Krugman’s blog, 4/17/14

April 18, 2014

There was one post yesterday, “What Eight Million Means:”

Sorry about blog silence — real life intruded, plus I did have to write a column. But I shouldn’t let the day pass without mentioning the latest big Obamacare news. Final enrollment for 2014, we now know, will be more than 8 million. The age mix has also improved, with more young people signing up at the end; as Jonathan Cohn points out in the linked article, the age mix in Obamacare’s first year is now just about identical to the age mix in Romneycare’s first year. Goodbye, death spiral.

How did enrollment manage to surge so impressively despite the initial debacle of healthcare.gov? Obviously they fixed the website; but the broader issue, as Sarah Kliff rightly points out, is that being uninsured is truly terrible. Uninsured Americans really, really wanted coverage, and they weren’t ready to give up.

Kliff doesn’t make this point too explicitly, but this diagnosis has another crucial implication: the benefits of Obamacare, for all its imperfections, are immense. Millions of people who lived extremely anxious lives now have far more security than before. Compared with those benefits, the complaints of some already insured people that they have less choice of doctors than before, or that they’re no longer allowed to retain minimalist plans, look like whining. (And of course not one of the more serious-sounding stories about soaring premiums and all that has held up under scrutiny.)

And speaking of whining, the GOP response seems to be to make every possible insinuation to the effect that the numbers are somehow fraudulent. I actually don’t think there’s a game plan here; their whole position was premised on the inevitable collapse of health reform, and they have no plan B.

All around, as Cohn says, a very good day for reform.

Brooks and Krugman

April 18, 2014

Oh, gawd…  Bobo’s heard about Common Core.  In “When the Circus Descends” he gurgles that right-wing talk radio hosts and left-wing interest groups are teaming up to defeat the most sensible school reform movement in a decade.  “Gemli” from Boston has this to say in his comment:  “Brooks has learned a thing or two about using the false equivalence to manipulate the discourse. He says that conservatives don’t like the Common Core and liberals don’t like it either. These two opposing sides represent the universe of views on the subject, but they cancel each other out, leaving his opinion shining like a cow pie in the moonlight.”  Love that image…  In “Salvation Gets Cheap” Prof. Krugman says the incredible recent decline in the cost of renewable energy, solar power in particular, have improved the economics of climate change.  Here’s Bobo:

We are pretty familiar with this story: A perfectly sensible if slightly boring idea is walking down the street. Suddenly, the ideological circus descends, burying the sensible idea in hysterical claims and fevered accusations. The idea’s political backers beat a craven retreat. The idea dies.

This is what seems to be happening to the Common Core education standards, which are being attacked on the right because they are common and on the left because they are core.

About seven years ago, it was widely acknowledged that state education standards were a complete mess. Huge numbers of students were graduating from high school unprepared either for college work or modern employment. A student who was rated “proficient” in one state would be rated “below basic” in another. About 14 states had pretty good standards, according to studies at the time, but the rest had standards that were verbose, lax or wildly confusing.

The National Governors Association and the Council of Chief State School Officers set out to draft clearer, consistent and more rigorous standards. Remember, school standards are not curricula. They do not determine what students read or how teachers should teach. They are the goals for what students should know at the end of each grade.

This was a state-led effort, supported by employers and financed by private foundations. This was not a federal effort, though the Obama administration did encourage states to embrace the new standards.

These Common Core standards are at least partially in place in 45 states. As is usual, the initial implementation has been a bit bumpy. It’s going to take a few years before there are textbooks and tests that are truly aligned with the new standards.

But the new initiative is clearly superior to the old mess. The math standards are more in line with the standards found in the top performing math nations. The English standards encourage reading comprehension. Whereas the old standards frequently encouraged students to read a book and then go off and write a response to it, the new standards encourage them to go back to the text and pick out specific passages for study and as evidence.

The Thomas B. Fordham Institute, which has been evaluating state standards for more than 15 years, concluded that the Common Core standards are “clearly superior” to the old standards in 37 states and are “too close to call” in 11 more.

But this makes no difference when the circus comes to town.

On the right, the market-share-obsessed talk-radio crowd claims that the Common Core standards represent a federal takeover of the schools. This is clearly false. This was a state-led effort, and localities preserve their control over what exactly is taught and how it is taught. Glenn Beck claims that Common Core represents “leftist indoctrination” of the young. On Fox, Elisabeth Hasselbeck cited a curriculum item that supposedly taught students that Abraham Lincoln’s religion was “liberal.” But, as the education analyst Michael J. Petrilli quickly demonstrated, this was some locally generated curriculum that was one of hundreds on a lesson-sharing website and it was promulgated a year before the Common Core standards even existed.

As it’s being attacked by the talk-radio right, the Common Core is being attacked by the interest group left. The general critique from progressives, and increasingly from teachers’ unions, is that the standards are too difficult, that implementation is shambolic and teachers are being forced into some top-down straitjacket that they detest.

It is true that the new standards are more rigorous than the old, and that in some cases students have to perform certain math skills a year earlier than they formerly had to learn them. But that is a feature, not a bug. The point is to get students competitive with their international peers.

The idea that the Common Core is unpopular is also false. Teachers and local authorities still have control of what they teach and how they teach it. A large survey in Kentucky revealed that 77 percent of teachers are enthusiastic about the challenge of implementing the standards in their classrooms. In another survey, a majority of teachers in Tennessee believe that implementation of the standards has begun positively. Al Baker of The Times interviewed a range of teachers in New York and reported, “most said their students were doing higher-quality work than they had ever seen, and were talking aloud more often.”

The new standards won’t revolutionize education. It’s not enough to set goals; you have to figure out how to meet them. But they are a step forward. Yet now states from New York to Oklahoma are thinking of rolling them back. This has less to do with substance and more to do with talk-radio bombast and interest group resistance to change.

The circus has come to town.

Now here’s Prof. Krugman:

The Intergovernmental Panel on Climate Change, which pools the efforts of scientists around the globe, has begun releasing draft chapters from its latest assessment, and, for the most part, the reading is as grim as you might expect. We are still on the road to catastrophe without major policy changes.

But there is one piece of the assessment that is surprisingly, if conditionally, upbeat: Its take on the economics of mitigation. Even as the report calls for drastic action to limit emissions of greenhouse gases, it asserts that the economic impact of such drastic action would be surprisingly small. In fact, even under the most ambitious goals the assessment considers, the estimated reduction in economic growth would basically amount to a rounding error, around 0.06 percent per year.

What’s behind this economic optimism? To a large extent, it reflects a technological revolution many people don’t know about, the incredible recent decline in the cost of renewable energy, solar power in particular.

Before I get to that revolution, however, let’s talk for a minute about the overall relationship between economic growth and the environment.

Other things equal, more G.D.P. tends to mean more pollution. What transformed China into the world’s largest emitter of greenhouse gases? Explosive economic growth. But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.

People on both the left and the right often fail to understand this point. (I hate it when pundits try to make every issue into a case of “both sides are wrong,” but, in this case, it happens to be true.) On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth. But there’s no reason we can’t become richer while reducing our impact on the environment.

Let me add that free-market advocates seem to experience a peculiar loss of faith whenever the subject of the environment comes up. They normally trumpet their belief that the magic of the market can surmount all obstacles — that the private sector’s flexibility and talent for innovation can easily cope with limiting factors like scarcity of land or minerals. But suggest the possibility of market-friendly environmental measures, like a carbon tax or a cap-and-trade system for carbon emissions, and they suddenly assert that the private sector would be unable to cope, that the costs would be immense. Funny how that works.

The sensible position on the economics of climate change has always been that it’s like the economics of everything else — that if we give corporations and individuals an incentive to reduce greenhouse gas emissions, they will respond. What form would that response take? Until a few years ago, the best guess was that it would proceed on many fronts, involving everything from better insulation and more fuel-efficient cars to increased use of nuclear power.

One front many people didn’t take too seriously, however, was renewable energy. Sure, cap-and-trade might make more room for wind and the sun, but how important could such sources really end up being? And I have to admit that I shared that skepticism. If truth be told, I thought of the idea that wind and sun could be major players as hippie-dippy wishful thinking.

But I was wrong.

The climate change panel, in its usual deadpan prose, notes that “many RE [renewable energy] technologies have demonstrated substantial performance improvements and cost reductions” since it released its last assessment, back in 2007. The Department of Energy is willing to display a bit more open enthusiasm; it titled a report on clean energy released last year “Revolution Now.” That sounds like hyperbole, but you realize that it isn’t when you learn that the price of solar panels has fallen more than 75 percent just since 2008.

Thanks to this technological leap forward, the climate panel can talk about “decarbonizing” electricity generation as a realistic goal — and since coal-fired power plants are a very large part of the climate problem, that’s a big part of the solution right there.

It’s even possible that decarbonizing will take place without special encouragement, but we can’t and shouldn’t count on that. The point, instead, is that drastic cuts in greenhouse gas emissions are now within fairly easy reach.

So is the climate threat solved? Well, it should be. The science is solid; the technology is there; the economics look far more favorable than anyone expected. All that stands in the way of saving the planet is a combination of ignorance, prejudice and vested interests. What could go wrong? Oh, wait.

Krugman’s blog, 4/16/14

April 17, 2014

There were three posts yesterday.  The first was “Piketty Day at the Graduate Center:”

A talk by Thomas Piketty at the CUNY Graduate Center, followed by a panel discussion with Steve Durlauf, Joe Stiglitz, and somebody else. Starting at 6 PM; live streaming here.

Yesterday’s second post was “Piketty Day Notes:”

I’m going to be commenting on Thomas Piketty later today, and I thought I would write up my thoughts in advance; this may or may not be what I actually end up saying.

There’s obviously a lot to be said about the substance of Piketty’s book, and there will be many more research papers inspired by his work. What I want to do, however, is go somewhat meta, and talk about how Piketty fits into the ongoing debate over the nature and implications of rising inequality — and why “Capital in the Twenty-First Century” is having such a big impact.

So here’s my diagnosis of why “Capital” is so big: Piketty offers the latest and most damning in what have been a series of “Oh, yeah? Guess what” moments.

In the first stage of the debate over inequality, there was widespread denial that rising inequality was even happening on any major scale. Actually, there still is — in this debate, in which one side is sustained by vast amounts of money and influence with an interest in obfuscation, refuted arguments are never abandoned; they just keep coming back. No point is ever conceded by the apologists. But it was nonetheless true that by sometime in the early 90s you could mostly say, “Oh, yeah? Guess what.” The evidence for a sharp rise in inequality, a definitive break with the three postwar decades, was overwhelming.

For a long time thereafter, however, the apologists had a fallback position: OK, maybe inequality was rising, but it wasn’t the rich versus everyone else — it was the whole top quintile, basically well-educated Americans, on the relative rise. So it nothing like the kind of class divisions of the past. The truth is that we knew better than that even by the late 1980, but even a few years ago you still found the voices of respectable opinion insisting that inequality was about the 20 percent, not the one percent.

