My Amazon Review of Tom Segev's "A State at Any Cost: The Life of David Ben-Gurion"

Implementing the Zionist Dream

Israeli journalist/historian Tom Segev has written a very detailed and somewhat biased biography of Israel’s first prime minister. He tells the story of how David Gruen, born in Plonsk, Poland, in 1886 becomes David Ben-Gurion the labor leader and for a time Israel’s leading politician after his arrival in Palestine in 1906.

Segev’s Ben-Gurion has a single minded focus on bringing the Israeli state into being. He analogizes him to Lenin, but there is also the all consummate Stalinist bureaucrat in him as he first gains control the Histadrut labor union and ultimately the Mapai (Socialist Labor) Party, Israel’s largest political party until 1977.

Ben-Gurion is a complete bibliophile as he reads voraciously and with his autodidact style become learned on science and military affairs. After the dropping of the atomic bomb in 1945 he immediately recognizes that it would bring a revolution in military affairs and in 1956 he starts the Israeli nuclear program.

We see him as a very lonely man subject to severe depression and although he was married to his wife Paula for over 50 years he undertook a series of affairs and he was far from a doting father to his children. His life was totally enmeshed in the politics necessary to bring into being the Zionist state.

Where Segev and his fellow “revisionist” historians go astray is when they argue that there was defined plan to uproot the Palestinians from 1948 Israel thereby creating the refugee problem. There was no central order given and while many Palestinians were forced to leave more of them left on their own accord. Segev pays little heed to Israel’s geopolitical reality of 1948 where there was no strategic depth. Hence it is unfair to characterize Defense Minister Dyan a warmonger in the 1956 War against Egypt. The strategic reality facing Israel is that it had to win quickly or lose a war of attrition. That lesson was learned in 1973 War, where Egypt attacked first and almost won.

Although Segev gives us a great deal of discussion on Ben-Gurion hot and cold relationship with Chaim Weitzman, there is far too little discussion on why Ben-Gurion’s relationship with Vladimir Jabotinsky, his political rival in the 1920’s and 30’s was so vitriolic. It had to be more than politics. That vitriol extended to Jabotinsky’s successor Menachem Begin.

To me Segev’s book is way too filled with minutia. Nevertheless, given the caveats mentioned above, he offers great insight into the life of Ben-Gurion and the creation of the Israeli state.

For the full amazon URL see: https://www.amazon.com/review/R1LLSNFVJT73TD/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

A Change in Registration

Today I walked into my county clerk's office and changed my registration to Democratic from Republican. Many of my friends asked, "what took you so long?" I guess I was hoping against hope that there would be real opposition to Trump within the Republican Party. That has obviously not happened and to the contrary the party has become even more sycophantic so much so that Republican House and Senate leaders have become mouthpieces for Putin. It is a far cry from the party of Ronald Reagan and John McCain.

The reason why I didn't register as an Independent is because I want to have a say in the Democratic nomination. No Bernie or Liz for me. Further history maybe playing out as I previously envisioned where the U.S. is realigning to three party system. A Hamiltonian Party (centrist Democrats and moderate Republicans), a Social Democratic Party (Bernie and his acolytes) and a Know Nothing Party (The zanies that make up most of today's Republican Party). My new home will be in the Hamiltonian Party. (See https://shulmaven.blogspot.com/2018/11/the-coming-political-realignment-part-ii.html)

A Simple Way of Looking At the Trump/Ukraine Scandal

President Trump's and his administration's dealings with Prime Minister Zelensky can be characterized as an extortion plot that went awry. In exchange for allowing the congressionally authorized  $391 million of desperately needed military aid to go through, Trump requested that Zelensky announce and follow through on a corruption investigation of Joe Biden and his son Hunter. If Zelensky followed through the Trump campaign would have received a huge boost, literally worth millions of dollars, against his Democratic rival Joe Biden.

This sounds complicated, but it really isn't. Let's assume that instead of asking for "dirt" on the Bidens, Trump instead asked for a $5 million personal kickback. That would be extortion pure and simple as Trump would be skimming something off the top of the military aid package for his very own benefit. That is exactly what Trump tried to do with his attempted extortion of Zelensky. Instead of getting cash he was asking for an in-kind campaign contribution. If that is not impeachable, nothing is.

