Yglesias

Donald Trump's Lies Versus Hillary Clinton's Lies

Donald Trump's Lies Versus Hillary Clinton's Lies:

When Hillary Clinton gets pressed on her somewhat slippery answers about why exactly she decided to use an off-label email server, she ends up looking evasive. She looks and acts like a normal human being who’s been caught out in an embarrassing situation. She’s admitted that she did the wrong thing, but she also doesn’t think she should suffer any consequences for it. It’s not a great look.

Trump, by contrast, is shameless. What’s his plan for ISIS? It’s a secret. If the generals are so dumb, why would he ask for their plan? He’ll get different generals.

Trump hasn’t learned. He doesn’t know basic facts about the world, and he doesn’t care. The question now is whether the American people will.

This sums it up. Hillary is basic political spin. She’s not even that good at it. Trump is a nutter detached from reality.

Something economists thought was impossible is happening in Europe

Something economists thought was impossible is happening in Europe:

Something really weird is happening in Europe. Interest rates on a range of debt — mostly government bonds from countries like Denmark, Switzerland, and Germany but also corporate bonds from Nestlé and, briefly, Shell — have gone negative. And not just negative in fancy inflation-adjusted terms like US government debt. It’s just negative. As in you give the owner of a Nestlé bond 100 euros, and four years later Nestlé gives you back less than that.* In my experience, ordinary people are not especially excited about this. But among finance and economic types, I promise you that it’s a huge deal — the economics equivalent of stumbling into a huge scientific discovery entirely by accident.

This the exact opposite of a the sovereign debt crisis that the austerity crowd has been warning about. The demand for debt is so high that people are willing to lose money to purchase it.

Obama's bank tax is a big idea that might actually get done - Vox

Obama's bank tax is a big idea that might actually get done - Vox:

What Obama proposed was a 0.07 percent tax on borrowing by America’s largest banks. The way this works is that banks with over $50 billion in assets (which is about 100 banks) would need to pay a 7 cent tax to the federal government on every $100 that they borrow. That has two goals — raising revenue and restraining risky debt from bailout-prone institutions. And Congress isn’t going to pass it.

This would both make a bailout less likely, it would create a fund that would pay for a bailout. And it would fall onto the banks directly. Why is anyone against this?

A $20 an hour minimum wage really would cost a lot of people their jobs

A $20 an hour minimum wage really would cost a lot of people their jobs:

The good news about Denmark is that their unemployment rate is only very slightly higher than the USA’s and was lower in the recent past. The Danish economy as a whole does a good job of keeping people employed, and it also does a much better job than the American economy of delivering high living standards for the poor. But mandating high wages for fast food workers has more or less the impact you would expect — low levels of fast food employment.

The standard response to raising the minimum wage is always why not a million dollars and hour as if that’s under consideration. $20 is too hight. Much to high. That doesn’t mean that $0 is the correct answer.

Obamacare implementation went great and people love it

Obamacare implementation went great and people love it:

None of this proves that the Affordable Care Act is a good law or that conservatives should love it. But it does prove that the Affordable Care Act is working just fine. When an initiative comes in ahead of schedule and below-cost, that’s called working. And the people on the new Obamacare plans are using them and they like them.

We are two decades away from people holding up signs demanding the government keep out of their Obamacare.

Basic Economics Has a Liberal Bias

Basic Economics Has a Liberal Bias:

People to the left of econ 101 will typically invoke the phrase “political economy” to explain why, for example, econ 101 underrates labor unions. Conversely those to the right of econ 101 will instead invoke the phrase “public choice” to explain why, for example, econ 101 overrates utility regulation. But in both cases the critics are saying the same thing, namely that the moderately liberal policies advocated by introduction to economics textbooks are ignoring certain realities of institutional design, practical politics, power dynamics, etc.

That is 100% spot on. I just do not see how it fits in with his title. Maybe I am missing something but it reads like Yglesias is making the mistake of confusing economics with a morality play.

Obamacare part-timism: A myth debunked.

Obamacare part-timism: A myth debunked.:

My strong suspicion is that if the ACA has an impact on the labor force (which it probably will) it will be through a different mechanism. Right now “in order to qualify for health benefits” is a very good reason to work full-time, even if you’d rather have more free time and less money at your current wage level. The Affordable Care Act will make this benefit qualification rationale less compelling,


The changes to part time employment in the past few years has almost nothing to do with Obamacare and everything to do with improved scheduling and time management systems in retail, hospitality and fast food sectors.

War on coal: A pretty good idea.

War on coal: A pretty good idea.

the only way to consider new coal-fired plants a remotely plausible undertaking is to completely ignore the social costs of burning the coal. By the same token, simply throwing all my garbage into my neighbor’s back yard could look like a cheap and appealing alternative to proper trash disposal if I were allowed to completely ignore the costs to my neighbor.

Getting rid of direct subsidies and then attacking indirect subsides is all that is need to make wind and solar competitive.

Yglesias: Obama's Five Percent Pay Cut Is Absurd

Yglesias: Obama's Five Percent Pay Cut Is Absurd

This business of President Obama giving himself a five percent pay cut in solidarity with sequester-ravaged federal agencies seems totally absurd to me. Who is better off thanks to this? It doesn’t seem to free up any budgetary funds for anything.

I usually refrain form calling out politicians for grand standing. It’s part of the job. As long as it isn’t too bad, you have to let it slide. But this is such silly grandstanding that it needs to be mocked. How exactly will Obama’s life be different after this 5% cut? Will he have to bring a brown bag lunch on Air Force one?

What Problem Are DC's New Food Truck Regulations Trying To Solve?

What Problem Are DC's New Food Truck Regulations Trying To Solve?

I know some people of a market urbanist persuasion take the view that trucks’ very existence is a sign of the failure of zoning codes and regulations, but I actually think trucks are an important lunch solution on the merits.

I would not be surprised if these regulations are being pushed by the fast food industry.

Prices out of Park Slope: America needs more filtering and less gentrification.

Prices out of Park Slope: America needs more filtering and less gentrification.

it’s still possible to step back from the distributive conflict, and say that as long as we’re parceling out a fixed supply of Park Slope someone is going to get stuck with that longer subway ride. But if you can actually make more Park Slope-either by building more houses there or improving the quality of subway access to other parts of Brooklyn-then you’re making progress on a more fundamental level.

Yglesias: the case for a higher minimum wage doesn't strictly require that there be no disemployment effect

Yglesias: the case for a higher minimum wage doesn't strictly require that there be no disemployment effect

the case for a higher minimum wage doesn’t strictly require that there be no disemployment effect. After all, if you can boost earnings for a huge swathe of low-income Americans at the cost of one guy losing his job that seems like an acceptable price to pay. Two guys? Still acceptable. And so on.

