Krugman’s blog, 3/31/15

April 1, 2015

There were two posts yesterday.  The first was “Missing Deflation and the Argument for Inflation:”

Matthew Klein has been going through Fed transcripts from 2009, and notes that the Fed was surprised at the persistence of inflation despite the Great Recession. Oddly, however, he seems to suggest that this episode weakens the case I and others have been making for a higher inflation target. Actually, it strengthens that case.

First of all, the Fed wasn’t alone in being surprised by the failure of actual deflation to emerge; so were many of us, and we treated it as a problem to be solved. And what emerged as at least one likely culprit was downward nominal wage rigidity, which has been overwhelmingly obvious in recent years, with a clear spike in the distribution of wage changes at precisely zero:

What does this have to do with the case for a higher inflation target? That case rests on the problem of the two zeroes: it’s very hard both to cut interest rates below zero (not impossible, we’ve learned, but hard), and it’s also very hard to get cuts in nominal wages. Both problems are much more likely to be serious problems for the economy with, say, 1 percent inflation than with 4 percent inflation.

Now, economists and central bankers were aware of the two-zeroes problem back when they converged on the 2 percent inflation target. That’s why the target was 2, not 0. But they wrongly believed that 2 was enough — that with a 2 percent target neither zero would be binding except in rare cases.

What we’ve learned since then is that the zeroes are a much bigger issue than the consensus had it; that you can spend 6 years and counting at the zero lower bound on interest rates, that you can face many years of grinding, painful adjustment as countries or regions try to achieve “internal devaluation.”

So the failure of inflation to fall as much as predicted in 2009 was part of a series of events that were trying to tell us that the initial inflation target was too low.

Yesterday’s second post was “Food For Thought:”

I once had a conversation with some Times people about reader interests, which are something the paper knows much more about than it did in the pre-digital age. And what they said, ruefully, was that what readers really seem to care about is food — sure, they may email a hard-hitting column or a revelatory piece of investigative reporting, but the sure-fire stuff is about eating (and health, and using animal training techniques on your husband).

Actually, I’m fine with that. Most people don’t live their lives obsessed with policy and world events, nor should they. In fact, a time when political or economic analyses are at the top of the agenda is almost surely a bad time, with everything going wrong, whereas a return to food-and-lifestyle is an indication of at least a partial return to normalcy.

Still, the top of today’s most-emailed list is striking:

Now excuse me while I throw out that piece of salmon I was going to cook and prepare some steak with nuts instead.

Friedman, solo

April 1, 2015

In “Tell Me How This Ends Well” The Moustache of Wisdom tells us that reading the newspapers in China can be very interesting.  Here he is, writing from Hong Kong:

I’ve been in China for the last week. It’s always instructive to see how the world looks from the Middle Kingdom. Sometimes the best insights come from just reading the local papers. On March 25, The China Daily published an essay detailing how “Beijing authorities” had “launched inspection tours of kindergartens this week to ensure that children are not overburdened with schoolwork. Although Chinese, mathematics and English are supposed to be taught to primary school students, it is not uncommon to see pre-school-age children across China being forced to study these subjects.” The essay went on to explain why it wasn’t healthy to “begin preparing for the college entrance exam” in preschool.

Reading that, I suddenly had a vision of a SWAT team from China’s Ministry of Education bursting through the doors of kindergartens and declaring: “Put those pencils and books down! Back away from your desks, and nobody gets hurt!”

What a problem to have! Kindergartens teaching math and English too soon.

In the same paper, there was also an article about the latest fighting between Shiite pro-Iranian and Sunni pro-Saudi factions in Yemen. Clashes there have focused on Yemen’s second-largest town, Taiz. Taiz? Wait a minute! I was in Taiz in May 2013 working on a documentary about how Yemen was becoming an environmental disaster. We focused on Taiz because, as a result of Yemen’s devastated ecosystems, residents of Taiz get to run their home water faucets for only 36 hours every 30 days or so.

So there you have it. The news out of China is the crackdown on kindergartens teaching math and English too early, and the news out of Yemen is that Sunni and Shiite factions are fighting over a town that is already so cracked up the water comes on only 36 hours a month and the rest of the time you have to rely on roving water trucks. And that was before the latest fighting.

But at least we’ve found the problem. I’ve read that it’s all President Obama’s fault. I wish. Obama has said and done some boneheaded things in the Middle East (like decapitating the Libyan regime with no plan for the morning after), but being wary about getting further embroiled in this region is not one of them. We’re dealing here with something no president has had to face: the collapse of the Arab state system after 70 years of failed governance.

Again, the comparison with Asia is instructive. After World II, Asia was ruled by many autocrats who essentially came to their people and said, “My people, we’re going to take away your freedom, but we’re going to give you the best education, infrastructure and export-led growth policies money can buy. And eventually you’ll build a big middle class and win your freedom.” Over that same period, Arab autocrats came to their people and said, “My people, we’re going to take away your freedom and give you the Arab-Israel conflict.”

Asian autocrats tended to be modernizers, like Singapore’s Lee Kuan Yew, who just died last week at 91 — and you see the results today: Singaporeans waiting in line for 10 hours to pay last respects to a man who vaulted them from nothing into the global middle class. Arab autocrats tended to be predators who used the conflict with Israel as a shiny object to distract their people from their own misgovernance. The result: Libya, Yemen, Syria and Iraq are now human development disaster areas.

Some saw this coming. In 2002, a group of Arab social scientists produced the U.N.’s Arab Human Development Report. It said the Arab world suffered deficits of freedom, knowledge and women’s empowerment, and, if it did not turn around, it would get where it was going. It was ignored by the Arab League. In 2011, the educated Arab masses rose up to force a turnaround before they got where they were going. Except for Tunisia (the only Arab country whose autocrat was also a modernizer), that awakening fizzled out. So now they’ve gotten where they were going: state collapse and a caldron of tribal, sectarian (Shiite-Sunni, Persian-Arab) civil wars — in a region bulging with unemployed, angry youths and schools that barely function, or, if they do, they teach an excess of religion not math.

I read President Abdel Fattah el-Sisi of Egypt declaring that “the challenges facing our national Arab security are grave, and we have succeeded in diagnosing the reasons behind it.” And that was? Too little Arab cooperation against Persians and Islamists. Really? Some 25 percent of Egyptians are illiterate today after $50 billion in U.S. aid since 1979. (In China, illiteracy is 5 percent; in Iran, 15 percent.) My heart goes out to all the people in this region. But when your leaders waste 70 years, the hole is really deep.

In fairness, Sisi is trying to dig Egypt out. Nevertheless, Egypt may send troops to defeat the rebels in Yemen. If so, it would be the first case of a country where 25 percent of the population can’t read sending troops to rescue a country where the water comes through the tap 36 hours a month to quell a war where the main issue is the 7th century struggle over who is the rightful heir to the Prophet Muhammad — Shiites or Sunnis.

Any Chinese preschooler can tell you: That’s not an equation for success.

Krugman’s blog, 3/30/15

March 31, 2015

There were two posts yesterday.  The first was “Ben Bernanke Blog Blogging:”

Ben Bernanke’s Brookings blog begins! And the subject of the first post is a defense of the Fed against the charge that it has been keeping interest rates “artificially low” and hurting savers.

