same way as how their fans hated the Yankees. But, in the mind of a Yankees fan, that their fans rooted for these other teams surely showed their loyalties were misplaced.  In this way I learned to consider Red Sox fans as lesser sorts of human beings.

In truth, I had and continue to have some good friends who rooted for the Red Sox.  Our rivalry was good natured and was entirely contained to the end of the season and the playoffs.  Still, I've found it useful, on occasion, to overplay this hand, using Red Sox fans as my personal placeholder for the detested other, those people you've come to intensely dislike and don't respect. Hereafter in this piece, when I talk about Red Sox fans, that's what I'm talking about.

There are some core questions I'd like to pose, which I will do from my own personal vantage, but I mean them to apply generally to everyone.  I will follow each question with some discussion.  I certainly don't have full answers, but I do have preliminary thoughts, which I will try to articulate.

Are Red Sox fans necessary for me as a way to focus my animus, an undeniable part of my personality?

Rooting for your favorite team is a very positive act, emotion laden and cathartic.  This is a big part of being a sports fan.  It is not just witnessing excellence in performance.  It is having aspirations and opening ourselves up to the possibility that those aspirations will be realized.  But, of course, failure is possible too and team sports, by design, are zero-sum games.  For each winner there is also a loser.

If you are open to the possibility of success, how do you self-protect against the disappointment of failure?  One way, I know, is to look at injustice as the cause of the outcome.  The umps made a bad call.  The other team cheated in some way.  We deserved to win.  In the heat of the moment, those sort of explanations are readily forthcoming.  Over time, however, the memory of any particular injustice fades and some other and broader form of self-protection is needed.  For me, Red Sox fans serve as a very useful way to address the concern.

Argyris and Schon, those social thinkers who helped me have a more mature view of adults and of managing in organizations, articulate that we have espoused theories and then we have theories in action.  The two are often not in alignment.  In other words, we talk a good game, but we don't live up to our own high standards.

Outside of the world of sports, my espoused theory is to treat everyone with common human decency.  Sometimes I adhere to that.  Other times, I stray.  I have during my professional life experienced substantial antagonism at times.  The Econ department, when I joined it, was intensely political and I got caught up in that.  Later, as a campus administrator and then in the College of Business, I occasionally bumped elbows with people who had an aggressive streak, much more than I had.  Once the path of negotiating it through to a sensible solution appeared blocked with such people, hostility developed in me.   That then became a permanent scar that conditioned subsequent interactions.

More recently, some of that type of attitude has entered into my teaching, where some of the kids seem quite spoiled to me and I soon lose my patience with them because of that.

Coincidentally, the Yankees haven't been very good as of late.  Neither have the other teams I normally root for.  So I've spent much less time in fan mode.  I wonder if these other irritations get to me more now, because I don't have the sports fan release for this sort of emotion.

Is there a difference between politics and sports regarding being a fan and disliking fans who root for the other team?  

I recently watched an old video on YouTube, Phil Rizzuto's speech during his Hall of Fame Induction.  Rizzuto was one of the TV announcers for the Yankees during the glory years.  The other guy in the booth was Bill White.  Both were former MLB players and they spoke with a ballplayer's reverence for the game.  They were a great team and listening to them while watching a ballgame was very enjoyable.  There was a mythic aspect to that and a friendliness in their banter that gave an aura to it all.  Even whn calling out people who upset him, he called such a person a huckleberry, Rizzuto showed respect and restraint.

At that time, I don't believe there was any equivalence between caring about politics and being a sports fan.  They were two entirely different things and remained that way at least until cable TV came along and probably for several years after that as well.   After Watergate and the Nixon pardon, interest in politics died down substantially.  For the first campaign where I got to vote for President, I wanted Mo Udall to be the Democratic candidate in 1976, but didn't get bent out of shape that Carter became President instead.  Interest in politics was less intense immediately thereafter and for quite some time to come.

Then some things changed in how sports reporting and commenting were done and likewise on political reporting and commenting that brought the two closer into alignment, regrettably so in my view. The TV show Crossfire on CNN was my introduction into the new approach, with a much more in-your-face style, where the hosts felt no compunction to be rude to their guests on occasion, interrupting them in mid sentence if they felt the need to do so.  This soon had a parallel in the sports world.  It is telling that Keith Olbermann, who practiced the approach with Dan Patrick while they were both on ESPN as co-anchors for the show SportsCenter, took the same act to MSNBC, where he is probably responsible for making them a brand and propagating the approach to all their evening programming.

The in-your-face style of reporting and commenting is not what I grew up with and I am still not comfortable with it.  Even now, it is possible to resist the style or, at least, not to be quite so extreme in practicing it.  The show Pardon the Interruption, with Tony Kornheiser and Michael Wilbon, (coincidentally, Wilbon was an undergraduate at Northwestern while I was a graduate student there) shows some balance and occasional humor, though it is still too over the top for my taste.   Yet it is a rare thing.  Shows like that are prone to be crowded out by more extreme programming (perhaps because younger reporters don't have a memory of a milder alternative approach), which though less elevating does attract eyeballs.  As I wrote not long ago in a post called Invasive Species and Tabloidism, this is a kind of market failure, one we're not apt to recognize unless we look at it from a historical perspective.  Given that it has happened and become mainstream, being a sports fan and being interested in politics have become similar.  The big difference, it seems to me, is that individual athletic contests end, and there is still such a thing as the off season in sports. With politics now, however, it just seems to go on and on.

