Krugman’s blog, 10/8/15

October 9, 2015

There were three posts yesterday.  The first was “The China Debt Fizzle:”

Remember the dire threat posed by our financial dependence on China? A few years ago it was all over the media, generally stated not as a hypothesis but as a fact. Obviously, terrible things would happen if China stopped buying our debt, or worse yet, started to sell off its holdings. Interest rates would soar and the U.S economy would plunge, right? Indeed, that great monetary expert Admiral Mullen was widely quoted as declaring that debt was our biggest security threat. Anyone who suggested that we didn’t actually need to worry about a China selloff was considered weird and irresponsible.

Well, don’t tell anyone, but the much-feared event is happening now. As China tries to prop up the yuan in the face of capital flight, it’s selling lots of U.S. debt; so are other emerging markets. And the effect on U.S. interest rates so far has been … nothing.

Who could have predicted such a thing? Well, me. And not just me: anyone who seriously thought through the economics of the situation, with the world awash in excess saving and the U.S. in a liquidity trap, quickly realized that the whole China-debt scare story was nonsense. But as I said, this wasn’t even reported as a debate; the threat of Chinese debt holdings was reported as fact.

And of course those who got this completely wrong have learned nothing from the experience.

The second post yesterday was “Prudence is Folly:”

Larry Summers calls for fiscal expansion, and rails (though he doesn’t use the term) against the Very Serious People, denouncing the fixation on structural reform:

Traditional approaches of focusing on sound government finance, increased supply potential and the avoidance of inflation court disaster … It is an irony of today’s secular stagnation that what is conventionally regarded as imprudent offers the only prudent way forward.

Quite. It’s now seven years since I warned that we had entered a world in which

virtue becomes vice, caution is risky and prudence is folly.

And we’re still in that world. I’m really glad to see Larry saying similar things, buttressed by the growing evidence that we’re facing a secular lack of adequate demand. I wish I believed it would matter.

Yesterday’s last post was “Flimflam Fever:”

Apparently desperate Republicans are pleading with Paul Ryan to become Speaker of the House, because he’s “super, super smart.” More than anyone else in his caucus, he has the reputation of being a brilliant policy wonk.

And that tells you even more about the dire state of the GOP. After all, Ryan is to policy wonkery what Carly Fiorina is to corporate management: brilliant at selling himself, hopeless at actually doing the job. Lest we forget, his much-vaunted budget plan proved, on even superficial examination, to be a ludicrous mess of magic asterisks. His big contribution to discussion of economic policy was his stern warning to Ben Bernanke that quantitative easing would “debase the dollar”, that rising commodity prices in early 2011 presaged a surge in inflation. This guy’s delusions of expertise should be considered funny.

Yet he may indeed be the best they have.

Nonetheless, it would be a huge mistake for him personally to take the job. Where he is, he can cultivate his wonk image, with nobody in the press willing to disturb the illusion. In a direct leadership role, he’d have no place to hide.

Brooks, Cohen and Krugman

October 9, 2015

Bobo has extruded a thing called “Hillary Clinton’s Opportunist Solution!” in which he babbles that Hillary Clinton no longer even pretends to be consistent or authentic, but maybe that can work with voters and in office.  In the comments “gemli” from Boston had this to say:  “Hillary Clinton is running as a Democrat, and she is shifting her policy positions to accommodate what Democrats want. Duhhhhhh. Republicans pretend to be scientifically-ignorant bible-thumping gun-loving homophobes to accommodate their base. Well, I hope they’re pretending. I’d respect them more if I thought they were opportunistic liars than if they actually believed what they say.  In short, I’d rather organize an administration under Hillary’s uncertain trumpet than around a dead-certain Trump.  (And 50 points from Slytherin for Brooks’ mentioning Bernie Sanders and Ben Carson in the same sentence.)”  Mr. Cohen, in “Indifference Kills,” says Milan’s Holocaust memorial houses refugees, turning its back on the indifference that kills.  Prof. Krugman points out that “It’s All Benghazi” and that the House hearings intended to hurt Hillary Clinton are just one case of politicians capitalizing on a nonissue. Remember the debt crisis?  Here’s Bobo:

All presidential candidates face a core problem. To win their party’s nomination in an age of growing polarization they have to adopt base-pleasing, pseudo-extreme policy positions. But to win a general election and actually govern they have to adopt semi-centrist majority positions.