It’s a very clear, well-argued post; regular readers know that I’ve been making essentially the same arguments for years. I’d just add two points.

First, the image of the little old lady living hand to mouth off the interest on her bank account is basically a fiction. Most retired Americans depend on Social Security for the majority of their income, and have very little in interest earnings; the decline in rates has primarily hurt a small minority of very well-off seniors. Here’s a chart (from data here) showing the change in asset income of seniors from all sources (I couldn’t break out interest) from 2006 to 2010, as interest rates fell through the floor, averaged by quintile:

It’s not as smooth as I expected, but it’s clear that the decline was much bigger among the better-off; to the extent that Fed policy was reducing returns, it was reducing inequality among seniors.

Second, much of the critique of low rates simply assumes that saving is a meritorious activity that should be encouraged. But the very fact that the economy remained depressed despite zero rates was telling us that we were awash in desired savings with no place to go — that’s what a liquidity trap is all about. And in that context more saving actually hurts the economy; it even hurts investment via the paradox of thrift.

What I find most interesting about Bernanke’s first blog post — which is, as I said, clear and completely correct — is that he chose that topic. What that’s telling us, I think, is what the people he talked to as Fed chair complained about most: not the failure to hit the inflation target, not the persistence of high unemployment, but disappointing returns for rentiers. John Galt, it turns out, wants price supports.

Yesterday’s second post was “The Road to Five Forks:”

Today in my Civil War obsession: some readers may recall that I’m a big U.S. Grant admirer; the scene at Appomattox, where the dashing cavalier Lee surrendered to the stumpy, grimy Grant, marks the coming of the modern era. I also find the campaign that led to that moment fascinating. And that campaign began in earnest 150 years ago today.

What happened was that Grant sent a force around Lee’s right, to threaten his lines of communication. What strikes me on reading accounts of how this played out are two things. First, Grant really was wasting no time — he moved as soon as the weather permitted, and actually a bit early. If you read the linked piece, you see that Union cavalry had to make heroic efforts simply to move across the flooded landscape, building corduroy roads as it went.

Second, we’re still talking about very hard fighting — as far as I can tell, precisely because Grant was aggressive about moving even in dubious weather. That temporarily left the Union cavalry in front facing a counterattack from a much larger force of Confederate infantry. The battle of Dinwiddie Court House was a nail-biting fighting retreat on the Union side, with heavy casualties all around.

The next day, of course, the Union infantry came up, and things got decisive.

Bobo, driveling solo

March 31, 2015

Bobo is flying driveling solo this morning.  In “Religious Liberty and Equality” he has the cojones to gurgle that the gay rights movement is at risk of losing its moral high ground by misusing its newfound political clout.  As usual, “gemli” from Boston sums it all up for us very succinctly.  He says “I’ve never read a more eloquent and heartfelt defense of homophobia.”  Here’s Bobo (and the Times should really explain to us why he still gets paid for his crap):

Over the past few decades the United States has engaged in a great struggle to balance civil rights and religious liberty.

On the one hand, there is a growing consensus that straight, gay and lesbian people deserve full equality with each other. We are to be judged by how we love, not by whom we love. If denying gays and lesbians their full civil rights and dignity is not wrong, then nothing is wrong. Gays and lesbians should not only be permitted to marry and live as they want, but be honored for doing so.

On the other hand, this was a nation founded on religious tolerance. The ways of the Lord are mysterious and are understood differently by different traditions. At their best, Americans have always believed that people should have the widest possible latitude to exercise their faith as they see fit or not exercise any faith. While there are many bigots, there are also many wise and deeply humane people whose most deeply held religious beliefs contain heterosexual definitions of marriage. These people are worthy of tolerance, respect and gentle persuasion.

At its best, the gay rights movement has promoted its cause while carefully respecting religious liberty and the traditional pillars of American society. The cause has focused on marriage and military service. It has not staged a frontal assault on the exercise of faith.

The 1993 Religious Freedom Restoration Act, which was supported by Senator Ted Kennedy and a wide posse of progressives, sidestepped the abstract and polarizing theological argument. It focused on the concrete facts of specific cases. The act basically holds that government sometimes has to infringe on religious freedom in order to pursue equality and other goods, but, when it does, it should have a compelling reason and should infringe in the least intrusive way possible.

This moderate, grounded, incremental strategy has produced amazing results. Fewer people have to face the horror of bigotry, isolation, marginalization and prejudice.

Yet I wonder if this phenomenal achievement is going off the rails. Indiana has passed a state law like the 1993 federal act, and sparked an incredible firestorm.

If the opponents of that law were arguing that the Indiana statute tightens the federal standards a notch too far, that would be compelling. But that’s not the argument the opponents are making.

Instead, the argument seems to be that the federal act’s concrete case-by-case approach is wrong. The opponents seem to be saying there is no valid tension between religious pluralism and equality. Claims of religious liberty are covers for anti-gay bigotry.

This deviation seems unwise both as a matter of pragmatics and as a matter of principle. In the first place, if there is no attempt to balance religious liberty and civil rights, the cause of gay rights will be associated with coercion, not liberation. Some people have lost their jobs for expressing opposition to gay marriage. There are too many stories like the Oregon bakery that may have to pay a $150,000 fine because it preferred not to bake a wedding cake for a same-sex ceremony. A movement that stands for tolerance does not want to be on the side of a government that compels a photographer who is an evangelical Christian to shoot a same-sex wedding that he would rather avoid.

Furthermore, the evangelical movement is evolving. Many young evangelicals understand that their faith should not be defined by this issue. If orthodox Christians are suddenly written out of polite society as modern-day Bull Connors, this would only halt progress, polarize the debate and lead to a bloody war of all against all.

As a matter of principle, it is simply the case that religious liberty is a value deserving our deepest respect, even in cases where it leads to disagreements as fundamental as the definition of marriage.

Morality is a politeness of the soul. Deep politeness means we make accommodations. Certain basic truths are inalienable. Discrimination is always wrong. In cases of actual bigotry, the hammer comes down. But as neighbors in a pluralistic society we try to turn philosophic clashes (about right and wrong) into neighborly problems in which different people are given space to have different lanes to lead lives. In cases where people with different values disagree, we seek a creative accommodation.

In the Jewish community, conservative Jews are generally polite toward Orthodox Jews who wouldn’t use their cutlery. Men are generally polite to Orthodox women who would prefer not to shake their hands. In the larger community, this respectful politeness works best.

The movement to champion gay rights is now in a position where it can afford to offer this respect, at a point where steady pressure works better than compulsion.

It’s always easier to take an absolutist position. But, in a clash of values like the one between religious pluralism and equality, that absolutism is neither pragmatic, virtuous nor true.

Perhaps God will forgive Bobo when he finally meets Her…

Krugman’s blog, 3/28 and 3/29

March 30, 2015

There were four posts on Saturday and two yesterday.  The first Saturday post was “Mild Winters and Crank Economics:”

Neil Irwin writes about migration patterns within the United States, and points out that they overwhelmingly reflect just two factors. Most important, people are moving to places with mild winters:

On top of this, they’re moving to places with cheap housing, although you need to allow for the fact that some places are cheap precisely because people are leaving.

As I pointed out the other day, this long-term movement toward the sun, in turn, probably has a lot to do with the gradual adjustment to air conditioning.