My Amazon Review of Emanuel Saez's and Gabriel Zucman's "The Triumph of Injustice: How the Rich Dodge Taxes and How to Make them Pay"

The Taxmen

UC Berkeley economics professors Emanuel Saez and Gabriel Zucman have written a social democratic screed against economic inequality and a concomitant plea for confiscatory taxes on the super-rich. That is taxation not to raise revenue, but rather to reduce the number of billionaires. It is no accident that they have advised both Elizabeth Warren’s and Bernie Sanders’ presidential campaigns.

Their discussion involves a data heavy look at the overall U.S. tax system that includes federal, state and local taxation. They conclude that from 1950-1980 the tax system has gone from a progressive one to a largely flat tax system with mildly regressive aspects at the top end. They use adjusted gross income as the basis for their tax rates among the various income groups. By using that metric they exclude transfer payments which bias the results. Further that ignores the very large charitable contributions made by the super-rich which reduces their effective tax rates as defined by the authors.  Had they not made those contributions I would assume that the apparent regressivity would give way to progressivity.

What Saez and Zucman get right is the need to crack down on corporate tax havens that allow for the transfer of income from high tax to low tax jurisdictions. The tax allocations performed by multi-national corporations have been elevated to a high art by the global accounting firms. Thus it makes a lot of sense to form a global compact to limit this behavior and establish a minimum corporate tax on the order of 20-25%.

Domestically they advocate increasing the corporate tax back to the 50% heyday of the 1950s and increasing the top individual rate to 60 %( federal and state). On top of that they propose a 6% national income tax on all income, but they would eliminate state and local sales taxes. On the individual level they would characterize capital gains and dividends as ordinary income while indexing gains to inflation. Because they are French I would characterize their pies de resistance a wealth tax on the order of 2-3% for the richest Americans. As noted above that tax is not for revenue, but rather to penalize and to reduce the number of super wealthy people. My simple question is how is the confiscating of 2-3% of someone’s wealth each year bear any relationship to justice? Think of a large farm where the government takes 20-30 acres away each year from the farmer without compensation. That would be a taking pure and simple.

The authors propose using all of the revenue generated from there overhaul of the tax code to fund child care, pre-K, free college and Medicare for all. It sure sounds like Bernie and Elizabeth.

What the authors ignore are the second order effects of their ambitious plan. The stock market would meltdown under the weight of lower after tax corporate profits and the forced selling of shares by the super-rich. With that the already shaky finances of public pension plans would crater and the private retirement savings of millions of Americans would take a severe hit. What would they recommend? The answer is obvious: a bailout.

Instead of their meat ax approach to the tax code a scalpel would achieve much of what they desire. A moderate increase in upper-income tax rates, elimination of the capital gains treatment of carried interest, elimination of 1031 exchanges for real estate transactions and increasing the corporate income tax rate from 21% to 25%. Such a program wouldn’t cure their bloodlust for billionaires, but would reduce inequality without wrecking the economy.

There is one major factual error in the book. The authors state that the top rates for ordinary income and capital gains taxation are 37% and 20%, respectively. That is wrong. The Obamacare taxes make the high income top rates for ordinary income and capital gains, 39.6% and 23.8%, respectively. They are also wrong in attributing the growth in tax shelters following the 1981 Reagan tax cuts to the genius of the tax avoidance industry. That is not quite true. It was the increased depreciation allowances of the Reagan tax cuts coupled with the Garn-St. Germain Act deregulation of the savings and loan industry that enabled the tax shelter industry to flourish. It was given to them on a silver platter. Lastly they note that stock buybacks were illegal prior to 1982. That is not true. Buybacks were legal, but they were highly restricted.

Saez and Zucman have offered up a serious, though dubious in my opinion, proposal for radical tax reform. Credible responses are necessary especially if either Warren of Sanders become the Democratic nominee for president.

