Krugman’s blog, 10/24/14

October 25, 2014

There were three posts yesterday.  The first was “The Invisible Moderate:”

I actually agree with a lot of what David Brooks says today. But — you know there has to be a “but” — so does a guy named Barack Obama. Which brings me to one of the enduringly weird aspects of our current pundit discourse: constant calls for a moderate, sensible path that supposedly lies between the extremes of the two parties, but is in fact exactly what Obama has been proposing.

So, David says that

The federal government should borrow money at current interest rates to build infrastructure, including better bus networks so workers can get to distant jobs. The fact that the federal government has not passed major infrastructure legislation is mind-boggling, considering how much support there is from both parties.

Well, the Obama administration would love to spend more on infrastructure; the problem is that a major spending bill has no chance of passing the House. And that’s not a problem of “both parties” — it’s the GOP blocking it. Exactly how many Republicans would be willing to engage in deficit spending to expand bus networks? (Remember, these are the people who consider making rental bicycles available an example of “totalitarian” rule.)

Also, there’s this:

the government should reduce its generosity to people who are not working but increase its support for people who are. That means reducing health benefits for the affluent elderly …

Hmm. The Affordable Care Act subsidizes insurance premiums for lower-income workers, and pays for those subsidies in part by eliminating overpayments for Medicare Advantage. So conservatives are celebrating both ends of that deal, right? Oh, wait, death panels.

It’s an amazing thing: Obama is essentially what we used to call a liberal Republican, who faces implacable opposition from a very hard right. But Obama’s moderation is hidden in plain sight, apparently invisible to the commentariat.

Well, Obama’s a socialist Kenyan usurper N[CLANG], after all…  Yesterday’s second post was “The Profits-Investment Disconnect:”

I caught a bit of CNBC in the locker room this morning, and they were talking about stock buybacks. Oddly — or maybe not that oddly, given my own experiences with the show — nobody brought up what I would have thought was the obvious question. Profits are very high, so why are companies concluding that they should return cash to stockholders rather than use it to expand their businesses?

After all, we normally think of high profits as a signal: a profitable business is one people should be trying to get into. But right now we see a combination of high profits and sluggish investment :

What’s going on? One possibility, I guess, is that business are holding back because Obama is looking at them funny. But more seriously, this kind of divergence — in which high profits don’t signal high returns to investment — is what you’d expect if a lot of those profits reflect monopoly power rather than returns on capital.

More on this in a while.

Yesterday’s last post was “Friday Night Gone:”

OK, this is weird. I posted Friday Night Music last night, or at least thought I did, and it’s gone — no post, not even a draft. I may try to reconstruct it later.

Nocera and Collins

October 25, 2014

In “Carl Icahn’s Bad Advice” Mr. Nocera says Apple should reject an activist shareholder’s suggestion that the company buy back its own stock to raise its share price.  Ms. Collins, in “Once Again, Guns,” says two years after the Sandy Hook tragedy, the top gun-control priority in the United States is still background checks.  Here’s Mr. Nocera:

Why should Tim Cook care what Carl Icahn thinks?

Earlier this month, Icahn, the famed “activist shareholder,” sent a lengthy letter to the Apple chief executive, which he also posted on the blogging platform Tumblr, so that the rest of us could read it as well. Most of the time, when Icahn takes a stake in a company, it is because the company is having problems; his missives are usually less than pleasant.

But that hardly describes Apple, which continues to churn out record profits and hot products like the recent iPhone 6. According to his letter, Icahn’s investment firm, Icahn Enterprises, owns 53 million shares of the company’s stock. He opens with words of praise for the company and Cook (“you are the ideal C.E.O. for Apple”), and then lays out, at great length, his vision of how Apple will gain market share against its competitors.

There is just one problem, in Icahn’s view. Unlike Icahn, the market is not giving Apple its due; its stock, he writes, is massively undervalued. And how does Icahn propose that Apple solve this problem? By having the company buy back its own shares. Icahn estimates that Apple’s price should be at $203, a little more than double its current price around $100 — and a share repurchase program is the best way to get there. (When a company buys back its own stock, its earnings per share go up because fewer shares are in circulation.)

Icahn has been down this road before with Apple and Cook; indeed it has been something of a theme with him in recent years. A year ago, for instance, Icahn was agitating for a $150 billion buyback (which he later scaled back to $50 billion). He didn’t get it, but in April of this year, Cook and the Apple board approved a $30 billion buyback, which came on top of a $60 billion buyback the year before. Although Apple had more than $100 billion in cash reserves, most of that money was locked up overseas because Apple didn’t want to pay the taxes required to repatriate the money. So instead, it borrowed money to help finance its buybacks.

But to what end? Carl Icahn is hardly the sort of long-term investor who has the best interests of Apple at heart. As William Lazonick, an economist at the University of Massachusetts, Lowell, put it in a recent blog post: Massive buybacks reward those “who have contributed the least to Apple’s products and profits.”

“Icahn,” he added, “has contributed absolutely nothing to Apple’s success.”

Lazonick is one of the biggest critics of buybacks in academia. Last month he published an article in Harvard Business Review, titled “Profits Without Prosperity,” in which he made the case that buybacks hurt not only the company that is buying back the stock, but also the country itself. Between 2003 and 2012, he noted, the 449 companies that were publicly listed in the S.&P. 500 index throughout that time spent 54 percent of their earnings buying back their own stock. That cost an astounding $2.4 trillion — money that could have been spent hiring workers or making capital investments.

And why have companies been so willing to buy back their own stock? Companies like to say they are buying their own stock to show faith in the company’s future. Lazonick shreds such justifications, pointing out, for instance, that companies tend to buy stock when it is high, not when it is low.

Rather, he says, the critical incentive for buybacks has been that chief executives are paid primarily in stock. Share buybacks may remove capital from the company, but when they raise the stock price, they enrich the boss.

“The very people we rely on to make investments in the productive capabilities that will increase our shared prosperity are instead devoting most of their companies’ profits to uses that will increase their own prosperity,” he writes.

As for Apple, in the late 1980s and early 1990s, when John Sculley was chief executive, the company spent $1.8 billion buying back its own stock. That was money it could have really used when the company then stumbled and needed to issue junk bonds — and issue $150 million in convertible preferred stock to Microsoft — just to survive.

Things are different now, of course. Apple is the king of the hill. Which is why if any company ought to be able to give Carl Icahn the back of its hand, it should be Apple. It should be the one making decisions about how to deploy its capital, rather than bending to the wishes of an activist shareholder.

After Icahn’s letter to Cook was published, the company pointed out that between buybacks and dividends, the company was already in the midst of “the largest capital return program in corporate history.”

Enough already. Let’s hope Tim Cook stops caring what Carl Icahn thinks.

Now here’s Ms. Collins:

There’s a TV ad that’s been running in Louisiana:

It’s evening and a mom is tucking in her baby. Getting a nice text from dad, who’s away on a trip. Then suddenly — dark shadow on a window. Somebody’s smashing the front door open! Next thing you know, there’s police tape around the house, blinking lights on emergency vehicles.

“It happens like that,” says a somber narrator. “The police can’t get there in time. How you defend yourself is up to you. It’s your choice. But Mary Landrieu voted to take away your gun rights. Vote like your safety depends on it. Defend your freedom. Defeat Mary Landrieu.”

Guns are a big issue in some of the hottest elections around the country this year, but there hasn’t been much national discussion about it. Perhaps we’ve been too busy worrying whether terrorists are infecting themselves with Ebola and sneaking across the Mexican border.

But now, as usual, we’re returning to the issue because of a terrible school shooting.

The latest — a high school freshman boy with a gun in the school’s cafeteria — occurred in the state of Washington, which also happens to be ground zero for the election-year gun debate. At least that’s the way the movement against gun violence sees it. There’s a voter initiative on the ballot that would require background checks for gun sales at gun shows or online. “We need to be laser focused on getting this policy passed,” said Brian Malte of the Brady Campaign.

