In a series of posts which you can find here, I have been trying to formulate an answer to the question why has neoliberal economics not been tossed out in the wake of its total failure as demonstrated by the Great Crash. I’ve used as a lens Thomas Kuhn’s seminal essay: The Structure of Scientific Revolutions. I am totally dissatisfied with the usual progressive explanations of bad faith, whether in the form of the ubiquitous quote from Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends on his not understanding it;” or direct or indirect accusations of intellectual dishonesty or corruption. The world is more complex, and we need to think more deeply, especially if we want to change things. Here is a list of the most important things I think I learned from the exercise.

1. Kuhn argues that science cannot proceed without a paradigm. That seems true in the hard sciences, but it seems inadequate as a description of the social sciences. Even so, there it remains an important insight. This series offered insights because I used the paradigm paradigm to examine a specific problem.

2. Following Mark Blyth, it seems that there are a number of schools of economics. These include neoliberals, post-Keynesians, Austrians, rational expectations theorists, and real business cycle theorists; to which we can add Modern Money Theorists, Marxians, and perhaps Piketty and his colleagues. Each of these has a paradigm through which it tries to organize the vast amount of data and theory we have accumulated over the centuries. Each has its own incommensurate ideas about what counts as data and about how to interpret the data. In other words, they each have a definition of truth, and their truth claims cannot be settled inside their paradigms, as Kuhn tells us is true about the hard sciences.

That means that the decisions about which, if any, of these schools dominates at any point in time has nothing to do with some transcendent truth, but rather with a struggle over politics.

3. This view was reinforced by a reading of Keynes’ delightful essay The Death of Laissez-Faire, which actually didn’t die despite Keynes best efforts, but lives on in the grifter stylings of Grover Norquist and the rest of the zombie right wing. If Keynes caouldn’t kill it, it is permanent.

4. It is further reinforced by Bronfenbrenner’s suggestion that paradigms in the social sciences are not replaced outright as Kuhn argues, but are met by an antithesis, and eventually fall into a new synthesis. I suggest that Paul Samuelson follows this approach in his textbook, based on the back inside cover. In a Hegelian or Marxian world, this is supposed to represent progress, but I’ve always thought of it a just something different that might or might not be useful in a specific social situation.

5. I laid out the seeds of a paradigm for neoliberal economics in this post. In passing I pointed out that Mankiw’s principles are couched in bland language, but they can easily be interpreted to carry out the neoliberal program. See 8. below. Again in passing, I note that tweaking them, and setting up a slightly different paradigm can produce a better solution to the problems our economy faces. That is an exercise for another day.

6. One crucial problem that arises from the existence of many schools of economics is that each can claim that there are no tests that disprove it. As Kuhn and others point out, that’s because the meaning of facts and truth is determined by the paradigm, and neither facts nor truths are commensurate across paradigms. That’s why the likes of Gary Becker and N. Gregory Mankiw can claim that the Great Crash was not a problem for neoliberal economics. What looks like a failure to a person who got hammered looks like the normal course of events to an ideologue married to a paradigm.

7. The neoliberals recognized the importance of politics in economics long before the liberals. They wrote their views into textbooks, which have a thin veneer of science and a thick veneer of authority, and used them to indoctrinate generations of college grads who only took one or two economics classes. They also arranged to have the basic tenets taught in high school classes mandated in many states on the wonders of capitalism. As Kuhn explains, the textbook is the authoritative teaching tool for creating new scientists and presumably new followers of the dominant school of economics. The tenets of neoliberal economics are taught as if they were the only way to understand capitalism, and any other set of ideas are communist or socialist, by which we are to understand they are evil.

8. One factor Blyth doesn’t discuss is why neoliberal economics has such a hold on the populace. Certainly a big part of that is the domination of authoritative discourse through the textbook process in point 7. Another crucial point is that without quite saying so, Mankiw’s principles of economics play directly to the prejudices of the a large segment of the voting public. Take the first one as an example: People face trade-offs. Some people face the trade-off between summering in the Hamptons or on Martha’s Vineyard. Others face trade-offs between rent and food. These are the same thing to neoliberals, who sneak in a bunch of outmoded Benthamite utility. And these are also the same for a huge number of conservatives. Suck it up and pick. It’s your fault for not being rich.

The rich people who dominate elections and the public discourse in general can rely on those principles in anodyne form to pacify the liberals while dog-whistling to their base of conservatives.

9. As a result, the voices of authority on economic matters don’t have to listen to anyone who disagrees with them. They have a base of voters who think it’s great to screw the poor and don’t even necessarily want to accept anything that comes from the government.

10. We need to focus attention on the political nature of economic paradigms. Neoliberal economics failed. We need to hammer home the failure, to undermine the authority of neoliberals on economic matters.

UPDATE
Here are links to the posts in this series with a note about each.

1. The Two Prongs of the Neoliberal Project. This is a justification of the inclusion of economics at this blog. It is also a general introduction to neoliberal economic theory.

2. Paradigms in Economics. This is an introduction to Kuhn’s theory of scientific revolutions and an introduction to a theory of paradigms in economics.

4. Paradigm Change in Science and Economics. This is a discussion of Kuhn’s explanation for paradigm change in science, and begins the discussion of the comparable problem in economics.

5. A Possible Paradigm for Neoliberal Economics. N. Gregory Mankiw’s textbook lists 10 principles of economics. This post takes those and a simple methodology as a possible paradigm for neoliberal economics. In passing, I discuss an actual paradigm change that seems to meet the requirements of Kuhn’s analysis.

6. Pragmatic Aspects of Paradigm Change According to Kuhn. This addresses Kuhn’s argument that even in the hard sciences, paradigm change requires persuasion, because the superiority of an alternative paradigm cannot be tested inside a different paradigm. This idea is applied to economics, and specifically to textbooks.

7. Keynes on Paradigm Change. John Maynard Keynes calls for the death of laissez-faire, especially in its virulent form of demanding that government do nothing. Economic ideas don’t die.

8. Paradigm Change Through Authority and Arguments about Truth. This is a discussion of a more sophisticated approach to changes in economics paradigms through a paper by Mark Blyth. Blyth offers a grounded approach to the problem of change as a result of authority and persuasion.

You’d think that in the sciences, paradigm change would be quick and painless. But Thomas Kuhn shows that it isn’t so in The Structure Of Scientific Revolutions. Most significant changes in physics, chemistry and astronomy, the examples Kuhn discusses, happen over a significant period of time. Kuhn discusses the problem at length. One factor is that there can be no proof of a scientific theory inside the existing paradigm, or inside the new one for that matter. As Kuhn says:

The premises and values shared by the two parties to a debate over paradigms are not sufficiently extensive for that. As in political revolutions, so in paradigm choice—there is no standard higher than the assent of the relevant community. To discover how scientific revolutions are effected, we shall therefore have to examine not only the impact of nature and of logic, but also the techniques of persuasive argumentation effective within the quite special groups that constitute the community of scientists. P. 93.

Kuhn identifies several methods of persuasion. First, there is the possibility that the new paradigm allows solutions to problems that the old one doesn’t. This would be highly persuasive, but it is rare. Normally it takes quite a while to work out the parameters of the new paradigm before it begins to yield better solutions to most problems. He also discusses the aesthetic aspects of solutions. Some, as the mathematicians say, are more elegant, more intellectually pleasing. That is attractive to some scientists, who begin to work in the area, and establish the conditions for more complete articulation of the new paradigm that produces better results and eventually persuades others to take up the new paradigm.

How do these observations apply to economics? Neoliberal ideas do not prescribe solutions to problems that were unsolvable by other schools of economics. Mankiw tells us that “The study of economics has many facets, but it is unified by several central ideas.” P. 4. Mankiw’s 10 Principles of Economics as the beginnings of a paradigm, as I discuss here, I don’t see anything particularly insightful or aesthetically pleasing. Here they are again:

1. People face tradeoffs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country’s standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces a short-run tradeoff between Inflation and unemployment

On close examination, they seem like an ad hoc collection of aphorisms based on a highly reductive view of human beings, and trite observations with little intellectual content (people face trade-offs?). More importantly, they have a strong ideological content: the solutions and the policy directions that they will support can easily be inferred. A different set of principles would produce a different set of solutions and policies.

As an example, look at number 8. It seems ambiguous. Perhaps Mankiw is talking about the production of goods and services for sale in the private sector. Does a counter-example spring to mind? China? They have a huge capacity to produce goods and services, and they have a low standard of living compared to the US, which has substantially reduced its capacity to produce goods other than food and lately and, at enormous environmental cost, petroleum.

Besides, what is the measure of standard of living? And when did it become an explicit goal of US economic policy? If standard of living includes health care, a decent environment and a functional infrastructure, how can we even say we or the Chinese have an acceptable standard of living? Can we think of alternatives to production of goods and services to produce a good standard of living? How about conquest and rapine? It worked for centuries and still does today.

Well, it turns out Mankiw meant that if the productivity of workers rises, then their standard of living improves. P. 13, Principles of Macroeconomics, Sixth Ed., 2011. This isn’t true in the US today, if it ever was and the proof generally offered is just nonsense from the Natural Law. In a 2006 blog post, Mankiw acknowledges that the labor share has been dropping while productivity was rising, for reasons he can’t quite explain. He remains untroubled, and includes this stuff in his book years later in the face of years of evidence to the contrary. It doesn’t sit well with his claim that economists are objective like scientists. P. 22.

Kuhn talks about textbooks at some length. They are essentially summaries of the scientist’s paradigm, detailed statements of things the scientific community agree are true at a point in time. He asserts that textbooks introduce the student to the conclusions of the community of scholars in a field, and enable the student to master the techniques necessary to progress from the more or less well-solved problems in the textbook to the problems at the edge of agreed results.

I think textbooks are important in economics, too. They introduce the student to the dominant ideas at a point in time. They implicitly assert that those ideas have the same degree of certainty that the equations for the Lorentz–FitzGerald contraction have. That certainty stays with students whether or not they go on in the field. Thus, economics education is one of the reasons for the hegemony of the neoliberal school of economics. And it’s not an accident. The rich contribute heavily to teaching this ideology in colleges and high schools. When people believe in a set of “principles” like those taught by Mankiw to the nation’s elites-in-training at Harvard, it’s difficult to change their minds as they age. So that’s one reason economists don’t change anything. They don’t have to. There is no demand from the elites for anything new.

Kuhn argues that textbooks disguise the actual process of changes in the dominant paradigms, by reconstructing the history of change.

From the beginning of the scientific enterprise, a textbook presentation implies, scientists have striven for the particular objectives that are embodied in today’s paradigms. One by one, in a process often compared to the addition of bricks to a building, scientists have added another fact, concept, law, or theory to the body of information supplied in the contemporary science text. P. 140.

You can see echoes of that view in the various writings I’ve discussed in this series, including Stigler, and it’s open in Samuelson and Nordhaus, who include a chart showing something like that on the back inside cover of Economics, 18th ed, 2005. You see it in both the textbooks I’ve mentioned, which pay little attention to the origins of the ideas they contain, whether the French Physiocrats, the Natural Law adherents, or the Benthamites. These ideas persist, they are not rooted out of the textbooks and continue to infect our public discourse. I’m sure those ideas would be much less persuasive if people understood that they arose from ideas like Natural Law.