Yglesias: The American economy is simultaneously overregulated and underregulated

Yglesias: The American economy is simultaneously overregulated and underregulated

The way I would put this is that the American economy is simultaneously overregulated and underregulated. It is much too difficult to get business and occupational licenses…Business licensing is different. “This city has too many restaurants to choose from” is not a real public policy problem, it’s only a problem for incumbent restauranteurs who don’t want to face competition.

In a nutshell, regulations can make sense in the case of information asymmetry and in cases of negative externality. They usually don’t make sense as price controls. And in many cases, business and occupational licenses, taxi medallions, street vendor quotas and the like act as defacto price controls.

Remember the famous scene from Raiders of the Lost Ark when Indiana Jones faces off against a guy who unsheathes a scimitar and wows the audience with his fancy swordsmanship-only to get shot in the chest by Indy? The swordsman-that's House Speaker John Boehner right now on the Bush tax cuts.

Remember the famous scene from Raiders of the Lost Ark when Indiana Jones faces off against a guy who unsheathes a scimitar and wows the audience with his fancy swordsmanship—only to get shot in the chest by Indy? The swordsman-that's House Speaker John Boehner right now on the Bush tax cuts.
—Boehner Is Bluffing Boehner and the fiscal cliff: The House Speaker is bluffing about the Bush tax cuts. - Slate Magazine

The myth of the libertarian Internet.

The myth of the libertarian Internet.

Imagine a world in which airplane technology was advancing rapidly but digital communications technology was stagnating. I think libertarians would have a ready explaination. Aviation, though hardly unregulated, is supervised by the government for basic safety of operations and then firms and inventors are allowed to roam freely. The Internet, by contrast, is a cesspool of government intervention. Rather than founded on the independent spirit of the Wright Brothers, the Internet is literally the bastard offspring of a government civil defense program and European physics research consortium. The Internet consists of a bunch of wires that need to be run underground, generally under city streets, ensuring that construction can only happen with the cooperation of local political officials. The cable and telephone companies who provide access are regulated by both state and federal governments, often with inconsistent and overlapping schemes.

Yglesias exposes the libertarian tactic of pointing to success and chanting capitalism and pointing to failure and chanting Da-Gubment! with little concern about details.

What is the Libor scandal?

What is the Libor scandal?

growing evidence that Libor numbers have been deliberately manipulated by banks for years means that millions of people have been paying the wrong interest rate on all manner of financial products. Vast sums of money have been wrongly snatched from innocent people and created equally vast undeserved windfalls for others. The basic structure of the world's financial system has once again been exposed as fundamentally broken.

And once again, the right says nothing about it, or claims it isn’t a problem because there is no way to fix the problem via tax cuts and deregulation. And if there is no way to fix it via tax cuts and deregulation, it can’t possibly be a real problem.

"The people who are the engine of the economy."

"The people who are the engine of the economy."

I’m not much of a car guy, but the way I understand this metaphor to work is that if you want to give rich people credit for being “the engine of the economy” then if the economy is performing subpar it follows that something’s wrong with your engine. And yet I suspect Zambrelli wouldn’t take kindly to that diagnosis.

If something good happens, praise me. If something bad happens, blame yourself. And if you disagree you’re a Marxist from Kenya.

Devaluation Is Austerity Done Right

Devaluation Is Austerity Done Right

Currency devaluation is best understood not as an alternative to austerity, but as the correct way for a debt-burdened society to implement austerity.

Why did Iceland recover and Ireland get worse? Iceland had a currency to debase. And they debased their currency enough to reset the economy and grow again. Three cheers for currency debasement. Ireland on the other hand, couldn’t debase the Euro. Like a nation on a gold standard, they had no way to make monetary policy changes to get the economy moving.

So if austerity works, shouldn’t it be the other way around? A stagnant Iceland and a booming Ireland?

The Real Source of Corruption in Congress: Members' Good-Faith Efforts To Help People

The Real Source of Corruption in Congress: Members' Good-Faith Efforts To Help People

But why does Rogers care so much about Phoenix Products that he wants to send all this business his way? What Phoenix Products has is something unique. It’s based in Kentucky, just like Harold Rogers. Its employees live in Harold Rogers’ district, they shop in stores that are in Harold Rogers’ district, their spouses and siblings live in Harold Rogers’ district, their incomes bolster the tax base for municipalities in Harold Rogers’ district. So if Harold Rogers wants to do the right thing for Harold Rogers’ constituents, he needs to do the right thing for Phoenix Products.

Hayek differentiated between an welfare state of Law versus one of administration. The former would function based on a set of rules in openness and transparency. The latter would be run by bureaucrats who distributed favors for their own political gain. The former would be compatible with a free democratic society, the later would subvert it.

I think we need to start looking at the defense industry as favor distributing patronage system that no longer serves its defined public purpose.

In 47 of America's fine states, if you want to accept people's money in order to give them advice on decorating and other people want to pay you to give advice on decorating, then congratulations-you're an interior decorator. In the other three states, and the District of Columbia, you need undergo 2,190 hours of training and apprenticeship and pass an exam before practicing. This, of course, is why homes in DC are wildly better-decorated than the homes in the Maryland and Virginia suburbs or in other large American cities such as New York, Los Angeles, Chicago, Boston, Dallas, and Philadelphia. Except of course that's not true.

In 47 of America’s fine states, if you want to accept people’s money in order to give them advice on decorating and other people want to pay you to give advice on decorating, then congratulations-you’re an interior decorator. In the other three states, and the District of Columbia, you need undergo 2,190 hours of training and apprenticeship and pass an exam before practicing. This, of course, is why homes in DC are wildly better-decorated than the homes in the Maryland and Virginia suburbs or in other large American cities such as New York, Los Angeles, Chicago, Boston, Dallas, and Philadelphia. Except of course that’s not true.
Licensed To Decorate

Scott Walker to campaign on made-up jobs data.

Scott Walker to campaign on made-up jobs data.

Wisconsin lost 23,900 jobs between March 2011 and 2012, according to the bureau, which will release fresh estimates tomorrow. Walker, who promised to create 250,000 jobs by the end of his first term in 2014, says the state is performing better than that. He said while campaigning this week that he would release his own figures as early as today, the Associated Press reported.

The numbers show my policy isn’t working so I will change the numbers we use so I can still promote my policy as a success. Wow.

