Krugman’s blog, 10/6/15

October 7, 2015

There were three posts yesterday.  The first was “Influenza Means Influence:”

So is this why I’ve just had such an awful week? I finally saw a specialist, and said yes to drugs; my ears are still partially clogged, but I can hear again, sort of.

Anyway, like all such lists, it’s kind of curious. I’m one rung above the pope, and several rungs above Christine Lagarde. And where’s Larry Summers? But I’ll take it.

Yesterday’s second post was “Learning Nothing in Europe:”

But not in Germany.
But not in Germany

If you want to feel despair about Europe’s prospects, first look at this recent presentation from Peter Praet, the chief economist of the ECB, then read this op-ed from the chief economist of the German finance ministry. Praet offers a portrait of a continent crippled by inadequate demand, with a strong deflationary downdraft; Ludger Schuknecht declares that we need to stop stimulus and reduce debt. In effect, he says that everyone should be like Germany, and run a huge trade surplus.

If there’s one thing we surely should have learned from the experience of the past seven years, it’s that adding up really matters. My spending is your income, your spending is my income, so if everyone slashes spending and tries to pay down debt at the same time, incomes fall and debt problems probably get worse. Europe’s debt to GDP ratio isn’t rising at this point because it’s spending more than it did during the good years; the overall structural deficit of the euro area is now very small, much lower than it was in 2005-2007, but low growth and inflation mean that GDP is going nowhere.

But German officials see this all as a tale of their virtue versus everyone else’s lack thereof. This means that nobody will change course aside from the ECB, which is in the process of finding out just how limited monetary policy really is when interest rates are already very low and fiscal policy is pulling in the wrong direction.

The last post yesterday was “TPP Take Two:”

I’ve described myself as a lukewarm opponent of the Trans-Pacific Partnership; although I don’t share the intense dislike of many progressives, I’ve seen it as an agreement not really so much about trade as about strengthening intellectual property monopolies and corporate clout in dispute settlement — both arguably bad things, not good, even from an efficiency standpoint. But the WH is telling me that the agreement just reached is significantly different from what we were hearing before, and the angry reaction of industry and Republicans seems to confirm that.

What I know so far: pharma is mad because the extension of property rights in biologics is much shorter than it wanted, tobacco is mad because it has been carved out of the dispute settlement deal, and Rs in general are mad because the labor protection stuff is stronger than expected. All of these are good things from my point of view. I’ll need to do much more homework once the details are clearer.

But it’s interesting that what we’re seeing so far is a harsh backlash from the right against these improvements. I find myself thinking of Grossman and Helpman’s work on the political economy of free trade agreements, in which they conclude, based on a highly stylized but nonetheless interesting model of special interest politics, that

An FTA is most likely to politically viable exactly when it would be socially harmful.

The TPP looks better than it did, which infuriates much of Congress.

Friedman and Bruni

October 7, 2015

In “Stuff Happens to the Environment, Like Climate Change” Mr. Friedman says we’re wearing down the planet, and the next president, even a Republican, will be faced with that reality.  Mr. Bruni, in “Carly Fiorina’s Shameless Promotion,” says the rising presidential candidate burns with conviction — when the cause is herself.  Here’s TMOW:

With both China and India having just announced major plans to curb their carbon emissions, the sound you hear is a tipping point tipping. Heading into the United Nations climate summit meeting in Paris in December, all the world’s largest industrial economies are now taking climate change more seriously. This includes the United States — except for some of the knuckleheads running to be our next president, which is not a small problem.

When, at CNN’s G.O.P. presidential debate, the moderator Jake Tapper read statements from Ronald Reagan’s secretary of state George Shultz (who drives an electric car powered by solar panels on his home’s roof) about how Reagan urged industry to proactively address ozone depletion, and why Shultz believes we should be just as proactive today in dealing with climate change, he got the usual know-nothing responses.

Senator Marco Rubio said, “We’re not going to destroy our economy the way the left-wing government that we are under now wants to do,” while Gov. Chris Christie opined of Shultz, “Listen, everybody makes a mistake every once in a while.”

They sure do, and it’s not Shultz, who has been wisely and courageously telling Republicans that the conservative thing to do now is to take out some insurance against climate change, because if it really gets rocking the results could be “catastrophic.” Hurricane Sandy — likely amplified by warmer ocean waters — caused over $36 billion in damage to Christie’s own state, New Jersey, in 2012.

But hey, stuff just happens.

There was a time when we could tolerate this kind of dumb-as-we-wanna-be thinking. But it’s over. The next eight years will be critical for the world’s climate and ecosystems, and if you vote for a climate skeptic for president, you’d better talk to your kids first, because you will have to answer to them later.

If you have time to read one book on this subject, I highly recommend the new “Big World, Small Planet,” by Johan Rockstrom, director of the Stockholm Resilience Center, and Mattias Klum, whose stunning photographs of ecosystem disruptions reinforce the urgency of the moment.

Rockstrom begins his argument with a reminder that for most of the earth’s 4.5-billion-year history its climate was not very hospitable to human beings, as it oscillated between “punishing ice ages and lush warm periods” that locked humanity into seminomadic lifestyles.

It’s only been in the last 10,000 years that we have enjoyed the stable climate conditions allowing civilizations to develop based on agriculture that could support towns and cities. This period, known as the Holocene, was an “almost miraculously stable and warm interglacial equilibrium, which is the only state of the planet we know for sure can support the modern world as we know it.” It finally gave us “a stable equilibrium of forests, savannahs, coral reefs, grasslands, fish, mammals, bacteria, air quality, ice cover, temperature, fresh water availability and productive soils.”

It “is our Eden,” Rockstrom added, and now “we are threatening to push earth out of this sweet spot,” starting in the mid-1950s, when the Industrial Revolution reached most of the rest of the globe and populations and middle classes exploded. That triggered “the great acceleration” of industrial and farming growth, which has put all of earth’s ecosystems under stress. The impacts now are obvious: “climate change, chemical pollution, air pollution, land and water degradation … and the massive loss of species and habitats.”

The good news is that in this period many more of the world’s have-nots have escaped from poverty. They’ve joined the party. The bad news, says Rockstrom, is that “the old party” cannot go on as it did. The earth is very good at finding ways to adapt to stress: oceans and forest absorb the extra CO2; ecosystems like the Amazon adapt to deforestation and still provide rain and fresh water; the Arctic ice shrinks but does not disappear. But eventually we can exhaust the planet’s adaptive capacities.

We’re sitting on these planetary boundaries right now, argues Rockstrom, and if these systems flip from one stable state to another — if the Amazon tips into a savannah, if the Arctic loses its ice cover and instead of reflecting the sun’s rays starts absorbing them in water, if the glaciers all melt and cannot feed the rivers — nature will be fine, but we will not be.

“The planet has demonstrated an impressive capacity to maintain its balance, using every trick in its bag to stay in the current state,” explains Rockstrom. But there are more and more signs that we may have reached a saturation point. Forests show the first signs of absorbing less carbon. The oceans are rapidly acidifying as they absorb more CO2, harming fish and coral. Global average temperatures keep rising.

