Krugman’s blog, 7/12/16

July 13, 2016

There was one post yesterday, “Still Confused About Brexit Macroeconomics:”

OK, I am still finding it hard to understand the near-consensus among my colleagues about the short- and medium-term effects of Brexit. As I’ve tried to point out, while there are clear reasons to believe that Brexit will make Britain somewhat poorer in the long run, it’s not completely obvious why this should lead to a recession in the short run. I got some thoughtful responses, but they raised more questions in my mind. And I have to say that quite a lot of the reaction I’ve received has involved strange failures of reading comprehension; it’s as if economists simply can’t process the proposition that what’s bad in the long run might not have obviously bad consequences in the short run.

So let me give an example of the kind of analysis that I think should raise eyebrows: BlackRock’s dire warnings about UK slump:

Britain will fall into recession over the coming year and growth in each of the next five years will be at least 0.5 percentage points lower as a result of Britain leaving the European Union, BlackRock said on Tuesday.

“Our base case is we will have a recession,” Richard Turnill, chief investment strategist at the world’s largest asset manager, told reporters at the firm’s investment outlook briefing.

“There’s likely to be a significant reduction of investment in the UK,” he said, adding that Brexit will ensure political and economic uncertainty remains high.

When we say “uncertainty”, what do we mean? The best answer I’ve gotten is that for a while, until things have shaken out, firms won’t be sure where the good investment opportunities in Britain are, so there will be an option value to waiting.

Let’s be slightly spuriously concrete. Suppose you think Brexit might have seriously adverse effects on service exports from the City of London. This would mean that investment in, say, London office buildings would become a bad idea. On the other hand, it would also mean a weaker pound, making investment in industrial properties in the north of England more attractive. But you don’t know how big either effect might be. So both kinds of investment are put on hold, pending clarification.

OK, that’s a coherent story, and it could lead to a recession next year.

At some point, however, this situation clarifies. Either we see financial business exiting London, and it becomes clear that a weak pound is here to stay, or the charms of Paris and Frankfurt turn out to be overstated, and London goes back to what it was. Either way, the pent-up investment spending that was put on hold should come back. This doesn’t just mean that the hit to growth is temporary: there should also be a bounce-back, a period of above-normal growth as the delayed investment kicks in.

And again, since some people seem unable to read what I’m saying, this should happen even if the negative scenario holds; it’s the resolution that should produce the delayed boom, whichever way that resolution goes.

But that’s not what BlackRock, or almost anyone else, seems to be saying; they’re projecting lower growth as far as the eye can see.

They could be right. But I still don’t see the logic. It seems to me that “uncertainty” is being used as a catchall for “bad stuff”.

Friedman and Bruni

July 13, 2016

In “The (G.O.P.) Party’s Over” The Moustache of Wisdom says Republican Party hasn’t been a productive part in a two-party democracy for a long time, but a crushing loss this fall could force it to change.  And how many Friedman Units will that take, Tommy?  After a crushing defeat all they’ll decide is that Trump wasn’t a pure enough conservative, and they’ll double down on racism, bigotry, misogyny, and everything else they stand for.  Mr. Bruni, in “Has Barack Obama Hurt Race Relations?”, says as the president spoke at a Dallas memorial, critics carped that he has set us back. Don’t believe it.  I think that editors create the headlines of their columns, and whoever produced this one should be shit canned.  Here’s TMOW:

This column has argued for a while now that there is only one thing worse than one-party autocracy, and that is one-party democracy. At least a one-party autocracy can order things to get done.

A one-party democracy — that is, a two-party system where only one party is interested in governing and the other is in constant blocking mode, which has characterized America in recent years — is much worse. It can’t do anything big, hard or important.

We can survive a few years of such deadlock in Washington, but we sure can’t take another four or eight years without real decay setting in, and that explains what I’m rooting for in this fall’s elections: I hope Hillary Clinton wins all 50 states and the Democrats take the presidency, the House, the Senate and, effectively, the Supreme Court.

That is the best thing that could happen to America, at least for the next two years — that Donald Trump is not just defeated, but is crushed at the polls. That would have multiple advantages for our country.

First, if Clinton wins a sweeping victory, we will have a chance (depending on the size of a Democratic majority in the Senate) to pass common-sense gun laws. That would mean restoring the Assault Weapons Ban, which was enacted as part of the 1994 federal crime bill but expired after 10 years, and making it illegal for anyone on the terrorist watch list to buy a gun.

I don’t want to touch any citizen’s Second Amendment rights, but the notion that we can’t restrict military weapons that are increasingly being used in mass murders defies common sense — yet it can’t be fixed as long as today’s G.O.P. controls any branch of government.

If Clinton wins a sweeping victory, we can borrow $100 billion at close to zero interest for a national infrastructure rebuild to deal with some of the nation’s shameful deferred maintenance of roads, bridges, airports and rails and its inadequate bandwidth, and create more blue-collar jobs that would stimulate growth.

If Clinton wins a sweeping victory, we will have a chance to put in place a revenue-neutral carbon tax that would stimulate more clean energy production and allow us to reduce both corporate taxes and personal income taxes, which would also help spur growth.

If Clinton wins a sweeping victory, we can fix whatever needs fixing with Obamacare, without having to junk the whole thing. Right now we have the worst of all worlds: The G.O.P. will not participate in any improvements to Obamacare nor has it offered a credible alternative.

At the same time, if Clinton crushes Trump in November, the message will be sent by the American people that the game he played to become the Republican nominee — through mainstreaming bigotry; name-calling; insulting women, the handicapped, Latinos and Muslims; retweeting posts by hate groups; ignorance of the Constitution; and a willingness to lie and make stuff up with an ease and regularity never seen before at the presidential campaign level — should never be tried by anyone again. The voters’ message, “Go away,” would be deafening.

Finally, if Trump presides over a devastating Republican defeat across all branches of government, the G.O.P. will be forced to do what it has needed to do for a long time: take a time out in the corner. In that corner Republicans could pull out a blank sheet of paper and on one side define the biggest forces shaping the world today — and the challenges and opportunities they pose to America — and on the other side define conservative, market-based policies to address them.

Our country needs a healthy center-right party that can compete with a healthy center-left party. Right now, the G.O.P. is not a healthy center-right party. It is a mishmash of religious conservatives; angry white males who fear they are becoming a minority in their own country and hate trade; gun-control opponents; pro-lifers; anti-regulation and free-market small-business owners; and pro- and anti-free trade entrepreneurs.

The party was once held together by the Cold War. But as that faded away it has been held together only by renting itself out to whomever could energize its base and keep it in power — Sarah Palin, Rush Limbaugh, the Tea Party, the National Rifle Association. But at its core there was no real common dominator, no take on the world, no real conservative framework.

The party grew into a messy, untended garden, and Donald Trump was like an invasive species that finally just took over the whole thing.

Party leaders can all still call themselves Republicans. They can even hold a convention with a lot of G.O.P. elephant balloons. But the truth is, the party’s over. Thoughtful Republicans have started to admit that. John Boehner gave up being speaker of the House because he knew that his caucus had become a madhouse, incapable of governing.

A Clinton sweep in November would force more Republicans to start rebuilding a center-right party ready to govern and compromise. And a Clinton sweep would also mean Hillary could govern from the place where her true political soul resides — the center-left, not the far left.

I make no predictions about who will win in November. But I sure knowwhat I’m praying for — and why.

Now here’s Mr. Bruni:

I have many qualms about Barack Obama’s presidency. I worry that he exhausted too much political capital too soon on Obamacare. That he overcorrected for his predecessor’s foreign debacle. That he wore his disdain for Congress too conspicuously.

But I cry foul at the complaint that he has significantly aggravated racial animosity and widened the racial divide in this country. It’s a simplistic read of what’s happening, and it lays too much blame on the doorstep of a man who has sought — imperfectly on some occasions, expertly on others — to speak for all Americans.

That complaint trailed him to Dallas, where he appeared on Tuesday at a memorial for the five police officers killed by a sniper last week. He was there not just to eulogize them — which he did, magnificently — but to try to steady a nation reeling from their deaths and the ones just beforehand of Alton Sterling in Louisiana and Philando Castile in Minnesota.

He painted a profoundly admiring portrait of cops, asking their detractors to consider how it feels to be “unfairly maligned” by hyperbolic cries of pervasive police misconduct. Then he painted a profoundly sympathetic portrait of protesters, explaining why so many African-Americans feel “unfairly targeted.”