Think about this. It’s really remarkable. Two years after the Sandy Hook tragedy, the top gun-control priority in the United States is still background checks. There is nothing controversial about the idea that people who buy guns should be screened to make sure they don’t have a criminal record or serious mental illness. Americans favor it by huge majorities. Even gun owners support it. Yet we’re still struggling with it.

The problem, of course, is the National Rifle Association, which does not actually represent gun owners nearly as ferociously as it represents gun sellers. The background check bill is on the ballot under voter initiative because the Washington State Legislature was too frightened of the N.R.A. to take it up. This in a state that managed to pass a right-to-die law, approve gay marriage and legalize the sale of marijuana.

The N.R.A. has worked hard to cultivate its reputation for terrifying implacability. Let’s return for a minute to Senator Mary Landrieu, who’s in a very tough re-election race. Last year, in the wake of Sandy Hook, she voted for a watered-down background check bill. It failed to get the requisite 60 votes in the Senate, but the N.R.A. is not forgetting.

Nor is it a fan of compromise. Landrieu has tried to straddle the middle on gun issues; she voted last year for the N.R.A.’s own top priority, a bill to create an enormous loophole in concealed weapons laws. As a reward, she got a “D” rating and the murdered-mom ad. In Colorado, the embattled Senator Mark Udall, who has a similar voting record, is getting the same treatment.

The N.R.A.’s vision of the world is purposefully dark and utterly irrational. It’s been running a series of what it regards as positive ads, which are so grim they do suggest that it’s time to grab a rifle and head for the bunker. In one, a mournful-looking woman asks whether there’s still anything worth fighting for in “a world that demands we submit, succumb, and believe in nothing.” It is, she continues, a world full of “cowards who pretend they don’t notice the elderly man fall …”

Now when was the last time you saw people ignore an elderly man who falls down? I live in what is supposed to be a hard-hearted city, but when an old person trips and hits the ground, there is a veritable stampede to get him upright.

The ad running against people like Landrieu makes no sense whatsoever. If that background-check bill had become law, the doomed mother would still have been able to buy a gun for protection unless she happened to be a convicted felon. And while we have many, many, many things to worry about these days, the prospect of an armed stranger breaking through the front door and murdering the family is not high on the list. Unless the intruder was actually a former abusive spouse or boyfriend, in which case a background check would have been extremely helpful in keeping him unarmed.

A shooting like the one in Washington State is so shocking that it seems almost improper to suggest that people respond by passing an extremely mild gun control measure. But there is a kind of moral balance. While we may not be able to stop these tragedies from happening, we can stop thinking of ourselves as a country that lets them happen and then does nothing.

Unless your worldview is as bleak as the N.R.A.’s, you have to believe we’re better than that.

Brooks and Krugman

October 24, 2014

In “The Working Nation” Bobo gurgles that there is a clear agenda for job growth that can materially and spiritually reinvigorate America. We just need to be willing to pursue it.  In the comments “Karen Garcia” from New Paltz, NY had this to say:  “Thatcher and Reagan leapt from the stagnant pond of their own self-absorption and left the rest of us to slowly drown in whole oceans full of plutocratic effluent.  That Brooks gives credence to Michael Strain’s cynical “all you need is a bus ticket and a dream” advice to the unemployed actually strains credulity. But what would reading a Brooks column be without the voluntary suspension of disbelief and a sense of humor?”  In “Plutocrats Against Democracy” Prof. Krugman says that the desire to suppress the vote in Hong Kong isn’t really so different from the agenda of the political right in the United States.  Here’s Bobo:

During the Cold War era, Western economies delivered broad and growing prosperity for the middle class. This nurtured a general faith in political institutions and culminated in the democratic triumphalism of the 1990s.

In a new essay called “The New Challenge to Market Democracies,” William Galston of the Brookings Institution argues that this era is over. In Europe, growth has stagnated and unemployment is at catastrophic levels, especially for the young. Japan is afflicted with economic stagnation and demographic decline. In the United States, the middle class is hollowing out. The median annual earnings of workers with bachelor’s degrees have not increased in three decades.

A tree known by its fruit, democratic capitalism, Galston observes, has not produced the expected crop. This has led to a loss of confidence in the regime. Galston’s essay is about how economic problems degrade the national spirit and lead to a loss of faith in the whole enterprise.

I think the malaise can be pinned down more precisely. In our meritocratic culture, satisfying and stretching work has become a psychological necessity. More than ever before, we are defined by what we do. If you are of prime age and you are not in the labor force, or engaged in some deeply stretching activity like parenting, then you will begin to feel drained inside. If you are in a dysfunctional workplace with bad personal relationships and no clear purpose, a core piece of you will begin to degrade. If you are not earning enough money so you can feel respected, and live without desperate stress, you will begin to lose confidence and élan.

And that is what’s happening today. The labor force participation rate is at its lowest in decades. Millions are in part-time or low-wage jobs that don’t come close to fulfilling their capacities. Millions more are in dysfunctional or unhealthy workplaces, but they don’t feel they can leave because they don’t think there are other jobs out there that pay the same amount.

The country is palpably in the middle of some sort of emotional recession. Yet over the past five years, the political class has done essentially nothing. That will fill future generations with astonishment and should fill the current generation with rage.

It is precisely at this moment that leaders are called upon leap past the current moment and to point the way to the sun-drenched path ahead. You may disagree with every policy they ever uttered, but Ronald Reagan and Margaret Thatcher leapt beyond the stagnant mood of the late 1970s.

If you get outside the partisan boxes, there’s a completely obvious agenda to create more middle-class, satisfying jobs. The federal government should borrow money at current interest rates to build infrastructure, including better bus networks so workers can get to distant jobs. The fact that the federal government has not passed major infrastructure legislation is mind-boggling, considering how much support there is from both parties.

Other shifts are more fundamental, but should be the signature themes of the next political era. First, the government should reduce its generosity to people who are not working but increase its support for people who are. That means reducing health benefits for the affluent elderly. But it means, as Michael Strain of the American Enterprise Institute recommends, increasing wage subsidies when employers hire the long-term unemployed and issuing relocation subsidies so people in high unemployment areas can move.

Second, the tax code could do a lot more to encourage work and investment. Ideally, we’d move to a progressive consumption tax. But at least we could have the sort of tax reform that Senators Marco Rubio and Mike Lee have suggested, which would simplify the code while subsidizing middle-class families. The fact that Washington hasn’t even made a run at serious tax reform is another sign of utter political malpractice.

Third, the immigration system should turn into a talent recruiting system, a relentless effort to get the world’s most gifted and driven people to move to our shores.

Fourth, there has to be a doubling-down on human capital, from early-education programs to community colleges and beyond. Today, too many people are focused on the top 1 percent. But, as economist David Autor has shown, if you took all the wealth gains the top 1 percent made between 1979 and 2012 and spread it to the bottom 99 percent, each household would get a payment of only $7,000. But if you take a two-earner, high-school-educated couple and get them college degrees, their income goes up by $58,000 per year. Inequality is mostly a human capital problem.

This isn’t rocket science. Vast majorities support every idea I’ve mentioned here. It just takes a relentless focus on job creation, bold political leadership and a country willing to be shaken out of its fear.

I love the way he says “only $7,000.”  Just because it’s chump change to you, Bobo, doesn’t mean that it couldn’t save people from bankruptcy.  Cripes, but he’s a jerk.  Here’s Prof. Krugman:

It’s always good when leaders tell the truth, especially if that wasn’t their intention. So we should be grateful to Leung Chun-ying, the Beijing-backed leader of Hong Kong, for blurting out the real reason pro-democracy demonstrators can’t get what they want: With open voting, “You would be talking to half of the people in Hong Kong who earn less than $1,800 a month. Then you would end up with that kind of politics and policies” — policies, presumably, that would make the rich less rich and provide more aid to those with lower incomes.