America's Helium Privatization Fiasco

America's Helium Privatization Fiasco

in 1996 when Congress decided that the United States did not need a giant strategic helium reserve, Chris Cox, R.-Calif., and his colleagues passed a Helium Privatization Act that ordered the helium supplies to be sold down at a formula-driven price rather than auctioned. That price has turned out to be way below the market rate. That’s encouraging overconsumption of helium, discouraging new helium production, and all-in-all creating a big helium shortage.

I’ve asked this question before and I will ask it again. If you think government can not run anything right, why do you think it can run a privatization program? Second, it looked like the state run helium system worked better (the fact that it was set up by people who actually think the public center can run things might have something to do with it) would you consider going back?

Tourism: America should make it much easier for foreign visitors to come here.

Tourism: America should make it much easier for foreign visitors to come here.

Talk of exports normally conjures up images of factories and container ships, but many of America's exports are services. The nation's biggest service export is in some sense not an export at all-it's travel and tourism

So can we now start arguing that the national security state is hurting exports?

Taxes Are Austerity

Taxes Are Austerity

A confusing new argument I’m seeing from the right is that European austerity programs aren’t really austerity because some of the deficit reduction has come from tax increases. All that shows is that European politicians favor fiscal austerity, which is a mix of tax hikes and spending cuts-i.e., exactly what European countries have been implementing.

This is the defense of austerity by claiming it wasn’t enough austere enough. If it were just done by massive service cuts then it would have worked.

District 12 is a quintessential extractive economy. It's oriented around a coal mine, the kind of facility where unskilled labor can be highly productive in light of the value of the underlying commodity. In a free society, market competition for labor and union organizing would drive wages up. But instead the Capitol imposes a single purchaser of mine labor and offers subsistence wages. Emigration to other districts in search of better opportunities is banned, as is exploitation of the apparently bountiful resources of the surrounding forest. With the mass of Seam workers unable to earn a decent wage, even relatively privileged townsfolk have modest living standards. If mineworkers earned more money, the Mellark family bakery would have more customers and more incentive to invest in expanded operations. A growing service economy would grow up around the mine. But the extractive institutions keep the entire District in a state of poverty, despite the availability of advanced technology in the Capitol.

District 12 is a quintessential extractive economy. It's oriented around a coal mine, the kind of facility where unskilled labor can be highly productive in light of the value of the underlying commodity. In a free society, market competition for labor and union organizing would drive wages up. But instead the Capitol imposes a single purchaser of mine labor and offers subsistence wages. Emigration to other districts in search of better opportunities is banned, as is exploitation of the apparently bountiful resources of the surrounding forest. With the mass of Seam workers unable to earn a decent wage, even relatively privileged townsfolk have modest living standards. If mineworkers earned more money, the Mellark family bakery would have more customers and more incentive to invest in expanded operations. A growing service economy would grow up around the mine. But the extractive institutions keep the entire District in a state of poverty, despite the availability of advanced technology in the Capitol.
The Hunger Games: Could a real country have an economy like Panem's? - Slate Magazine

The Spanish government, fearful of the bond markets, enacted tough austerity budget measures that decreased Spanish people's incomes and therefore demand for the products of Spanish firms. This has pushed the country deeper into recession, so it should come as little surprise that their bond sales are now going poorly. That's counterproductive austerity at work.

The Spanish government, fearful of the bond markets, enacted tough austerity budget measures that decreased Spanish people’s incomes and therefore demand for the products of Spanish firms. This has pushed the country deeper into recession, so it should come as little surprise that their bond sales are now going poorly. That’s counterproductive austerity at work.

Counterproductive Austerity in Spain

Contraction isn’t expansion.

When lieutenant governor Kerry Healey, a fellow Republican, called for suspending the state's 23.5 cent gas tax during a price spike in May 2006, Romney rejected the idea, saying it would only further drive up gasoline consumption. "I don't think that now is the time, and I'm not sure there will be the right time, for us to encourage the use of more gasoline," Romney said, according to the Quincy Patriot Ledger's report at the time. "I'm very much in favor of people recognizing that these high gasoline prices are probably here to stay.

When lieutenant governor Kerry Healey, a fellow Republican, called for suspending the state's 23.5 cent gas tax during a price spike in May 2006, Romney rejected the idea, saying it would only further drive up gasoline consumption. "I don't think that now is the time, and I'm not sure there will be the right time, for us to encourage the use of more gasoline," Romney said, according to the Quincy Patriot Ledger's report at the time. "I'm very much in favor of people recognizing that these high gasoline prices are probably here to stay.

Mitt Romney Talking Sense On Gas Prices In 2006

I wish that Mitt Romney was running for office. Sounds like a sensible fiscal conservative with a solid understanding of markets.

If you want to grow slightly alarmed about the American future, contemplate not just the scale of our trade deficit with China but the fact that our largest export to them by a wide margin is soybeans.

If you want to grow slightly alarmed about the American future, contemplate not just the scale of our trade deficit with China but the fact that our largest export to them by a wide margin is soybeans.
America’s Customers Are Mostly Nearby

Racial Education Gap Narrowing, Income Education Gap Growing

Racial Education Gap Narrowing, Income Education Gap Growing

pure income inequality has become much bigger and on a variety of different fronts income-linked stratification has become a bigger deal. One way in which this reflects itself is that the “achievement gap” in school between white kids and black kids used to be bigger than the gap between rich and poor.

I remember someone on Bill Maher’s old show making a joke about this. Conservatives looked at the problem of poor black kids having fewer opportunities to get an education than poor white kids and decided to solve the problem by making sure that poor white kids don’t have any opportunities for a good education either.

The real workforce of Facebook is all the people who are creating Facebook content. That's closer to 800 million people (roughly their user base) than to 3,000 people (roughly their number of employees). There's nothing new about medica companies getting people to produce content for free (that's what the letters to the editor page or comments section is) but Facebook has built the most amazing vehicle for the appropriation of surplus value that the world has ever known. Ergo its stunning profits and amazing ratio of market capitalization to formal employees.

The real workforce of Facebook is all the people who are creating Facebook content. That’s closer to 800 million people (roughly their user base) than to 3,000 people (roughly their number of employees). There’s nothing new about medica companies getting people to produce content for free (that’s what the letters to the editor page or comments section is) but Facebook has built the most amazing vehicle for the appropriation of surplus value that the world has ever known. Ergo its stunning profits and amazing ratio of market capitalization to formal employees.

Facebook Has The World’s Largest Workforce

I’ve been working on the model that the difference between internet media companies and social networking is content creation. If you create content for your users (like Slate) you’re in publishing. If your users create and share content, you’re a social network. And Usenet was the first large scale social network.