“Can we find the character, as Americans, to open our hearts to each other?” he said. He may not have phrased the question that way before, but to my ears, it’s what he’s been asking all along.

His sternest critics have decided to hear something different, homing in on his references to racial disparities in criminal justice to charge that he has brought the country to a boil.

In the last few days alone, he has been accused of abetting a “fundamental misreading of American society as irremediably racist,” of consistently choosing “to see things through the eyes of an aggrieved black activist”’ and of being possibly “the worst president in U.S. history” specifically because he “set back American race relations by 50 years.”

It’s true that Obama has sometimes spoken of discrimination before all the facts of a given killing were known. But those remarks touched on wider realities and were usually important acknowledgments of the fury that many Americans were feeling.

Imagine that he instead stood mute or told those Americans to treat the killings as isolated incidents and quietly move on. That might well have raised the temperature, not lowered it.

Besides which, he hasn’t discussedonly discrimination. In Warsaw last week, when he expressed concern about the deaths of Sterling and Castile, he repeatedly mentioned the fine work of most police officers and the need to keep them safe.

“When people say black lives matter, that doesn’t mean blue lives don’t matter,” he said, and this was before the Dallas carnage. His critics edit that out.

They point to data like a Gallup poll from three months ago in which 35 percent of Americans said that they worried “a great deal” about race relations. That number had doubled over the prior two years, a period coinciding with the rise of the Black Lives Matter movement. It was also the highest number since Gallup first began asking this question 15 years ago.

But it may well reflect alarm about how we navigate an overdue conversation rather than a belief that the conversation lacks merit. It’s surely the outgrowth of technological advances. Ask yourself: Are these protests the consequence of Obama’s words or of smartphone images and their documentation of events never glimpsed so intimately and immediately before? There’s no contest.

It’s also possible that the election of the first black president gave some wishful Americans hope of suddenly perfect racial harmony and that the current bitterness grew in the gap between expectations and reality. That’s not Obama’s fault.

If he were an “aggrieved black activist,” he wouldn’t have been able to shrug off Joe Biden’s 2007 comment that he was “the first mainstream African-American who is articulate and bright and clean” and then make Biden his vice president and friend.

If he were an “aggrieved black activist,” he wouldn’t have used his graduation speech at Howard University in May to caution its black students not to ignore enormous racial progress and to assure them that if they could choose a time to be “young, gifted and black in America, you’d choose right now.”

If he were an “aggrieved black activist,” he wouldn’t have pulled off what he did in Dallas on Tuesday, a nuanced balancing act in an era without much nuance or balance.

Just before his speech, Michelle Obama bent toward and reached out to the person seated to her right. That tender image — of her hand on George W. Bush’s — is one I’ll hold on to, and it’s a fitting retort to the nonsense that Obama is sowing hate.

Bobo, solo

July 12, 2016

Oh, but this is precious.  Bobo is wringing his hands and wailing.  He has a question:  “Are We on the Path to National Ruin?”  He moans that Europe in the 1930s and America in the 1890s faced many troubling conditions like we do today. They responded with very different answers.  Here’s a brief response from “zb” in BC, with “gemli” response to follow after Bobo.  Here’s “zb:”  “For 50 years the rightwing has been promoting the notion of “national ruin” as the center piece of its political strategy (along with pandering to hate, ignorance, and hypocrisy) and now you want to play the part of an ignorant bystander to it all?  Really, give us a break.”  Now here’s Bobo, writing from San Antonio:

I never really understood how fascism could have come to Europe, but I think I understand better now. You start with some fundamental historical transformation, like the Great Depression or the shift to an information economy. A certain number of people are dispossessed. They lose identity, self-respect and hope.

They begin to base their sense of self-worth on their tribe, not their behavior. They become mired in their resentments, spiraling deeper into the addiction of their own victimology. They fall for politicians who lie about the source of their problems and about how they can surmount them. Facts lose their meaning. Entertainment replaces reality.

Once facts are unmoored, everything else is unmoored, too. People who value humility and kindness in private life abandon those traits when they select leaders in the common sphere. Hardened by a corrosive cynicism, they fall for morally deranged little showmen.

And then perhaps there’s a catalyzing event. Societies in this condition are culturally tense and socially isolated. That means there are a lot of lonely, alienated young men seeking self-worth through violence. Some wear police badges; some sit in their rooms fantasizing of mass murder. When they act, the results can be convulsive.

Normally, nations pull together after tragedy, but a society plagued by dislocation and slipped off the rails of reality can go the other way. Rallies become gripped by an exaltation of tribal fervor. Before you know it, political life has spun out of control, dragging the country itself into a place both bizarre and unrecognizable.

This happened in Europe in the 1930s. We’re not close to that kind of descent in America today, but we’re closer than we’ve been. Let’s be honest: The crack of some abyss opened up for a moment by the end of last week.

Blood was in the streets last week — victims of police violence in two cities and slain cops in another. America’s leadership crisis looked dire. The F.B.I. director’s statements reminded us that Hillary Clinton is willing to blatantly lie to preserve her career. Donald Trump, of course, lies continually and without compunction. It’s very easy to see this country on a nightmare trajectory.

How can America answer a set of generational challenges when the leadership class is dysfunctional, political conversation has entered a post-fact era and the political parties are divided on racial lines — set to blow at a moment’s notice?

On the other hand …

I never really understood how a nation could arise as one and completely turn itself around, but I think I’m beginning to understand now. Back in the 1880s and 1890s, America faced crises as deep as the ones we face today. The economy was going through an epochal transition, then to industrialization. The political system was worse and more corrupt than ours is today.

Culturally things were bad, too. Racism and anti-immigrant feelings were at plague-like levels. Urban poverty was indescribable.

And yet America responded. A new leadership class emerged, separately at first, but finally congealing into a national movement. In 1889, Jane Addams created settlement houses to serve urban poor. In 1892, Francis Bellamy wrote the Pledge of Allegiance to give the diversifying country a sense of common loyalty. In 1902, Owen Wister published “The Virginian,” a novel that created the cowboy mythology and galvanized the American imagination.

New sorts of political leaders emerged. In city after city, progressive reformers cleaned up politics and professionalized the civil service. Theodore Roosevelt went into elective politics at a time when few Ivy League types thought it was decent to do so. He bound the country around a New Nationalism and helped pass legislation that ensured capitalism would remain open, fair and competitive.

This was a clear example of a society facing a generational challenge and surmounting it. The Progressives were far from perfect, but they inherited rotting leadership institutions, reformed them and heralded in a new era of national greatness.

So which path will we take? The future of the world hangs on that question.

One way to think about it is this: America still has great resources at the local and social level. Here in San Antonio, there are cops who know how to de-escalate conflicts by showing dignity and respect. Everywhere I go there are mayors thinking practically and non-dogmatically. Can these local leaders move upward and redeem the national system, or will the national politics become so deranged that it will outweigh and corrupt all the good that is done block by block?

I’m betting the local is more powerful, that the healthy growth on the forest floor is more important than the rot in the canopy. But last week was a confidence shaker. There’s a cavity beneath what we thought was the floor of national life, and there are demons there.

You gotta love him citing the Pledge of Allegiance. He neglected to mention that a Republican administration added “under God”…  I can’t wait to see what Driftglass has to say about this.  Now here’s “gemli”:

“A half-truth is worse than a lie. Brooks gives us a great example when he says that our dysfunctional system is the result of a disorganized peasant revolt. He says unknown cosmic forces wrecked the economy and destabilized the government, and the people, confused and resentful, drew the wagons in a circle and started shooting each other and voting for liars.

Cosmic forces had nothing to do with it. We were on a progressive roll throughout the 20th century, undoing stupid biblical ideas about the worth of women, the resentments of race, and the normal spectrum of sexuality. We were protecting the working class as wages rose, and had woven a social safety net for people who had trouble making it.

There were some horrible setbacks, but for a bunch of recently-evolved primates we weren’t doing too badly. Things were looking up.

Then, suddenly, a few monkeys wanted all the bananas. Wages froze and people went begging, while a few banked billions. Biblical ideas reasserted themselves regarding women, non-whites and gays. There was war, social upheaval and economic abandonment of whole communities. In the turmoil that followed we locked up a lot of the victims and flooded the country with deadly weapons.