How can one person do both?

Nobody had figured this out until, brilliantly, Hillary Clinton. She is campaigning on a series of positions that she transparently does not believe in. She’ll say what she needs to say now to become Bernie Sanders in a pantsuit (wait, Bernie Sanders already wears a pantsuit!). Then, nomination in hand and White House won, she will, it appears, transparently flip back and embrace whatever other positions she doesn’t believe in that will help her succeed in her new role.

In other words, one of the causes of polarized gridlock and political dysfunction is that we have too many politicians with ideological convictions. Clinton seems to be eliding this problem.

Her most impressive elision concerns trade, the Trans-Pacific Partnership. When she announced her opposition to Judy Woodruff on the “PBS NewsHour” she was performing a flip-flop of the sort that leaves gymnasts gaping and applauding. As CNN pointed out, she’s praised the deal 45 separate times, at one point calling it “the gold standard in trade agreements.”

This was not only a substantive flip-flop. It was so naked it amounted to a bold and clarion statement of faith on behalf of flip-flopping itself. It suggested a whole style of campaigning and method of governing based on the principle of unprincipledness.

In order to navigate her way through the wilds of politics and the morass of an ungovernable nation, she’ll do whatever she needs to do, say whatever needs to be said and fight for whatever constituency is most useful at the moment.

She’ll get things done. (Whatever those things happen to be.)

This flexibility has become something of a leitmotif. The most exhaustively reported account of her various policy adjustments comes from Evan Popp, a journalism student at Ithaca College who documented Clinton’s shifts while he interned at the Institute for Public Accuracy. He has collected Clinton’s statements on either side of various issues.

In 2000 she supported the Defense of Marriage Act, though now she is pro-gay marriage. In the 1990s she was for more incarceration. “We need more prisons to keep violent offenders for as long as it takes to keep them off the streets.” Now she’s against mass incarceration.

In 2007 she was against allowing undocumented immigrants to have driver’s licenses. Now she supports them. In 2002, she was against ethanol subsidies, but now she’s bullish.

We all get to change our mind in response to the facts, but each of these intellectual inquiries happens to have led her in a politically convenient direction.

This deftness could, if used wisely, help Clinton placate the left in order to get the nomination and then placate the powerful in order, as president, to pass legislation. By contrast, if a conviction politician like Sanders or Ben Carson got elected, he wouldn’t be able to get 35 votes for anything he proposed.

But there are downsides to the Opportunist Solution. First, politically. The Clinton theory of the campaign seems to be that people vote on the basis of what policy a candidate can deliver or what interest group he or she kowtows to. But it could be that voters actually vote on the basis of authenticity and trustworthiness. In that case, Clinton could be hurt by the fact that only 35 percent of, say, Floridians think she is honest and trustworthy, according to a Quinnipiac poll, whereas, just to pick a random name, 71 percent think that of Joe Biden.

Second, as a matter of practical governing, it’s hard to organize an administration around an uncertain trumpet. Administrations generally work best when everybody on the team knows consistently what the president stands for. As the old wisdom goes, the problem with pragmatism is that it doesn’t work.

Third, there’s the humanitarian issue. Clinton once supported the Pacific trade deal for good reason. According to a report from the Peterson Institute for International Economics, the deal would bolster U.S. gross domestic product growth and jobs over the next decade. It would lift Malaysian growth by 6.6 percent and Vietnamese growth by 14 percent. It would also build a solid Asian alliance to balance Chinese hegemony. If Clinton’s flip-flop ends up sinking the deal, she will have helped sentence millions of people to further poverty and destabilized the world’s most dynamic region.

Still, it would be interesting to see how government by flip-flop might work. If we had a president hopping opportunistically from issue to issue, that might disrupt our ossified landscape and tear down the old-fashioned partisan walls.