So Mr. Leung is worried about the 50 percent of Hong Kong’s population that, he believes, would vote for bad policies because they don’t make enough money. This may sound like the 47 percent of Americans who Mitt Romney said would vote against him because they don’t pay income taxes and, therefore, don’t take responsibility for themselves, or the 60 percent that Representative Paul Ryan argued pose a danger because they are “takers,” getting more from the government than they pay in. Indeed, these are all basically the same thing.

For the political right has always been uncomfortable with democracy. No matter how well conservatives do in elections, no matter how thoroughly free-market ideology dominates discourse, there is always an undercurrent of fear that the great unwashed will vote in left-wingers who will tax the rich, hand out largess to the poor, and destroy the economy.

In fact, the very success of the conservative agenda only intensifies this fear. Many on the right — and I’m not just talking about people listening to Rush Limbaugh; I’m talking about members of the political elite — live, at least part of the time, in an alternative universe in which America has spent the past few decades marching rapidly down the road to serfdom. Never mind the new Gilded Age that tax cuts and financial deregulation have created; they’re reading books with titles like “A Nation of Takers: America’s Entitlement Epidemic,” asserting that the big problem we have is runaway redistribution.

This is a fantasy. Still, is there anything to fears that economic populism will lead to economic disaster? Not really. Lower-income voters are much more supportive than the wealthy toward policies that benefit people like them, and they generally support higher taxes at the top. But if you worry that low-income voters will run wild, that they’ll greedily grab everything and tax job creators into oblivion, history says that you’re wrong. All advanced nations have had substantial welfare states since the 1940s — welfare states that, inevitably, have stronger support among their poorer citizens. But you don’t, in fact, see countries descending into tax-and-spend death spirals — and no, that’s not what ails Europe.

Still, while the “kind of politics and policies” that responds to the bottom half of the income distribution won’t destroy the economy, it does tend to crimp the incomes and wealth of the 1 percent, at least a bit; the top 0.1 percent is paying quite a lot more in taxes right now than it would have if Mr. Romney had won. So what’s a plutocrat to do?

One answer is propaganda: tell voters, often and loudly, that taxing the rich and helping the poor will cause economic disaster, while cutting taxes on “job creators” will create prosperity for all. There’s a reason conservative faith in the magic of tax cuts persists no matter how many times such prophecies fail (as is happening right now in Kansas): There’s a lavishly funded industry of think tanks and media organizations dedicated to promoting and preserving that faith.

Another answer, with a long tradition in the United States, is to make the most of racial and ethnic divisions — government aid just goes to Those People, don’t you know. And besides, liberals are snooty elitists who hate America.

A third answer is to make sure government programs fail, or never come into existence, so that voters never learn that things could be different.

But these strategies for protecting plutocrats from the mob are indirect and imperfect. The obvious answer is Mr. Leung’s: Don’t let the bottom half, or maybe even the bottom 90 percent, vote.

And now you understand why there’s so much furor on the right over the alleged but actually almost nonexistent problem of voter fraud, and so much support for voter ID laws that make it hard for the poor and even the working class to cast ballots. American politicians don’t dare say outright that only the wealthy should have political rights — at least not yet. But if you follow the currents of thought now prevalent on the political right to their logical conclusion, that’s where you end up.

The truth is that a lot of what’s going on in American politics is, at root, a fight between democracy and plutocracy. And it’s by no means clear which side will win.

Cohen, Kristof and Collins

October 23, 2014

In “Active Fatalism” Mr. Cohen says we We have heroism all wrong. He thinks we should consider Sisyphus happy: He has a task and it is his own.  In “How to Defeat Ebola” Mr. Kristof says to protect America from Ebola, we should ignore the hysteria and focus on stopping the outbreak at its source.  Ms. Collins, in “What Women Want,” says from personhood to motherhood, women’s issues dominate 2014 campaigns.  Here’s Mr. Cohen:

A core problem with the modern world is that we have heroism all wrong. It is not just the conflation of heroes with celebrities as role models, giving rise to the endless magazine lists of ways to be more like Beyoncé. The more serious issue is how, in the rush to elevate the authors of exceptional acts, we forget the ordinary man and woman doing their often menial jobs day after day. I am less interested in the firefighter-hero and the soldier-hero (not to mention the hedge-fund honchos and other quick-killing merchants thrust into the contemporary pantheon) than I am in the myriad doers of everyday good who would shun the description heroic.

A few weeks back I was listening to remarks by the German finance minister, Wolfgang Schäuble. The minister was the target of an assassination attempt in 1990 that left him partially paralyzed, confined to a wheelchair. He brought up Sisyphus, the Greek mythological figure whose devious attempt to defy the gods and even death itself was punished with his condemnation to the task of pushing a boulder up a hill, only for it to roll down again and oblige him to renew the effort through all eternity. No task, it would appear, better captures the meaningless futility of existence. But Schäuble suggested that Sisyphus is a happy man for “he has a task and it is his own.”

The phrase was arresting because the culture of today holds repetitive actions — like working on a production line in a factory — in such contempt. Hundreds of millions may do it, and take care of their families with what they earn, but they are mere specks of dust compared to the Silicon Valley inventor of the killer app or the lean global financiers adept in making money with money. Routine equals drudgery; the worker is a demeaned figure; youths are exhorted to live their dreams rather than make a living wage. Dreams are all very well but are not known to pay the mortgage.

Schäuble was echoing the French writer and philosopher, Albert Camus, who in his book “The Myth of Sisyphus” noted that “there is no fate that cannot be surmounted by scorn.” In besieged Sarajevo during the Bosnian war of 1992-1995 the freest people in the encircled city were those who, every day, dressed impeccably, went to work and did their jobs, thereby demonstrating “inat,” or scorn, for the barbaric gunners in the hills. It was absurd to work, just as the existence of a European city cut off and surrounded by a dirt trench was absurd, but in the everyday duty fulfilled lay liberation of sorts. Similarly, the labor of Sisyphus may be the embodiment of the absurd, which is the human condition, but he is freed by his lucid knowledge and acceptance of his task. He keeps pushing even if the pushing appears to lead nowhere. Camus’ conclusion is that, “One must imagine Sisyphus happy.”

In Camus’ book, “The Plague,” one of the most powerful moments comes in an exchange between the doctor at the center of the novel, Bernard Rieux, and a journalist named Raymond Rambert. Rieux has been battling the pestilence day after day, more often defeated than not. Rambert has been dreaming of, and plotting, escape from the city to be reunited with his loved one. Rieux suddenly speaks his mind:

“I have to tell you this: this whole thing is not about heroism. It’s about decency. It may seem a ridiculous idea, but the only way to fight the plague is with decency.”

“What is decency?” Rambert asked, suddenly serious.

“In general, I can’t say, but in my case I know that it consists of doing my job.”

The next day, Rambert calls the doctor and says he wants to work with him in the emergency teams battling the plague. Later in the novel, Rieux says, “I feel more solidarity with the defeated than with saints. I don’t think I have any taste for heroism and sainthood. What interests me is to be a man.”

These are almost forgotten ideas in an age much taken, on the one hand, with a kind of sentimental or gimmicky “heroism,” and, on the other, with the revealed truth of religion that is held to resolve the absurdity of life, subsuming the individual into some greater pattern of meaning that brings salvation. I prefer the approach to life summed up by Camus as active fatalism. The true hero is the unsung one who does his or her daily shift, puts food on the table for the children, gives them an education and a roof over their heads. I am with Rieux when he says, “Salvation is too big a word for me. I don’t go that far. What interests me is man’s health, his health first of all.”

I have my heroes. We all do. They are the nameless ones.

Next up we have Mr. Kristof:

An alarming new symptom of Ebola in America: It seems to make brains mushy and hearts hard.

