Krugman’s blog, 7/21/14

July 22, 2014

There were two posts yesterday.  The first was “Asymmetrical Doctrines (Vaguely Wonkish):”

Are Keynesians and market monetarists symmetric, both in their doctrines and in their political position? Nick Rowe says yes; Simon Wren-Lewis says no. Simon is right here, but in fact for more reasons than he gives.

This all started with me saying that the market monetarists have no resonance in the modern conservative movement. Nick says that this is equally true of “fiscalists”, who haven’t managed to get traction with governments, even leftish ones, either. What’s the difference?

As Simon says, one big difference is that people like me are eclectic, urging that multiple policy tools be brought to bear — and willing to accept second-best policies if that’s what is available. We’re all for quantitative easing, even if there are some doubts about its effectiveness, in a world where fiscal austerity is happening whether you like it or not. This is very different from the MM insistence that fiscal policy has no role, and that austerity has no effect because central banks (they claim) could offset it, whether or not they really do.

But there’s also a big difference in the intellectual roles of MM on the right and Keynes on the left.

Talk with Barack Obama, and you’ll find that he has a basically Keynesian view of the world. It may have wobbled a bit in the past, at times when he seemed to buy into the Confidence Fairy, but it’s still his basic outlook — and his aides are very much IS-LM macro types. True, they haven’t gone all out to push for fiscal expansion in the face of opposition (but remember the payroll tax cut), but that’s mainly a political judgement on their part. It’s not a fundamental difference in worldview from friendly economists.

Contrast this with Republican leaders, who get their macroeconomics from Hayek and Ayn Rand, and are clearly liquidationist; it’s not that they don’t take advice from MM, they’re actively hostile to its very concepts.

That’s what I mean when I say that MM is homeless, in a way that my tribe isn’t.

Yesterday’s second post was “Yes, We Have No Banana:”

Noah Smith has a funny piece on the hermetic system that is Austrian economics, with its multilayered defenses against any kind of criticism. What gets me in particular, because I’ve noticed it a lot lately, is this:

3. “Inflation” doesn’t mean “a rise in the general level of consumer prices,” it means “an increase in the monetary base”, so QE is inflation by definition.

So when Austrians were predicting runaway inflation, they didn’t actually mean consumer prices?

OK, you know that if the CPI had soared, they would have claimed vindication. But the main point is that nobody else cares about the monetary base, or at any rate they care about it only to the extent that it was presumed to say something about future rises in the CPI. Insisting that the term “inflation” means something else in your private language is just pathetic.

But maybe it would have helped, five or six years ago, to have pinned Austrian down on what they thought would happen to something else; following Alfred Kahn, they could have called a general rise in the CPI a banana. Were they predicting a banana? Of course they were. And they were wrong.

Cohen and Nocera

July 22, 2014

Bobo and Bruni are off today.  In “The Suns of August” Mr. Cohen says bodies rot, looters roam, and the Russian-enabled downing of Flight 17 marks the nadir of the West.  Mr. Nocera has a question:  “Did Dodd-Frank Work?”  He says we really have no way of knowing whether “too big to fail” is still with us until we have another crisis.  Here’s Mr. Cohen:

A century on from World War I, nobody wants the guns of August.

Yet it must be asked if waiting years for the evasive conclusions of an official investigation into the fate of Malaysia Airlines Flight 17 is better than acting now on what we already know: That the Boeing 777 with 298 people on board was shot down by a missile from a Russian-made SA-11 antiaircraft system fired from an area of eastern Ukraine controlled by Russian-backed separatists, Russian mercenaries and Russian agents. A half-drunk Ukrainian peasant with a 1950s-era rifle doesn’t shoot down a plane at 33,000 feet.

An “enormous amount of evidence,” in Secretary of State John Kerry’s words, points to Russian provision of SA-11 systems and training. The Ukrainian government has damning audio and images that capture the crime. In June, a Ukrainian cargo plane landing in the area was hit with shoulder-fired missiles, killing 49 people. This month, another cargo plane flying at 22,000 feet was hit by a missile. Rocket science is not required.

