The Pasty Little Putz, Dowd, Friedman and Kristof

July 20, 2014

Mr. Bruni is off today.  In “The Parent Trap” The Putz tells us that you must over your children or the neighborhood busybodies and the police may step in.  MoDo, in “A Popular President,” sniffs that Bill — not Barry or Hillary — has the heat.  Standard MoDo crap, but as “Debra” formerly from NYC points out in her comment “… quoting Bill O’Reilly answering Geraldo Rivera to make your point is really….well, I don’t know how to describe that one.”  It’s called grasping for straws, Debra.  The Moustache of Wisdom is banging on his “sharing economy” tin drum again.  In “And Now For a Bit of Good News …” he babbles that from taxi rides to overnight stays, the sharing economy is growing rapidly, and creating a village where your reputation is everything.  “Claus Gehner” from Seattle and Munich had this to say in the comments:  “This column again shows Mr. Friedman’s somewhat simplistic cheerleading for the “hyper-connected world” and the wonders of social media. After being shown wrong with his predictions of all the wonderful things social media would do for the “Arab Spring”, he is still on a roll.”  Mr. Kristof asks “Who’s Right and Wrong in the Middle East?”  He says with Israeli troops in Gaza again, there’s a symmetry in the rhetoric by partisans on both sides of the conflict.  Here’s The Putz:

When I was about 9 years old, I graduated to a Little League whose diamonds were a few miles from our house, in a neighborhood that got rougher after dark. After one practice finished early, I ended up as the last kid left with the coach, waiting in the gloaming while he grumbled, looked at his watch and finally left me — to wait or walk home, I’m not sure which.

I started walking. Halfway there, along a busy road, my father picked me up. He called my coach, as furious as you would expect a protective parent to be; the coach, who probably grew up having fistfights in that neighborhood, gave as good as he got; I finished the season in a different league.

Here are two things that didn’t happen. My (lawyer) father did not call the police and have the coach arrested for reckless endangerment of a minor. And nobody who saw me picking my way home alone thought to call the police on my parents, or to charge them with neglect for letting their child slip free of perfect safety for an hour.

Today they might not have been so lucky. For instance, they might have ended up like the Connecticut mother who earned a misdemeanor for letting her 11-year-old stay in the car while she ran into a store. Or the mother charged with “contributing to the delinquency of a minor” after a bystander snapped a photo of her leaving her 4-year-old in a locked, windows-cracked car for five minutes on a 50 degree day. Or the Ohio father arrested in front of his family for “child endangerment” because — unbeknown to him — his 8-year-old had slipped away from a church service and ended up in a nearby Family Dollar.

Or (I’m just getting warmed up) like the mother of four, recently widowed, who left her children — the oldest 10, the youngest 5 — at home together while she went to a community-college class; her neighbor called the police, protective services took the kids, and it took a two-year legal fight to pry them back from foster care. Or like the parents from two families who were arrested after their girls, two friends who were 5 and 7, cut through a parking lot near their houses — again without the parents’ knowledge — and were spotted by a stranger who immediately called the police.

Or — arriving at this week’s high-profile story — like Debra Harrell, an African-American single mother in Georgia, who let her 9-year-old daughter play in a nearby park while she worked a shift at McDonald’s, and who ended up shamed on local news and jailed.

Some of these cases have been reported, but some are first-person accounts, and in some the conduct of neighbors and the police and social workers may be more defensible than the anecdote suggests.

But the pattern — a “criminalization of parenthood,” in the words of The Washington Post’s Radley Balko — still looks slightly nightmarish, and there are forces at work here that we should recognize, name and resist.

First is the upper-class, competition-driven vision of childhood as a rigorously supervised period in which unattended play is abnormal, risky, weird. This perspective hasn’t just led to “the erosion of child culture,” to borrow a quote from Hanna Rosin’s depressing Atlantic essay on “The Overprotected Kid”; it has encouraged bystanders and public servants to regard a deviation from constant supervision as a sign of parental neglect.

Second is the disproportionate anxiety over child safety, fed by media coverage of every abduction, every murdered child, every tragic “hot car” death. Such horrors are real, of course, but the danger is wildly overstated: Crime rates are down, abductions and car deaths are both rare, and most of the parents leaving children (especially non-infants) in cars briefly or letting them roam a little are behaving perfectly responsibly.

Third is an erosion of community and social trust, which has made ordinary neighborliness seem somehow unnatural or archaic, and given us instead what Gracy Olmstead’s article in The American Conservative dubs the “bad Samaritan” phenomenon — the passer-by who passes the buck to law enforcement as expeditiously as possible. (Technology accentuates this problem: Why speak to a parent when you can just snap a smartphone picture for the cops?)

And then finally there’s a policy element — the way these trends interact not only with the rise of single parenthood, but also with a welfare system whose work requirements can put a single mother behind a fast-food counter while her kid is out of school.

This last issue presents a distinctive challenge to conservatives like me, who believe such work requirements are essential. If we want women like Debra Harrell to take jobs instead of welfare, we have to also find a way to defend their liberty as parents, instead of expecting them to hover like helicopters and then literally arresting them if they don’t.

Otherwise we’ll be throwing up defenses against big government, while ignoring a police state growing in our midst.

Next up we have MoDo:

The thing about him is, he just keeps going.

At 67, he continues to be, as Anna Quindlen once wrote, like one of those inflatable toys with sand weighting the bottom — you knock him over and he pops back up.

As Hillary stumbles and President Obama slumps, Bill Clinton keeps getting more popular.

The women, the cheesy behavior, the fund-raising excesses, the self-pity, the adolescent narcissism, the impeachment, the charges of racially tinged insults against Obama in 2008, the foundation dishabille — all that percussive drama has faded to a mellow saxophone riff for many Americans.

A recent Wall Street Journal/NBC News/Annenberg center poll showed that Clinton was, by a long shot, the most admired president of the last quarter-century. A new YouGov poll finds that among the last eight elected presidents, Clinton is regarded as the most intelligent and W. the least.

(Clinton and W. both should have been more aggressive in catching Osama. But certainly, if Clinton had been president post-9/11, there would have been no phony invasion of Iraq, and Katrina would have elicited more empathy.)

A Washington Post/ABC News poll in May found Bill’s approval ratings rebounding to the highest they had been since early in his presidency.

Even some who used to mock his lip-biting have decided that warmth, even if it’s fake at times, beats real chilliness.

Speaking at the 92nd Street Y last month, Bill O’Reilly was asked by Geraldo Rivera whether the country would have been better off electing Hillary instead of Barack Obama.

“With Hillary you get Bill,” O’Reilly replied. “And Bill knows what’s going on. You may not like him but he knows what’s going on. Hillary doesn’t understand how the world works.”

Except for L.B.J. and Nixon, ex-presidents tend to grow more popular. Yet Bill Clinton, wandering the global stage as a former president who may return to the White House as the husband of a president, plays a unique role in American history. (Newly released Clinton library documents revealed that Bill, believing it punchier, preferred to use “America” and “Americans” in speeches rather than “the United States” and “people of the United States.”)

But why is he burning brighter now, when the spotlight should be on his successor and his wife?

Do we miss the days when the National Debt Clock was retired? Are we more accepting that politicians have feet of clay? Are we tired of leaders who act as burdened as Sisyphus? Do we miss having a showman and a show?

“Maybe they admire his vegan body,” said David Axelrod impishly, before replying seriously: “He’s the most seductive character that we’ve seen in American politics in our lifetime. He just has this unbelievably resilient and seductive personality.”

James Carville noted dryly: “People are confused. They don’t know which one they like more, the peace or the prosperity.” He calls Clinton the “anti-Putin,” someone who did not exercise power to harm people but to help them.

42 had greater strengths and greater weaknesses than the average pol.

Rand Paul accused Clinton of “predatory” behavior. Liz Cheney told Politico’s Mike Allen that she trusts Hillary more than she trusts Bill, implying that was because of Monica Lewinsky. And Todd “legitimate rape” Akin defended himself on Fox News this past week by hitting Clinton’s “long history of sexual abuse and indecency.”

But G.O.P. pollster Kellyanne Conway said the words “Monica” and “liberal” rarely come up when she polls about Bill Clinton. The words “global” and “philanthropic” come up. She said that after Clinton, people “shrugged their shoulders at what had once made them raise their eyebrows.”