But at a certain point — to a large extent thanks to Piketty and Emmanuel Saez — we got to say “Oh, yeah? Guess what.” Actually, rising inequality was in large part about the rise of a tiny elite, the one percent and within that the 0.1 percent.

Oh, and to those who admitted some rise in inequality but declared that it was nothing like the Gilded Age, the answer was, “Oh, yeah? Guess what.” We don’t have Gilded Age survey data, but we do have tax records back to the early 20th century, and top income shares are right back at late-Gilded-Age levels.

This brings us to the latest fallback position of inequality’s apologists, one that has lately been associated in particular with Greg Mankiw — namely, that maybe the one percent have been thriving, but they earned it. After all, we’re talking about self-made men here, not heirs to inherited wealth, right?

Now, this is actually a very weak argument on multiple levels. Although the apologists love to talk about movie actors and sports stars, the highest incomes in America overwhelmingly go to executives, whose contributions to the economy are largely in the eyes of the beholder. And anyway, marginal product isn’t moral justification; even if you believe that, say, Sandy Weill was so much better than the next best alternative that his earnings reflected his true contribution to GDP, that says nothing about whether it was fair or just for him to keep so much more of those earnings than he would have been able to if 1960s tax rates were still in effect.

But in any case, the presumption here is that modern wealth is self-made, nothing like the inherited fortunes of ol. And you know the reply: “Oh, yeah? Guess what.” What Piketty shows is that inherited wealth has been making a comeback, that it’s already a much bigger factor than most people even on the left realize, and that it’s on track to become much larger still.

And this really is a revelation. Piketty’s literary sources are Jane Austen and Balzac; our modern conceptions, even among liberals worried by rising inequality, tend to be shaped by the likes of Oliver Stone. Yet it turns out that Gordon Gekko is an increasingly outmoded archetype. Yes, he’s a predator — but he’s very much a self-made predator. And while those people still exist, the economic elite is increasingly made up of their sons and daughters. As I’ve noted, six of the ten wealthiest Americans, according to Forbes, are Walton and Koch heirs; further down the list are a lot of old men, who will soon be passing their wealth on.

This brings me to my second point about Piketty, which is that his work greatly reinforces the notion that we may face a political-economy spiral of inequality, in which great wealth brings great power, which is used to reinforce the concentration of wealth. That was a concern even when we thought we were facing a one-generation dispersion of economic success. But it becomes much more of a concern when one realizes that we’re talking about creating an environment favorable to “patrimonial capitalism”, of sustained dominance by family dynasties.

And let me say that while the core of Piketty’s work is his economic analysis, his discussion of the political economy of dynastic wealth is a major additional highlight. I was especially struck by the somewhat paradoxical contrast between Belle Epoque France and Gilded Age America: a notionally egalitarian society in which anything that might challenge the privileges of inherited wealth was beyond the pale, versus a society that celebrated financial success but in which it was considered reasonable and respectable to advocate high taxation for the explicit purpose of reducing inequality. It seems to me that we want some real scholarship — from political scientists, not (or not just) economists — to figure out that contrast, and learn lessons that might help us break the cycle of rising dynastic power we face today.

OK, that’s my meta analysis of why Piketty has made such a splash. But let me conclude by saying something about why I was so bowled over by this book. Obviously I share the widespread sense that we’re learning something very important about the past and future of inequality. But there’s something else: this analysis isn’t just important, it’s beautiful. Piketty gives us something we didn’t know we needed — a sweeping, elegant integration of growth theory, the factor distribution of income, and the personal distribution of income and wealth. He even (in work linked to but not presented in the book) shows how to derive the power laws that we know govern the distribution of income and wealth at the top, and shows how r-g determines the crucial exponents.

And my admiration is only reinforced by my sheer, green-eyed professional jealousy. What a book!

The last post yesterday was “Obamacare Truthers at MSNBC:”

Just a quick note in support of government statisticians. They do an incredibly important job, and by and large do it very well. They’ve also maintained a well-deserved reputation for staying out of the political fray, of acting as civil servants, not party apparatchiks.

You can argue that the Census decision to change its health-insurance questionnaire starting with the 2013 data wasn’t such a good idea — in fact, I know a number of health care experts who are dismayed. But it’s really quite vile to have talk-show hosts who quite literally know nothing about the field, other than that they’re against covering the uninsured, casually accusing Census of “cooking the books” to support Obamacare.

But remember, MSNBC is the liberal network, right? Why don’t they just hire Donald Trump and be done with it?

Blow, Kristof and Collins

April 17, 2014

In “Minimum Wage, Maximum Outrage” Mr. Blow has a question:  Even if both parties are playing politics with this issue to some degree, which side would you rather be on?  Mr. Kristof, who’s in Kiev, has decided to whale away on The Moustache of Wisdom’s little war drum.  He also has a question.  In “In Ukraine, Seeking U.S. Aid” he says Ukrainians have been bullied relentlessly by Russia. He then poses his question:  Why aren’t we doing more to stand up for them?  Gee, why aren’t Germany and France?  At least they’re on the same damn continent…  Ms. Collins, in “There’s A Moon Out Tonight,” says look on the bright side of things, people, even when doomsday is predicted and the moon is blood red.  Here’s Mr. Blow:

No one should ever endure the kind of economic humiliation that comes with working a full-time job and making a less-than-living wage.

There is dignity in all work, but that dignity grows dim when the checks are cashed and the coins are counted and still the bills rise higher than the wages.

Most people want to work. It is a basic human desire: to make a way, to provide for one’s self and one’s loved ones, to advance. It is that great hope of tomorrow, better and brighter, in which we can be happy and secure, able to sleep without hunger and wake without worry.

But it is easy to see how people can have that hope thrashed out of them, by having to wrestle with the most wrenching of questions: how to make do when you work for less than you can live on?

That is why the minimum wage debate resonates so profoundly with so many: We know what it feels like to not have enough money after you’ve busted your body with too-hard work. We know the worry in parents’ eyes as they sit around a dinner table littered with more bills than dollar bills, trying to figure out whom to pay and how to save.

These scenes play themselves out in more American households than the well-dressed men and women in the marbled halls of Congress will ever care to imagine. These are the forgotten and forsaken, the just getting by on just enough. They don’t have much money to donate to a church, let alone a political campaign, and yet they yearn just the same for someone to look out for them. They struggle to make it to the polls, sometimes on public transportation, and wait hours to vote.

Raising the minimum wage won’t erase all of the problems of the poor, but it is one component, one rooted in basic dignity and fairness, of a much fairer picture of income inequality and poverty.

Most Americans understand this. According to a Gallup poll last year, 71 percent of adults (91 percent of Democrats, 68 percent of independents and 50 percent of Republicans) said they would vote for a law that would raise the federal minimum wage to $9 an hour on Election Day if they could.

But, as one would expect, Republicans in Congress are chafing. Some say that raising the minimum wage could hurt small businesses, though a Gallup poll in November showed that small businesses were split on increasing the minimum wage, with roughly half for and half against it. Furthermore, according to a report by the National Employment Law Project, “the majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations with over 100 employees.”

Others dismiss the push for increasing the minimum wage, which is being advanced aggressively by Democrats, purely as a political move.

On some level, is the focus on the minimum wage a political ploy on the part of Democrats? I have no doubt. But that doesn’t drain the proposal of its merit. Much of what occurs in Washington occurs at the intersection of political advantage and earnest intentions, and it has ever been thus. Whenever one side accuses the other of playing politics, the accusation is often laced with an envy of the other’s adroitness.

So with the minimum wage, we have an issue that’s both smart politics and compassionate policy.

Politicians do things for political ends, even things designed to help real people.

And that political haymaking is going both ways. This week, the Republican governor of Oklahoma, Mary Fallin, signed a bill banning the state’s cities from “establishing mandatory minimum wages or vacation and sick-day requirements,” according to The Associated Press.

How callous is that? And it should be noted that, according to the Bureau of Labor Statistics, “In 2012, Oklahoma’s proportion of hourly paid workers earning at or below the prevailing federal minimum wage ranked third highest among the 50 states and the District of Columbia.” The bureau reported that 7.2 percent of the hourly paid workers in Oklahoma earned the federal minimum wage or less, compared with 4.7 percent nationally.

And things have not been moving in a positive direction. The bureau also notes that:

“From 2011 to 2012, the portion of hourly paid workers in Oklahoma who earned at or below the federal minimum wage rose from 6.8 to 7.2 percent. The percentage of workers earning less than the federal minimum rose 1.5 percentage points in 2012 to 3.9 percent, while the share earning exactly the minimum wage fell 1.0 points to 3.3 percent.”

Now, if both sides are playing politics with the minimum wage to some degree, which side would you rather be on: that of the working people, who are struggling to make a living, or that of the politicians determined to block them?

Next up we have Mr. Kristof and his little drum:

For decades, Ukrainians have been starved, oppressed and bullied by Russians, and, with Russia now inciting instability that could lead to an invasion and dismemberment of eastern Ukraine, plenty of brave Ukrainians here say they’ve had it and are ready to go bear-hunting.

If they could just equip themselves.

“Any chance you could provide some machine guns or sniper rifles?” one former protester asked me hopefully in Kiev’s Independence Square, a scorched collection of roadblocks where so many Ukrainians lost their lives toppling a corrupt ruler earlier this year.

I explained that I was out of both. The next day, when another self-styled commander asked for weapons to fight the Russian invaders, I pointed to the pistol in his belt and told him he was better prepared than I was.

He laughed ruefully, pulled it out and showed that it was a pellet gun. “It’s a child’s toy,” he said scornfully. “And we have only one of these for every 10 men.”

That’s a glimpse of the mood in Ukraine these days. People seem to feel a bit disappointed that the United States and Europe haven’t been more supportive, and they are humiliated that their own acting government hasn’t done more to confront Russian-backed militants. So, especially after a few drinks, people are ready to take down the Russian Army themselves.

“We will defeat the Russian Army, hang the Ukrainian flag over the Kremlin, and turn it into a lake,” boasted Roman Butsyk, a locomotive driver who joined the protest movement.

Usually in international affairs, there’s a good deal of gray, but what is happening in Ukraine is pretty black and white.

President Vladimir Putin of Russia warns that Ukraine is on the brink of civil war. But the chaos in eastern cities is his own creation, in part by sending provocateurs across the border. It’s not clear how many of the troublemakers in the east are Russian security agents and how many are Ukrainians who want to remain in Russia’s orbit, but it’s reasonably clear that there are plenty of both. Ukrainians note that supposed locals in the pro-Russian camp sometimes are unfamiliar with local streets.

Putin has emerged as a great champion of the rights of Russian-speakers everywhere — except in the place where their rights are most endangered. That’s Russia itself.

Meanwhile, Russian propaganda has reached almost North Korean proportions: Putin shrugs at the world and embraces implausible deniability.

Ukrainians mounted their revolution because they wanted to be more like the West, so it frustrates them that the West hasn’t returned the love. Europe fears that sanctioning Russia would hurt business, and even the Obama administration has been cautious and has resisted providing military assistance (except for military meals).

The Ukrainians have a point. A bear is charging them, and we offer spaghetti?

President Obama’s concerns about provoking Putin are understandable, and I disagree with those Republicans who argue that Putin is on a rampage because of Obama’s foreign policy weaknesses. But I do think the White House can do more — with military transfers, financial aid, economic sanctions and moral support — to stand with Ukraine. Vice President Joe Biden’s planned visit to Ukraine is a welcome step to show support.

So far, Putin has arguably gained from his bullying of Crimea: His standing in domestic polls has surged — his approval at home is roughly twice Obama’s — and he has outmaneuvered some local critics, leaving them appearing unpatriotic or on the side of the enemy. It’s crucial that Putin pay a price for aggression so that he doesn’t benefit from bellicosity.

“I understand the U.S. reluctance,” acknowledged Igor Grosul, who sells doormats with the face of the ousted president. “If there is a war between America and Russia, it might be the last war ever.”

Yet Grosul, who was hospitalized in the fight to overthrow the old regime, still would like to see America more engaged. As a Russian speaker himself, he is also indignant at reports that most Russian speakers are pro-Russian.

Clearly, some Russian-speaking Ukrainians genuinely want greater autonomy for their regions, and the country should grant it. But Grosul says that in his city of Mykolaiv, most people are Russian speakers who have turned against Moscow because of the seizure of Crimea and the hysterical anti-Ukraine propaganda.

When Ukrainians ask me what I think, I tell them that I admire their spirit, but that courage is, sadly, no match for a tank. They disagree.

“When we were fighting against the police, we had just wooden sticks,” said Volodymyr Kozak, who helps run a tent museum in Independence Square about the recent battles there. “We can manage against Russia as well.”

These people don’t have much, but they have heart. We should do more to back them up.

And I’m sure we’ll be greeted as liberators, with flowers strewn in the streets, just as we were in Baghdad, right?  Shit…  Here’s Ms. Collins:

Let’s talk about something cheerful. I nominate the apocalypse.

You may not have noticed, but we survived an end-of-the-world moment again this week when a lunar eclipse made the moon look sort of reddish. This is known as a Blood Moon, and, in certain circles, it was seen as the Start of Something Big.

“The heavens are God’s billboard,” said televangelist John Hagee, the author of the best-selling “Four Blood Moons: Something Is About to Change.” This is the same John Hagee who once theorized that Hurricane Katrina was God’s punishment to New Orleans for scheduling a gay pride parade. He later apologized. And moved on. To the moon.

As doomsday scenarios go, this one is not particularly original: the basic evangelical vision of trouble in the Middle East followed by the Second Coming. And red moons happen all the time. If you wanted a sign of the end of days this week, there are lots better candidates. Kathleen Sebelius for Senate? The idea that anybody believes Donald Trump will buy the Buffalo Bills? Or limes — their price is quadrupling! You can read all about that in my upcoming book, “The End of Guacamole.”

The Blood Moon predictions are going to be with us for a while because there will be four of the same lunar eclipses over the next year and a half. And Hagee’s theories have sold a heck of a lot of books on Amazon. But they lack the exciting specificity of the classic end-of-the-world prophecies. Like polar shifts (earth crust moves, triggering volcanoes, floods and eliminating all life-forms) or the Amazing Criswell, who was waiting for a black rainbow to show up and suck off all the oxygen.

Television is taking up the slack. It’s awash with doomsday stories, with more on the runway. Killer viruses, planetary power failures, nuclear war. Plus your basic Rapture. (“ ‘The Leftovers’ is the story of the people who didn’t make the cut.”) Chris Carter, the “X-Files” creator who’s offering “The After,” was apparently really moved by that Mayan-calendar-ends crisis in 2012. “There was nervousness. It was in the air. …Certainly the power of that played a part in my desire to do something about a world-changing event,” he told TV Guide.

People, do you remember being all that worried about the Mayan calendar? Or zombies? Zombies are still so darned popular. It would be nice if we were being barraged with a new series about a utopian future where everybody got along except your occasional Romulan. Yet here we are.

The feel-good side of end-of-the-world predictions is that everything seems so nice the day after. We’re still here! There’s oxygen!

Unless, of course, you’re someone like Robert Fitzpatrick, a follower of the late Harold Camping, a serial apocalypse predictor who claimed Judgment Day was going to be May 21, 2011. Fitzpatrick spent what he said was his life savings putting warning signs in the New York City subway system. (“Global Earthquake: The Greatest Ever!”) On the plus side, he did give commuters a really fine ride to work on May 22.

If you enjoy worrying about doomsday, be sure to hedge your bets. Remember Y2K and all the millennium end-of-the-world scenarios? Years ago, I worked on a project that involved a collection of all the predictions about terrible things that were going to happen in the year 2000, and I enjoyed it very much. I talked to a guy living on a mountain who was both waiting for the end and writing a movie script about it. Also, an official in a small Illinois town that had been founded on a plan to airlift refugees into space where they would rotate around until the polar shift calmed down. This was all based on the work of the town’s founder, Richard Kieninger, who was eventually kicked out amid rumors of sexual misbehavior. The rest of the community decided to just concentrate on building self-sufficient lifestyles.

So really, pretty happy ending.

And then, the pope! It was only a year ago that the College of Cardinals was meeting in the Vatican to elect a new pope, and some people were pointing out that this one was going to be the last pontiff, according to a 12th-century prediction made by St. Malachy, who also mentioned the destruction of Rome and “many tribulations” everywhere.

True, Malachy’s list was probably a forgery. But who would have predicted that Catholics would get a new pope who was obsessed with the poor and apparently totally uninterested in people’s sex lives? Nobody. Talking heads sniffed when Francis was chosen and said the cardinals “probably did not come up with the most progressive pope in the history of the world.” Actually, that would have been me.

Our moral today is that things often turn out better than we might have imagined. Look on the bright side. Even when it’s dark and the moon appears to be a rather unusual color.

Krugman’s blog, 4/15/14

April 16, 2014

There were three posts yesterday.  The first was “Rising Sun:”

Joe Romm draws our attention to the third slice of the latest IPCC report on climate change, on the costs of mitigation; the panel finds that these costs aren’t that big — a few percent of GDP even by the end of the century, which means only a trivial hit to the growth rate.

At one level this shouldn’t be considered news. It has been apparent for quite a while that given the right incentives we could maintain economic growth even while greatly reducing greenhouse gas emissions. But there is, in fact, some news that greatly strengthens the case that saving the planet would be quite cheap.

First, a word about the general principle here. Actually, for once I get to play “balanced” journalist, and bash both left and right. For there are some people on the left who keep insisting that economic growth is incompatible with reduced emissions, and that therefore we have to turn our backs on growth. Such people have no power, and therefore don’t do any real harm. Still, it’s worth pointing out that they have a much too narrow notion of what it means to have a growing economy. It doesn’t necessarily mean more stuff! It could be better stuff, or more services — and there are also choices to be made in how we produce and distribute stuff. There is absolutely no reason to believe in a one-for-one link between real GDP and greenhouse gases.

As a practical matter, the fallacies of the right are much more important — indeed, they may destroy civilization. What’s notable about right-wing commentary on the economics of emission reduction is how people on that side suddenly seem to change their views about the effectiveness of markets. Normally they extol the magic of the marketplace, which can brush aside all limits; but somehow they simultaneously believe that markets would be totally unable to cope with a carbon tax or a cap-and-trade system. Scarce resources are no problem; limited rights to pollute are catastrophic. It’s not hard to see the ulterior motives here, but it’s still peculiar.

In fact, you should be optimistic about the ability of a market economy to reduce emissions given the incentives. And now we know something new: the technological prospects for a low-emission economy have gotten dramatically better.

It’s kind of odd how little attention the media give to the solar revolution, but this is really huge stuff:

In fact, it’s possible that solar will displace coal even without special incentives. But we can’t count on that. What we do know is that it’s no longer remotely true that we need to keep burning coal to satisfy electricity demand. The way is open to a drastic reduction in emissions, at not very high cost.

And that should make us optimistic about the future, right? I mean, all that stands in our way is prejudice, ignorance, and vested interests. Oh, wait.

Yesterday’s second post was “Supply, Demand, and Unemployment Benefits:”

Ben Casselman points out that we’ve had a sort of natural experiment in the alleged effects of unemployment benefits in reducing employment. Extended benefits were cancelled at the beginning of this year; have the long-term unemployed shown any tendency to find jobs faster? And the answer is no.

Let me parse this a bit more, and ask, how was it, exactly, that reduced benefits were supposed to encourage employment in the first place?

Making the unemployed miserable arguably increases labor supply, as workers become less choosy and more willing to take whatever job they can find. But the US labor market in 2014 isn’t constrained by supply, it’s constrained by demand: given what firms can sell, they have no need for as many hours of work as workers are willing to give.

So make the long-term unemployed more desperate; so what? They can’t do anything to increase the amount of work demanded, and in fact their reduced purchasing power reduces labor demand.

You might imagine that the long-term unemployed, through their desperation, might take jobs away from existing workers — but it’s not easy to see how that might work, and there’s no evidence that this is happening.

So the point is that as long as you understood that we have a demand-constrained economy, you knew that cutting off the unemployed would produce all pain, no gain. And your prediction was right.

Oh, and this constitutes another source of evidence that the “regular economics” extolled by Barro and others — that is, economics in which unemployment benefits must reduce employment because they’re “paying people not to work” — is just wrong in a depressed economy.

The last post yesterday was “Blaming the Messengers, Euro Edition:”

Aha. I missed this, from Jürgen Stark, which is one of the most amazing things I’ve ever seen written by a former central banker:

It is likely we are living in an extended period of price stability. This is good news. It boosts real disposable income and will eventually support private consumption. Inflation expectations are well anchored, and there is no evidence households and companies are delaying purchases because of negative expectations. Warnings about outright deflation and calls for ECB action are misguided and irresponsible. The longer this discussion continues, and the more intense it becomes, the more likely the risk of a self-fulfilling prophecy.

So, Stark begins by asserting that low inflation boosts real disposable income. That’s a zero-credit answer on any undergraduate exam: yes, low inflation makes income gains higher for any given rate of increase in nominal income, but low inflation reduces the rate of nominal income growth one for one. The notion that an influential former monetary official doesn’t understand this is breathtaking.

Now, it’s not true that low inflation has no effect; it increases the real value of debt, which is contractionary because debtors cut spending more than creditors raise it, and it raises real interest rates when nominal rates are near the zero lower bound. But these are both demand-depressing effects.

Oh, and low overall European inflation makes the adjustment problem of debtor countries much worse, which Stark doesn’t even mention.

But the real kicker is the claim that even talking about the possibility of deflation is irresponsible, because that can turn into a self-fulfilling prophecy. That’s right: if inadequate ECB action leads Europe into a Japan-style lost decade or two, it’s the fault of all those critics who warned that this might happen; if only everyone had kept clapping, everything would have been OK.

I can understand why some policymakers would like to live in a world like that — a world in which, if critics say that their policies will fail, and then they do fail, it’s the critics’ fault. But it’s hard to imagine the state of mind of someone who would actually state that view in the FT.

Dowd and Friedman

April 16, 2014

In “Game of Drones” MoDo says it just might be the right time for a “Top Gun” sequel, considering we’re already on the highway to the danger zone.  The Moustache of Wisdom, in “Not the Same Old, Same Old,” says we’re not dealing anymore with your grandfather’s Israel, and they’re not dealing anymore with your grandmother’s America either.  Here’s MoDo:

It will be tough to go into the big battle against drones without the irrepressible Goose.

And Tom Cruise, now 51, will no longer be playing a snot-nosed jockey with a need for speed on the highway to the danger zone. Three decades later, the mature Maverick will be a seasoned pilot with the chops to prove, as John Henry did against the steam-powered hammer, that man can beat machine. He won’t be going up against Russians in the Cold War, but robots in the Drone War. Instead of Cruise as a loose cannon, it will be Cruise fighting loose drones.

It was a sequel idea proposed by Tony Scott, who directed the blockbuster “Top Gun,” before he committed suicide in 2012.

Jerry Bruckheimer, who co-produced the 1986 movie, which he once described as “ ‘Star Wars’ on earth,” recently revealed to The Huffington Post that he and Cruise are getting “closer and closer” to a deal to make “Top Gun 2.”

“The concept is, basically: Are the pilots obsolete because of drones?” Bruckheimer said. “Cruise is going to show them that they’re not obsolete. That pilots are here to stay.” (With a hackneyed pitch like that, the producer can no doubt count on lavish Navy cooperation again.)

But the producer is missing a more original twist. Instead of unmanned planes controlled by terrorists, the drones could be an army of angry birds amassed by our computer overlords, Google, Facebook and Amazon. Every time one of the tech giants reveals it is venturing into the drone business, the rationale is presented purely as smart business, a benign and even benevolent expansion.

Amazon will be able to drop packages right on your lawn, or even your head. With fleets of solar-powered jet drones, Google and Facebook would be able to expand their customer bases by offering online access to poor and remote areas of the world devoid of telephone wires or cellphone towers.

On Tuesday, The Wall Street Journal published a front-page article about Google outbidding Facebook to acquire a New Mexico start-up named Titan that makes solar-powered drones. Facebook then bought a British-based aerospace company that’s working on solar drones.

A Google spokesman said in a statement that “atmospheric satellites,” as Titan’s dragonfly-shaped, battery-powered, bigger-than-jetliners drones were being called, could “help solve other problems, including disaster relief and environmental damage like deforestation.”

But given the privacy breaches of Google and Facebook, and their collusion with N.S.A. spying, we can be forgiven for some skepticism about what happens when the omnivorous and omniscient tech behemoths acquire the extra-judicial killing machines.

“Zuckerberg Vows Facebook Will Shoot Down Google Drones,” Andy Borowitz proclaimed in The New Yorker.

Can we really trust Google, who stole millions of the world’s books and whose Street View vehicles secretly scooped up data around the world, with drones?

Patrick Egan, a Sacramento drone expert who runs a website on the subject, told me that we are already in the Kubrickian future. “Drones are legal in a lot of countries in Europe, and they’re legal in Japan,” he said. He asserts there are more than 14,000 certified drone operators in Japan.

So whether the F.A.A. likes it or not, we’ll soon have Minnesota ice fishermen getting beer delivered by a drone and maybe even the mythical TacoCopter.

My friend Jim Gleick, the author of “The Information” who is working on a book about time travel, is as leery as I am about the company whose unofficial motto is “Don’t Be Evil.”

“We’ve all learned that the nicest people with the best intentions are capable of bringing evil into the world,” he said. “No matter how sincere and idealistic they are, they are concentrating an enormous amount of power in our informational universe in a very small number of hands. A single, giant company responsible only to its managers can’t claim to have the world’s interests at heart. Ultimately, what Google does is for Google.”

He says while Facebook is merely creepy, with an intrusion into privacy that’s so blatant it’s part of the game, Google is “inescapable.”

“You can’t get through life anymore without using Google,” he said.

He said that he bought a Nest thermostat, which connects your home’s temperature to the Internet, and then Google bought Nest. “So now Google not only knows what books I’m reading,” he said, “but they also know whether I’m shivering while I’m reading them.”

Even before one falls from the sky and kills somebody or crashes into a building, the tech drones will mean, as Gleick says, “we’re living in a dystopian novel, with a continuous eye in the sky on everything that happens down below.”

He muses: “Are Google’s drones going to be watching while Amazon’s drones deliver my packages? How will we distinguish the drones with cameras from the drones with cameras and guns? How long before the N.R.A. insists on the rights of drones to bear arms? The Constitution says people have a right to bear arms. And the Supreme Court says that corporations are people. Do the math.”

Forget “Top Gun 2.” This sounds more like “Risky Business.”

Gawd, I’m glad I’m old enough to be dead before this plays all the way out…  Here’s The Moustache of Wisdom:

At first, the article in The Jerusalem Post last week seemed like the same old, same old: A picture of a ransacked Israel Defense Forces post in the West Bank. Then a quote from Defense Minister Moshe Yaalon: “The State of Israel will not tolerate such criminal activity, which is terrorism in all respects.” Those Palestinians will never quit.

 Oh, wait a minute. Yaalon wasn’t talking about Palestinian terrorists. He was talking about Jewish terrorists, renegade settlers, who slashed the tires of an I.D.F. jeep parked in the settlement of Yitzhar, after Israeli soldiers came to demolish illegal buildings. “Settlers clashed with security forces during Monday night’s demolition and lightly injured six officers,” The Post reported. “A group of 50 to 60 settlers then raided an army post located to the west of the settlement, destroying generators, army equipment, heaters and diesel fuel tanks.” Israel’s justice minister, Tzipi Livni, warned that extremist settlers had crossed a line: “An ideology has flourished that does not recognize the rule of law, that does not recognize us or what we represent.”

These small stories tell a bigger one: We’re not dealing anymore with your grandfather’s Israel, and they’re not dealing anymore with your grandmother’s America either. Time matters, and the near half-century since the 1967 war has changed both of us in ways neither wants to acknowledge — but which the latest impasse in talks only underscores.

Israel, from its side, has become a more religious society — on Friday nights in Jerusalem now you barely see a car moving on the streets in Jewish neighborhoods, which only used to be the case on Yom Kippur — and the settlers are clearly more brazen. Many West Bank settlers are respectful of the state, but there is now a growing core who are armed zealots, who will fight the I.D.F. if it tries to remove them. You did not go to summer camp with these Jews. You did not meet them at your local Reform synagogue. This is a hard core.

But even the more tame settlers are more dominant than ever in the Likud Party and in the Israeli army officer corps. It is not a fiction to say today that the Likud prime minister, Bibi Netanyahu, represents the “center” of Israel’s right-wing bloc. And it is not an accident that Israel’s housing minister, Uri Ariel, who comes from a pro-settler party to the right of the Likud, approved a tender for 700 homes in Jerusalem’s Gilo neighborhood, across the Green Line — just as Secretary of State John Kerry’s peace talks were coming to a head. As Minister Livni, Israel’s chief negotiator, put it: “Minister Ariel purposefully and intentionally did what he did to torpedo” the peace talks.

There are now about 350,000 Jews living in the West Bank. It took 50,000 Israeli police and soldiers to remove 8,000 settlers from Gaza, who barely resisted. I fear the lift in the West Bank to make peace there is now just too heavy for conventional politics and diplomacy. The only way settler resistance can be trumped would be by a prime minister, and an Israeli majority, who were really excited about the prospects for peace or truly frightened of the alternative.

But I do not believe Netanyahu will ever be anything other than ambivalent. And his ambivalence is reinforced by many factors: Israel today is so much more powerful, economically and militarily, than the Palestinians; Israeli (and Palestinian) security forces have effectively shut down Palestinian suicide bombers and the Israel lobby in Washington has effectively shut down any pressure from the White House or Congress. Israel has never been so insulated.

But these are not your grandfather’s Palestinians either. There is a young generation emerging that increasingly has no faith in their parents’ negotiations with the Jews, have no desire to recognize Israel as a “Jewish state” and would rather demand the right to vote in a one-state solution.

At the same time, America has changed. There was a time in the 1970s and 1980s when the fate of the Middle East was critical to our economy. After all, there had been an Arab oil embargo in 1973. And, strategically, the Middle East was seen as the arena most likely to trigger a U.S.-U.S.S.R. nuclear war. Peacemaking in Henry Kissinger’s day was a necessity. Today it is a hobby. It is not an unimportant hobby: If Israelis and Palestinians go back to war, it surely would make an unstable region more unstable, creating myriad difficulties for the U.S.  But urgent? America will become the world’s largest oil producer by 2015, and the Soviet Union no longer exists.

The truth is Kerry’s mission is less an act of strategy and more an act of deep friendship. It is America trying to save Israel from trends that will inevitably undermine it as a Jewish and democratic state. But Kerry is the last of an old guard. Those in the Obama administration who think he is on a suicide mission reflect the new U.S. attitude toward the region. And those in Israel who denounce him as a nuisance reflect the new Israel.

Kerry, in my view, is doing the Lord’s work. But the weight of time and all the changes it has wrought on the ground may just be too heavy for such an act of friendship. If he folds his tent, though, Israelis and Palestinians will deeply regret it, and soon.

Krugman’s blog, 4/14/14

April 15, 2014

There were two posts yesterday.  The first was “Obamacare, The Unknown Ideal, Continued:”

The current state of public opinion on health reform is really peculiar. If you’ve been following the issue at all closely, you know that the Affordable Care Act is one of the great comeback stories of public policy: after a terrible start, it has dramatically exceeded expectations. But hardly anyone seems to know that.

It’s easy to understand how that happens for Fox-watchers and Rush-listeners, who are fed a steady diet of supposed Obamacare disaster stories. Remember this?

But the real story hasn’t even gotten through to many people who should know better.

Over the weekend I had dinner in NYC with some very smart, sophisticated people; yes, all of them liberals. And almost everyone in the group was under the impression that Obamacare is still going badly — they wanted me to tell them whether it could still be turned around.

Meanwhile, New York (which created its own exchange) is a huge success story: enrollment is 60 percent higher than federal projections, premiums have been cut in half.

An aside: New York was already a community-rating state, where insurers weren’t allowed to discriminate based on medical history. But the result of that system was that healthy people tended to stay out of the individual market, creating a bad risk pool that drove up rates. Now everyone has to be in, dramatically improving the risk pool. As such, the New York experiences demonstrates the essential role of the individual mandate for reform.

But anyway, back to the mystery: here we have smart, pro-reform people living in a state where reform is going really well. And they don’t know it!

In part this may reflect the Obama administration’s lackluster job so far in getting the word out. But it also, I think, reflects a persistent anti-ACA tilt in news coverage. In the final days of March I wrote about the de facto blackout on the obvious surge in enrollments; if you weren’t reading Charles Gaba and/or bloggers who followed him, you were in the dark about a huge developing story. And this tilt has continued.

Just FYI: the article I linked above, about the spectacular success of New York reform, was on page A16 …

Yesterday’s second post was “Interest Rates and the Budget Outlook:”

The CBO has issued its latest budget update, and as always it’s a very careful piece of work. But there is one thing really worth drawing attention to — not that the CBO is necessarily wrong, but it might be, and at any rate people should be aware of what’s driving the conclusions.

Here it is: the CBO’s projection has deficits quite low in the near term, but starting to widen a few years from now. What’s driving that move toward deficit? To an important extent it’s interest payments, which CBO has rising from 1.3% of GDP in 2014 to 3.3% of GDP in 2024.

Well, that’s what happens when you have ever-growing debt, right? The more you owe, the bigger the interest payments, and up it spirals, right?

Wrong.

CBO has debt rising only slightly as a share of GDP, from 74 percent in 2014 to 78 percent in 2024. Essentially all of that rise in interest burden reflects the assumption that the federal government’s borrowing costs will rise sharply as the economy normalizes. But meanwhile we have another careful organization, the IMF, declaring that there is a long-term downward trend in real interest rates, that secular stagnation is a real risk, and that rates not much higher than what we see now may be the new normal.

Who’s right? I’m with the IMF, but they and I could be wrong. The key point for now, however, is that the CBO hasn’t exactly found that deficits will start to rise in a few years; it has essentially assumed that they will rise, because it assumes that interest rates will rise much more than many economists, including those at the IMF, believe.

Brooks, Nocera and Bruni

April 15, 2014

In “A Long Obedience” Bobo gurgles that we often hear the story of Passover as a tale of liberation, but its richest core truth is one of joyful obedience.  “Stu Freeman” of Brooklyn, NY had this to say in the comments:  “Only a Republican could come up with a biblical interpretation like this: “‘Shut Up And Do As I Tell You’ said Moses to the Hebrews.” And the rich and the powerful inherited the earth and made the laws that the rest of us must follow. Thank you, David.”  I’ll warn you – Bobo uses the phrase “sweet compulsion” toward the end of his gurgling…  Mr. Nocera, in “C.E.O. Pay Goes Up, Up and Away!”, says so much for getting executive compensation under control.  Mr. Bruni ponders “The Oldest Hatred, Forever Young” and says well beyond Kansas, anti-Semitism persists.  Here, FSM help us, is Bobo:

Monday night was the start of Passover, the period when Jews celebrate the liberation of the Israelites from slavery into freedom.

This is the part of the Exodus story that sits most easily with modern culture. We like stories of people who shake off the yoke of oppression and taste the first bliss of liberty. We like it when masses of freedom-yearning people gather in city squares in Beijing, Tehran, Cairo or Kiev.

But that’s not all the Exodus story is, or not even mainly what it is. When John Adams, Thomas Jefferson and Benjamin Franklin wanted to put Moses as a central figure on the Great Seal of the United States, they were not celebrating him as a liberator, but as a re-binder. It wasn’t just that he led the Israelites out of one set of unjust laws. It was that he re-bound them with another set of laws. Liberating to freedom is the easy part. Re-binding with just order and accepted compulsion is the hard part.

America’s founders understood that when you are creating a social order, the first people who need to be bound down are the leaders themselves.

The Moses of Exodus is not some majestic, charismatic, Charlton Heston-type hero who can be trusted to run things. He’s a deeply flawed person like the rest of us. He’s passive. He’s afraid of snakes. He’s a poor speaker. He whines, and he’s sometimes angry and depressed. He’s meek.

The first time Moses tries to strike out against Egyptian oppression, he does it rashly and on his own, and he totally messes it up. He sees an Egyptian soldier cruelly mistreating a Hebrew slave. He looks this way and that, to make sure nobody is watching. Then he kills the Egyptian and hides his body in the sand.

It’s a well-intentioned act of just rebellion, but it’s done without order, a plan or a strategy. Even the Israelites don’t admire it. They just think Moses is violent and impetuous. Moses has to flee into exile. The lesson some draw is that even well-motivated acts of liberation have to be done under the structure of control and authority.

Even after he’s summoned to lead his people at the burning bush, Moses has still not fully learned this lesson. He rushes off to his task, but he doesn’t pause to circumcise his son — the act that symbolizes the covenant with God. A leader who isn’t himself obedient to the rules is not going to be effective, so God tries to kill Moses. Fortunately, Moses’s wife, Zipporah, grabs a sharp stone and does the deed.

This is a vision of obedient leadership. Leaders in the ancient world, like leaders today, tried to project an image of pompous majesty and mastery. But Moses was to exemplify the quality of “anivut.” Anivut, Rabbi Norman Lamm once wrote, “means a soft answer to a harsh challenge; silence in the face of abuse; graciousness when receiving honor; dignity in response to humiliation; restraint in the presence of provocation; forbearance and quiet calm when confronted with calumny and carping criticism.”

Just as leaders need binding, so do regular people. The Israelites in Exodus whine; they groan; they rebel for petty reasons. When they are lost in a moral wilderness, they immediately construct an idol to worship and give meaning to their lives.

But Exodus is a reminder that statecraft is soulcraft, that good laws can nurture better people. Even Jews have different takes on how exactly one must observe the 613 commandments, but the general vision is that the laws serve many practical and spiritual purposes. For example, they provide a comforting structure for daily life. If you are nervous about the transitions in your life, the moments when you go through a door post, literally or metaphorically, the laws will give you something to do in those moments and ease you on your way.

The laws tame the ego and create habits of deference by reminding you of your subordination to something permanent. The laws spiritualize matter, so that something very normal, like having a meal, has a sacred component to it. The laws build community by anchoring belief in common practices. The laws moderate religious zeal; faith is not expressed in fiery acts but in everyday habits. The laws moderate the pleasures; they create guardrails that are meant to restrain people from going off to emotional or sensual extremes.

The 20th-century philosopher Eliyahu Dessler wrote, “the ultimate aim of all our service is to graduate from freedom to compulsion.” Exodus provides a vision of movement that is different from mere escape and liberation. The Israelites are simultaneously moving away and being bound upward. Exodus provides a vision of a life marked by travel and change but simultaneously by sweet compulsions, whether it’s the compulsions of love, friendship, family, citizenship, faith, a profession or a people.

One wonders how many of the mitzvot Bobo feels “sweetly compelled” to actually follow.  Here’s Mr. Nocera:

At 79, Graef “Bud” Crystal is the grand old man of executive compensation critics. Once a top compensation consultant, he switched sides in the 1980s, becoming a fierce critic of many of the practices he helped institutionalize, and analyzing executive pay for other media like Fortune and, most recently, Bloomberg News. He’s been known to call his second career “atoning for my sins.”

The other day, Crystal was recalling what it used to be like trying to cobble together pay information about a chief executive based on reading the disclosure documents required by the Securities and Exchange Commission. There was no rhyme or reason to the way the numbers were put together, and shareholders were often left scratching their heads.

“I remember writing an article for Fortune in the late 1980s, using Goizueta’s pay at Coca-Cola,” Crystal told me. (Roberto Goizueta was the chief executive of Coke from 1981 until his death in 1997.) The proxy statement showed that he made $800,000 that year in salary. But about 15 pages later, it showed that he had received an additional $56 million in stock options. Except that, instead of being written numerically, the option grant was spelled out, thus easy to overlook. “It was deliberate obfuscation,” said Crystal.

For the most part, it isn’t like that anymore. In the mid-2000s, the S.E.C. passed rules forcing companies to place all the compensation information for top executives in one place. There were people who thought that this effort at pay “transparency” would help get C.E.O. compensation under control — in effect shaming compensation committees and chief executives from letting executive pay get any more out of hand than it already was.

Not exactly how it turned out, is it?

On Sunday, The New York Times published its annual list of the compensation of the top executives at the 100 largest publicly traded American companies. (The survey is conducted by Equilar for The Times.) Topping the list, as he often has, was Larry Ellison, the chief executive of Oracle, who, despite being the world’s fifth-wealthiest person, raked in an additional $78.4 million in 2013, a combination of cash, stock and stock options. That was more than twice as much as the second and third place finishers, Robert Iger of Disney and Rupert Murdoch of 21st Century Fox. Not that they had anything to complain about, at $34.3 million and $26.1 million respectively.

The Times reported that the median compensation for C.E.O.’s in 2013 was $13.9 million, a 9 percent increase from 2012. The Wall Street Journal, which did its own, smaller survey a few weeks earlier, described the 2013 pay increases as representing “moderate growth.”

Nell Minow, another longtime critic of corporate governance and executive compensation practices, told me that the last time she harbored hope that executive pay might be brought under control was 1993. That was the year that Congress passed a bill capping cash compensation at $1 million. But the law also exempted pay that was based on “performance.”

Two things resulted. “Immediately, everybody got a raise to $1 million,” said Minow. And, second, company boards began setting performance measures that were easy to clear — and larding pay packages with huge stock option grants. “I hadn’t realized how easy it would be to manipulate performance measures,” Minow said.

Since then, nothing has stopped executive compensation from rising. When the market fell after the financial crisis, many companies gave their chief executives big option grants to “make up for” what they’d lost. When performance measures were toughened, chief executives responded by demanding larger grants because they were taking more “risk.”

It’s a rigged game. When the company’s stock goes up, says Crystal, the chief executive views himself as a hero. And when it goes down, “it’s Janet Yellen’s or Barack Obama’s fault.”

Plus, there’s simple greed. When I asked Crystal about Ellison’s pay package, he laughed. “There are billionaires like Warren Buffett and Larry Page who don’t pig out,” he said. (As the chief executive of Google, co-founder Page takes a $1 annual salary.) “But there are others who can’t keep their hands off the dough. Ellison is in that category.”

Soon enough, the S.E.C. is going to require yet another disclosure. As a result of the Dodd-Frank financial reform law, companies will have to publish a ratio comparing the chief executive’s pay to the median pay of the company’s employees. At most large American corporations, the ratio is likely to be very high, hinting at how corrosive these huge executive pay packages have become, and the degree to which they play a role in furthering income inequality, a point made in “Capital in the Twenty-First Century,” the new book by Thomas Piketty, the economist. The ratio is going to make people mad.

But will it reduce executive pay? We already know the answer to that.

And now here’s Mr. Bruni:

Most of the hate crimes in the United States don’t take the fatal form that the shootings in Kansas over the weekend did, and most aren’t perpetrated by villains as bloated with rage and blinded by conspiracy theories as the person accused in this case, Frazier Glenn Miller. He’s an extreme, not an emblem.

This is someone who went on Howard Stern’s radio show four years ago (why, Howard, did you even hand him that megaphone?) and called Adolf Hitler “the greatest man who ever walked the earth.” When Stern asked Miller whether he had more intense antipathy for Jews or for blacks (why that question?), Miller chose the Jews, definitely the Jews, “a thousand times more,” he said.