The role model for this sort of behavior is heavyweight wresting.  As a kid I would watch that on occasion, when Argentina Apollo, Bobo Brazil, and Gorilla Monsoon were featured and my brother and I would view it in our bedroom on our black and white TV.  Then later, as an assistant professor, I would watch with a friend, for the humor and farce in the pronouncements.  By then it was commonly known to all be an act, a put on.  One could enjoy it on its own terms if own possessed a juvenile sense of humor.  (I suspect that now I wouldn't enjoy it.)  Alas, it is not the same thing at all when the audience isn't in on the gag.  And it becomes still a different matter when, while deliberate, there is no gag.

Can we ever go back to the way news and commenting were or move onto something else which isn't so clearly aimed at stoking the audience?  The partial answer is that we have, with satirical comedy the alternative.  Even when I was a kid there was The Smothers Brothers Comedy Hour, Rowan and Martin's Laugh-In, and the David Frost vehicle That Was The Week That Was.  Then, however, people watched the news or read the newspaper so the role of these shows was much more just for the sake of entertainment, though Nixon did go on Laugh-In to say sock it to me.  So, admittedly, the line between news and entertainment was blurred.  But now, we know, many avoid the news outlets entirely and go straight for the humor/satire.  Further, the shows are more edgy now, matching the way other media gets done.  For the gentler, less edgy, and perhaps more clearly sentimental approach to make a comeback, it would need to confront the increasingly limited attention span of the audience.  Maybe that is possible, though maybe not.

Can you argue with fans from the other team if the rivalry is not friendly?

This is one where the espoused theory, yes you can have such an argument, stands in sharp contrast to the theory in action, where my experience has been that such arguments are extremely frustrating and eventually degenerate into something worse, whereupon they typically lead to fracture.  Understanding that, either the topic is avoided, as a way to maintain the peace, or the people avoid each other, to refrain from the unpleasantness that would surely ensue otherwise should they interact.

Can you restore friendly relationships with people after there has been fracture?  

It's possible, I believe, but consider the expression "bury the hatchet" and take it as a guide.  The more benign admonition, "forgive and forget," largely doesn't work.  People don't forget.  And they don't get over it, unless they are made too.

My mother's parents were killed in a concentration camp.  For quite a while I felt a sense of collective guilt toward German people, including those born well after World War II, so obviously not responsible for the Nazi period in any way.  At some point I got past these feelings.  Perhaps watching German angst movies while a graduate student mattered.  Of that I'm not sure.  I recall in the mid 1980s there was a German woman who was a graduate student in the Economics department, Anita, and I taught her microeconomics.  Anita was a decent and articulate person and that helped this way.  Later, my mother received a kind of personal reparations pension from Germany and from Austria too.  That also helped.

When considering injustice, can we distinguish between a mountain and a molehill or is it all a matter of parallax and who is doing the viewing?  

This one I want to begin straight off by saying that I don't' have an answer.  So instead I will pose a couple of different questions.  Have you been in a situation where you are perceived as a Red Sox fan?  If so, what was that like?

I will recount two situations like that for me, one professional the other familial.

For three years I was the director of a small campus unit called the Center for Educational Technologies (CET).  I loved the structure and the freedom that job afforded me to work hard on the mission, as I understood it.  For the most part, my staff felt the same way.  At the beginning of the third year my boss, the campus CIO, initiated a process to merge CET with the much larger campus computing organization CCSO and his CIO office into an organization that was subsequently known as CITES.  I didn't want the merger and I believe that most CCSO folks didn't want the merger either.  For my part I was afraid that our particular culture in CET would get wiped out and our mission would be compromised.  Nevertheless, my boss prevailed and the merger happened.

In the process I got a title change, something of a promotion, and a bump up in salary.  Further, I was the only one with faculty status in all of CITES, though by that point I was 100% time as an administrator.  Mainly because of the faculty status, I was treated with kid gloves and afforded a lot of respect.  At a personal level, then, the merger worked for me.

But it didn't work nearly as well for my direct reports and the units that they led.  The governance structure contributed to that.  At the highest level was the CIO Cabinet, which I was a member of and which functioned reasonably well.  It was small, collegial, and a place where each participant had a voice.  At the next rung down there was something called the Roundtable, which included the Cabinet and then the various division directors. (My direct reports were division directors.  There were many more and much larger divisions in the rest of the organization.)  The Roundtable meetings were far less satisfying.  They included some sniping by the division directors and some expression of open contempt for other members of the group.  Here I should mention that there was political tension between the various divisions in the old CCSO.  It wasn't just us against them, though it felt that way at times.

The third governance group had acronym MOG, which stood for something like Managers Operations Group.  As an academic first and foremost, I was considered a strategic thinker but definitely not an operations guy.  So I wasn't on the MOG.  Neither was the CIO.  My direct reports attended the MOG and they hated it.  They felt disrespected there and as if their opinions didn't count.  They were getting beaten up by those meetings.  I wanted to protect them, but I didn't have a mechanism to do so.  It was all very frustrating.

Related to this, my units were under financed.  Indeed, much of the larger CITES organization seemed under financed, with the notable exception of the Networking division.  Then there was a different sort of issue, quite apart from the money.  I felt that much of the IT organization was far too insular.  People talked with other IT people only, got their opinions confirmed in those discussions, and then locked into their views.  For the most part they didn't have conversations with people outside of IT and sometimes not even with IT people who were on campus but were located in one of the Colleges rather than in CITES.  These communication failures contributed to an inflexible mindset and a somewhat tyrannical view of how IT should be done on campus.

It was my job, one that I fell into rather than one I sought out, to be the voice of the faculty within CITES.  People seemed to appreciate my articulating an alternative view.  Yet they never showed that appreciation by acceding to my views.  Rather, they acted as if it gave them comfort to proceed as they had been planning to all along, having now heard an alternative suggestion on how to proceed but invariably finding some flaw with that.