This leaves the process of change in the paradigm to the experts in the field, the economists themselves. They don’t seem troubled by their failures, but they are fully insulated, both in their wallets and in their tenure, and are supported by wealth. So there is no reason to expect them to change on their own.

Amid posts bewailing Rand Paul because the Senator’s substantial discussions of the problems with EO 12333 and Section 702 spying aren’t the substantial discussions he wants (I’ll return to these once more pressing matters have passed), Steve Vladeck has returned to the USA F-ReDux topic on which he doesn’t keep contradicting himself: the amicus.

As he notes (and I noted here), Mitch McConnell is (as we speak) attempting to water down the already flimsy FISC amicus via amendment. And Vladeck — as he has before — exposed the false claims that the objections to the amicus comes from the judiciary, this time as represented in the letter from Director of the Administrative Offices of US Courts James Duff.

Why is such a radical amendment to a provision in the House bill that was negotiated very carefully so necessary? According to the memo, “Amendment 1451 is responsive to the judiciary’s continual opposition to the amicus structure of the USA Freedom Act,” as manifested in “a letter to Congress from the director of the Administrative Office of the U.S. Courts.”

[snip]

I don’t mean to belabor the point. If anything, as I suggested yesterday, section 401 of the House-passed USA FREEDOM Act is a terribly weak version of what should have been a very good (and unobjectionable) idea–allowing a security-cleared outside lawyer to participate in the tiny percentage of cases before the FISC that involve applications for anything besides individualized warrants (you know, the cases in which adversarial participation is already authorized).Part of why section 401 is so weak is because members of Congress have consistently allowed themselves to be snookered by (or have found it convenient to hide behind) the objections of the “judiciary.”

On the merits, though, these objections are patently unavailing. And they certainly aren’t the objections of the “judiciary.”

I’ve also tracked how others, like James Clapper, have been using these purported judiciary concerns to undercut the “advocate” that President Obama used to pretend to want.

What’s particularly interesting, however, is one of the recurrent problems the “judges” seem to keep having. Duff emphasizes that one problem with amici is the Executive would lie to the FISC if telling the truth might risk revealing useful information to an amici. And as one part of that, he focuses on USA F-ReDux’s intent to get

Designated amici are required to have access to “all relevant” legal precedent, as well as certain other materials “the court determines are relevant.

[snip]

We are concerned that a lack of parallel construction in proposed clause (6)(A)(i) (apparently differentiating between access to legal precedent as opposed to access to other materials) could lead to confusion in its application.

This is what Clapper seemed to be going after last September.

Clapper signals he will make the amicus curiae something different. First, he emphasized this amicus will not interfere with ex parte communications between the court and the government. That may violate this passage of Leahy’s bill, which guarantees the special advocate have access to anything that is “relevant” to her duties.

(A) IN GENERAL.—If a court established under subsection (a) or (b) designates a special advocate to participate as an amicus curiae in a proceeding, the special advocate—

[snip]

(ii) shall have access to all relevant legal precedent, and any application, certification, petition, motion, or such other materials as are relevant to the duties of the special advocate;

Given that in other parts of 50 USC 1861, “relevant” has come to mean “all,” it’s pretty amazing that Clapper says the advocate won’t have access to all communication between the government and the court.

But the really interesting thing — the reason McConnell’s as-we-speak attempt to gut the amicus further — is that the House already fixed some of this. In a manager’s amendment presented as technical clarifications (but which, on this issue, were not), Bob Goodlatte rewrote this passage:

(i) shall have access to all relevant legal precedent, and any application, certification, petition, motion, or such other materials that the court determines are relevant to the duties of the amicus curiae;

To read like this, to directly address one of Huff’s stated concerns:

(i) shall have access to any relevant legal precedent, and application, certification, petition, motion, or such other materials that the court determines are relevant to the duties of the amicus curiae;

That is, Goodlatte already gave the court complete discretion over what the amicus could access, up to and including underlying legal precedents.

Of course, all that assumes the courts will get all the information they need, which they have a long history of not doing.

Here’s the real takeaway though. The President likes to claim he supports this reform. But he has already made it clear he didn’t really want an advocate at the FISC, but would instead like the FISC to remain a rubber stamp.

As luck and airplane schedules and Senate debate would have it, Jim missed all of U Florida’s extra time win over Auburn. And I missed all of U Michigan’s “shorter than a cloture vote” game against LSU.

That means Monday night, our softball teams square off for all the marbles. Female Babe Ruth (she just hit 70 home runs, pitching wins, and player of the year) Lauren Haegar takes on bad-ass Sierra Romero and a whole lot of hitting oomph.

There were a few Pac-12 teams in the World Series, but it was really UM against the SEC, singlehandedly.

Which is why you should all root for UM, cause it’s the only thing standing between you and SEC overlordism.

As I noted, DOJ’s Inspector General has finally liberated the report on Section 215 use through 2009 that it finished almost a year ago. The key takeaway is that FBI continued to blow off privacy protections required by Congress in 2006 until 2013.

This will be a working thread on the rest of the report. Page numbers will be PDF.

For ease of access, here’s my table on Section 215 orders by year.

PDF 7: There was some double digit number of requests withdrawn.

PDF 7: The report breaks out how many were submitted by other agencies and how many by the FBI.

PDF 7: FBI was already getting a lot of Internet collex in 2009.

PDF 7: 3 reasons why the numbers of USPs is not the same affected: those who weren’t subjects of investigation, those who fit into weird def of USP, and those who were incidental.

PDF 7: FBI is clearly getting a lot of this voluntarily.