“He was a good ambassador for the baby boomer generation,” she said. “Who hasn’t screwed up? Who hasn’t had a third and fourth chance?”

Perhaps, given the tribal wars in Washington and dark tides loose in the world, there’s a longing for Bill’s better angels: the Happy Warrior desire to get up every day and go at it, no matter how difficult; the unfailing belief that in the future things will be better; the zest in the hand-to-hand combat of politics and policy, the reaching out to Newt Gingrich and other Republicans — even through government shutdowns and impeachment — and later teaming up with Bush Senior. “There’s a suspicion among a lot of people that Obama doesn’t much care for politics,” Carville said. “It’s amazing that a man can be so successful at something he really doesn’t like. It’s like if you found out that Peyton Manning didn’t like to play football.”

Mike Murphy, the Republican strategist, said that Obama’s fade has been “the best Clinton rehab.”

Murphy noted the irony that first, Bill had to use his extroverted personality, his talent as Explainer in Chief and his “empathy ray gun” to help Obama get re-elected, and now he will need to use those skills to push another clinical, cerebral candidate — his wife — up the hill.

“The one guy he can’t help elect is himself because of that pesky Constitution,” Murphy said. “But of course, that’s what he’d love to do.”

Next up we have The Moustache of Wisdom:

From Ukraine to the Middle East, some bad actors — Hamas, Vladimir Putin and Israeli settlers to name but a few — are trying to bury the future with the past and divide people. Instead of focusing on them even more, I prefer to write about a company that is burying the past with the future, and actually bringing strangers together.

Last year, I interviewed Brian Chesky, one of the co-founders of Airbnb.com, about the emerging sharing economy, led by companies like the on-demand taxi app Uber and Airbnb, which provides a platform for people to rent their spare rooms, homes, castles and yurts to strangers with the same ease you can book a room at Marriott. We just got together again, and Chesky laid out the growth spurt his company has experienced in the last 12 months — a spurt so fast that it’s telling you this new sharing economy is the real deal and will increasingly be a source of income for more and more people.

Chesky offered this sample of Airbnb’s latest metrics:

• “We have over 3,000 castles, 2,000 treehouses, 900 islands and 400 lighthouses available to book on the site. On a recent night, over 100 people were staying in yurts.”

• “Fifty-six percent of guests staying on Airbnb on a recent weekend were doing so for their first time. Last week, guests left reviews for hosts in 42 different languages. Over 17 million total guests have stayed on Airbnb. It took Airbnb nearly four years to get its first million guests. Now one million guests stay on Airbnb every month.”

• “Roughly 120,000 people stayed in Brazil in Airbnb-rented rooms for the World Cup, including travelers from over 150 different countries. Airbnb hosts in Brazil earned roughly $38 million from reservations during the World Cup. The average host in Rio earned roughly $4,000 during the monthlong tournament — about four times the average monthly salary in Rio. And 189 German guests stayed with Brazilians on the night of the Brazil/Germany World Cup semifinal match.”

• July 5, 2014, was Airbnb’s biggest night ever. “Its platform hosted over 330,000 total guests staying around the world — in thousands of cities and over 160 different countries,” said Chesky. In Paris, nearly 20,000 people were staying in Airbnb rooms on July 5. In 2012, that number was under 4,000.

What’s the secret? Who knew so many people would rent out rooms in their homes to strangers and that so many strangers would want to stay in other people’s spare bedrooms?

The short answer is that Airbnb understood that the world was becoming hyperconnected — meaning the technology was there to connect any renter to any tourist or businessperson anywhere on the planet. And if someone created the trust platform to bring them together, huge value could be created for both parties. That was Airbnb’s real innovation — a platform of “trust” — where everyone could not only see everyone else’s identity but also rate them as good, bad or indifferent hosts or guests. This meant everyone using the system would pretty quickly develop a relevant “reputation” visible to everyone else in the system.

Take trusted identities and relevant reputations and put them together with the Internet and suddenly you have 120,000 people staying in Brazilians’ homes instead of hotels at the World Cup. Obviously, there are exceptions and bad apples, and Airbnb provides $1 million in damage coverage for such cases, but the numbers say the system is working for a lot of people.

“I think we’re going to move back to a place where the world is a village again — a place where a lot of people know each other and trust each other … and where everyone has a reputation that everyone else knows,” said Chesky, 32. “On Airbnb, everyone has an identity.”

You can’t rent a room from someone or to someone unless you create a profile. And the more information you put into your profile — license, passport, Facebook page and reviews of people who have stayed with you — the more customers are likely to come. And the better reputation you earn from reviews, “the more other people want to work with you,” Chesky added. “All the social friction because of a lack of trust gets removed.” In the process, “you unlock all this value and the world starts to feel like a community again.”

But what happens to “ownership?”

“There used to be a romanticism about ownership, because it meant you were free, you were empowered,” Chesky answered. “I think now, for the younger generation, ownership is viewed as a burden. Young people will only want to own what they want responsibility for. And a lot of people my age don’t want responsibility for a car and a house and to have a lot of stuff everywhere. What I want to own is my reputation, because in this hyperconnected world, reputation will give you access to all kinds of things now. … Your reputation now is like having a giant key that will allow you to open more and more doors. [Young people] today don’t want to own those doors, but they will want the key that unlocks them” — in order to rent a spare room, teach a skill, drive people or be driven.

But what will this mean for traditional jobs?

Today, said Chesky, “you may have many jobs and many different kinds of income, and you will accumulate different reputations, based on peer reviews, across multiple platforms of people. … You may start by delivering food, but as an aspiring chef you may start cooking your own food and delivering that and eventually you do home-cooked meals and offer a dining experience in your own home.” Just as Airbnb was “able to find use for that space you never found use for, it will be the same for people. That skill, that hobby that you knew was there but never used it,” the sharing economy will be able to monetize it.

How fast that happens will depend, in part, on regulators and tax collectors in different cities — not all of whom like people turning their spare bedrooms into hotels or their kitchens into pop-up restaurants. The sharing economy can complement the existing one, and make the pie bigger. But the bigger the Ubers and Airbnbs get, the more incumbents will resist them. This will be a struggle between the 20th-century economy and the 21st’s.

The 20th-century economy was powered by big corporations that standardized everything because they never really knew their customers, argued Chesky. “The 21st-century economy will be powered by people” — where the buyers all have identities and the producers all have personal reputations — “so I will be able to sell something directly to you and delight you and surprise you, and the selection you’ll be able to choose from won’t be 4 but 4,000,000.”

I don’t know if that’s how it will play out, but given Airbnb’s rapid growth, Chesky’s argument definitely has my attention.

And don’t forget that you’re supposed to take your gently used designer duds to the consignment shop…  Here’s Mr. Kristof:

With Israeli troops again invading Gaza and the death toll rising, some of the rhetoric from partisans on each side is oddly parallel. Maybe it’s time to correct a few common misconceptions among the salvos flying back and forth.

This is a struggle between good and evil, right and wrong. We can’t relax, can’t compromise, and we had no choice but to act.

On the contrary, this is a war in which both peoples have a considerable amount of right on their sides. The failure to acknowledge the humanity and legitimate interests of people on the other side has led to cross-demonization. That results in a series of military escalations that leave both peoples worse off.

Israelis are absolutely correct that they have a right not to be hit with rockets by Hamas, not to be kidnapped, not to be subjected to terrorist bombings. And Palestinians are absolutely right that they have a right to a state, a right to run businesses and import goods, a right to live in freedom rather than relegated to second-class citizenship in their own land.

Both sides have plenty of good people who just want the best for their children and their communities, and also plenty of myopic zealots who preach hatred. A starting point is to put away the good vs. evil narrative and recognize this as the aching story of two peoples — each with legitimate grievances — colliding with each other.

Just because the underlying conflict is between two peoples who each have plenty of right, that’s not to say that there are no villains. Hamas is violent, not only toward Israel, but toward its own people, and, in contrast to Israel, it doesn’t seem to try to minimize civilian casualties — its own or Israel’s. Hamas is not as corrupt as the Palestinian Authority, but it is far more repressive, and my impression from my visits to Gaza is that it’s also unpopular at home. Hamas sometimes seems to have more support on certain college campuses in America or Europe than within Gaza.