In an era of polarization and dysfunction, maybe authenticity, conviction, consistency and principle are the hobgoblins of little minds!

Next up we have Mr. Cohen, writing from Milan:

“Indifference” is the word engraved on the stark wall at the entrance to Milan’s Holocaust memorial, housed beneath the central railway station from which Jews were deported to Auschwitz and other Nazi camps. The premises vibrate when trains depart overhead, as if mirroring the shudder the place provokes.

A survivor of the deportation, Liliana Segre, whose father, Alberto, was killed at Auschwitz, suggested that “indifference” was the most appropriate word to greet visitors to the memorial, which opened in 2013. Nobody had cared when, from 1943 onward, Jews were hauled through the elegant avenues of Milan to the station. They were unloaded from trucks and packed into wooden boxcars made to transport six horses but used for some 80 doomed human beings.

So it was perhaps inevitable that when Roberto Jarach, the vice president of the memorial, was asked if he could help with Milan’s refugee crisis, he saw that word flash through his mind. As hundreds of desperate refugees converged daily on Milan’s central station — opened during the rule of the Fascist dictator Benito Mussolini — the memorial could not show “indifference.”

“I immediately came down here to measure the space we have,” Jarach told me. “These people hardly know where they are.”

And so, for a few months now, camp beds have been set out every night to the left of the main entrance. In all, about 3,500 people have been sheltered, mainly Eritreans, but also Syrians and Afghans, part of the largest movement of refugees and migrants since the end of World War II.

Children are given toys and crayons. Adults get a new pair of shoes: A pile of discarded footwear testifies to their popularity. A jury-rigged pipe provides a shower in the washrooms. When I visited, 38 refugees had spent the previous night at the memorial. They come in the evening from the station, where municipal authorities and an organization called Progetto Arca have set up a processing center. They sleep near the Indifference Wall. They leave the next morning, usually headed north toward Germany.

There is no direct analogy between the situation of millions of refugees today and the Jews who were deported from Milan’s Platform 21 (as the memorial is also known). The refugees are fleeing war — not, in general, targeted annihilation. They are victims of weak states, not an all-powerful one. Their plight often reflects the crisis of a religion, Islam — its uneasy adaptation to modernity — not the depredations of a single murderous ideology.

Still, there are echoes, not least in that word, indifference.

The indifference of Hungary, with its self-appointed little exercise in bigotry: the defense of Europe as Christian Club. The indifference of Britain, where the prime minister speaks of “swarms,” the foreign secretary of “desperate migrants marauding,” and the home secretary of threats “to a cohesive society.” The indifference of a Europe that cannot rouse itself to establish adequate legal routes to refugee status that would stem trafficking that has left about 3,000 people dead this year in the Mediterranean.

Then there is the indifference of an America that seems to have forgotten its role as haven for refugees of every stripe. The indifference of a world unready to acknowledge that more than 4 million Syrian refugees absorbed by Turkey, Jordan and Lebanon need a massive program of economic and educational aid over the next decade to confront the crisis. “It’s a trend and not a blip,” David Miliband, the president of the International Rescue Committee, told me.

If the counter-indifference gesture of Milan’s Holocaust memorial were repeated myriad times across a European Union of more than half a billion people, the impact would be dramatic. One quarter of Lebanon’s population is now composed of Syrian refugees; the numbers reaching the E.U. constitute less than 0.5 percent of its population.

Another echo, for Jews, lies in their own situation in Europe a little over a century ago. They were often marginalized. As Rabbi Julia Neuberger pointed out in a recent sermon at the West London Synagogue, around 150,000 Jews, often fleeing pogroms, arrived in Britain between 1881 and 1914. An anti-immigrant group called the British Brothers’ League declared then that Britain could not become “the dumping ground for the scum of Europe.”

Sound familiar?

Yesterday’s “scum” often proves to be the invigorating lifeblood of renewal. Churchill opposed the Aliens’ Act of 1905, designed to control Jewish immigration, on the grounds that “free entry and asylum” were practices from which Britain “has so greatly gained.”

Europe is awash in small-mindedness, prejudice and amnesia. On Syria, the United States is not far behind.