PDF 7: As you read the blacked out numbers of non-FBI requests, remember that the number of phone dragnet orders for that period is public: 15. If they just had one other bulk collection program (the Western Union CIA one?) that would be another 15 orders.

PDF 9: I think I’ll start to call Section 215 the “Gigabytes of Metadata and Other Electronic Information” program.

PDF 11: Report notes that NSD submits all applications to get around the statutory gig.

PDF 15: It’s clear the government at first told IG that no one had ever challenged an order, but the modified that (presumably after Snowden).

PDF 16: They use the “FISA Management System” to apply. Which probably means that’s where the data goes in?

PDF 16: “Some Section 215 requests originate from FBI Headquarters.” This may mean they use requests to parallel construct something else, as stuff that arises there often does.

PDF 19: Big redaction on USP data that exists in NSI guidelines. May mean default non-USP, same way 702 MPs work.

PDF 20: Note December 16, 2009 letter. Came at the end of a year of problems with FISC. There was also an October 28, 2009 one.

PDF 20: Someone asked FBI nicely to adopt other minimization procedures in the “redacted” manner (could be CIA, but could also be the first of the Internet ones).

PDF 23: Govt redacted the entire discussion of what led DOJ to finally follow the law.

PDF 23: The minimization procedures do not have a destruction data, which means stuff that has been determined FI will be retained 30 years.

PDF 23: Note the redacted footnote on the classified directive on US person status.

PDF 23: These MPs seem to resemble the 702 ones, which entail not looking at data but then declaring it FI.

PDF 24: The entirely redacted paragraph appears to address dissemination.

PDF 24: DOJ first started referencing FPs in August 2013.

PDF 29: In case there was any question about whether Section 215 gets dumped in with the rest of FBI’s FISA data.

PDF 30: This procedure is very similar to Section 702 procedures.

Which likely means the non-FISA-trained access is through complete copies of metadata as happens with 702 data.

PDF 32: There are 3 kinds of metadata in FBI’s stash. The distinction of what is metadata is probably important because the MPs likely let FBI copy entire databases of metadata (as they do under Section 702).

PDF 32: Yet more proof the treatment of 215 data is close to 702 data. This may respond to issues about whether someone is a USP, which pertains to First Amendment review. (see PDF 40)

PDF 33: “The type of information that is categorized as metadata will likely continue to evolve and expand.”

PDF 34: FBI has claimed DOJ IG can’t have access to 215 info to see if it is complying.

PDF 36: So AG Holder had to intervene in spat between NSD and FBI, which led them to submit MPs to the FISC in 2010, but the FISC rejected those. Remember one of the earlier debates was over the meaning of PII.

PDF 37: The numbers for 2006 seems to suggest there were 32 combined orders in 2006, some of which included subscriber data, some of which included CSLI. Note the reference to an odd app in 2008.

PDF 40: The report notes that there is some doubt about whether someone is a USP in a cyber investigation. This probably relates back to the PDF 32 comment, and that may in turn be a source of uncertainty in 702 investigations.

PDF 40: It looks like the classified directive pertains to how you deal with IP?

PDF 40: It makes it clear that there are two bulk programs.

PDF 41: First example is a short-term app (3-days) which ended up having material misstatments about where the tip — about the content of a phone call!!! — came from.  The FBI agent “is no longer with the FBI.” Oh, okay.

PDF 42ff: Second example is an Agent who applied for stuff normally obtained using NSLs, but for some reason he wanted to do 215. That resulted in significant minimization concerns. This is where the investigative value exception for accessing 215 databases derived from.

PDF 45: This one involved a supplemental order. Even after that DOJ IG found some inaccuracies that weren’t noticed to FISC until June 13, 2013 (it was a 2009 order).

PDF 47ff: This one involves medical and education records (the request was from a CT target’s employer). This one involved another error. This one also showed the subject had no nexus to terrorism.

PDF 50: This looks like they were (are) still using PRBR orders, presumably for location?

PDF 51: This was the one cyberhackery investigation (dating to 2009). It got modified. The Agent claimed he lost the original production and said most of what got kept was publicly available and so didn’t minimize it.

This looks like the redaction on the 3 kinds of metadata elsewhere in the report, obtained w/a PRTT or PRBR.

PDF 53: In addition to making clear that they use 215 where nothing else can be used it shows that FISC does police content of EC but not of other things (which I expected).

PDF 53: Some clarification of what is considered a modification.

PDF 63: Horowitz appears to have written the IG Report with the expectation Stellar Wind might not come out, because this is less detailed than that in ways that align more with what has been publicly released.

PDF 66: Whoa. This suggests there are a lot more sources of telephony metadata (or EO 12333 is even more interesting than I know–or that they’re hiding SPCMA still).

PDF 74: In several cases the FISC doubted that targets were non-USPs.

Mitch McConnell, as you’ve probably heard, has just introduced a bill to reauthorize the expiring provisions of the PATRIOT Act until 2020.

The move has elicited a bunch of outraged comments — as if anyone should ever expect anything but dickishness from Mitch McConnell. But few interesting analytical comments.

For example, Mitch is doing this under Rule 14, meaning it bypasses normal committee process. But that’s not as unusual, in ultimate effect, as people are making out. After all, last year the House Judiciary Committee was forced to adopt a much more conservative opening bill under threat of having its jurisdiction stripped entirely — something that Bob Goodlatte surely liked because it helped him rein in the reformers on his committee. Particularly given Chuck Grassley’s dawdling, I suspect something similar is at issue, an effort to give him leverage to rein in last year’s USA Freedom Act in order to undercut Mitch’s ploy.

Moreover, I think it would be utterly naive to believe Mitch and Richard Burr when they claim they would prefer straight reauthorization.