In New Jersey, two students from Rwanda, which has had no Ebola cases and is 2,800 miles from the affected countries in West Africa, are being kept home. Navarro College in Texas rejected applicants from Nigeria, initially stating that it would not accept students from countries with Ebola cases — a bit problematic because that would mean no longer accepting Americans.

The former executive director of the South Carolina Republican Party, Todd Kincannon, suggested (perhaps satirically) one way to control the disease: All people who tested positive for the Ebola virus could be “humanely put down.”

Many Republicans and some Democrats have been calling for a ban on flights from the Ebola-affected West African countries. A Reuters poll indicated that almost three-quarters of Americans favored such a ban on flights.

It’s a superficially attractive idea, but also a reflection of our mixed-up notions of how to protect ourselves. The truth is that Ebola is both less serious and far more serious than we think.

It’s less serious here because, in the end, the United States and other countries with advanced health systems can suppress Ebola outbreaks. Granted, the Dallas hospital bungled its response. Still, if Nigeria and Senegal can manage Ebola successfully, so can the United States. We won’t have an epidemic here.

Yet Ebola is more serious because there is a significant risk that it will become endemic in West Africa and spin off to other countries in the region or to India, Bangladesh or China. Ebola in India would be a catastrophe.

Oxfam rightly warns that more resources are needed to prevent Ebola from becoming the “definitive humanitarian disaster of our generation.” And if the virus lingers or spreads among poor countries, it will periodically travel to America. In a globalized world, Ebola anywhere is a threat to people everywhere.

There are also security risks. Aum Shinrikyo, a Japanese terrorist group, tried to collect Ebola samples in Congo in 1992 for bioterror weapons but failed. Today, it would be easy to collect the virus, and a few suicide operatives could deliberately contract Ebola and then travel to the United States to spread the virus. (However, if the aim is mass murder, it would be simpler and probably more effective just to set off bombs.)

In any case, the point is that global health is not just a warm and fuzzy kind of aid. It’s also self-interest. It’s also national security. The best way to protect ourselves is to eradicate Ebola at its source.

A flight ban would hamper that effort by making it more difficult to get health workers and supplies to Guinea, Liberia and Sierra Leone.

Dr. Peter Piot, who helped identify Ebola in 1976, tells me that flight bans would be counterproductive because they would “make aid really more difficult and expensive.”

Likewise, Dr. Paul Farmer, founder of Partners in Health, tells me bluntly: “A ban would be worse than ineffective, and would certainly hamper the efforts of groups like ours — and worsen the epidemic.”

Even airport screenings may be a feel-good distraction. An editorial in BMJ, a medical journal, noted that Canada used questionnaires and thermal scanners to screen hundreds of thousands of people for SARS, spent $15 million, and didn’t find a single case. The editorial suggests that airport screening “will have no meaningful effect” and that resources would be better used fighting Ebola in West Africa.

For all the fuss about our own borders, not nearly enough is being done where it counts most: in West Africa. Bravo to President Obama for pledging up to 4,000 troops to fight the disease there, but the United States and other countries must do far more — and quickly! — if Ebola is to be defeated.

The number of Ebola cases is still doubling every two to four weeks, and these countries can’t defeat the outbreak on their own. Liberia is said to have only 50 practicing doctors, according to Reuters, and there appear to be more Liberian doctors practicing in the United States than in Liberia. That brain drain means that Liberia, in effect, is providing medical foreign aid to the United States.

These are lovely countries with friendly people and some heroic health workers, but roads, electricity and other infrastructure are desperately weak. All of Liberia can produce less than one-third as much electricity as the Dallas Cowboys football stadium consumes at peak times.

That’s why the American military’s help in West Africa is crucial, and why it’s a disgrace that less than half of a Sept. 16 United Nations target for Ebola response funds has been raised.

Our values and interests coincide here. So let’s calm down and get to work protecting America from Ebola by stopping this disaster at its source.

And last but not least here’s Ms. Collins:

Women are big this election season. No group is more courted. It’s great! The issues are important. Plus, we all enjoy the occasional pander.

Candidates are re-interpreting their old arguments in a new, woman-centric way. In Michigan, the Democratic Senate candidate defines his opponent’s opposition to Obamacare as a plan to “cut women’s access to … mammograms.” In Kentucky, Republican Mitch McConnell has female surrogates claiming that his opponent, Alison Grimes, is trying to convince women that they “can’t graduate from college without raising your taxes.” This appears to be an oblique reference to Grimes’s call for reduced rates on student loans.

The College Republican National Committee has been investing heavily in online ads aimed at fans of the TV show “Say Yes to the Dress,” in which the dresses are named after gubernatorial candidates. If you are in, say, Florida, you’ll see a happy young woman trying on wedding gowns, twirling around and announcing that “The Rick Scott is perfect,” while her irritating mother demands that she take the Charlie Crist dress, even though it’s unflattering and costs more money. As a writer in Jezebel noted, it seems to have been made by people who felt the best way to communicate with female voters is “to explain things in terms of bridal wear.”

In Colorado, some commentators have given Democrat Mark Udall the nickname “Mark Uterus” because Udall has run so hard on women’s reproductive rights. It is definitely true that Udall has devoted a prodigious amount of ad-time to the fact that his opponent, Representative Cory Gardner, is a longtime supporter of the personhood movement, which declares all fertilized eggs are human beings. Voters find this idea so unnerving that a personhood amendment to the Constitution was soundly defeated in Mississippi. As well as Colorado, twice. Where it is on the ballot in November, yet again.

Gardner said he had changed his mind about the state constitutional amendment after it was overwhelmingly rejected in 2010 and he suddenly realized that it would have an effect on contraceptives. He is still a co-sponsor of a federal personhood bill, which he claims is merely “a statement that I support life.” Personally, I can see why Udall might feel that this matter deserves more inquiry.

To rise to the level of hard-core pandering, a candidate has to float free of issues and waft into the ether of personal feelings. Consider Michigan, where Terri Lynn Land, the Republican candidate for Senate, has been running as a person who’s been victimized for being a mother.

The issue here is that Land has developed a tendency to deflect questions by mentioning that she’s a parent. Local columnists have begun to make jokes about it, and there were suggestions that the mom-mentions might make a good drinking game. A spokesperson for Land’s opponent, Gary Peters, said that being a mom was a good thing, but a strange point to bring up when the issue at hand was, say, ISIS.

“Well, I’m a mom, and I tell you, moms look at things from their perspective,” said Land in a comment that her staff mass-mailed under the headline “ ‘Well, I’m a Mom,’ Terri Lynn Land Fires Back.” Soon, prominent female Republicans were dropping hints that Michelle Obama might want to intervene on behalf of motherhood.

What do you think? How much mom-mentioning is too much? Here in New York, we have a candidate for Congress who’s running under the slogan “Doctor. Mother. Neighbor.” Does that sound a little … vague?

One thing we know: male candidates who get in trouble over issues of sexism are not allowed to get out of it by marshaling all the women in their family to pose for a campaign ad. Really, that’s just one step short of dragging your wife into the press conference where you announce you’re resigning due to those sexting charges.

We are thinking here about Representative Steve Southerland, a Florida Republican who sent out invitations to a male-only campaign event that suggested his guests “tell the misses not to wait up” because “the after dinner whiskey and cigars will be smooth & the issues to discuss are many.”

Southerland is running against Democrat Gwen Graham, and doing such a swell job of it that in a year that House Republicans are expecting a big sweep, he’s in trouble. Possibly more endangered than the guy in Staten Island who was indicted for perjury and tax fraud shortly after threatening to throw a TV reporter over a Capitol balcony.

When The Tampa Bay Times asked him about the male-only event, Southerland laughed and said: “I live with five women. That’s all I’m saying. I live with five women. Listen: Has Gwen Graham ever been to a lingerie shower? Ask her. And how many men were there?”

Now he’s up with a new ad in which he stands surrounded by his sister, mother, daughters and his wife, who announces: “Steve’s heart is in the right place.”

