Tyler Cowen: Jeffrey Sachs on Charter Cities, Paul Krugman, and How to Reform Graduate Economics Education

(33:25)

TYLER COWEN: To pick a success from the past, let me mention Poland. In my opinion, Poland has gone very well. It’s a great country. It’s been a success. If I made the following claim, would you agree with it? That you, Jeffrey Sachs, have done more for economic liberty through the medium and history of Poland than almost any other economist alive today? True or false?

.. In 1989, I made recommendations for Poland. I said several unusual things, like “Don’t pay your debts, get debt cancellation. You need emergency, a billion dollars on this date,” and so forth. Everything I recommended actually ended up happening with US government support.

.. Then in Russia two years later I was asked by Gorbachev and then by Yeltsin to help them, because they saw what was happening in Poland. They liked that. They wanted something similar. So I said exactly the same things, and the US government kept saying, “No, no way, no way.” I kept saying, “But that kept working there.”

I didn’t understand it in some deep sense for a long, long time, how weird this was. I knew it wasn’t the difference of economic advice. I understand what a financial crisis is.

TYLER COWEN: Culturally weird, you mean.

JEFFREY SACHS: No, how weird it was in the historical moment that things that had worked extremely well, had shown themselves, where I had had Brent Scowcroft and Bob Dole and others strongly supporting it, all of a sudden just no support from Washington. The IMF saying, “We’re not going to do this.” I said, “But, Richard Urban, you did that two years ago in Poland.” “We’re not going to do it.” “Why?” Flat.

OK. What’s the lesson of this? Quite important, actually. It’s a little bit off-topic, but very important. We didn’t want to help Russia in 1991. We wanted our unipolar world. I didn’t know that at the time.

 

..  I had had Brent Scowcroft and Bob Dole and others strongly supporting it, all of a sudden just no support from Washington. The IMF saying, “We’re not going to do this.” I said, “But, Richard Urban, you did that two years ago in Poland.” “We’re not going to do it.” “Why?” Flat.

.. What I didn’t understand was everything I said about Poland was immediately accepted because it was good advice and because Poland was going to be a bulwark of NATO. Everything I said about Russia didn’t matter whether it was good advice or not. Russia was on the other side.

TYLER COWEN: But China did it without us, without American help for the most part. What is it about Russia that meant Russia couldn’t do it? The problem was not like a Khrushchev-Kennedy dialog. But Russia must have failed in some other way where China more or less did not. What is that element?

.. JEFFREY SACHS: Many things. First of all, Russia faced in 1991 an extremely acute financial crisis. If you haven’t lived through a deep, deep, deep financial crisis, it’s hard to understand what it is.

.. But there’s a big difference of being a urban industrial, broken, Soviet economy.

TYLER COWEN: Which was deindustrializing eventually anyway.

JEFFREY SACHS: Which had so overgrown the investor heavy industry, and it was in a lot of collapse, versus being an agrarian, impoverished country, as China was in 1978. The pathways were bound to be very, very different. The geography is different, by the way, because China’s just filled with people who could do low-cost labor right at the ports on the east coast of China.

Whereas for Russia, it’s almost basically a landlocked landmass that was running off of petroleum which had collapsed in global price, which had collapsed in the physical facilities in the countryside, with collapsing steel mills, collapsing everything.

 

.. Syria had a huge drought, the biggest in its modern history, from 2006 to ’10. It led to many social ramifications that contributed to the explosion of violence starting in 2011.

This fact of these ecological crises turning into social catastrophes, I think, is a very real phenomenon. We should not presume that somehow we’ll just be able to handle this stuff. I’m told constantly, “Crisis leads to innovation and solution.” The truth is that’s sometimes true, and sometimes crisis leads to catastrophe.

 

.. Just a final word about that. We have so much statistical machinery to ask the question, “What can you learn from this dataset?” That’s the wrong question because the dataset is always a tiny, tiny fraction of what you can know about the problem that you’re studying.

If you want to know about the problem, get out there and learn about it. Don’t think that you’re going to find it in your dataset. For that we need a different kind of epistemological approach and a different kind of teaching approach as well.

I want our students out on the hospital wards, as it were

Is Trump mentally ill? Or is America? Psychiatrists weigh in.

Review of “The Dangerous Case of Donald Trump” by Bandy X. Lee (ed.), “Twilight of American Sanity” by Allen Frances, and “Fantasyland” by Kurt Andersen.