And as I also pointed out, the search for mild winters can lead to a lot of spurious correlations. With the exception of California — which has mild winters but also, now, has very high housing prices — America’s warm states are very conservative. And that’s not an accident: warm states were also slave states and members of the Confederacy, and a glance at any election map will tell you that in US politics the Civil War is far from over.

The point, then, is that these hot red states also tend to be low-minimum-wage, low-taxes-on-the-wealthy jurisdictions. And that opens the door to sloppy and/or mendacious claims that low wages and taxes are driving their growth.

This really shouldn’t even be controversial — I think it’s kind of obvious.

The second post on Saturday was “Unreal Keynesians:”

Brad DeLong points me to Lars Syll declaring that I am not a “real Keynesian”, because I use equilibrium models and don’t emphasize the instability of expectations.

One way to answer this is to point out that Keynes said a lot of things, not all consistent with each other. (The same is true for all of us.) Right at the beginning of the General Theory, Keynes explains the “principle of effective demand” with a little model of temporary equilibrium that takes expectations as given. If that kind of modeling is anti-Keynesian, the man himself must be excommunicated.

But surely we don’t want to do economics via textual analysis of the masters. The questions one should ask about any economic approach are whether it helps us understand what’s going on, and whether it provides useful guidance for decisions.

So I don’t care whether Hicksian IS-LM is Keynesian in the sense that Keynes himself would have approved of it, and neither should you. What you should ask is whether that approach has proved useful — and whether the critics have something better to offer.

And as I have often argued, these past 6 or 7 years have in fact been a triumph for IS-LM. Those of us using IS-LM made predictions about the quiescence of interest rates and inflation that were ridiculed by many on the right, but have been completely borne out in practice. We also predicted much bigger adverse effects from austerity than usual because of the zero lower bound, and that has also come true.

Now, what have those who declare themselves the true Keynesians had to offer? Has insisting that expectations are volatile and unpredictable been helpful in this context? Actually, if anything it lends support to believers in the confidence fairy. After all, if it’s all animal spirits, who are we to say they’re wrong?

Has declaring uncertainty to be unquantifiable, and mathematical modeling in any form foolish, been productive? Remember, that’s what the Austrians say too.

If you can show me any useful advice given by those sniping at me and other for our failure to be proper Keynesians, I’ll be happy to take it under consideration. If you can’t, then we’re just doing literary criticism here, and I’m not interested.

The third post on Saturday was “Privatization Memories:”

Dave Weigel has one of the more interesting Harry Reid retrospectives, focusing on his role in fighting back Bush’s attempt to privatize Social Security — and in particular on the way he forged an alliance with liberal bloggers.

I remember that episode very well, for several reasons. One was that I, too, was writing a lot, debunking one bad argument for privatization after another. It wasn’t the first time I had done that kind of thing, but this was different in two ways: it was really intense, and for once my side of the argument won the political fight.

It was also a formative period for my perceptions of how policy arguments actually play out in modern America. There are always three sides here: the right, which isn’t interested in facts or logic; the left (which isn’t very leftist in this country — they’re really center-left by anyone else’s standards); and self-proclaimed centrists, who have very little in the way of a constituency in the country at large but have a lot of influence inside the Beltway.

And what you learned early on in the Social Security debate was that centrists desperately want to believe that there is symmetry between the left and the right, that Democrats and Republicans are equally extreme in their own way. And this means that they are always looking for ways to say nice things about Republicans and their policy proposals, no matter how bad those proposals are. That’s how Paul Ryan ended up getting an award for fiscal responsibility.

So back in 2005, Bush was making a dubious claim coupled with a complete non sequitur. First, the claim that Social Security was in crisis; second, that privatization was the answer, even though it would do nothing at all to help the system’s finances. How could centrists say nice things about such a crude bait-and-switch?

Well, here’s Joe Klein in 2005:

I agree with Paul [Krugman] in that private accounts have nothing to do with solvency and solvency is the issue. I disagree with Paul because I think private accounts [are] a terrific policy and that in the information age, you’re going to need different kinds of structures in the entitlement area than you had in the industrial age. But it is very hard to do that kind of change under these political circumstances where you have the parties at such loggerheads.

The Democrats have for the last 10 or 15 years blatantly, shamelessly demagogued this issue. They’ve offered nothing positive on Social Security or on Medicare or on Medicaid, and it’s time for them to compromise here.

Say what? To his credit, Klein later admitted that he was all wrong here. But the point is that what we saw here was the instinct to come up with something, anything, that would let centrists pretend symmetry between the parties.

Incidentally, about Democrats doing nothing about Medicare and Medicaid: it’s interesting to look at budget projections made around the time of the Social Security debate. Back then CBO projected that by fiscal 2014 Medicare spending would rise to $708 billion and Medicaid spending to $361 billion. The actual numbers for 2014 were 600 and 301, respectively, despite the Medicaid expansion under Obamacare. At least some of this unexpectedly low cost can be attributed to measures included in the Affordable Care Act. And strange to say, this was achieved without destroying or privatizing the programs.

But back to 2005: what Harry Reid realized was that it was time to stop courting the Very Serious People and instead make an alliance with the DFHs — which isn’t quite shorthand for Dirty Foolish Hippies — who, unlike the VSPs, were actually making sense on both the policy and the politics. It was an important turning point.

Saturday’s last post was “Air Conditioning and the Rise of the South:”

Just a short further note on this subject. (If you’re wondering why I’m doing posting so much on a Saturday, I’m housebound with a cold, so why not?)

First, there’s a real demographic turning point for the South circa 1960, as a steadily falling share of the total US population shifts to a sustained rise:

Second, this turning point coincides with the coming of widespread home air conditioning:

So when you ask why Sunbelt states have in general grown faster than those in the Northeasy, don’t credit Art Laffer; credit Willis Carrier.

Yesterday’s first post was “Talking Econoheads:”

A couple of events I was involved in are now online:

Piketty/Stiglitz/me talking inequality at the 92nd Street Y

Lots of people talking about economics for the New York Review of Books at Scandinavia House.

The last post yesterday was “Austerity, Big and Small:”

At this point it’s fairly common to look at the effects of austerity via cross-country scatterplots: one axis shows some measure of fiscal consolidation, while the other shows the change in GDP. Who started this practice? I think I did, here, although I’m happy to cede credit to someone else if I missed it.

There are problems with this approach: causation could run the other way, although given the extent to which austerity, in the eurozone at any rate, was driven by debt panic, those problems shouldn’t be too severe. Another issue, however, is concern that such cross-sectional pictures could be dominated by small outliers. Are we basing too much on Greece?

Well, I’ve been doing some class prep and decided to play around with bubble charts — scatterplots in which the size of the markers varies, in this case with PPP GDP. Here’s what the eurozone scatter looks like, using the IMF’s estimate of the change in the structural balance as a share of potential GDP:

There seem to be three insights from this picture. First, the case that austerity really does hurt a lot does not depend on Greece. If anything, Greek economic contraction seems to have been somewhat less than you might have expected given the extreme austerity.

Second, and relatedly, the apparent multiplier looks larger if you focus only on the bigger economies; a weighted regression has a coefficient of -1.6, versus -1.3 for the unweighted version.

Finally, all the attention given to Latvia looks a bit … odd.