After a few years of this, I got fed up with the arrangement.  I left CITES for the College of Business 4 years after the merger happened.  I do want to point out that all of this wasn't just me.  Some years later, after the Campus went through the Stewarding Excellence process, most of the people who were in the divisions that reported to me got reassigned to the Center for Innovation in Teaching and Learning (CITL).  That structure may have made sense back in 2002, when CITES formed, but politics and individual personalities prevented it from happening then.  What they have now still may not be ideal, but it is a better structure than when I was a part of it.

My family story is shorter.  I am a minority of one within my wife's family.  They are Methodists.  I am Jewish.  For the most part, I would say this hasn't mattered and that our collective good nature got us through what otherwise could possibly have been some awkwardness.  There was one time, however, when my kids were quite young and we were visiting my sister-in-law in Texas, when getting along didn't happen.  My mother-in-law, Helen, was there too.  Helen wanted the kids to be Baptized.  I was not asked about this, but had I been I would have been dead against it.  We were at some place they called "the ranch" and while I was off doing something with my sister-in-law's husband, Randy, they performed a little ceremony in the house  (or perhaps outside, that part I don't remember).  I found out about it after the fact.  I was not pleased, for sure.   I then did what I used to do a lot as a teenager.  I mumbled.  That was it.  It didn't come up again, as far as I recall.  But the memory is still there, part of the patchwork quilt of memories from when the kids were young, including many other fond memories of Helen.  She passed away quite a while ago. 

Wrap Up

With sufficient time, it is possible for me to discuss these various incidents without getting too worked up about them   That doesn't mean I'd be able to have an even handed conversation on a parallel matter were something similar to happen now.  In the present tense, it is much harder to keep the anger under wraps.   I don't know anyone who is good at doing that.

Within the context of rooting for the Yankees, being angry at Red Sox fans seems benign to me.  If you have to be angry that's a good outlet for the emotion.  In other contexts, however, letting anger surface is like playing with fire.  It can be very dangerous.

I spend a good chunk of time looking at my Facebook feed, sometimes much more than is healthful for me.   Many of my friends express anger.  Some quite frequently.  The expression, righteous indignation, comes to mind.  Much of it is directed at Trump, but some of it focuses on fellow citizens.    Even if the immediate future looks pretty grim, might there still be a way to heal beyond that?  If so, how could that possibly happen?  It's these questions that explain why I wrote this piece and framed it the way I did. 

Wednesday, February 01, 2017

Bonehead Plays in TV Dramas

This post is meant as lighter fare.  I've been watching a couple of shows as diversion recently, Goliath and Homeland Season 5.  While their plots are quite different they share some common features.  Neither has any comedic elements.  Both have main characters who are highly proficient in what they do.  They are not geniuses in the sense of Albert Einstein, but they have deep understanding as insiders and long-time practitioners who are intensely into their work and whose intelligence manifests that way.  These abilities are then coupled with personal idiosyncrasy that humanizes the characters, but does not diminish their work abilities.

I very much enjoyed Homeland seasons 1 - 3.  The story line was gripping and the plot ingenious.  Season 4 was something of a letdown. Maybe that was unavoidable.  Let's recall that after the Bulls won their third championship in a row, Michael Jordan left the NBA for a couple of years to play baseball (and maybe to get his head right again).  These TV shows that are remarkably successful can't take such a hiatus.  That have a loyal following to keep happy (and, one suspects, the money guys wouldn't tolerate a lengthy interruption).  It's not just that much of the story was about defeat rather than triumph.  It's that the story is mainly set in Kabul but for much of the Americans act as if they are in Washington D.C.  I don't know what Kabul is actually like, but much of the show didn't have the right feel from the get go.

This sort of explanation doesn't work for Goliath, a mini-series that is one and done.  While Goliath doesn't have any comedy, it does have farce, quite a bit.  Characters are exaggerated in their construction.   They are also more uni-dimensional, the good guys and the bad guys, that sort of thing.  Some of the bad guys are really bad and particularly self-serving. 

At critical junctures each story relies on the main character(s) making a really bad mistake.  I asked myself as a viewer, were I in that situation might I make the same mistake?  Or is the mistake incongruous to the character, negligence or a mental lapse this is inconsistent with the rest of the behavior the character performs?

In real life, of course, people do make errors, quite a few of them.  Some of that is incompetence.  Other times, it is breaking down when operating under too much stress.  And then sometimes it is just a bad call made in the heat of the moment.  Major league umpires do that now and then.  But the characters we are talking about are anything but incompetent.  And the errors we're talking about survive substantial potential reflection on the matter, so a rapid call in the heat of the moment doesn't really cut it.  There is enormous stress that they operate under, yes, but otherwise they get things right and, indeed, show they are several steps ahead of everyone else.  So when they make a mistake like this it seems odd.  This is as much true for the villains as it is for the heroes in the story.

I wondered whether it would be possible to construct similar story lines but without these sort of mistakes.  I don't really know but my guess is yes, it is possible, but it makes the writing job harder for those who craft the screenplay.  The story line has to be tighter.  In some sense, these mistakes allow the writers to cheat a little with the story line.  The plot works as they originally conceived it, as long as the mistakes by leading characters are allowed to stand.  The plot fails otherwise, not like a failed coup attempt, but as a story that doesn't grip the viewer.  A really tight story line pulls the viewer in.  One which has these artificial plot devices seems contrived.

I also wonder whether other viewers react similarly to these shows.  I watch these shows substantially after they first appeared, with little to no lag between one episode and then next.  Maybe it is different watching them as they appear, with a week between episodes to let the suspense build.  I don't know.