We’re all only half a chromosome removed from chimps. Some who aided and abetted the turmoil try to rewrite history, to absolve themselves of responsibility. But I’d stand back from the cage if I were you, given what we’re wont to fling.”

Blow and Krugman

July 11, 2016

In “A Week From Hell” Mr. Blow says we as a society will not extinguish violence quickly, but individuals can make a start today.  Prof. Krugman says “Cheap Money Talks,” and that  what it says is to invest in the future.  Here’s Mr. Blow:

Last week was yet another week that tore at the very fiber of our nation.

After two videos emerged showing the gruesome killings of two black men by police officers, one in Baton Rouge, La., and the other in Falcon Heights, Minn., a black man shot and killed five officers in a cowardly ambush at an otherwise peaceful protest and wounded nine more people. The Dallas police chief, David O. Brown, said, “He was upset about Black Lives Matter” and “about the recent police shootings” and “was upset at white people” and “wanted to kill white people, especially white officers.”

We seem caught in a cycle of escalating atrocities without an easy way out, without enough clear voices of calm, without tools for reduction, without resolutions that will satisfy.

There is so much loss and pain. There are so many families whose hearts hurt for a loved one needlessly taken, never to be embraced again.

There is so much disintegrating trust, so much animosity stirring.

So many — too many — Americans now seem to be living with an ambient terror that someone is somehow targeting them.

Friday morning, after the Dallas shootings, my college student daughter entered my room before heading out to her summer job. She hugged me and said: “Dad, I’m scared. Are you scared?” We talked about what had happened in the preceding days, and I tried to allay her fears and soothe her anxiety.

How does a father answer such a question? I’m still not sure I got it precisely right.

Truth is, I am afraid. Not so much for my own safety, which is what my daughter was fretting about, but more for the country I love.

This is not a level of stress and strain that a civil society can long endure.

I feel numb, and anguished and heartbroken, and I fear that I am far from alone.

And yet, I also fear that time is a requirement for remedy. We didn’t arrive at this place overnight and we won’t move on from it overnight.

Centuries of American policy, culture and tribalism are simply being revealed as the frothy tide of hagiographic history recedes.

Our American “ghettos” were created by policy and design. These areas of concentrated poverty became fertile ground for crime and violence. Municipalities used heavy police forces to try to cap that violence. Too often, aggressive policing began to feel like oppressive policing. Relationships between communities and cops became strained. A small number of criminals poisoned police beliefs about whole communities, and a small number of dishonorable officers poisoned communities’ beliefs about entire police forces. And then, too often the unimaginable happened and someone ended up dead at the hands of the police.

Since people have camera phones, we are actually seeing these deaths, live and in living color. Now a terrorist with a racist worldview has taken it upon himself to co-opt a cause and mow down innocent officers.

This is a time when communities, institutions, movements and even nations are tested. Will the people of moral clarity, good character and righteous cause be able to drown out the chorus of voices that seek to use each dead body as a societal wedge?

Will the people who can see clearly that there is no such thing as selective, discriminatory, exclusionary outrage and grieving when lives are taken, be heard above those who see every tragedy as a plus or minus for a cumulative argument?

Will the people who see both the protests over police killings and the killings of police officers as fundamentally about the value of life rise above those who see political opportunity in this arms race of atrocities?

These are very serious questions — soul-of-a-nation questions — that we dare not ignore.

We must see all unwarranted violence for what it is: A corrosion of culture.

I know well that when people speak of love and empathy and honor in the face of violence, it can feel like meeting hard power with soft, like there is inherent weakness in an approach that leans so heavily on things so ephemeral and even clichéd.

But that is simply an illusion fostered by those of little faith.

Anger and vengeance and violence are exceedingly easy to access and almost effortlessly unleashed.

The higher calling — the harder trial — is the belief in the ultimate moral justice and the inevitable victory of righteousness over wrong.

This requires an almost religious faith in fate, and that can be hard for some to accept, but accept it we must.

The moment any person comes to accept as justifiable an act of violence upon another — whether physical, spiritual or otherwise — that person has already lost the moral battle, even if he is currently winning the somatic one.

When we all can see clearly that the ultimate goal is harmony and not hate, rectification and not retribution, we have a chance to see our way forward. But we all need to start here and now, by doing this simple thing: Seeing every person as fully human, deserving every day to make it home to the people he loves.

Now here’s Prof. Krugman:

What with everything else going on, from Trump to Brexit to the horror in Dallas, it’s hard to focus on developments in financial markets — especially because we’re not facing any immediate crisis. But extraordinary things have been happening lately, especially in bond markets. And because money still makes the world go ’round, attention must be paid to what the markets are trying to tell us.

Specifically, there has been an extraordinary plunge in long-term interest rates. Late last year the yield on 10-year U.S. government bonds was around 2.3 percent, already historically low; on Friday it was just 1.36 percent.  German bonds, the safe asset of the eurozone, are yielding minus — that’s right, minus — 0.19 percent. Basically, investors are willing to offer governments money for nothing, or less than nothing. What does it mean?

Some commentators blame the Federal Reserve and the European Central Bank, accusing them of engineering “artificially low” interest rates that encourage speculation and distort the economy. These are, by the way, largely the same people who used to predict that budget deficits would cause interest rates to soar. In any case, however, it’s important to understand that they’re not making sense.

For what does “artificially low” mean in this context? Compared to what? Historically, the consequence of excessively easy money — the way you know that money is too easy — has been out-of-control inflation. That’s not happening in America, where inflation is still below the Fed’s target, and it’s definitely not happening in Europe, where the central bank has been trying to raise inflation, without success.

If anything, developments in the real economies of the advanced world are telling us that interest rates aren’t low enough — that is, while low rates may be having their usual effects of boosting the housing sector and, to some extent, the stock market, those effects aren’t big enough to produce a strong recovery. But why?

In some past episodes of very low government borrowing costs, the story has been one of a flight to safety: investors piling into U.S. or German bonds because they’re afraid to buy riskier assets. But there’s little sign of such a fear-driven process now. The premiums on risky corporate bonds, which soared during the 2008 financial crisis, have stayed fairly low. European bond spreads, like the difference between Italian and German interest rates, have also stayed low. And stock prices have been hitting new highs.

By the way, the financial fallout from Britain’s vote to leave the European Union looks fairly limited, at least so far. The pound is down, and investors have been pulling money from funds that invest in the London property market. But British stocks are up, and there’s nothing like the kind of panic some pre-referendum rhetoric seemed to predict. All that seems to have happened is an intensification of the trend toward ever-lower interest rates.

So what’s going on? I think of it as the Great Capitulation.

A number of economists — most famously Larry Summers, but also yours truly and others — have been warning for a while that the whole world may be turning Japanese. That is, it looks as if weak demand and a bias toward deflation are enduring problems. Until recently, however, investors acted as if they still expected a return to what we used to consider normal conditions. Now they’ve thrown in the towel, in effect conceding that persistent weakness is the new normal. This means low short-term interest rates for a very long time, and low long-term rates right away.

Many people don’t like what’s happening, but raising rates in the face of weak economies would be an act of folly that might well push us back into recession.

What policy makers should be doing, instead, is accepting the markets’ offer of incredibly cheap financing. Investors are willing to pay the German government to take their money; the U.S. situation is less extreme, but even here interest rates adjusted for inflation are negative.

Meanwhile, there are huge unmet demands for public investment on both sides of the Atlantic. America’s aging infrastructure is legendary, but not unique: years of austerity have left German roads and railways in worse shape than most people realize. So why not borrow money at these low, low rates and do some much-needed repair and renovation? This would be eminently worth doing even if it wouldn’t also create jobs, but it would do that too.

I know, deficit scolds would issue dire warnings about the evils of public debt. But they have been wrong about everything for at least the past eight years, and it’s time to stop taking them seriously.

They say that money talks; well, cheap money is speaking very clearly right now, and it’s telling us to invest in our future.

Brooks and Krugman

July 8, 2016

Oh, cripes.  Bobo has now decided to harangue us on “The Power of Altruism.”  He bleats that we inherently desire to do good, but society’s assumptions of selfishness affect our behavior.  His “thoughts” will be followed by a comment by “Socrates” from Downtown Verona, NJ.  Prof. Krugman considers “All the Nominee’s Enablers” and says the G.O.P. establishment, and the people behind it, will accept a lot as long as the rich ultimately benefit.  Here’s Bobo:

Western society is built on the assumption that people are fundamentally selfish. Machiavelli and Hobbes gave us influential philosophies built on human selfishness. Sigmund Freud gave us a psychology of selfishness. Children, he wrote, “are completely egoistic; they feel their needs intensely and strive ruthlessly to satisfy them.”