But his brain (which I wonder if he has) is right up his ass.

Krugman’s blog, 10/21/14

October 22, 2014

There was one post yesterday, “Fly the Derpy Skies:”

Last night Atif Mian and I flew up to Boston for a conference — and as I slid into my seat, who should I see staring at me but Ron Paul. It turned out that all of the seatback screens in the plane were showing Newsmax TV — who knew there was such a thing? Is it there to serve people who find Fox News too liberal? — and as best I could tell from the visual context (the sound was blessedly off), the elder Paul was lecturing us about monetary policy.

This sort of thing is obviously an important part of the reason we’re living in an age of derp. Events and data may have made nonsense of claims that the Fed’s policies would inevitably produce runaway inflation, and made those insisting on such claims look like fools; but there’s a large audience of people who, pulled in by affinity fraud, live in a bubble where they never hear about such evidence.

Truly, we live in a world in which people feel entitled not just to their own opinions but their own facts.

From the title I’m guessing he was flying United, but I do wish he had told us what airline he was on…

Friedman and Bruni

October 22, 2014

In “Putin and the Pope” The Moustache of Wisdom muses about two leaders with a lot of influence who matter in very different ways.  Mr. Bruni, in “Capitalism’s Suffocating Music,” says corporate sponsors have turned every last place and personage into ads.  Here’s The Moustache of Wisdom:

Reading the papers these days I find that the two world leaders who stir the most passion in me are Pope Francis and Vladimir Putin, the president of Russia. One is everything you’d want in a leader, the other everything you wouldn’t want. One holds sway over 1.2 billion Roman Catholics, the other over nine time zones. One keeps surprising us with his capacity for empathy, the other by how much he has become a first-class jerk and thug. But neither can be ignored and both have an outsized influence on the world today.

First, the pope. At a time when so many leaders around the world are looking to promote their political fortunes by exploiting grievances and fault lines, we have a pope asking his flock to do something hard, something outside their comfort zone, pushing them to be more inclusive of gays and divorced people.

Yes, Francis was rebuffed by conservative bishops at a recent Vatican synod when he asked them to embrace the notion that “homosexuals have gifts and qualities to offer to the Christian community,” adding, “are we capable of welcoming these people, guaranteeing to them a fraternal space in our communities?”

But, as an editorial in this paper noted: “The very fact that Francis ordered church leaders to address these challenges seems a landmark in Vatican history.” The pope asked that rejected language be published for all to see, while also cautioning against “hostile inflexibility — that is, wanting to close oneself within the written word, and not allowing oneself to be surprised by God.”

“Hostile inflexibility?” Whose leadership does that describe? Look at Putin’s recent behavior: His military was indirectly involved in downing a Malaysian airliner over Ukraine and his K.G.B. has not only been trying to take a bite out of Ukraine but is nibbling on Estonia, Georgia and Moldova, all under the guise of protecting “Russian speakers.”

I opposed NATO expansion because I believed that there are few global problems that we can solve without the help of Russia. By expanding NATO at the end of the Cold War, when Russia was weak, we helped to cultivate a politics there that would one day be very receptive to Putin’s message that the West is ganging up on Russia. But, that said, the message is a lie. The West has no intention of bringing Ukraine into NATO. And please raise your hand if you think the European Union plans to invade Russia.

Yet Putin just exploits these fears for two reasons. First, he has a huge chip on his shoulder — no, excuse me; he has a whole lumberyard there — of resentment that Russia is no longer the global power it once was. But rather than make Russia great again by tapping its creative people — empowering them with education, the rule of law and consensual politics to realize their full potential — he has opted for the shortcut of tapping his oil and gas wells and seizing power from his people.

And instead of creating a Russia that is an example to its neighbors, he relies on the brute force that his oil and gas can still buy him. While he rails against NATO, he is really afraid of European Union expansion — that Ukrainians would rather embrace the E.U. market and democracy rules than their historical ties to Russia because they know that through the E.U. they can realize potentials that would never be possible with Russia.

By seizing Crimea and stoking up nationalism, Putin was not protecting Russia from NATO. He was protecting himself from the viruses of E.U. accountability and transparency, which, if they took hold in Ukraine, could spread to Moscow, undermining his kleptocracy.

Normally, I wouldn’t care, but when the world is dividing between zones of order and disorder, and the world of order needs to be collaborating to stem and reverse disorder, the fact that Putin is stoking disorder on Russia’s borders, and not collaborating to promote order in the Middle East, is a real problem. What’s more worrying is that the country he threatens most is Russia. If things go bad there — and its economy is already sagging under Western sanctions — the world of disorder will get a lot bigger.

That is why Putin’s leadership matters, and so does the pope’s. I’m focused on Putin because I think he is making the world a worse place for bad reasons, when he could make a difference in Europe and the Middle East with just an ounce more decency and collaboration. America, too, has plenty to learn from the pope’s humility, but say what you will, we’re still focused on trying to strengthen the global commons, whether by protecting people from jihadists in Iraq or fighting Ebola in Africa. We could do more. Putin needs to do a lot more.

“The best leaders don’t set timid and selfish goals that are easy to meet but instead set bold and inclusive goals that are hard to achieve,” remarked Timothy Shriver, the chairman of the Special Olympics, who has just written a book on leadership, “Fully Alive: Discovering What Matters Most.” “We’re all looking for ways to make sense of a world without a center, but we’ll only find that in people who lead with authentic humility and reckless generosity.”

And now here’s Mr. Bruni:

Onstage before thousands of fans, Sam Smith sang “Stay With Me,” beseeching his partner in a one-night stand for a few minutes more, and I half wondered if the two of them needed the extra time to finish bottles of Miller Lite, because a printed plug for the beer hovered over his head.

Performing “Summertime Sadness,” Lana Del Rey told a lover to “kiss me hard before you go.” Would she be texting him later with a Samsung Galaxy, the smartphone for which the stage on which she appeared was visibly named?

And while I’d never thought about any car in connection with the musicians in the band Interpol, I came to picture them caroming from gig to gig in a Civic or an Accord. “Honda” floated over them as they gave their concert.

For every stage, a different sponsor. Behind every beat, a different brand.

This happened in early October. I was at the Austin City Limits Music Festival, and I was at the limits of my patience. I hadn’t expected all of these corporate come-ons, so pervasive in other precincts, to be assaulting me here of all places.

“Keep Austin Weird” is the Texas capital’s unofficial slogan, a clue to its proudly subversive soul. And a gathering of bare-armed, bare-legged lovers of song and smokers of pot on a gigantic field brings to mind Woodstock, not Austin Ventures, which provides financing to start-ups, and RetailMeNot, which distributes discount coupons. Those firms, too, were sponsors of stages.

Someone shoved a free sample of Cinnamon Toast Crunch cereal at me on my way in. Someone else handed out free beer cozies advertising Imperial, a brew on sale at the event. Plastered all over the place were posters for “Not That Kind of Girl,” the new memoir by a certain “Girls” creator. The festival had been misnamed. This was Lenapalooza.

I kept thinking of another writer, David Foster Wallace. His novel “Infinite Jest,” published in 1996, imagines a tomorrow in which time itself is auctioned off to the highest bidder and the calendar becomes a billboard. There’s the “Year of the Whopper,” the “Year of the Whisper-Quiet Maytag Dishmaster” and even the “Year of the Tucks Medicated Pad” — a 12-month paean to posterior discomfort, 52 weeks in honor of hemorrhoids.

Is that future so far off? While recording devices have liberated many of us from commercials on television, the rest of our lives are awash in ads. They’re now nestled among the trailers at movies. They flicker on the screens in taxis.

They’re woven so thoroughly into sporting events, from Nascar races to basketball games, that it’s hard to imagine an era when they weren’t omnipresent. But in a story earlier this year on the website Consumerist, Chris Moran reported that 20 years ago, only one of the major-league baseball stadiums had a corporate moniker, Busch Stadium in St. Louis.