When businesspeople complain about regulations, you should generally be skeptical. The regulations, after all, are there precisely because some businesses can make more money by despoiling the environment, endangering public health and safety, and threatening the financial system. A regulation that's not annoying someone by wrecking his money-making scheme would be completely pointless.

When businesspeople complain about regulations, you should generally be skeptical. The regulations, after all, are there precisely because some businesses can make more money by despoiling the environment, endangering public health and safety, and threatening the financial system. A regulation that's not annoying someone by wrecking his money-making scheme would be completely pointless.
Bruce Braley's Plain Regulations Act: Can the Iowa Democrat force the government to write in clear English? - Slate Magazine

President Obama's muddled plan to boost employment by hindering trade

President Obama's muddled plan to boost employment by hindering trade

When Obama brags that "over 1,000 Americans are working today because we stopped a surge in Chinese tires," he's implementing a small-scale version of a similar idea. Blocking an influx of cheap Chinese tires does, indeed, preserve jobs for tire-makers. But tire-buyers pay higher prices and presumably curtail their purchases of some other goods or services in exchange. Meanwhile, Chinese tire-makers have lost jobs and are now less likely to buy American soybeans or DVDs of our movies. … This line of thinking swiftly stumbles into self-contradiction. After lambasting companies that "ship jobs overseas," Obama launched into a feel-good anecdote about how "Siemens opened a gas turbine factory in Charlotte and formed a partnership with Central Piedmont Community College." Is a politician in Germany giving a speech lambasting Siemens for shipping jobs to the U.S. and complaining, as Obama did, that it's "not fair when foreign manufacturers have a leg up on ours only because they're heavily subsidized," perhaps through partnerships with community colleges.

This is where Obama gets things wrong. You can compete by having poorly paid workers living in dorms working 60 hour weeks with no concern about the health and safety of those workers or you can compete by having workers produce much more value per hour worked. The former is the developing nations model, the later is the developed nation model. Why I think the later is a better idea for the US should be obvious in the same why it is obvious why China picked the former.

Deadweight loss exists any time the profit-maximizing price of a unit of something exceeds the cost of producing an extra unit. In a highly competitive market in which many sellers are offering largely undifferentiated goods, profit margins are low and deadweight loss is tiny. But the whole point of copyright is that the owner of the rights to, say, Breaking Bad has a monopoly on sales of new episodes of the show. At the same time, producing an extra copy of a Breaking Bad episode is nearly free. So when the powers that be decide that the profit-maximizing strategy is to charge more than $100 to download all four seasons of Breaking Bad from iTunes, they're creating a situation in which lots of people who'd gain $15 or $85 worth of enjoyment from watching the show can't watch it. This is "deadweight loss," and to the extent that copyright infringement reduces it, infringement is a boon to society.

Deadweight loss exists any time the profit-maximizing price of a unit of something exceeds the cost of producing an extra unit. In a highly competitive market in which many sellers are offering largely undifferentiated goods, profit margins are low and deadweight loss is tiny. But the whole point of copyright is that the owner of the rights to, say, Breaking Bad has a monopoly on sales of new episodes of the show. At the same time, producing an extra copy of a Breaking Bad episode is nearly free. So when the powers that be decide that the profit-maximizing strategy is to charge more than $100 to download all four seasons of Breaking Bad from iTunes, they're creating a situation in which lots of people who'd gain $15 or $85 worth of enjoyment from watching the show can't watch it. This is "deadweight loss," and to the extent that copyright infringement reduces it, infringement is a boon to society.
SOPA: Stopping online piracy would be a social and economic disaster. - Slate Magazine

things like public libraries, used bookstores, and the widespread practice of lending books to friends all cost publishers money. But nobody (I hope) is going to introduce the Stop Used Bookstores Now Act purely on these grounds. The public policy question is not whether the libraries are bad for publishers, but whether libraries are beneficial on balance.

things like public libraries, used bookstores, and the widespread practice of lending books to friends all cost publishers money. But nobody (I hope) is going to introduce the Stop Used Bookstores Now Act purely on these grounds. The public policy question is not whether the libraries are bad for publishers, but whether libraries are beneficial on balance.
SOPA: Stopping online piracy would be a social and economic disaster. - Slate Magazine

One difficulty in fighting against son-of-SOPA legislative efforts is going to be that anti-SOPA campaigning has focused very heavily on the most extreme elements of the bill and not quite aimed at the core of the underlying dubious economic and public policy arguments driving the legislation

One difficulty in fighting against son-of-SOPA legislative efforts is going to be that anti-SOPA campaigning has focused very heavily on the most extreme elements of the bill and not quite aimed at the core of the underlying dubious economic and public policy arguments driving the legislation
What’s Still In Play In SOPA

Leaving the payroll tax intact and reducing Social Security benefits for higher-income seniors is, in effect, an increase in marginal tax rates but it was clear from the discussion at this morning's GOP Presidential debate that few Republicans see it this way. Still, it's true. The way Social Security works is that you pay taxes when you're working and you collect benefits when you retire, with the benefits proportional to what you paid.

Leaving the payroll tax intact and reducing Social Security benefits for higher-income seniors is, in effect, an increase in marginal tax rates but it was clear from the discussion at this morning’s GOP Presidential debate that few Republicans see it this way. Still, it’s true. The way Social Security works is that you pay taxes when you’re working and you collect benefits when you retire, with the benefits proportional to what you paid.
Means Testing Social Security Is A Kind of Tax Increase

Maybe Fair Trade Cotton Isn't Growth By Child Slaves After All

Maybe Fair Trade Cotton Isn't Growth By Child Slaves After All

If you think about an agricultural economy centered around a cash crop for export-it could be cotton, coffee, or whatever else you like-then realistically locally focused food production is also going to be part of the picture. The cotton farmers need food after all. So you could easily have a situation in which a bunch of farmers are clustered in a village, partially growing vegetables for basically their own consumption and partially growing cotton. In the unfair trade paradigm, children and adults alike grow both cotton and vegetables. Then when you switch to a fair trade paradigm, what you get is labor market segmentation. Maybe children stop working in the export-oriented cotton fields, but now children are doing all the vegetable farming. The household- and village-level economies, however, are still dependent on child labor. This is all just very tricky to deal with unless the country where it’s happening has the state capacity to enact mandatory free public schooling rules and enforce them effectively as a matter of policy.

In case you thought the European financial crisis was over, today's auction of new German debt garnered an average nominal yield of -0.0122 percent, the first time we've ever seen a negative nominal yield.