“Compared to our Jewish problem, all other problems are mere distractions,” he declaimed, and he apparently wasn’t just spouting off. He was gearing up.

On Sunday, according to the police, he drove to a Jewish community center in Overland Park, Kan., and opened fire, then moved on to a nearby Jewish retirement home and did the same. Three people were killed.

They were Christian, as it happens. When hatred is loosed, we’re all in the crossfire.

On Monday, as law enforcement officials formally branded what happened in Kansas a hate crime, I looked at the spectrum of such offenses nationally: assault, intimidation, vandalism.

The Federal Bureau of Investigation keeps statistics, the most recent of which are for 2012. In the United States that year there were 6,573 hate-crime incidents reported to the bureau (a fraction, no doubt, of all that occurred). While most were motivated by race, about 20 percent were motivated by the victims’ perceived religion — roughly the same percentage as those motivated by the victims’ presumed sexual orientation. I didn’t expect a number that high.

Nor did I expect this: Of the religion-prompted hate crimes, 65 percent were aimed at Jews, a share relatively unchanged from five years earlier (69 percent) and another five before that (65 percent). In contrast, 11 percent of religious-bias crimes in 2012 were against Muslims.

Our country has come so far from the anti-Semitism of decades ago that we tend to overlook the anti-Semitism that endures. We’ve moved on to fresher discussions, newer fears.

Following 9/11, there was enormous concern that all Muslims would be stereotyped and scapegoated, and this heightened sensitivity lingers. It partly explains what just happened at Brandeis University. The school had invited Ayaan Hirsi Ali, a celebrated advocate for Muslim women, to receive an honorary degree. But when some professors and students complained, citing statements of hers that seemed broadly derisive of Islam, the invitation was withdrawn. Clearly, university officials didn’t want their campus seen as a cradle or theater of Islamophobia.

But other college campuses in recent years have been theaters of anti-Israel discussions that occasionally veer toward, or bleed into, condemnations of Jews. And while we don’t have the anti-Semitism in our politics that some European countries do, there’s still bigotry under the surface. There are still caricatures that won’t die.

One of them flared last month on the Christian televangelist Pat Robertson’s TV show. His guest was a rabbi who, shockingly, was himself trafficking in the notion that Jews excel at making money. The rabbi said that a Jew wouldn’t squander a weekend tinkering with his car when he could hire a mechanic and concentrate on something else.

“It’s polishing diamonds, not fixing cars,” Robertson interjected.

Polishing diamonds?

In a 2013 survey of 1,200 American adults for the Anti-Defamation League, 14 percent agreed with the statement that “Jews have too much power” in our country, while 15 percent said Jews are “more willing to use shady practices” and 30 percent said that American Jews are “more loyal to Israel” than to the United States.

That’s disturbing, as is the way in which the Holocaust is minimized by its repeated invocation as an analogy. In separate comments this year, both the venture capitalist Tom Perkins and Kenneth Langone, one of the founders of Home Depot, said that the superrich in America were being vilified the way Jews in Nazi Germany had been.

It’s not just Kansas and the heartland where anti-Semitism, sometimes called the oldest hatred, stays young.

A story in The Times last year focused on an upstate New York community in which three Jewish families filed suit against the school district, citing harassment of Jewish students by their peers. The abuse included Nazi salutes and swastikas drawn on desks, on lockers, on a playground slide.

When a parent complained in 2011, the district’s superintendent responded, in an email: “Your expectations for changing inbred prejudice may be a bit unrealistic.”

Well, the only way to breed that prejudice out of the generations to come is never to shrug our shoulders like that — and never to avert our eyes.

Krugman’s blog, 4/13/14

April 14, 2014

There were two posts yesterday, one from a guest poster.  The first post was “ECO 348, The Great Recession:  Unemployment, Structural or Cyclical?”:

Slides here (pdf).

The second post was “Legal But Not Fair (Hungary):”

A new post from my Princeton colleague Kim Lane Scheppele, about how 45 percent of the popular vote turned into a two-thirds supermajority for Fidesz.

Legal but not Fair: Viktor Orbán’s New Supermajority

Kim Lane Scheppele
Princeton University and Institute for Advanced Study, Princeton

with Miklós Bánkuti in Princeton and Zoltán Réti in Budapest*

13 April 2014

Viktor Orbán and his Fidesz party coasted to a clear victory in last weekend’s Hungarian election, as expected. The governing party got 45% of the vote, but the new “rules of the game” turned this plurality vote into two thirds of the seats in the parliament. A continuing two-thirds parliamentary majority allows Orbán to govern without constraint because he can change the constitution at will. But this constitution-making majority hangs by a thread.

Orbán’s mandate to govern is clear because his party got more votes than any other single political bloc. What is not legitimate, however, is his two-thirds supermajority. Orbán was certainly not supported by two-thirds of Hungarians – nowhere close. In fact, a majority gave their votes to other parties. Orbán’s two-thirds victory was achieved through legal smoke and mirrors. Legal. But smoke and mirrors.

The International Election Observer Mission of the Organization for Security and Cooperation in Europe was extremely critical of the election. The election monitors found that in many different ways “[t]he main governing party enjoyed an undue advantage.” They reported numerous violations of international standards, including a failure to separate party and state, a biased media environment, a partisan Electoral Commission, lack of transparency in determining the electoral districts, and a generally un-level playing field. These, too, contributed to Orbán’s success.

In this post, I will explain why a plurality result in the polls turned into a constitutional supermajority and why that supermajority is due more to Fidesz’s self-dealing than to popular will. I will also show that Fidesz’s supermajority was so close that it depends on every one of the new tricks that the party inserted into the electoral system to benefit itself. One seat less, and the supermajority would be gone.

In saying that Orbán’s supermajority is illegitimate, I am not arguing that Orbán simply stole the election. No other party came close to Orbán’s 45% of the vote, though when you exclude the new Hungarian citizens from the neighboring countries – people who don’t actually live in Hungary and probably never have – Orban’s support drops to 43.5% among domestic voters.

The left alliance, a collection of five parties with the Socialists in the lead, received only 26% of the vote. It evidently failed to capture the public imagination and capitalize on the fact that about half of the voters wanted a change of government. Jobbik, a far-right party, won a shocking 21% of the vote, up more than 3% from its already large 2010 showing, making it the most successful far-right party in the European Union. The tiny, vaguely Green (but mostly vague) party LMP just barely squeaked over the 5% threshold to enter the parliament.

Orbán’s parliamentary two-thirds hides a complex set of calculations that depends on many factors. The Hungarian election system is fiendishly complicated. The bottom line is that the “two thirds mandate” includes far less popular support than one would guess given its size and far more legal trickery than a democratic government should be permitted to use. Orbán’s parliamentary majority may have been earned, but the supermajority mandate was not.

That said, Fidesz would probably have won a majority in parliament no matter what sort of electoral system Hungary had. Most mixed electoral systems like Hungary’s top up large pluralities into majorities. Also, many governments – if they can – attempt to shape the rules to aid their own reelection. Some tweaking of the electoral rules to favor the party in power is regrettable but normal.

But the Orbán government went well beyond normal tinkering when it extensively revised the electoral framework during its last four years in office. The new system was designed precisely to give Orbán a vastly disproportionate two-thirds parliamentary majority with less than a majority vote. And it worked.

The international election monitors were not impressed with the new system. They concentrated primarily on evaluating the campaign and the election itself, as we will see later, but they also expressed concern about the election framework and how it had been adopted. As the election monitors noted, the governing party’s “undue advantage” resulted in part from a “legal overhaul” that was “unprecedented” and consisted of laws that were “passed and modified without public consultation or inclusive dialogue with opposition parties.” They found that “[t]he manner in which these laws were adopted and frequently amended, including in the year prior to these elections, led to legal uncertainty and did not provide for effective and inclusive public consultation, contrary to national legislation and good practice.” The election observers concluded that the legislative process used to adopt the new electoral framework “undermined support and confidence in the reform process.”

While written in the diplomatic language characteristic of international reports, this is a serious condemnation.

How did this legal overhaul produce the 2014 election result? It manufactured the appearance of another landslide for Orbán, a landslide that did not occur.

In fact, Orbán’s victory disguised a growing weakness in his appeal to Hungarian voters. Between the 2010 and 2014 elections, Orbán lost a substantial fraction of his supporters. In 2010, Fidesz received more than 2.7 million votes while in 2014 the party won less than 2.3 million. This 16% drop in the total number of Fidesz voters was produced by one of the lowest turnouts in the post-communist period, combined with an 8% decline in the party’s overall support among those who voted. In fact, the three lowest turnout elections since communism ended were the three that Orbán won: 1998, 2010 and 2014.

These numbers mask the even more dramatic decline in Orbán’s popularity at home because they include new citizens in the neighboring states to whom the 2012 Fidesz constitution granted citizenship. The new citizens who voted for the first time this year are a formidable force since they voted 95% for Fidesz.

But these new citizens were not eligible to vote in 2010 so we should compare Orbán’s support in 2010 and 2014 without them. Among domestic voters, Orbán received only 2.1 million votes this time, losing 21% of the voters that had supported him in 2010. His party list vote slipped by 9% in this group as well.

Fidesz lost more than one fifth of its domestic voters overall in part because of the lower turnout, but the far-right Jobbik party and the left alliance both gained voters, as the chart below indicates.

The depressed turnout and yet the increased success of the two other major parties show Orbán’s weakness despite his huge parliamentary majority. Overall, 37% of voters stayed away from the polls, 35% voted for other parties, and only 28% of Hungarians actually cast an affirmative vote for Fidesz (including the “over the borders” voters).

If you consider only those who went to the polls, leaving aside the possibility that the low turnout is itself a signal of Orbán’s weakness, 51% voted for the three other parties that entered the parliament while 45% voted for Fidesz. And yet 51% of voters will get only 33% of the seats. And Orbán will get his two-thirds.

How is it possible for only 45% of the vote to turn into a two-thirds parliamentary mandate? Orbán’s “two-thirds” was enabled by a series of tricks that were legal, but not fair.

(To follow the analysis, you need to know that Hungarians cast two votes at a parliamentary election, one for a representative from their home constituency and one for a party. Fidesz got 45% of both the constituency and the party votes.)

Orbán’s electoral system had the overall effect of creating a huge disparity in how many votes each party needed to gain a parliamentary seat. If you add all votes (party list and constituencies together) and divide them by the number of seats each party actually got in this election, you can see that not all votes were equal in securing representation in parliament. A simple formula describes how many votes for any other party it would take to generate the representation in parliament that one vote for Fidesz did:

1 Fidesz vote = 2.1 left alliance votes = 2.6 Jobbik votes = 3.1 LMP votes

In short, the Fidesz seats were acquired with many fewer votes the others.

In an earlier set of blog posts, I explained the new election system in detail. Now that we have election results, we can see how the different parts of the remodeled election system worked to generate this two-thirds parliamentary mandate.