That’s because we know the IC can’t do everything they want to do under Section 215 right now. While reports that they only get 30% of calls are misleading (not least because NSA gets plenty of international calls into the US under EO 12333), for legal or technical or some other reason, the NSA isn’t currently getting all the records it needs to have full coverage. But it could get all or almost all if it worked with providers.

In addition — and this may be related — the NSA has never been able to turn its automated processes back on for US collected telephone data since they had to turn them off in 2009. They gave up trying last year, when Obama decided to move data to the providers. I suspect that the combination of mandated assistance, record delivery in optimal form, and immunity will permit NSA to dump this data into its existing automated system.

So while Mitch and Burr may pretend they’d love straight reauthorization, it is far, far more likely they’re using this gambit to demand changes to USAF that permit the IC to claim more authorities while pretending to reluctantly adopt reform.

And chief on that list is likely to be data retention, something reformers have been conspicuously silent about since Dianne Feinstein revealed USAF would have had a data retention handshake, but not a mandate. Data retention is why most SSCI members opposed USAF last year, it’s why Bill Nelson (working off his dated understanding of the program from when he served on SSCI) voted against it, and Bob Litt has renewed his emphasis on data retention.

Moreover, given the debates about encryption of the last year, especially Jim Comey’s concerns that Apple would have an unfair advantage over Verizon if it can shield iMessage data, I suspect that by data retention they also mean “forced retention of non-telephony messaging metadata.” I’m not sure whether they would be able to pull this off, but I wouldn’t be surprised if the IC plans to use “NSA reform” as an opportunity to force Apple to keep iMessage metadata.

So that’s what I expect this is about: I expect Mitch deliberately caused outright panic among those fighting straight reauthorization that even he doesn’t really want to demand more things from this “reform” bill.

I’ve been following the recent PR battle between Saudi Arabia and Iran as they square off over Yemen and their other proxy battles across the greater Middle East. Of particular interest has been the accusation by Iran that two Iranian teenage boys were sexually assaulted at an airport as they returned from visiting holy sites in Saudi Arabia. The incident apparently took place in March but took a while to achieve the level of attention it is now commanding. Although Iran now has actually cancelled Umrah trips to Mecca and Medina (these are the lesser trips to the holy sites; Hajj this year will be in September), Iran’s description of the incident has evolved away from certainty that sexual assault took place down to stating that sexual assault was only attempted.

For example, here is the Mehr News announcement of cancellation of Umrah linked above:

In an order to Iran’s Hajj and Pilgrimage Organization, Iranian Minister of Culture and Islamic Guidance Ali Jannati suspended Umrah to Mecca and Medina in Saudi Arabia in protest to sexual assault attempt against two teenage Iranian boys by Jeddah airport security forces.

“I have ordered the Hajj and Pilgrimage Organization to suspend the Umrah pilgrimage until the criminals are sentenced and punished,” Ali Jannati asserted.

The airport security agents harassing two Iranian young Hajj pilgrims are kept in custody, Jannati said, adding that Saudi officials had promised to exert maximum punishment on the perpetrators behind the assault at Jeddah airport.

Contrast that description of “sexual assault attempt” with this language from a PressTV article dated April 8:

Iran has submitted a note of complaint to the Saudi government over sexual abuse of two teenage Iranian pilgrims by Saudi officers at the King Abdulaziz International Airport in Jeddah.

/snip/

While performing body search on passengers, Saudi officers allegedly took the 14- and 15-year-old teenagers away citing suspicion, sounded off the alarm at the gate, and subjected them to the immorality.

Afkham said Saudi authorities had voiced disgust at the abuse and said its culprits would face religious and legal punishment upon establishment of their crime.

On April 8, then, we have frank “sexual abuse”, but only three days later it went down to the point that PressTV said the boys were “sexually harrassed” rather than abused:

Saudi officers sexually harassed two Iranian teenage boys at the King Abdulaziz International Airport in Jeddah two weeks ago, prompting Tehran to submit a note of complaint to the Saudi government, according to Iran’s Foreign Ministry spokeswoman, Marzieh Afkham.

We then go from the April 11 “sexually harrassed” to today’s downgrade to attempted sexual assault. AP’s report on the situation yesterday afternoon noted that just what actually took place is unclear:

The alleged abuse, the details of which have not been publicly disclosed, sparked unauthorized protests at the Saudi Embassy in Tehran on Saturday. Public anger has grown over the incident, with President Hassan Rouhani ordering an investigation and Iran’s Foreign Ministry summoning a Saudi diplomat for an explanation.

But what actually happened remains unclear. On Monday, a representative of Iran’s top leader on hajj affairs downplayed the case, saying the pilgrims weren’t abused, the semi-official Fars news agency reported.

“In the incident, no abuse has happened and the two policemen who attempted abuse were identified and detained by Saudi police,” Ali Ghaziasgar was quoted as saying.

Isn’t it interesting that Iran’s description of the incident didn’t soften until the very day that the “unauthorized” protests took place? Although described as unauthorized, the protests were mentioned by the major Iranian news outlets I scan, so Iran clearly intended to use them to portray Iran as victimized by the Saudis in the incident. But now that the protests have taken place and gotten their attention, we are finding out that no sexual assault likely even took place and the Saudis have placed the two policemen under arrest for attempted assault. It will be very interesting to see what happens at any trial these policemen might face and how each side will portray the outcome.