It is something comparatively new for premium channels like Showtime and HBO to produce their own content and likewise for Amazon Prime and Netflix.  There is obviously a heated competition going on now for viewer eyeballs.  My guess is that competition of this sort is bad for story quality.  As the market gets more niched, the average quality goes down some, or so I conjecture.  Then again, if these shows are not competing with each other so much as they offer an escapism alternative to Bill Maher, John Oliver, and the Daily Show, perhaps that explains it.  I don't watch those shows but my wife does on occasion, so I sometimes hear them in the background.  In my view, they don't set a very high bar.

Alternatively, my tastes may be hopelessly out of date.  Definitely true.  And I'm still nostalgic for The West Wing

Tuesday, January 31, 2017

All Together Now

If they have the chicken pox
Putting people in a box
Once okay given by docs
Keeps the illness under locks.

Otherwise it isn't cool
A restrictive club, an elite school
Only helps to division fuel
And violates the golden rule. 

Monday, January 30, 2017

Soft Skills Revisited

It is a delight to write on learning in college stuff instead of you know what.

This piece from Inside Higher Ed caught my eye. Soft skills are very important, no doubt. Mid career executives learn these skills in the process of doing their jobs over a very long period of time, perhaps a decade or more. In contrast, this is the description of what Reinhardt is doing.

"Reinhardt’s program, the Strategic Career Advantage Platform (S-CAP), was launched in fall 2016. Each month, the college offers a Saturday session focused on a different topic -- for example, one four-hour January session focused on emotional intelligence. Others so far have covered impression management, listening and mediation.

At the end of the session, the students are not tested on the material. Instead, they write and reflect on what they learned and how they could realistically communicate that to an employer, said Reinhardt President Kina Mallard. The idea is for students to recognize real-life scenarios in which they have used those soft skills -- such as conflict resolution, mediation and listening -- and to then highlight that on their résumés or in job interviews."


I would call this soft-skills lite or perhaps the more pejorative, soft-skills appreciation.

Then years ago I wrote a piece called Soft Skills Are Hard that was reacting to a piece from the Chronicle about discord in MBA education. The employers wanted soft skills. The students, however, wanted to focus on technical proficiency, because the latter was much easier to demonstrate while the former was more difficult to acquire. It should be noted that most MBA students have substantial work experience before returning for the MBA.  So they are different from undergraduates, who may have done an internship or two but are still pretty green in regarding work. 

Beyond those issues there are other concerns, perhaps more fundamental, such as what Sherry Turkle has pointed out.  Students need to engage in face-to-face conversations with peers, quite a lot of it, to learn empathy for others, how to schmooze, and to develop a taste for discussions of this sort.  If you don't try to certify this, college offers a great opportunity for it to happen on its own, through bull sessions with housemates.  

If these sort of sessions were happening would the the more formal approach that Reinhardt is taking be useful in addition?  I don't know.  Perhaps it would.  If those sessions are not happening, however, my guess is that what Reinhardt is doing is largely a waste of time.  In that case the students wouldn't be bringing enough to the table ahead of time.  

The holy grail, then, is getting students to engage in lots of one-on-one or small group conversation, where they can be comfortable, open up, feel a sense of vulnerability, and then engage in exploration of ideas with peers.  This is what college should be about rather than what it seems to be about now, grades and certifications.  

Perhaps Reinhardt will find its way to this by starting down the path it is headed in.  I wish them good luck on it.  For the rest of us, how do we get there?

Sunday, January 29, 2017

How much is lying part of our ordinary lives?

This post is prompted by something odd that happened to me yesterday.  Sometimes after reading a piece published in a popular outlet and written by an author with an academic pedigree, I will write to that person by email, giving some reaction to the piece.  I don't do this very often, probably less than a dozen times in total.  I did so yesterday, and got an almost immediate response from the author, somebody I had a previous exchange with a couple of years earlier.

The issue is that the title of the piece (which was about facts) suggested some tie in to the current political controversy, while the piece itself had no such connection.  The author, in his response, expressed disappointment at the title of the piece, which he did not choose.  It was imposed, apparently, by an editor/marketer whose job it is to get more eyeballs to look at the content that this periodical distributes.  My complaint should have been directed toward that person.  But that person was entirely invisible to me.  The author, who gave me a brief explanation of what had happened, mildly scolded me at the end of his message for being duped by the title.  I should know better.

I actually wasn't duped, as I've had this experience before, though the first time without the other author scolding me.  The irony, of course, is that periodicals like this one are taking Trump and his administration to task for all the lying, while they are under assault from this administration for performing hatchet jobs in their coverage.  And then there is the question of how this is supposed to work with readers like me.  If I feel disrespected by the way that title misrepresented the contents of the piece, what will that do to my relationship with the periodical and whether I continue to read stuff they produce?

It occurred to me to think this through from the point of view of the editor/marketer who made the decision.  Did this person perceive the act simply as doing the job, with little to no duplicity in the process?  It also occurred to me to ask whether this person is one and the same as the person who chose to make this piece featured in the online offerings of this periodical, which is a general interest journal.  If an appropriate title for the piece had been chosen, did the piece merit interest from a reader like me?  If not, and if many other readers would react similarly, was this piece appropriate for the intended audience?

In considering my own behavior, I definitely do not adhere to all the rules that are imposed on me.  Speeding is the quintessential example.  I asked myself whether speeding is tantamount to lying. After a while, I concluded that it is not.  The last time I recall being stopped on the road, which was on I-80 in Indiana while returning from a trip to Ann Arbor to visit my brother's family, the highway patrol officer asked me how fast I was going.  I told him.  He thanked me for being honest, cautioned me to drive slower, and did not give me a ticket.  I did drive slower for the remainder of that trip.  Although I still have memory of that incident, it doesn't seem to have any impact on my current driving.