“The Dangerous Case of Donald Trump” features more than two dozen essays breaking down the president’s perceived traits, which the contributors find consistent with symptoms of narcissistic personality disorder, sociopathy and other maladies.

.. In his new book, “Twilight of American Sanity,” psychiatrist Allen Frances asserts that Trump is not mentally ill — we are. “Calling Trump crazy allows us to avoid confronting the craziness in our society,” he writes. “We can’t expect to change Trump, but we must work to undo the societal delusions that created him.”

.. And those delusions, Kurt Andersen contends in “Fantasyland,” have been around for a long time. “People tend to regard the Trump moment — this post-truth, alternative facts moment — as some inexplicable and crazy new American phenomenon,” he writes. “In fact, what’s happening is just the ultimate extrapolation and expression of attitudes and instincts that have made America exceptional for its entire history.”

.. The volume’s contributors take solace in Tarasoff v. Regents of the University of California, a 1976 case in which the California Supreme Court held that mental-health experts have a responsibility to speak out when they determine that someone poses a physical danger to others.

.. “The majority of mental health professionals tend to be liberal in their leanings,”

.. Noam Chomsky makes an odd cameo in the book’s epilogue, warning that the Trump administration may stage a fake terrorist attack.

.. Allen Frances wrote the criteria for narcissistic personality disorder used in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM), and he doesn’t think Trump qualifies. In “Twilight of American Sanity,” Frances says the diagnosis requires the patient to experience significant distress because of his condition. But throughout his life, Trump “has been generously rewarded for his Trumpism, not impaired by it,” Frances writes. “Trump is a threat to the United States, and to the world, not because he is clinically mad, but because he is very bad.”

.. He trashes Trump as a “secular antichrist,” a “two-bit, would-be Mussolini,” even an instrument of divine vengeance. “If you were assigned the task of punishing humanity for its original sins,” he thunders, “you could do no better than invent a Donald Trump and give him extraordinary power.”

.. America is delusional not just because it elected Trump, but because it doesn’t conform to Frances’s views on climate change, population growth, technology, privacy, war, economics and guns.

.. Kurt Andersen is here to tell us that America has featured magical thinking and nutty impulses for centuries. Thanks to our mix of religiosity and Enlightenment values — plus the do-your-own-thing vibe of the 1960s and the super-powered distribution channel known as the Internet — Americans have developed a “promiscuous devotion to the untrue,”

.. he chronicles those he considers purveyors of secular and religious pipe dreams, from Cotton Mather to P.T. Barnum, from Walt Disney to Oprah Winfrey. And, of course, from Donald Trump the real estate huckster to Donald Trump the commander in chief.

.. “Fantasyland” reads like the work of an author who comes up with a catchy idea and then Dumpster-dives his way through history for anything supporting it.

.. “Fantasyland” reads like the work of an author who comes up with a catchy idea and then Dumpster-dives his way through history for anything supporting it.

.. “Trump waited to run for president until he sensed that a critical mass of Americans had decided politics were all a show and a sham,” Andersen explains.

At that point, Trump fit right in.

.. writing books lamenting America’s generalized insanity — and the delusions of Trump supporters in particular — may not be the ideal first step to win that trust. For all their expertise in human behavior, these psychiatrists don’t seem well-equipped to coax us out of our current political madness.

Trump Presser Fallout

1. The President of the United States cannot control himself. I know, this isn’t really news, but good grief, it is hard to imagine a president who does more damage to himself by not being able to handle his own temper. Even if he 100 percent believed the things he said today, he ought to have enough sense than to say them publicly. If I worked for this administration, I would send my resume out tonight — if not out of a sense of self-respect, then out of a sense of self-preservation. Trump’s temperament is going to bring his presidency crashing down. It has already started.

2. Trump is openly trying to legitimize people who should never be legitimized. Look at this exchange from today’s press conference

.. Now, let me be clear: there really are very fine people who are opposed to taking down Confederate statues. I know some of them. Their kind would not have gone anywhere near that far-right event in Charlottesville.

Among the far-right groups engaged in organizing the march were the

  • clubs of the neo-Nazi website The Daily Stormer,
  • the neo-Confederate League of the South,
  • the National Policy Institute [Richard Spencer’s think tank],
  • and the National Socialist Movement.