This is what will greet the next president — a resilient planet that could once absorb our excesses at seemingly no cost to us, suddenly tipping into a saturated planet, sending us “daily invoices” that will get bigger each year. When nature goes against you, watch out.

“For the first time, we need to be clever,” says Rockstrom, “and rise to a crisis before it happens,” before we cross nature’s tipping points. Later will be too late. We elect a president who ignores this science at our peril.

Now here’s Mr. Bruni:

Carly Fiorina gives one heck of a speech.

That was my first impression, a positive one, when I caught up with her in Sacramento in 2010 to chronicle her bid for the Senate.

She had focus, urgency and a brimming arsenal of barbs, just as she does now. She liked to mention an incident in which Senator Barbara Boxer, the incumbent Democrat, once upbraided an Army bigwig for calling her “Ma’am” rather than “Senator,” and she told Californians that if they gave her Boxer’s job: “You may call me ‘Ma’am.’ You may call me ‘Senator.’ You may call me ‘Carly.’ You may call me, ‘Hey, you, remember, you work for me.’ ”

She presented herself as a woman of the people, at our service.

But that wasn’t my impression of her after about a week of attending her campaign events, riding around California with her and interviewing her about her drive and her desires.

Even more so than is usually the case, the candidacy seemed to be all about the candidate. She yearned to silence forever all of the naysaying about her stewardship of Hewlett-Packard, to be validated by voters, to have the final say.

She failed, and she failed big, losing to Boxer by 10 points.

Her response? To seek a promotion. She’s running for president.

Give her credit for dauntlessness.

But look closely and you see its ugly sibling, shamelessness, not just in the way she treats facts but in the way she treats others.

The Washington Post just published a humiliating account of her sluggishness to pay bills from that 2010 campaign. That she stiffed several vendors until January 2015 wasn’t really the damning part: That’s sadly common in politics.

But The Post reported that one of the people stiffed was the widow of the pollster Joe Shumate, who dropped dead of a heart attack, “surrounded by sheets of polling data” for Fiorina, shortly before Election Day in 2010. Fiorina mourned him as “the heart and soul” of her operation, then neglected for years to fork over at least $30,000 that she owed him.

Martin Wilson, who managed that campaign, told The Post that he occasionally implored her to settle up. “She just wouldn’t,” he said.

It’s striking that he’d tattle like that on Fiorina. She apparently doesn’t leave much love in her wake. Reuters interviewed about 30 people who worked for her in 2010, 12 of whom said: Never again. “I’d rather go to Iraq,” one unidentified campaign aide groused.

And The Daily Beast examined Fiorina’s recent campaign-finance filings and noticed that almost no one at Hewlett-Packard had given more than $200 — the minimum amount for which a donor must be identified — to her presidential quest.

She has her loyalists, including some glass-half-full revisionists. Consider this from the Post story: “Her supporters cautioned that little could be gleaned from her California campaign. They maintain that Fiorina’s corporate experience is more akin to managing a presidential campaign than a bid for office in one of the nation’s most liberal states.”

In other words, the Boxer contest was small potatoes — peculiar ones, too — and a leader of Fiorina’s vision and scope is suited only to a giant spud.

For someone so caustic about others’ shortcomings, she’s awfully cavalier about her own.

“It was a mistake,” she said to me in 2010 about her failure to vote in elections in New Jersey, where she’d once lived for 10 years, and in more than half of the 18 elections in California in which she could have participated.

Then she qualified that confession, explaining that she hadn’t been “running my life to seek political office,” as if such a goal were the only reason to show up at the polls.

In the cause of others, she’s not so quick, exuberant or deft. She campaigned as a surrogate for John McCain in the 2008 presidential election but had to be sidelined after saying that neither McCain nor Sarah Palin, his running mate, could run a big corporation. It was a fascinating lapse, in that she was denying them the chops to do precisely what she had done (albeit poorly, by many measures).

In her calculus, the corporate world qualified her for governing, but government experience didn’t qualify others for the corporate world. What self-flattering, self-serving arithmetic.

It has been correctly observed that her ascent in the polls, coupled with Donald Trump’s enduringly strong showing, reflects the currency of political outsiders right now.

But it also reflects the potency of an insatiable hunger for approbation and an unshakable belief in your genius. She and Trump share that, and of course she gives one heck of a speech. She thrills to her own voice.

Brooks and Nocera

October 6, 2015

In “The Big University” Bobo gurgles that many universities founded as religious institutions have needlessly dropped a key original goal: educating students’ emotional, spiritual and moral sides.  In the comments “allseriousnessaside” from Washington, DC had this to say:  “Sweeping generalizations based on no data, a premise that is entirely manufactured and a series of absurd and contradictory statements.”  In other words, the standard Bobo offering.  Mr. Nocera, in “The Case for Compromise,” says a chemical-safety bill in the Senate shows the wisdom of “good, old-fashioned legislating.”  Here’s Bobo:

Many American universities were founded as religious institutions, explicitly designed to cultivate their students’ spiritual and moral natures. But over the course of the 20th century they became officially or effectively secular.

Religious rituals like mandatory chapel services were dropped. Academic research and teaching replaced character formation at the core of the university’s mission.

Administrators and professors dropped spiritual language and moral prescription either because they didn’t know what to say or because they didn’t want to alienate any part of their diversifying constituencies. The humanities departments became less important, while parents ratcheted up the pressure for career training.

Universities are more professional and glittering than ever, but in some ways there is emptiness deep down. Students are taught how to do things, but many are not forced to reflect on why they should do them or what we are here for. They are given many career options, but they are on their own when it comes to developing criteria to determine which vocation would lead to the fullest life.

But things are changing. On almost every campus faculty members and administrators are trying to stem the careerist tide and to widen the system’s narrow definition of achievement. Institutes are popping up — with interdisciplinary humanities programs and even meditation centers — designed to cultivate the whole student: the emotional, spiritual and moral sides and not just the intellectual.

Technology is also forcing change. Online courses make the transmission of information a commodity. If colleges are going to justify themselves, they are going to have to thrive at those things that require physical proximity. That includes moral and spiritual development. Very few of us cultivate our souls as hermits. We do it through small groups and relationships and in social contexts.

In short, for the past many decades colleges narrowed down to focus on professional academic disciplines, but now there are a series of forces leading them to widen out so that they leave a mark on the full human being.

The trick is to find a way to talk about moral and spiritual things while respecting diversity. Universities might do that by taking responsibility for four important tasks.

First, reveal moral options. We’re the inheritors of an array of moral traditions. There’s the Greek tradition emphasizing honor, glory and courage, the Jewish tradition emphasizing justice and law, the Christian tradition emphasizing surrender and grace, the scientific tradition emphasizing reason and logic, and so on.

Colleges can insist that students at least become familiar with these different moral ecologies. Then it’s up to the students to figure out which one or which combination is best to live by.