Jarach, whose Jewish family arrived in Milan in the late 19th century, is assisted by Adhil Rabhi, a Moroccan immigrant. They showed me around the memorial, explained how each boxcar was filled with Jews and then shunted to an elevator that took them up to the platform.

Nobody saw the Jews. Nobody wanted to see them. Indifference kills. As Syria demonstrates.

And now here’s Prof. Krugman:

So Representative Kevin McCarthy, who was supposed to succeed John Boehner as speaker of the House, won’t be pursuing the job after all. He would have faced a rough ride both winning the post and handling it under the best of circumstances, thanks to the doomsday caucus — the fairly large bloc of Republicans demanding that the party cut off funds to Planned Parenthood, or kill Obamacare, or anyway damage something liberals like, by shutting down the government and forcing it into default.

Still, he finished off his chances by admitting — boasting, actually — that the endless House hearings on Benghazi had nothing to do with national security, that they were all about inflicting political damage on Hillary Clinton.

But we all knew that, didn’t we?

I often wonder about commentators who write about things like those hearings as if there were some real issue involved, who keep going on about the Clinton email controversy as if all these months of scrutiny had produced any evidence of wrongdoing, as opposed to sloppiness.

Surely they have to know better, whether they admit it to themselves or not. And surely the long history of Clinton nonscandals and retracted allegations — remember, there never was anything to the Whitewater accusations — should serve as a cautionary tale.

Somehow, though, politicians who pretend to be concerned about issues, but are obviously just milking those issues for political gain, keep getting a free pass. And it’s not just a Clinton story.

Consider the example of an issue that might seem completely different, one that dominated much of our political discourse just a few years ago: federal debt.

Many prominent politicians made warnings about the dangers posed by U.S. debt, especially debt owned by China, a central part of their political image. Paul Ryan, when he was chairman of the House Budget Committee, portrayed himself as a heroic crusader against deficits. Mitt Romney made denunciations of borrowing from China a centerpiece of his campaign for president. And by and large, commentators treated this posturing as if it were serious. But it wasn’t.

I don’t mean that it was bad economics, although it was. Remember all the dire warnings about what would happen if China stopped buying our debt, or worse yet, starting selling it? Remember how interest rates would soar and America would find itself in crisis?

Well, don’t tell anyone, but the much feared event has happened: China is no longer buying our debt, and is in fact selling tens of billions of dollars in U.S. debt every month as it tries to support its troubled currency. And what has happened is what serious economic analysis always told us would happen: nothing. It was always a false alarm.

Beyond that, however, it was a fake alarm.

If you looked at all closely at the plans and proposals released by politicians who claimed to be deeply worried about deficits, it soon became obvious that they were just pretending to care about fiscal responsibility. People who really worry about government debt don’t propose huge tax cuts for the rich, only partly offset by savage cuts in aid to the poor and middle class, and base all claims of debt reduction on unspecified savings to be announced on some future occasion.

And once fiscal scare tactics started to lose political traction, even the pretense went away. Just look at the people seeking the Republican presidential nomination. One after another, they have been proposing giant tax cuts that would add trillions to the deficit.

Debt, it seems, only matters when there’s a Democrat in the White House. Or more accurately, all the talk about debt wasn’t about fiscal prudence; it was about trying to inflict political damage on President Obama, and it stopped when the tactic lost effectiveness.

Again, none of this should come as news to anyone who follows politics and policy even moderately closely. But I’m not sure that normal people, who have jobs to do and families to raise, are getting the message. After all, who will tell them?

Sometimes I have the impression that many people in the media consider it uncouth to acknowledge, even to themselves, the fraudulence of much political posturing. The done thing, it seems, is to pretend that we’re having real debates about national security or economics even when it’s both obvious and easy to show that nothing of the kind is actually taking place.

But turning our eyes away from political fakery, pretending that we’re having a serious discussion when we aren’t, is itself a kind of fraudulence. Mr. McCarthy inadvertently did the nation a big favor with his ill-advised honesty, but telling the public what’s really going on shouldn’t depend on politicians with loose lips.