The neoliberal project offers a vision of two classes, the rich, and homo economicus, the consuming human. Homo economicus is a new creature in the world, one of a long string of visions offered to the great mass of humans by the elites. It has sunk in so quickly that we are often unable to perceive the changes in our fellow humans, or even in ourselves. A simple way to imagine this is to ask what happened to the 40-hour work week, that triumph of social engineering, that badge of the middle class, handed down to baby boomers by their parents as a proud accomplishment of their parents and grandparents. Now we, all of the workers of this country, scramble to put together a work life from bits and pieces, a misery endured by adjunct professors and fast-food workers alike; or we are so moored to work that we have no actual human life, like these hominids described by Digby.

Philip Mirowski describes homo economicus in his book Never Let a Serious Crisis Go to Waste, especially Chapter 3, Everyday Neoliberalism. One of the central attributes of neoliberal humans is ignorance, meaning a perfect inability to decide on what will bring about the best outcome for society. The only function consuming humans can perform is choosing among the alternatives presented by the markets at the moment, whether it’s for consumption or for the purchase of their labor. Mirowski quotes a passage from The Birth of Biopolitics in which Michel Foucault discusses Adam Smith’s invisible hand:

For there to be certainty of collective benefit, for it to be certain that the greatest good is attained for the greatest number of people, not only is it possible, but it is absolutely necessary that each actor be blind with regard to this totality. Everyone must be uncertain with regard to the collective outcome if this positive collective outcome is really to be expected. Being in the dark[,] and the blindness of all the economic agents are absolutely necessary. The collective good must not be an objective. It must not be an objective because it cannot be calculated, at least, not within an economic strategy. Here we are at the heart of a principle of invisibility. … It is an invisibility which means that no economic agent should or can pursue the collective good.

Again, ignorance in this sense means that individuals are not capable of doing more than deciding what is in their personal interest. In other words, they are the rational choice mechanisms in the markets envisioned by neoliberal economists, and, in fact, among almost all economists through the theory of microfoundations. Individuals lack any useful agency beyond satisfying their desire of the moment. Perhaps at a later moment, they discover and satisfy another desire. Then perhaps they work at their jobs, to earn money to consume something to satisfy the desire of some other moment.

Now look at the absurd Mersault, as drawn by Camus in The Stranger. He has no interest in past or future, only the present. He only moves to satisfy a want in a moment of time. Here’s an example from the older Stuart Gilbert translation:

I told Marie about the old man’s habits, and it made her laugh. She was wearing one of my pajama suits, and had the sleeves rolled up. When she laughed I wanted her again. A moment later she asked me if I loved her. I said that sort of question had no meaning, really; but I supposed I didn’t. She looked sad for a bit, but when we were getting our lunch ready she brightened up and started laughing, and when she laughs I always want to kiss her.

Mersault is not stupid. He has a good job, does well at it, and is offered a transfer from Algiers to Paris to open a new branch for his employer. Here’s his response.

I told him I was quite prepared to go; but really I didn’t care much one way or the other.
He then asked if a “change of life,” as he called it, didn’t appeal to me, and I answered that one never changed his way of life; one life was as good as another, and my present one suited me quite well.
At this he looked rather hurt, and told me that I always shilly-shallied, and that I lacked ambition—a grave defect, to his mind, when one was in business.
I returned to my work. I’d have preferred not to vex him, but I saw no reason for “changing my life.” By and large it wasn’t an unpleasant one. As a student I’d had plenty of ambition of the kind he meant. But, when I had to drop my studies, I very soon realized all that was pretty futile.
Marie came that evening and asked me if I’d marry her. I said I didn’t mind; if she was keen on it, we’d get married.

Here’s how Jean-Paul Sartre, another investigator of the absurd, describes The Stranger:

Each sentence is a present instant, but not an indecisive one that spreads like a stain to the following one. The sentence is sharp, distinct, and self-contained. It is separated by a void from the following one, just as Descartes’s instant is separated from the one that follows it. The world is destroyed and reborn from sentence to sentence. When the word makes its appearance it is a creation ex nihilo. The sentences in The Stranger are islands. We bounce from sentence to sentence, from void to void….

The sentences are not, of course, arranged in relation to each other; they are simply juxtaposed. In particular, all causal links are avoided lest they introduce the germ of an explanation and an order other than that of pure succession….

[Can] we speak of Camus’s novel as something whole? All the sentences of his book are equal to each other, just as all the absurd man’s experiences are equal. Each one sets up for itself and sweeps the others into the void. But, as a result, no single one of them detaches itself from the background of the others, except for the rare moments in which the author, abandoning these principles, becomes poetic.

This describes Homo Economicus perfectly. I buy something, and the marketplace moves on to the next instant. Perhaps I buy something else. It really doesn’t matter. The market doesn’t care. It has no meaning. The next instant occurs. The absurd person has no sense of past or future. There is only the minute. Then the next minute. Both the market and the person are unable to see a future or a past. This is the life neoliberals envision for us.

In the middle of The Stranger, Mersault kills a man. At the end, he is convicted and sentenced to death. It doesn’t mean anything. It could have happened another way. Mersault is happy with his life. So is homo economicus. I guess.

Several commenters have pointed out definitional problems with the term “utility” as used in neoclassical economics, including Tarheel Dem, rg and Alan. As I noted in the linked post, Samuelson and Nordhaus are careful to call utility a “ scientific construct”, and not a measurable thing. Philip Mirowski is very helpful in clarifying what this remarkable notion might mean. I’ve referred several times to this paper, Physics and the “Marginalist Revolution”, in which Mirowski offers a brief, perhaps too brief, explanation, which he incorporated into a dense, perhaps too dense, book, More Heat Than Light: Economics as Social Physics, Physics as Nature’s Economics. I’m slowly making my way through the book, but the paper is probably enough for a decent understanding of one issue.