There is also the issue of expedience as the prime determinant of behavior.  When I go to the liquor store the person at the checkout will invariably ask, did you find everything okay?  Sometimes the answer is no, but I don't say that. At this point I want to complete my transaction and leave.  Saying that I didn't find something would prolong matters.  Why bother?

People who are in a sales or marketing job may view their work the same way I view driving or talking with the guy at the checkout.  A little breaking of the rules is to be expected, isn't it?  What's the big deal?  And yet it seems that more and more of our lives as taken up with people who are trying to sell us something.  (Here I include trying to capture our attention, even if we don't directly pay for that.)  In turn, we spend more of our own time marketing ourselves.  Sometimes we do this, I believe, entirely unaware that we're engaging in self-promotion.  The lack of awareness, however, encourages mild forms of misrepresentation.

Earlier this week I became captivated by this promo from Forbes, Ten Guaranteed Ways To Appear Smarter Than You Are.  It is both humorous and frightening.  The piece is offered up earnestly, without any hint at it being ethically challenged or, for that matter, without any consideration of why the behavior it recommends will or will not be effective.  (My interpretation is that it is really about conforming to workplace norms and expectations, so is about confirmation bias in others at work.  Therefore, it might work, but it might be better for all if it didn't.)

A few years ago I wrote a post called Gaming The System Versus Designing It.  It started out that we've all gotten more proficient in manipulating the system to our own advantage.  One of the examples given was commercial standardized test preparation, such as training offered by Stanley Kaplan.  At root, is there any real difference between taking an SAT prep class and following the suggestions given in the Forbes promo linked above?

There is also the famous Lord Acton line:

“Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority; still more when you superadd the tendency of the certainty of corruption by authority.”

Lying may have become more normalized as elites distanced themselves from the rest of the population.  It's hard to know this.  The Gulf of Tonkin incident happened in 1964.  Nixon became President in 1968.  Did that mark a departure from the Eisenhower years or not?

Even Leave It to Beaver had Eddie Haskell.  But Eddie Haskell was such an indelible part of the show because he stood in contrast to the Wally and the Beaver, who were much more earnest.   Now, has each of us turned into Eddie Haskell?

Thursday, January 26, 2017

Musings about Macroeconomics

I was a reasonably good theorist in microeconomics when I did economic research for real (until 1995 after which I switched to learning technology).  I never did numbers at a research level and I never felt I understood macroeconomics at the same level of depth as I understood microeconomics.

Now, considering the future economic situation of my family, where I've done a little looking at our finances recently, and as a concerned citizen, where we know that there is a pretty strong correlation between macroeconomic performance and our national politics, I thought I'd go through several little exercises here so others reading this, who have less economics training, can consider the same issues from their own perspective.

Given my background, I'm going to go through a micro foundations set of considerations first.  Then I will consider macro policy.  In total I hope this might be a useful primer for some.

Your Income and Your Savings Rate

Since tax time is approaching, you might want to leverage the time spent assembling the information needed to complete the forms by also doing some tracking about your personal finances.  I'm going to talk it through here based on my situation.  Somebody else might build a generalized spreadsheet that you could use to make such calculations.

Leslie and I each get a W2 form.  I also get a 1099R form for my pension.  The IRS might consider the pension income unearned, but I like to consider it together with wages so as to make comparisons with earning pre and post retirement.   University employees can participate in a 403B plan, which is like a 401K plan for others.  That is one obvious place where people save financially.  In Leslie's case, the size of the contribution to the 403B plan was determined at the time of enrolling in the program.  Thereafter monthly contributions have been deducted from her paycheck.  Thus this sort of saving decision is quite passive.  Serious thought about it occurred once.  Thereafter, it is pretty much out of mind.

Another one that is like this happens if you have a mortgage.  We have a 15 year fixed rate mortgage.  So our payments are the same each month.  It is therefore quite easy to determine the annual payment.  The bank where we have our mortgage tells us how much of that payment is interest.  In a month or two they will send a statement with that to us.  In the meantime, I note that my online banking reports this.  The difference between the annual payment and the interest paid is equity built up in your home and should be considered savings.  It is another significant way that ordinary people who are homeowners save. Again, the decision to do this is quite passive.  Our mortgage payments are deducted automatically out of our checking account.

We do have some investment accounts where at our stage in life for the most part the money just sits there, for later use when the need arises.  These earn some return.  (In contrast, money in a checking or savings account now earns essentially nothing because the interest rates there are so low.)  The return is reinvested.  That is an additional form of savings.  Then you can look at checking and savings accounts and compare end of year balances between 2016 and 2015.  If the balances are higher in 2016, the difference represents the amount saved.  If is the other way around the difference will be negative and the absolute value gives the amount dissaved.

Some people have income from other sources (for example, they hold real estate or they are part owners in a small business).   In principle, there is no difficulty in handling these alternative sources of income.  In practice, particularly when there are capital gains or loses which are accrued but not realized (the capital gain is realized when the asset is sold, until then it is accrued), accounting for those can be more art than science, so I'm simply going to ignore such income in this discussion.  Likewise, when you purchase a consumer durable - a car, a major appliance, a piece of artwork or some furniture, etc., conceptually these things have resale value, so the consumption on the good is only the purchase price less the resale price after a year. The part that isn't consumption in the purchase price is then also savings, though in kind rather than financial.   If you are more anal than I am, you can do some tracking and calculations to figure out how much value is in your real property.  That's just too hard for me.  So I'm ignoring it here.

With the data we have so far you can compute a rough household savings rate.  I did that for my family yesterday.  I got around 25%.