President Vladimir Putin of Russia has been playing with fire. His irredentism has made him a hero in Russia. It has endangered the world. Crimea was the swaggering precedent to this crime. The shooting down of Malaysia Airlines Flight 17 amounts to an act of war. It was impromptu perhaps, but still. Dutch corpses have rained down on the sunflowers and cornfields of eastern Ukraine, to be defiled even in death, 193 innocent Dutch souls dishonored by the thugs of the Donetsk People’s Republic.

“This is murder, mass murder. Let’s call it what it is,” said Julian Lindley-French, a defense analyst who lives in the small Dutch village of Alphen. “Shock is turning to anger here,” he told me, “and that anger will resonate in the coming weeks. This is the beginning of a period of complex torture for the Netherlands.”

The Dutch response has been of tip-toeing deference to Moscow. As for the European Union, it has been near-nonexistent. When crisis comes, Europe vanishes — the ghost that slithers away. The West has become an empty notion. The Dutch trade a lot with Russia. Europe floats along in a bubble of quasi pacifism. Better to be bullied than belligerent. Nobody wants the guns of August.

“Swift recovery of the victims’ remains is now an absolute necessity and our highest priority,” Mark Rutte, the Dutch prime minister, said in a statement. “I am shocked by the images of completely disrespectful behavior at this tragic place.” He spoke to Putin to express his outrage.

That was pretty much it. Bodies rot in the sun for four days. They are stashed in plastic bags in refrigerated railroad cars at a fly-infested station before finally moving. The black box is a fungible bargaining chip. Louts go looting. It’s a free-for-all! Official investigation teams are barred at the perimeter. Putin spins implausible yarns robed in ghastly official formulas. His plausible deniability is utterly implausible.

A Dutch writer, Sidney Vollmer, addressed a bitter letter to Rutte thanking him for preserving the moral high ground of the Dutch, for “not rushing in for a bunch of rotting corpses” as “their wallets and iPhones make it all the way” to Moscow. The corpses, anyway, “will vanish into the fog of war” and, as everyone knows, “we need Gazprom.”

Dutch passivity has a name: the Srebrenica syndrome. It is becoming the Europe syndrome.

This mass murder is an outrage that should not stand. Falling military budgets have reduced the Dutch special forces to a paltry remnant. Russia would veto any United Nations Security Council Resolution authorizing force for a limited mission to recover the bodies and the evidence. But Ukraine, on whose territory the debris and dead lie, would support it. The American, British, Dutch and Australian governments should set an ultimatum backed by the credible threat of force demanding unfettered access to the site. Putin’s Russia must not be permitted to host the 2018 World Cup. A Western priority must be to transform the Ukrainian army into a credible force.

It won’t happen. Europe is weak. Obama’s America is about retrenchment, not resolve. Putin must be appeased. Nobody is about to call his bluff. The Putin-pacifiers have many arguments. Send forces into Ukraine and you prove the Russian argument that the West has designs on it. Besides, who wants World War III?

The self-styled Donetsk People’s Republic stares down Mark Rutte. The deathly poppy fields of 1914 give way to the deathly sunflower fields of 2014. Dutch flowers wing around the globe, still, a thriving trade.

A reader, Katherine Holden, sent me a poem called “The Flowering of Death.” She writes: “Velvet leaves and sturdy stems transient graves for children mothers lovers doctors teachers fathers students artists siblings seekers fallen from the darkening sky. Flesh-fed rain.”

Everyone wants the suns of August. Summer vacations rule. Nobody wants the guns — and damn the bigger guns appeasement may bring.

This article was updated to reflect news developments.

Yeah.  Let’s rattle the sabers and swing our dicks.  That will be helpful…  Here’s Mr. Nocera:

Ralph Nader has written a new book, entitled “Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State.” If you spend any time looking into the current state of affairs with the Dodd-Frank Act — Monday was the fourth anniversary of the law enacted to ensure that the country never suffers through another financial crisis like the one in 2008 — you’d have to say that he has a point.

There are many aspects of the law on which Democrats and Republicans disagree. But there is one area in which the two sides are largely in agreement: “Too Big to Fail” is still with us.

“In no way, shape or form does the Dodd-Frank Act end too big to fail,” said Representative Jeb Hensarling, the Texas Republican who is chairman of the House Financial Services Committee.