Classical economics adopts a model that says people are primarily driven by material self-interest. Political science assumes that people are driven to maximize their power.

But this worldview is clearly wrong. In real life, the push of selfishness is matched by the pull of empathy and altruism. This is not Hallmark card sentimentalism but scientific fact: As babies our neural connections are built by love and care. We have evolved to be really good at cooperation and empathy. We are strongly motivated to teach and help others.

As Matthieu Ricard notes in his rigorous book “Altruism,” if an 18-month-old sees a man drop a clothespin she will move to pick it up and hand it back to him within five seconds, about the same amount of time it takes an adult to offer assistance. If you reward a baby with a gift for being kind, the propensity to help will decrease, in some studies by up to 40 percent.

When we build academic disciplines and social institutions upon suppositions of selfishness we’re missing the motivations that drive people much of the time.

Worse, if you expect people to be selfish, you can actually crush their tendency to be good.

Samuel Bowles provides a slew of examples in his book “The Moral Economy.” For example, six day care centers in Haifa, Israel, imposed a fine on parents who were late in picking up their kids at the end of the day. The share of parents who arrived late doubled. Before the fine, picking up their kids on time was an act of being considerate to the teachers. But after the fine, showing up to pick up their kids became an economic transaction. They felt less compunction to be kind.

In 2001, the Boston fire commissioner ended his department’s policy of unlimited sick days and imposed a limit of 15 per year. Those who exceeded the limit had their pay docked. Suddenly what had been an ethic to serve the city was replaced by a utilitarian paid arrangement. The number of firefighters who called in sick on Christmas and New Year’s increased by tenfold over the previous year.

To simplify, there are two lenses people can use to see any situation: the economic lens or the moral lens.

When you introduce a financial incentive you prompt people to see their situation through an economic lens. Instead of following their natural bias toward reciprocity, service and cooperation, you encourage people to do a selfish cost-benefit calculation. They begin to ask, “What’s in this for me?”

By evoking an economic motivation, you often get worse outcomes. Imagine what would happen to a marriage if both people went in saying, “I want to get more out of this than I put in.” The prospects of such a marriage would not be good.

Many of our commitments, professional or civic, are like that. To be a good citizen, to be a good worker, you often have to make an altruistic commitment to some group or ideal, which will see you through those times when your job of citizenship is hard and frustrating. Whether you are a teacher serving students or a soldier serving your country or a clerk who likes your office mates, the moral motivation is much more powerful than the financial motivations. Arrangements that arouse the financial lens alone are just messing everything up.

In 1776, Adam Smith defined capitalism as a machine that takes private self-interest and organizes it to produce general prosperity. A few years later America’s founders created a democracy structured to take private factional competition and, through checks and balances, turn it into deliberative democracy. Both rely on a low but steady view of human nature and try to turn private vice into public virtue.

But back then, there were plenty of institutions that promoted the moral lens to balance the economic lens: churches, guilds, community organizations, military service and honor codes.

Since then, the institutions that arouse the moral lens have withered while the institutions that manipulate incentives — the market and the state — have expanded. Now economic, utilitarian thinking has become the normal way we do social analysis and see the world. We’ve wound up with a society that is less cooperative, less trusting, less effective and less lovely.

By assuming that people are selfish, by prioritizing arrangements based on selfishness, we have encouraged selfish frames of mind. Maybe it’s time to upend classical economics and political science. Maybe it’s time to build institutions that harness people’s natural longing to do good.

Great.  Let’s start by destroying the Republican party and everything it currently stands for.  They don’t call Paul Ryan the “Zombie-Eyed Granny Starver” for nothing, Bobo.  Here’s the comment by “Socrates:”

“Machiavelli would be perfectly at home moored in the bay of one of today’s 0.1% Cayman Island or Panamanian tax havens, napping peacefully on his 500-foot super yacht on a bed of red roses handpicked by serfs this morning.. “completely egoistic; feeling his needs intensely and striving ruthlessly to satisfy” his insatiable greed.

0.1% individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, according to the Tax Justice Network, and economist James Henry.

0.1% trillions of graft and greed is held in tax havens by private elites and puts it beyond the reach of tax authorities and excludes it from the common good.

Research estimates that since the 1970s, the richest citizens of 139 countries had amassed $7.3 to $9.3 trillion of “unrecorded offshore wealth” by 2010.

Private wealth held offshore represents “a subterranean” systemic “economic equivalent of an astrophysical black hole” of 0.1% greed in the world economy.

The $32T estimate is roughly twice the size of the US GDP —- offshored ‘altruism’ and compassionate 0.1% conservatism at its truly finest.

“Wall Street and other major banks manage the tax havens — their business is fraud and grand theft. Private banking operations yield huge profits. Keeping funds secreted tax free attracts rich clients and criminals – funds are welcome from anyone, “no questions asked”, wrote Stephen Lendman of Global Research.

The Power Of Greed is a timeless psychopathy, Mr. Brooks.”

And now here’s Prof. Krugman, the voice crying in the wilderness:

A couple of weeks ago Paul Ryan, the speaker of the House, sort of laid out both a health care plan and a tax plan. I say sort of, because there weren’t enough details in either case to do any kind of quantitative analysis. But it was clear that Mr. Ryan’s latest proposals had the same general shape as every other proposal he’s released: huge tax cuts for the wealthy combined with savage but smaller cuts in aid to the poor, and the claim that all of this would somehow reduce the budget deficit thanks to unspecified additional measures.

Given everything else that’s going on, this latest installment of Ryanomics attracted little attention. One group that did notice, however, was Fix the Debt, a nonpartisan deficit-scold group that used to have substantial influence in Washington.

Indeed, Fix the Debt issued a statement — but not, as you might have expected, condemning Mr. Ryan for proposing to make the deficit bigger. No, the statement praised him. “We are concerned that the policies in the plan may not add up,” the organization admitted, but it went on to declare that “we welcome this blueprint.”

And there, in miniature, is the story of how America ended up with someone like Donald Trump as the presumptive Republican nominee and possible next president. It’s all about the enablers, and the enablers of the enablers.

At one level, all Mr. Trump has done is to channel the racism that has always been a part of our political life — it’s literally as American as apple pie — and hitch it to the authoritarian impulse that has also always lurked behind democratic norms. But there’s a reason these tendencies are sufficiently concentrated in the G.O.P. that Trumpism could triumph in the primaries: a cynical political strategy that the party’s establishment has pursued for decades.

To put it bluntly, the modern Republican Party is in essence a machine designed to deliver high after-tax incomes to the 1 percent. Look at Mr. Ryan: Has he ever shown any willingness, for any reason, to make the rich pay so much as a dime more in taxes? Comforting the very comfortable is what it’s all about.

But not many voters are interested in that goal. So the party has prospered politically by harnessing its fortunes to racial hostility, which it has not-so-discreetly encouraged for decades.

These days, former President George H.W. Bush is treated as an elder statesman, too gentlemanly to endorse the likes of Donald Trump — but remember, he’s the one who ran the Willie Horton ad. Mitt Romney is also sitting this one out — but he was happy to accept Mr. Trump’s endorsement back when the candidate was best known for his rabid birtherism.

And Mr. Ryan, after a brief pretense of agonizing about Mr. Trump, is now in full attack-dog mode on the candidate’s behalf. After all, the Trump tax plan would be a huge windfall for the wealthy, while Hillary Clinton would surely sustain President Obama’s significant tax hike on high incomes, and try to push it further.

I’m not saying that all leading Republicans are racists; most of them probably aren’t, although Mr. Trump probably is. It is that in pursuit of their economic — actually, class-interest — goals they were willing to act as enablers, to make their party a safe space for prejudice. And the result is a party base that is strikingly racist, in which a plurality of voters believe that Mr. Obama is a Muslim, and more — a base just waiting for a candidate willing to blurt out what the establishment conveyed by innuendo.

But there’s one more crucial element here: We wouldn’t have gotten to this point if so many people outside the G.O.P. — in particular, journalists and self-proclaimed centrists — hadn’t refused to acknowledge what was happening.

Political analysts who tried to talk about the G.O.P.’s transformation, like Norman Ornstein of the American Enterprise Institute, were effectively ostracized for years. Instead, the respectable, “balanced” thing was to pretend that the parties were symmetric, to turn a blind eye to the cynicism of the modern Republican project.

Which brings me back to Mr. Ryan, the de facto leader of his party until the Trumpocalypse. How did he reach that position? Not by inspiring deep loyalty in the base, but rather by getting incredibly favorable treatment from journalists and centrists eager to show their bipartisanship by finding a serious, honest Republican to praise — or at least someone able to do a passable job of playing that character on TV. And as the latest from Fix the Debt shows, the charade is still going on.

The point is that this kind of false balance does real harm. The Republican establishment directly enabled the forces that led to Trump; but many influential people outside the G.O.P. in effect enabled the enablers. And so here we are.

Blow and Collins

July 7, 2016

In “Hillary Clinton: Ma’am Survivor” Mr. Blow says you have to accept the swirl of madness with the political mastery, the constant flirtation with self-destruction.  Ms. Collins, in “Hillary, Beyond Email,” says it’s a good time for Clinton to make changes so she doesn’t win simply by default.  Here’s Mr. Blow:

The Clintons — both Hillary and Bill — are very smart, but also quite reckless. They play too close to the edge and sometimes go over. They parse words to parry attacks. They possess a sort of preternatural political ability, but also a political paranoia.

Anyone who has followed the Clintons over the years already knows this. So hearing the stinging rebuke by the F.B.I. director, James Comey, of Hillary Clinton over her email usage in some ways made no waves, at least not for me. As obviously qualified as Clinton is — at a Charlotte, N.C., campaign rally, President Obama said, “There has never been any man or woman more qualified for this office than Hillary Clinton, ever, and that’s the truth” — and as clearly superior to the puffed-up presumptive Republican nominee as she is, there is something about Clinton, and indeed the Clintons, that makes me uneasy.

But Comey refused to bring charges against Clinton, which seems to be the right call, and also seems in line with the Clinton history.

I know that Republicans have attacked the Clintons for decades. Many of those attacks were baseless, opponents driven mad by the Clintons seeming imperviousness, an endless search for a presumed fire beneath a fog they perceive as smoke. But some of those attacks come because of the Clintons’ own carelessness, as it did in this case. Sometimes there actually is a fire, however large or small, that the Clintons themselves have set.

With the Clintons, you have to accept the swirl of madness with the political mastery. They have a constant flirtation with self-destruction.

But it seems to me that most voters have actually adjusted their expectations for this reality, whether they support or oppose her.

If nothing else, the Clintons are the ultimate survivors.

When an Iowa caucusgoer asked Hillary in January why young people are not enthusiastic about her campaign, she replied, in part:

You know, look, I’ve been around a long time. People have thrown all kinds of things at me. And you know, I can’t keep up with it. I just keep going forward. They fall by the wayside. They come up with these outlandish things. They make these charges. I just keep going forward because there’s nothing to it. They throw all this stuff at me, and I’m still standing.

That is true. But the attacks and her impressive ability to dodge them seem to lead to a sort of Wonder Woman syndrome, in which the evasion of calamity creates an expanding sense of invincibility.

Rather than possessing strategic discipline, the Clintons’ Republican opponents have displayed an uncanny, uncontrollable impulse to overplay their hand, like a poker player with three deuces betting the house.

Donald Trump suggested that Clinton had bribed Attorney General Loretta Lynch in the case, although the decision to recommend no charges was made by Comey, and as USA Today reported last week, “Attorney General Loretta Lynch said Friday that she will accept the decision of career prosecutors, investigators and F.B.I. Director James Comey on whether to bring criminal charges” in the case.

Republicans, smarting over once again not bagging a Clinton when they were sure they had one trapped, have called Comey to the Hill to testify — or to be grilled, as will likely be the case — Thursday before the House Oversight Committee.

Republicans will turn a damaging episode for Clinton, one that would otherwise reinforce the specter of mistrust that they have labored so diligently to foster in the public around her, into another spectacle of the absurd.

They have a near algebraic ability to turn a positive into a negative, and vice versa.

They were hanging their hats on a stronger action against Clinton because they are wringing their hands with consternation over Trump.

In any other election cycle with pretty much any other candidate, the damage they have done to Clinton would be enough to fell her. But this year, she is running against the most inept, unqualified, ill-equipped, abrasive candidate imaginable.

In this context, in which a damaged candidate is up against a deranged one, Clinton will likely emerge with little more than yet another battle scar from this episode. And while Clinton won’t face charges, it is a fact that Trump is embroiled in two class action lawsuits over Trump University, as well as a lawsuit brought by New York Attorney General Eric Schneiderman.

Clinton’s case is now in the realm of what might have been, but Trump’s cases are in the realm of what actually is. Indeed, in every way when you compare Clinton to Trump, her shortcomings shrink.

Clinton’s survival instinct will likely allow her to weather whatever Trump and the Republicans throw at her.

Specifically, in the case of the “damn emails,” as Bernie Sanders called them, the Clinton magic — wiggling out of danger and constriction to great amazement — remains intact. Unfortunately, belief in magic also requires a certain amount of naïveté.

Now here’s Ms. Collins:

Chances are, Hillary Clinton did not grow up dreaming that someday she’d be a woman of whom it could be said that “no reasonable prosecutor” would indict her.

But think positive: Between the F.B.I.’s 11-month email investigation and the eight congressional Benghazi inquiries, Clinton has now probably been examined more thoroughly than any candidate not up for canonization in the Catholic Church. How many times have you, as a concerned citizen, witnessed a famous politician felled by a terrible revelation and thought, “My God, who knew?” Not likely to be a problem with this one.

In his big press appearance Tuesday, F.B.I. Director James Comey took the now-familiar prosecutorial path of smearing the target he couldn’t nail. But the bottom line was that Clinton had used less-than-secure private email servers rather than the State Department system, which was the proper procedure, albeit possibly even less less-than-secure. Worse, she did not tell the whole truth and nothing but the truth when she was cornered.

It’s a problem for campaign strategists, but not much of a surprise for voters. We already knew that she was paranoid about privacy. Perhaps that was why some people decided, in 2008, that they preferred Barack Obama, who was promising presidential transparency. Whose administration then set new Olympics-level records when it came to rejecting Freedom of Information Act requests and persecuting suspected leakers of information to the media.

We obviously haven’t heard the last of the email scandal — Comey is testifying before a House committee on Thursday. Attorney General Loretta Lynch is going to be dragged before another committee next week to answer questions about that private meeting she had with Bill Clinton on an airport tarmac at the worst moment humanly possible.

The Republicans will broadcast Comey’s “extremely careless” quote from now through November. “People have been convicted for far less,” House Speaker Paul Ryan said as he happily made the cable TV rounds after the F.B.I. announcement. This came between the moment in which Ryan had to distance himself from Donald Trump’s anti-Semitic tweet and the moment in which he had to distance himself from the speech in which Trump praised Saddam Hussein.

Oh yes, Donald Trump. The Republican presidential candidate who had a “university” that wrung thousands of dollars out of credulous students with get-rich-quick promises, which was linked to an extremely shady seminar program that plagiarized course materials from an old real estate manual. And which is now subject to lawsuits, some of which are being heard by a distinguished federal judge from Indiana. Who Trump slammed as a biased “Mexican,” triggering a Paul Ryan distancing of epic proportions.

Every problem with Hillary Clinton’s campaign comes attached to a reminder that the alternative is the businessman with a terrible business record and attraction to murderous tyrants. It’s hard to imagine anything that she could do that would make her look like the worse option in this particular contest. It’s a lucky candidate who gets the chance to divert attention from her problems by giving a speech in the city where her opponent bankrupted several casinos and dodged the bills of a long line of small businesses.

But nobody wants to be remembering 2016 as the year America elected its first woman president by default. Since at least she didn’t get indicted.

Clinton can spend the next four months listing all the ways Trump would be worse. Or she can use her intelligence, experience and fortitude to turn her story around. So that when the confetti falls in Philadelphia, we’ve got something more to celebrate than a new entry in the Guinness World Records book.

A few suggestions:

■ Send Bill home. This is an easy call. At best, he’s a reminder that she didn’t get where she’s at entirely on her own. At worst — well, plane. Attorney general.