How Savings Rates Vary

There are several factors to consider that matter a lot for determining the personal savings rate.   One is obviously income.   Low income households save very little if anything.   If low income persists for many years, such households may have little to no net worth.

Another factor is the age of household members.  When our kids where young, it seemed that there was nothing left at the end of the month to put into a savings account or into an investment account.  Spending directly on the kids, on family travel, and on the household took up pretty much all the take home pay.

Another factor is current indebtedness/current wealth.  Much has been made about incurring debt in college.  Those carrying substantial debt no doubt have that strongly influence their consumption choices,  keeping their current spending more modest so they can pay off their loans.  Conversely, those who have accumulated wealth, perhaps as a consequence of a bequest from parents, have that as assurance and likely spend a greater fraction of their current income.

Still an additional factor is how expected future income compares with current income.   Normally people just starting out in the labor market expect to climb the job ladder some and with that see their earnings rise.  Conversely, most people at or near retirement expect to see earnings drop in the future.  Future prospects impact the current decision to save.

Let me add one more factor here, irrational exuberance or its opposite, irrational pessimism.  From around 1999 till when the housing bubble burst, savings rates in aggregate for the U.S. economy were very low and I believe turned negative around 2004 or 2005.  Those who owned homes saw their home values appreciate and seemingly acted on the belief that those values would keep rising.  If you have capital gains income that is substantial, why save in other ways?  Of course, when the bubble burst such people found themselves in trouble.  Many ended up losing their homes.  The flip side of this (excessive pessimism) is taking savings and putting the money under the mattress for fear that if putting it into an uninsured investment it will not be possible to get the money back out when it is needed or to not trust that insurance will pay off when the investment fails even in an insured investment.  The flip side can create its own panic scenario - a run on a bank.

Marginal Propensity to Save/Consume

If you get an additional dollar of income, you either spend it or you save it or you divide it between the two uses.  The marginal propensity to consume is how much you spend out of that additional dollar.  The marginal propensity to save is how much you save out of the additional dollar.  The two taken together must satisfy the identity MPC + MPS = 1.  So if you say something about the marginal propensity to save, you are implicitly saying the reverse about the marginal propensity to consume.

One of the issues impacting the MPS is whether the person views the additional dollar as coming with strings attached or not. A loan of a dollar that must be repaid is quite different from a gift of dollar that implies no obligation of a return gift.  Another issue impacting the MPS is whether the additional dollar impacts the prediction of future income, in Milton Friedman's terminology it increases permanent income, or if it has no impact on the future, again in Milton Friedman's terminology it is an increase in transitory income.   The difference in the two notions is exemplified for the former by getting a pay increase at work while for the latter the income arises from winning at bingo at the church social.

A different factor that impacts the MPS is whether people are liquidity constrained or not.  Liquidity constrained people would like to borrow more (dissave) but can't because potential lenders view them as default risks, so won't lend to them.  The MPS of a liquidity constrained person is often zero and possibly negative. (The way it could be negative is if a lender trusts the person for a loan after the income increase where the person wasn't deemed trustworthy beforehand.)

For non liquidity constrained people, does the MPS vary with wealth?  This may be more of a contentious point.  My own belief is yes.  Uber rich people like Bill Gates or Mark Zuckerberg have MPS equal to 1.  They can afford to buy whatever they want.  If they don't buy something it's because they don't want it.  The affordability of something desired simply isn't an issue for them.  No doubt, there is more than a little hand waving in what I say next.  If liquidity constrained people have an MPS of 0 and the uber rich have an MPS of 1, it is not a bad assumption that the MPS of people rises continuously with wealth, once the liquidity constraint is no longer binding.

The point is that if you did income redistribution under this assumption and played Robin Hood, by taking a dollar of income from the rich and giving that dollar to somebody who is poor, aggregate consumption would rise (savings would fall).  Income distribution in the opposite direction would then have the opposite effect.

So Much for Households, What About Businesses?  

I'm going to say less about business because, frankly, I don't have the same ordinary experience as I do as a head of household.  I've never run my own business.  Nonetheless, I think I can get the fundamentals out so the discussion is balanced.

The operative decisions are:  How many people does the business employ? What wages are paid? How much investment in human capital (skill development of the staff) is made?  What about investment in physical capital (plant and equipment)?  Those are the input choices.  On the output side there are similar questions.  How is the product or service priced?  When is new product brought to market?  When is an old product retired?   Surely there are further questions to consider, like how should expansion into new markets geographically occur, how should the product be marketed so how much should sales be integrated with production, and how should the firm face emerging competition from other firms that are new to the industry?

For the sake of this discussion, the key way to think of these questions is to consider expectations about the future, near term and longer term, and how those compare with the situation at present.  If demand for product is expected to grow that is a reason to invest in human capital, physical capital, and increase the size of the work force.  If current profit margins are already low and competition is expected to heat up more, that is a reason to consider getting out of the business.

For those firms who want to invest and/or expand the size of their work force, we can think of them in three different categories.  The first have sufficient cash on hand from retained earnings to entirely finance the investment themselves.  The second may not have that much cash but they are viewed as safe investments so can borrow as much as they want at market interest rates to finance the investments they plan to make.  The third are viewed as riskier than that.  These firms either have to pay a premium to secure a loan, an admission that default risk is present, or they can't raise capital at all and in that sense are like the liquidity constrained buyers out there.  They may perceive an investment opportunity but it dies on the vine and never turns into wine because they can't raise the financing.