In case you thought the European financial crisis was over, today’s auction of new German debt garnered an average nominal yield of -0.0122 percent, the first time we’ve ever seen a negative nominal yield.

Negative Nominal Yields On New Germany Debt

Liquidity trap.

Loser liberalism, by implying that all fortunes are created equal, alternately goes too easy on scoundrels and comes down too hard on people who are merely prosperous. Chris Paul is in the one percent, but he's also a kid from a working class background who's spent his entire career being structurally underpaid and victimized by cartels. By contrast, even substantially lower-paid (and there's lots of room to be both lower-paid than Chris Paul and very highly paid) folks working on Wall Street are making a living in an industry that's systematically dependent on implicit and explicit government guarantees. Making a living as a patent troll is totally different from making a living as a genuine innovator.

Loser liberalism, by implying that all fortunes are created equal, alternately goes too easy on scoundrels and comes down too hard on people who are merely prosperous. Chris Paul is in the one percent, but he’s also a kid from a working class background who’s spent his entire career being structurally underpaid and victimized by cartels. By contrast, even substantially lower-paid (and there’s lots of room to be both lower-paid than Chris Paul and very highly paid) folks working on Wall Street are making a living in an industry that’s systematically dependent on implicit and explicit government guarantees. Making a living as a patent troll is totally different from making a living as a genuine innovator.
Barack Obama’s Loser Liberalism

If the problem is years of "living beyond our means" the solution dictated by cosmic justice is years of laboring in auto plants building cars for South Koreans to drive. If the question is "why are we consuming so much less than we produced" the answer may be "it's because in the past we consumed more than we produced." But right now the question facing America is "why are so many millions of people producing nothing at all." The answer can't be simply that we had too much debt in the past or that we lived beyond our means.

If the problem is years of “living beyond our means” the solution dictated by cosmic justice is years of laboring in auto plants building cars for South Koreans to drive. If the question is “why are we consuming so much less than we produced” the answer may be “it’s because in the past we consumed more than we produced.” But right now the question facing America is “why are so many millions of people producing nothing at all.” The answer can’t be simply that we had too much debt in the past or that we lived beyond our means.
"Japanese" Cars, Made in America and Ready for Export to South Korea

I suppose I agree with Will Wilkinson about the importance of "an ethos of initiative, hard work, and individual responsibility" though I have no real idea why he thinks most progressives are against such an ethos. It strikes me that cultivating such an ethos is sort of integral to making a progressive agenda work. I think back sometimes to the time when I stumbled into a Stockholm Metro station and got the person working the booth to explain what I needed to do to use the city's bikeshare system. This wasn't really her job, and the conversation wasn't in her native language, and obviously no practical harm would have come to her if she'd blown me off but I take it that she took pride in working for Stockholm Metro and had a self-conception as someone who's a helpful public servant. Any effective public agency from the United States Marine Corps on down is built in pretty profound ways on an ethos of duty and hard work in an even more profound way than things in the for-profit business sector. People who believe in public sector work and public services must believe in the idea of a strong work-ethic.

I suppose I agree with Will Wilkinson about the importance of "an ethos of initiative, hard work, and individual responsibility" though I have no real idea why he thinks most progressives are against such an ethos. It strikes me that cultivating such an ethos is sort of integral to making a progressive agenda work. I think back sometimes to the time when I stumbled into a Stockholm Metro station and got the person working the booth to explain what I needed to do to use the city's bikeshare system. This wasn't really her job, and the conversation wasn't in her native language, and obviously no practical harm would have come to her if she'd blown me off but I take it that she took pride in working for Stockholm Metro and had a self-conception as someone who's a helpful public servant. Any effective public agency from the United States Marine Corps on down is built in pretty profound ways on an ethos of duty and hard work in an even more profound way than things in the for-profit business sector. People who believe in public sector work and public services must believe in the idea of a strong work-ethic.

Who Killed Hard Work And Personal Responsibility? | ThinkProgress

Worth a read.

The Recovery The Fed Wants

The Recovery The Fed Wants

the FOMC meekly "anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate." If the unemployment rate is not currently at a level consistent with the mandate and is also not converging rapidly toward a level consistent with the mandate, then in my view the FOMC ought to do something new and dramatic in order to fulfill its mandate. Instead, the FOMC is standing pat. They think 9.1 percent unemployment and moderate growth is fine and they don't intend to do anything about it.

One of the major differences between people with right of center views on economic policy who know what they're talking about and those who don't know what they're talking about, is that those who don't know what they're talking about tend to prattle a lot about equality of opportunity.

One of the major differences between people with right of center views on economic policy who know what they're talking about and those who don't know what they're talking about, is that those who don't know what they're talking about tend to prattle a lot about equality of opportunity.

Paul Ryan And Equality Of Opportunity | ThinkProgress

Funny but true. Article is well worth the read.

the only difference between debt-financed spending and tax-financed spending is that debt-financed spending needs to be paid back with interest. So by preferring $1.2 trillion in cuts to $2 trillion in cuts and $1 trillion in spending hikes, the GOP position is pushing both long-run spending and long-run taxes much higher than it would be under the Democratic plan.

the only difference between debt-financed spending and tax-financed spending is that debt-financed spending needs to be paid back with interest. So by preferring $1.2 trillion in cuts to $2 trillion in cuts and $1 trillion in spending hikes, the GOP position is pushing both long-run spending and long-run taxes much higher than it would be under the Democratic plan.

Conservative Orthodoxy Makes Spending Higher | ThinkProgress

And somehow we are to believe that the GOP cares about the debt? Or that their interest in cutting spending is about concern about the debt and not policy preference to push desired economic outcomes?

Mexico City Needs Regulatory Reform, Not Underground Buildings

Mexico City Needs Regulatory Reform, Not Underground Buildings

"Living underground is a dystopian scenario for when the surface of the earth becomes uninhabitable, it shouldn't be a go-to response to a regulatory mandate for short buildings."

If the point of building codes is so far removed from what is needed for actual utilization of land, there is clearly something wrong. Mexico city should be looking at a way to have modern structures without losing its uniqueness.

The Copernican Revolution In Macroeconomics

My view, with both all due respect and all due derision, is that the Robert Lucas types are like the early Copernicans here. There's something admirable in their insistence that it ought to all work out to an easily modeled system grounded in compelling theoretically considerations. The New Keynesian model is a mess, like late-Ptolemaic astronomy, thrown together to account for observed reality. But you don't fly to a moon with an elegant model that delivers mistaken predictions about where the moon's going to be. And what we actually need is a Kepler to give us an elegant model that actually predicts the phenomena, and then a Newton who can explain what that model means.

From The Copernican Revolution In Macroeconomics | ThinkProgress


Not sure I agree with the main point, but worth a read.

the Bush administration took a very ideological view of "the war on terror." They viewed the United States as broadly in conflict with a vast-yet-hazily-defined array of Muslim Bad Guys such that Saddam Hussein and the government of Iran were somehow part of the same problem as Osama bin Laden. The conceptual alternative to this that Obama offered ... was to think of al-Qaeda as a specific, narrow thing that ought to be obsessively targeted and destroyed. ... You see in the rising body count that this all wasn't just talk. There's been some kind of meaningful reallocation of national resources away from Bush's geopolitical vision in favor of a much more literal global effort to identify, locate, and kill members of al-Qaeda.

the Bush administration took a very ideological view of "the war on terror." They viewed the United States as broadly in conflict with a vast-yet-hazily-defined array of Muslim Bad Guys such that Saddam Hussein and the government of Iran were somehow part of the same problem as Osama bin Laden. The conceptual alternative to this that Obama offered … was to think of al-Qaeda as a specific, narrow thing that ought to be obsessively targeted and destroyed. … You see in the rising body count that this all wasn't just talk. There's been some kind of meaningful reallocation of national resources away from Bush's geopolitical vision in favor of a much more literal global effort to identify, locate, and kill members of al-Qaeda.
The Obama Doctrine In Action | ThinkProgress

Actual Class Warfare

With talk of class warfare in the air, it's perhaps useful for the sake of context to re-examine the 1929 platform of the Communist Party of Great Britain, titled "Class Against Class" and representing an avowedly class warfare approach to an economic crisis. Here's what they had to say on tax policy:

(1) Abolition of all indirect taxes.

(2) Exemption from all kinds of taxation for all wage-earners.

(3) Tax exemption for all working farmers.


From Actual Class Warfare


This is what real class warfare looks like. It isn’t pretty. And it is very different from the current GOP stance that if you want oil companies to pay tax rather than receive subsidies, it’s class warfare.

These rogue traders are out there because their bosses don't want to know what they're doing. I never get a "rogue burrito" at Chipotle because the management wants people to get burritos that are rolled properly. But suppose the management wants people to obtain the kind of high returns that can only be achieved through unduly risky trades. Well, you can't very well issue a directive telling people to make unduly risky trades. You certainly can, however, create circumstances under which incentives, control, and supervision are structured so as to make it the case that "rogue traders" will pop up here and there and then there rogueishness can be blamed ex post for undertakings that go badly.

These rogue traders are out there because their bosses don't want to know what they're doing. I never get a "rogue burrito" at Chipotle because the management wants people to get burritos that are rolled properly. But suppose the management wants people to obtain the kind of high returns that can only be achieved through unduly risky trades. Well, you can't very well issue a directive telling people to make unduly risky trades. You certainly can, however, create circumstances under which incentives, control, and supervision are structured so as to make it the case that "rogue traders" will pop up here and there and then there rogueishness can be blamed ex post for undertakings that go badly.
ThinkProgress

Looks like we had 17,000 thousand new private sector jobs in August, which were 100 percent offset by 17,000 lost jobs in the public sector. The striking zero result should galvanize minds, but it's worth noting that this has been the trend all year. The public sector has been steadily shrinking. According to the conservative theory of the economy, when the public sector shrinks that should super-charge the private sector. What's happened in the real world has been that public sector shrinkage has simply been paired with anemic private sector growth. This is what I've called "The Conservative Recovery." Conservatives complain about the results because the President is a Democrat named Barack Obama. But the policy result is what conservatives say they want. Steady cuts to the government sector, offset somewhat by private sector growth.

Looks like we had 17,000 thousand new private sector jobs in August, which were 100 percent offset by 17,000 lost jobs in the public sector.
The striking zero result should galvanize minds, but it's worth noting that this has been the trend all year. The public sector has been steadily shrinking. According to the conservative theory of the economy, when the public sector shrinks that should super-charge the private sector. What's happened in the real world has been that public sector shrinkage has simply been paired with anemic private sector growth. This is what I've called "The Conservative Recovery." Conservatives complain about the results because the President is a Democrat named Barack Obama. But the policy result is what conservatives say they want. Steady cuts to the government sector, offset somewhat by private sector growth.
The Conservative Recovery Teeters Into Recession | ThinkProgress

Tweets for 2011-09-02

  1. #Yglesias on The Conservative Recovery http://t.co/6IHLplp
  2. "Not long ago, a political party seeking to change U.S. policy would try to achieve that goal by…" http://t.co/NYLUYtP
  3. the Panthers began a regular practice of policing the police http://t.co/TkyblRb
  4. sdenaro: RT @BorowitzReport: Dear Pat Robertson, if God really hates gays so much, why has there never been a tsunami on Project Runway?

The National Flood Insurance Program Reextension Act of 2010 was sponsored by a bipartisan group, it passed the filibuster-ridden Senate by unanimous consent on September 21, it passed the House of Representatives on a voice vote on September 23, and was signed into law by President Obama a week later. The lead sponsor of the current Flood Insurance Reauthorization is Senator Roger Wicker, Republican of Mississippi. Amidst fierce ideological debate about the size and scope of the federal government, in other words, there's no serious budget-cutting move to stop subsidizing people from living in dangerous flood zones.

The National Flood Insurance Program Reextension Act of 2010 was sponsored by a bipartisan group, it passed the filibuster-ridden Senate by unanimous consent on September 21, it passed the House of Representatives on a voice vote on September 23, and was signed into law by President Obama a week later. The lead sponsor of the current Flood Insurance Reauthorization is Senator Roger Wicker, Republican of Mississippi. Amidst fierce ideological debate about the size and scope of the federal government, in other words, there's no serious budget-cutting move to stop subsidizing people from living in dangerous flood zones.
America's Worst Federal Spending Is Generally Its Least Controversial | ThinkProgress

imagine a small country that never borrows money. Alongside funding its normal operations out of tax revenue, it sets a little bit aside each year in an investment fund looking forward to the time when there'll be enough money in the pot to build a giant monument to the country's founder. Then along comes a recession-unemployment rises and revenue plummets. Under the circumstances, deciding to skip a year or two of contributions to the Monument Fund in order to maintain regular levels of public services is the most intuitive thing in the world. What would sound strange would be the idea that economic growth could be maximized by reducing spending to cut the deficit in order to "restore confidence" by making full contributions to the Monument Fund. Who cares about the Monument Fund? Back to the actual situation, the basic logic of "deficit spend in a recession if you can get away with it" holds just as clearly whether you have a Monument Fund or a budget deficit.