■ Hold a news conference every week. Clinton has not met with the press corps for an open-ended question-and-answer session this calendar year. Her strategists aren’t stupid; they know that the chances of making unwelcome news at these encounters are high. They’ll keep dodging them if they simply want to make sure she can stagger across the finish line this fall. The only argument on the other side is that she’s prepared to demonstrate she’s not just better than Trump; she’s better than her own current background noise.

■ Take a hard position, just because. Clinton has been rolling out some smart, progressive and well thought out proposals on issues like student loans. But it doesn’t exactly require a profile in courage to be against college debt. A brave and specific series of recommendations on, say, trade would be something else. Or a plan to fix Obamacare that would involve tough news for the pharmaceutical industry. Or pretty much any reform that would make big-money Democratic campaign contributors unhappy.

She can win without doing anything. It’s just the difference between making great history and being the lesser of two evils.

Bruni, solo

July 6, 2016

In “Barack Obama’s Final Fight” Mr. Bruni says it’s not simply for Hillary Clinton. It’s for an optimism and a set of values at the very core of his own story.  Here he is:

You introduce yourself to voters as a son of Kansas and Kenya, an emblem of this country’s openness to outsiders and its embrace of difference. Your election and re-election affirm the distance that the United States has traveled, or so you believe. So you hope.

Then you look up toward the end of your second term to behold a Republican presidential nominee who is cynically exploiting racism and xenophobia to put the White House within his own reach. He’s not merely your adversary; he’s your antithesis. And his victory would do more than endanger your policies. It would question the very moral of your journey, the very bend of the arc you frequently invoke.

That’s what Barack Obama confronts right now, and that’s why he hit the campaign trail on Tuesday, appearing onstage with Hillary Clinton in North Carolina and proclaiming without reservation that “there has never been any man or woman more qualified for this office” than she. That’s why he’ll say words like those again and again, with the same fire, in the months ahead.

For the nation’s first black president, Clinton isn’t just the better candidate. She’s the better America. She wins and he holds on to his rosiest convictions about what he and his presidency symbolize. Donald Trump wins and that’s a tricky thing to do.

Trump forged his bond with bigots by essentially calling Obama an impostor and demanding to see his birth certificate. But that particular stunt weighs less on Obama than Trump’s sustained behavior during the 2016 presidential race does, according to people close to the president.

“The thing that I’m sure aggravates him — enrages him — is the invocation of race and ethnicity in our politics,” David Axelrod, a former White House aide, told me. “Obama’s message is about the emerging America and the strength of our diversity. He represents it. And when Trump says ‘Make America great again,’ there’s an element of turning the clock back to the days when minorities were at the back of the bus.”

“That goes to the character of our country,” Axelrod added. “The president is someone who would be uniquely sensitive to that.”

Uniquely sensitive and utterly impassioned. In North Carolina he didn’t so much urge voters as command them, with a testimonial about Clinton that was gushing and epic. I swear I saw her blush.

Was Trump on Obama’s mind? I suspect. “Everybody can tweet,” he said, adding that it’s no preparation or qualification for the presidency. He brought up his younger daughter. “Sasha tweets, but she doesn’t think that she thereby should be sitting behind the desk.”

Was Trump on Clinton’s mind? Clearly. She complimented Obama as “someone who has never forgotten where he came from — and Donald, if you’re out there tweeting, it’s Hawaii.”

The 2016 campaign keeps showing us things that we’re not accustomed to, and a second-term president campaigning with unfettered vigor for his desired successor is another of those. George W. Bush didn’t do it: He was so toxic at this point in his administration that John McCain’s most fervent wish was to tuck him into a broom closet.

Bill Clinton didn’t do it, because Al Gore was intent on coming across as his own, less priapic man. Neither did Ronald Reagan, because Bush’s father similarly felt the need to flex his own muscle, outside of anyone’s shadow, and Reagan’s energy was flagging anyway.

Dwight Eisenhower? When asked what Richard Nixon had accomplished as his vice president, he said that he needed a week to think about it.

Obama and Hillary Clinton have arrived at a place of obvious respect for each other, and of palpable fondness. His high approval ratings put him in a position to help. Her stature puts her in a position not to be eclipsed by his presence or belittled by that assistance.

Campaigning together is an imperfect arrangement, inasmuch as she may seem to be arguing for the status quo instead of a better tomorrow. But Americans hold Obama in significantly higher esteem than they do her or Trump. There are far riskier things than letting the president carry the ball.

And he’s a player in this regardless, given the larger context, which was clear when Clinton asked the North Carolina audience to think of “the early patriots who met in Philadelphia” in 1776.

“Nobody who looked like Barack Obama or me would have been included back then,” she said. “But we’re here today because the story of America is the story of hard-fought, hard-won progress.”

That’s the tale that Obama has always told. It’s the narrative that so many of us cling to. Where does Trump fit into it, and does it survive him? Instead of just wondering and worrying, the departing president has joined the fight.

Solo Bobo

July 5, 2016

In “Choosing Leaders: Clueless or Crazy” Bobo gurgles that British political party members and Republican presidential primary voters have all faced dilemmas.  His bleating will be followed by an extensive comment from “Socrates” from Downtown Verona, NJ.  Here’s Bobo:

These days, if you want to elect a leader, you generally have two choices: a sensible, establishment figure who is completely out of touch, or a populist outsider who is incompetent, crazy or both.

That was the choice British Labour Party members faced in 2015, when they were picking a new leader. They went with the incompetent, inexperienced outsider, Jeremy Corbyn. He recently lost a no-confidence vote among members of Parliament in his own party, 172 to 40.

That was the choice Republican voters in the states faced throughout the primaries. Passing up the out-of-touch insiders, they went for an overflowing souffle of crazy incompetence in the form of Donald Trump.

And this is certainly the choice that confronts members of the British Conservative Party. Calm cluelessness comes to them in the form of David Cameron. He was a good prime minister, but he called for a “Brexit” referendum for short-term political gain, blithely unaware of what was happening in his own nation.

Crazy incompetence comes in the forms of the two leading pro-Brexit campaigners, Boris Johnson and Michael Gove.

Johnson is a witty, rakish showman who always puts himself at the center of attention and is willing to put up with a lot of scandal and disapproval in order to stay there.

It’s not clear Johnson was really in favor of Britain leaving the European Union, but leading a campaign for it seemed to be the quickest way to make himself prime minister. When his side of the referendum surprisingly won, he emerged ashen-faced, like a boy who’d had fun playing with matches but accidentally blew up his own house.

His first response apparently was denial. He had no post-referendum plan and canceled a meeting with M.P.s 15 minutes before it was due to start, but, according to British newspapers, did manage to spend a day playing cricket with his friend Earl Spencer at Althorp House, Princess Diana’s ancestral estate. The next day he hosted a barbecue at his house in Oxfordshire that was described in The Telegraph as “boozy, shambolic, disorganized and ill-disciplined” — which sounds fun but maybe not for a politician in the middle of a world crisis.

Then came the backpedaling. He wrote an op-ed piece for The Telegraph headlined “I Cannot Stress Too Much That Britain Is Part of Europe — and Always Will Be,” which went beyond reassuring the markets and left the impression that nothing very important had happened at all.

The week ended with him abandoning his campaign to become prime minister — an astounding feat of snatching defeat from the jaws of victory that must make some of history’s all-time choke artists gape and applaud.

Gove, on the other hand, is earnestly sincere, with a manner that would get him kicked off many math teams for being too nerdy. Two years earlier, Gove had expressed disdain for Johnson, reportedly telling a crowd after a long dinner: “Boris is incapable of focusing on serious issues and has no gravitas. He isn’t a team player and plays to the gallery the whole time.” But during the Brexit campaign, Gove was Johnson’s deputy and seemed destined to be his No. 2 in the government.

But sometime in the days following the victory he decided that Johnson was wobbly and that he himself should really be No. 1. Gove’s doubts were fortified by an email from his wife, the Daily Mail columnist Sarah Vine. She reminded her husband that party members were skeptical of Johnson but found him reassuring. “Do not concede any ground. Be your stubborn best,” she wrote to him.

How an email from a wife to a husband got leaked to the press is a question for another day.

Gove shockingly announced that rather than support Johnson, he would run against him. This may have been an act of principle, but it left the impression, as one Tory party leader told The Telegraph, that Gove is a “Machiavellian psychopath” who had planned to stab his friend in the back “from the beginning.”