In my earlier analysis, I alleged that the new electoral districts had been gerrymandered to produce winning results for Fidesz. It’s true that the parliament was reduced in size from 386 seats to only 199, so the districts had to be redrawn. Moreover, the old districts were massively unequal, so the Constitutional Court had required that they be made more equal in size. But neither the smaller parliament nor the more equal districts required gerrymandering.

How can one tell if a district has been gerrymandered? There are many ways to gerrymander by drawing the precise boundaries of districts to achieve a particular result. The full effects are hard to tell without better data than we have.

But the new districts are highly unequal in size, which gives us a way to test for gerrymandering. A gerrymanderer not constrained by the need for strictly equal districts would make the districts of his opponents systematically larger than the districts where his own voters dominate. In larger districts, it takes more votes to elect an MP, so each vote counts less. If the “left” districts are systematically larger than the “right” districts, that is evidence of conservative gerrymandering.

The relationship between district size (here measured by the number of voters who actually voted in each district) and partisanship (measured by the percentage of the vote that went to the left alliance and LMP combined) is substantial. As one would expect in a system gerrymandered to benefit the right wing of the political spectrum, the more left-leaning a district is, the more voters it has. In fact, the explained variation (R-squared) is 37%. In social science, it’s a huge effect when one variable accounts for more than one-third of the variation in another.

The system is in fact much more biased against left voters than the one it replaced. Calculated using the 2010 districts and voting data, the same model (votes for the left v. # of votes in a district) explained less than 2% of the variance (R-squared = .019), as the figure below indicates.

The old districts were much more unequal in size (which was a problem) but they were not nearly as politically biased, as the nearly flat regression line shows. The new districts are still highly unequal in size. But now they are strongly biased against the left. This is what a gerrymander looks like.

There’s another aspect to the gerrymander that we can also see clearly. In the old parliament, more mandates were determined by the list votes than by individual constituencies. (The pre-2014 system was also disproportionate, but less so.) List votes which are distributed over a set of candidates are more proportional than individual constituencies which are generally more disproportionate because only one candidate can win. In the new parliament, the relative proportions of list and constituency mandates are reversed, so that now 106 of the seats are determined by the individual constituencies and 93 come from the party lists. This makes the effect of the gerrymandered districts bigger in the overall calculation of parliamentary mandates.

Fidesz won 45% of the votes in the individual constituencies in 2014 and yet got 88% of the seats. The effects of the gerrymander, even on the rough analysis above, assisted massively in producing such a disproportionate effect.

Recall that Fidesz unilaterally set the boundaries of all of the districts in a law requiring a two-thirds vote, and did so without allowing the opposition to have any input at all. As the international election monitors noted in their post-election report, “The process of delimitation of constituencies was criticized . . . for lacking transparency and inclusive consultation.” While the election law required that districts vary by no more than 15% above and below the national average, the election observers noted that districts still fell outside this wide margin. As we can see, that gave more room for the gerrymanderers to play with the district composition.

While gerrymandering is probably the single biggest trick that converted Orbán’s plurality to a supermajority, Orbán’s supermajority is built from many different sleights of vote. In my earlier analysis, I showed how the parties on the left were forced to work together for many different reasons ranging from the elimination of the second round of voting in individual constituencies to the novel system of compensatory mandates on the party-list side. Because the new “first past the post system” of individual constituencies was designed to reward the largest single party, it was important for the fragmented and fractious left to unite to win.

Five of the parties on the left eventually forged an alliance with each other to overcome the bias against small parties built into the system. The alliance groups squabbled and quite visibly hated working together, which no doubt suppressed the vote they got. Together, they won only 10 of the 106 individual constituencies with their 26% of the constituency vote. But they would surely have lost almost every single constituency if they hadn’t joined together.

As predicted, party fragmentation had huge effects. Had the alliance had managed to attract to its ranks just one more party, the LMP, the number of individual constituencies that a six-party alliance would have gained would have more than doubled – from 10 to 21. Even this small division in the left opposition cut in half the number of individual mandates that the left won. That’s a powerful effect of the system.

LMP had its own reasons to stay outside the alliance, and it guessed correctly that it could (barely) get its own parliamentary fraction by doing so. But if it had joined with the alliance, the left opposition together would have gained an additional 11 district mandates instead of the five that LMP got from its list votes, for a net gain of six.

(The individual constituencies where the Alliance + LMP > Fidesz are Budapest districts #1, #2, #4, #6, #12, #13, #15, #18; Baranya districts # 1 and #2; Szabolcs-Szatmár-Bereg district #1 as you can see here.)

Many mixed electoral systems allow the “unused votes” won by losing candidates to be added to their party-list totals when the list mandates are calculated, so I will call that “normal compensation.” Normal compensation is the tool through which mixed systems become more proportional. But only Hungary has a winner compensation system that throws proportionality to the winds. With winner compensation, the winners of individual constituencies may add difference between the number of votes they received and the number of vote received by the second-place candidate (minus one) to the totals for their party lists for use in calculating party-list mandates. It’s complicated but a simple explanation is here.

With the results in, we can see that winner compensation added six parliamentary mandates to the Fidesz totals, which were essential to the party’s supermajority. We calculated this using the Election Office website data that handily provides the difference in the number of votes between the first- and second-highest vote-getter each district here. The left alliance would gain three of those mandates, Jobbik would gain two and LMP would gain one.

The table below shows that, if winner compensation were removed from the system, Fidesz would lose six of its parliamentary seats, which by itself would put two-thirds far out of reach.

There was another trick cooked into the legal reforms that we can measure directly from the election results. Orbán’s new constitution gave expedited citizenship, upon application, to ethnic Hungarians who have never lived in Hungary. With citizenship came the right to vote. About 600,000 ethnic Hungarians “over the borders” took out citizenship and nearly 200,000 of them registered to vote. Voter turnout in this group was 81% (much higher than among domestic voters) but 19% of the ballots were disqualified due to errors in the way that the ballots were prepared. Six days after the election, these ballots were finally counted, and Fidesz won 95.49% of the “over the borders” vote.

The “over the borders” votes added 122,588 to the party list votes, enough for 1.4 parliamentary mandates. (Since all party list votes and compensation votes are added together before being divided by the total number of mandates available, all votes contribute to the overall pool and therefore particular sources like “over the borders” voters may produce fractions of mandates.) Given how close Orbán’s two-thirds majority was, the “over the borders” voters were clearly essential to achieving it. Every single mandate was necessary to the two-thirds.

Since Orbán’s supermajority hangs on the votes of the new “over the borders” citizens, the constitutional majority will depend on a set of voters whose ballots were most open to fraud. My earlier analysis showed that the votes from Hungarians “over the borders” were cast with virtually no integrity checks in place. The law required the Election Office to ignore irregularities in applications from this group alone, while ex-pats voting abroad were held to a higher standard. The list of the “over the borders” voters was secret so that only a few election observers could see it and, even then, these observers could record nothing from the lists. (This secrecy of the foreign voters’ list was justified, in the government’s view, because two of Hungary’s neighbors, Slovakia and Ukraine, do not permit dual citizenship.)

Fully one-third of the new citizens who registered to vote without a residence in Hungary gave no address to which the ballots could be sent, providing only an email address. As a result, we cannot even tell what country these voters are voting from and there are even fewer controls on the integrity of the process through which these voters got their ballots. Though secrecy of the process is a logical consequence of giving citizenship to ethnic Hungarians living in countries that ban dual citizenship, this secrecy also makes it very hard to check the integrity of the vote. New citizens who registered to vote abroad could have asked for their ballot to be sent anywhere. And of course, these Hungarians “over the borders” were the only ones allowed to vote either by mail or by having a proxy drop their ballot at a designated polling station without the voter herself having to appear in person.

The “over the borders” citizens faced no ID check in place anywhere in the process from the initial registration to vote to the actual casting of the ballot. As a result, there were no formal checks that would ensure whether people who registered to vote and voted were in fact the new citizens in whose name they voted. All other voters who cast ballots in the Hungarian election had to show some ID to vote. But not those over the borders.

The actual balloting did little to ensure confidence in the integrity of these votes. Photographs published in the online HvG news portal showed voters in Transylvania voting in tents helpfully provided by the Erdély Magyar Nemzeti Tanács. This is a group that has close links with Fidesz. As you can see if you look at the pictures, there was no secrecy of the ballot.

In addition to the voter assistance helpfully provided by Fidesz allies, tens of thousands of ballots (111,268 ballots in fact) were dropped off at consulates by unofficial bundlers who gathered up the votes from Hungarian communities and took them to polling stations without having to demonstrate that the ballots collected in this way arrived intact and unchanged. There is no public accounting of who these bundlers were. Establishing the integrity of the “chain of custody” from voter to polling station was not required.

While these new voters are only responsible for a little under one and a half mandates, they are now key contributors to Orbán’s razor-thin constitution-making majority. But these are votes under a shadow of suspicion.

Orbán’s mandate to be prime minister in the next government came from the voters. His supermajority came from a variety of legal tricks contained in the laws that were written by Fidesz, for Fidesz.

* * *

The day after the election, election monitors filed a hard-hitting assessment based on their observations in the month before the election. They said good things about the generally efficient administration of the actual balloting (without having looked closely yet at the “over the borders” votes) and they praised the diverse choice of candidates on offer. But the evaluation of the monitoring team was sharply critical about many other aspects of the election. Their report concentrated on the unfairness of the campaign, going beyond the unfair effects of the election rules that I have shown above.

As their report indicates, the “main governing party enjoyed an undue advantage” because, among other things, the campaign “did not fully respect the separation of party and state.” The election monitoring team confirmed this damning judgment in multiple ways.

The government had developed a slogan “Hungary is performing better” which the government had used since March 2013 to advertise its own accomplishments. Just before the campaign began, government then “sold” the slogan to Fidesz for EUR 640. But, while Fidesz took up the slogan, the government continued to use it in government advertisements on commercial television, where election ads from parties were banned. Eventually, the Supreme Court found that government ads using the same slogans as the governing party violated the campaign rules and had to be removed. But that decision did not come until 18 March, very close to the election, after the ads had run for weeks.

Fidesz-run municipalities also campaigned on behalf of the governing party, running campaign ads on municipally funded television, contributing to the lack of separation between party and state. In addition, a huge advertising campaign sponsored by the government-allied NGO Civil Unity Forum (CÖF) “circumvent[ed] campaign finance regulations,” as the monitors said. What the election monitors did not say is that the law itself exempted the government and the NGOs from the campaign finance limits specifically and from the campaign rules altogether, so the overwhelming blitz of pro-Fidesz information coming from the government and its allied NGOs was not regulated by law while the activities of parties were strictly controlled.

The election monitors noted that most of the campaign was devoted to negative press coverage of corruption allegations against the Socialist party. Early in the campaign, charges were brought against a deputy leader of the Socialists, who resigned when the allegations were made public. What the election monitors did not say is that the corruption allegations were brought at the start of the campaign by a public prosecutor who has long been allied with the governing party. The monitors did note that after the charges were brought, the government-allied media talked about almost nothing else during the rest of the campaign.