“The chances of another financial crisis will remain unacceptably high as long as there are financial institutions that are ‘too big to fail,’ ” wrote Senator Elizabeth Warren, a Massachusetts Democrat, in an opinion article she co-wrote with, among others, Republican Senator John McCain.

Dodd-Frank, of course, was supposed to end “Too Big to Fail,” the catchphrase for a financial institution whose collapse had the potential to bring down the entire financial system. That prospect is why, less than a month after the bankruptcy of Lehman Brothers, the government handed billions of dollars to the big banks to help stabilize them.

In some ways, eliminating the possibility of future bank bailouts was the whole point of Dodd-Frank. Partly this was for populist reasons: Americans were outraged that the banks were bailed out, while the country got the worst of the Great Recession.

But it was also just good public policy. Karen Petrou, the managing partner of Federal Financial Analytics, told me that if the too-big-to-fail provisions in the law worked, “the rest of the law wouldn’t matter that much because the market would discipline the institutions.” But, she added, “I don’t think the Federal Reserve or the F.D.I.C.” — the Federal Deposit Insurance Corporation — “is prepared to handle a systemic crisis for one of the big banks.”

To be sure, the Treasury Department insists that the days of “Too Big to Fail” are over. In a recent speech, Mary John Miller, the Treasury’s undersecretary for domestic finance, said, “No financial institution, regardless of its size, will be bailed out by taxpayers again.” She added, “Shareholders of failed companies will be wiped out; creditors will absorb losses; culpable management will not be retained and may have their compensation clawed back.” But the markets don’t believe it, and neither do most people who pay attention to Dodd-Frank.

There are two essential problems. The first is that it is hard to imagine that the government wouldn’t blink, as it did in 2008. “Does anyone really believe that if any of the big banks were about to go down, that the government would allow that to happen?” asked Dean Baker, a co-founder of the progressive Center for Economic and Policy Research. “No.”

The second problem is that it is difficult to envision how the law itself would “resolve” these institutions. In one part of Dodd-Frank, the banks are required to write “living wills,” laying out how they could wind down without causing a financial catastrophe. Although they are now on their third round of living wills, the documents are thousands of pages, and the government hasn’t yet told them whether the second round of living wills, filed a year or so ago, passed muster.

The law also says that if the regulators find the living wills too unwieldy and difficult to execute, it can force banks and financial institutions to shed assets and simplify their structures to make them easier to wind down. Warren and other lawmakers have pointed to this provision as something that could — if regulators pushed for it — force the banks to look more like they did pre-deregulation: with a division between commercial banks and investment banks.

Meanwhile, there is another part of Dodd-Frank that calls for banks to wind down through a process called orderly liquidation. In this scenario, the government puts the functioning parts of the bank into a new “bridge financial company,” and forces the private sector — shareholders, certain creditors, even assessments on other financial institutions if it comes to that — to take losses. Although the Treasury Department insists that the law forbids public money from being used, there are a lot of economists who have a hard time believing that taxpayer money would not somehow be used if things got really bad.

One person who does believe is Sheila Bair, the former chairwoman of the F.D.I.C. “I do think they could handle a big bank failure,” she told me. “It would be messy and difficult, but they could do it.”

Which is the ultimate problem: We have no way of knowing whether “too big to fail” still exists until we have another crisis. Let’s just hope we don’t have to find out anytime soon.

Krugman’s blog, 7/20/14

July 21, 2014

There was one post yesterday, “The Horror, The Horror:”

I happened to click on this John Mauldin post, in which he informs us that GDP is a Keynesian plot, and that without it Hayek would of course have won the macroeconomic debate. Oh, kay — but that’s not the horror. It’s this:

We have now made the Newt Gingrich and Niall Ferguson Strategic Investment Conference videos available. … This week, we are happy to provide even more material from this incredibly informative event. Newt Gingrich and Niall Ferguson were the two highest rated presenters at a conference packed with some of the finest economic and investment minds in the world.

Oh, boy.

Krugman, solo

July 21, 2014

Mr. Blow is off today, so Prof. Krugman has the floor solo.  In “The Fiscal Fizzle” he says the deficit scolds are still going at it, even though the whole panic turned out to be a false alarm.  Here he is:

For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.

That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.

I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.

About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.

Things are expected to deteriorate after that, mainly because of the impact of an aging population on Medicare and Social Security. But there has been a dramatic slowdown in the growth of health care costs, which used to play a big role in frightening budget scenarios. As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century. Oh, and the budget office now expects interest rates to remain fairly low, not much higher than the economy’s rate of growth. This in turn weakens, indeed almost eliminates, the risk of a debt spiral, in which the cost of servicing debt drives debt even higher.

Still, rising debt isn’t good. So what would it take to avoid any rise in the debt ratio? Surprisingly little. The budget office estimates that stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. if we started now, or 1.5 percent of G.D.P. if we waited until 2020. Politically, that would be hard given total Republican opposition to anything a Democratic president might propose, but in economic terms it would be no big deal, and wouldn’t require any fundamental change in our major social programs.

In short, the debt apocalypse has been called off.

Wait — what about the risk of a crisis of confidence? There have been many warnings that such a crisis was imminent, some of them coupled with surprisingly frank admissions of disappointment that it hadn’t happened yet. For example, Alan Greenspan warned of the “Greece analogy,” and declared that it was “regrettable” that U.S. interest rates and inflation hadn’t yet soared.

But that was more than four years ago, and both inflation and interest rates remain low. Maybe the United States, which among other things borrows in its own currency and therefore can’t run out of cash, isn’t much like Greece after all.

In fact, even within Europe the severity of the debt crisis diminished rapidly once the European Central Bank began doing its job, making it clear that it would do “whatever it takes” to avoid cash crises in nations that have given up their own currencies and adopted the euro. Did you know that Italy, which remains deep in debt and suffers much more from the burden of an aging population than we do, can now borrow long term at an interest rate of only 2.78 percent? Did you know that France, which is the subject of constant negative reporting, pays only 1.57 percent?

So we don’t have a debt crisis, and never did. Why did everyone important seem to think otherwise?

To be fair, there has been some real good news about the long-run fiscal prospect, mainly from health care. But it’s hard to escape the sense that debt panic was promoted because it served a political purpose — that many people were pushing the notion of a debt crisis as a way to attack Social Security and Medicare. And they did immense damage along the way, diverting the nation’s attention from its real problems — crippling unemployment, deteriorating infrastructure and more — for years on end.

Krugman’s blog, 7/19/14

July 20, 2014

There was one post yesterday, “Always Inflation Somewhere:”

Whenever you point out that the hyperinflation the usual suspects have been predicting for the past 6 years hasn’t materialized, you get a rash of comments declaring that yes it has, the government is just lying about the statistics. One answer — aside from come on, how do you think that works? — is that independent measures, like the Billion Price Index, aren’t very different from the official index. Still, people will point to the price of something that has gone up as evidence that we have lots of inflation.

Not that I think such people can be budged, but it is important to realize that relative prices are always shifting around, and that some prices inevitably go up more than the average. As the figure shows, if you go back to the beginning of the Great Recession, food prices have risen more than the overall CPI (although hyperinflation it isn’t), but car prices have risen more slowly (and high-tech stuff has, of course, gotten much cheaper).

And what about Shadowstats, which claims that inflation is much higher than the government lets on? A subscription costs $175 — the same as 8 years ago.

The Pasty Little Putz, Dowd, Friedman and Kristof

July 20, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Next up we have MoDo:

The thing about him is, he just keeps going.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Next up we have The Moustache of Wisdom:

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

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

Chesky offered this sample of Airbnb’s latest metrics:

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

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

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

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

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

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

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

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

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

But what happens to “ownership?”

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

But what will this mean for traditional jobs?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Krugman’s blog, 7/18/14

July 19, 2014

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

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

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

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

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

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

 

Nocera, solo

July 19, 2014

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

Kalydeco is truly a wonder drug.

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

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

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

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

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

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

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

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

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

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

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

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

Dream on.

 

Krugman’s blog, 7/17/14

July 18, 2014

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

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

Why this lack of progress?

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

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

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

Sorry, guys, but you have no home.

Cohen and Krugman

July 18, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

Now here’s Prof. Krugman:

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

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

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

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

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

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

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

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

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

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

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

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


Follow

Get every new post delivered to your Inbox.

Join 157 other followers