Second, foster transcendent experiences. If a student spends four years in regular and concentrated contact with beauty — with poetry or music, extended time in a cathedral, serving a child with Down syndrome, waking up with loving friends on a mountain — there’s a good chance something transcendent and imagination-altering will happen.

Third, investigate current loves and teach new things to love. On her great blog, Brain Pickings, Maria Popova quotes a passage from Nietzsche on how to find your identity: “Let the young soul survey its own life with a view of the following question: ‘What have you truly loved thus far? What has ever uplifted your soul, what has dominated and delighted it at the same time?’ ” Line up these revered objects in a row, Nietzsche says, and they will reveal your fundamental self.

To lead a full future life, meanwhile, students have to find new things to love: a field of interest, an activity, a spouse, community, philosophy or faith. College is about exposing students to many things and creating an aphrodisiac atmosphere so that they might fall in lifelong love with a few.

Fourth, apply the humanities. The social sciences are not shy about applying their disciplines to real life. But literary critics, philosophers and art historians are shy about applying their knowledge to real life because it might seem too Oprahesque or self-helpy. They are afraid of being prescriptive because they idolize individual choice.

But the great works of art and literature have a lot to say on how to tackle the concrete challenges of living, like how to escape the chains of public opinion, how to cope with grief or how to build loving friendships. Instead of organizing classes around academic concepts — 19th-century French literature — more could be organized around the concrete challenges students will face in the first decade after graduation.

It’s tough to know how much philosophical instruction anybody can absorb at age 20, before most of life has happened, but seeds can be planted. Universities could more intentionally provide those enchanted goods that the marketplace doesn’t offer. If that happens, the future of the university will be found in its original moral and spiritual mission, but secularized, and in an open and aspiring way.

Lordy, but he’s tiresome.  Here’s Mr. Nocera:

In March, Moms Clean Air Force, a grass-roots environmental group co-founded by Dominique Browning, was tossed out of a coalition called Safer Chemicals, Healthy Families. Its heresy was supporting a Senate bill that would constitute the first serious revision in nearly 40 years of the woefully outdated Toxic Substances Control Act.

You see, the bill — officially the Frank R. Lautenberg Chemical Safety for the 21st Century Act — is the result of (shudder!) compromise. Those compromises were originally hammered out by Lautenberg, a liberal Democratic senator, and David Vitter, a right-wing Republican senator allied with the chemical industry. The two men co-sponsored a bill in May 2013. Then Lautenberg died.

Senator Tom Udall, another Democrat, picked up where Lautenberg left off, and over the next two-plus years, he and Vitter continued to improve the bill while also making compromises to gain additional Senate support. In just the last week, the bipartisan bill, which the Senate is expected to vote on soon, has gained enough co-sponsors to be filibuster-proof.

In this era of polarized politics, it is something of a miracle: “an example of good, old-fashioned legislating,” Udall told me.

Browning, an old friend of mine, describes herself as an environmental pragmatist. She concluded that whatever the flaws in the bill, it was a vast improvement over the status quo — a status quo in which the Environmental Protection Agency can’t even regulate formaldehyde. She and her brain trust decided that their 570,000-member group would work to improve the bill instead of oppose it. This is also the position taken by the ever-pragmatic Fred Krupp of the Environmental Defense Fund, with which Moms Clean Air Force is affiliated.

The Safer Chemicals, Healthy Families coalition, however, which includes such major environmental groups as the Natural Resources Defense Council and Earthjustice, opposed the Senate bill. In a blog post, Andy Igrejas, who heads the coalition, listed provisions that he described, essentially, as gifts to the chemical industry. His coalition had thrown out E.D.F., a founding member, over the issue in 2013; now it was Moms Clean Air Force’s turn.

“They were supporting a Senate bill everyone else opposed,” Igrejas said when I asked him why. “You couldn’t do that and stay in the coalition.” He added, “At every point along the way, Fred [Krupp] would say, ‘You can’t let the perfect be the enemy of the good. Blah, blah, blah.’”

Igrejas believes that the bill, which his coalition still opposes, despite the many improvements, is better only because he and others came out so strongly against it. (I should note that the coalition supports a much narrower House bill.) The E.D.F.-Moms Clean Air Force view is that the bill got better because they were willing to roll up their sleeves and make common cause with conservative senators like Vitter and chemical industry lobbyists.

“We have always been clear that the way to get this done is to work in a bipartisan manner to support both Democrats and Republicans who were trying to solve the problem of the old law not working,” said Richard Denison, E.D.F.’s point person on the chemical bill. “And while lending our support, we also asked for improvements.” Which they got.

The bill doesn’t give environmentalists everything they want. There are thousands of unregulated chemicals, yet the bill calls for the E.P.A. to look at only 25 during the first five years after the bill becomes law. But it hardly gives the industry everything it wants, either: Chemicals that were once unregulated would now face the prospect of serious restrictions on their use.

The biggest issue is around something called “pre-emption” — meaning that states will not be able to write laws about certain chemicals if the E.P.A. starts a formal review of that chemical. Because some states, like California, are much tougher on chemicals than the federal government has been, many environmentalists don’t want any federal pre-emption. But the chemical industry, tired of dealing with different state standards, insisted on it.

The Senate bill offers a reasonable compromise that says that if the E.P.A. doesn’t act within a certain time frame, states can act on their own. This provision, notes Denison, is “an important backstop” that would prevent companies from seeking to delay E.P.A. action as long as possible.

“I could sit in my office and write a perfect bill, but it wouldn’t be one that could become law in the United States,” said Krupp. “The question isn’t whether it is perfect. The question is whether it is a really good bill. We think it is.”

Browning had another point: “If you live in California, then of course you don’t want pre-emption. But what about the rest of us poor moms who aren’t protected by serious state laws?” For them, the Senate bill’s compromises would improve their lives.

Proving, I think, that the perfect really is the enemy of the good.

Blah, blah blah notwithstanding.

Blow, Cohen and Krugman

October 5, 2015

In “On Guns, Fear Is Winning” Mr. Blow says the latest mass shooting should prod Americans into action, and not further into a kind of numbness.  Mr. Cohen considers “Rhodes and the Balanced Life” and says the fury of attempts to draw neat ethno-national-religious lines is matched only by its futility.  Prof. Krugman, in “Enemies of the Sun,” says the defenders of Old Energy try their best to ignore technologies which are increasingly viable.  Here’s Mr. Blow:

An exasperated — and frustrated — President Obama said of the gun massacre last week in Oregon:

“Somehow this has become routine. The reporting is routine. My response here at this podium ends up being routine. The conversation in the aftermath of it. We have become numb to this.”

Obama continued:

“What’s also routine is that somebody, somewhere, will comment and say ‘Obama politicized this issue.’ Well this is something we should politicize. It is relevant to our common life together, to the body politic.”

And as if on cue, leading Republican candidates came out against more gun restrictions.

Speaking Friday in South Carolina, Jeb Bush resisted calls for greater gun restrictions, saying: “We’re in a difficult time in our country and I don’t think more government is necessarily the answer to this. I think we need to reconnect ourselves with everybody else. It’s just very sad to see.”