For the full amazon URL see: https://www.amazon.com/review/R1SW7XXSI2N8SC/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

  

My Amazon Review of Janek Wasserman's "The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas"

Something was in the Coffee

I first learned of Eugen von Bohm-Bawerk from the late and great UCLA economist Jack Hirshleifer’s capital theory class nearly 50 years ago. Who knew he was an Austrian and I had never heard of the Austrian School of economics. I have since learned of the people and ideas associated with the school. Here University of Alabama history professor Janek Wasserman presents a way too detailed look at the people and ideas of the Austrian School.

There must have been something in the coffee of late 19^th and early 20^th Century Austria-Hungary. In Vienna there lived the founders of the Austrian school including the above mentioned Bohm-Bawerk and Friedrich Hayek, Joseph Schumpeter, Carl Menger, Fritz Machlup, Gottfried Haberler, Oscar Morgenstern, and Ludvig von Mises. Not to be overshadowed in the dual monarchy, Budapest produced such physicists as Edward Teller, Leo Szilard, John von Neumann, and Dennis Gabor around the same time. In fact the two strands would merge when Morgenstern teamed up with von Neumann to write the “Theory of Games and Economic Behavior” in 1944.

The Austrian school was a major promoter of the now accepted marginal utility theory of value. Menger along with Jevons and Walras developed the theory in the 1870s and it was codified by Marshall in the 1890s. Marginal utility stood in direct contrast to the classical labor theory of value developed by Adam Smith and David Ricardo that was later expanded by Karl Marx.

The Austrians viewed themselves as classical liberals and as such they stood foursquare in opposition to the growing appeal of socialism that developed in the 1880s. Their theory was developed in the coffee houses of Vienna and many of their seminars were open to all. Indeed Bohm-Bawerk was open enough to invite socialists Otto Bauer and Rudolf Hilferding and the soon to be Bolshevik   revolutionary Nikolai Bukharin. But make no mistake, the Austrians were suspicious of popular democracy.

Their world first crashed with the onset of World War I and its aftermath and then the leading lights were forced into exile with the arrival of Hitler. Two emigres to the West became famous in the 1940s with Hayek’s “The Road to Serfdom” and Schumpeter’s “Capitalism, Socialism and Democracy.” 

With collectivism on the rise in the 1940s, they formed the Mont Pelerin Society where unlike the looser seminars of pre-World War I Vienna, dissent was not welcomed. It was through Mont Pelerin that the Austrians linked up with such Chicago School luminaries as Milton Friedman and George Stigler. It was at one of their conferences that von Mises called them out as socialists. Splits were inevitable.

Nevertheless after the Austrians linked up with Chicago and they received increasing funding from sympathetic foundations their influence soared as their views of limited government, free trade, floating exchange rates and the information economy percolated up to policy makers on both sides of the Atlantic. In a sense they were the godfathers of the neoliberal world.

Wasserman tells the story in way too much detail which is great for the academic reader, but not so much for the educated lay reader.

The Full amazon URL appears at: https://www.amazon.com/review/R1ZQEF4OUM2GWU/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

Quoted in an AP story, "Apple commits $2.5b to combat California Housing Crisis," Nov. 4

"It's a recognition that the San Francisco Bay Area is in a major housing crisis," said David Shulman, a senior economist with the Anderson Forecast at the University of California, Los Angeles.



https://www.ajc.com/business/apple-commits-combat-california-housing-crisis/6umms4WnEQiZk2tChPLFfO/

Via Atlanta Journal Constitution

My Amazon Review of David Lagercrantz's "The Girl Who Lived Twice"

A Good Airplane Read

This book is David Lagercrantz’s third addition to Stieg Larrson’s Millennium series with star characters Lisbeth Salander and Mikael Bloomqvist. Although not as good as the originals, Lagercrantz does a very credible job in keeping the series going.

The story begins with the mysterious death of a beggar in Stockholm.  From there we run into Sherpa mountain guides on Mount Everest, Lisbeth’s evil sister, Russian internet trolls, high Swedish government officials, and a prima donna celebrity and although not directly on stage, we have a Donald Trump-like hotel mogul with links to the Russian mob. All in all that makes for a pretty good story.

I read the book on a transatlantic flight and it helped make the time go by quickly making it a good airplane read.

The full Amazon URL appears at: https://www.amazon.com/review/R38SQZEW4H8IFD/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv