Krugman’s blog, 10/14/14

October 15, 2014

There were three posts yesterday.  The first was “Jean Tirole and the Triumph of Calculated Silliness:”

I’m late coming in on the Tirole Nobel – busy with real life – and many people have already weighed in on his contribution. But I though I might still have something useful to say about what the New Industrial Organization, of which he was the most important figure, actually did – namely, it made it safe to be strategically silly, to the great benefit of economics.

What do I mean by that? Before the new IO, economists wrote about perfect competition and monopoly, then acknowledged (if they were honest) that most of the real economy seemed to consist of oligopoly – competition among the few – but did little there except some hand-waving. Why? Because there was no general model of oligopoly.

And there still isn’t. When you have a small number of players, each able to have a significant effect on prices, lots of things can happen. They can collude – maybe implicitly, if there is an effectively enforced antitrust law; but what are the limits of collusion, and why and when does it sometimes break down? We like to assume that firms maximize profits, but what does that even mean when there are small-group interactions that create prisoners’-dilemma-type situations?

And yet you do want to model the economy, to think about stuff – and sometimes that stuff can’t be modeled without addressing imperfect competition. That was very much the case in my home field of trade, where even trying to model the role of increasing returns meant dealing with the fact that increasing returns internal to firms must cause perfect competition to break down.

Before the new IO came along, the way economics dealt with such issues was to assume them away. Increasing returns as a cause of trade? Hey, you can’t deal with that because we don’t have a theory of imperfect competition, so we have to assume that it’s all comparative advantage. (Harry Johnson once wrote a more or less triumphant paper to that effect.) Investment in R&D, and the temporary market power that results, as a source of technological progress? No can do.

What new IO brought was not so much a solution as an attitude. No, we don’t have a general model of oligopoly – but why not tell some stories and see where they lead? We can simply assume noncooperative price (or quantity) setting; yes, real firms are probably going to find ways to collude, but we might learn interesting things by working through the case where they don’t. We can make absurd assumptions about tastes and technology that lead to a tractable version of monopolistic competition; no, real markets don’t look like that, but why not use this funny version to think about increasing returns in trade and growth?

Basically, the new IO made it OK to tell stories rather than proving theorems, and thereby made it possible to talk about and model issues that had been ruled out by the limits of perfect competition. It was, I can tell you from experience, profoundly liberating.

Of course, there came a later phase when things were too liberated – when a smart grad student could produce a model to justify anything. Time for empirical work! But by then a lot had been achieved.

Yesterday’s second post was “The State of Macro, Six Years Later:”

Olivier Blanchard has gotten a lot of ribbing, from me among others, for his 2008 paper proclaiming that “the state of macro is good.” My critique was that Olivier was in a state of denial about the Dark Age of macroeconomics; when crisis struck and action became necessary, it became all too clear that freshwater macro had unlearned everything Keynes and Hicks had taught – and also that the desperate New Keynesian attempt to appease the rational expectations crowd had not only failed in that purpose, but arguably hobbled efforts to think clearly about anything that didn’t fit easily into a model where everything except price stickiness reflected maximization..

I would argue that Olivier’s latest version, which concedes that there are “dark corners” where the rational expectations approach doesn’t work, is still trying too hard to appease the unappeasable. But Arnold Kling offers a different critique: he thinks that Blanchard is demonstrating “modeling hubris.” And that, I’d argue, is all wrong.

First of all, whenever somebody claims to have a deeper understanding of economics (or actually anything) that transcends the insights of simple models, my reaction is that this is self-delusion. Any time you make any kind of causal statement about economics, you are at least implicitly using a model of how the economy works. And when you refuse to be explicit about that model, you almost always end up – whether you know it or not – de facto using models that are much more simplistic than the crossing curves or whatever your intellectual opponents are using.

Think, in particular, of all the Austrians declaring that the economy is too complicated for any simple model – and then confidently declaring that the Fed’s monetary expansion would cause runaway inflation. Whatever they may have imagined, they were in practice using a crude quantity-theory model of the price level.

And as I have often tried to explain, the experience of the past six years has actually been a great vindication for those who relied on a simple but explicit model, Hicksian IS-LM, which made predictions very much at odds with what a lot of people who didn’t use explicit models were sure would happen.

Suppose that you didn’t know about IS-LM and the concept of the liquidity trap. You would (and many did) look at the growth of the monetary base, and predict huge inflation:

And you could (and many did) look at government borrowing, and predict soaring interest rates:

But if you understood IS-LM, you realized that both the relationship between money and inflation and the relationship between borrowing and interest rates break down at the zero lower bound; and so they did.

If you don’t think these successful predictions are a big deal, go back and read the dismissive, vituperative comments those of us who predicted low inflation and interest rates faced back in 2009.

And a somewhat related point: when people claim to have a sophisticated understanding that transcends models, what, exactly, would they ever regard as evidence that their sophisticated understanding is, you know, wrong?

The last post yesterday was “Nobody Understands the Liquidity Trap: Cliff Asness Edition:”

Cliff Asness, one of the signers of the infamous open letter warning Ben Bernanke that his policies risked debasing the dollar, weighs in with a complaint that I am being a big meanie. As Brad DeLong immediately notes, what Asness mainly ends up doing is showing that he doesn’t at all get the whole notion of the liquidity trap, and the resulting irrelevance of monetary expansion to both prices and output.

Clearly, Asness has never read anything at all on the subject — not what I’ve written, not what Mike Woodford has written, not what Ben Bernanke has written. And he seems to view the failure of inflation to follow from quantitative easing as some sort of weird coincidence, not what anyone who applied basic macroeconomics to the situation predicted.

Now, I understand that busy people can’t keep track of everything, and even that you can sometimes be a successful money manager without reading up on monetary economics. But if you’re one of those people who don’t have time to understand the monetary debate, I have a simple piece of advice: Don’t lecture the chairman of the Fed on monetary policy.

Friedman and Bruni

October 15, 2014

In “A Pump War?” The Moustache of Wisdom says the decline in oil prices is no accident.  He has a question:  What’s really playing out here?  Mr. Bruni, in “Scarier Than Ebola,” says our gravest health threats are those that we understand, but fail to take proper action against.  Here’s The Moustache of Wisdom:

Is it just my imagination or is there a global oil war underway pitting the United States and Saudi Arabia on one side against Russia and Iran on the other? One can’t say for sure whether the American-Saudi oil alliance is deliberate or a coincidence of interests, but, if it is explicit, then clearly we’re trying to do to President Vladimir Putin of Russia and Iran’s supreme leader, Ayatollah Ali Khamenei, exactly what the Americans and Saudis did to the last leaders of the Soviet Union: pump them to death — bankrupt them by bringing down the price of oil to levels below what both Moscow and Tehran need to finance their budgets.

Think about this: four oil producers — Libya, Iraq, Nigeria and Syria — are in turmoil today, and Iran is hobbled by sanctions. Ten years ago, such news would have sent oil prices soaring. But today, the opposite is happening. Global crude oil prices have been falling for weeks, now resting around $88 — after a long stretch at $105 to $110 a barrel.

The price drop is the result of economic slowdowns in Europe and China, combined with the United States becoming one of the world’s biggest oil producers — thanks to new technologies enabling the extraction of large amounts of “tight oil” from shale — combined with America starting to make exceptions and allowing some of its newfound oil products to be exported, combined with Saudi Arabia refusing to cut back its production to keep prices higher, but choosing instead to maintain its market share against other OPEC producers. The net result has been to make life difficult for Russia and Iran, at a time when Saudi Arabia and America are confronting both of them in a proxy war in Syria. This is business, but it also has the feel of war by other means: oil.

The Russians have noticed. How could they not? They’ve seen this play before. The Russian newspaper Pravda published an article on April 3 with the headline, “Obama Wants Saudi Arabia to Destroy Russian Economy.” It said: “There is a precedent [for] such joint action that caused the collapse of the U.S.S.R. In 1985, the Kingdom dramatically increased oil production from 2 million to 10 million barrels per day, dropping the price from $32 to $10 per barrel. [The] U.S.S.R. began selling some batches at an even lower price, about $6 per barrel. Saudi Arabia [did not lose] anything, because when prices fell by 3.5 times [Saudi] production increased fivefold. The planned economy of the Soviet Union was not able to cope with falling export revenues, and this was one of the reasons for the collapse of the U.S.S.R.”

Indeed, the late Yegor Gaidar, who between 1991 and 1994 was Russia’s acting prime minister, observed in a Nov. 13, 2006, speech that: “The timeline of the collapse of the Soviet Union can be traced to Sept. 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices. … During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed. … The Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.”

Neither Moscow nor Tehran will collapse tomorrow. And if oil prices fall below $70 you will see a drop in U.S. production, as some exploration won’t be cost effective, and prices could firm up. But have no doubt, this price falloff serves U.S. and Saudi strategic interests and it harms Russia and Iran. Oil export revenues account for about 60 percent of Iran’s government revenues and more than half of Russia’s.

The price decline is no accident. In an Oct. 3 article in The Times, Stanley Reed noted that the sharp drop in oil prices “was seen as a response to Saudi Arabia’s signaling … to the markets that it was more interested in maintaining market share than in defending prices. Saudi Aramco, the national oil company, stunned markets by announcing that it was cutting prices by about $1 a barrel to Asia, the crucial growth market for the Persian Gulf producers, as well as by 40 cents a barrel to the United States.” The Times also noted that with America now producing so much more oil and gas, “net oil imports to the United States have fallen since 2007 by 8.7 million barrels a day, ‘roughly equivalent to total Saudi and Nigerian exports,’ according to a recent Citigroup report.”

This resource abundance comes at a time when we’ve also hit a “gusher” of energy technology in Silicon Valley, which is supplying us with unprecedented gains in energy efficiency and productivity, savings that may become as impactful as shale in determining our energy security and global strength. Google, through Nest, and Apple through coding in the iPhone software, are making it easier for average Americans to manage and save energy at home or work.

Bottom line: The trend line for petro-dictators is not so good. America today has a growing advantage in what the former Assistant Energy Secretary Andy Karsner calls “the three big C’s: code, crude and capital.” If only we could do tax reform, and replace payroll and corporate taxes with a carbon tax, we’d have a formula for resiliency and success far better than any of our adversaries.

Now here’s Mr. Bruni:

We Americans do panic really well.

We could use a few pointers on prudence.

Do me a favor. Turn away from the ceaseless media coverage of Ebola in Texas — the interviews with the Dallas nurse’s neighbors, the hand-wringing over her pooch, the instructions on protective medical gear — and answer this: Have you had your flu shot? Are you planning on one?

During the 2013-2014 flu season, according to the Centers for Disease Control and Prevention, only 46 percent of Americans received vaccinations against influenza, even though it kills about 3,000 people in this country in a good year, nearly 50,000 in a bad one.

These are deaths by a familiar assassin. Many of them could have been prevented. So why aren’t we in a lather over that? Why fixate on remote threats that we feel we can’t control when there are immediate ones that we simply don’t bother to?

On matters exotic, we’re rapt. On matters quotidian, which are nonetheless matters of life and death, we’re cavalier. Tens of thousands of Americans die in car crashes annually, and according to a federal analysis from 2012, more than half of them weren’t wearing seatbelts.

Perhaps that didn’t make a difference in many cases. In some, it probably did. But on this front, as on others, we have clear answers about how to minimize risk and we simply proceed to forget or ignore them.

There’s no way to square skin-cancer statistics in the United States — more than 3.5 million cases diagnosed yearly and almost 10,000 deaths — with the number of Americans showing off their tans. They aren’t all getting body paint. They’ve been lectured about sunscreen and shade and hats. But vanity trumps sanity, and melanoma rides its coattails.

I’m not dismissing the horror of Ebola, a full-blown crisis in Africa that should command the whole world’s assistance. And Ebola in the United States certainly warrants concern. We’re still searching for definitive answers about transmission and prevention.

But Americans already have such answers about a host of other, greater perils to our health, and we’d be wiser to reacquaint ourselves with those, and recommit to heeding them, than to worry about our imminent exposure to Ebola.

“People get very fearful and stressed out and have a lot of anxiety about things like Ebola that aren’t a general health risk,” said Jeffrey Duchin, who is the chairman of the public health committee of the Infectious Diseases Society of America. “Just look at causes of death in the United States. Everything is higher than Ebola, and there are things that we can do about many of them.”

Duchin, a physician, moderated a panel of experts who discussed Ebola at the society’s conference last week. These doctors sought to refocus attention on influenza, which lacks novelty but not potency.

In my conversation with him, Duchin also pointed out that between 2.7 and 5.2 million Americans are believed to be infected with the hepatitis C virus. Deaths related to it can range widely, from 17,000 to 80,000 annually, he said. There’s a test for it. There’s effective treatment. But the C.D.C. says that up to 75 percent of the people with the virus don’t know they have it.

Stephen Morse, a professor of epidemiology at Columbia University’s Mailman School of Public Health, told me: “We have a lot of vaccine-preventable diseases and we see more and more people refusing to have their children take vaccines.”

He was referring to outbreaks of measles and pertussis (or whooping cough) in states and cities where parents have hallucinated a connection between immunizations and autism. They cling to this fiction in the face of scientific information to the contrary.

Both The Hollywood Reporter and Time magazine recently published accounts of anti-vaccine madness among supposedly educated, affluent Americans in particular. According to the story in The Hollywood Reporter, by Gary Baum, the parents of 57 percent of the children at a Beverly Hills preschool and of 68 percent at one in Santa Monica had filed personal-belief exemptions from having their kids vaccinated.

Such numbers, Baum wrote, “are in line with immunization rates in developing countries like Chad and South Sudan.”

On CNN on Monday night, a Dallas pediatrician was asked about what she had advised the families she sees. She said that she urged them to have their children “vaccinated against diseases that we can prevent,” and that she also stressed frequent hand-washing. Ebola or no Ebola, it’s a responsible — and frequently disregarded — way to lessen health risks.

So are these: fewer potato chips. Less sugary soda. Safer sex. Tighter restrictions on firearms. More than 30,000 Americans die from gunshots every year. Anyone looking for an epidemic to freak out about can find one right there.

Brooks, Cohen and Nocera

October 14, 2014

In “The Sorting Election” Bobo gurgles that American society is self-segregating, and it’s showing up everywhere — including in next month’s midterm elections.  In “The Instruction of Pestilence” Mr. Cohen says plague can remain dormant for years but its bacillus never dies or vanishes entirely.  Mr. Nocera says “Amazon Plays Rough.  So What?” and has a question:  While the debate rages on over monopoly status, is anyone really going to stop shopping at the website?  Here’s Bobo:

Everybody knows that Silicon Valley has become an economic powerhouse over the past quarter-century, but Houston’s boom is less appreciated. Joel Kotkin of Chapman University points out that over the past decade, Houston has outperformed every major metropolitan area in income growth, population growth and migration. Since 2000, the city’s employment figures have risen by 32 percent, ranking it No. 1 in percentage job growth. In August, Houston issued more single-family housing permits than all of California.

The Bay Area and Houston share a strategic asset: engineers. The two regions rank first and second in the country in engineers per capita. Beyond that, they are thriving on the basis of very different growth models.

Obviously, the Bay Area is driven by technology. Houston’s growth is driven by energy. More than 5,000 energy-related companies are located there. The Bay Area is a tightly regulated city. Houston has no formal zoning code, though, as the city gets more affluent, more rules are being written. The Bay Area is beautiful in the way urbanists like, while Houston is mostly ugly, in the way fast-food chains like. The Bay Area is densely populated and great for walking, while Houston is sprawling, though much of the development over the past few years has been high-density hipster infill.

The Bay Area is the hands-down winner when it comes to creativity and charm. But it’s a luxury region, unaffordable and wildly unequal. Houston wins when it comes to livability, especially for people who want to have children.

Kotkin, who has become an evangelist for the Houston model, points out that Houston is possibly the most ethnically diverse city in America. It’s more egalitarian than San Francisco. African-Americans and Hispanics there have high home ownership rates. Houstonians also enjoy a pretty high standard of living. If you take annual earnings per job and adjust it for the local cost of living, then Houston ranks top among major cities.

Over the past few years, liberals and conservatives have been arguing over which growth model is best. But, of course, there’s no need to choose. Both models are more or less working.

What we’re seeing, it seems to me, is a profusion of economic growth models in different parts of the country — a net increase in economic pluralism and diversity. Perhaps even more than in the past, cities are specializing, turning into global hubs for a specific economic sector.

This diversity is an enormous economic advantage for the country, and an enormous social and political challenge. As the country diversifies economically, it segments socially and politically. Each economic sector attracts different kinds of people and nurtures different kinds of values. The specialization of output means that every place becomes more like itself.

In addition, as society gets more educated, it segments further. Educated people are more polarized politically than less educated people. Educated people are also more likely to move around and tend to move in with people like themselves. Over the past few decades, we’ve seen increases in residential segregation along political, income and cultural lines.

As the years go by, politics more and more resembles these underlying divisions. I used to think that this was basically a centrist country and that political polarization was an elite phenomenon. But most of the recent evidence suggests that polarization is deeply rooted in the economic conditions and personal values of the country. Washington is not the cause of polarization; America is. The irony is that something good about America (economic pluralism) is contributing to something bad (segmentation and political trench warfare).

Which more or less explains the midterm elections. The 2014 campaign has been the most boring and uncreative campaign I can remember. Democrats cry, “My Republican opponent is an extremist loon!” Republicans cry, “My Democratic opponent once shook hands with President Obama!” There’s not even a Contract With America, nor many policy suggestions of any sort. Most campaigns just remind preconvinced voters how bad the other party is.

One result of the election is already clear. Political representation will more closely resemble the underlying social segmentation. Right now there are a lot of red states with Democratic senators. After this election, there will be fewer — probably between four and nine fewer. The election is about sorting people more tightly into their pre-existing boxes.

People often compare this era to the progressive era — a time of economic transition with wide inequality and political rot. But that was an era of centralizing economic forces. This is an era of economic pluralism and political segmentation.

People in San Francisco and Houston are achieving success while pursuing different economic models. It probably doesn’t make much sense to govern them intrusively from Washington as if they were engaged in the same project.

Of course gerrymandering has NOTHING to do with ANYTHING.  Nothing to see here, move along…  Here’s Mr. Cohen:

Webster’s Dictionary defines plague as “anything that afflicts or troubles; calamity; scourge.” Further definitions include “any contagious epidemic disease that is deadly; esp., bubonic plague” and, from the Bible, “any of various calamities sent down as divine punishment.” The verb form means “to vex; harass; trouble; torment.”

In Albert Camus’ novel, “The Plague,” written soon after the Nazi occupation of France, the first sign of the epidemic is rats dying in numbers: “They came up from basements and cubby-holes, cellars and drains, in long swaying lines; they staggered in the light, collapsed and died, right next to people. At night, in corridors and side-streets, one could clearly hear the tiny squeaks as they expired. In the morning, on the outskirts of town, you would find them stretched out in the gutter with a little floret of blood on their pointed muzzles, some blown up and rotting, other stiff, with their whiskers still standing up.”

The rats are messengers, but — human nature being what it is — their message is not immediately heeded. Life must go on. There are errands to run, money to be made. The novel is set in Oran, an Algerian coastal town of commerce and lassitude, where the heat rises steadily to the point that the sea changes color, deep blue turning to a “sheen of silver or iron, making it painful to look at.” Even when people start to die — their lymph nodes swollen, blackish patches spreading on their skin, vomiting bile, gasping for breath — the authorities’ response is hesitant. The word “plague” is almost unsayable. In exasperation, the doctor-protagonist tells a hastily convened health commission: “I don’t mind the form of words. Let’s just say that we should not act as though half the town were not threatened with death, because then it would be.”

The sequence of emotions feels familiar. Denial is followed by faint anxiety, which is followed by concern, which is followed by fear, which is followed by panic. The phobia is stoked by the sudden realization that there are uncontrollable dark forces, lurking in the drains and the sewers, just beneath life’s placid surface. The disease is a leveler, suddenly everyone is vulnerable, and the moral strength of each individual is tested. The plague is on everyone’s minds, when it’s not in their bodies. Questions multiply: What is the chain of transmission? How to isolate the victims?

Plague and epidemics are a thing of the past, of course they are. Physical contact has been cut to a minimum in developed societies. Devices and their digital messages direct our lives. It is not necessary to look into someone’s eyes let alone touch their skin in order to become, somehow, intimate. Food is hermetically sealed. Blood, secretions, saliva, pus, bodily fluids — these are things with which hospitals deal, not matters of daily concern.

A virus contracted in West Africa, perhaps by a man hunting fruit bats in a tropical forest to feed his family, and cutting the bat open, cannot affect a nurse in Dallas, Texas, who has been wearing protective clothing as she tended a patient who died. Except that it does. “Pestilence is in fact very common,” Camus observes, “but we find it hard to believe in a pestilence when it descends upon us.”

The scary thing is that the bat that carries the virus is not sick. It is simply capable of transmitting the virus in the right circumstances. In other words, the virus is always lurking even if invisible. It is easily ignored until it is too late.

Pestilence, of course, is a metaphor as well as a physical fact. It is not just blood oozing from gums and eyes, diarrhea and vomiting. A plague had descended on Europe as Camus wrote. The calamity and slaughter were spreading through the North Africa where he had passed his childhood. This virus hopping today from Africa to Europe to the United States has come in a time of beheadings and unease. People put the phenomena together as denial turns to anxiety and panic. They sense the stirring of uncontrollable forces. They want to be wrong but they are not sure they are.

At the end of the novel, the doctor contemplates a relieved throng that has survived: “He knew that this happy crowd was unaware of something that one can read in books, which is that the plague bacillus never dies or vanishes entirely, that it can remain dormant for dozens of years in furniture or clothing, that it waits patiently in bedrooms, cellars, trunks, handkerchiefs and old papers, and that perhaps the day will come when, for the instruction or misfortune of mankind, the plague will rouse its rats and send them to die in some well-contented city.”

The most surprising word there is the most important: The epidemic may also serve for the “instruction” of a blithe humanity.

And now we get to Mr. Nocera:

Is Amazon a monopoly?

That certainly is what Franklin Foer, the editor of The New Republic, thinks. In the magazine’s current issue, he has written a lengthy polemic denouncing the company for all manner of sins. The headline reads: “Amazon Must Be Stopped.”

“Shopping on Amazon,” he writes, “has so ingrained itself in modern American life that it has become something close to our unthinking habit, and the company has achieved a level of dominance that merits the application of a very old label: monopoly.”

Foer’s brief is that Amazon undercuts competitors so ruthlessly and squeezes suppliers so brutally — “in its pursuit of bigness” — that it has become “highly worrisome.” Its founder and chief executive, Jeff Bezos, “borrowed his personal style from the parsimonious Sam Walton,” the founder of (shudder) Walmart, and Foer notes that pushing suppliers has always been the key to Walmart’s low prices, just as it is for Amazon’s.

But, he says, when Amazon does it, the effect is somehow “darker.” Why? Because “without the constraints of brick and mortar, it considers nothing too remote from its core business, so it has grown to sell server space to the C.I.A., produce original television shows about bumbling congressmen, and engineer its own line of mobile phones.” What, precisely, is darker about making TV shows about bumbling congressmen is left unsaid.

And then, of course, there is the book business, which Amazon most certainly dominates, with 67 percent of the e-book market and 41 percent of the overall book market, by some estimates. Foer devotes a big chunk of his essay to Amazon’s ongoing efforts to “disintermediate” the book business, most vividly on display in its current battle over e-book pricing with Hachette, in which it is punishing Hachette by putting its books at a disadvantage on its website compared with other publishers’ books. Foer worries about what Amazon’s tactics will ultimately mean for book advances. And he fears that books will become commoditized — “deflating Salman Rushdie and Jennifer Egan novels to the price of a Diet Coke.”

What he doesn’t say — because he can’t — is that Amazon is in clear violation of the country’s antitrust laws. As Annie Lowrey and Matthew Yglesias both pointed out in blog posts (at New York magazine and Vox respectively), there is no possible way Amazon can legitimately be called a monopoly. Lowrey notes that Amazon’s sales amount to only “about 15 percent of total e-commerce sales.” Walmart’s e-commerce sales are growing at least as fast as Amazon’s. Meanwhile, as Yglesias points out, Amazon has to compete with far larger rivals, including not just Walmart, but Target and Home Depot in the brick-and-mortar world, and Google and Apple in the digital universe.

The truth is that American antitrust law is simply not very concerned with the fate of competitors. What it cares about is whether harm is being done to consumers. Walmart has squashed many more small competitors than Amazon ever will, with nary a peep from the antitrust police. Even in the one business Amazon does dominate — books — it earned its market share fair and square, by, among other things, inventing the first truly commercially successful e-reader. Even now, most people turn to Amazon for e-books not because there are no alternatives but because its service is superior.

“In confronting what to do about Amazon,” Foer writes as his essay nears its conclusion, “first we have to realize our own complicity. We’ve all been seduced by the deep discounts, the monthly automatic diaper delivery, the free Prime movies, the gift wrapping, the free two-day shipping, the ability to buy shoes or books or pinto beans or a toilet all from the same place.”

Our complicity? In fact, in its two decades of life, Amazon has redefined customer service in a way that has delighted people and caused them to return to the site again and again. Does Amazon have a dark side? Yes, it does — primarily in the way it has historically treated its warehouse workers. But to say that Amazon has to be stopped because it is giving people what they want is to misunderstand the nature of capitalism.

Let’s be honest here: The intelligentsia is focused on Amazon not because it sells pinto beans or toilets, but because it sells books. That’s their business. Amazon is changing the book industry in ways that threaten to diminish the role of publishers and traditional ways of publishing. Its battle with Hachette is a battle over control. It’s not terribly different from the forces that ultimately disintermediated the music business.

As an author, I’m rooting for Hachette. The old system — in which the writer gets an advance, and the publisher markets the final product — works for me, as it does for most writers of serious nonfiction.

But, am I going to stop using Amazon? No way. I’m betting you won’t either.

Krugman’s blog, 10/12/14

October 13, 2014

There were two posts yesterday.  The first was “Sunday in the Park for George:”

I did an interview with Jonathan Karl for This Week, about my Rolling Stone article on Obama. Here’s video of part of it.

Yesterday’s second post was “German Weakness:”

Wolfgang Münchau says the right thing: Germany doesn’t actually have a strong domestic economy. It’s more or less at full employment thanks to an immense trade surplus that has yet to diminish significantly:

Credit Eurostat

And even so, and despite negative real interest rates, it’s not in a roaring boom. Without that huge surplus — driven, as Münchau says, by investment booms abroad — Germany would be very clearly in the grips of secular stagnation.

The idea that Germany is a useful role model depends on Ordoarithmetic — the view that what we need is for everyone to run enormous trade surpluses at the same time.

Krugman, solo

October 13, 2014

Mr. Blow is off today, so Prof. Krugman has the place to himself.  In “Revenge of the Unforgiven” he says sometimes debt relief is in everybody’s interest, but policy makers only seem interested in moral indignation.  Here he is:

Stop me if you’ve heard this before: The world economy appears to be stumbling. For a while, things seemed to be looking up, and there was talk about green shoots of recovery. But now growth is stalling, and the specter of deflation looms.

If this story sounds familiar, it should; it has played out repeatedly since 2008. As in previous episodes, the worst news is coming from Europe, but this time there is also a clear slowdown in emerging markets — and there are even warning signs in the United States, despite pretty good job growth at the moment.

Why does this keep happening? After all, the events that brought on the Great Recession — the housing bust, the banking crisis — took place a long time ago. Why can’t we escape their legacy?

The proximate answer lies in a series of policy mistakes: Austerity when economies needed stimulus, paranoia about inflation when the real risk is deflation, and so on. But why do governments keep making these mistakes? In particular, why do they keep making the same mistakes, year after year?

The answer, I’d suggest, is an excess of virtue. Righteousness is killing the world economy.

What, after all, is our fundamental economic problem? A simplified but broadly correct account of what went wrong goes like this: In the years leading up to the Great Recession, we had an explosion of credit (mainly to the private sector). Old notions of prudence, for both lenders and borrowers, were cast aside; debt levels that would once have been considered deeply unsound became the norm.

Then the music stopped, the money stopped flowing, and everyone began trying to “deleverage,” to reduce the level of debt. For each individual, this was prudent. But my spending is your income and your spending is my income, so when everyone tries to pay down debt at the same time, you get a depressed economy.

So what can be done? Historically, the solution to high levels of debt has often involved writing off and forgiving much of that debt. Sometimes this happens explicitly: In the 1930s F.D.R. helped borrowers refinance with much cheaper mortgages, while in this crisis Iceland is outright canceling a significant part of the debt households ran up during the bubble years. More often, debt relief takes place implicitly, through “financial repression”: government policies hold interest rates down, while inflation erodes the real value of debt.

What’s striking about the past few years, however, is how little debt relief has actually taken place. Yes, there’s Iceland — but it’s tiny. Yes, Greek creditors took a significant “haircut” — but Greece is still a small player (and still hopelessly in debt). In major economies, very few debtors have received a break. And far from being inflated away, the burden of debt has been aggravated by falling inflation, which is running well below target in America and near zero in Europe.

Why are debtors receiving so little relief? As I said, it’s about righteousness — the sense that any kind of debt forgiveness would involve rewarding bad behavior. In America, the famous Rick Santelli rant that gave birth to the Tea Party wasn’t about taxes or spending — it was a furious denunciation of proposals to help troubled homeowners. In Europe, austerity policies have been driven less by economic analysis than by Germany’s moral indignation over the notion that irresponsible borrowers might not face the full consequences of their actions.

So the policy response to a crisis of excessive debt has, in effect, been a demand that debtors pay off their debts in full. What does history say about that strategy? That’s easy: It doesn’t work. Whatever progress debtors make through suffering and saving is more than offset through depression and deflation. That is, for example, what happened to Britain after World War I, when it tried to pay off its debt with huge budget surpluses while returning to the gold standard: Despite years of sacrifice, it made almost no progress in bringing down the ratio of debt to G.D.P.

And that’s what is happening now. A recent comprehensive report on debt is titled “Deleveraging, what deleveraging?”; despite private cutbacks and public austerity, debt levels are rising thanks to poor economic performance. And we are arguably no closer to escaping our debt trap than we were five years ago.

But it has been very hard to get either the policy elite or the public to understand that sometimes debt relief is in everyone’s interest. Instead, the response to poor economic performance has essentially been that the beatings will continue until morale improves.

Maybe, just maybe, bad news — say, a recession in Germany — will finally bring an end to this destructive reign of virtue. But don’t count on it.

Krugman’s blog, 10/11/14

October 12, 2014

There was one post yesterday, “Europanic 2.0:”

Anyone who works in international monetary economics is familiar with Dornbusch’s Law:

The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.

And so it is with the latest euro crisis. Not that long ago the austerians who had dictated macro policy in the euro area were strutting around, proclaiming victory on the basis of a modest uptick in growth. Then inflation plunged and the eurozone economy began to sputter — and perhaps more important, everyone looked at the fundamentals again and realized that the situation remains extremely dire.

Now, things looked very dire in the summer of 2012, too, and Mario Draghi pulled Europe back from the brink. And maybe, just maybe, he can do it again. But the task looks much harder.

In 2012, the problem was very high borrowing costs in the periphery — which we now know were driven more by liquidity issues than solvency concerns. That is, the markets basically feared that Spain or Italy might default in the near term because they would literally run out of money — and market fears threatened to turn into a self-fulfilling prophecy. And all it took to defuse that crisis was three words: “Whatever it takes”. Once the prospect of a cash shortage was taken off the table, the panic quickly subsided, and at this point both Spain and Italy have historically low borrowing costs.

What’s happening now, however, is very different. It’s a slower-motion crisis, involving the euro area as a whole, which is sliding into a deflationary trap with the ECB already essentially at the zero lower bound. Draghi can try to get traction through quantitative easing, but it’s by no means clear that this could do the trick even under the best of circumstances — and in reality he faces severe political constraints on what he can do.

What strikes me, also, is the extent of intellectual confusion that remains. Germany still seems determined to regard the whole thing as the wages of fiscal irresponsibility, which not only rules out effective fiscal stimulus but hobbles QE, since it’s anathema for them to consider buying government debt.

And it’s remarkable, too, how the logic of the liquidity trap remains elusive even after six years — six years! — at the zero lower bound. Not the worst example, but I read Reza Moghadam today:

Wages and other labour costs are simply too high, even by the standards of rich countries, let alone emerging markets competitors.

Augh! If it’s external competitiveness you’re worried about, depreciating the euro is what you want, not wage cuts. And cutting wages in a liquidity-trap economy almost surely deepens the slump. How can this not be part of what everyone understands by now?

Europe has surprised many people, myself included, with its resilience. And I do think the Draghi-era ECB has become a major source of strength. But I (and others I talk to) are having an ever harder time seeing how this ends — or rather, how it ends non-catastrophically. You may find a story in which Marine Le Pen takes France out of both the euro and the EU implausible; but what’s your scenario?

The Pasty Little Putz, Dowd, Friedman, Kristof and Bruni

October 12, 2014

In “The Last Right” The Putz thinks he can explain why America is moving so slowly on assisted suicide, while shifting dramatically on other social issues.  MoDo has a question in “Lady Psychopaths Welcome:”  The debate rages: Is “Gone Girl” about a she-monster or a me-monster?  The Moustache of Wisdom, in “I.S. = Invasive Species,” also has a question:  Just how did ISIS spread so far, so fast? He says the National Arboretum might have the answer.  In “When Whites Just Don’t Get It, Part 3″ Mr. Kristof says a conversation on racial inequality in America continues with a look at the justice system.  In “Appetite, Bill and Barack” Mr. Bruni says our 42nd president brought something to the office that our 43rd and 44th didn’t — what about our 45th?  Here’s The Putz:

On Nov. 1, barring the medically unexpected or a change of heart, a young woman named Brittany Maynard will ingest a lethal prescription and die by suicide.

Maynard is 29, recently married and is suffering from terminal brain cancer. After deciding against hospice care — fearing, she wrote in a CNN op-ed, a combination of pain, personality changes, and the loss of basic mental and physical functions — she and her husband moved from California to Oregon, one of five states that permit physician-assisted suicide. In the time remaining to her, she has become a public advocate for that practice’s expansion, recording testimonials on behalf of the right of the terminally ill to make their quietus.

The tragedy here is almost deep enough to drown the political debate. But that debate’s continued existence is still a striking fact. Why, in a society where individualism seems to be carrying the day, is the right that Maynard intends to exercise still confined to just a handful of states? Why has assisted suicide’s advance been slow, when on other social issues the landscape has shifted dramatically in a libertarian direction?

Twenty years ago, a much more rapid advance seemed likely. Some sort of right to suicide seemed like a potential extension of “the right to define one’s own concept of existence” that the Supreme Court had invoked while upholding a woman’s constitutional right to abortion. Polls in the 1990s consistently showed more support — majority support, depending on the framing — for physician-assisted suicide than for what then seemed like the eccentric cause of same-sex marriage.

Yet the latter cause has triumphed sweepingly, while voluntary euthanasia has advanced only haltingly. Part of the explanation lies with the Supreme Court, which in 1997 ruled 9 to 0 that the Constitution does not include a right to suicide. But the court would not have ruled as it did absent a deeper reality: Many liberals seem considerably more uncomfortable with the idea of physician-assisted suicide than with other causes, from abortion to homosexuality, where claims about personal autonomy and liberty are at stake.

Conservatives oppose assisted suicide more fiercely, but it’s a persistent left-of-center discomfort, even among the most secular liberals, that’s really held the idea at bay. Indeed, on this issue you can find many liberal writers who sound like, well, social conservatives — who warn of the danger of a lives-not-worth-living mentality, acknowledge the ease with which ethical and legal slopes can slip, recognize the limits of “consent” alone as a standard for moral judgment.

At the same time, though, there are tensions within the liberal mind on this issue, particularly when the discussion moves from the general (why assisted suicide is unwise as public policy) to the particular (why life is still worth living after all hope is lost, and why a given person facing death shouldn’t avail themselves of suicide).

You can see that tension illustrated, in a fascinating way, in the work of Ezekiel Emanuel, the health care expert and bioethicist (and brother of Chicago’s mayor). Emanuel’s 1997 Atlantic essay on physician-assisted suicide remains the best liberal critique of the idea, and he reiterated his anti-suicide position this fall, again in the Atlantic, in an essay discussing his perspective on aging, medicine and death.

But the new essay — which ran under the headline “Why I Hope to Die at 75” — was also shot through with precisely the fear of diminishment and incapacity, the anxiety at being any kind of burden, the desire to somehow exit at one’s sharpest and fittest and best, that drives the impulse toward medicalized suicide. It was partially a powerful case against unnecessary medical treatment — but partially a window into a worldview ill equipped to make sense of suffering that’s bound to lead to death, or that does not have a mountain-climbing, op-ed-writing recovery at the end of it.

The same deficit is apparent in responses to Brittany Maynard’s plight. Liberal policy writers are comfortable using her case to discuss the inadequacies of end-of-life care (as the health care expert Harold Pollack did, eloquently, in a piece for The New Republic). But when it comes time to make an affirmative case for what she actually has to live for, they often demur. To find that case, you often have to turn to explicitly religious writers — like Kara Tippetts, a mother of four currently dying of her own cancer, who wrote Maynard a passionate open letter urging her to embrace the possibility that their shared trial could actually have a purpose, that “beauty will meet us in that last breath.”

The future of the assisted suicide debate may depend, in part, on whether Tippetts’s case for the worth of what can seem like pointless suffering can be made either without her theological perspective, or by a liberalism more open to metaphysical arguments than the left is today.

If it can, then laws like Oregon’s will remain unusual, and the politics of assisted suicide the exception to the ever-more-libertarian trend.

If it can’t, then many more tragic stories will have the ending Brittany Maynard has chosen to embrace.

Correction: October 11, 2014 An earlier version of this column misidentified the writer Kara Tippetts. Her name is not Krista Tippett.

You’d think if the schmuck was citing someone’s work he’d bother to get her name right.  And of course the Times’ fact checkers outdid themselves again…  Here’s MoDo:

Fighting Superman is super hard.

“The guy is tough,” says Ben Affleck, who is playing Batman in a new iteration filming now in Detroit where the Caped Crusader and the Man of Steel duke it out. The actor is also having a tricky time with less heroic characters in his new hit movie, “Gone Girl,” a twisted and twisty conjugal cage fight that has sparked charges of misogyny, misandry and misanthropy.

Critics complain that Gillian Flynn’s clever creation, Amy Dunne, who punishes the men in her life by conjuring two false charges of rape and one of murder, is as cartoonish as muscly men in tights. They keen that the sleek blonde portrayed by Rosamund Pike in the movie is the latest in a line of stereotypical she-monsters and vagina dentata dames, independent women who turn out to be scary sociopaths.

“Gone Girl” opened last weekend with the backdrop of cover-ups on N.F.L. domestic violence and campaigns against sexual assault in the military and on campus. (California just passed legislation requiring students to give active consent before any sexual activity.)

In The Guardian, Joan Smith contended that the movie’s fake rape scenarios perpetuate the idea that victims of sexual violence “can’t be trusted.”

The New Republic’s Rebecca Traister told The Financial Times that the movie’s depiction of “our little sexual monsters” traded “on very, very old ideas about the power that women have to sexually, emotionally manipulate men. When you boil women down to only that, it’s troubling.”

Not to mention when the boiled-down women boil bunnies.

But, as a devotee of film noir vixens, I side with Flynn, whose philosophy is: “Dark sides are important. They should be nurtured like nasty black orchids.”

Given my choice between allowing portrayals of women who are sexually manipulative, erotically aggressive, fearless in a deranged kind of way, completely true to their own temperament, desperately vital, or the alternative — wallowing in feminist propaganda and succumbing to the niceness plague — I’ll take the former.

If “Gone Girl” is sending the wrong message about women, then Emma Bovary should have gone to medical school instead of cheating on her husband, Anna Karenina should have been a train engineer rather than throwing herself onto the tracks, and Eve Harrington should have waited her turn.

The idea that every portrait of a woman should be an ideal woman, meant to stand for all of womanhood, is an enemy of art — not to mention wickedly delicious Joan Crawford and Bette Davis movies. Art is meant to explore all the unattractive inner realities as well as to recommend glittering ideals. It is not meant to provide uplift or confirm people’s prior ideological assumptions. Art says “Think,” not “You’re right.”

After the 1917 revolution, the Bolsheviks pushed Socialist Realism, creating the Proletkult to ensure that art served ideology. Must we now have a Gynokult to ensure Feminist Unrealism?

“Good God, we’re in a lot of trouble if people think that Amy represents every woman,” Flynn marveled, telling me: “Once I was being mentioned alongside Ray Rice, I thought, wow, this is going to an interesting place.

“Feminism is not that fragile, I hope. What Amy does is to weaponize female stereotypes. She embodies them to get what she wants and then she detonates them. Men do bad things in films all the time and they’re called anti-heroes.”

Amy may not be admirable, Flynn notes, but “neither are the men on ‘The Sopranos.’ ”

“I think part of what people are pushing back on is that Amy’s not a dismissible bad person,” she said. “She doesn’t get punished.”

David Fincher, the director with the gift for saturating scenes in the darkness that interests him, is equally bemused.

“I don’t think the book or movie is saying that one out of five women in the Midwest needs to be scrutinized for borderline personality disorder,” he said. “The character is hyperbolized. It’s not ‘60 Minutes.’ It’s a mystery that becomes an absurdist thriller that ultimately becomes a satire.”

Flynn, Fincher and Affleck agree the movie is less about the she-monster than the me-monster, the narcissism involved in seducing your aspirational soul mate.

“The whole point is that these are two people pretending to be other people, better people, versions of the dream guy and dream girl,” Flynn said. “But each one couldn’t keep it up, so they destroy each other.”

Or as Fincher puts it, eventually in a relationship, you get to the point where exhaustion sets in and you say, “I don’t feel like repainting the Golden Gate Bridge yet again.”

Affleck said that, as the father of two young girls, he is acutely aware of the dangers that women face in the world.

“But picking apart the plot architecture in this literal way misses the larger point of Gillian’s book and David’s movie,” he said. “Just as Kubrick’s ‘Lolita’ was about pedophilia, plotwise, but actually about obsession, this movie is not simply about a diabolical woman or a man getting railroaded. It’s an indictment of how we lie to one another until, eventually, the mask falls off. Ironically, it is a movie that’s critical of marriage from two people who have great marriages.”

So to the Church of Feminism and the Niceness Thought Police, I say: Let a thousand black orchids bloom.

And now we get to The Moustache of Wisdom:

An Iraqi official recently told me this story: When the Islamic State, also known as ISIS, took over Mosul in the summer, the Sunni jihadist fighters in ISIS, many of whom were foreigners, went house to house. On the homes of Christians they marked “Nassarah,” an archaic Arabic term for Christians. But on the homes of Shiites they marked “Rafidha,” which means “those who reject” the Sunni line of authority as to who should be caliph, or leader of the Muslim community, after the death of the Prophet Muhammad. But here’s what was interesting, the Iraqi official said, the term “Rafidha” was largely unknown in Iraq to describe Shiites. It is a term used by Wahhabi fundamentalists in Saudi Arabia. “We did not know this word,” he told me. “This is not an Iraqi term.”

I was intrigued by this story because it highlighted the degree to which ISIS operates just like an “invasive species” in the world of plants and animals. It is not native to either the Iraqi or Syrian ecosystems. It never before grew in their landscapes.

I find it useful at times to use the natural world to illuminate trends in geopolitics and globalization, and this is one of them. The United States National Arboretum website notes that “invasive plant species thrive where the continuity of a natural ecosystem is breached and are abundant on disturbed sites like construction areas and road cuts. … In some situations these nonnative species cause serious ecological disturbances. In the worst cases, invasive plants … ruthlessly choke out other plant life. This puts extreme pressure on native plants and animals, and threatened species may succumb to this pressure. Ultimately, invasive plants alter habitats and reduce biodiversity.”

I can’t think of a better way to understand ISIS. It is a coalition. One part consists of Sunni Muslim jihadist fighters from all over the world: Chechnya, Libya, Britain, France, Australia and especially Saudi Arabia. They spread so far, so fast, despite their relatively small numbers, because the disturbed Iraqi and Syrian societies enabled these foreign jihadists to forge alliances with secular, native-born, Iraqi and Syrian Sunni tribesmen and former Baathist army officers, whose grievances were less religious and more about how Iraq and Syria were governed.

Today, ISIS — the foreigners and locals together — is putting pressure on all of Iraq’s and Syria’s native species with the avowed goal of reducing the diversity of these once polycultural societies and turning them into bleak, dark, jihadist, Sunni fundamentalist monocultures.

It is easy to see how ISIS spread. Think about the life of a 50-year-old Iraqi Sunni male from Mosul. He first got drafted to fight in the eight-year Iran-Iraq war that ended in 1988. Then he had to fight in the Persian Gulf war I after Saddam Hussein invaded Kuwait. Then he lived under a decade of U.N. sanctions that broke Iraq’s middle class. Then he had to endure the years of chaos that followed the U.S. invasion, which ended with a corrupt, brutal, pro-Iranian Shiite regime in Baghdad led by Nuri Kamal al-Maliki that did all it could to keep Sunnis poor and powerless. This was the fractured political ecosystem in which ISIS found fertile ground.

How do you deal with an invasive species? The National Arboretum says you should “use systemic herbicides carefully” (President Obama’s air war), while also constantly working to strengthen and “preserve healthy native plant habitats” (Obama’s effort to forge a national unity government in Baghdad with Shiites, Sunnis and Kurds together).

Generally speaking, though, over the years in Iraq and Afghanistan we have overspent on herbicides (guns and training) and underinvested in the best bulwark against invasive species (noncorrupt, just governance). We should be pressing the Iraqi government, which is rich with cash, to focus on delivering to every Iraqi still under its control 24 hours of electricity a day, a job, better schools, more personal security and a sense that no matter what sect they’re from the game is not rigged against them and their voice will count. That is how you strengthen an ecosystem against invasive species.

“It was misgovernance which drove Iraqis to contemplate a relationship with ISIS with the view that it was less detrimental to their interests than their own (Shiite-led) government,” explained Sarah Chayes, a senior associate at the Carnegie Endowment who is a former U.S. adviser in Afghanistan and author of the upcoming “Thieves of State: Why Corruption Threatens Global Security.” The Iraqi Army we built was seen by many Iraqi Sunnis “as the enforcer of a kleptocratic network.” That army got “sucked dry by the cronies of Maliki so it became a hollow shell that couldn’t withstand the first bullet.”

The goal of ISIS now is to draw us in, get us to bomb Sunni towns and drive the non-ISIS Sunnis away from America and closer to ISIS, “because,” notes Chayes, “ISIS knows it can’t survive without the support of these non-ISIS Sunnis.”

We always overestimate military training and force and underestimate what Arabs and Afghans want most: decent and just governance. Without the latter, there is no way to cultivate real citizens with a will to fight — and without will there is no training that matters.

Ask any general — or gardener.

Next up we have Mr. Kristof:

Some white Americans may be surprised to hear Archbishop Desmond Tutu describe Bryan Stevenson, an African-American lawyer fighting for racial justice, as “America’s young Nelson Mandela.”

Huh? Why do we need a Mandela over here? We’ve made so much progress on race over 50 years! And who is this guy Stevenson, anyway?

Yet Archbishop Tutu is right. Even after remarkable gains in civil rights, including the election of a black president, the United States remains a profoundly unequal society — and nowhere is justice more elusive than in our justice system.

When I was born in 1959, the hospital in which I arrived had separate floors for black babies and white babies, and it was then illegal for blacks and whites to marry in many states. So progress has been enormous, and America today is nothing like the apartheid South Africa that imprisoned Mandela. But there’s also a risk that that progress distracts us from the profound and persistent inequality that remains.

After the shooting of Michael Brown in Ferguson, Mo., I wrote a couple of columns entitled “When Whites Just Don’t Get It.” The reaction to those columns — sometimes bewildered, resentful or unprintable — suggests to me that many whites in America don’t understand the depths of racial inequity lingering in this country.

This inequity is embedded in our law enforcement and criminal justice system, and that is why Bryan Stevenson may, indeed, be America’s Mandela. For decades he has fought judges, prosecutors and police on behalf of those who are impoverished, black or both. When someone is both and caught in the maw of the justice system — well, Stevenson jokes that “it’s like having two kinds of cancer at the same time.”

“We have a system that treats you better if you’re rich and guilty than if you’re poor and innocent,” he adds.

Stevenson, 54, grew up in a poor black neighborhood in Delaware and ended up at Harvard Law School. He started the Equal Justice Initiative, based in Montgomery, Ala., to challenge bias and represent the voiceless. It’s a tale he recounts in a searing, moving and infuriating memoir that is scheduled to be published later this month, “Just Mercy.”

Stevenson tells of Walter McMillian, a black Alabama businessman who scandalized his local community by having an affair with a married white woman. Police were under enormous pressure to solve the murder of an 18-year-old white woman, and they ended up arresting McMillian in 1987.

The authorities suppressed exculpatory evidence and found informants to testify against McMillian with preposterous, contradictory and constantly changing stories. McMillian had no serious criminal history and had an alibi: At the time of the murder, he was at a church fish fry, attended by dozens of people who confirmed his presence.

None of this mattered. An overwhelmingly white jury found McMillian guilty of the murder, and the judge — inauspiciously named Robert E. Lee Key Jr. — sentenced him to die.

When Stevenson sought to appeal on McMillian’s behalf, Judge Key called him up. “Why in the hell would you want to represent someone like Walter McMillian?” the judge asked, according to Stevenson’s account.

Stevenson dug up evidence showing that McMillian couldn’t have committed the crime, and prosecuting witnesses recanted their testimony, with one saying that he had been threatened with execution unless he testified against McMillian. Officials shrugged. They seemed completely uninterested in justice as long as the innocent man on death row was black.

Despite receiving death threats, Stevenson pursued the case and eventually won: McMillian was exonerated and freed in 1993 after spending six years on death row.

I suggested to Stevenson that such a blatant and racially tinged miscarriage of justice would be less likely today. On the contrary, he said, such cases remain common, adding that he is currently representing a prisoner in Alabama who has even more evidence of innocence than McMillian had.

“If anything, because of the tremendous increase in people incarcerated, I’m confident that we have more innocent people in prison today than 25 years ago,” Stevenson said.

Those of us who are white and in the middle class rarely see this side of the justice system. The system works for us, and it’s easy to overlook how deeply it is skewed against the poor or members of minority groups.

Yet consider drug arrests. Surveys overwhelmingly find that similar percentages of blacks and whites use illegal drugs. Yet the Justice Department says that blacks are arrested for such drug offenses at three times the rate of whites.

One study in Seattle found that blacks made up 16 percent of observed drug dealers for the five most dangerous drugs and 64 percent of arrests for dealing those drugs.

Likewise, research suggests that blacks and whites violate traffic laws at similar rates, but blacks are far more likely to be stopped and arrested. The Sentencing Project, which pushes for fairer law enforcement, cites a New Jersey study that racial minorities account for 15 percent of drivers on the turnpike, but blacks account for 42 percent of stops.

THE greatest problem is not with flat-out white racists, but rather with the far larger number of Americans who believe intellectually in racial equality but are quietly oblivious to injustice around them. Too many whites unquestioningly accept a system that disproportionately punishes blacks and that gives public schools serving disadvantaged children many fewer resources than those serving affluent children. We are not racists, but we accept a system that acts in racist ways.

Some whites think that the fundamental problem is young black men who show no personal responsibility, screw up and then look for others to blame. Yes, that happens. But I also see a white-dominated society that shows no sense of responsibility for disadvantaged children born on a path that often propels them toward drugs, crime and joblessness; we fail those kids before they fail us, and then we, too, look for others to blame.

Today we sometimes wonder how so many smart, well-meaning white people in the Jim Crow era could have unthinkingly accepted segregation. The truth is that injustice is easy not to notice when it affects people different from ourselves; that helps explain the obliviousness of our own generation to inequity today. We need to wake up.

And that is why we need a Mandela in this country.

Last but not least we get to Mr. Bruni:

After the latest meeting of the Clinton Global Initiative wrapped up three weeks ago, I thought I’d missed the perfect window to write about Bill Clinton’s continued hold on Americans’ hearts, his sustained claim on the spotlight.

Silly me. In short order and with customary brio, Clinton simply traded that stage for the next one: the entire state of Arkansas, his old stamping grounds, through which he barnstormed over recent days in the service of Senate Democrats.

He remained in the headlines. He was still in the mix. Even when he’s not running, he’s running — exuberantly, indefatigably, for just causes, for lost causes, because he hopes to move the needle, because he loves the sound of his own voice and because he doesn’t know any other way to be. Politics is his calling. The arena is his home.

And that’s the real reason that he’s so popular in his post-presidency, so beloved in both retrospect and the moment. In bold contrast to the easily embittered, frequently disappointing occupant of the Oval Office right now, Bill Clinton was — and is — game.

Nothing stops him or slows him or sours him, at least not for long. Nothing is beneath him, because he’s as unabashedly messy and slick as the operators all around him. He doesn’t recoil at the rough and tumble, or feel belittled and diminished by it. He relishes it. Throw a punch at him and he throws one at you. Impeach him and he bounces back.

It’s that very gameness that fueled his undeniable successes as a president, and that’s worth keeping in mind when the midterms end and we turn our attention more fully to the 2016 presidential race. Who in the emerging field of contenders has his level of enthusiasm, his degree of stamina, his intensity of engagement?

Neither of the two presidents who followed him do, and that absent fire explains many of their shortcomings in office. Both George W. Bush and Barack Obama felt put out by what they had to do to get there. Neither masked his sense of being better than the ugly process he was lashed to.

Bush was always craving distance from the stink and muck of the Potomac, and routinely averted his gaze: from the truth of Iraq, from the wrath of Katrina. In a different way, Obama also pulls away, accepting stalemates and defeats, not wanting to get too dirty, not breaking too much of a sweat. “The audacity of mope,” his countenance has been called.

It comes into sharper, more troubling focus with each passing season and each new book, including Leon Panetta’s, “Worthy Fights,” which was published last week. The reservations expressed by Panetta, who served under Obama as both C.I.A director and defense secretary, seconded those articulated by so many other Democrats.

The president, Panetta wrote, “relies on the logic of a law professor rather than the passion of a leader.” He exhibits “a frustrating reticence to engage his opponents and rally support for his cause,” in Panetta’s words, and he “avoids the battle, complains and misses opportunities.”

As Washington absorbed Panetta’s assessment and debated whether it was an act of disloyalty or of patriotism, Arkansas opened its arms to Clinton, who beamed and pressed the flesh and talked and talked.

He talked in particular about Mark Pryor, the incumbent Democratic senator, who seems poised to be defeated by Tom Cotton, a rising Republican star. And while it’s doubtful that Clinton’s backing will save Pryor, it’s almost certain that no other Democrat’s favor would serve Pryor any better.

A Wall Street Journal/NBC/Annenberg poll that came out last week suggested that a campaign plug from Clinton would carry more weight with voters than one from Obama, the first lady, Hillary Clinton, Mitt Romney or Chris Christie. He’s the endorser in chief.

That gives him an invitation and a license to step onto soapboxes wide and far. Last month he stumped in Maine, North Carolina, Georgia and Maryland. This month he’s bound for Massachusetts and New Hampshire. He’s wanted. He’s welcomed.

And, yes, that’s partly because he’s a reminder of an epoch more economically dynamic than the current one, of an America less humbled and fearful. It’s also because he has no real responsibility and thus no real culpability: He can’t let us down. On top of which, absence has always made the heart grow fonder.

BUT he never really went away. He abandoned the White House only to begin plotting by proxy to move in again. He’s the past, present and future tenses all entwined, and that’s a clue that there’s something other than just nostalgia behind the outsize affection for him. He’s missed because he demonstrates what’s missing in the commanders in chief since.

He’s missed for that gameness, an invaluable asset that fueled so many leaders’ triumphs but wasn’t abundant in leaders who suffered many defeats.

Jimmy Carter, for one. “He was not just detached and not just unfamiliar with congressional politics but he also didn’t like it, didn’t want to play it — and that was a huge obstacle for him,” said Julian Zelizer, a Princeton University historian who has written books about Carter and Bush and has one about Lyndon Baines Johnson, “The Fierce Urgency of Now,” scheduled for publication in January. “It really damaged him.”

“Clinton was the last president we’ve had who loved politics,” Zelizer added. “Bush — and you can see this in his post-presidency — didn’t have a taste for what Washington was all about. Executive power was partly a way to avoid Congress entirely. And Obama is just like Bush that way.”

It’s interesting to note that neither Bush nor Obama knew any really big, bitter political disappointments en route to the White House. (Bush’s failed 1978 congressional race, so early in his career and so distant from his subsequent bid for Texas governor, doesn’t count.) Their paths were relatively unimpeded ones, while Clinton suffered the humiliation of being booted from his job as governor of Arkansas after one term, then having to regain it.

Scars like that do a politician good. They prove that he or she loves the sport enough to keep going, and has the grit for it. We’d be wise to look for them in the politicians angling for the presidency next. The ugliness of the job isn’t going to change. Might as well elect someone with the appetite for it.

Clinton showed us the downside of unappeasable hunger, but he also showed us the upside, and he’s showing us still. He gets love and he gets his way simply by never letting up in his demand for them. There’s a lesson in that.

Krugman’s blog, 10/10/14

October 11, 2014

There was one post yesterday, “Friday Night Music: Sarah Jarosz and the Milk Carton Kids:”

On the road, maybe something substantive tomorrow. But we gotta have music:

 

Cohen and Nocera

October 11, 2014

Ms. Collins is off today.  In “God Bless America” Mr. Cohen says a quarter-century after the fall of the Berlin Wall, alliances still count.  Mr. Nocera, in “Putin Shows His Hand,” says the Western sanctions imposed on Russia may be generating some unintended consequences.  Here’s Mr. Cohen, writing from Berlin:

I went for a walk in Berlin. Fall leaves yellowing in allotments with their little wooden birdhouses. Streets with more space than people, belying that facile epithet, “capital of Europe.” I had just left a friend in Grunewald who told me his house was built in 1930 by a Jewish family who fled to Brazil in 1936. Once he showed the granddaughter of the first owner around, and then did the same for descendants of the British officer who lived in the requisitioned house after 1945. Life, as archaeologists know, recounts its story in layers, and nowhere more so than in this city. A German woman told me of stripping away the wallpaper in her new apartment and finding exultant newspaper headlines celebrating the Führer’s birthday in 1937. A better epithet might be “Berlin, capital of memory.”

How then to remember the 25th anniversary of the fall of the Berlin Wall — the end of Germany’s division, and Europe’s, and the world’s. A quarter-century has gone by. The bloody 20th century has receded into the mist. The wall’s fall was not the end of history but the dawn of a different history. It did not usher in an era where enlightened self-interest would govern the conduct of affairs between nations united in liberal democracy. Forms of nationalism, far from dying, revived. Fanaticism found fertile ground in desert sand. Russia arose growling. Yet of course this was, in the words of Wolfgang Schäuble, the German finance minister, the “most lucky moment in our history,” a near unimaginable re-encounter of Germany with itself. For millions of Central and Eastern Europeans it was also when liberation came from the Soviet clamp.

Germany now hums along like this city’s trams. Unification took a generation, was arduous, but happened. In an age of minute-to-minute political adjustment, this country is a reminder that it helps to set long-term objectives and stick to them. Federalism aided the process. So did the Constitution’s promise of roughly equable “Lebensverhältnisse,” or living conditions, for all Germans. The rich have gotten richer here, as everywhere, but with less obscenity. Social democracy is not an empty idea in a nation whose experience of depravity has taught an indelible lesson of the dangers of social fracture.

Outside Germany, the European story is unhappier. A quarter-century on, the questions posed by German unification and a Europe made whole have not been answered. Greece is broke, France sullen, the European Union stalled. Germany dominates Europe, a role it does not relish, even if it is not immune to the occasional frisson. With that dominance old intellectual temptations have revived: the notion of being a determining power equidistant from Russia and the United States. German adherence to the union and NATO is still sacrosanct. But Russia’s little war in Ukraine and its annexation of Crimea have revealed Vladimir Putin’s sympathizers to the left and the right, buoyed by fashionable anti-American sentiment. As Ukrainians have, in the words of Joschka Fischer, a former foreign minister, “died to be part of Europe,” Europe has appeared unworthy of the sacrifice, in thrall to Russian energy. What most Ukrainians want now is no different from what East Germans and Poles wanted in 1989.

Memories coming and going in no particular direction, like fall leaves skittering along the Hohenzollerndamm. I came in 1998 to a Berlin not yet reborn as the German capital, divided still in mind-set. The next year, on the 10th anniversary, I spoke to Harald Jaeger, the border guard who opened the gate and so ended Europe’s division on Nov. 9, 1989. I asked him how he felt: “Sweat was pouring down my neck and my legs were trembling. I knew what I had done. I knew immediately. That’s it, I thought, East Germany is finished.”

It would not have been finished without the resolve of America and its allies. Unflinching American support for German unification, and the diplomatic brilliance of James Baker, then the secretary of state, turned a breach in the wall into a new order that freed half of Europe and was accepted by Moscow. Such forceful, clearheaded diplomacy is much needed today from Ukraine to Iraq. A new generation is learning that to float along and hope for the best is not enough. Hope is not a policy. The world is dangerous. Alliances count, both their commitments and their red lines.

In a tribute to Baker, who received this year’s Kissinger Prize at the American Academy in Berlin, Hans-Dietrich Genscher, the German foreign minister in 1989, told how as crowds surged through the wall, he placed a call from the ministry in Bonn to Baker. The telephone operator reached the secretary of state. Before Genscher could say anything, she blurted out, “Mr. Secretary, God bless America!”

Only the most insouciant Berliner could ever forget those words.

Now here’s Mr. Nocera:

A few days ago, The Financial Times published an interview with a Russian businessman named Sergei Pugachev. Once an ally of President Vladimir Putin, Pugachev owned shipbuilding and construction interests, as well as a bank. Indeed, he was once known as “the Kremlin’s banker.” But his bank collapsed a few years ago, and, in 2012, the government seized his two shipyards. Jointly valued at $3.5 billion by the accounting firm of BDO, they were sold to a competitor, the United Shipbuilding Corporation, for $422.5 million, according to the paper.

The chairman of United Shipbuilding at the time was Igor Sechin, one of Putin’s closest associates and the head of Rosneft, the state oil company. Russian businessmen, Pugachev complained to The Financial Times, had become nothing more than “serfs” in Russia. “Today in Russia, there is no private property,” he added. “There are only serfs who belong to Putin.”

And so it goes in Putin’s Russia.

I had been making inquiries, hoping to find out whether the sanctions imposed by the United States and Europe in the wake of Russia’s takeover of Crimea were working. The answer, I believe, is yes, but not necessarily in the way you’d think.

The first point to make is that the Russian economy has been in a downturn ever since Putin returned to power in May 2012. In recent months, that slide accelerated. Economic growth has flat-lined. The ruble is in free fall. Inflation is rising. More than $100 billion of capital is expected to flee the country this year. Most ominous of all, the price of oil — Russia’s primary asset, upon which the government depends to finance itself — has been dropping.

Although the mounting problems have been coincident with the sanctions, it is impossible to say for sure whether there is a direct correlation. (One thing that is making a difference, I should note, is the boom in American oil and gas, which has produced a glut of fossil fuel and has helped depress prices.) The direct effect will more likely be felt in the near future, when, for instance, Russian companies have to refinance their debt despite being locked out of Western capital markets.

What the sanctions have done, though, is bring out the worst tendencies of Putin and his close associates, putting them on display for all to see. The rule of law has long been a fiction in Russia, but, for years, Western businessmen — and Russian businessmen as well — made excuses. Mikhail Khodorkovsky, the former oligarch who spent 10 years in a Soviet penal colony, had foolishly decided to take Putin on politically, they would say.

But since the sanctions have been put in place, McDonald’s restaurants, which had never had any problems before in Russia, are suddenly being closely inspected and a handful shut down. Other Western companies are having similar troubles.

Or take the case of Vladimir Yevtushenkov, a Russian billionaire who ran Sistema, a big conglomerate. One of Sistema’s assets was Bashneft, Russia’s sixth-largest oil company by output. Last month, Yevtushenkov was placed under house arrest, accused of money laundering. After a court hearing, his shares in Bashneft were seized by the government.