Bush continued: “But I resist the notion — and I had this challenge as governor — because we had — look, stuff happens, there’s always a crisis. And the impulse is always to do something and it’s not necessarily the right thing to do.”

Stuff happens? Really? That stuff is the continued gun slaughter of Americans by other Americans. This “stuff” is a scourge.

But Obama is right: We have grown numb to this scourge, and even when politicians politicize gun violence, Washington can’t seem to muster the political will to make even the most modest changes to our federal gun laws.

This has to change. We have to start the process of curtailing our gun culture, and I don’t say that as an anti-gun absolutist, but as a person who grew up around guns, and even owned a gun.

When I was growing up in the rural South, boys had rifles. There was nothing odd about it. Every boy in wood shop made a gun rack.

A rifle wasn’t a weapon as much as a tool. People hunted. They raised and slaughtered food animals. Rifles were used to keep the snakes out of the grass and the vermin out of the garden (though surely there must have been more humane ways to do this). They were poor folks’s fireworks on special occasions like New Year’s.

And they were a guard against intruders — though those intruders were more an idea than a reality in those parts — who might threaten life or property. Law enforcement officials were scarce, and 911 was nonexistent.

But that seems to me another time and place. There didn’t exist the fear and paranoia that grips so many now when it comes to gun ownership. And there wasn’t the fetish for military-style weapons and armor-piercing bullets.

And as I have mentioned before, my oldest brother is a gun collector. He is a regular at the gun shows, buying and selling, but even he talks about a sense of unease at those shows as people engage in what can only be described as panic buying and ammunition hoarding.

These people are afraid. They are afraid of a time conservative media and the gun industry has convinced them is coming when sales of weapons, particularly some types of weapons, will be restricted or forbidden. They are afraid of growing populations of people they don’t trust. Some are even afraid that a time will come when they will have to defend themselves against the government itself.

Unfortunately this fear is winning, as many Americans think crime is up,even though it’s down. This fear is winning as massacres, and the gun violence discussions that follow, don’t lead to fewer gun sales, but more. This fear is winning, following continued violence by antigovernment militias and hate groups.

Fear is winning as there are now close to as many guns in this country as people — with the gun industry producing millions more each year.

We have reached our supersaturation point as a culture. And with that many guns in circulation, too many will invariably make their way into the hands of people with ill intent.

But for how long we are willing to let fear overpower reason? We have to decide if the positives of having a gun culture outweigh the negatives.

Do we want a society in which some 33,000 people in America lose their lives to gun violence each year and more than twice as many are injured by guns? Do we want a society in which mass shootings are routine?

If we do, well, we have it. But if we don’t, and I believe that most of us don’t, then we have to start thinking about ways to not only keep guns out of the wrong hands, but also about how we slow or reverse the proliferation of guns.

If there is one thing that my brother’s collection has taught me, it is that guns outlive their owners. These hundreds of millions of guns will most likely be part of our society for decades, and some even for centuries, regardless of what laws we pass now. That is something of which we should truly be afraid.

Next up we have Mr. Cohen, writing from Rhodes, Greece:

Gazing at Rhodes under a clear blue sky it occurred to me that the fury of attempts to draw neat ethno-national-religious lines through realities of mingling is matched only by its futility.

I climbed a clock tower. Below me, washed by the wind, lay the city of Rhodes: the castle of the Roman Catholic Order of the Knights of St. John, who for more than two centuries made Rhodes the headquarters of their fight for the Holy Land; the minarets of the mosques built by the Ottomans who vanquished the Knights of Rhodes in 1522; the Square of the Jewish Martyrs, where a memorial recalls the Nazi extermination in 1944 of the Jews of Rhodes and Kos.

Christian, Muslim and Jew trod these smooth and luminous stones. They fought, yes. They also cohabited and allowed their respective places of worship to stand in close proximity. The Turkish consul saved dozens of Jews from the Germans.

Beyond the city walls lay the sea. I gazed across it, imagining Aleppo and the graveyard of Syria, not so far away. There, the struggle to draw new sectarian lines rages. Sunni and Shiites, Kurds and Alawites, outside powers and regime apparatchiks, do battle in the land of a murderous dictator and a barbarous jihadi cult.

The Jews of Syria are long gone and, now, many of the Christians, too. President Vladimir Putin thinks he can sort out whatever’s left of the country with muscle flexing from Mother Russia. Good luck to him in that charnel house.

The exhaustion of war will come to Syria, too. That much history teaches us. But, as with the 17th century European wars of religion, decades may be needed.

Syria has become the epicenter of every fanaticism spawned by religious schism, state repression and popular uprising in the name of representation. These forces, in a dysfunctional Middle East, will not soon abate. We do not contemplate contemporary events from some clock tower, but from within them, in the shallow cacophony of now.

Across Rhodes and other Greek islands you see the jigsaw of archeological fragments. It is arduous work piecing them together to recreate, say, a 2,000-year-old mosaic of an elated Eros riding a dolphin. The labor conjures away millennia as we recognize the urges of then — for beauty and order — as familiar. In the same way, archeologists of our own lives, we try to piece events together, discern a pattern in fragments, and draw coherence from confusion.

Then there are the days of magic, when everything is clear and bright, each moment an answer rather than a question.

I wandered down — past stray cats and dry leaves skittering across shiny stones and children playing flimsy accordions — to the Synagogue Kahal Kadosh Shalom. It was closed. This puzzled me. I’d been on a cruise ship and lost track of time.

Reading the sign outside, I thought the synagogue should be open. Before Mel Rosenberg and Benny Duanis, visiting from Israel, reminded me that it was Saturday — the one day the sign said the synagogue was closed.

“Shabbat Shalom,” I said.

“Shabbat Shalom,” they said.

We got talking.

Strange to have a synagogue closed on Shabbat, but then there are only a few dozen Jews left on Rhodes. The synagogue serves partly as a museum. Tough to get a minyan, Rosenberg observed. When I told him I write about international affairs, he said, “Oy vey.”

Turned out Rosenberg had spent much of his life treating halitosis. He’d even invented a mouthwash still sold widely. “But after treating 10,000 people with bad breath, I decided it was enough,” he told me. Now he’s into children’s books. Talk about a salutary career switch.

We were happy to be chatting, out of the nearby Middle East, in a place where history has settled down.

From the synagogue it’s a short walk to the Square of the Jewish Martyrs. A monument commemorates the “1,604 Jewish martyrs of Rhodes and Kos who were murdered in the Nazi death camps.” They were rounded up in the summer of 1944, sent to Auschwitz in the last consignment of Greek Jews. How conscientious the Germans were, rounding up Jews in far-flung islands while the Third Reich disintegrated.

Fanaticism is most foul. Yeats captured its galvanizing illusions: “We had fed the heart on fantasies, The heart’s grown brutal from the fare.”

I got myself lost, inebriated by the beauty of the place. The air, the light and the temperature were perfect. Serendipitous paths of pleasure led to a shaded square. I sat down to a lunch of calamari. Afterward I got talking to a restaurant owner about Greek toasts — “To our health,” favored today, and “To the balanced life,” favored, he suggested, in ancient Greece.

It seemed apt to end this lovely interlude of church spires and minarets and Jewish memorials with the Socratic notion that humankind must choose the mean, avoid extremes, shun excess, and seek for balance.

And now here’s Prof. Krugman:

Does anyone remember the Cheney energy task force? Early in the George W. Bush administration, Vice President Dick Cheney released a report that was widely derided as a document written by and for Big Energy — because it was. The administration fought tooth and nail to keep the process by which the report was produced secret, but the list of people the task force met was eventually leaked, and it was exactly what you’d expect: a who’s who of energy industry executives, with environmental groups getting a chance to make their case only after the work was essentially done.

But here’s the thing: by the standards of today’s Republican Party, the Cheney report was enlightened, even left-leaning. One whole chapter was devoted to conservation, another to renewable energy. By contrast, recent speeches by Jeb Bush and Marco Rubio — still the most likely Republican presidential nominees — barely address either topic. When it comes to energy policy, the G.O.P. has become fossilized. That is, it’s fossil fuels, and only fossil fuels, all the way.

And that’s a remarkable development, because while it’s true that fracking has led to a boom in U.S. gas and oil production, we’re also living in an era of spectacular progress in wind and solar energy. Why has the right become so hostile to technologies that look more and more like the wave of the future?

Before I try to answer that question, a few facts about renewable energy.

Wind and solar used to have a reputation as hippie-dippy stuff, not part of any serious approach to our energy future, and many people still have that perception. But it’s way out of date. The cost of wind power has dropped sharply – 30 percent in just the past five years, according to the International Energy Agency.

And solar panels are becoming cheaper and more efficient at a startling rate, reminiscent of the progress in microchips that underlies the information technology revolution. As a result, renewables account for essentially all recent growth in electricity generation capacity in advanced countries.

Furthermore, renewables have become major industries in their own right, employing several hundred thousand people in the United States. Employment in the solar industry alone now exceeds the number of coal miners, and solar is adding jobs even as coal declines.

So you might expect people like Mr. Rubio, who says he wants to “unleash our energy potential,” and Mr. Bush, who says he wants to “unleash the Energy Revolution,” to embrace wind and solar as engines of jobs and growth. But they don’t. Indeed, they’re less open-minded than Dick Cheney, which is quite an accomplishment. Why?

Part of the answer is surely that promotion of renewable energy is linked in many people’s minds with attempts to limit climate change — and climate denial has become a key part of conservative identity. The truth is that climate impact isn’t the only cost of burning fossil fuels, that fossil-fuel-associated pollutants like particulates and ozone inflict huge, measurable damage and are major reasons to support alternative energy. Furthermore, renewables are getting close to being cost-competitive even in the absence of special incentives (and don’t forget that oil and gas have long been subsidized by the tax code.) But the association with climate science evokes visceral hostility on the right.

Beyond that, you need to follow the money. We used to say that the G.O.P. was the party of Big Energy, but these days it would be more accurate to say that it’s the party of Old Energy. In the 2014 election cycle the oil and gas industry gave 87 percent of its political contributions to Republicans; for coal mining the figure was 96, that’s right, 96 percent. Meanwhile,alternative energy went 56 percent for Democrats.

And Old Energy is engaged in a systematic effort to blacken the image of renewable energy, one that closely resembles the way it has supported “experts” willing to help create a cloud of doubt about climate science. An example: Earlier this year Newsweek published an op-ed article purporting to show that the true cost of wind power was much higher than it seems. But it turned out that the article contained major factual errors, and its author had failed to disclose that he was the Charles W. Koch professor at Utah State, and a fellow of a Koch- and ExxonMobil-backed think tank.

It’s unlikely, I guess, that energy policy will play as big a role as other issues, such as tax policy, in the 2016 election. But to the extent it does, you need to know what’s really at stake.

While politicians on the right may talk about encouraging innovation and promoting an energy revolution, they’re actually defenders of the energy status quo, part of a movement trying to block anything that might disrupt the reign of fossil fuels.

Krugman’s blog, 10/3/15

October 4, 2015

There were three posts yesterday.  The first was “

Janet Gornick, Branko Milanovic, and yours truly will be talking about LIS and what it does Tuesday, October 6th, 2015, 11:30 a.m. to 12:30 p.m. It will be in the Skylight Room at the Graduate Center, 34th and 5th Avenue. More information here.

I’ll bet that’s what happened to the late and much lamented B. Altman & Co.  Yesterday’s second post was “The Blanchard Touch:”

Steven Pearlstein has a very nice profile of Olivier Blanchard, a world-class macroeconomist who went on to become an even more towering figure as chief economist at the IMF. (Full disclosure: Olivier and I were in grad school together — we worked out the analytics of anticipated shocks on the lunchroom table together — then were colleagues at MIT for many years.) Under Olivier’s leadership the IMF research department became a huge source of important work that was both intellectually bracing and extremely relevant to policy. And I thought I might add a bit to the profile by talking briefly about one line of that work, the IMF’s ground-breaking empirical analysis of fiscal policy.

Back in early 2010 policymakers in Europe, and some politicians in the United States, went all in for the notion of “expansionary austerity”, the belief that slashing spending in a depressed economy would actually increase demand by inspiring confidence. This view was allegedly supported by statistical evidence, although it was fairly obvious that this evidence was weak, that the statistical procedures being used to identify episodes of austerity and stimulusdidn’t actually work. But the world badly needed a careful examination of the facts.

The IMF delivered, showing that the measures of austerity used in expansionary austerity papers were indeed badly flawed; the Fund used actual changes in policy, and found that austerity has indeed been contractionary.

How contractionary? Initial estimates suggested a multiplier of around 0.5, and that’s what the Fund went with in much of its policy analysis, even though many of us warned from the beginning that the multiplier was probably much larger with interest rates at the zero lower bound. When the slumps in debtor countries proved much deeper than forecast, Blanchard and colleagues, enormously to their credit, revisited the issue and concluded that they hadunderstated the adverse effects of fiscal contraction. This was a wonderful thing to see, especially in a world where almost nobody ever admits having been wrong about anything. And it came in time to have a useful effect on policy, if policymakers had listened, which they didn’t.

But doesn’t government spending crowd out investment, so that austerity may be bad in the short run but good in the long run? No, said the IMF in yet another crucial analysis, which said that fiscal policy appears to produce crowding in, not crowding out — an economy weakened by austerity will invest less, not more.

And there’s more, like the IMF’s use of interwar data to assess the chances for successful debt reduction via austerity. (Not good.)

I’m sure I’m missing stuff. But the point should be clear: the Blanchard era at the IMF was one of unprecedented data-driven analysis of policy problems, done with consummate skill.

The last post yesterday was “Puzzled by Peter Gourevitch:”

Peter Gourevitch has a followup on politics and economics that leaves me, if anything, more puzzled about what’s going on.

He notes that

The fundamental point is that the Federal Reserve is not a seminar. It is not only about being “serious” or “smart” or “finding the right theory” or getting the data right. It is about a political game of balancing between multiple forces of pressure: the people inside the Fed Committee; Congress and the president, who make appointments and set budget and powers; political parties aggregating various ideas and interests to capture political office; interest groups who lobby hard one way or another; the media which helps or hurts one side or another, markets which respond with their various forms of power, foreign governments and countries.

But how does that differ from what I’ve been saying? If you read the column that I think motivated his original piece, it was all about trying to understand the political economy of a debate in which the straight economics seems to give a clear answer, but the Fed doesn’t want to accept that answer. I asked who has an interest in tighter money, and has ways to influence monetary policy; my answer is that bankers have the motive and the means.

And when he says that “his ideas about this broader context enter his columns perhaps once every six months,” I guess I have to conclude that he isn’t reading the columns very carefully. I talk all the time about interests and political pressures; the “device of the Very Serious People” isn’t about stupidity, it’s about how political and social pressures induce conformity within the elite on certain economic views, even in the face of contrary evidence.

Am I facing another version of the caricature of the dumb economist who knows nothing beyond his models? Or is all this basically a complaint that I haven’t cited enough political science literature?

I remain quite puzzled.

Krugman’s blog, 10/2/15

October 3, 2015

There were two posts yesterday.  The first was “Why Bankers Want Rate Hikes:”

I’ve been arguing that a major source of the urge to hike interest rates despite low inflation is the self-interest of bankers, whose profits suffer in a low-rate environment. Right on cue, the BIS has a new paper documenting that relationship. The key argument:

The “retail deposits endowment effect” derives from the fact that bank deposits are typically priced as a markdown on market rates, typically reflecting some form of oligopolistic power and transaction services. If the markdown becomes smaller as interest rates decline, then monetary policy tightening will increase net interest income. The endowment effect was a big source of profits at high inflation rates and when competition within the banking sector and between banks and non-banks was very limited, such as in many countries in the late 1970s. It has again become quite prominent, but operating in reverse, post-crisis, as interest rates have become extraordinarily low: as the deposit rate cannot fall below zero, at least to any significant extent, the markdown is compressed when the policy rate is reduced to very low levels.

This is pretty much what I said in the linked piece. The chart shows the paper’s estimate of the effect of higher short-term rates on bank profits (the partial derivative); it’s strongly positive at low rates.

So it really is in bankers’ interest to demand monetary tightening, even when it’s inappropriate given the state of the economy.

The second post yesterday was “The Investment Accelerator and the Woes of the World:”

Jason Furman of the Council of Economic Advisers gave anilluminating talk on the sources of weak business investment, largely aimed at refuting the “Ma! He’s looking at me funny!” school, which attributes US economic weakness to the way the Obama administration has created uncertainty, or hurt businessmen’s feelings, or something. As Furman shows, it’s a global slowdown, very much consistent with the “accelerator” model in which the level of investment demand depends on the rate of growth of overall demand.

It seems worth pointing out, or actually reiterating, several implications of this analysis that go beyond Obama-bashing and its discontents.

First, if weak demand leads to lower investment, which it does, and if fiscal austerity is contractionary, which it is, then in a depressed economy deficit spending doesn’t crowd investment out — it crowds investment in. Or to be more explicit, austerity policies don’t release resources for private investment — they lead to lower private investment, and reduce future capacity in addition to causing present pain. Conversely, stimulus in times of depression supports, not hinders, long-run growth.

Second, secular stagnation — persistent difficulties in achieving full employment — is a real concern if potential growth is slowing due to a combination of demography and weak technological progress, which seems to be happening. Lower growth means lower investment demand, so getting the private sector to spend enough gets harder.

Finally, an extreme case of this arises in China, where the exhaustion of the reserve of underemployed peasants plus, perhaps, a slowdown in the rate of technological catchup means that the very high investment rates of the past can’t be sustained. Look out below.

Nocera, solo

October 3, 2015

Ms. Collins is off today.  In “O’Bannon’s Hollow Victory Over the N.C.A.A.” Mr. Nocera says the association is happy with a ruling that found it violated the law.  Here he is:

In the last 18 months, three government entities have concluded that theN.C.A.A. unfairly exploits college football and men’s basketball players.

First, in March 2014, Peter Sung Ohr, a regional director of the National Labor Relations Board, ruled that Northwestern University’s football team could form a union. Because the players work up to 50 hours a week on their sport, because their coach is effectively their boss and because their scholarships are a form of compensation, they are employees of the university, he said.

Five months later, a federal judge, Claudia Wilken, handed down her decision in the much-heralded O’Bannon case. After presiding over a three-week trial, she concluded that N.C.A.A. rules prohibiting college athletes from receiving cash compensation was a violation of the nation’s antitrust laws.

It was the first time any federal judge had held that the N.C.A.A.’s amateurism rules amounted to a form of price-fixing. Among other important things, she dismissed out of hand the association’s long-held claim that the Supreme Court had blessed its amateurism rules in the 1984 case N.C.A.A. v. Board of Regents — a case, I should note, the association lost.

And finally, on Wednesday, a panel of the United States Court of Appeals for the Ninth Circuit, in a 2-1 decision, affirmed much of Wilken’s ruling. The judge was correct to conclude “that the N.C.A.A.’s compensation rules were an unlawful restraint of trade,” the appeals panel wrote.

And yet here we are, with the dust settling on that appeals court decision, and the N.C.A.A. not only is still standing but has barely been dented. Although Michael Hausfeld, Ed O’Bannon’s lead lawyer, quickly declared victory — and having the N.C.A.A. deemed an antitrust violator surely is a victory — the N.C.A.A. wasn’t exactly perturbed by the outcome. In a conference call, Mark Emmert, the association’s president, pronounced himself “pleased.”

As well he should be. For in each of the three rulings, the arbiters blinked.

The labor board, after hearing Northwestern’s appeal of Ohr’s decision, declined to rule on whether the football players were employees, even refusing, in a remarkable act of cowardice, to assert jurisdiction. Its abdication was a defeat for the players; one potential avenue of redress is now cut off from them.

Judge Wilken, for her part, ordered the N.C.A.A. to allow colleges to pay the full “cost of attendance” to football and men’s basketball players — that is, the difference between a player’s scholarship and the additional $3,000 to $4,000 expense of going to college. But this was something the association had already agreed to do, after pressure from the powerful conference commissioners.

She also said that schools could put up to $5,000 in a trust fund that a player could have access to once he left college. In other words, after saying that schools and the N.C.A.A. had colluded illegally, she basically agreed to sanction the collusion, just at a higher amount.

The Ninth Circuit decision was perhaps the bitterest blow of all. After spending much of their decision explaining why the amateurism rules are not exempt from antitrust scrutiny, the two judges in the majority spent the latter part of the decision echoing the N.C.A.A.’s hoary rationale that amateurism is the sine qua non of college sports. They eliminated Wilken’s $5,000 trust fund remedy on the grounds that paying cash compensation not related to education would not “preserve amateurism.” (They allowed the cost of attendance payments, however.)