Sometimes — all too often — there’s no substance under the shouting. And then we need to tell the truth, and say that it’s all Benghazi.

Krugman’s blog, 10/7/15

October 8, 2015

There was one post yesterday, “Did The Fed Save The World?”:

I’m only part way into Ben Bernanke’s book, but I wanted to play devil’s advocate about the book’s central thesis — not to criticize BB, or question the job he did, but as a way to provoke thought about what lessons we should learn from the crisis of 2008.

Bernanke’s basic theme is that the shocks of 2008 were bad enough that we could have had a full replay of the Great Depression; the reason we didn’t was that in the 30s central banks just sat immobilized while the financial system crashed, but this time they went all out to keep markets working. Should we believe this?

It’s not a hard story to tell — and I very much agree with BB that pulling out all the stops was the right thing to do. You don’t play games at such times.

But I’m not persuaded that the real difference between 2008 and 1930-31 (which is when the Depression turned Great) lies in central bank action, or related bailouts.

It’s true that the 30s were marked by a big financial disruption; one measure (which I learned from Bernanke’s academic work) is the soaring spread between slightly risky corporate bonds and government debt:

But there was also a big financial disruption in 2008-2009, in fact comparable in size by this measure:

It didn’t last as long, but that may be as much effect as cause of the failure to experience a full-blown depression.

Why was the disruption so large despite the bailouts and emergency lending? Well, banks by and large didn’t collapse, but shadow banking rapidly shriveled up, with repo and other alternatives to bank financing shrinking very fast; liquidity for everything but the safest of assets disappeared even though the big financial firms remained in being.

And if we’re looking for effects of the tightening in credit conditions, remember that credit policy usually exerts its biggest effects through housing — and housing investment fell more than 60 percent as a share of GDP:

Even a total collapse of home lending couldn’t have subtracted more than a point or two more off aggregate demand.

So really, was putting a limit on the financial crisis the reason we didn’t do a full 1930s? Or was it something else?

And there is one other big difference between the world in 2008 and the world in 1930: big government. Not so much deliberate stimulus, although that helped, as automatic stabilizers: the U.S. budget deficit widened much more in 2007-2010 than it did in 1930-33, even though the slump was much milder, simply because taxing and spending were much bigger as a share of GDP. And that budget deficit was a good thing, supporting demand at a crucial time.

Again, Bernanke and company were right to step in forcefully. But I’d argue that the fiscal environment was probably more important than monetary actions in limiting the damage.

Oh, and since 2010 officials everywhere, but especially in Europe, have been doing all they can to undo the favorable effects of automatic stabilizers. And the result is that in Europe economic performance is at this point considerably worse than it was at this point in the 1930s.

Blow, Kristof and Collins

October 8, 2015

Mr. Blow says “With Ben Carson, the Doctor is Always Out” and that after this week’s string of dumbfounding comments emanating from the candidate, I’m starting to doubt everything that comes out of his mouth.  Mr. Kristof considers “3 Peerless Republicans for President: Trump, Carson and Fiorina” and says any  of the front-runners would make history by being elected without basic experiences of every other occupant of the Oval Office.  Ms. Collins says “Too Many Bushes Spoil the Broth” and that Jeb’s supporters are hearing from the whole family: Columba, George, Barbara, George W. and Laura.  Here’s Mr. Blow:

Oh, Ben.

On Tuesday, Ben Carson was on “Fox & Friends” and was posed this hypothetical: “If a gunman walks up and puts a gun at you and says what religion are you, that is the ultimate test of your faith,” as the Oregon shooter reportedly did to his victims.

It wasn’t a question per se, but the interviewer obviously wanted to know how Carson would react in that incredibly stressful circumstance.

Carson responded:

“I’m glad you asked that question because not only would I not probably not cooperate with him, I would not just stand there and let him shoot me. I would say, ‘Hey guys, everybody attack him. He may shoot me, but he can’t get us all.’ ”

Then Carson chuckled.

Oh, Ben.

Do you not see why so many people saw this as a callous, thickheaded blaming of the victim? The statement doesn’t honor the heroism of Chris Mintz, who did exactly as Carson suggested — charged at the shooter, was shot seven times, but wasn’t able to incapacitate him — and it also devalues the lives and reactions of all the other victims who didn’t or couldn’t charge the shooter.