imagine a small country that never borrows money. Alongside funding its normal operations out of tax revenue, it sets a little bit aside each year in an investment fund looking forward to the time when there'll be enough money in the pot to build a giant monument to the country's founder. Then along comes a recession-unemployment rises and revenue plummets. Under the circumstances, deciding to skip a year or two of contributions to the Monument Fund in order to maintain regular levels of public services is the most intuitive thing in the world. What would sound strange would be the idea that economic growth could be maximized by reducing spending to cut the deficit in order to "restore confidence" by making full contributions to the Monument Fund. Who cares about the Monument Fund?
Back to the actual situation, the basic logic of "deficit spend in a recession if you can get away with it" holds just as clearly whether you have a Monument Fund or a budget deficit.
—Keynes in one lesson. The Magic Of Zero | ThinkProgress

The Anti-Keynesian Two-Step

the way the dialogue works is that first a Keynesian observes that fiscal stimulus can increase growth in a depressed economy. Second, as an attempted reductio, a conservative says "if that was true, then you could increase growth by breaking a bunch of windows." Third, the Keynesian accurately points out that you could, in fact, increase growth by breaking windows. Fourth, the conservative accuses Keynesians of wanting to break windows or believing that window-breaking increases wealth. But nobody ever said that! The point is that we have very good reasons to think smashing windows would be a bad idea-there's more to life than full employment-and that's why Keynesians generally want to boost employment by having people do something useful like renovate schools or repair bridges.

From The Anti-Keynesian Two-Step

Nice summary of the argument.

The basic notion seems to be that if you see "the government" doing "something" and the outcome is perverse, that proves that when "the government" does "things" it gets bad results so the government shouldn't do anything. But pay attention to the story! This looks to me essentially like a story of the slightly perverse consequences of what amounts to privatization of infrastructure provision. The New York State Thruway Authority dealt with the Hudson River bridge issue in a manner designed to maximize profits rather than a benevolent social planner putting the bridge in the socially optimal more southerly location.

The basic notion seems to be that if you see "the government" doing "something" and the outcome is perverse, that proves that when "the government" does "things" it gets bad results so the government shouldn't do anything. But pay attention to the story! This looks to me essentially like a story of the slightly perverse consequences of what amounts to privatization of infrastructure provision. The New York State Thruway Authority dealt with the Hudson River bridge issue in a manner designed to maximize profits rather than a benevolent social planner putting the bridge in the socially optimal more southerly location.
The Tappan Zee Bridge | ThinkProgress

I remember well the contention that there wasn't a dime's worth of difference between George W Bush and Al Gore. And, indeed, there wasn't. Both wholeheartedly embraced American military hegemony as a foreign policy and the neoliberal "Washington Consensus" approach to international economic policy. Both emphasized improved education as the key to long-term prosperity, both valorized capitalism as an engine of growth, and neither in any meaningful way challenged the various prevailing economic and social dogmas of the era. And yet looking back in concrete terms, it seems to me that the 2000 election turns out to have been one of the most consequential in American history. That's because while both Bush and Bill Clinton pursued policies from within the paradigm of the elite American ideological consensus of the post-Cold War era they actually pursued very different policies.

I remember well the contention that there wasn't a dime's worth of difference between George W Bush and Al Gore. And, indeed, there wasn't. Both wholeheartedly embraced American military hegemony as a foreign policy and the neoliberal "Washington Consensus" approach to international economic policy. Both emphasized improved education as the key to long-term prosperity, both valorized capitalism as an engine of growth, and neither in any meaningful way challenged the various prevailing economic and social dogmas of the era. And yet looking back in concrete terms, it seems to me that the 2000 election turns out to have been one of the most consequential in American history. That's because while both Bush and Bill Clinton pursued policies from within the paradigm of the elite American ideological consensus of the post-Cold War era they actually pursued very different policies.
A Dime's Worth Of Difference | ThinkProgress

Medicaid Spending In New York State

If you have a program that delivers services, and the expense of providing the services seems disproportionate to the benefits, and if the reason the expense seems disproportionate is something that unionized public workers have gotten out of the political process, then it's easy to get conservatives hopping mad about it. But if you have a program that delivers services, and the expense of providing the services seems disproportionate to the benefits, and if the reason the expense seems disproportionate is something that private firms have gotten out of the political proces, then suddenly increased government oversight (regulation of for-profit colleges, IPAB, etc.) is a slippery slope to socialism.

From ThinkProgress

In a nutshell, this is what is broken about our policy making system.

The era of Keynesian fiscal policy is dead and may never have been alive in the first place. Yet economic success stories caused by adherence to policies that most observers would consider "Keynesian" still can be found - even in small Southern cities with Republican mayors.

The era of Keynesian fiscal policy is dead and may never have been alive in the first place. Yet economic success stories caused by adherence to policies that most observers would consider "Keynesian" still can be found - even in small Southern cities with Republican mayors.

Keynesian Economics Alive and Well in Greenville | ThinkProgress

If Keynesian policies don’t work, then why do they work?

Maybe Someone Should Do Something

A major Bronx water supply line burst this morning just before 6:30 a.m., flooding Jerome Avenue for several blocks near 177th Street, halting traffic, disrupting subway and bus service, and damaging two nearby gas mains. The water flow was capped by 9:20 a.m., officials said. Speaking at a news conference, Mayor Michael R. Bloomberg said it was not clear why the pipe, which was installed in 1903, had burst. "It has been doing yeoman's work, but unfortunately, after 108 years, it's not," he said.

What's difficult to think is a good reason for the United States of America to have this problem. The United States can current sell five year bonds at a negative real interest rate. The United States has plenty of unemployed construction workers. Are we suffering from a metal shortage of some kind that makes it impossible to take advantage of cheap lending to hire construction workers to fix broken pipes? If so, I haven't heard about it. Instead, we seem to be suffering from a shortage of effective political leadership. Not coincidentally, we're talking about a rich, low-tax country that's also the world's military hegemon losing its AAA-rated bond status.


From Maybe Someone Should Do Something

I think the problem is worse than that. There is a large segment of the political establishment that thinks the problem is the lack of private water companies. Because if the government got out of the way, there would be plenty of people willing to start private water companies to run pipes everywhere and they could do it cheaper and better than the government. And if you point out the numbers suggest this is not the case and demonstrate the game theory that explains why such a thing is unlikely; then they just toss up their hands and insist that government water is slavery. You can not have a sane policy discussion with people who find the concept of policy illegitimate.