It took the court’s chief justice, Sidney Thomas, to expose the fallacy of the majority’s reasoning in a stinging dissent. “The N.C.A.A. insists that this multibillion dollar industry would be lost if the teenagers and young adults who play for these college teams earn one dollar above their cost of school attendance,” he wrote. “That is a difficult argument to swallow.”

It’s not hard to understand why the courts, even now, won’t propose the obvious remedy that their antitrust rulings would seem to require: allowing the players to be paid. Decades of propaganda about the centrality of amateurism have had an effect.

But these decision makers also clearly fear that college sports will be thrown into chaos if schools can pay players — and they don’t want to be blamed. The labor board practically said as much. Of course that is also what baseball owners once said about the prospect of free agency, and Olympic officials about allowing in professional athletes. Those fears turned out to be unfounded. The same will be true if college players are paid.

On Thursday, Wilken held a hearing in another case against the N.C.A.A., called the Jenkins case. That case is intended to take the N.C.A.A.’s antitrust violations to their logical conclusion; the lawyer leading it, Jeffrey Kessler, wants to see all N.C.A.A. wage restraints abolished.

At one point during the hearing, Wilken said that the Ninth Circuit’s O’Bannon ruling won’t necessarily have any effect on the Jenkins case. We’ll find out soon enough whether she means it.

Krugman’s blog, 10/1/15

October 2, 2015

There was one post yesterday, “Prisoners of Derp:”

Matt O’Brien recalls Michael Kinsley’s pronouncement, five years ago, that inflation was coming, and his doubling down two years later. Kinsley, it turns out, remains unrepentant and very annoyed at the people who said that he didn’t know what he was talking about.

It’s really quite sad. Kinsley is a very smart guy, who also happens to have given me my big break into journalism by hiring me to write for Slate. But now he’s a prisoner of derp.

I’ve seen this a number of times, mainly in economics, although it happens in other fields (especially climate science) too. Somebody with a reputation for cleverness looks at, say, macroeconomics, and imagines himself smart enough to weigh in — not realizing that there is a technical discipline here, and that he, well, has no idea what he’s talking about.

And he chooses the wrong side, for whatever reason. I think Kinsley was, more than anything else, motivated by that TNR/Slate “counterintuitive” thing — hey, Bernanke and Krugman act like experts, but I’ll show my cleverness by taking the opposite position. For someone like Cliff Asness, it was more likely affinity fraud: the inflationistas sounded like his sort of people, and he didn’t realize that they were peddling derp.

So what do you do when it becomes clear that you did, indeed, pick the wrong side? You could pull a Kocherlakota — admit that you were wrong, and revise your world view. But that’s very rare. The great majority of people who find themselves having made an indefensible argument respond as Kinsley has, by doubling down trying to defend the indefensible — and by getting angrier and angrier at the people who warned them that they were getting it wrong.


Brooks and Krugman

October 2, 2015

Bobo, drenched in flop sweat while he whistles past the graveyard, now casts his eye to Carly.  (The Donald has them all terrified…)  In “Carly Fiorina: The Marketing Genius” he gurgles that Carly Fiorina’s rise will quickly flame out unless she develops an understanding of middle-class challenges necessary to back up her impressive rhetoric.  “Marketing genius” and “impressive rhetoric…”  Wow.  Just wow.  Here’s what “gemli” in Boston had to say in the comments:  “What an interesting rhetorical exercise this is. Brooks has penned an anti-paean, or maybe it’s an odious ode, to Carly Fiorina. He highlights her the way ISIS might highlight an ancient temple, first focusing our attention on it and then blowing it to pieces.”  Prof. Krugman tells us that “Voodoo Never Dies” and that the tax cuts favored by every Republican candidate just happen to be exactly what rich donors want.  How surprising…  Here’s Bobo:

Carly Fiorina’s presidential campaign has been built on confrontational moments. With impregnable self-confidence and a fearless intensity, she has out-Trumped Trump and landed the most telling and quotable blows on Hillary Clinton.

In such a giant field of candidates what matters most is the ability to grab the spotlight. The era of YouTube and FaceTime video links has further magnified the power of a candidate who can create significant moments. Fiorina is great at it, perfectly suited to this environment.

She can go on MSNBC or some other outlet and bludgeon a host with a barrage of forcefully delivered bullet points, which then goes viral. When challenged on the accuracy or fairness of her assertions, she blasts straight through.

Clinton and Fiorina appeared back to back on “Meet the Press” recently. Clinton was challenged on the email issue and tried affably to defend her conduct. Fiorina was challenged on the existence of a Planned Parenthood video she claims to have seen.

In contrast to Clinton, Fiorina simply refused to adopt a defensive posture. She ignored the challenges and just hit Planned Parenthood harder. The factual issue sort of got lost in her torrent. She was stylistically indomitable even if she didn’t address the substance of the critique.

She is in tune with an electorate that is disgusted with the political class. In her stump speech she tells story after story in which she walks into this or that lion’s den and takes on the establishment. Some of her stories involve taking on the male establishment in corporate America. Others involve taking on the inside-the-Beltway crowd where she lives.

And yet for all her feisty outsider bravado, if you actually look at her views on substance and her behavior in the past, she is a completely conventional Republican. She was a strong supporter of John McCain and Mitt Romney, the last two nominees. A lot of her language is the normal, vague corporate-speak about “leadership,” “unlocking potential,” and understanding the economy.

On policy grounds her views are orthodox. She doesn’t want to move the party to the left or right, or in a more populist, libertarian or moderate direction. Her core argument on the stump is that government has gotten too big and is crushing business, which is hardly an innovative message in a Republican primary.

On issues where her views once contradicted the current fashion, like No Child Left Behind, and a path to citizenship for immigrants, she has moved to be where Republican voters now are. She is where the consumers want her to be.

In short, stylistically she is a renegade outsider, but substantively she’s completely establishmentarian. Another way to say it is that her campaign is brilliantly creative in its marketing arm, but unimaginative when it comes to product development.

And this is where her business background comes into view. When she ran Hewlett-Packard the core critique against her was that she was really good at marketing but not good at tech or operations.

Different people have very different takes on her performance at HP, but when you talk to close observers and read some of the voluminous literature on her tenure, it’s hard to come away feeling sanguine. Most tellingly, she made the classic marketer’s error, letting her promises get far out in front of reality. As my colleague Joseph Nocera pointed out, under her, HP failed to meets it revenue and profit projections nine times. One time it missed its earnings projections by a gigantic 23 percent.

The positive theory of her campaign is that she’s perfectly suited for a Republican electorate that wants to vent its outrage at the political class and the timid party leadership, but which doesn’t really believe in any alternative direction. She gives the G.O.P. establishment rebellious fire, but is actually one of them.

The more likely scenario is that Fiorina fades over the next few months. In this race there’s been a huge gap between the campaigners, like Trump, Carson and Fiorina, and the governors — those with actual experience in government.