Mirowski says that the four most important neoclassical economists were hooked on the physics of the day. All of them, Jevons, Pareto, Walras and Edgeworth, were trained in math and physics, and all had at least some acquaintance with the work of Jeremy Bentham. They were also quite explicit that their ideas were congruent with the emerging understanding of energy as a mathematical basis for a number of expanding areas of physics. He quotes Jevons as follows:

Utility only exists when there is on the one side the person wanting, and on the other the thing wanted… Just as the gravitating force of a material body depends not alone on the mass of that body, but upon the masses and relative positions and distances of the surrounding material bodies, so utility is an attraction between a wanting being and what is wanted. Citation omitted.

Jevons repeatedly uses language suitable to calculus to explain his derivation of economic laws. He refers to the effect of the increase in utility that comes from the addition of an “infinitesimal” increase in the amount of the commodity consumed; the use of that term, which could not possibly arise in the real world, is intended to make it appear that standard integration rules are applicable to his theory, and he draws smooth curves instead of stairstep lines to show the consumption of goods and services. Samuelson and Nordhaus do the same thing, though a bit more subtly. Economics, 2005 ed.

This is hardly the only inaccurate use of math. Consider this drawing from the Mirowski paper:

In this picture there is a point particle moved from point A to point B in a two-dimensional plane by a force F (vectors are usually indicated by bold-face; I’m also using italics). We can rewrite F as the combination of F_x and F_y the components of the force vector along the x and y axes. For a quick brush-up on this point, see this. The equation in the drawing gives the kinetic energy of the particle, denoted by T. If the expression F_xdx + F_ydy is an exact differential, then there is another function U that meets this requirement:

The U in this equation is identified as the potential energy of the particle. The particle moves along a path such that the sum of T and U remains constant; usually this is written as T – U = 0. The point of Mirowski’s example is that we are looking at a force field, an energy field that describes the energy at each point by amount and direction. The function F does not have to be a simple equation as it would be in the first example; it can map out complicated curves. But F and each of its components have to be the exact differential of some other equation, which puts some constraints on them. Finally, we should note that this idea can be generalized to any number of dimensions.

This is from the Mirowski paper:

Walras insisted that his … equations resembled those of the physical sciences in every respect. We may see now that he was very nearly correct. Simply redefine the variables of the earlier equations: let F be the vector of prices of a set of traded goods, and let q be the vector of the quantities of those goods purchased. The integral ∫F•dq = T is then defined as the total expenditure on those goods. If the expression to be integrated is an exact differential, then it is possible to define a scalar function of the goods x and y of the form U = U(x,y), which can then be interpreted as the “utilities of those goods. In exact parallel to the original concept of potential energy, these utilities are unobservable, and can only be inferred from theoretical linkage to other observable variables. P. 368

In other words, utility is a scientific construct. I hope this from the book will make this somewhat clearer.

Suppose we have a person with a supply of two goods that can be traded, designated by x₀ and y₀. The point A is the intersection of the two goods. In neoclassical economics world, our hypothetical person is presumed to know how much of each good the person would purchase with an infinitesimal increase in money. The person is presumed to know this for every point in the commodity plane. This example can also be expanded into multiple dimensions to cover multiple commodities.

The math goes on from here, but we don’t really need to follow it. We can see that this doesn’t really make good sense, the idea that we would know what to do with an infinitesimal part of a piece of money. But even the math doesn’t make sense, as Mirowski explains in tedious detail. The equations aren’t solvable unless there are certain kinds of constraints. The physics problem is solved by assuming that the energy of the system is conserved, or at least it was when Walras and Jevons were writing, and we still use that idea today for simple local problems, like mechanics in physics. But that constraint isn’t available in economics: T is the equivalent of money, and U is utility, and the two are measured in different units. The term T – U doesn’t mean anything. Neither do other possible constraints, as Mirowski explains. The math fails at every level, including the levels Mirowski plumbs and I won’t.

One of the problem this creates for economics is that it undermines the claim that markets are demonstrably a superior form of organization. Recall from this post that Jevons makes this claim explicit. There are other problems, as Mirowski explains in section 5 of the paper and at much greater length in the book.

The standard response to the deconstruction of the basis of the model is to say it doesn’t matter. The models work, so who cares how or why. This was Milton Friedman’s view, as in this excerpt from Essays From Positive Economics from 1953. This raises a host of fascinating questions, but for now, here are two thoughts.

1. Lots of important problems can be solved with simple Newtonian analysis. If I want to figure out how a ball will roll down a ramp or how the moon revolves around the earth, I don’t need anything more complicated to get really close to the correct answers. But there are many other problems for which relativity theory is necessary. There are others that cannot be solved without quantum mechanics. The fact that some kinds of economic problems can be solved with simple neoclassical models doesn’t mean that all economics works that way, or that there might not be other and much better ways to figure out how to organize a society for production and allocation of scarce resources.

2. Economics is not a normative field. The rules of a society must deal not only with economic efficiency and utility of individuals at a point in time, which seem to be the subjects of neoclassical market theory, but many and broader aspects of being human, including our interest in the future, the impacts of our behavior on other people, fairness, social justice, and a host of other concerns. The neoliberal program seeks to erase those concerns in search of homo economicus, the consuming person, as the sole exemplar and highest form of being human. When we talk about society, we are told by Margaret Thatcher that there is no such thing. Not only is there a society, there is a government, which is a tool for society to arrange things as we see fit. We don’t have to live like the solitary selfish solipsistic homo economicus. We have plenty of choices.