In any case, they are both now thoroughly in disgrace, Johnson out of the race and Gove languishing.

The big historical context is this: Something fundamental is shifting in our politics. The insiders can’t see it. Outsiders get thrown up amid the tumult, but they are too marginal, eccentric and inexperienced to lead effectively.

Without much enthusiasm, many voters seem to be flocking to tough, no-nonsense women who at least seem sensible: Angela Merkel, Hillary Clinton and, now, the Conservative Party front-runner, Theresa May.

We probably need a political Pope Francis-type figure, who comes up from the bottom and understands life there, but who can still make the case for an open dynamic world, with free-flowing goods, ideas, capital and people. Until that figure emerges, we could be in for a set of serial leadership crises.

Gee — doesn’t that “Pope Francis-type figure” sound an AWFUL lot like Obama?  Now here’s the comment from “Socrates:”

“Clueless and crazy is what you get when you intentionally dumb down the voter, Mr. Brooks, and when it comes to drowning the collective IQ of a nation’s IQ in a fear and disinformation bathtub, nobody does it better than the right-wing and its media puppets on both sides of the pond.

Here are some of the headline stories the British tabloid fearmongers ran in advance of the Brexit vote:

“Britons could lose control of their coastline.”

“England could be scrapped or merged with France.”

“Prospect of a ban on its kettles” in a nation in which tea-making is a daily ritual.

A Reuters Institute for the Study of Journalism study found that of 928 articles on the referendum, 45% were in favor of leaving, while only 27% were in favor of remaining, with the remaining stories considered neutral.

The Mail ran an editorial under the headline: “If you believe in Britain, vote Leave.”

The Sun, owned by Fox News zillionaire and propagandist Rupert Murdoch, urged readers earlier this month to “beLEAVE in Britain.”

After the Brexit vote, jubilant headlines rang out from UK tabloids.

“We’re Out!” said The Daily Mail.

“See EU Later!” yelled The Sun.

The Frenchman Joseph de Maistre said “Every nation gets the government it deserves”.

It turns out that every nation gets the idiotic, self-destructive outcome the right-wing scare-mongering fear-mongering press puts in the paper and on TV for breakfast, lunch and dinner.

Perhaps the press should stop pushing the stupidity drug to voters.”

Krugman’s blog, 7/2 and 7/3/16

July 4, 2016

There was one post on Saturday, and one yesterday.  Saturday’s post was “More on the Short-Run Macroeconomics of Brexit:”

On Thursday I weighed in on the short-term effects of Brexit, questioning the near-universal premise among economists that it will be a major negative shock to demand. I wasn’t trying to be counterintuitive for the sake of sounding clever, let alone trying to defend the Brexiteers. I was just genuinely puzzled about where this consensus came from, given that nothing in standard macroeconomic models says that a policy bad for the economy’s long-run supply side necessarily hurts its short-run demand side. And I worried that the apparent consensus among economists was in some sense political rather than analytical: free trade good, breaking from Europe bad, therefore you don’t have to be careful in your arguments about exactly why it’s bad.

I’ve received several thoughtful responses from economists I respect, all making a particular argument about the effects of Brexit-induced uncertainty. It goes like this: right now, firms don’t know how closely Britain will be tied to Europe, so it makes sense for them to postpone investments until the situation clarifies.

This is an interesting and defensible argument — basically, that the unclear shape of Brexit creates an option value to waiting. But I have three questions about it.

First, is this really the argument underlying all of these dire post-Brexit forecasts? My guess is that very few people reading news reports, or even briefing papers, about Brexit are hearing this; what they’re getting is much closer to the notion that uncertainty = increased probability of bad things. That is, this argument is a lot more nuanced and subtle than anything I previously heard in this discussion.

Second, doesn’t this argument imply a later investment boom once the uncertainty is resolved in either direction? That is, once Prime Minster Farage and President Le Pen have engineered the demise of the EU, there’s no reason to wait, and all the pent-up investment comes roaring back, right? But I haven’t heard anyone arguing that the contractionary effect of Brexit will be followed by a compensating boom once things settle down.

Third, doesn’t this argument suggest essentially the same effects from any policy negotiation whose end result isn’t known? Why don’t we say that the possibilities of TPP or TTIP are contractionary, because firms have an incentive to postpone investment decisions until they know whether these agreements actually happen? Somehow, though I’ve never heard anyone argue for the depressing effects of pending trade liberalization.

Again, I’m not trying to defend Brexit. But I worry that the urge to condemn it has led to a lowering of intellectual standards.

And let me also say that the narrative of disaster is coloring some (not all) financial reporting. On the whole, the market reaction looks pretty muted to me. It’s not just stocks: European bond spreads are about where they were a month ago. True, globally, rates are considerably lower; but we aren’t seeing the kind of financial disruption so widely predicted. Yet headlines about turmoil are everywhere.

Could I be wrong about all of this? Of course! But everyone really should ask where the consensus about Brexit macro is coming from.

Yesterday’s post was “Trade and Jobs: A Note:”

Given Trump’s economic policy speech – well, “policy” speech – it seems time to brush up on trade and jobs, an issue I used to write a lot about. The big story in the academia/policy space lately has been the work of Autor et al, who in two papers have estimated large losses from Chinese import penetration. I basically agree with this conclusion, at least when we’re talking about manufacturing employment. But I’m troubled by some conceptual issues, which I think are important for interpreting the results.

Maybe the best way to explain all of this is to start by talking about how I would do this – in fact, the way I’ve been doing it on the backs of various envelopes over the years. I would begin by posing a counterfactual: what would U.S. employment look like if we had pursued policies such as Trump tariffs that prevented the large trade deficits in manufacturing we actually have?

I’d start by arguing that a balanced expansion of imports and imports would have, to a first approximation, no effect on manufacturing value added, and an effect on employment only to the extent that import-competing industry is more labor-intensive than exports. Leave that on one side. Then what matters is the manufacturing trade deficit, which according to the WTO was approximately $600 billion in 2014.

How much manufacturing did that deficit displace? It doesn’t all come out of manufacturing value added, because a fair bit of a dollar spent on manufactured goods eventually shows up in purchases of non-manufactured imports. I need to do this more carefully (on deadline right now), but a rough number would be 60 percent for manufactured content; so we’re talking about $360 billion.

Then, employment: value added per worker in manufacturing is approximately $175,000. So this should translate into a bit over 2 million jobs.

OK, what about the effect on overall employment? In general, you can’t answer that with a similar computation, because it all depends on offsetting policies. If monetary and fiscal policy are used to achieve a target level of employment – as they generally were prior to the 2008 crisis – then a first cut at the impact on overall employment is zero. That is, trade deficits meant 2 million fewer manufacturing jobs and 2 million more in the service sector.

Since 2008, of course, we’ve been in a liquidity trap, with the Fed either unable or unwilling to hit its targets and fiscal policy paralyzed by ideology, so trade deficits are in practice a major drag on overall employment. But this is a bit different from the usual “trade costs jobs” argument.

So, how big a deal is displacement of 2 million manufacturing jobs? Not trivial, to say the least. But if you want to place it in the context of deindustrialization: we’re talking about 1.5 percent of the work force. So absent the trade deficit – that is, again, imagining some policy that prevents deficits from emerging – we would have roughly 11.5 percent of the work force in manufacturing, rather than the actual 10. Compare this with the realities of the past: more than 20 percent in manufacturing in the late 1970s, more than 25 percent in the 1960s.

OK, now for Autor and various co-authors, who do something very different: a bottom-up approach. They start with an empirical analysis, using cross-section data, of the impact of the China shock on employment, wages, and so on at the regional level – which is perfectly fine, and in fact beautiful work.

But what they do next is to apply the implied coefficient from this analysis to the aggregate effects of the China shock. And that’s much more dubious – especially when, in the second paper, they purport to estimate the effects on overall employment. In general, you can’t do that: applying estimates of partial regional effects to the overall aggregate exposes you to huge possible fallacies of composition.

And in this case the crucial issue is monetary and fiscal response. Up through 2007 we basically had a Fed which raised rates whenever it thought the economy was overheating; in the absence of the China shock it would have raised rates sooner and faster, so you just can’t use the results of the cross-section regression – which doesn’t reflect monetary policy, which was the same for everyone – to predict how things would have turned out.

Now, it so happens that my alternative procedure yields results for manufacturing alone that aren’t too much out of line with those papers. But this should be seen as jobs shifted out of manufacturing to other sectors, not total job loss, at least pre-crisis.