In this early phase the voters are indulging in a little free outrage, enjoying the campaigners. But history teaches that parties invariably nominate government officials. Sooner or later, voters want a candidate rooted in something more than a marketing strategy. They want someone authentically connected to middle-class concerns and with strategies for their specific challenges, like wage stagnation.

Opposing the political class is not an agenda. Unless Fiorina can become a lot more creative and sympathetically connected to working-class voters, she’ll fall to an opponent who will turn to her in debate and ask, “Where’s the beef?”

Now here’s Prof. Krugman:

So Donald Trump has unveiled his tax plan. It would, it turns out, lavish huge cuts on the wealthy while blowing up the deficit.

This is in contrast to Jeb Bush’s plan, which would lavish huge cuts on the wealthy while blowing up the deficit, and Marco Rubio’s plan, which would lavish huge cuts on the wealthy while blowing up the deficit.

For what it’s worth, it looks as if Trump’s plan would make an even bigger hole in the budget than Jeb’s. Jeb justifies his plan by claiming that it would double America’s rate of growth; The Donald, ahem, trumps this by claiming that he would triple the rate of growth. But really, why sweat the details? It’s all voodoo. The interesting question is why every Republican candidate feels compelled to go down this path.

You might think that there was a defensible economic case for the obsession with cutting taxes on the rich. That is, you might think that if you’d spent the past 20 years in a cave (or a conservative think tank). Otherwise, you’d be aware that tax-cut enthusiasts have a remarkable track record: They’ve been wrong about everything, year after year.

Some readers may remember the forecasts of economic doom back in 1993, when Bill Clinton raised the top tax rate. What happened instead was a sustained boom, surpassing the Reagan years by every measure.

Undaunted, the same people predicted great things as a result of George W. Bush’s tax cuts. What happened instead was a sluggish recovery followed by a catastrophic economic crash.

Most recently, the usual suspects once again predicted doom in 2013, when taxes on the 1 percent rose sharply due to the expiration of some of the Bush tax cuts and new taxes that help pay for health reform. What happened instead was job growth at rates not seen since the 1990s.

Then there’s the recent state-level evidence. Kansas slashed taxes, in what its right-wing governor described as a “real live experiment” in economic policy; the state’s growth has lagged ever since. California moved in the opposite direction, raising taxes; it has recently led the nation in job growth.

True, you can find self-proclaimed economic experts claiming to find overall evidence that low tax rates spur economic growth, but such experts invariably turn out to be on the payroll of right-wing pressure groups (and have an interesting habit of getting their numbers wrong). Independent studies of the correlation between tax rates and economic growth, for example by the Congressional Research Service, consistently find no relationship at all. There is no serious economic case for the tax-cut obsession.

Still, tax cuts are politically popular, right? Actually, no, at least when it comes to tax cuts for the wealthy. According to Gallup, only 13 percent of Americans believe that upper-income individuals pay too much in taxes, while 61 percent believe that they pay too little. Even among self-identified Republicans, those who say that the rich should pay more outnumber those who say they should pay less by two to one.

So every Republican who would be president is committed to a policy that is both demonstrably bad economics and deeply unpopular. What’s going on?

Well, consider the trajectory of Marco Rubio, who may at this point be the most likely Republican nominee. Last year he supported a tax-cut plan devised by Senator Mike Lee that purported to be aimed at the poor and the middle class. In reality, its benefits were strongly tilted toward high incomes — but it still drew harsh criticism from the right for giving too much to ordinary families while not cutting taxes on top incomes enough.

So Mr. Rubio came back with a plan that eliminated taxes on dividends, capital gains, and inherited wealth, providing a huge windfall to the very wealthy. And suddenly he was gaining a lot of buzz among Republican donors. The new plan would add trillions to the deficit, which conservatives claim to care about, but never mind.

In other words, it’s straightforward and quite stark: Republicans support big tax cuts for the wealthy because that’s what wealthy donors want. No doubt most of those donors have managed to convince themselves that what’s good for them is good for America. But at root it’s about rich people supporting politicians who will make them richer. Everything else is just rationalization.

Of course, once the Republicans settle on a nominee, an army of hired guns will be mobilized to obscure this stark truth. We’ll see claims that it’s really a middle-class tax cut, that it will too do great things for economic growth, and look over there — emails! And given the conventions of he-said-she-said journalism, this campaign of obfuscation may work.

But never forget that what it’s really about is top-down class warfare. That may sound simplistic, but it’s the way the world works.

Krugman’s blog, 9/30/15

October 1, 2015

There were four posts yesterday.  The first was “Tontines Explained:”

Trying to drag myself back to the real world — although my head still feels stuffed full of cotton. But I did want to weigh in on a Wonkblog piece from a couple of days ago about the possible virtues of tontines — retirement schemes in which the payouts go only to surviving members of a group. The article does reference a Simpsons episode; but surely we can’t tackle this subject without mentioning the movie The Wrong Box, with a plot that hinges on two brothers who are the sole survivors of a tontine. Here’s how the rest of the group went:

That’s one of the funniest movies ever made.  If you haven’t seen it, hie thee to Netflix…  Yesterday’s second post was “Commodities and Cranks:”

Does anyone remember the heyday of the inflationistas, when they were berating Ben Bernanke for debasing the dollar? One of their key arguments was that commodity prices were rising, and that this was a harbinger of soaring overall inflation.

So now, the same people are worried about deflation, and urging Janet Yellen to keep her pedal to the metal. Right? Right?

Funny how that doesn’t happen.

The third post yesterday was “Jeb Goes Galt:”

This is amazing:

“I think the left wants slow growth because that means people are more dependent upon government,” Bush told Fox Business’ Maria Bartiromo.

Remember, this is the establishment candidate for the GOP nomination — and he thinks he’s living in Atlas Shrugged.

They all do.  They’re the mole people.  And pray God they ALL “go Galt” so we don’t have to deal with them any more.  Yesterday’s last post was “The Fed Puzzle:”

OK, maybe it’s the ear infection, but I’m having a very hard time understanding what Peter Gourevitch is saying in this article name-checking me. Stuff is complicated? What?

In any case, however, Gourevitch seems to have missed a crucial point about my puzzlement over the Fed’s eagerness to raise rates. I’m not saying “I’m smart, so why aren’t they listening to me?” Yes, people can have different views about how the world works.

But the strange thing here is that as far as anyone can tell, the people inside the Fed who are eager to hike and the people outside the Fed who think it’s premature have more or less the same economic models in their heads. It’s not just me; Larry Summers, the IMF (presumably reflecting Olivier Blanchard), the World Bank, and more are aghast at the urge to hike; and the thing is, all of the outsiders come from the same Cambridge 1970s updated Keynesian school of macro as the key insiders. Most of us were Stan Fischer’s students!

So we’re trying to understand why the insiders have such a different view of appropriate policy from the outsiders when their intellectual apparatus is the same. If you don’t get that, you’re missing the point.


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