Meanwhile, the Israeli right undermines the best partner for peace Israel has had, President Mahmoud Abbas of the Palestinian Authority, and Israel’s settlements are a gift to Palestinian extremism. These days, in both Gaza and Jerusalem, hawks are in charge, and they empower each other.

The other side understands only force. What else can we do but fight back when we are attacked?

Israeli leaders, starting with Prime Minister Benjamin Netanyahu, think that the way to protect their citizens is to invade Gaza and blow up tunnels — and, if Gazan civilians and children die, that’s sad but inevitable. And some Gazans think that they’re already in an open-air prison, suffocating under the Israeli embargo, and the only way to achieve change is fire rockets — and if some Israeli children die, that’s too bad, but 100 times as many Palestinian children are dying already.

In fact, we’ve seen this movie before: Israel responded to aggression by invading Lebanon in 1982 and 2006, and Gaza in 2008; each time, hawks cheered. Yet each invasion in retrospect accomplished at best temporary military gains while killing large numbers of innocents; they didn’t solve any problems.

Likewise, Palestinian militancy has accomplished nothing but increasing the misery of the Palestinian people. If Palestinians instead turned more to huge Gandhi-style nonviolence resistance campaigns, the resulting videos would reverberate around the world and Palestine would achieve statehood and freedom.

Some Palestinians understand this and are trying this strategy, but too many define nonviolence to include rock-throwing. No, that doesn’t cut it.

What would you do if your family were in Gaza/Israel, at risk of being killed. You wouldn’t just sit back and sing ‘Kumbaya,’ would you?

If any of us were in southern Israel, frightened sick by rockets being fired by Hamas, we, too, might cheer an invasion of Gaza. And if any of us were in Gaza, strangled by the embargo and losing relatives to Israeli airstrikes, we, too, might cheer the launch of rockets on Tel Aviv. That’s human nature.

That’s why we need to de-escalate, starting with a cease-fire that includes an end to Hamas rocket attacks and a withdrawal from Gaza by Israel. For Israel, this is a chance to use diplomacy to achieve what gunpowder won’t: the marginalization of Hamas. Israel might suggest an internationally supervised election in Gaza with the promise that the return of control to the Palestinian Authority would mean an end to the economic embargo.

Here we have a conflict between right and right that has been hijacked by hard-liners on each side who feed each other. It’s not that they are the same, and what I see isn’t equivalence. Yet there is, in some ways, a painful symmetry — and one element is that each side vigorously denies that there is any symmetry at all.

Krugman’s blog, 7/18/14

July 19, 2014

There were two posts yesterday.  The first was “James Tobin and Aggregate Supply (Implicitly Wonkish):”

Thomas Palley argues that mainstream macroeconomists have been looking in all the wrong places for an explanation of the stickiness of inflation in the face of high unemployment; what they should do is consider the old Tobin approach that combines multiple sectors (so that some workers have rising wages even in an economy that’s depressed on average) with downward nominal wage rigidity.

OK, I guess I’m a bit puzzled. I very much agree with Palley that Tobin’s approach does a lot to help explain what we’re seeing; but I don’t know why he thinks this is such a radical notion. I’ve been telling more or less the same story for a while, explicitly name-checking Tobin; and the formal modeling of Daly and Hobijn (pdf), which I’ve cited several times, declared in its first paragraph that it’s building on Tobin’s insights.

There are slight echoes here of an earlier exchange in which Palley made other declarations about insights that New Keynesians have supposedly abandoned, which was odd because those very insights feature in a number of models. But no matter: I do believe that Palley is on the right track here, because it’s pretty much the same track a number of us have been following for the past few years.

As usual, he ended the work week with music.  Here’s “Friday Night Music: Lake Street Dive, What I’m Doing Here:”

When I heard this I assumed it was an old standard — but no, Rachael Price wrote it, and the performance … well, just listen.

 

Nocera, solo

July 19, 2014

Ms. Collins is off today, so Mr. Nocera has the place to himself.  In “The $300,000 Drug” he says a miracle cystic fibrosis treatment carries a heavy price.  Here he is:

Kalydeco is truly a wonder drug.

Developed by Vertex Pharmaceuticals, it is the first drug that attacks not just the symptoms but the underlying cause of cystic fibrosis, a genetic lung disease that usually kills victims by the time they reach their 40s. It doesn’t work for every sufferer of the disease, but rather for a small subset — probably around 2,000 people — who have a specific genetic mutation that the drug targets. But for those it helps, it is life changing.

“I still pinch myself every day,” says Emily Schaller, 32, who has been taking the drug since she participated in its Phase III trials five years ago. “I can take deep breaths. I can run without coughing.”

Two years ago, as it was coming to market, Dr. Margaret Hamburg, the head of the Food and Drug Administration, described Kalydeco an “an excellent example of the promise of personalized medicine.” Personalized medicine describes drugs that treat so-called orphan diseases — that is, diseases with a small population — or subsets of people with broader diseases. This kind of targeted medicine has been the Holy Grail ever since the genome was first sequenced about a decade ago. Now it is becoming a reality.

There is one other way that Kalydeco is an excellent example of personalized medicine: its cost. It’s more than $300,000 a year. Because patients will likely be taking the drug for the rest of their lives, it could cost millions of dollars to keep just one patient on Kalydeco. That raises another important question about the coming of personalized medicine. How are we, as a society, going to pay for it?

What brings this question to the fore is a fight taking place in Arkansas, where the state’s Medicaid program is balking at paying for Kalydeco for a handful of young patients with cystic fibrosis. Although state officials won’t say so publicly, it is clear that cost is a key issue; The Wall Street Journal got ahold of emails that show Arkansas officials “discussing Kalydeco’s cost, and their worries about the expense of future cystic fibrosis drugs.”

It’s likely that Arkansas will eventually fold. Most state Medicaid programs — and private insurers — are paying Kalydeco’s cost because it works so well, and because the patient population is so small.

What happens, though, when there are 200 such drugs? Or when they are targeted not at cystic fibrosis, which has maybe 30,000 sufferers, but at diabetes or (heaven forbid) cholesterol? A drug called Sovaldi, marketed by Gilead Sciences, takes aim at hepatitis C. It is described as a “breakthrough” drug. But each pill costs $1,000 — and the full regimen costs $84,000. And the hepatitis C population isn’t 30,000 — it is over 3 million. If everyone with hepatitis C took Sovaldi, it would cost something like $300 billion, which is about what the country now pays for all prescription drugs combined.

“This is the future of medicine,” says Barry Werth, “and there’s going to be a reckoning.” Werth is the author of “The Antidote,” a terrific book about Vertex and its race to discover and bring to market these new kinds of drugs. “Everyone wants to see these drugs succeed,” he told me. “Wall Street is all charged up. There really hasn’t been any pushback yet on cost.”

And even when the pushback comes, as it surely will, how will we get the pharmaceutical companies to change their pricing? Brian O’Sullivan, a cystic fibrosis specialist at the University of Massachusetts Medical School, told me that he thought the price of drugs like Kalydeco was “not sustainable.” But in the next breath, he marveled at how well the drug worked and said he didn’t want to “scare companies away from doing cystic fibrosis research” by focusing too much on the cost.

When I asked Vertex how it could possibly justify charging $300,000 for Kalydeco, a company spokesman pointed to the small patient population and “the benefit that the medicine provides.” He also said that the company had spent $6.5 billion on research in its existence, and had only two drugs approved by the F.D.A. In effect, he was saying that the Vertex drug was priced, in part, to recoup not just the research and development that led to Kalydeco but all the company’s R&D. (For cystic fibrosis sufferers with no insurance, Vertex provides the drug for free.)

When I asked Werth how Vertex could charge $300,000, he had a much simpler answer: “Because they can.”

Vertex has another cystic fibrosis drug that has just come through its Phase III trial and is likely to be on the market soon. It attacks a different, more common problem than Kalydeco and may broaden the number of patients who can be helped to more than 15,000. In my talks with people in the cystic fibrosis community, I got the strong sense that they are hoping this next drug will cost less.

Dream on.

 

Krugman’s blog, 7/17/14

July 18, 2014

There was one post yesterday, “Understanding the Crank Epidemic:”

James Pethokoukis and Ramesh Ponnuru are frustrated. They’ve been trying to convert Republicans to market monetarism, but the right’s favorite intellectuals keep turning to cranks peddling conspiracy theories about inflation. Three years ago it was Niall Ferguson, citing a bogus source. Ferguson was widely ridiculed, by moderate conservatives as well as liberals — but here comes Amity Shlaes, making the same argument and citing the same source. The “reform conservatives” have made no headway at all.

Why this lack of progress?

The answer is that inflation paranoia isn’t a simple misunderstanding that can be corrected by pointing to evidence. It’s deeply embedded in the modern conservative psyche. Government action must, by definition, have disastrous results; and whatever market monetarists may try to say, their political comrades will continue to lump monetary policy in with fiscal stimulus and Obamacare. And fiat money can’t work — Francisco D’Anconia said so, and it must be true. So it’s always the 70s, if not Weimar, and if the numbers say otherwise, they must be cooked. Evidence has a well-known liberal bias.

Even the rare conservative willing to admit that we don’t yet have high inflation won’t admit that this suggests something wrong with models that predicted a huge inflation surge. No, it’s just a miracle.

So market monetarism isn’t going anywhere, politically. It was conspicuously absent in the Eric Cantor-sponsored book of supposed new ideas — and Cantor himself was knocked out of Congress by a faith-based Randite (which doesn’t make sense, but sense also has a well-known liberal bias.)

Sorry, guys, but you have no home.

Cohen and Krugman

July 18, 2014

Mr. Cohen says “Germany Is Weltmeister” and that Germany is different. It does not believe in quick fixes. Its World Cup team and its society reflect that.  In “Addicted to Inflation” Prof. Krugman says the right is obsessed with the claim that runaway inflation is either happening or about to happen.  Here’s Mr. Cohen:

A new nation won the World Cup. It was the first victory for a unified Germany, or a reunified Germany if you prefer. That country was more than a generation in the making. Germans do not believe in quick fixes.

Formal reunification occurred on Oct. 3, 1990, a few months after the previous 1-0 German victory over Argentina in a World Cup final, an ugly affair in Rome. But it has taken a quarter-century, and untold billions, to knit the post-Cold War nation together. When I lived in Berlin between 1998 and 2001, it was not just the countless cranes hovering over the city that told of a work in progress. It was the different mind-sets of Ossi and Wessi, Easterners and Westerners eyeing each other with resentment.

No matter, Germany had decided. It would pay the price to achieve reunification. It would work on the problem. It would move in the appointed direction, come what may.

This fine World Cup winning team was also the fruit of long-term planning. Over the past dozen years, the Deutscher Fussball-Bund (DFB), or German Football Association, has invested a fortune in new facilities, identifying youthful talent, nurturing that talent and ushering it to the national level. Two young players who emerged from that system, André Schürrle of Chelsea and Mario Götze of Bayern Munich, combined to conjure the beautiful goal that clinched victory.

It had been preceded by the 7-1 demolition of the hosts, Brazil, in the semi-final. Seldom has a soccer match so resembled an execution. It was not only Germans who felt the need to look away. Domination is not the modern German way. Brazilian agony was too explicit not to cringe.

BBC commentators could not resist the clichés. Germany was “clinical.” It was “efficient.” People tweeted, “Don’t mention the score.” With Germany there is always something unmentionable that rhymes with war. It is not easy to be German. But in that difficulty, as this team suggested, there lie strengths. Everything about this team, from its talent to its ethics, was admirable. The right team does not always win. In this case it did.

Germany, I said, does not believe in quick fixes. It is worth repeating because it is an idea that sets the country apart in an age where a quick killing, tomorrow’s share price, instant gratification and short-termism are the norm. Germans on the whole think what the rest of the world builds is flimsy. Anyone who has felt the weight of a German window, or the satisfying hermetic clunk of one closing, knows they have a point. The German time frame is longer.

Why Germany differs in this may be debated. Having plumbed the depths of destruction and evil, having understood the depravity into which a “civilized” country may descend, Germany had to rebuild from the “Stunde Null,” or “Zero Hour,” of 1945. It had to hoist itself up step by step; and it had to build into its reconstituted self the guarantees that ensured no relapse was possible. This took planning. It took persistence. It involved prudence. Even before all this the first German unity of 1871 came only after centuries of strife at the European crossroads. Geborgenheit is an untranslatable German word but no less important for that. It means roughly warmth, home, trust and security, everything that is so precious in part because it may go up in smoke.

Perhaps German success is the result of the immensity of past German failure. I think that has something to do with it, even a lot. Whatever its roots, German success is important and instructive.

If you talk to business leaders of the German Mittelstand, the small and medium-sized companies at the heart of the country’s economy, you are transported to another world. You sit in stark boardrooms, so devoid of indulgence they resemble classrooms, with unassuming people leading billion-dollar companies, and they speak of loyalty, 10-year plans, prudence and quality. If one word induces a look of horror, it is debt. The notion of making money with money, of financial engineering rather than engineering itself, is alien.

Joachim Löw, the German coach, spoke before the final of the careful building of his youthful side: “We can play on top of the world for a good few years yet, with some young players coming in to reinforce the team.” Inevitably, the idea of Germany “on top of the world” for a long time conjured up images the phrase would not evoke for another country. Even a victory dance by members of the German team turned into a national debate because it was seen by some as unseemly mocking of the gaucho Argentine. The president of the DFB apologized.

Germany is now soccer’s “Weltmeister,” a composite word composed of “world” and “master.” It deserves the honor. Its society has much to teach others. But restraint will be its watchword.

Now here’s Prof. Krugman:

The first step toward recovery is admitting that you have a problem. That goes for political movements as well as individuals. So I have some advice for so-called reform conservatives trying to rebuild the intellectual vitality of the right: You need to start by facing up to the fact that your movement is in the grip of some uncontrollable urges. In particular, it’s addicted to inflation — not the thing itself, but the claim that runaway inflation is either happening or about to happen.

To see what I’m talking about, consider a scene that played out the other day on CNBC.

Rick Santelli, one of the network’s stars, is best known for a rant against debt relief that arguably gave birth to the Tea Party. On this occasion, however, he was ranting about another of his favorite subjects, the allegedly inflationary policies of the Federal Reserve. And his colleague Steve Liesman had had enough. “It’s impossible for you to have been more wrong,” Mr. Liesman declared, and he went on to detail the wrong predictions: “The higher interest rates never came, the inability of the U.S. to sell bonds never happened, the dollar never crashed, Rick. There isn’t a single one that’s worked for you.”

You could say the same thing about many people. I’ve had conversations with investors bemused by the failure of the dollar to crash and inflation to soar, because “all the experts” said that was going to happen. And that is indeed what you might have imagined if your notion of expertise was what you saw on CNBC, on The Wall Street Journal’s editorial page, or in Forbes.

And this has been going on for a long time — at least since early 2009. Yet despite being consistently wrong for more than five years, these “experts” never consider the possibility that there might be something amiss with their economic framework, let alone that Ben Bernanke, Janet Yellen or, for that matter, yours truly might have been right to dismiss their warnings.

At best, the inflation-is-coming crowd admits that it hasn’t happened yet, but attributes the delay to unforeseeable circumstances. Thus, in recent Congressional testimony, Lawrence Kudlow, also of CNBC, warned about “excess money and a devalued dollar.” However, “Miraculously, both actual and expected inflation indicators have stayed low.” It’s not something wrong with my model. It’s a miracle!

At worst, inflationistas resort to conspiracy theories: Inflation is already high, but the government is covering it up. The sources purporting to document this cover-up were thoroughly debunked years ago; among other things, private indicators of inflation like the Billion Prices Index (derived from Internet prices) basically confirm the official numbers. Furthermore, inflation conspiracy theorists have faced well-deserved ridicule even from fellow conservatives. Yet the conspiracy theory keeps resurfacing. It has, predictably, been rolled out to defend Mr. Santelli.

All of this is very frustrating to those reform conservatives. If you ask what new ideas they have to offer, they often mention “market monetarism,” which translates under current circumstances to the notion that the Fed should be doing more, not less.

One member of the group, Josh Barro — who is now at The Times — has gone so far as to call market monetarism “the shining success of the conservative reform movement.” But this idea has achieved no traction at all with the rest of American conservatism, which is still obsessed with the phantom menace of runaway inflation.

And the roots of inflation addiction run deep. Reformers like to minimize the influence of libertarian fantasies — fantasies that invariably involve the notion that inflationary disaster looms unless we return to gold — on today’s conservative leaders. But to do that, you have to dismiss what these leaders have actually said. If, for example, people accuse Representative Paul Ryan, chairman of the House Budget Committee, of believing that he’s living in an Ayn Rand novel, that’s because in 2009 he said that we are “living in an Ayn Rand novel.

More generally, modern American conservatism is deeply opposed to any form of government activism, and while monetary policy is sometimes treated as a technocratic affair, the truth is that printing dollars to fight a slump, or even to stabilize some broader definition of the money supply, is indeed an activist policy.

The point, then, is that inflation addiction is telling us something about the intellectual state of one side of our great national divide. The right’s obsessive focus on a problem we don’t have, its refusal to reconsider its premises despite overwhelming practical failure, tells you that we aren’t actually having any kind of rational debate. And that, in turn, bodes ill not just for would-be reformers, but for the nation.

Krugman’s blog, 7/16/14

July 17, 2014

There were three posts yesterday.  The first was “Ya Gotta Have Faith:”

Jared Bernstein sends me to Congressional testimony on the state of the economy – his and Larry Kudlow’s (pdf). Jared’s remarks are, of course, sensible. Kudlow’s are … well, kind of amazing.

Kudlow’s side of the aisle has, of course, been predicting runaway inflation and a debased dollar for around five and a half years. Kudlow, to his credit, has actually admitted that his prediction didn’t pan out, which is rare. But what has he learned from the experience?

The zero Federal Reserve target rate, at five-years-plus after the financial meltdown, is too low and is contributing to a distortion of risk assessment in the financial markets. Moreover, the Fed has relapsed into the nonexistent Phillips-curve tradeoff between inflation and unemployment. Ms. Yellen’s dashboard of labor-market indicators makes your head spin. That’s no way to conduct policy. More people working does not cause inflation. Excess money and a devalued dollar do.

Miraculously, both actual and expected inflation indicators have stayed low.

Hey, nothing wrong with my model – it’s just that miracles happen.

The second post yesterday was “Fantasies of Personal Destruction:”

A correspondent directs me to a piece in Forbes about yours truly that is both funny and scary.

Yep, scurrying away with my tail between my legs, I am, disgraced for policy views shared only by crazy people like the IMF’s chief economist (pdf).

One thing I’ve noticed, though, is how many people on the right are drawn to power fantasies in which liberals aren’t just proved wrong and driven from office, but personally destroyed. Does anyone else remember this bit from the O’Reilly scandal?

“Look at Al Franken, one day he’s going to get a knock on his door and life as he’s known it will change forever,” O’Reilly said. “That day will happen, trust me. . . . Ailes knows very powerful people and this goes all the way to the top.”

And people wonder why I don’t treat all of this as a gentlemanly conversation.

Yesterday’s last post was “Debt Shall Have No Dominion:”

Nick Bunker notes an important point about the CBO’s new long-term fiscal projections (pdf): The budget office has marked down its estimate of long-term interest rates, reflecting the growing evidence for a secular downshift in the “natural” rate.

This markdown has the effect of making the budget outlook — which was already a lot less dire than conventional wisdom has it — look even less dire. But there’s a further point worth emphasizing: the CBO has just declared an end to the debt spiral.

You’ve heard the story: the more debt we have, the more we pay in interest, so the bigger the deficit, and the faster debt grows, until boom, we’ve turned into Greece, Greece I tell you.

Now, if you knew the arithmetic, you knew that this wasn’t as clear as all that. Look at the annual change in the ratio of debt to GDP (which is what matters). It has to take account of growth and inflation as well as interest — actually, it’s

Change in debt/GDP = (debt/GDP)*(interest rate – nominal growth rate of GDP) – primary surplus/GDP

where the primary surplus is the difference between revenues and non-interest spending. The effect of a rising debt level, then, depends on how much higher the interest rate is than the combined effect of inflation and real growth.

So we turn to Table A-1 on page 104 of the CBO report, and we learn that for the next 25 years CBO projects an average interest rate on federal debt of 4.1 percent and an average growth rate of nominal GDP of 4.3 percent. And this means no debt spiral at all.

Now, wait a second, you may say: higher debt will mean higher borrowing rates, because people will fear that we’re about to turn into Greece, Greece I tell you. That was the theme of quite a few analyses — for example, in the Greenlaw et al paper “Crunch time” (pdf), which estimated an upward-sloping relationship between debt and interest rates, and used it to claim that the US was near a critical point.

As many of us pointed out, however, such results were driven almost entirely by the euro crisis; high-debt countries that borrow in their own currencies haven’t seemed to face anything like the same costs. And a funny thing has happened to the euro area itself since the ECB started doing its job as lender of last resort: not only have rates come down, but the relationship between debt and borrowing costs has become much flatter. The figure shows gross debt as a percentage of GDP for euro area countries in June 2012 and June 2014; what a different “whatever it takes” makes!

I don’t want to say that debt doesn’t matter at all. But it clearly matters a lot less than the fearmongers tried to tell us.

Blow and Kristof

July 17, 2014

In “Tears For the Border Children” Mr. Blow says their fate has been consumed by political theater and callous fabrication. This is not the best face of a great nation. We are more honorable than this.  Well, Mr. Blow, some of us are, and some of us are the Mole People…  In “Leading Through Great Loss” Mr. Kristof says those who have lost the most and have the biggest reason for revenge in the Middle East offer the greatest wisdom.  Here’s Mr. Blow:

The fight over how to process and care for masses of children from Central America who have crossed into this country is quickly becoming a spectacle of the obscene.

While the government tries to abide by the law as written and handle the children with as much care as any child would deserve, under any circumstances, the public continues to see images of angry adults intent on confronting buses full of minors.

This month, demonstrators in Murrieta, Calif., forced buses carrying immigrants to turn back. A group in Oracle, Ariz., this week blocked a road to prevent a bus filled with immigrant children from making it to a temporary housing facility.

The latest protest came after the county sheriff tipped local residents off about the incoming bus. According to the Associated Press:

Sheriff Paul Babeu “is credited with stirring up the anti-immigrant protesters via social media postings and a press release Monday and by leaking information about the migrants’ arrival to a local activist.”

Adam Kwasman, a Republican congressional candidate and state legislator, also showed up to protest the children’s arrival. When a school bus was spotted, Kwasman tweeted a picture of it with the words, “Bus coming in. This is not compassion. This is the abrogation of the rule of law.”

Kwasman even regaled a local reporter with what he said he saw on the bus:

“I was able to actually see some of the children in the buses and the fear on their faces. This is not compassion.”

That was until the reporter informed Kwasman that the children on the bus weren’t migrant children but local YMCA campers who, according to “reporters at the scene,” were “laughing and taking pictures on their iPhones.”

Kwasman’s response: “They were sad, too.”

Well, I know that I’m sad. We should all be.

I’m sad that the fate of children has been so consumed by political theater and callous fabrication.

Some of these children will no doubt be found to simply be illegal immigrants and sent back home, but others, likely many, will indeed qualify for refugee status.

In fact, MSNBC reported last week that of more than 400 children who fled their homes, the United Nations High Commissioner for Refugees “found that almost 60 percent of children had legitimate claims to seek asylum in the United States. Most were escaping recruiting attempts by violent gangs who forced participation or threatened the entire families of children who refused.”

And yet, rather than refer to these children as just that — children — or possibly refugees, some Republicans have taken to calling their entry into the country an “invasion.” They have suggested that these kids are disease-ridden. Representative Louie Gohmert even suggested on the House floor that the wave of children posed an existential threat to the country, and Gov. Rick Perry hinted that the influx could be some sort of Obama administration conspiracy.

All this has raised the tenor of xenophobic hysteria in this country and is likely to poison the well of comprehensive immigration reform.

A Pew Research Center Poll released Wednesday found that most Americans want to speed up the process by which these children are processed in this country, even if some who are eligible for asylum are deported.

When that question is viewed through an ideological lens, 60 percent of Republicans and 56 percent of Independents want to speed up the process, while Democrats are evenly split.

At this point, the entire issue has taken on partisan dimensions. Many of the president’s core supporters — blacks, liberal Democrats and young people — are more likely to support following the current policy. On the other hand, constituencies more likely to oppose the president — men, whites, older people and Republicans, particularly those who are supporters of the Tea Party — favor speeding up the process.

In fact, this issue has chilled Republican views of immigration in general. There has been a 10-percentage point drop — from 64 percent in February to 54 percent now — in the share of Republicans who support “a path to legal status for undocumented immigrants.”

This is not the best face of a great nation. This is the underside of a great stone, which when lifted sends creepy things slithering in all directions. We are better than this. We are more compassionate than this. We are more honorable than this.

This is not the time to give in to our lesser angels, but the time to rise with our better ones.

Now here’s Mr. Kristof:

In the carnage of Gaza and the Middle East, the most unlikely people have stepped forward from their grief to offer moral leadership.

The family of Naftali Fraenkel, a 16-year-old Jewish boy who was one of three kidnapped and murdered, said in a statement after the apparent revenge killing of a Palestinian boy: “There is no difference between Arab blood and Jewish blood. Murder is murder.”

Likewise, the father of Muhammad Abu Khdeir, the Palestinian boy, said: “I am against kidnapping and killing. Whether Jew or Arab, who would accept that his son or daughter would be kidnapped and killed? I call on both sides to stop the bloodshed.”

Thus those who have lost the most, who have the greatest reason for revenge, offer the greatest wisdom. Yet, instead, it is now hard-liners on each side who are driving events, in turn empowering hard-liners on the other side.

Look, when militants in Gaza fire rockets at Israel, then Israel has a right to respond, but with some proportionality. More than 200 Gazans have been killed, three-quarters of them civilians, according to United Nations officials; one Israeli has been killed. In any case, Israel’s long-term interest lies in de-escalating, not moving to the ground war it now threatens.

Remember that the trend had been away from Gaza rocket strikes. Last year, according to the Israeli Foreign Ministry website, there were far fewer rocket strikes on Israel than in any year since Hamas took over Gaza in 2006. But then, since June, there were the kidnappings and killings, rockets and the kind of mutual escalation that arises when each side thinks that the other understands only violence.

When missiles are flying, hard-liners on each side are ascendant. They purport to be defenders of their people, but, in fact, they’ve repeatedly demonstrated myopia and taken actions that ultimately created vulnerability and weakness.

After all, it was Israel itself that helped nurture Hamas and its predecessors in the 1970s and ’80s. The late Eyad El-Sarraj, a prominent psychiatrist in Gaza, warned Israel’s governor that he was “playing with fire” by nurturing religious militants. According to the book “Hamas,” by Beverley Milton-Edwards and Stephen Farrell, the governor replied: “Don’t worry, we know how to handle things. Our enemy today is the P.L.O.”

Similar shortsightedness unfolded to the north. The Israeli invasion of Lebanon in 1982 inadvertently helped lead to the rise of its enemy there, Hezbollah.

Likewise, it was Hamas extremism and violence after the 2005 Gaza withdrawal that undermined Israeli moderates and led to the rise of the hard-liners who today are bombing Gaza. Israel helped create Hamas, and Hamas helped created today’s Israel.

The only way out in the long run is a two-state peace agreement. It’s true that one is not achievable now, but the aim should be to take steps that make a peace deal possible in 10 years or 20 years.

Israel could learn a lesson from Britain and Spain, both of which managed to defeat terrorist challenges that were once seen as insoluble. The analogy is imperfect, for rockets weren’t falling on London or Madrid. But Spain could have sent troops to quash Basque terrorists, and Britain could have bulldozed the offices of the I.R.A.’s political wing in Belfast.

Instead, Spain gave autonomy to the Basque Country and Prime Minister Margaret Thatcher negotiated an agreement in 1985 that was criticized at the time for rewarding terrorists. This was painful and controversial, and it was by no means an instant success. Thatcher said in her memoir that the results were “disappointing.” Eventually, this approach proved transformative.

Today, in Middle Eastern terms, the analog would be a minimalist response, not a maximalist one. It would be a halt to settlements, cooperation to bolster Mahmoud Abbas and other moderate Palestinians, and an easing of the economic chokehold on Gaza to strengthen businesses there as a check on Hamas.

None of this is easy or certain. Secretary of State John Kerry’s admirable but failed peace initiative suggests that mutual distrust is so great that it may take years to lay the groundwork, so let’s get started.

When the families of a murdered Palestinian and a murdered Jew each call for humanity toward the other, it’s easy to dismiss the plea as naïve, inconsistent with harsh realities on the ground. But what we’ve actually seen for decades is that aggression on one side boomerangs and leads to aggression on the other.

In contrast, what has worked — albeit not very well and not very quickly, and in different circumstances — is the Spanish and British approaches of tough-minded conciliation and restraint to change the political landscape. That’s the approach that empowers not the hawks, but rather the Fraenkels and the Abu Khdeirs, so that an impossible peace eventually becomes possible.

Krugman’s blog, 7/15/14

July 16, 2014

There were three posts yesterday.  The first was “On the Neo-paleo-Keynesian Phillips Curve (Wonkish):”

In a previous post I mentioned, sort of in passing, that recent data actually look like an old-fashioned pre-accelerationist Phillips curve — that is, unemployment determines the inflation rate, not the rate of change of the inflation rate.

Where did this assertion come from? There seems to be one of these funny situations right now where people who don’t work on such issues consider this a wild and crazy, or maybe just silly assertion, while those actually doing serious empirical work treat it as a matter of course.

Here’s what you see if you look at US data:

But is that just me? No. Consider two recent studies on unemployment and inflation.

First, there’s Michael Kiley (pdf), who had the very good idea of adding power by estimating the relationship across a number of metropolitan areas.You need to read it carefully, but it turns out that his Phillips curve is non-accelerationist for the past 15 years:

We estimate equation 2 over two sample periods (as in our national es- timates), 1985-2013 and 1998-2013. For the 1985-2013 sample, we proxy expected inflation with a region-specific intercept and the national measure of long-run expected inflation from the Survey of Professional forecasters used in our national regression; for the 1998-2013 sample, region fixed ef- fects are used to proxy for expected inflation (because, as in the national regressions presented earlier, the survey measure of expected inflation is es- sentially constant over the 1998-2013 period).

Then there’s the new post by Klitgaard and Peck at Liberty Street, which essentially does a similar exercise for eurozone countries. Their results look like this:

That’s a relationship between the change in unemployment and the change in inflation, equivalent to a relationship between the level of unemployment and the level of inflation — i.e., an old-fashioned Phillips curve.

I’m not saying that this is a fundamental truth. All I’m saying is that people trying to fit recent data keep finding something that looks like the old-fashioned relationship. You can offer various explanations — downward wage rigidity, anchored expectations, or maybe it just isn’t worth adjusting price-setting to match fairly small variations in expected inflation. But anyway, that’s what the data look like.

The second post yesterday was “Life Without Cars:”

I’ve been following some of the discussion about Uber, Lyft, and all that, and I have a few unoriginal thoughts. Well, strictly speaking they are original, in the sense that I haven’t read them anywhere else — but surely they’re out there. So this post is partly a bleg for references.

Anyway: the big benefit from new IT-mediated car services will come if they make it possible for lots of people — and not just people in Manhattan — to live without owning their own cars. And if you think about it, you can see how that might work.

Right now, if you live in places without exceptionally good public transportation, it’s very difficult to manage without a car. Yet when you think about it, for most people owning a car is quite wasteful. It’s an expensive item of equipment that sits idle most of the time; it requires parking (and often a parking structure) both at origin and at destination; it requires maintenance and is a big hassle all around.

So reliable, quick-response chauffeur services could free many people from the need to tie up all those resources in a consumer durable that they only use now and then. And from a social point of view it would avoid the need to tie up so much capital that sits unused most of the time.

There is, however, an obvious problem: rush hour. Peak car use comes twice a day, and that would seem to dictate that we have nearly as many cars as we do now even if they’re supplied by the likes of Uber.

But here’s where surge pricing comes in. If traveling during peak hours is more expensive than off-peak, people will have an incentive to shave off those peaks. People who aren’t commuting to work will avoid travel at peak hours; some people will find other ways to travel; some people (and businesses) will rearrange their schedules to take advantage of cheaper off-peak travel. So you can imagine a society that still relies mainly on cars to get around, but manages to do this with significantly fewer cars than we need at present.

Cars aren’t the only consumer durable where something like this might work, of course. People in New York don’t need refrigerators (and in particular freezers) that are as big as those in the suburbs, because it’s so easy to pop around the corner for groceries; online ordering and delivery could produce a similar effect outside the city. But cars are surely the big prize.

Again, I’m sure this has been worked out by someone somewhere. But I’m having fun thinking about it.

He is SO right about refrigerator size…  Yesterday’s last post was “This Age of Infallibility:”

The estimable Sarah Kliff tabulates all the predictions of Obamacare disaster that didn’t come true; she puts it at seven major themes, ranging from “the website will never work” to “nobody will sign up”. We can presume, then, that people like John Boehner — who declared that it would never work and that more people would lose insurance than gain it — are spending some time now trying to understand how they could have been so wrong.

April fools! (Yes, I know it’s July.)

I guess there’s always been a human tendency to claim that you were right even when you have been totally wrong. George Orwell put it clearly in “In Front of Your Nose“:

The point is that we are all capable of believing things which we know to be untrue, and then, when we are finally proved wrong, impudently twisting the facts so as to show that we were right. Intellectually, it is possible to carry on this process for an indefinite time: the only check on it is that sooner or later a false belief bumps up against solid reality, usually on a battlefield.

Actually, if you look at the complete unrepentance of the Cheneys et al, even bumping up against reality on a battlefield seems not to be enough these days. And it does seem to me that denial runs even deeper than it used to; consider the impossible-to-be-more-wrong Rick Santelli angrily declaring that he was right.

It’s probably about partisanship, which means both living in an information bubble and being so deeply committed to a worldview that you literally can’t consider facts that don’t fit.

But it’s quite something to behold.

Dowd and Friedman

July 16, 2014

In “Where’s the Oval Avatar?” Ms. Dowd babbles that the day may come when a candidate’s hologram could appear in your kitchen and talk about education issues.  The Moustache of Wisdom, in “Order vs. Disorder, Part 2,” says the Israeli-Arab conflict has become a miniature of the most relevant divide in the world today.  Here’s MoDo:

The White House likes to use a phrase of tingling adventure to describe the president’s recent penchant for wandering the country talking to people: “The bear is loose.”

There are three problems with this unbearable metaphor: Barack Obama is not in captivity, he’s not a bear, and he’s not loose. As Voltaire said of the Holy Roman Empire, it was “neither Holy, nor Roman, nor an empire.”

When our whippetlike president travels on Air Force One from staged photo-op to staged photo-op and then to coinciding fund-raiser to coinciding fund-raiser, encased by the White House travel behemoth and press centipede, that’s kind of the opposite of breaking loose.

Somehow, I thought that the tech revolution in campaigns would usher in fresh ways for presidents to communicate. In the age of Snapchat, I didn’t think presidents would still be crisscrossing the country to do hokey snaps of chats.

As David Plouffe wrote in The Wall Street Journal last week, “With advancements in artificial intelligence, you could soon have holograms of presidential candidates at your door, interacting with you and asking and answering questions.” He noted that Narendra Modi used holograms to extend his reach during his successful campaign to become the Indian prime minister.

So where’s the Oval Office holodeck?

Besides the fact that the posed pictures end up on Twitter as well as in the paper, prescreened and sanitized political tableaus seem stuck in the 20th century. 44 does rallies and round tables and has Kabuki sit-downs with people in coffee joints just the same way 41 did.

In the sixth year of his presidency, the White House is still trying to cast Barack Obama as a regular guy, playing pool and drinking beer (even though he only took a few sips) in Denver with Gov. John Hickenlooper of Colorado. This, when the one thing we know, and that Obama wants us to know, is that he’s no regular guy.

As Julie Hirschfeld Davis wrote in The Times on Tuesday, the president has been seeking out the intellectual, artistic and tech elite at private dinners around the globe.

“Sometimes stretching into the small hours of the morning, the dinners reflect a restless president weary of the obligations of the White House and less concerned about the appearance of partying with the rich and celebrated,” Davis wrote.

In Dallas last week, Obama did a short round table with Gov. Rick Perry of Texas on the border imbroglio followed by a barbecue D.C.C.C. fund-raiser with five round tables of fat cats. Explaining why he was staying away from the heart-wrenching scene on the border, the president said, “This isn’t theater. This is a problem,” adding, “I’m not interested in photo-ops. I’m interested in solving a problem.”

Yet, even as the world is roiling, the president’s desk is clean. As he flees gridlock and a Boehner lawsuit in Washington, the best news for Democrats is that Republicans are talking impeachment. The Democrats can actually make money on that. Obama seems fixated on both the photo-ops he’s doing and the ones he’s not doing.

He didn’t go to the L.B.J. play on Broadway and meet its Tony-winning star, Bryan Cranston, after Cranston suggested that if he went, he might learn some methods for getting his way with Congress. And the president doesn’t want to be pictured on the border in shots that look as if he’s welcoming children, many fleeing violence in Central America, who are illegally entering the country, even though Pope Francis has advised that “the humanitarian emergency requires, as a first urgent measure, these children be welcomed and protected.”

By now, Americans are so habituated to stagy things, it’s hard to imagine that many people don’t see the president’s roving photo-ops as posed and theatrical.

But Plouffe, who helped devise Obama’s technologically groundbreaking campaign, contends that such events are more important than ever because for younger people, if you don’t have the visual with the words, it’s almost as though it doesn’t exist.

“People like to see their president or their governor or their mayor out mixing it up in the community and not behind the ivory gates,” he told me, adding that he could see a day when a campaign could have a candidate’s hologram materialize in the kitchen of a swing voter in Lorain, Ohio, to talk education.

“It’s not going to be a 2016 thing,” he said. “But it could be a 2020 or a 2024 thing.”

(Microsoft’s Jaron Lanier waggishly suggests that political avatars be saved for fund-raising, where their algorithms could be fine-tuned to deliver individual, if hypocritical, pitches that would get the maximum donations.)

“My suspicion,” Plouffe said, “is that unless the Republicans shed some of their intolerance, Hillary Clinton will get all the great tech talent.”

The president’s odysseys are meant to illustrate that he’s still relevant. But do they actually underscore irrelevance by conveying his view that if Republicans in Congress are going to keep blocking him, he may as well go fishin’?

What a waste of oxygen that broad is…  Here’s The Moustache of Wisdom:

I’ve argued for a while now that it is always useful to study the Israeli-Arab conflict because it is to the wider war of civilizations what Off Broadway is to Broadway. A lot of stuff starts there and then goes to Broadway. So what’s playing Off Broadway these days? The Israeli-Arab conflict has become a miniature of the most relevant divide in the world today: the divide between the “world of order” and the “world of disorder.”

Israel faces nonstate actors in civilian clothes, armed with homemade rockets and drones, nested among civilians on four of its five borders: Sinai, Gaza, Lebanon and Syria. And what is most striking about this play is that the traditional means of bringing order seem ineffective. Israel, a mini-superpower, keeps pummeling the ragtag Islamist militias in Gaza with its modern air force, but the superempowered Palestinian militants, leveraging cheap high-tech tools, keep coming back with homemade rockets and even a homemade drone. You used to need a contract with Boeing to get a drone. Now you can make one in Gaza.

What to do? For starters, it would be great if the big powers of the world of order — the United States, Russia, China, Japan, India and the European Union — were able to collaborate more in stemming the spread of the world of disorder. That is certainly necessary. But the prospects for that are limited. No power these days wants to lay hands on the world of disorder because all you win is a bill. And even if they did, it would not be sufficient.

In my view, the only way Israel can truly curtail the Hamas rocket threat is if the Palestinians of Gaza demand that the rockets stop. Sure, Israel can inflict enough pain on all of Gaza to get a cease-fire, but it never lasts. The only sustainable way to do it is by Israel partnering with moderate Palestinians in the West Bank to build a thriving state there, so Gaza Palestinians wake up every day and say to the nihilistic Hamas: “We want what our West Bank cousins have.” The only sustainable controls are those that come from within.

That is how the U.S. military defeated the earlier version of the Islamic State in Iraq and Syria, or ISIS, when the jihadists largely took over Iraq’s Anbar Province in 2006-7. The U.S. partnered with the Sunni Muslim tribal leaders who didn’t want puritanical Islam, or their daughters to be forced to marry fundamentalists, or to give up their whiskey. But we did not just arm them. We brokered an agreement of shared guns, shared power and shared values — about the future of Iraq — between those Sunni tribesmen and Iraq’s ruling Shiite president, Nuri Kamal al-Maliki. That is what ended the jihadist disorder there in 2007.