Which of us truly know precisely how we would react — even those of us who are sure that we would be fearless — when caught off guard and caught up in an active mass shooting where bodies, ripped open by bullets, are falling all around?

On Tuesday evening, Carson appeared on Fox News’ “The Kelly File,” where the host, Megyn Kelly, put this statement to him: “The accusation there, Dr. Carson, is that you appeared tone deaf and that you seemed callous in the laughter about a massacre and what you would have done.”

Carson responded, “I’m laughing at them and their silliness.” “Who?” Kelly asked. “The people asking that question,” Carson responded.

Hold up! When the original statement/question was put to Carson, the “them” were the hosts on “Fox & Friends,” and Carson’s response began with “I’m glad you asked that question…”

I’m starting to doubt everything that comes out of this man’s mouth.

On Wednesday on “CBS This Morning,” Carson defended his comments, saying, “I want to plant in people’s minds what to do in a situation like this because, unfortunately, this is probably not going to be the last time this happens.”

What Carson wants to plant in people’s minds flows counter to what the Department of Homeland Security wants to plant in their minds as “good practices.” The agency prioritizes personal protection and fleeing over engagement:

“If you suspect a potential active shooter situation, you must quickly determine the most reasonable way to protect your own life. If there is an accessible escape path, attempt to evacuate the premises.”

The recommendations continue:

“If evacuation is not possible, you should find a place to hide where the active shooter is less likely to find you.”

And then:

“As a last resort, and only when your life is in imminent danger, you should attempt to incapacitate the shooter by acting with physical aggression and throwing items at the active shooter.”

On Wednesday, Carson appeared again on Fox News, responding to the criticism over his Tuesday comments.

“I’m not gonna change and become — you know, you know — a vanilla envelope that they can accept. They’re never going to accept me because I don’t believe in political correctness. So I can twist myself in pretzels trying to fit into their silly little box or I can be who I am. And we need people who are willing to stand up and talk what’s logical right now.”


Oh, Ben.

Did you mean manila, perchance?


This is not about whether speech should conform to political correctness, Mr. Carson, but about having a reasonable expectation that politicians can speak correctly. You, apparently, cannot.

We have to deal with all of the issues that contribute to our epidemic of gun violence in this country — everything from better assessment and treatment of mental illness, to sensible, national gun-control measures, to addressing a fame-obsessed, violence-soaked culture.

Our politicians won’t stand up to the gun lobby. But we can’t simply, as Carson recommends, throw our bodies at armed men.

During a Facebook question and answer session, he seemed to suggest that he preferred bodies riddled with bullets to more gun control. Carson wrote:

“There is no doubt that this senseless violence is breathtaking — but I never saw a body with bullet holes that was more devastating than taking the right to arm ourselves away.”

Oh, Ben.

Next up we have Mr. Kristof:

The leading contenders for the Republican nomination for president tell us three interesting things about America.

First, many G.O.P. voters are so disenchanted they’re willing to entrust the country to candidates — Donald Trump, Ben Carson and Carly Fiorina — with zero experience in elective office or military command. Only two men without previous time in major elective office or the military have been president, Herbert Hoover and William Howard Taft, and both had held cabinet posts. No president has ever been as inexperienced as any of these three leading Republican candidates.

Second, the public feels an odd awe for C.E.O.s and presumes they know how to run things, even if their records suggest otherwise. This cultural reverence for C.E.O.s perhaps also explains why pay packages have increased — and why Fiorina was allowed to take home a $21 million severance package after she was fired as Hewlett-Packard’s chief executive for incompetence.

Third, the only kind of welfare that carries no stigma in America is corporate welfare. For all Trump’s criticisms of government, his familywealth came from feeding at the government trough. His father, Fred Trump, leveraged government housing programs into a construction business; the empire was founded on public money.

My bet is that Trump, Fiorina and Carson will fade, and that voters will eventually turn to a more conventional candidate, perhaps Senator Marco Rubio. From the Democrats’ point of view, the scariest Republican ticket might pair Rubio with John Kasich. Rubio has natural political skills, projects youth and change, and would signal that the Republican Party is ready to expand its demographic base. Rubio and Kasich would also have a decent chance of winning their home states, Florida and Ohio — and any ticket that could win Florida and Ohio would be a strong contender.

But instead, Republican primary voters for now are pursuing a bizarre flirtation with three candidates who are the least qualified since, well, maybe since Trump put his toe in the waters before the 2000 election.

In that sense, they offer a window into the American psyche — part of which is our adulation of the C.E.O.

There’s something to be said for C.E.O.s’ entering politics: In theory, they have management expertise and financial savvy. Then again, it didn’t work so well with Dick Cheney.

More broadly, the United States has overdone the cult of the C.E.O., partly explaining why at the largest companies the ratio of C.E.O. compensation to typical worker pay rose from 20 to one in 1965 to 303 to one in 2014,according to the Economic Policy Institute.

In any case, even if you were conducting a job search for a great C.E.O. to lead the free world, you wouldn’t turn to either Trump or Fiorina.

My sense is that Trump isn’t the idiot that critics often claim (the most common words voters used to describe him in a recent poll were “idiot,” “jerk,” “stupid” and “dumb”). This is a man who is near the top of diverse fields: real estate, book writing, television and now presidential politics. He’s a born showman, a master of branding and marketing. But he doesn’t seem a master of investing.

Back in 1976, Trump said he was worth “more than $200 million.” If he had simply put $200 million in an index fund and reinvested dividends, he would be worth $12 billion today, notes Max Ehrenfreund of The Washington Post. In fact, he’s worth $4.5 billion, according to Forbes.

In other words, Trump’s business acumen seems less than half as impressive as that of an ordinary Joe who parks his savings in an index fund.

An index fund might also have been less ethically problematic. In the 1970s, the Justice Department accused Trump of refusing to rent to blacks. And in 2013, New York State’s attorney general sued him, alleging “persistent fraudulent, illegal and deceptive conduct”; Trump denied the charges.

If Trump’s performance as a business executive was problematic, Fiorina’s was exceptional. Exceptionally bad.

Put aside the fact that she’s the C.E.O. who fired thousands of workers while raking in more than $100 million in compensation and pushing H.P. to acquire five corporate jets. Just looking at the bottom line, she earned her place on those “worst C.E.O.” lists she appeared on.

As Steven Rattner wrote in The Times, Hewlett-Packard’s share price fell 52 percent in the nearly six years she was at the helm. H.P. did worse than its peers: IBM fell 27.5 percent, and Dell, 3 percent.

Oh, and on the day she was fired, the stock market celebrated: H.P. shares soared 7 percent.

If I wanted a circus ringmaster, I’d hire Trump. If I wanted advice on brain surgery or hospital management, I’d turn to Carson. Fiorina would make an articulate television pundit. But for president?

The fact that these tyros are the three leading presidential contenders for a major political party is a sad window into our political dysfunction.

And now here’s Ms. Collins:

Happiness is being on the Jeb Bush campaign mailing list. Recent highlights:

Sept. 27 — Columba Bush emailed to say she wants me to get to know the Jeb she knows, who is a person of principle. Also very tall. “But Friend, no one is going to see that side of him if he misses his critical End of Quarter fundraising goal of $200,000.”

Sept. 29 — President George H.W. Bush is in my inbox. The good Bush! He wants me to know that Jeb is ready.

Later that day …

Barbara Bush just wrote, asking me to donate some money. She admits she’s not as big into email as her son. (Jeb brags that he spent 25 to 30 hours a week emailing when he was governor. He has a book coming out about this and a lot of the messages seem to involve thanking people for writing.) Anyhow, the former first lady mentions that — although she has no idea why — her family calls her “The Enforcer.” I am not entirely clear on why she’s bringing that up. Is it a threat?

Sept. 30 — Oh, wow, they’re rolling out W. He feels Jeb “has what it takes to lead our nation.” Also, both he and Laura would really appreciate it if I send some money.