Blow and Krugman

July 4, 2016

In “Giving Clinton Her Due” Mr. Blow says of the two flawed presidential candidates, one is clearly out-campaigning the other.  Prof. Krugman considers “Trump, Trade and Workers” and says bashing China doesn’t make you labor’s friend.  Here’s Mr. Blow:

It is easy in an election cycle that has seen the improbable rise of the preposterous presumptive Republican nominee Donald Trump to center all discussion about the race on him: how poorly he’s doing, how outrageous this week’s comments were, how damning a new investigative report into his past has proved.

But doing so exposes a bias toward the sensational, underselling another rather remarkable story, at least for the month of June: Hillary Clinton ran an incredibly strong campaign last month.

First, let’s start with the obvious. As Gallup pointed out last week: “Trump and Clinton are currently among the worst-rated presidential candidates of the last seven decades.” But the article continued: “In the race to the bottom, however, Trump’s 42 percent highly unfavorable score easily outpaces Clinton’s 33 percent. Prior to now, 1964 Republican nominee Barry Goldwater had the highest negative score, with 26 percent rating him highly unfavorably in October 1964.”

A couple of weeks ago Gallup found that “Americans’ views of Donald Trump have drifted slightly more negative over the past month and a half, with his net favorable rating slipping to -33 for June 13-19 from -28 in the first week of May. Americans’ views of Hillary Clinton have remained significantly less negative than their views of Trump — and have been more stable, with her current -13 net favorable rating almost identical to her -14 from early May.”

Both Clinton and Trump are flawed and damaged candidates, but they aren’t equally flawed and damaged. And while Trump is digging his holes deeper, Clinton is remaining steady in some and climbing out of others.

Clinton began the month with a major foreign policy speech that CNN called an “evisceration of Donald Trump,” and she never let up. She delivered a stinging critique of Trump as dangerous in an economic policy speech in Ohio. In an article about the speech, The New York Times pointed out: “The barrage comes at a perilous moment for Mr. Trump, who fired his campaign manager on Monday and faces severe disadvantages in fund-raising and on-the-ground organization. One supporter introducing Mrs. Clinton said gleefully that the campaign had more staff members in Ohio than Mr. Trump had nationwide.”

How did Trump respond to this speech? He live-tweeted his objections.

When he did give a major speech in response, it was roundly condemned for the numerous falsehoods it contained. But this is nothing new for Trump. Of all the statements by Trump that have been examined by the fact-checking site PolitiFact, most have been rated false or “pants on fire.”

Trump simply can’t muster the discipline that is one of Clinton’s hallmarks. While giving a trade speech in New Hampshire last week, Trump departed from the subject to again go after Mexico. What is this man’s issue with Mexico, anyway?

As The Times observed: “Donald J. Trump was seven minutes into an address on Thursday on the loading dock of a shuttered lighting plant here in New Hampshire, reading from prepared remarks, when he turned his attention to Mexico. That country’s leaders are smarter than those in the United States, the presumptive Republican presidential nominee said. Then, as the sound of a plane overhead drowned out his voice, Mr. Trump went off his script. ‘In fact,’ Mr. Trump said, pointing his finger toward the sky, ‘that could be a Mexican plane up there. They’re getting ready to attack.’”

At times last month, Clinton and her campaign so outmatched Trump that the competition wasn’t even close.

And perhaps most intriguingly, in the wake of the terrorist attacks in Orlando and Turkey and the Brexit vote in England, Clinton turned what many had seen as a negative for her into a positive: Her cautious delivery, which can sometimes feel a bit guarded and robotic, began to sound steady, reassuring and presidential.

Trump, in contrast, stumbled terribly, because rather than rise in these moments of trauma and volatility, he sinks to being more, well, Trump. He made everything about him.

After the Orlando massacre, Trump tweeted: “Appreciate the congrats for being right on radical Islamic terrorism, I don’t want congrats, I want toughness & vigilance. We must be smart!”

Following the Brexit vote, MSNBC reported: “Asked about economic turmoil and the degree to which the Brexit results are undermining the value of the British pound,” Trump replied “that the market decline is good news — for him. ‘If the pound goes down, more people are coming to Turnberry, frankly,’ he said, referring to the location of his resort. ‘For traveling and for other things, I think it very well could turn out to be positive.’ ”

There’s no way to know if this will continue, especially in light of the ongoing F.B.I. investigation of her emails, but last month Clinton out-campaigned and outclassed Trump at every turn. It’s important that she is given her due.

Now here’s Prof. Krugman:

Donald Trump gave a speech on economic policy last week. Just about every factual assertion he made was wrong, but I’m not going to do a line-by-line critique. What I want to do, instead, is talk about the general thrust: the candidate’s claim to be on the side of American workers.

Of course, that’s what they all say. But Trumponomics goes beyond the usual Republican assertions that cutting taxes on corporations and the rich, ending environmental regulation and so on will conjure up the magic of the marketplace and make everyone prosper. It also involves posing as a populist, claiming that getting tough on foreigners and ripping up our trade agreements will bring back the well-paying jobs America has lost.

That’s a departure, although not as much as you may think — people forget that Mitt Romney similarly threatened a trade war with China during the 2012 campaign. Still, it was interesting to see a Republican presidential candidate name-check not just Bernie Sanders but the left-leaning Economic Policy Institute, which has long been critical of globalization.

But the institute is having none of it: Lawrence Mishel, the think tank’s president, put out a derisive reply to what he called the “Trump trade scam.” His point was that even if you think, as he does, that trade agreements have hurt American workers, they’re only part of a much broader set of anti-labor policies. And on everything else, Donald Trump is very much on the wrong side of the issues.

About globalization: There’s no question that rising imports, especially from China, have reduced the number of manufacturing jobs in America. One widely-cited paper estimates that China’s rise reduced U.S. manufacturing employment by around one million between 1999 and 2011. My own back-of-the-envelope calculation suggests that completely eliminating the U.S. trade deficit in manufactured goods would add about two million manufacturing jobs.

But America is a big place, and total employment exceeds 140 million. Shifting two million workers back into manufacturing would raise that sector’s share of employment back from around 10 percent to around 11.5 percent. To get some perspective: in 1979, on the eve of the great surge in inequality, manufacturing accounted for more than 20 percent of employment. In the 1960s it was more than 25 percent. I’m not sure when, exactly, Mr. Trump thinks America was great, but Trumponomics wouldn’t come close to bringing the old days back.

In any case, falling manufacturing employment is only one factor in the decline of the middle class. As Mr. Mishel says, there have been “many other intentional policies” driving wages down even as top incomes soar: union-bashing, the failure to raise the minimum wage with inflation, austerity, financial deregulation, the tax-cut obsession.

And Mr. Trump buys fully into the ideology that has driven these wage-destroying policies.

In fact, even as he tried to pose as a populist he repeated the same falsehoods usually used to justify anti-worker policies. We are, he declared, “one of the highest taxed nations in the world.” Actually, among 34 advanced countries, we’re No. 31. And, regulations are “an even greater impediment” to our competitiveness than taxes: Actually, we’re far less regulated than, say, Germany, which runs a gigantic trade surplus.

As Mr. Mishel wrote, “if is he so keen to help working people, why does he then steer the discussion back toward the traditional corporate agenda of tax cuts for corporations and the rich?” I think we know the answer.

But never mind Mr. Trump’s motivations. What’s important is that voters not mistake tough talk on trade for a pro-worker agenda.

No matter what we do on trade, America is going to be mainly a service economy for the foreseeable future. If we want to be a middle-class nation, we need policies that give service-sector workers the essentials of a middle-class life. This means guaranteed health insurance — Obamacare brought insurance to 20 million Americans, but Republicans want to repeal it and also take Medicare away from millions. It means the right of workers to organize and bargain for better wages — which all Republicans oppose. It means adequate support in retirement from Social Security — which Democrats want to expand, but Republicans want to cut and privatize.

Is Mr. Trump for any of these things? Not as far as anyone can tell. And it should go without saying that a populist agenda won’t be possible if we’re also pushing through a Trump-style tax plan, which would offer the top 1 percent huge tax cuts and add trillions to the national debt.

Sorry, but adding a bit of China-bashing to a fundamentally anti-labor agenda does no more to make you a friend of workers than eating a taco bowl does to make you a friend of Latinos.


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