Looking at some Macroeconomic Variables and their Values at Present

Given the recent to do about "alternate facts" let me make two observations that may trouble some readers.  First, there are many potential variables to consider.  Which ones to bring to people's attention and which ones remain in the background is something of an art form.  Second, people trained in the discipline agree much more on the microeconomics (what I said above) than on the macroeconomics and the efficacy of policy (or not).  Chicago School (free market) economists will come to quite different conclusions than Keynesians.  I am a Keynesian in my orientation/training.  I'll try to make my personal biases apparent at the appropriate time.

Three variables that are normally considered in macroeconomic performance are: the unemployment rate, GDP growth rate, and the inflation rate.  Better performance of the economy as a whole is identified with low unemployment, high GDP growth, and low inflation.

For the U.S. you can find data on these variables at various sources.  Here's a bit of a look:

Inflation Rates U.S. - There are some graphs at the link.  Inflation last year was quite low, below 1% much of the time.  It is beginning to heat up a little now and is currently at 2.1%.  If we could sustain that, it would be fine.  When it rises much above 2%, however, the economy begins to under perform because of inflation.

GDP Growth U.S. -  There are three components to GDP growth.  One is inflation.   Because of that, GDP graphs and inflation graphs will correlate positively.  Sometimes the inflation effect is netted out and what is reported is GDP in constant dollars relative to some base year.  That is not done in the graph which is linked.  The next component is population growth.  The final component is productivity growth. In the third quarter of 2016 GDP growth was 3.5% and much higher than earlier in the year, where it was less than 1%.

Unemployment Rate U.S. -  The unemployment rate varies through the business cycle. It is very high during a recession.  It is much lower when there has been high GDP growth for a sustained period of time.  That growth implies greater aggregate demand and gives a reason for firms to hire additional people.  There is some debate about whether the unemployment rate and the inflation rate are negatively correlated or not.  The Keynesians tend to believe there is such a correlation though it may be only operational at or near full employment.  When I was in graduate school in the late 1970s we went through a period of stagflation where this correlation was apparently severed.  History may matter on this.  There was a sustained inflation in the 1970s that preceded the stagflation.  We've had relatively modest inflation for quite some time, more than a decade, but we've also been below full employment for most if not all of that time.  The current unemployment rate is 4.6%.

There are some other variables that have gotten attention lately, consideration of which make the conversation richer, but also more complex.   The first one is the real wage, the wage adjusted for inflation.  A Keynesian view of the labor market would say that when below full employment real wages will be flat and changes in the demand for labor will be met by changes in the unemployment rate.   In fact, that seems to be the history for unskilled and semi-skilled workers, though not at all for highly educated workers.

Real Wages - Some other factors should be mentioned here to explain this history.  One is the decline in unions.  Another is increased mobility of plant location, so firms can credibly threaten relocation and get wages concessions even when there is a union present.  Likewise, the possibility of automating work acts as a break on wage demand.

The second variable is the labor force participation rate.  In the simplest conception, you look at total labor supply, total employment, difference those, and divide the difference by the total labor supply to get the unemployment rate.  But the Bureau of Labor Statistics takes a more nuanced approach.  A person who is not working is part of the labor supply only if the person has been actively looking for work.  People who are not actively looking are then deemed out of the market.

A rich person who is able in body and mind may be out of the labor market because the person doesn't need the income from working.  Such people definitely exist but they are few in number compared to the size of the economy as a whole.  Other people who are out of the labor market, people who are not rich, don't seek employment either because they are disabled in some way or because they are discouraged and have given up looking for work.  ADA is supposed to come to the aid of people in the first category.  I am not expert on how effective ADA is in achieving its goals.  But because it is present I'm simply going to lump those who are disabled but who can't find work into the second category.

Labor Force Participation Rates -  I am not sure what a healthy number is here, but if you think it should be at or above 90% and you see it is in the low 60s% and has been declining for a while, that is disconcerting.  It also explains, perhaps, some of Donald Trump's comments about the true unemployment rate, in his mind the one where the discouraged people are counted as unemployed rather than out of the market.

This document takes a longer view and disaggregates the information in a way to see more of what is going on.  Take a look at Table 1 on page 2.  There are participation rates by age and by gender.  Teen and young adult participation rates are lower as are participation rates of senior citizens.  This sort of difference allows the aggregate rate to be influenced by composition effects.  If there are more people overall in those age categories with low participation rates, the aggregate will fall.  If you look at the rates for males from 55 to 64 over time, that paints a picture that explains the disaffection in older males, particular if you couple it with doing the same type of comparison with the female participation rates for that age bracket and the next younger bracket.

The last of these sort of variables to consider is life expectancy.  Much of a to-do has been made about the recent decline in life expectancy among whites along with the associated increase in opioid use, assumed to be an indication of desperation rather than merely a recreational habit.  Given improvements in medical science, this sort of decrease is unexpected, and a warning sign that some things are not right.

Up till now I have focused on the U.S. only.  Now I want to turn to an international look.  There are two types of variables one might consider.  One type is exchange rates and how the currency of one nation appreciates or depreciates relative to another.  I'm going to ignore that here.  The other type is interest rates.  While there are many possible rates to look at, one way to compare countries is to look at the rate that the Central Monetary Authority charges member banks.  These are on short term loans, I believe one month, with the effective rate then annualized. 

Global Interest Rates Charged by Central Banks - In many countries this rate is quite low.  In Canada it is 0.5%.  In both Europe and Japan it is 0.0%.  In the U.S. the Fed currently has the rate at 0.75%.  Real rates of interest are the nominal rate less the inflation rate on that particular currency.  While I haven't verified this, the countries that have higher interest rates in the table also likely have higher inflation rates, though countries that are experiencing substantial real GDP growth and are already at full employment will have high real interest rates.  So, my interpretation of the low real rates is that the global economy is not growing much if at all beyond population growth, and may not even be keeping up with that.