Blow, Cohen and Krugman

March 30, 2015

In “The Beating of Floyd Dent” Mr. Blow says another horrifically violent incident furthers the perception that the police are more likely to use force against blacks.  Mr. Cohen says “Iran Matters Most” and that America cannot stop the Sunni-Shia schism in the Middle East or its violence. It’s a time for fierce realism.  Prof. Krugman, in “Imaginary Healthcare Horrors,” says the Affordable Care Act is costing taxpayers much less than expected, but that hasn’t deterred the prophets of disaster.  Here’s Mr. Blow:

“He was beating me upside the head,” Floyd Dent, a 57-year-old longtime autoworker told a gaggle of reporters last week, according to The Detroit Free Press. “I was trying to protect my face with my right arm. I heard one of them say, ‘Tase the M…F.’ ”

Dent was describing what he experienced in a horrifically violent dashboard camera video that shows Inkster, Mich., police officers pulling him over, dragging him from his car, punching him 16 times in the head and tasing him three times, while he lay bloody and struggling on the ground, before arresting him.

According to the website for a local NBC News affiliate: “Police said they first saw Dent’s car through binoculars while watching an area known to have drug activity. They followed Dent’s car and said he didn’t make a complete stop at a stop sign. Police said that when they turned on their flashing lights, Dent didn’t immediately pull over.”

Furthermore: “Police said they ordered Dent to put his hands up, but they could only see one. Police said Dent yelled ‘I’ll kill you’ at the officers. Dent’s attorney, Greg Rohl, said there’s no audio of the alleged threat.”

Finally: “Police said Dent refused to put his hands behind his back. Dent said he thought he was being choked to death and tried to pull the officers’ arms away from his throat. One of the officers said Dent bit him on the arm, and that’s why he started punching Dent. Police said the force was needed to restrain Dent. The officer who said he was bit did not seek medical attention or photograph the bite marks.”

According to The Free Press, “Police initially charged him with assault, resisting arrest and possession of cocaine, insisting they found cocaine beneath the passenger seat of his Cadillac. Dent says police planted the drugs at the time of his arrest. An Inkster district court judge, after reviewing the tape, tossed the assault and resisting charges, but Dent faces an April 1 hearing on the drug charge.”

Dent’s lawyer says the drugs were planted by the officer who punched him, William Melendez. And there is video that the lawyer claims backs up the allegation. As a reporter at the local NBC News affiliate describes it: “In the video, the officer seen throwing the punches, William Melendez, is seen pulling something from his pocket that looks like a plastic baggy with something inside it. Melendez testified in court police found a baggy of crack cocaine under the passenger seat of Dent’s car.”

It should be noted that, according to the local NBC News affiliate website, Dent said a blood test showed no drugs in his system.

It should also be noted that, according to The Free Press, Melendez, who federal investigators in 2003 said “was known on the street as ‘Robocop,’ ” “has been involved in 12 lawsuits related to his conduct as an officer over the years, including similar allegations in a civil rights suit now pending in federal court.”

Those lawsuits allege, “among other things, that he planted evidence, assaulted people in their homes, fabricated police reports and wrongly arrested people.”

Videos like the Dent footage further the perception, especially among African-Americans, that the police are more likely to use force — specifically deadly force — against blacks than whites.

A December CBS News poll found that 84 percent of blacks and 33 percent of whites believe that the police in most communities are more likely to use deadly force against blacks. Just 2 percent of whites, and 0 percent of blacks, believe the police are more likely to use such force against whites.

(Fifty-seven percent of whites and 10 percent of blacks said they thought race did not affect the use of deadly force.)

And it is important to register where the most recent cases are centered.

As Isabel Wilkerson, author of the monumental book “The Warmth of Other Suns,” put it in a January New York Times essay titled “When Will the North Face Its Racism?”: “High-profile cases of police brutality have recently come to be associated with the North rather than the South. And it is in the South that two recent cases of police shootings of unarmed black people resulted in more vigorous prosecution.”

She concluded: “If the events of the last year have taught us anything, it is that, as much progress has been made over the generations, the challenges of color and tribe were not locked away in another century or confined to a single region but persist as a national problem and require the commitment of the entire nation to resolve.”

So much about Dent’s case is troublesome, and so he has become the latest touchstone in our coalescing conversation about the intersection of police forces and communities of color, particularly in the parts of this country that African-Americans fled to in search of a better life.

Next up we have Mr. Cohen:

Do the Iran deal. Defeat the barbaric marauders of Islamic State. In the fragmenting mayhem of the Middle East, these must be the American and Western priorities.

They are objectives rooted in the strict Western interest. An Iranian nuclear accord lasting at least a decade that ring-fences a fiercely monitored and strictly limited enrichment program compatible only with civilian use is not an ideal outcome, but it is the best conceivable outcome of protracted talks that have already reversed the nuclear momentum in Iran and established a bridgehead between Washington and Tehran.

Any such agreement — and the deadline is imminent — must leave Iran a minimum of a year from any ‘‘break-out’’ to a bomb. The alternatives are far worse. Centrifuges and enrichment levels would resume their upward curve. War drums would beat again despite the fact that calls to attack Iran are an irresponsible invitation to disaster.

American or Israeli bombs on Persia (or both) would have all sorts of ghastly consequences, but the fundamental argument against such folly is that they would cause no more than a hiccup in Iran’s nuclear program before spurring it to renewed and unmonitored intensity. This would be war without purpose, or war on false pretenses. We’ve seen enough of that.

Iran is a hopeful and youthful society. Nurture the hope. Don’t imprison it. A deal lasting 10 years would condemn Iran and America to a working relationship over that period. I use the word ‘‘condemn’’ advisedly. It would not be pretty. In fact it would be ugly. There would be plenty of disagreements.

But jaw-jaw is better than war-war. Much can be achieved with nations that have fundamental ideological differences with the United States; look at the history of Chinese-American relations since they resumed in the 1970’s. During the next decade the Islamic Republic is likely to go through a leadership change. Its society is aspirational and Westward-looking. ‘‘Death to America’’ has become a tired refrain. What these elements will produce in terms of change is unpredictable, but the chance of positive developments is enhanced by contact and diminished by punitive estrangement of Tehran.

Would it be preferable that Iran not have the nuclear capacity it has acquired? Sure. Can there be absolute guarantees a deal would be honored? No. But diplomacy deals with the real world. The toughest, most important diplomacy is conducted with enemies. Opponents of an accord have offered no serious alternatives.

Only elementary knowledge of Iran is needed to know that sanctions will never bring this proud nation to its knees. It would rather starve than cave. What better assures Israel’s security, a decade of strict limitation and inspection of Iran’s nuclear program that prevents it making a bomb, or a war that delays the program a couple of years, locks in the most radical factions in Tehran, and intensifies Middle Eastern violence? It’s a no-brainer.

I like the current inconsistencies in President Obama’s Middle East policy. Some ask how it can make sense to pursue an Iran deal while backing Arab states, principally Sunni Saudi Arabia, in a campaign against Iranian-backed Houthi forces in Yemen. To which the answer is first that interests drive foreign policy, not the pursuit of consistency (Stalin was once the most effective of American allies); and second that America is making it clear to Iran, even before any possible deal, that it will not abandon its allies, including Egypt and the Saudis, just because a nuclear agreement has been reached. This is an important message. The United States will oppose Iran where its interests and those of its allies demand that, deal or no deal.

One area where American and Iranian interests broadly coincide is in defeating Islamic State, the latest expression of the metastasizing Salafi Islamist ideology of murderous hatred toward Western civilization that produced 9/11 and recent murderous rampages in Europe. Islamic State is also a Sunni revanchist movement in Iraq and Syria, directly opposed to Shia Iran. There is nothing uplifting about the overlap in American and Iranian interests, but that does not make it any the less important. Rolling back Islamic State requires at least tacit Iranian cooperation.

America cannot stop the Sunni-Shia schism in the Middle East that its invasion of Iraq exacerbated. It cannot rebuild the Sykes-Picot order, or the borders that went with it. It cannot reverse its failure to prevent the worst in Syria (which will forever blot Obama’s record), nor its failure, outside Tunisia, and particularly in Egypt, to nurture the hope of the Arab spring for more representative societies freed from the paralyzing (and mutually reinforcing) confrontation of dictatorship and Islamism. It cannot prevent the violence inherent in all these developments. Nor should it hide its eyes from the fact that this violence will last a generation at least.

This is not cause for despair but reason to concentrate, fiercely, on the two attainable objectives that matter most now.

Last but not least we have Prof. Krugman:

There’s a lot of fuzzy math in American politics, but Representative Pete Sessions of Texas, the chairman of the House Rules Committee, recently set a new standard when he declared the cost of Obamacare “unconscionable.” If you do “simple multiplication,” he insisted, you find that the coverage expansion is costing $5 million per recipient. But his calculation was a bit off — namely, by a factor of more than a thousand. The actual cost per newly insured American is about $4,000.

Now, everyone makes mistakes. But this wasn’t a forgivable error. Whatever your overall view of the Affordable Care Act, one indisputable fact is that it’s costing taxpayers much less than expected — about 20 percent less, according to the Congressional Budget Office. A senior member of Congress should know that, and he certainly has no business making speeches about an issue if he won’t bother to read budget office reports.

But that is, of course, how it’s been all along with Obamacare. Before the law went into effect, opponents predicted disaster on all levels. What has happened instead is that the law is working pretty well. So how have the prophets of disaster responded? By pretending that the bad things they said would happen have, in fact, happened.

Costs aren’t the only area where enemies of reform prefer to talk about imaginary disasters rather than real success stories. Remember, Obamacare was also supposed to be a huge job-killer. In 2011, the House even passed a bill called the Repealing the Job-Killing Health Care Law Act. Health reform, opponents declared, would cripple the economy and in particular cause businesses to force their employees into part-time work.

Well, Obamacare went into effect fully at the beginning of 2014 — and private-sector job growth actually accelerated, to a pace we haven’t seen since the Clinton years. Meanwhile, involuntary part-time employment — the number of workers who want full-time work but can’t get it — has dropped sharply. But the usual suspects talk as if their dire predictions came true. Obamacare, Jeb Bush declared a few weeks ago, is “the greatest job suppressor in the so-called recovery.”

Finally, there’s the never-ending hunt for snarks and boojums — for ordinary, hard-working Americans who have suffered hardship thanks to health reform. As we’ve just seen, Obamacare opponents by and large don’t do math (and they’re sorry when they try). But all they really need are a few sob stories, tales of sympathetic individuals who have been impoverished by some aspect of the law.

Remarkably, however, they haven’t been able to find those stories. Early last year, Americans for Prosperity, a Koch brothers-backed group, ran a series of ads featuring alleged Obamacare victims — but not one of those tales of woe stood up to scrutiny. More recently, Representative Cathy McMorris Rodgers of Washington State took to Facebook to ask for Obamacare horror stories. What she got instead was a torrent of testimonials from people whose lives have been improved, and in some cases saved, by health reform.

In reality, the only people hurt by health reform are Americans with very high incomes, who have seen their taxes go up, and a relatively small number of people who have seen their premiums rise because they’re young and healthy (so insurers previously saw them as good risks) and affluent (so they don’t qualify for subsidies). Neither group supplies suitable victims for attack ads.

In short, when it comes to the facts, the attack on health reform has come up empty-handed. But the public doesn’t know that. The good news about costs hasn’t made it through at all: According to a recent poll by Vox.com, only 5 percent of Americans know that Obamacare is costing less than predicted, while 42 percent think the government is spending more than expected.

And the favorable experiences of the roughly 16 million Americans who have gained insurance so far have had little effect on public perceptions. Partly that’s because the Affordable Care Act, by design, has had almost no effect on those who already had good health insurance: Before the act, a large majority of Americans were already covered by their employers, by Medicare or by Medicaid, and they have seen no change in their status.

At a deeper level, however, what we’re looking at here is the impact of post-truth politics. We live in an era in which politicians and the supposed experts who serve them never feel obliged to acknowledge uncomfortable facts, in which no argument is ever dropped, no matter how overwhelming the evidence that it’s wrong.

And the result is that imaginary disasters can overshadow real successes. Obamacare isn’t perfect, but it has dramatically improved the lives of millions. Someone should tell the voters.

Krugman’s blog, 3/27/15

March 28, 2015

There were two posts yesterday, a bit out of order.  The first post was “Friday Night Music: The Lone Bellow, Watch Over Us:”

Yes, I am aware that it’s Friday morning. But I have meetings followed by travel, and probably won’t be able to blog later. Normal service will resume tomorrow.

Meanwhile, I went to see TLB at the Bowery Ballroom Wednesday night:

And it was even better than I expected — you can watch performance videos, but (as with most of the bands I love!) they don’t capture what it’s really like in the room, with the audience very much part of the show. When they did this song, the person standing next to me (it’s all standing, preferably with beer in hand) burst out, “This is surreal — they can do anything!”

Yesterday’s second post was “Hidden Healthcare Horrors:”

One of the odder subplots of the health reform saga has been the almost pathetic efforts of Republicans to come up with Obamacare horror stories. You might think that given the complexity of the law and the almost unlimited resources of the propaganda machine, they’d be able to come up with someone to serve as the poster child of the law’s terrible effects on innocent Americans. As far as I know, however, we have yet to see a single credible example — all the characters featured in Koch brothers ads or GOP speeches have turned out to be potential beneficiaries of the Affordable Care Act, if only they were willing to look at their actual options.

So Cathy McMorris Rodgers went on Facebook to ask for Obamacare horror stories — and instead got an avalanche of testimonials from people who got essential insurance and care thanks to the ACA.

Why can’t the GOP find the horror stories it knows, just knows, must be out there? Matthew Yglesias gets at most of it by noting that Obamacare does, in fact, redistribute from the few to the many:

[O]ne of the main things it does is raise taxes rather dramatically on a pretty small number of high-income people in order to give subsidized health insurance policies to a substantially larger number of low-income people. Indeed, this is one of the main things Republicans don’t like about it!

But there’s a bit more to the story. Millionaires paying higher taxes aren’t the only people hurt, at least slightly, by the law. If you are a young. healthy person (especially if you’re male), living in a state that didn’t have community rating pre-ACA, you may have had a cheap policy that went up in price once the law went into effect; and if you’re affluent as well, you don’t receive subsidies. So there are victims out there.