And then what did Maliki do as soon as we left Iraq? He stopped paying the Sunni tribal militias and tried to arrest moderate Sunni politicians. Rather than building on the foundation we laid of power-sharing, Maliki uprooted it. That is why ISIS found it so easy to move in. Iraqi Sunnis weren’t going to fight for Maliki’s government. No trust, no power-sharing — no order.

Jewish settlers in Israel have done all they could to build more settlements and undermine Palestinian trust that Israel will ever share sufficient power for a West Bank Palestinian state to emerge. And the moderate, secular Palestinian leadership in the West Bank all too often has shown too little courage to compromise at crunchtime. So no compelling West Bank alternative to Hamas’s nihilism exists. Israel, the moderate Palestinians and Maliki all wasted the quiet of the last few years. And Maliki and Israel’s leaders now insist on wiping out the military threats they face from radicals — before rebuilding or reconsidering any of the political alternatives that they themselves helped to scuttle. That won’t work.

Patrick Doherty, author of “A New U.S. Grand Strategy” in Foreign Policy magazine, argues that if you look at the traditional responses to the world of disorder by both American and other leaders, you notice that there are a lot of  “controllers and disrupters but no builders. Our leaders were trained in the control tactics of the Cold War — a.k.a. ‘crisis management.’ So it’s no surprise that we are using our power only to hedge risk and preserve a failing status quo. But now we need our leaders to be builders with enough foresight to shape a sustainable international order — and to support regional leaders committed to the same.” Control, notes Doherty, is surely better than chaos. But as we have seen with the controllers America has tended to adopt in Egypt, Iraq and Israel, their brand of control “tends toward stagnation and excesses, as power is concentrated to counter the forces of chaos.”

When all the old means of top-down control are decreasingly available or increasingly expensive (in a world of strong people and strong technologies, being a strongman isn’t what it used to be), leaders and their people are going to eventually have to embrace a new, more sustainable source of order that emerges from the bottom up and is built on shared power, values and trust. Leadership will be about how to cultivate that kind of order. Yes, yes. I know that sounds impossibly hard. But when isolated Gazans can make their own drones, order doesn’t come easy anymore.

Krugman’s blog, 7/14/14

July 15, 2014

There were four posts yesterday.  The first was “Obamacare Must Fail:”

So Chris Christie says that Obamacare is “a failure on a number of levels”. Which levels, exactly?

I mean, first-year enrollment is above projections. The number of Americans without insurance has dropped sharply. Costs appear to be lower than expected, and more broadly cost control on health seems to be doing remarkably well:

 

To some extent I suspect that Christie is living in the bubble; I keep remembering how Rand Paul was shocked and disbelieving at the proposition that government employment had fallen under Obama, even though all it takes to know that is a quick look at public data.

But it’s not just misinformation; the reality doesn’t matter for Christie, or Republicans in general. Just as tax cuts can never fail, programs that help the unlucky can never succeed.

The second post yesterday was “Aggregate Demand, Aggregate Supply, and What We Know (Wonkish):”

Brad DeLong finds Chris House taking me to task for failing to “own up” to the puzzling failure of deflation to emerge despite years of depression, and is baffled — because I have in fact repeatedly acknowledged the puzzle, and talked about it a lot.

Partly this is House once again desperately seeking false equivalence; he starts from the proposition that everyone must be equally at fault, and that I must therefore be as unwilling to acknowledge wrong predictions as the equilibrium macro types — no need to check what I actually wrote. (I’m still waiting for examples of things I’ve said that are as crazy as Prescott’s insistence that there is no evidence that monetary policy matters.)

But let’s leave that stuff aside; there’s a point I think needs making about how a Keynesian (or if you like, a Hicksian — let’s not get into the question of What Keynes Really Meant) thinks he knows.

As I see it, we have a general proposition — most recessions are the result of inadequate demand. And we have a pretty good model of aggregate demand, and of how monetary and fiscal policy affect that demand. That model is IS-LM, with endogenous money as appropriate. You can, for some purposes, usefully think of the IS curve as derived from intertemporal optimization, but that’s a metaphor rather than a principle.

We do not have an equally good model of aggregate supply. What we have, instead, is an observation: prices and wages clearly are sticky in the short run, and maybe for longer than that. There’s overwhelming evidence for that proposition, but in trying to justify it we engage in various kinds of hand-waving about menu costs and bounded rationality.

The thing is, for many purposes this slightly vague notion of aggregate supply is enough; we can, for example, be fairly sure that expansionary policies in a depressed economy won’t be inflationary, and we can use the pretty good demand side model to tell us that monetary expansion won’t work but fiscal policy will when we’re at the zero lower bound.

Still, we try. New Keynesians do stuff like one-period-ahead price setting or Calvo pricing, in which prices are revised randomly. Practicing Keynesians have tended to rely on “accelerationist” Phillips curves in which unemployment determined the rate of change rather than the level of inflation.

So what has happened since 2008 is that both of these approaches have been found wanting: inflation has dropped, but stayed positive despite high unemployment. What the data actually look like is an old-fashioned non-expectations Phillips curve. And there are a couple of popular stories about why: downward wage rigidity even in the long run, anchored expectations.

The point, however, is that the price-setting side of the models has never been an integral part of Keynesian doctrine, and the surprising resilience of inflation hasn’t undermined the core insights.

And it remains true that Keynesians have been hugely right on the effects of monetary and fiscal policy, while equilibrium macro types have been wrong about everything.

Yesterday’s third post was “Rick Santelli and Affinity Fraud:”

So, there was a fun moment on CNBC: Rick Santelli went on a rant about inflation and the Fed, and CNBC analyst Steve Liesman went medieval on him:

It’s impossible for you to have been more wrong, Rick. Your call for inflation, the destruction of the dollar, the failure of the US economy to rebound. Rick, it’s impossible for you to have been more wrong. Every single bit of advice you gave would have lost people money, Rick. Lost people money, Rick. Every single bit of advice. There is no piece of advice that you’ve given that’s worked, Rick. There is no piece of advice that you’ve given that’s worked, Rick. Not a single one. Not a single one, Rick. The higher interest rates never came, the inability of the U.S. to sell bonds never happened, the dollar never crashed, Rick. There isn’t a single one that’s worked for you.

You really need to watch this moment:

But here’s the thing: before Liesman started, Santelli yelled that he had been right all along — and some of the traders started applauding.

Think about that: Liesman is of course right about Santelli’s record, and as I’ve pointed out many times this goes for all the inflationistas. So any trader who believed him would have lost money hand over fist. So why the applause?

Basically, I think, it’s because Santelli is their kind of guy; he hates the poors, he hates people who want to help the poors, he was trashing Janet Yellen for suggesting that she actually cares about the plight of the unemployed. And the traders feel the same way. So they like Santelli even though he’s been wrong about everything.

The last post yesterday was “Health Care Hatred:”

The good news about Obamacare so far shouldn’t be considered disputable. Enrollments really are above target; multiple independent surveys show a sharp drop in the uninsured population; health care cost growth really has slowed dramatically, whatever the reason; the newly insured are generally satisfied with their coverage. If you want to insist that big problems lie ahead, fine (but please explain), but the facts so far are pretty good.

But what I’m getting — and what you get whenever you suggest that things are going OK — is an outpouring, not so much of disagreement, as of fury. People get red-in-the-face angry, practically to the point of incoherence, over the suggestion that it’s not a disaster.

What’s that about? Partly it may be Obama derangement syndrome. I was struck by mail I received after my last column accusing me of shilling for Obama and refusing to admit what a disaster he’s been — when the column didn’t so much as mention the guy. Obamacare was a label stuck on the Affordable Care Act by its opponents, to tie the president to the disaster to come; now they’re livid that it, and he, are turning out OK.

Partly it may be general hatred for any kind of program that helps the less fortunate, especially if they happen to be, you know, not white. Such programs must be disasters — don’t bother me with evidence.

And partly, I suspect, there’s now an element of shame. If this thing is actually working, everyone who yelled about how it would be a disaster ends up looking fairly stupid.

But, you know, sometimes looks don’t deceive.


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