I’ve written about definitions and uses of “market” in several posts. The term “utility” is equally important in the development of mainstream economics. Here’s what Samuelson and Nordhaus say in Economics, 2005 ed.:

In a word, utility denotes satisfaction. More precisely, it refers to how consumers rank different goods and services. If basket A has higher utility than basket B for Smith, this ranking indicates that Smith prefers A over B. Often, it is convenient to think of utility as the subjective pleasure or usefulness that a person derives from consuming a good or service. But you should definitely resist the idea that utility is a psychological function or feeling that can be observed. Rather, utility is a scientific construct that economists use to understand how rational consumers divide their limited resources among the commodities that provide them with satisfaction. Emphasis in original.

The idea of a “scientific construct” seems at first glance to be far from the early neoclassical economists; in fact it seems downright bizarre. Recall from this post that the neoclassical economist William Stanley Jevons defined utility this way, quoting Bentham:

”By utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness (all this, in the present case, comes to the same thing), or (what comes again to the same thing) to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered.”

This perfectly expresses the meaning of the word in Economics, provided that the will or inclination of the person immediately concerned is taken as the sole criterion, for the time, of what is or is not useful.

Jevons recognizes something Samuelson and Nordhaus seem to think, but do not make explicit: utility is solely related to each individual in the role of consumer of goods and services at a specific point in time. Jevons says that we get the total utility of all consumers by adding up the utility of each consumer, and argues that for perfectly competitive markets, this is the highest possible total of utility given a specific group of resources.

But it’s easy to show that even with the highly unlikely circumstances of rational consumers and competitive markets, there are plenty of outcomes that are far less than optimal. One obvious example is the paradox of thrift, first identified by John Maynard Keynes, and popularized by Paul Krugman; here’s an example from his blog, complete with charts and graphs. Here’s another example:

… [S]ometimes the economy is not like a household, [and] our individual choices sometimes lead to outcomes that are in nobody’s interest.

In particular, when you have economy-wide deleveraging — when everyone is trying to spend less than his or her income, so as to pay down debt — you have a fundamental adding-up problem. My spending is your income, and your spending is my income, so if both of us try to spend less at the same time, what we end up achieving is mutual impoverishment.

Those who reject the paradox of thrift, including the Austrians, suggested that something else would happen in the current economic circumstances. They have been proven utterly wrong. For the individual consumer, it is easy to see why the choice of paying down debt is better than the choice to consume more, but the result is an interminable recession.

Here’s another example. No body wants to pay taxes. For each of us, it would be much better not to. But there’s a disaster waiting to happen if everyone ducks taxes, as the examples of Greece and Italy show. The problem is also present in the US, though so far only the rich and their corporations and trusts have managed to escape taxation in a big way; most of us just got miserly tax cuts, and cheating by the 99% is still low. But the results are just as horrible. As Elizabeth Warren and Elijah Cummings pointed out in this op-ed in USA Today, the US middle class is collapsing. They explain the problem this way:

Beginning in the late 1970s, corporate executives and stockholders began taking greater shares of the gains. Productivity kept going up, but workers were left behind as wages stagnated.

Families might have survived as their incomes flattened, except for one hard fact: the costs of basic needs like housing, education and child care exploded. Millions took on mountains of debt and young people began struggling to cling to the same economic rung as their parents.

The response of both political parties at the state and federal level to this slowly growing disaster was the standard neoliberal prescription: tax cuts and reduced regulation. There were some small tax cuts for the working classes, and massive tax cuts for the very rich and their corporations. At the state level, the damage was especially great as governments also doled out huge tax cuts to keep businesses or lure them from other states. See, e.g., Kansas.

Those tax cuts starved state and local governments, and led to cuts in federal spending on all discretionary programs except military and spying. The result was that the cost of education rose dramatically, and that meant a staggering increase in student debt. The cost of housing rose for reasons related to the stunning increase in money in the hands of the wealthy with no investment prospects in new productive enterprises. Child care rose as two worker families and single mothers worked longer and harder to pay for necessities.

Meanwhile, cuts to education were inadequate, so governments stopped maintaining infrastructure. Driving around Chicago is a nightmare of “Rahmholes” and invisible lane dividers. Bridges collapse, inadequate transit systems collapse under winter weather, schools rot, and generally life is more unpleasant.

This list could be extended indefinitely, but I’ll stop. It should be clear that for most of us, the extra costs imposed by the inadequate provision of public goods far outweigh the minimal savings from the tiny tax cuts available to the bottom 90% of income earners.

Here are three lessons I draw from the paradox of taxation:

1. Tax policy focused on the middle class won’t help. That’s the Third Way Democrat policy, and it’s the policy of the remaining sane Republicans. Warren and Cummings suggest getting rid of tax loopholes for the rich and their corporations. That’s a start. Heavy top end income taxes, heavy capital income taxes, heavy estate taxes, greater taxation of corporations, and a heavy wealth tax are a better goal. The key to higher incomes is reducing the ability of the rich to buy up politicians, reporters and compliant academics.

2. Neoclassical economics turns on a simple form of total utility in an economy. They teach that we just add up the utility of all consumers, and claim that we are maximizing utility. That is inadequate for accurate analysis of a complex economy. In fact, it is guaranteed to produce an inadequate supply of public goods, and thus a rotten distribution of scarce resources. It doesn’t deal with the future in any intelligent way. It doesn’t handle scale problems like poisoning of the atmosphere, or filling up the oceans with plastic.

3. The rich take advantage of the inadequate supply of public goods by privatization.The problem the rich have is what to do with all the money they’ve gouged out of the economic system. One solution is to buy roads and rent them to you, to buy street parking and rent it to you, to establish training schools to sell you an education and keep you in debt and hungry for income so you’ll take any rotten job. They want to profit from goods and services we can buy cheaper through government.

The plain fact is that neoliberal economic theory is solely about keeping the rich happy. It has nothing to offer average people who only have labor to sell for the money they need to live.