Later that day …

Jeb wants to make sure I caught his brother’s note: “Really thankful to have his support on this journey.” I think someday we should discuss the national tendency to describe everything as a “journey.” Journey is getting a bad name.

Oct. 4 — Big news from Jeb: He’s been talking with his parents, and they think it would be great if I could get to know them personally. “Today we’re launching a contest to fly one lucky winner down to Texas at the end of the month to meet Mom and Dad. All you have to do is chip in $1.”

Oct. 6 — Columba wants to make sure I got Jeb’s note about the contest to meet George H.W. and Barbara. “Jeb loves meeting his biggest supporters, and I can’t think of a better way to do that than flying you to Houston to meet the whole family.” She and Jeb are going to be there, too. Although not, apparently, W. and Laura. Maybe they’re on a different journey.

• • •

This is far from the first time a candidate for president has dragged the family into fund-raising efforts. (By the end of the campaign, you’re going to see third cousins serving as honorary guests at $100-a-plate dinners.) And eventually, we’re going to have some serious conversations about Bill Clinton. But right now, we’re starting to get so many Bushes, the nation is in danger of becoming one large political hedge.

This week Jonathan Martin and Matt Flegenheimer reported in The Timesthat the Bush organization is seriously considering having George W. campaign for his brother in South Carolina, where people apparently look back on the invasion of Iraq as the best of times. South Carolina was a critical victory for W. in 2000 and I remember interviewing Republican primary voters who said they were going to vote for him because they knew if he got in trouble, his parents would straighten him out. It seemed sort of sweet at the time. Oh well.

The longer the race goes on, the closer Jeb seems to snuggle up to his older brother. We’ve come a long way from the “my own man” distancing epoch. After that, there was the arm’s-length era of Well, I wouldn’t have expanded Medicare. And then it was on to the fabled moment during the last debate when Donald Trump dissed W., and Jeb shot back: “You know what? As it relates to my brother, there’s one thing I know for sure. He kept us safe.” He then went on to mention the hugging of the firefighter at ground zero.

The World Trade Center was such a terrible, terrible tragedy that it seems unseemly to use it for political leverage in any way. However, if you’re going to bring it up, the accurate way to describe George W. Bush in relation to 9/11 would be something like, “The man who, despite the best intentions in the world, failed to keep us safe.”

Chances are, Jeb did envision a campaign in which he was the only Bush in sight. Just last month he told voters he knew he’d never get elected “by being the third Bush running for president.” But desperate times breed desperate measures. Very hard to go around bragging that you were a terrific Florida governor at the same time Florida Republicans are saying they’d much rather vote for Trump.

Plus, the big donors are getting restless. Dissatisfaction on the part of your former constituents is one thing, but there’s nothing worse than cranky oligarchs. Dangers abound. It’s a time when you need to see your kin flocking to the rescue. One person’s hedge is another person’s security blanket.

Krugman’s blog, 10/6/15

October 7, 2015

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

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

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

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

But not in Germany.
But not in Germany

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

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

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

The last post yesterday was “TPP Take Two:”

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

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

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

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

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

Friedman and Bruni

October 7, 2015

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

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

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

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

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

But hey, stuff just happens.

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

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

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

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

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

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

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

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

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

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

Now here’s Mr. Bruni:

Carly Fiorina gives one heck of a speech.

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

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

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

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

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

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

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

Give her credit for dauntlessness.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brooks and Nocera

October 6, 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Blah, blah blah notwithstanding.

Blow, Cohen and Krugman

October 5, 2015

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

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

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

Obama continued:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Shabbat Shalom,” I said.

“Shabbat Shalom,” they said.

We got talking.

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

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

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

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

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

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

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

And now here’s Prof. Krugman:

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

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

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

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

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

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

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

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

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

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

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

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

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

Krugman’s blog, 10/3/15

October 4, 2015

There were three posts yesterday.  The first was “

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

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

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

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

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

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

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

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

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

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

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

He notes that

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

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

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

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

I remain quite puzzled.

Krugman’s blog, 10/2/15

October 3, 2015

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

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

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

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

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

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

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

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

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

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

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


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