Other groups involved in the rally were

  • the Ku Klux Klan,
  • the Fraternal Order of Alt-Knights,
  • the 3 Percenters,
  • the Traditionalist Workers Party,
  • Identity Evropa,
  • the Oath Keepers,
  • Vanguard America,
  • the American Guard,
  • the Pennsylvania Light Foot Militia,
  • the New York Light Foot Militia,
  • the Virginia Minutemen Militia,
  • the Nationalist Front,
  • the Rise Above Movement,
  • True Cascadia,
  • and Anti-Communist Action.

Prominent far-right figures in attendance included

  • Richard B. Spencer,
  • Baked Alaska,
  • Augustus Invictus [an occultist, by the way — RD],
  • David Duke,
  • Nathan Damigo,
  • Matthew Heimbach,
  • Faith Goldy,
  • Mike Enoch,
  • League of the South founder Michael Hill,
  • AltRight.com editor Daniel Friberg,
  • former Business Insider CTO Pax Dickinson,
  • Daily Stormer writers Johnny Monoxide,
  • self-described “white activist” and organizer Jason Kessler, and
  • radio host Christopher Cantwell.

.. Who among this crew is a “very fine” person? The rally was called “Unite The Right,” so named by organizers because they wanted to bring together all the far-right groups. If you went down to that protest this weekend and marched alongside neo-Nazis and Ku Klux Klansmen, you deserve to be condemned in the strongest possible terms.

3. Trump was right about the role of the antifa provocateurs, and he was right about this:

It is perfectly legitimate to raise the question of where this ends. Once the anti-Confederate crusaders remove all those statues, they’re going to turn on the Founding Fathers who owned slaves. Why wouldn’t they? And on what principle will they be stopped?

..  Christine Emba in the Washington Post. “It’s privileged status, not history, that’s being protected.” If this is a war on symbols of “privileged status,” it can never end.

.. Trump’s point is perfectly legitimate, and an important one. But the aftermath of Charlottesville is not the time or the context in which to discuss it. It is also perfectly legitimate to discuss the role of violent antifa provocateurs — but not when you are the President of the United States, and you are under fire for being unable to straightforwardly condemn neo-Nazis and Klansmen. 

.. The Left is emboldened now, and fired up. Trump is an accelerant. They will get nastier and more confrontational.

.. People on the Right — ordinary people, not far-right activists or people who identify with the far right in any way — will become angrier and more afraid of what the Left in power means for them.

.. watch the reaction to Mark Lilla’s book The Once And Future Liberal, which exhorts the left to abandon identity politics so they can start winning elections.) The radicalized Left will overreach, and we will see even angrier, more conservative Republicans elected to Congress.

.. 5. The Left — including in the media — will now despise all Trump voters equally, without qualification.

.. The liberal journalist Chris Arnade has been doing incredible work actually traveling the country and visiting Trump voters among the down and out. He’s made the point over and over again that a lot of people voted for Trump not because they’re bigots, but because they are in desperate straits, and have concluded that they have been forgotten by elites.

6. Trump has definitively made his brand pure poison. Anybody who stands by him going forward is going to suffer for it. Look at this:

7. The nation is at an extraordinarily weak moment. Nearly two out of three Americans disapprove of the president. That’s bad news for any president, but in Trump’s case, it’s worse, because he’s so polarizing. If this country were to face a serious crisis — a war, in the worst case — do you really see the nation uniting around Donald Trump? If I were an enemy of America, I would see this as an opportunity.

UPDATE: Here is a link to a 22-minute VICE report on the weekend’s events in Charlottesville.  Warning: it is not safe for work, because of language. But you need to see it if you have time. These far-right provocateurs are demonic. At the end, Christopher Cantwell, one of the leaders (and a heavily armed dude from New Hampshire) tells the reporter that the killing of the female protester by the fascist kid driving a car was justified — and that by the time they’re done, there will be a lot more dead. Watch it. It’s chilling.

Could a Lottery Be the Answer to America’s Poor Savings Rate?

Skewness is the idea that some low-probability event could change your life.

.. Prize-Linked Savings (PLS). In a nutshell, PLS is a kind of savings account that pools some of the interest from all depositors and pays out a big lottery prize every month or so. It combines the thrill of the lottery with the safety of a savings account. It’s sometimes called a “no-lose lottery,” since a depositor is automatically entered into the lottery but can’t lose the original money she deposits.

 

In South Africa, this was tried, but the State Lottery later shut it down.