The problem for the GOP is that they’re the wrong kind of victims. What Republicans want are struggling, salt of the earth regular Americans, preferably older and with expensive medical conditions — not healthy, well-paid guys in their 20s. But the profile of the ideal Obamacare victim matches, pretty much exactly, the profile of the kind of person Obamacare was designed to help.

And the inability of the GOP to come up with true horror stories is, in its own way, a demonstration that the law is working as intended.

Solo Collins

March 28, 2015

Mr. Nocera is off today, so Ms. Collins has the place to herself.  She has a “Ted Cruz Pop Quiz.”  She says we officially have a 2016 presidential candidate! She also asks how well do you know him?  Here she is:

The presidential race is on! And right now the official pack of contenders consists of … Ted Cruz.

Don’t panic. There will be others. Really, April is going to bring a veritable shower. But, right now, unless you count all the people who register to run for president on the Unknown ticket, and the anesthesiologist in Cleveland who declared his candidacy but forgot to tell his wife, Cruz is the only genuine, more-or-less serious, on-the-record candidate we’ve got. Attention must be paid.

Cruz, a freshman senator from Texas, is 44 with about two years of experience in elective office. (Barack Obama’s success seems to have given hope to the wrong people.) He announced his candidacy in a big speech to the students at Liberty University, a conservative evangelical school in Virginia.

It was a great setting — an auditorium full of fresh faces, all of them eager to support Ted Cruz and avoid a $10 fine the university levied for nonattendance.

The announcement was long on biography: Cruz tells his family story a lot, stressing the terrible obstacles overcome on the road to American success. As a public service, we are going to check to see whether you’ve been paying attention:

Ted Cruz was born in:

  • A) Cuba.

  • B) A manger somewhere south of Houston.

  • C) Canada.

Cruz is very close to his father, an evangelical pastor who has said that President Obama:

  • A) Is a lot like Fidel Castro.

  • B) Should be sent “back to Kenya.”

  • C) ”Seeks to destroy all concept of God.”

  • D) All of the above.

Cruz describes leaving home for college as a very difficult experience. (“He was alone and scared,” the presidential candidate told his audience at Liberty, speaking in the third person.) His traumatic voyage into higher education took place at:

  • A) An exchange student program in Ulan Bator.

  • B) A community college in a tough neighborhood in Toledo.

  • C) Princeton.

Cruz worked two jobs to get through college. This was partly for tuition and partly because:

  • A) He had lost $1,800 playing poker.

  • B) He wanted to give generous donations in the Sunday collection plate.

  • C) He was saving up to buy an embossed copy of the Constitution.

After college Cruz was lucky enough to get into Harvard Law School. Later, he recalled Harvard Law as a place with:

  • A) Enlightening classes.

  • B) Great poker games.

  • C) Communist professors.

After law school, Cruz’s struggles continued, and he:

  • A) Attempted to volunteer for the military but was rejected for poor vision. So he signed up instead for four years of missionary work in Papua New Guinea.

  • B) Taught in a low-income neighborhood in San Antonio while devoting his weekends to coaching midnight basketball at the Y.

  • C) Clerked for Supreme Court Chief Justice William Rehnquist, worked as a $695-an-hour appellate lawyer and nabbed an appointment as Texas solicitor general.

Cruz was a big music fan in his youth, but he claims he stopped liking rock after:

  • A) 9/11.

  • B) Led Zeppelin broke up.

  • C) Mick Jagger turned 70.

Cruz has been making the regular stops for a presidential hopeful. In Iowa, when a reporter asked him for a personal fact no one knows, he confided that he despises:

  • A) Avocados.

  • B) Alexander Hamilton and the influence of urban mercantilism in the post-Revolutionary era.

  • C) Everything Beyoncé has done since Destiny’s Child.

In New Hampshire, Cruz recently gave his apocalyptic speech about the way the Democrats are ruining the country. When he declaimed “The whole world is on fire!” he appeared to:

  • A) Levitate.

  • B) Scare a little girl.

  • C) Glow in the dark.

 

Here’s the answer key:  1C, 2D, 3C, 4A, 5C, 6C, 7A, 8A, 9B

I got them all right.  I wonder if that should alarm me…

Brooks, Cohen and Krugman

March 27, 2015

In “The Field Is Flat” Bobo tries to convince us of something.  He gurgles that many people think the Democrats have an advantage heading into 2016, but he says they don’t.  Keep on trying to convince yourself of that, Bobo, as you watch the 2016 Clown Car fill up with lunatic Teatards.  Mr. Cohen, in “Of Catfish Wars and Shooting Wars,” says graves in the life-giving rice paddies along the Mekong Delta suggest the Asian gift for acceptance.  In “Mornings in Blue America” Prof. Krugman tells us about when good news of solid job growth at both the national level and in states is a conservative nightmare.  Here’s Bobo, who should read Prof. Krugman today:

Like a lot of people who pay attention to such things, I had assumed that Democrats had a huge advantage going into next year’s presidential race. Democrats do really well among the growing demographic groups, like Hispanics, single people and the young. Republicans, meanwhile, do doing sensationally well with just about every shrinking group. If 67-year-old rural white men were the future of the electorate, the G.O.P. would be rolling.

But there’s a growing body of evidence to suggest that, in fact, Democrats do not enter this election with an advantage. There are a series of trends that may cancel out the Democratic gains with immigrants, singles and the like.

We first began to notice these counterforces in the high-immigrant red states that were supposed to start turning purple by now — places like Texas, Arizona and Georgia. New types of voters have, indeed, flooded into these places, but as Ronald Brownstein points out in The National Journal, since 1992 Democratic presidential nominees have averaged only 44.5 percent of the vote in Georgia, 43.7 percent of the vote in Arizona and a pathetic 40.4 percent of the vote in Texas.

Instead of turning pink or purple, these states have become more thoroughly Republican — from school board elections on up.

Nationally, three big things are happening to at least temporarily hold off the Democratic realignment. First, the aging of the electorate is partially canceling out the diversifying of the electorate. People tend to get more Republican as they get older, and they vote at higher rates. And older people are moving to crucial states. In Arizona, Obama won 63 percent of the young adults but only 29 percent of the oldsters.

This aging effect could have a big impact in the swing states of the Midwest, like Wisconsin, Ohio, Iowa, Michigan and Pennsylvania. These states have generally gone Democratic in presidential years, but it’s hard to miss the growing Republican strength at every other level. As Brownstein notes, Republicans have a 42-to-18 advantage in House seats in these states. They control the governorships in all but Pennsylvania. They control both statehouses in all these states save the Iowa Senate.

Second, Democrats continue to lose support among the white working class. In 2008, Barack Obama carried 40 percent of white voters with a high school degree. By 2012, that was down to 36 percent. As John B. Judis points out in a National Journal piece called “The Emerging Republican Advantage,” the tilt of the white working class to the G.O.P. has been even more pronounced in other races. In 2006, Democrats got 44 percent of the white-working-class vote in House races. By 2014, they got only 34 percent. In 2009, Republicans had a 20-seat advantage in House districts that were majority white working class. Today, they have a 125-seat advantage.

Most surprising, Democrats are now doing worse among college-educated voters. Obama won white college graduates in 2008, but he lost them to Mitt Romney in 2012. In Colorado, for example, Obama lost 8 points in his support from college-educated voters from 2008 to 2012.