Closed Economy or Open Economy

Here is an imperfect metaphor by which to consider the issue, but before I get to that I want to note that this is the section intended to bridge the gap from describing the macroeconomy to asking what is good macroeconomic policy.  The metaphor I have in mind is to look at states within the U.S.   If you live in Illinois as I do, should you focus on the economy of Illinois only (closed economy) or focus on the economy of the U.S. overall (open economy)?  When considering policy, which focus is appropriate if you are in state government and thus making that policy? 

Paul Krugman, a noted Keynesian and a vocal Liberal, has been recently making closed economy arguments about the U.S. economy as a whole.  He argues that we are at or near full employment, where we weren't there until quite recently.  Krugman is also dead against Trump.  The arguments Krugman has been making serve as a way to bash Trump.  So those arguments may be made for that reason instead of because they provide the right way to frame the question.

However, a friend who is an economist and is far less politically animated points out that longer term interest rates are rising in the U.S.  As I've already indicated above, there has been a recent blip up in inflation.   This is happening even while global interest rates are very low.  So maybe a closed economy view for the U.S. has some merit now, because full employment has been attained.

Let's make one further observation here.  In the U.S., states don't correlate their fiscal policy.  But, for example, economic activity in Illinois will be influenced by fiscal policy in border states, and vice versa.  And it may be that a policy meant to benefit residents in one state ends up benefiting residents in a neighboring state, while harming residents in the state of origin.   A closed economy focus will ignore those external effects.

Restoring Fiscal Policy as an Option

Immediately after Obama took office, in January 2009, there was a large stimulus package passed by Congress.  During the lame duck session of 2010, before the Tea Party would shift the House majority to the Republicans, there was a second stimulus package passed.  Some have also argued that ACA would have a substantial impact to stimulate employment, by holding down the costs of health care and therefore controlling the costs of hiring additional employees.

There is debate about whether these stimulus packages worked.  In the popular conception, there was also some confounding between the initial stimulus and TARP, which was passed while Bush was still President.  TARP was enormously unpopular, in large part because it seemed to benefit the bankers and financiers who caused the crisis.  The view of the initial stimulus has been similarly tarnished.  But most Keynesian economists think the opposite.  The stimulus prevented a second Great Depression.  An even larger stimulus, and one that didn't include so much in tax cuts for wealthy people, would have done even better.

Since 2011, the Republicans have controlled at least one branch of Congress and in 2011 there was the Debt Ceiling Crisis.  Fiscal policy at the Federal level has been much more contained since.  Republicans have taken control of many state legislatures and governorships as well.  Consequently, fiscal policy has been more contained there.

The consequences have been perplexing.  I will illustrate by going back to a microeconomics look at the situation where I live.  Our house is right across the street from a park.  The park is popular with residents and with non-residents who have little kids.  Often, cars will be parked outside my front door and I see parents taking there kids to the playground where there is a sliding pond and a swing and a sandbox.  The playground is on the west side of the park.  On the east side there is a flower garden that is quite attractive in the spring and summer.  The flower garden is visible to everyone who drives  into the development from the entrance on Duncan Road.   It makes an immediate good impression of the neighborhood.

The park in one of many parks that are part of the Champaign Park District.  They maintain it and do a good job with the upkeep.  The commons areas that surround the walkways in our community are also maintained by the Park District, and that is kept up quite nicely as well.  I believe the entire funding for the Park District comes out of the local property taxes that we pay.

In contrast, many of the roads in the area, including Windsor Road, which is a main drag and heavily utilized, are in a horrible state of disrepair and have been this way for many years.  Some roads, such as Curtis Road, have recently been redone and are in much better shape.  The repaving of Curtis Road was done as an adjunct project to them putting in a new Curtis Road exit on Interstate 57.  So it isn't as if it is impossible to redo the roads.  The issue for why it doesn't happen more broadly is lack of funding.  And here I'm guessing that such funding comes from overlapping jurisdictions - perhaps some Federal funding, certainly some State of Illinois funding, and then perhaps some local Champaign funding as well.  You only have to drive down Windsor Road once to know that it should be redone.  But the politics of getting that to happen now seems will nigh impossible.

During the last campaign there seemed some growing consensus about doing a major infrastructure  package at the Federal level.  We'll see if it comes to pass.  Even if it happens, my guess is that it will be too small and not sustained for long enough.

The construction work that one associates with infrastructure investment generates income for those people doing the work on the project.  Thus, legislation that calls for infrastructure investment is often described as a jobs bill.  If done sufficiently intensively, it can be used as policy to address both low labor force participation and to raise the real wages of unskilled and semi-skilled workers.

Paying for that type of investment requires raising taxes.  If the taxes are put disproportionately on the very wealthy, they will no doubt object to that.  But the macroeconomic consequence should be like the Robin Hood sort of income redistribution discussed earlier.  That is the Keynesian view. 

Wrap Up

My motivation in writing this piece is to consider professionals like myself (doctors, lawyers, accountants, university professors, etc.),who have done quite well in the income distribution, even if we don't consider ourselves rich.  We are much better off than the median household.   We should be paying more in taxes, not for our own private benefit, but for the good of the order.  Further, as there are many more such professionals than there are those who are uber rich, our paying more in taxes sets an ethical tone that the uber rich should pay more in taxes too.  Indeed, they should pay a lot more.

The Republicans as they are currently structured are an anti-tax party.  So the argument I just made will not fly with them.  The question is whether it can fly with upscale Democrats.   It seems to me that if it can the Democrats can get past the critique that the elites don't care about ordinary people.  In contrast, if upscale Democrats appear like Republicans on taxation, I'm afraid they'll fail to put together a winning coalition, even as the country flounders now.