But the deputy leader was not the only allegedly corrupt Socialist to dominate the campaign. Huge posters all over Budapest sponsored by CÖF showed unflattering pictures of the three top candidates on the left alliance ticket, along with the Socialist former deputy mayor of Budapest. He was not running for anything but he had been awaiting trial on corruption charges for years. Though charged ages ago, his case is in legal limbo, having been moved around the legal system by political officials who changed the location of the trial. At the moment, no court acknowledges jurisdiction of his case. But his face was all over the city.

In neither corruption case was concrete evidence against these opposition politicians proven in court before the allegations were used in the campaign. As the government-allied media whipped up a frenzy about these corruption charges, support for the left alliance dropped in the last few weeks before the election. In the end, the election monitors reported, “The tone of the campaign was dominated by alleged corruption cases at the expense of discussion on substantive issues.”

The monitors found that “the absence of other political advertisements on nationwide commercial TV, combined with a significant amount of government advertisements, undermined the unimpeded and equal access of contestants to the media, contrary to [OSCE standards].” Overall, the campaign was judged to have taken place on “an uneven playing field.”

The election monitors found that government offices charged with supervising the election were too close to the government itself. Because of the way that its permanent members had been selected, the National Election Commission was, in their view, “a partisan commission.” While more than 900 complaints were raised before the Election Commission during the election campaign, many were rejected on purely formal grounds without considering their substantive merits. Decisions of the Election Commission were “adopted unanimously without debate, while issues of substance were rarely addressed.” And the decisions were “inconsistent.” The monitors’ report concluded: “The rejection of complaints on formal requirements often left complainants without effective consideration of their claims, which is at odds with [the standards that the OSCE applies].”

The courts, too, did not always carry out their election responsibilities properly. As the election monitors noted, any technical mistake in an applicant’s submission resulted in an immediate rejection of the complaint without the possibility of an appeal. (Though the election monitors didn’t mention it, this standard was actually built into the law.) Perhaps most damning, the election monitors found that “[s]ome cases decided by the courts contradicted legislation and led to legal uncertainty.”

In support of this judgment, the monitors obliquely referenced two decisions of the Constitutional Court, where a majority of the judges have now been appointed by the governing party. One decision found that a government decree banning the placement of election posters did not have anything to do with free speech, and the other found that no constitutional issues were raised when some voters were allowed to vote by mail while others were prevented from doing so.

The Supreme Court did somewhat better than the Constitutional Court in policing election standards, as the case involving the government advertisements on commercial television revealed. But, as the monitors noted, the Supreme Court sometimes said one thing while the Constitutional Court said another. The Supreme Court’s decision that campaign posters could be placed on lampposts contradicted the Constitutional Court judgment supporting the government’s ban. And, as the monitors’ report noted, the Supreme Court’s decision was “not fully enforced.”

The Media Council, with the remit to ensure balanced media coverage, failed to do so during the campaign, according to the monitors. Instead they found that the Council itself evinced “a lack of political balance” because all of its members were allied with the governing party. During the campaign, the Council enforced “unclear legal provisions” in way that created “uncertainty for media outlets.”

A content analysis of news coverage performed by the election monitors during the campaign found that the media themselves were systematically biased in favor of the governing party. Three of the five monitored television stations, for example, “displayed a significant bias toward Fidesz by covering nearly all of its campaign in a positive tone while more than half of the coverage of the opposition alliance was in a negative tone.” The public broadcaster showed a “lack of independence.” In the end, as the election monitors reported, “there are few independent media outlets” and “political pluralism is undermined by an increasing number of outlets directly or indirectly owned by businesspeople associated with Fidesz and by the allocation of state advertising to these media outlets.”

Journalists critical of the government reported to the election monitors that the withdrawal of state and private advertising from the opposition media “threatens the economic viability of media outlets and results in self-censorship.” Journalists also complained that the Media Council’s “significant sanctioning power create[s] fear of arbitrary inference.” The election observers backed the journalists, finding that “there is a lack of legal certainty due to a lack of clarity in what constitutes ‘balanced coverage’ in broadcast news,” a standard that the Media Council allegedly enforces.

The media during the campaign were also subjected to decisions from the Election Council and the Supreme Court affecting the content of broadcasting during the campaign. One decision made by the Election Commission and upheld by the Supreme Court required the lone opposition-friendly television channel to invite a Jobbik representative to a televised debate among opposition candidates.

The election monitors were concerned with other aspects of the new electoral system that created inequalities among voters. The dual system for foreign voters, in which new citizens who never lived in the country could easily register on line and vote by mail while expatriate Hungarians living abroad encountered a more onerous registration process and had to vote in person at consulates, “undermine[d] the principle of equal suffrage.” The election monitors also reported that this difference in treatment was “perceived as at attempt to differentiate voting rights on partisan grounds.” Among domestic voters, the new system for minority voting required advance registration and allowed voting for only one candidate which, in the view of the monitors, both undermined secrecy of the ballot and limited the electoral choices of minority voters.

Overall, the election monitoring mission documented violations of many international standards in the way the campaign was run, including a systemic failure to separate government from party, an overwhelmingly imbalanced media sphere, a partisan Election Commission along with a government-dominated Media Council and inconsistent courts, a campaign preoccupied with government-created scandals whipped up to a frenzy by government-controlled media, and serious inequalities in the right to vote for different categories of citizens.

Viktor Orbán needed every trick he used to get his two-thirds mandate. Every single parliamentary seat is crucial to it. Remove any one of the legal tricks above, or show that any of the campaign violations were consequential to the result, and the two-thirds is gone.

It is impossible to conclude, as the Hungarian government wishes the world to do, that Orbán was swept back into power with the eager support of two-thirds of Hungarian voters. Yes, Orbán’s Fidesz party won more votes than any other party. And yes, in most electoral systems in the world, that would allow this party to form a government. But Orbán’s two-thirds supermajority was obtained through a series of legal tricks. Moreover, the patent unfairness of the campaign itself cast serious doubts on the validity of the results in general.

Orbán’s constitutional majority – which will allow him to govern without constraint — was made possible only by a series of legal changes unbecoming a proper democracy. Not only were the legal changed rammed through the parliament by Orbán’s own party over the objections of the opposition, but all of these legal changes are now cooked into the new two-thirds mandate. Remove any one of them and the two-thirds crumbles. Add in any of the violations of international standards revealed during the campaign and the election results cannot even be trusted.

The European Union imagines itself as a club of democracies, but now must face the reality of a Potemkin democracy in its midst. The EU is now going into its own parliamentary elections, after which it will have to decide whether Hungary still qualifies to be a member of the club.

* * *

A note on numbers: These numbers look slightly different from the ones that the world’s press announced the day after the election, when Fidesz had 44% of the vote. The numbers I am using here were updated on 13 April, after the Election Office added several categories of new voters to the tallies, most on 12 April. Nearly a week after the election, the office officially added most of the votes from voters abroad – both those who did not permanent addresses in Hungary and those who did. The office also added in all of the voters who voted in Hungary, but in districts other than the ones in which they were officially registered. Plus the office added in the votes from one precinct per district, a precinct held back from the day-of-election vote counts in case the other last minute votes coming from ex-pats or voters voting outside the district constituted such a small number that secrecy of the ballot would be compromised by adding them late. This meant that about 170,000 domestic voters and 63,000 “over the borders” voters were added to the totals after election day. This analysis includes their votes.

Many thanks for assistance with the election analysis go to Miklós Bánkuti who received his MPA in 2012 from Princeton with a specialization in economics and Zoltán Réti who received his PhD in 1994 from the University of Florida in mathematics.

Krugman, solo

April 14, 2014

In “Three Expensive Milliseconds” Prof. Krugman says we’re giving huge sums to the financial industry while receiving little or nothing in return.  Here he is:

Four years ago Chris Christie, the governor of New Jersey, abruptly canceled America’s biggest and arguably most important infrastructure project, a desperately needed new rail tunnel under the Hudson River. Count me among those who blame his presidential ambitions, and believe that he was trying to curry favor with the government- and public-transit-hating Republican base.

Even as one tunnel was being canceled, however, another was nearing completion, as Spread Networks finished boring its way through the Allegheny Mountains of Pennsylvania. Spread’s tunnel was not, however, intended to carry passengers, or even freight; it was for a fiber-optic cable that would shave three milliseconds — three-thousandths of a second — off communication time between the futures markets of Chicago and the stock markets of New York. And the fact that this tunnel was built while the rail tunnel wasn’t tells you a lot about what’s wrong with America today.

Who cares about three milliseconds? The answer is, high-frequency traders, who make money by buying or selling stock a tiny fraction of a second faster than other players. Not surprisingly, Michael Lewis starts his best-selling new book “Flash Boys,” a polemic against high-frequency trading, with the story of the Spread Networks tunnel. But the real moral of the tunnel tale is independent of Mr. Lewis’s polemic.

Think about it. You may or may not buy Mr. Lewis’s depiction of the high-frequency types as villains and those trying to thwart them as heroes. (If you ask me, there are no good guys in this story.) But either way, spending hundreds of millions of dollars to save three milliseconds looks like a huge waste. And that’s part of a much broader picture, in which society is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.

How much waste are we talking about? A paper by Thomas Philippon of New York University puts it at several hundred billion dollars a year.

Mr. Philippon starts with the familiar observation that finance has grown much faster than the economy as a whole. Specifically, the share of G.D.P. accruing to bankers, traders, and so on has nearly doubled since 1980, when we started dismantling the system of financial regulation created as a response to the Great Depression.

What are we getting in return for all that money? Not much, as far as anyone can tell. Mr. Philippon shows that the financial industry has grown much faster than either the flow of savings it channels or the assets it manages. Defenders of modern finance like to argue that it does the economy a great service by allocating capital to its most productive uses — but that’s a hard argument to sustain after a decade in which Wall Street’s crowning achievement involved directing hundreds of billions of dollars into subprime mortgages.

Wall Street’s friends also used to claim that the proliferation of complex financial instruments was reducing risk and increasing the system’s stability, so that financial crises were a thing of the past. No, really.

But if our supersized financial sector isn’t making us either safer or more productive, what is it doing? One answer is that it’s playing small investors for suckers, causing them to waste huge sums in a vain effort to beat the market. Don’t take my word for it — that’s what the president of the American Finance Association declared in 2008. Another answer is that a lot of money is going to speculative activities that are privately profitable but socially unproductive.

You may object that this can’t be right, that the invisible hand of the market ensures that private returns and social returns coincide. Economists have, however, known for a long time that when it comes to speculation, that proposition just isn’t true. Back in 1815 Baron Rothschild made a killing because he knew the outcome of the Battle of Waterloo a few hours before everyone else; it’s hard to see how that knowledge made Britain as a whole richer. It’s even harder to see how the three-millisecond advantage conveyed by the Spread Networks tunnel makes modern America richer; yet that advantage was clearly worth it to the speculators.

In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. Mr. Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.

So never mind the debate about exactly how much damage high-frequency trading does. It’s the whole financial industry, not just that piece, that’s undermining our economy and our society.


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