White college grads are drifting away from Democrats down ballot, too. And, most significant, there are signs that Hispanic voters, at least in Sun Belt states, are getting more Republican as they move up the educational ladder.

Surveys and interviews give us some sense of what’s going on. Voters have a lot of economic anxieties. But they also have a template in their heads for what economic dynamism looks like.

That template does not include a big role for government. Polls show that faith in government is near all-time lows. In a Gallup survey, voters listed dysfunctional government as the nation’s No. 1 problem. In fact, American voters’ traditional distrust has morphed and hardened. They used to think it was bloated and ineffective. Now they think it is bloated and ineffective and rigged to help those who need it least.

When many of these voters think of economic dynamism, they think of places like Texas, the top job producer in the nation over the past decade, and, especially, places like Houston, a low-regulation, low-cost-of-living place. In places like Wisconsin, voters in the middle class private sector support candidates who cut state pensions and pass right-to-work laws, so that economic governance can be more Texas-style.

In short, economic philosophy is mitigating the effect of demographic change, at least for a little while longer. The political guru Charlie Cook asks: Will this be a “Time for a Change” election or will this be a “Changing American Demographics” election? I suspect it will be a “Time for a Change” election. The crucial swing voters will be white and Hispanic college graduates in suburban office parks. They are not into redistribution or that Senator Ted Cruz opened his campaign at Liberty University.

The 2016 campaign is starting on level ground.

This is wishful thinking and whistling past the graveyard.  Now here’s Mr. Cohen, writing from Than Binh, Vietnam:

I drove out through a watery landscape, the rice paddies shimmering, watermelon being planted in muddy fields. There were ducks on the canals, graves and shrines in the light green rice fields, the dead among the living, not hidden but recalled daily. Women in conical hats pushed bicycles over rickety wooden bridges. The breeze was warm, the viscous coffee sweet. Cafes set with hammocks, some advertising Wi-Fi, offered sugar cane juice pressed through small hand-cranked mills. Everything felt liquid, soft, fluid here in the Mekong Delta, an aqueous microclimate.

Yes, the dead among the living: four decades gone by since the war, the bombs and the napalm — twitchy young Americans at the other side of the world wondering what menace lurked in this lush vegetation. America mired in the mud of an unwinnable war.

Now, if anything, the Vietnamese wonder whether the United States military would protect them against the Chinese, if it ever came to that. The temporary enemy has become a partner of sorts against the eternal enemy. Annual trade between Vietnam and the United States has soared from a mere $220 million in 1994 to $29.6 billion in 2013.

The wars over, the Vietnamese did not want to dwell on them. They wanted to sow seeds of commerce rather than grievance. Asia could offer this lesson to other parts of the world where I have spent too much time. Vengeance and victimhood wither the soul. The life-giving rice growing around the dead is an image fecund with acceptance. Even the mud yields.

At its banks the lazy Mekong seems boundless. Business along the river has boomed. I watched with Huynh Khanh Chau, the vice general director of Asia Commerce Fisheries, as large blue plastic containers of live fish were unloaded from boats into a pipe system that swept them in a watery gush into a nearby factory. The fish are raised on nearby farms; aquaculture has become a big industry in the Mekong.

The name of the small-headed, fat-bodied fish is a matter of some dispute. It is catfish-like. So it has been called Vietnamese catfish. In the United States it is sometimes called “swai.” It has also been dubbed “basa” and in Europe is often referred to as “pangasius.” This has not been a mere lexicographical game. The “catfish wars” between the United States and Vietnam have been bitter.

The U.S. catfish industry initially pressed Congress to prohibit labeling “basa” as catfish. The first antidumping duties against “certain frozen fish fillets from Vietnam” went into effect in 2003. They have not been lifted. More recently, Vietnam has been angered by an attempt to reclassify “basa” as catfish, which could lead to stricter United States Department of Agriculture inspection standards. Where are Joseph Heller and “Catch-22” when you need them?

Huynh has no doubt this is a simple case of American protectionism. When it comes to catfish, Vietnam with its ideal climate and cheap labor is more competitive. Its fish tastes good — or at least just as good. Still, better catfish war than hot war.

His company has had to adjust. It’s exporting more to China, but the Chinese taste is only for large fillets. Europe likes medium-sized fillets. By contrast, the United States, ever the omnivore, “is a great market because it likes large, medium-sized and small fillets!”

Inside, the fish are killed by workers with a single throat-cutting thrust of the knife through the gill. Blood drips down a stainless-steel chute into a pool. The fish are cleaned. Another team of men in brown numbered uniforms does the initial filleting, knives sweeping in practiced incisions through the pale pink flesh to leave, in seconds, a carcass of head and bone. The men pile the fillets in blue trays and add a disc with their number; pay depends on productivity.

Now it is the turn of blue-uniformed women, whose work is more skilled. It is easy to tear the fillet. With precision and speed, they nip, they scrape, they flip, they excise — until every blemish is gone. The factory floor is a sea of young women and quicksilver knife movements. Fillets are then sorted by size and color, before freezing. From live fish to the frozen fillet ready to be boxed and exported to Western or Chinese supermarkets, no more than an hour elapses.

Outside, in a cafe, I met a worker, Nguyen Van Tu, from the adjacent Hung Ca fish factory and exporter. He said he works a 12-hour shift, six days a week, with one-hour lunch break, and two 20-minute pauses. He earns about $220 a month. Next time I eat a frozen fish fillet in New York or blackened catfish in Louisiana I’ll think of his smiling face, his low pay, flashing knives in female hands, fish wars versus shooting wars, the peace of the watery Delta, and those graves in the glistening rice paddies.

Now here’s Prof. Krugman:

Two impossible things happened to the U.S. economy over the course of the past year — or at least they were supposed to be impossible, according to the ideology that dominates half our political spectrum. First, remember how Obamacare was supposed to be a gigantic job killer? Well, in the first year of the Affordable Care Act’s full implementation, the U.S. economy as a whole added 3.3 million jobs — the biggest gain since the 1990s. Second, half a million of those jobs were added in California, which has taken the lead in job creation away from Texas.

Were President Obama’s policies the cause of national job growth? Did Jerry Brown — the tax-raising, Obamacare-embracing governor of California — engineer his state’s boom? No, and few liberals would claim otherwise. What we’ve been seeing at both the national and the state level is mainly a natural process of recovery as the economy finally starts to heal from the housing and debt bubbles of the Bush years.

But recent job growth, nonetheless, has big political implications — implications so disturbing to many on the right that they are in frantic denial, claiming that the recovery is somehow bogus. Why can’t they handle the good news? The answer actually comes on three levels: Obama Derangement Syndrome, or O.D.S.; Reaganolatry; and the confidence con.

Not much need be said about O.D.S. It is, by now, a fixed idea on the right that this president is both evil and incompetent, that everything touched by the atheist Islamic Marxist Kenyan Democrat — mostly that last item — must go terribly wrong. When good news arrives about the budget, or the economy, or Obamacare — which is, by the way, rapidly reducing the number of uninsured while costing much less than expected — it must be denied.

At a deeper level, modern conservative ideology utterly depends on the proposition that conservatives, and only they, possess the secret key to prosperity. As a result, you often have politicians on the right making claims like this one, from Senator Rand Paul: “When is the last time in our country we created millions of jobs? It was under Ronald Reagan.”