In contrast, 20 of the 30 stadiums now have sponsors.

It’s the same with football, maybe worse. On the weekend after I got back from Austin, I went to watch the New York Jets play, and within five minutes of my arrival at MetLife Stadium, I was confronted with all sorts of sub-sponsors.

Near the Verizon gate, I spotted a V.I.P. section called the Hertz suites and saw signs that identified JetBlue as the official airline of the team, Toyota as its official vehicle and the Microsoft Surface as the official tablet of the National Football League. I resolved to check out the restrooms for an official toilet paper. (Note to Cottonelle: I did, and there’s an unclaimed opportunity for you, if you can beat Charmin to the punch.)

Inside the stadium, the Verizon scoreboard was not to be confused with the Bud Light scoreboard or the Pepsi scoreboard.

When Americans talk about how crass contemporary life can seem, this advertising onslaught is part of what they’re reacting to. And their growing chilliness toward corporations and sense of capitalism run amok aren’t just about the salaries of chief executives and the tax dodges in play. They’re about the way hucksterism invades everything, scooping up everyone.

Matthew McConaughey is at his career’s summit, with a recent Oscar for “Dallas Buyers Club” and a splendid performance in “Interstellar” (to be released next month), and what’s he doing with this clout? He’s putting it behind the wheel of a Lincoln and peddling luxury cars the way Beyoncé has pushed Pepsi all these years.

Sellers keep finding new, willing vessels for their logos everywhere they turn. Will we someday travel from San Francisco to Northern California across the Gulden’s Mustard Bridge, for a hike in the Wells Fargo Redwood Forest?

It’s a vendor’s world. We’re just pawns in it, even when all we want to do is hum a simple tune.

Brooks, Cohen and Nocera

October 21, 2014

Bobo thinks he’s going to tell us all about “The Quality of Fear.”  He babbles that the reaction nationally to Ebola is rooted in weaknesses in our cultural fabric.  I’m sure that the ginning up of pants-pissing terror by the media has nothing to do with anything…  Mr. Cohen, in “China Versus America,” ‘splains how Chinese “harmony” and American “freedom” produce the dangerous clash of two exceptionalisms.  Mr. Nocera, in “A World Without OPEC?”, thinks he knows how the shale revolution has weakened the power of the oil cartel.  In the comments “sdavidc9″ from Cornwall had this to say:  “To write an article on the future of oil without mentioning global warming is oh so Republican. We are fighting over seating arrangements on the Titanic.”  Here’s Bobo:

There’s been a lot of tut-tutting about the people who are overreacting to the Ebola virus. There was the lady who showed up at the airport in a homemade hazmat suit. There were the hundreds of parents in Mississippi who pulled their kids from school because the principal had traveled to Zambia, a country in southern Africa untouched by the Ebola outbreak in the western region of the continent. There was the school district in Ohio that closed a middle school and an elementary school because an employee might have flown on the same plane (not even the same flight) as an Ebola-infected health care worker.

The critics point out that these people are behaving hysterically, all out of proportion to the scientific risks, which, of course, is true. But the critics misunderstand what’s going on here. Fear isn’t only a function of risk; it’s a function of isolation. We live in a society almost perfectly suited for contagions of hysteria and overreaction.

In the first place, we’re living in a segmented society. Over the past few decades we’ve seen a pervasive increase in the gaps between different social classes. People are much less likely to marry across social class, or to join a club and befriend people across social class.

That means there are many more people who feel completely alienated from the leadership class of this country, whether it’s the political, cultural or scientific leadership. They don’t know people in authority. They perceive a vast status gap between themselves and people in authority. They may harbor feelings of intellectual inferiority toward people in authority. It becomes easy to wave away the whole lot of them, and that distrust isolates them further. “What loneliness is more lonely than distrust,” George Eliot writes in “Middlemarch.”

So you get the rise of the anti-vaccine parents, who simply distrust the cloud of experts telling them that vaccines are safe for their children. You get the rise of the anti-science folks, who distrust the realm of far-off studies and prefer anecdotes from friends to data about populations. You get more and more people who simply do not believe what the establishment is telling them about the Ebola virus, especially since the establishment doesn’t seem particularly competent anyway.

Second, you’ve got a large group of people who are bone-deep suspicious of globalization, what it does to their jobs and their communities. Along comes Ebola, which is the perfect biological embodiment of what many fear about globalization. It is a dark insidious force from a mysterious place far away that seems to be able to spread uncontrollably and get into the intimate spheres of life back home.

Third, you’ve got the culture of instant news. It’s a weird phenomenon of the media age that, except in extreme circumstances, it is a lot scarier to follow an event on TV than it is to actually be there covering it. When you’re watching on TV, you only see the death and mayhem. But when you’re actually there, you see the broader context of everyday life going on alongside. Studies of the Boston Marathon bombing found that people who consumed a lot of news media during the first week suffered more stress than people who were actually there.

Fourth, you’ve got our culture’s tendency to distance itself from death. Philip Roth once wrote: “In every calm and reasonable person there is a hidden second person scared witless about death.” In cultures where death is more present, or at least dealt with more commonly, people are more familiar with that second person, and people can think a bit more clearly about risks of death in any given moment.

In cultures where people deal with death by simply getting it out of their minds, the prospect of sudden savage death, even if extremely unlikely, can arouse a mental fog of fear, and an unmoored and utopian desire to want to reduce the risk of early death to zero, all other considerations be damned.

Given all these conditions, you wind up with an emotional spiral that develops its own momentum.

The Ebola crisis has aroused its own flavor of fear. It’s not the heart-pounding fear you might feel if you were running away from a bear or some distinct threat. It’s a sour, existential fear. It’s a fear you feel when the whole environment seems hostile, when the things that are supposed to keep you safe, like national borders and national authorities, seem porous and ineffective, when some menace is hard to understand.

In these circumstances, skepticism about authority turns into corrosive cynicism. People seek to build walls, to pull in the circle of trust. They become afraid. Fear, of course, breeds fear. Fear is a fog that alters perception and clouds thought. Fear is, in the novelist Yann Martel’s words, “a wordless darkness.”

Ebola is a treacherous adversary. It’s found a weakness in our bodies. Worse, it exploits the weakness in the fabric of our culture.

Go change your underwear, Bobo…  Here’s Mr. Cohen, writing from Singapore:

Let us take it as a given that the post-1945 world order with the United States as dominant nation has begun to unravel, that China is rising to inherit the earth, that the unease of our times has much to do with that difficult transition, and that violent conflict is a normal accompaniment to the passing of the baton from one great power to the next. America stood tall at the end of World War II. It also stood on a vast field of corpses.

Let us further posit the far-fetched hypothesis that humankind has learned from history. It must then be determined to avoid another conflagration. Happy talk of hyper-connectivity is not enough. The dream of the victory of enlightened self-interest in the name of the collective good on a shrinking planet was an ephemeral late 20th-century illusion. What will matter above all is the capacity of the United States and China to avoid fatal misunderstanding. In a state of mutual incomprehension, clashing interests will escalate.

How far China and America are from understanding each other became clear to me the other day as I listened to George Yeo, the former Singaporean foreign minister. He set out his view of the United States as a “missionary” power filled with the righteous conviction that it must usher the earth to liberty and democracy, and of China as an anti-missionary power convinced by its own bitter experience of foreign domination that nonintervention in the affairs of other states is a necessary form of respect. Far from cynical exploitation, Yeo argued, China’s non-judgmental approach to other powers was above all a reflection of its own history, a form of moral rectitude. The West’s perception of Chinese bullying and ruthless mercantilism was just plain wrong.

