All’s well that ends well

I like magazine articles with interesting endings.  Here are a couple examples:

1.  The Economist brings together Julio Cortázar and Tyler Cowen:

IN “The Night Face Up”””a 1956 short story by Julio Cortázar, an Argentine master of magical realism””a young man lies in a hospital at night, one injured arm held aloft by weights and pulleys. He is tormented by a recurring nightmare in which he is being hunted by Aztec warriors. The dreams are vivid, from the cling and reek of the jungle swamp in which he is captured to the chill of a dungeon floor and the hands dragging him up stone steps to an altar slick with human blood. The gore is mostly hinted at. The story’s menace turns on the man’s repeated struggles to wake and return to his darkened ward.

Across the rich world and above all in western Europe, lots of voters know just how that young patient feels. They yearn to hear that today’s unhappy realities””of austerity and spending cuts, debt, intermittent growth and relative decline””are a nightmare from which they can wake. They long to return to the “normality” of the boom years ended by the credit crunch of 2007.

.   .   .

Cortázar’s story ends with a twist: the man realises that he is, in reality, an Aztec prisoner. Modern life, the hospital, his motorcycle like “an enormous metal insect, whirring away between his legs”, was the absurd dream, falling away as he awaits death.

Britons and other Europeans need to go through a similarly vertiginous moment. For decades workers, faced with exploding global competition, were compensated by governments with cheap goods, early retirement and welfare on credit: a dream of affluence for life to replace jobs for life. Now the competition is as intense as ever, societies are ageing and their nations are poorer than they thought only a few years ago. The boom years were the dream. Hard work and tighter belts are the new reality.

If only “hard work” was new new reality.  Actually, mass unemployment is the new reality.

2.  Reason magazine has Thaddeus Russell review The Other America:

Harrington saw nothing of value in black culture, but he was not a racist—he saw nothing of value in anything produced by poor people of any color.  What he found in Appalachian towns populated by white hillbillies, for example, was “a sort of loose, defeated gaiety about the place, the casualness of a people who expected little . . . In some ways they resembled the stereotype of the happy-go-lucky Negro, and the truth of the description is about the same for both.”  And as with blacks, Harrington could see not only into their souls, but also into their futures: “It was relatively easy to guess which boys might end up in a penitentiary, which girls would become pregnant before they were out of grade school.”

His argument that the poor suffer from a comprehensive degradation leads Harrington to prescribe a totalizing project: the elimination of “the cultures of the poor,” the “abolition of the neighborhoods” in which they live, and “the establishment of new communities” for them.  Of course, according to Harrington, there is “only one institution in the society capable” of carrying out such a project: “That is the Federal Government.”

.   .   .

In fact, Lyndon Johnson’s “war on poverty” deployed legions of social workers, armed not only with the power to extort proper behavior from the poor with welfare payments but also with the prevailing idea that their subjects should be treated as children, with restrictions imposed on their sex lives, leisure time, diet, spending habits, clothing, and grooming styles.  In 1996 the welfare regime tightened its grip with the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), signed into law by another Democrat, Bill Clinton.

.   .   .

Welfare recipients are now instructed in how to improve their attitudes and demeaner so as to be more employable.  In Michigan, Florida, Georgia, and Utah, they are subject to drug testing as a condition of their benefits.  Bills are now before 23 state legislatures that would require testing for people who apply not just for welfare but also in some cases for food stamps, public housing, job training, and even some home heating assistance.

Although few of its left-wing supporters or right-wing detractors know it, our welfare state represents the unity of their cultural values.  It is the dream of Republicans, justified by the ideas of a socialist and enacted by armies of progressive do-gooders, of eliminating not just “the other America” but any other America.

He really nailed it with that final sentence.



18 Responses to “All’s well that ends well”

  1. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    27. May 2012 at 09:42

    Nothing new. The basis for Victorian Morality was the improvement of the culture of England’s lower classes. Which worked, at least somewhat. Anyone who’s seen ‘Gangs of New York’ will recognize our version of that 19th century problem.

    Nor are we free of depredations today;

    ‘It was a scene as creepy as a Hannibal Lecter movie.

    ‘One man was shot to death by Miami police, and another man is fighting for his life after he was attacked, and his face allegedly half eaten, by a naked man on the MacArthur Causeway off ramp Saturday, police said.’

  2. Gravatar of Becky Hargrove Becky Hargrove
    27. May 2012 at 09:44

    Years ago, I remember a welfare worker complaining that one of her ‘families’ had the audacity to allow their dog to have puppies.

  3. Gravatar of John John
    27. May 2012 at 09:55


    I had a question to try to pin down your beliefs on monetary policy.

    Imagine that you controlled a printing press, set up an NGDP futures market, and made sure you spent enough money on your own consumption to keep 5% expected NGDP growth. Would I be able to persuade you to give me that printing press and do the exact same thing by arguing, in classic Chicago School style, that money is neutral. It doesn’t affect wealth distribution, and it only acts on the economy by raising the general “price level”?

    It would seem ridiculous for you to give up a legal money printing press but given some of the reasoning I’ve seen you use, theoretically you’d have to hand it over.

  4. Gravatar of Bill Woolsey Bill Woolsey
    27. May 2012 at 10:55

    I think Sumner’s position is that yes, the issue of currency creates a revenue for the government that it otherwise would not have. This would impact public finances– a decrease in other taxes or more government spending.

    The resources for this added government spending or to fund existing spending despite lower taxes omes from people spending less than their incomes on consumer goods or other assets to accumulate money.

    In a deflationary scenario, money holdings appreciate, and so it is not necessary to build currency holdings by reducing other sorts of spending out of output.

    This solely applies to the hand-to-hand currency issued by the government. With bank issued deposits, the banks earn interest on loans and pay interest on deposits. The nominal interest on both rise with the growth rate of nominal GDP. At least if deflation isn’t too great, superneutrality should apply. The real quantity of deposits, the real amount of lending, and the real interest rates on loans are deposits aren’t impacted.

  5. Gravatar of ssumner ssumner
    27. May 2012 at 11:35

    Patrick, That’s something we just don’t do here in Newton Massachusetts.

    Bonnie, I’m not surprised.

    John, See Bill’s response. There are second order effects from money creation, but in America they are pretty small, as new currency creation is a small share of GDP (much less than 1%.)

  6. Gravatar of Morgan Warstler Morgan Warstler
    27. May 2012 at 17:14

    This is why my Guaranteed Income system is so much more humane.

    The Social Workers are FIRED.

    The computer will suspended your dole the same way Ebay does, but unlike Ebay, after your suspension ends, you are welcome back to the fold.

    The ONLY real task becomes to just get the guy who won you last week to bid on you again. And the computer loves you.


    The process will truly filter out the lazy from the rest, and this will change life:

    1. we will respect the “the rest” – the 80%+ who we KNOW every day get up and have a bossy boss looks to maximize their gain from the labor they bought.

    2. and the lazy, they will be despised by even the 80% who are now working to improve their lot.

    We can FIX humans, the market does it every single day.

    Govt. can’t do it.

    The difference is that the market has no self-interest in the continued failure of the lower class.

  7. Gravatar of Major_Freedom Major_Freedom
    27. May 2012 at 17:18


    This is why my Guaranteed Income system is so much more humane.

    How can your system be GUARANTEED? What is the difference between your “plan” and abolishing the minimum wage?

  8. Gravatar of Morgan Warstler Morgan Warstler
    27. May 2012 at 18:29

    Guaranteed Income = Handout Reform + No Minimum Wage

    My plan make sure that everyone who has their week’s labor auctioned receives $240 every Friday night in the Paypal acct.

    Plus their receive a piece of the bid, so as the bid goes up, the govt. is out less than $240.

    But the plan is a giant money saver from status quo because private companies with subsidized labor are able to bid to privatize the the public sector (the govt. can’t bid) – which makes state and local govts. far less expensive to run.

    It basically ends illegal immigration with 30M Americans priced under illegal labor, illegals leave voluntarily. The ones who stay are TRULY doing jobs no one wants.

    AND MF, it ends the argument that the Fed should print money. There’s no more unemployment.


    If you haven’t read my plan, that’s one thing.

    But if you’ve read it, this stuff should be obvious.

  9. Gravatar of Floccina Floccina
    28. May 2012 at 04:36

    I think that the people’s desire to eliminate poverty is partly about aesthetics and not all compassion, consider we are seeing the beginnings on a war on fat. Fat is not a sign of scarcity but the opposite but those engaged in supporting the effort try desperately to make the case that the scarcity, of grocery stores in poor areas or other high price of fruits and vegetables are the problem.

  10. Gravatar of Saturos Saturos
    28. May 2012 at 09:50

    Tyler doesn’t think monetary policy can help Europe until the banks are guaranteed:

  11. Gravatar of Saturos Saturos
    28. May 2012 at 10:32

    Also Scott, could you please respond to John Cochrane’s latest:

  12. Gravatar of ssumner ssumner
    28. May 2012 at 12:09

    Morgan, Yes, that’s a better way.

    Floccina, That’s right.

    Saturos, He’s confusing money and credit.

    Cochrane underestimates the stimulative effect of Greece leaving the eurozone. But I do agree that 6 months later Greece would still be in bad shape.

  13. Gravatar of Saturos Saturos
    30. May 2012 at 00:01

    This article by Barry Eichengreen is pretty good, isn’t it?

  14. Gravatar of ssumner ssumner
    30. May 2012 at 12:41

    Saturos, Very good, but I’d quibble with the opening sections. In both the 1930s and today they weren’t “hit” by a deflationary shock, their policymakers caused it.

  15. Gravatar of John John
    30. May 2012 at 14:55

    I’d like to enjoy small second order effects equal to 1% of GDP. That would make me the richest man in the world in less than 6 months. Joking aside, I can’t understand how it seems that you’re denying that the path new money takes through the economic system means more than the after the fact construction of a price level. It seems like the economics profession is taking gross shortcuts to seem more scientific.

  16. Gravatar of ssumner ssumner
    31. May 2012 at 14:44

    John, There is no way of knowing the path money takes through the economy, there is no GPS on dollar bills. And market price movements tell us nothing, as lots of money is transacted in markets both when prices are rising and when they are falling.

  17. Gravatar of dwb dwb
    31. May 2012 at 15:09

    there is no GPS on dollar bills
    never say never

  18. Gravatar of Major_Freedom Major_Freedom
    31. May 2012 at 15:19


    Guaranteed Income = Handout Reform + No Minimum Wage

    Handout Reform = ???

    the plan is a giant money saver from status quo because private companies with subsidized labor are able to bid to privatize the the public sector (the govt. can’t bid) – which makes state and local govts. far less expensive to run.

    Why can’t the government hire people outside this auction system?

    AND MF, it ends the argument that the Fed should print money. There’s no more unemployment.

    That can be done by abolishing the minimum wage and all other labor market regulations that artificially increase the cost of labor.

    My plan is even less costly than yours, because no bureaucratic machination is funded by the taxpayers.

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