Actually, if creating “millions of jobs” means adding two million or more jobs in a given year, we’ve done that 13 times since Reagan left office: eight times under Bill Clinton, twice under George W. Bush, and three times, so far, under Barack Obama. But who’s counting?

Still, don’t liberals have similar delusions? Not really. The economy added 23 million jobs under Clinton, compared with 16 million under Reagan, but there’s nothing on the left comparable to the cult of the Blessed Ronald. That’s because liberals don’t need to claim that their policies will produce spectacular growth. All they need to claim is feasibility: that we can do things like, say, guaranteeing health insurance to everyone without killing the economy. Conservatives, on the other hand, want to block such things and, instead, to cut taxes on the rich and slash aid to the less fortunate. So they must claim both that liberal policies are job killers and that being nice to the rich is a magic elixir.

Which brings us to the last point: the confidence con.

One enduring puzzle of political economy is why business interests so often oppose policies to fight unemployment. After all, boosting the economy with expansionary monetary and fiscal policy is good for profits as well as wages, yet many wealthy individuals and business leaders demand tight money and austerity instead.

As a number of observers have pointed out, however, for big businesses to admit that government policies can create jobs would be to devalue one of their favorite political arguments — the claim that to achieve prosperity politicians must preserve business confidence, among other things, by refraining from any criticism of what businesspeople do.

In the case of the Obama economy, this kind of thinking led to what I like to call the “Ma! He’s looking at me funny!” theory of sluggish recovery. By this I mean the insistence that recovery wasn’t being held back by objective factors like spending cuts and debt overhang, but rather by the corporate elite’s hurt feelings after Mr. Obama suggested that some bankers behaved badly and some executives might be overpaid. Who knew that moguls and tycoons were such sensitive souls? In any case, however, that theory is unsustainable in the face of a recovery that has finally started to deliver big job gains, even if it should have happened sooner.

So, as I said at the beginning, the fact that we’re now seeing mornings in blue America — solid job growth both at the national level and in states that have defied the right’s tax-cutting, deregulatory orthodoxy — is a big problem for conservatives. Although they would never admit it, events have proved their most cherished beliefs wrong.

Krugman’s blog, 3/25/15

March 26, 2015

There were three posts yesterday.  The first was “Anti-Keynesian Delusions:”

I forgot to congratulate Mark Thoma on his tenth blogoversary, so let me do that now. It’s hard to imagine what current economic debate would look like without the incredible job Mark does in assembling and discussing the most important new work, every day; for sure it would be vastly impoverished. Live long and prosper, Mark.

Today Mark includes a link to one of his own columns, a characteristically polite and cool-headed response to the latest salvo from David K. Levine. Brad DeLong has also weighed in, less politely.

I’d like to weigh in with a more general piece of impoliteness, and note a strong empirical regularity in this whole area. Namely, whenever someone steps up to declare that Keynesian economics is logically and empirically flawed, has been proved wrong and refuted, you know what comes next: a series of logical and empirical howlers — crude errors of reasoning, assertions of fact that can be checked and rejected in a minute or two.

Levine doesn’t disappoint. Right at the beginning of the example he claims refutes Keynesian thinking, he says,

Now suppose that the phone guy suddenly decides he doesn’t like tattoos enough to be bothered building a phone.

OK, stop right there. That’s an adverse supply shock, and no Keynesian claims that demand-side policies can cure the economy from the effects of such shocks. If you have a harvest failure, deficit spending can’t put the crops back in the fields. But that’s not what happened to the world economy in 2008, or in 1930; productive capacity was unimpaired, as was the willingness to work, so what we were looking at was something quite different — a demand shock, according to most economists, and everything we’ve seen is consistent with this view.

Actually, it’s even funnier than that: as Nick Rowe points out, Levine has in effect made phones the medium of exchange, so that he’s actually modeling something like a contractionary monetary policy!

And by the way: if you want a simple, homely example of how demand shocks can happen and cause unemployment, there is the baby-sitting coop.

So it’s the usual.

Meanwhile, on the empirical side: Anti-Keynesians like Levine are actually anti-monetarists too, although they may not realize it; their whole beef is with the idea that demand shortfalls can ever be a problem, and that pumping up demand in any way, monetary or fiscal, can ever be helpful. And they invariably live under a strange delusion: that the empirical evidence supports their position. This was never really true, and in fact the opposite has been the case for more than 30 years.

I could give you a lot of direct evidence, but let me instead just cite a guy named Chris Sims, who I think got some kind of prize for statistical work on economic fluctuations. Here’s his prize lecture, in which he describes his results:

The effects of monetary policy identified this way were quite plausible: a monetary contraction raised interest rates, reduced output and investment, reduced the money stock, and slowly decreased prices … This pattern of results turned out to be robust in a great deal of subse- quent research by others that considered data from other countries and time periods and used a variety of other approaches

Here’s how I see it: by any normal set of intellectual criteria, this debate should have been over 25 years ago. The evidence that monetary shocks have real effects was and is overwhelming, and it’s very difficult to write down a model in which this is true but in which fiscal policy is never effective at least on some occasions. The spectacular success of liquidity-trap predictions these past 6 years is just icing on the cake.

To understand why anti-Keynesian delusions persist, then, we need to turn to other social sciences, and try to make sense of the sociological forces that keep these delusions alive.

Yesterday’s second post was “Eurobounce:”

A lot of the recent data coming in show a substantial acceleration in European growth. And you know what will be coming next: claims that this (a) vindicates austerity and (b) shows that there is no reason to worry about Japanification.

Time, then, for some prophylaxis.

First, on austerity: one of the truly amazing and depressing things about the whole fiscal policy debate is the apparent inability of large numbers of supposedly sophisticated commentators to appreciate the distinction between levels and rates of change. Maybe it would help to note that the US economy grew 10.8 percent — that’s right, 10.8 percent — in 1934, but nobody would claim that the Great Depression was over? Nah, it won’t help at all.

Still, for what it’s worth: think of Keynesian economics as asserting that

GDP = multiplier*government spending + other stuff

Then if we’re looking at growth

Change in GDP = multiplier*Change in government spending + change in other stuff

Now look at euro area fiscal policy, as estimated by the IMF:

There was a major tightening after the Greek crisis struck and Germany reverted to type, but there hasn’t been much further tightening recently. So there’s nothing especially troubling about a return to growth.

What about Japanification? There seems to be a widespread misperception that Japan spent its lost decade in a continual downward spiral, with never an uptick. Not so. There was, in fact, a return to growth in the mid-1990s that lasted until contractionary fiscal policy and a banking crisis led to recession, and another period of growth under Koizumi that, however, wasn’t enough to get Japan out of deflation:

You really don’t want to take a short-run rise in growth as a sign that secular stagnation is no longer a worry.

Right now, I’d argue that Europe is benefiting a lot from the weaker euro, which is coinciding with a de facto, if unacknowledged, pause in austerity. But the downdrafts — shrinking working-age population, a single currency in a distinctly non-optimum currency area, and the intellectual rigidity of too many policymakers — remain.

The last post yesterday was “Hook, Line, and Thinker (Trivial):”

Apropos of nothing much, the British magazine Prospect has done a poll to identify the world’s leading thinkers. Some very odd characters there.

A small complaint: if you’re going to use photos at all, maybe use photos from the past couple of years, not way back when?


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