Yeo is a highly intelligent and thoughtful man with a deep knowledge of China and considerable experience of life in America. I can’t help seeing cynicism in China’s readiness to extract resources from the realms of dictators or democrats and its unreadiness to do as much as America in stopping Ebola or the killers who call themselves Islamic State. I am sure that, for President Xi Jinping of China, the sight of America getting enmeshed in another Middle Eastern skirmish has its satisfactions. But Yeo made me wonder. Can the missionary mindset begin to comprehend the non-missionary worldview, or even accept such categorization?

The core problem is two forms of exceptionalism, the American and the Chinese. The United States is an idea as well as a nation. Americans, even in a battle-scarred inward-looking moment such as the present, are hard-wired to the notion of their country as a beacon to humanity. President Obama’s foreign policy is unpopular in part because he has interpreted a popular desire to regroup as license to be satisfied with hitting singles and avoiding strike-outs. That is the attitude of an unexceptional nation, which can never be America’s self-image.

But Chinese exceptionalism is no less powerful. It holds up China as a uniquely non-expansionist power over millennia of history, bringing harmony in a Confucian expression of its benevolence — a China standing in contrast to the predatory West. The Communist Party, with its mantra of “peaceful rise,” has fashioned an effective pillar of its ideology through the integration of Middle Kingdom thought. As Joe Studwell, the author of “How Asia Works,” put it to me in an e-mail, the party with “not much socialism to cling to, has reached into Middle Kingdom exceptionalism by resurrecting Confucius, starting Confucius Institutes all over the world.” The result, as Yuan-kang Wang, an associate professor at Western Michigan University, has written in Foreign Policy, is a widespread belief in “historical China as a shining civilization in the center of All-under-Heaven, radiating a splendid and peace-loving culture.”

Exceptionalism, in all its forms, is tenacious. Tell Tibetans about China’s peace-loving culture. Tell Iraqis about America’s dedication to liberty. The contradictions, and failings, within the beliefs do not diminish them. I believe, still, in the overall beneficence of American power, the fundamental yearning of the human spirit for freedom, and the unique American identification with that desire. Xi’s clampdown on the Internet, his attempt to clean up corruption when corruption must be endemic to any one-party state, his expansionism in the South China Sea, and his difficulties with a stubborn pro-democracy movement in Hong Kong all strike me as demonstrating the internal contradictions of “harmony” and “peace” within a Chinese system that has generated prosperity but increasingly stifles the open debate more prosperous people want.

Europeans, with their experience of 20th-century devastation, would argue that all forms of exceptionalism are dangerous, the missionary and non-missionary equally so. They have settled for less in the interests of quiet. America and China will not do that in the foreseeable future, and so their relationship must be viewed with guarded pessimism. In war’s aftermath there are no exceptions to human suffering.

And now we get to Gunga Din:

Forty-one years ago this month, the Arab oil embargo began. The countries that were part of it belonged, of course, to the Organization of Petroleum Exporting Countries — OPEC — which had banded together 13 years earlier to strengthen their ability to negotiate with international oil companies. The embargo led to widespread shortages in the United States, higher prices at the gas pump and long lines at gas stations. By the time it ended, the price of oil had risen to $12 a barrel from $3.

Perhaps more important than the price increases themselves was the new world order the embargo signaled. The embargo “set in motion geopolitical circumstances that eventually allowed [OPEC] to wrest control over global oil production and pricing from the giant international oil companies — ushering in an era of significantly higher oil prices,” as Amy Myers Jaffe and Ed Morse noted in an article in Foreign Policy magazine that was published last year at the 40th anniversary. Twice a year, OPEC’s oil ministers would meet in Vienna, where they would set oil policy — deciding to either hold back or increase oil production. There was always cheating among members, but there was usually enough discipline in the ranks to keep prices more or less where OPEC wanted them.

As it happens, the title of that Foreign Policy article was “The End of OPEC.” Jaffe and Morse are both global energy experts — she is the executive director of Energy and Sustainability at the University of California, Davis, and he is the global head of commodities research at Citigroup — who say that if America plays its cards right, OPEC’s dominance over the oil market could be over. I think that day may have already arrived.

“OPEC is not going to survive another 50 years,” Morse told me. “It probably won’t even survive another 10. It has become extremely difficult for them to forge an agreement.”

When Morse and Jaffe wrote their article last year, the price of oil was more than $100 a barrel. Today, the per-barrel price is in the low- to mid-$80s. It has dropped more than 25 percent since June. There was a time when $80 a barrel would have been more than satisfactory for OPEC members, but those days are long gone. Venezuela’s budgetary needs requires that it sell its oil at well above $100 a barrel. The Arab Spring prompted a number of important OPEC members — including Saudi Arabia and the United Arab Emirates — to increase budgetary spending to keep their own populations quiescent. According to the International Monetary Fund, the United Arab Emirates needs a price of more than $80 to meet its budgetary obligations. That’s up from less than $25 a barrel in 2008.

Not long ago, Venezuela asked for an emergency OPEC meeting to discuss decreasing production. Iran has said that such a meeting is unnecessary. Meanwhile, Saudi Arabia has made it clear that it is primarily concerned with not losing market share, so it will continue to pump out oil regardless of the needs of other OPEC members. This is not exactly cartel-like behavior. The next OPEC meeting is scheduled for late November, but there is little likelihood of an agreement.

And why does OPEC suddenly find itself in such disarray? Simply put, the supply of oil is greater than the demand, and OPEC has lost its ability to control the supply. Part of the reason is a slowdown in global demand. China’s economy has slowed, and so has its voracious appetite for oil. Japan, meanwhile, is increasingly turning to natural gas and nuclear power.

But an even bigger part of the reason is that the shale revolution in North America is utterly changing the supply-demand dynamic. Since 2008, says Bernard Weinstein, an energy expert at Southern Methodist University, oil production in the United States is up 60 percent. That’s an additional three million barrels a day. Within a few years, predicts Morse, America will overtake Russia and Saudi Arabia and become the world’s largest oil producer.

What’s more, according to another article Morse wrote, this one for Foreign Affairs magazine, “the costs of finding and producing oil and gas in shale and tight rock formations are steadily going down and will drop even more in the years to come.” In other words, the American energy industry might well be able to withstand further price drops easier than OPEC members.

When I got Jaffe on the phone, I asked her if she thought OPEC was a spent force. “You can never say never,” she replied, and then laid out a few dire scenarios — mostly revolving around oil fields being bombed or attacked — that might make supply scarce again. But barring that, this is a moment we’ve long been waiting for. Thanks to the shale revolution, OPEC has become a paper tiger.

Krugman’s blog, 10/19/14

October 20, 2014

There was one post yesterday, “This Age of Derp:”

I gather that some readers were puzzled by my use of the term “derp” with regard to peddlers of inflation paranoia, even though I’ve used it quite a lot. So maybe it’s time to revisit the concept; among other things, once you understand the problem of derpitude, you understand why I write the way I do (and why the Asnesses of this world whine so much.)

Josh Barro brought derp into economic discussion, and many of us immediately realized that this was a term we’d been needing all along. As Noah Smith explained, what it means — at least in this context — is a determined belief in some economic doctrine that is completely unmovable by evidence. And there’s a lot of that going around.

The inflation controversy is a prime example. If you came into the global financial crisis believing that a large expansion of the Federal Reserve’s balance sheet must lead to terrible inflation, what you have in fact encountered is this:

I’ve indicated the date of the debasement letter for reference.

So how do you respond? We all get things wrong, and if we’re not engaged in derp, we learn from the experience. But if you’re doing derp, you insist that you were right, and continue to fulminate against money-printing exactly as you did before.

The same thing happens when we try to discuss the effects of tax cuts — belief in their magical efficacy is utterly insensitive to evidence and experience.

Now, not every wrong idea — or claim that I disagree with — is derp. I was pretty unhappy with the claim that doom looms whenever debt crosses 90 percent of GDP, and not too happy with the later claims that the relevant economists never said such a thing; that’s what everyone from Paul Ryan to Olli Rehn heard, and they were not warned off. But there has not, thankfully, been a movement insisting that growth does too fall off a cliff at 90 percent, so this is not a derp thing.