Yevtushenkov was not politically active like Khodorkovsky. He was no threat to Putin. But it is widely believed that Bashneft’s assets will eventually find their way to Sechin and become part of Rosneft. Rosneft had asked the government for a $40 billion bailout to help it withstand Western sanctions; handing it cheap assets is certainly one way to help.

“Rule No. 1 for Putin is that his people will be protected, and he is signaling that,” said Karen Dawisha, a Russia expert at Miami University of Ohio and the author of a new book, “Putin’s Kleptocracy.” “They have started to dip into the pension funds. There are double-digit cuts in the health budget. His people will always be served before the people.”

In imposing the sanctions, the Obama administration and its counterparts in Europe have targeted precisely the men and the companies that are closest to Putin. By reacting the way he has, Putin is scaring away not just foreign investors but Russian businessmen as well. Not that he seems to care.

Just a few days ago, the Russian Parliament began the process of passing a law that would allow the government to seize assets owned by foreign companies — and use them to reimburse oligarchs and others who have been financially hurt by the sanctions. They are calling it the “Rotenberg villa law,” named for Arkady Rotenberg, an oligarch who had four luxury villas in Italy frozen because of the sanctions. This is such a foolishly counterproductive measure that even some inside the government protested it. Nonetheless, it will almost surely pass.

Thus, in the face of sanctions, does Russia cut off its nose to spite its face.

Brooks and Krugman

October 10, 2014

Bobo is trying to convince us that “Money Matters Less.”  He has a question:  Remember all the talk about how Citizens United would give Republicans a spending advantage forevermore? He tells us that hasn’t happened.  Prof. Krugman, in “Secret Deficit Lovers,” says debt scolds hate good fiscal news so much that most Americans haven’t heard that the deficit plunge of the past several years continues.  Here’s Bobo:

I happened to be in the U.S. Capitol when the Citizens United decision came down four years ago. Democratic lawmakers greeted the decision with a mutually reinforcing mixture of fury and fear. The decision, everyone agreed, would unleash a tsunami of corporate and plutocratic money into politics, giving Republicans a huge spending advantage. “This is the end of our party,” wailed one Democrat, aware he was going a tad over the top.

Things haven’t worked out as expected. In 2012, Mitt Romney did not have a spending advantage over Barack Obama. According to the Center for Responsive Politics, very few publicly traded corporations made political donations.

During the 2012 campaign cycle, news articles began appearing in local papers reporting that it was sometimes Democratic groups who were making the most of the post-Citizens United landscape. The Center for Public Integrity looked at campaigns in 38 states in 2012. Democratic-leaning groups outspent Republicans by more than $8 million.

This year, the same sorts of articles are appearing. A Politico analysis in September found that the 15 top Democratic-aligned committees outraised the 15 top Republican ones by $164 million. Based on data from the Center for Responsive Politics, Democrats have more money than Republicans in most of the tightest Senate races: Colorado, Alaska, Arkansas, Georgia, Iowa, Louisiana, Minnesota, North Carolina, New Hampshire and Virginia.

Karl Rove has been shaking the Republican donor base, arguing that his groups are being outspent. A September study by his “super PAC,” American Crossroads, found that Democratic candidates have reserved $109 million in television advertising time before Election Day, while Republicans have reserved $85 million.

So was the furor about Citizens United misplaced? Will Democrats end up winning the political spending wars, thanks to their own plutocratic donor base?

Well, the situation is complicated. The first thing we know about the post-Citizens United era is that it has accelerated a pre-existing trend: Each year more money flows into campaigns. Spending this cycle is more than double what it was at this point in 2010 and four times higher than it was in early October 2006.

Second, the decision has not scared away small donors, as many feared. A study by Douglas M. Spencer and Abby K. Wood suggested that smaller donors were just as likely to be active after the decision as before.

Third, many of Democrats’ apparent advantages in spending this year are temporary. A major wave of Republican money is expected over the next few weeks. Democrats do have an advantage in the donations made to super PACs, which have to report their donors. But Republicans have an advantage in donations made to 501(c)(4) groups, which can keep the names of donors secret.

The final and most important effect of Citizens United is that it will reduce the influence of money on electoral outcomes. Yes, that’s right. Reduce.

Remember, money is quite important in local races, with unknown candidates.

But money is not that important in high-attention federal races. Every year we get more evidence suggesting that campaign spending does not lead to victory. In 2012 the Koch brothers spent huge amounts of money to pathetic effect. Rove’s American Crossroads dumped $117 million into the 2012 election. More than 90 percent of it was spent on candidates who ended up losing.

And money is really not important when both candidates are well-financed. After both candidates have hit a certain spending threshold, the additional TV commercials they might buy are just making the rubble bounce. The economist Steve Levitt has found that if you cut a campaign’s spending in half, and held everything else constant, then the candidate would only lose 1 percent of the popular vote. If you doubled a candidate’s spending, the candidate would only gain 1 percentage point. In other words, big swings in spending produce only small changes in the vote totals.

We’re now at a moment when a fire hose of money is trying to fill the same glasses of voters. That means every plausible Senate candidate and almost every plausible House candidate has more than enough money to get his or her message out. What matters more is the quality of that message and the national mood. If Democrats exceed expectations this year it will because of the reasons Ashley Parker and Nicholas Confessore identified in a recent Times article: because their message is better defined.

The upshot is that we should all relax about campaign spending. We should worry more about America’s rich. Some people who are really smart at making money are apparently really stupid at spending it. This year, the big spender is a hedge fund manager named Tom Steyer. He could have spent $42.7 million paying for kids to go to college. Instead he has spent that much money this year further enriching the people who own TV stations. What a waste.

And what a waste of oxygen and pixels Bobo is…  Here’s Prof. Krugman:

What if they balanced the budget and nobody knew or cared?

O.K., the federal budget hasn’t actually been balanced. But the Congressional Budget Office has tallied up the totals for fiscal 2014, which ran through the end of September, and reports that the deficit plunge of the past several years continues. You still hear politicians ranting about “trillion dollar deficits,” but last year’s deficit was less than half-a-trillion dollars — or, a more meaningful number, just 2.8 percent of G.D.P. — and it’s still falling.

So where are the ticker-tape parades? For that matter, where are the front-page news reports? After all, talk about the evils of deficits and the grave fiscal danger facing America dominated Washington for years. Shouldn’t we be making a big deal of the fact that the alleged crisis is over?

Well, we aren’t, and once you understand why, you also understand what fiscal hysteria was really about.

First, ordinary Americans aren’t celebrating the deficit’s decline because they don’t know about it.

That’s not mere speculation on my part. Earlier this year, YouGov polled Americans on fiscal issues, asking among other things whether the deficit had increased or declined since President Obama took office. (In case you’re wondering, the pollsters carefully explained the difference between annual deficits and the level of accumulated debt.) More than half of those polled said it had gone up, while only 19 percent correctly said that it had gone down.

Why doesn’t the public know better? Probably because of the way much of the news media report this and other issues, with bad news played up and good news downplayed if it’s reported at all.

This has been glaringly obvious in the case of health reform, where every problem with the Affordable Care Act has been the subject of headlines, while in right-wing media — and to some extent in mainstream news sources — favorable developments go unremarked. As a result, many people — even, in my experience, liberals — have the impression that the rollout of Obamacare has been a disaster, and have no idea that enrollment is above expectations, costs are lower than expected, and the number of Americans without insurance has dropped sharply. Surely something similar has happened on the budget deficit.

But what about people who pay a lot of attention to the budget, the self-proclaimed deficit hawks? (Some of us prefer to call them deficit scolds.) They’ve spent the past few years telling us that budget shortfalls are the most important issue facing the nation, that terrible things will happen unless we act to stem the flow of red ink. Are they expressing satisfaction over the fading of that threat?

Not a chance. Far from celebrating the deficit’s decline, the usual suspects — fiscal-scold think tanks, inside-the-Beltway pundits — seem annoyed by the news. It’s a “false victory,” they declare. “Trillion dollar deficits are coming back,” they warn. And they’re furious with President Obama for saying that it’s time to get past “mindless austerity” and “manufactured crises.” He’s declaring mission accomplished, they say, when he should be making another push for entitlement reform.

All of which demonstrates a truth that has been apparent for a while, if you have been paying close attention: Deficit scolds actually love big budget deficits, and hate it when those deficits get smaller. Why? Because fears of a fiscal crisis — fears that they feed assiduously — are their best hope of getting what they really want: big cuts in social programs. A few years ago they almost managed to bully the nation into cutting Social Security and/or raising the Medicare eligibility age; they even had hopes of turning Medicare into an underfinanced voucher program. Now that window of opportunity is closing fast.

But isn’t the falling deficit just a short-term blip, with the long-run outlook as dire as ever? Actually, no. Falling deficits right now have a lot to do with a strengthening economy plus some of that “mindless austerity” the president condemned. But there has also been a dramatic slowdown in the growth of health spending — and if that continues, the long-run fiscal outlook is much better than anyone thought possible not long ago. Yes, current projections still show a rising ratio of debt to G.D.P. starting some years from now, and uncomfortable levels of debt a generation from now. But given all the clear and present dangers we face, it’s hard to see why dealing with that distant and uncertain prospect should be any kind of policy priority.

So let’s say goodbye to fiscal hysteria. I know that the deficit scolds are having a hard time letting go; they’re still trying to bring back the days when Bowles and Simpson bestrode the Beltway like colossi. But those days aren’t coming back, and we should be glad.


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