But there is, as I said, a lot of derp out there. And what that means, in turn, is that you shouldn’t pretend that we’re having a real discussion when we aren’t. In fact, it’s intellectually dishonest and a public disservice to pretend that such a discussion is taking place. We can and indeed are having a serious discussion about the effects of quantitative easing, but people like Paul Ryan and Cliff Asness are not part of that discussion, because no evidence could ever change their view. It’s not economics, it’s just derp.

Now, saying this brings howls of rage, accusations of rudeness and being nasty. But what else can one do?

Krugman, solo

October 20, 2014

Mr. Blow is off today, so Prof. Krugman has the place to himself.  In “Amazon’s Monopsony Is Not O.K.” he says it comes down to this: Amazon has too much power, and it is abusing it.  Here he is:

Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America.

O.K., I know that was kind of abrupt. But I wanted to get the central point out there right away, because discussions of Amazon tend, all too often, to get lost in side issues.

For example, critics of the company sometimes portray it as a monster about to take over the whole economy. Such claims are over the top — Amazon doesn’t dominate overall online sales, let alone retailing as a whole, and probably never will. But so what? Amazon is still playing a troubling role.

Meanwhile, Amazon’s defenders often digress into paeans to online bookselling, which has indeed been a good thing for many Americans, or testimonials to Amazon customer service — and in case you’re wondering, yes, I have Amazon Prime and use it a lot. But again, so what? The desirability of new technology, or even Amazon’s effective use of that technology, is not the issue. After all, John D. Rockefeller and his associates were pretty good at the oil business, too — but Standard Oil nonetheless had too much power, and public action to curb that power was essential.

And the same is true of Amazon today.

If you haven’t been following the recent Amazon news: Back in May a dispute between Amazon and Hachette, a major publishing house, broke out into open commercial warfare. Amazon had been demanding a larger cut of the price of Hachette books it sells; when Hachette balked, Amazon began disrupting the publisher’s sales. Hachette books weren’t banned outright from Amazon’s site, but Amazon began delaying their delivery, raising their prices, and/or steering customers to other publishers.

You might be tempted to say that this is just business — no different from Standard Oil, back in the days before it was broken up, refusing to ship oil via railroads that refused to grant it special discounts. But that is, of course, the point: The robber baron era ended when we as a nation decided that some business tactics were out of line. And the question is whether we want to go back on that decision.

Does Amazon really have robber-baron-type market power? When it comes to books, definitely. Amazon overwhelmingly dominates online book sales, with a market share comparable to Standard Oil’s share of the refined oil market when it was broken up in 1911. Even if you look at total book sales, Amazon is by far the largest player.

So far Amazon has not tried to exploit consumers. In fact, it has systematically kept prices low, to reinforce its dominance. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books — hence the fight with Hachette. In economics jargon, Amazon is not, at least so far, acting like a monopolist, a dominant seller with the power to raise prices. Instead, it is acting as a monopsonist, a dominant buyer with the power to push prices down.

And on that front its power is really immense — in fact, even greater than the market share numbers indicate. Book sales depend crucially on buzz and word of mouth (which is why authors are often sent on grueling book tours); you buy a book because you’ve heard about it, because other people are reading it, because it’s a topic of conversation, because it’s made the best-seller list. And what Amazon possesses is the power to kill the buzz. It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.

So can we trust Amazon not to abuse that power? The Hachette dispute has settled that question: no, we can’t.

It’s not just about the money, although that’s important: By putting the squeeze on publishers, Amazon is ultimately hurting authors and readers. But there’s also the question of undue influence.

Specifically, the penalty Amazon is imposing on Hachette books is bad in itself, but there’s also a curious selectivity in the way that penalty has been applied. Last month the Times’s Bits blog documented the case of two Hachette books receiving very different treatment. One is Daniel Schulman’s “Sons of Wichita,” a profile of the Koch brothers; the other is “The Way Forward,” by Paul Ryan, who was Mitt Romney’s running mate and is chairman of the House Budget Committee. Both are listed as eligible for Amazon Prime, and for Mr. Ryan’s book Amazon offers the usual free two-day delivery. What about “Sons of Wichita”? As of Sunday, it “usually ships in 2 to 3 weeks.” Uh-huh.

Which brings us back to the key question. Don’t tell me that Amazon is giving consumers what they want, or that it has earned its position. What matters is whether it has too much power, and is abusing that power. Well, it does, and it is.

Krugman’s blog, 10/18/14

October 19, 2014

There were three posts yesterday.  The first was “The Civility Whine:”

At this point in the great inflation-deflation debate, a lot of what the inflationistas have to say takes the form of whining about the rudeness of their critics — of course, me in particular. I would say that this is a de facto confession that they’ve run out of substantive defenses for their position — although I guess I would say that, wouldn’t I?

But there’s something else you should know: the inflation derpers aren’t just ignorant about monetary policy, they also don’t understand the rules of argument. In particular, the constant complaint about “ad hominem” attacks shows that they don’t know what that means.

I think the Wikipedia definition is pretty good: an ad hominem is

a form of criticism directed at something about the person one is criticizing, rather than something (potentially, at least) independent of that person.

So if, for example, somebody discussing my views on monetary policy refers to me as “Enron consultant Paul Krugman”, that’s ad hominem. But if I say that inflationistas have been

bobbing and weaving, refusing to acknowledge having said what they said, being completely unwilling to admit mistakes.

that’s really not ad hominem; I’m attacking how these people argue, not their personal attributes.

What about the lexicon we’ve developed over the course of the past few years — zombies, cockroaches, confidence fairies, derp? These are all terms directed at arguments, not people; no, I didn’t call Olli Rehn a cockroach, just his historically ignorant assertion that Keynes wouldn’t have called for fiscal stimulus in the face of high debt.

The point is that at no point, as far as I know, have I relied on personal attacks as a substitute for substantive argument. I never accuse someone of practicing derp without showing that he is, indeed, practicing derp.

Still, why use such colorful language? To get peoples’ attention, of course, and to highlight the sheer scale of the folly. And it’s working, isn’t it?

Now, the people who make zombie arguments and engage in derp feel deeply insulted by all of this. But if you’re going to engage in public debate, with very real policy concerns that affect the lives of millions at stake, you are not entitled to have your arguments treated with respect unless they deserve respect.

One more thing: I also don’t think that the derp brigade understands what it means to argue from authority. When I say that you shouldn’t opine on monetary policy unless you’re willing to invest some time on understanding the monetary debate, I am saying exactly that. I’m not saying that you need a Ph.D. or a chair at a fancy university; I’m saying that you need to do your homework.

In a better world, none of this would be relevant. Policy disputes would be based on defensible, well-informed positions, on which reasonable people could disagree, and people who were proved wrong would acknowledge that fact and revise their views. Also, everyone would get a pony.

Phooey on the pony.  I want a unicorn.  His second post yesterday was “Why to Worry About Deflation:”

David Wessel has a very nice explainer in the WSJ — although I wonder how the editor allowed his citation of a particular expert under point #2 to slip through. One thing he doesn’t do, however, is make it clear that zero is not a magic red line here — as even the IMF has made a point of emphasizing, too-low inflation has all the adverse effects of outright deflation, just to a lesser degree.

Most notably, the euro area currently has 0.8 percent core inflation, far below its 2 percent target, which is itself too low. This means that Europe is already in a lowflationary trap, qualitatively the same as a deflationary trap.

Yesterday’s last post was “Friday Night Music, Saturday Night Followup:”

Last week I highlighted the Sarah Jarosz/Milk Carton Kids matchup; just saw them live, and it was better than I could have imagined — the chemistry among the musicians was amazing, and they’re lovely people too. So catch them if you can …

 


Follow

Get every new post delivered to your Inbox.

Join 162 other followers