Even with several decades of median wage stagnation, the fact of the matter is that the median American household has quite a lot of money compared to the median household of almost every other country. And yet, I think there are a lot of other respects in which quality of life in the United States falls short. We spend a lot of time in traffic jams. We have both a frighteningly high murder rate and a frighteningly high level of incarceration. Our health care system is very inefficient. Americans work very long hours and have unusually little vacation time. It's not clear to me that any of these issues can be usefully tackled primarily by focusing on higher taxation of the very wealthy.

Even with several decades of median wage stagnation, the fact of the matter is that the median American household has quite a lot of money compared to the median household of almost every other country. And yet, I think there are a lot of other respects in which quality of life in the United States falls short. We spend a lot of time in traffic jams. We have both a frighteningly high murder rate and a frighteningly high level of incarceration. Our health care system is very inefficient. Americans work very long hours and have unusually little vacation time. It's not clear to me that any of these issues can be usefully tackled primarily by focusing on higher taxation of the very wealthy.

Beyond The Top One Percent | ThinkProgress

This is why there is more to policy than taxes.

Suppose the government had two choices. It could either pay for infrastructure improvements as it went along out of tax revenue or it could borrow money build the infrastructure now and then repay the money with tax revenues. Ordinarily the question would be, does the advantage of building quickly outweigh the cost of the interest. However, right now the interest cost is negative. The government saves money by borrowing now rather than waiting and paying cash. ThinkProgress

Michigan Woman Faces Jail Time For Vegetable Garden

The fact that this kind of thing doesn't seem to prompt much in the way of outrage from the very same people who are scandalized by increased regulation of light bulbs tells you a lot about American politics. For one thing, there are several giant industries willing and eager to put up lots of money to fund people to complain about the work of climate change activists, so these stories get blown up. But it's also just a reminder that, in practice, things like support for free markets, belief in freedom, hostility to government regulation, support for small government, etc. play no actual role in American politics. It's interesting that the political movement to which a plurality of Americans belong likes to talk a lot about these ideas. But there's no nationwide tea party backlash against lawn regulations.

From Michigan Woman Faces Jail Time For Vegetable Garden


This is just another instance of how the people who are against regulations of industry where there is a real problems of industry shifting its problems onto others by all kinds of externalities don’t seem to be willing to expend that much energy on regulations on individuals where the externalities are trivial.

(via Yet Another Conservative Economist Thinks Barack Obama Can Travel Through Time | ThinkProgress) Business investment started trending toward way back in 2006 and did the bulk of its plunging in 2008. It also seems to me that George W Bush was president at this time. Soon after Barack Obama took office, investment bottomed-out and began to rebound. Neither Obama's rhetoric nor his policies can possibly be responsible for the Obama-era drop in investment for the simple reason that no such drop occurred.

A Hamiltonian Solution For Europe

It would start with the recognition that Greece is insolvent. It can't pay the money it owes. One or two or maybe three other countries also may be insolvent. And the existence of solvency problems in some states is creating liquidity problems for other larger states. So there's some insolvency, and even though the insolvency is concentrated in a relatively small number of small states it's a problem for a much broader set of European people. At the same time, if you look at the total amount of sovereign debt in Europe and compare it to the Eurozone's total fiscal capacity, the debt is very manageable. The Eurozone as a whole is a very solvent, creditworthy entity. So in principle you could consolidate all that outstanding European debt into a single Eurozone-wide debt financed by a modest European Solidarity VAT Surcharge. Then you'd have to severely curtail (if not eliminate) the EU member states' ability to engage in deficit spending, limiting them to some kind of authority to borrow from a central European entity. The EU itself would become a debt-issuing, taxing entity like a real country.

From A Hamiltonian Solution For Europe


Yglesias comparison of the current European Union and the US under the Articles of Confederation is flawed but not without merit.

Mercatus Institute Study Refutes Libertarian Conception of Freedom

The Mercatus Center, a libertarian think tank, produced a study today purporting to show that New York and California are the least-free places in the United States while New Hampshire and South Dakota are the freest:

From Mercatus Institute Study Refutes Libertarian Conception of Freedom

I’m waiting for headline “Mercatus relocates to South Dakota”. More importantly, there should be a distinction between most freedom and most opportunity to exercise your freedom.

Higher Inflation Would Slow U.S.-China Currency Adjustment | ThinkProgress

Kindred Winecoff introduces the excellent point that the fact that the U.S. is experiencing an inflation rate that's lower than China's means that the real exchange rate is adjusting faster than the nominal rate. Consequently, "[t]o the extent that we want to boost employment through exporting, increased inflation could prolong that process."

Or to look at it another way, our inability to get China to allow for more rapid appreciation of the Yuan is arguably pressing us toward a lower-than-ideal inflation rate.


From Higher Inflation Would Slow U.S.-China Currency Adjustment | ThinkProgress

Good point.

The Ongoing Conservative Recovery

Over the past year, we've consistently seen the economy engage in so-so private sector job growth offset by job losses in the public sector. The results are, if you ask me, bad. But in a decent world, conservatives would be forced to acknowledge that these are the results they claim to want. The private sector's not being held back by the grasping arm of big government. Government is shrinking. And the shrinking of the government sector isn't leading to any kind of private sector explosion. It's simply offsetting meager private sector growth.

From The Ongoing Conservative Recovery


This is assuming that conservatives want that because they think that it is good economics policy. I think its much more likely that they want those results irregardless of the economic consequences. They want to shrink government to shrink government.

Obviously the federal government has the authority to specify for what purposes federal grant money can be used. Obviously. How else could it work? The other is the tendency to regard any existing profit stream as a form of property. Banks are entitled to their federal subsidies to offer student loans. For-profit colleges are entitled to their own student loan subsidy stream. Health care providers are entitled to unlimited wasteful spending at federal expense. Potato growers are entitled to their school lunch money. Great take down of Tea Party constitutional interpretation.

Newt Gingrich Used To Love Individual Health Insurance Mandates

Citizens should not be able to cheat their neighbors by not buying insurance, particularly when they can afford it, and expect others to pay for their care when they need it." An "individual mandate," he added, should be applied "when the larger health-care system has been fundamentally changed." […]

"Finally, we should insist that everyone above a certain level buy coverage (or, if they are opposed to insurance, post a bond). Meanwhile, we should provide tax credits or subsidize private insurance for the poor."

"People whose income is too low should receive Medicaid vouchers and tax credits to buy insurance,"


From Newt Gingrich Used To Love Individual Health Insurance Mandates


When Newt Gingrich suggests a mandate its about Personal Responsibility. When the Dems do the exact same thing its a godless socialist federal power-grab that puts us all on the road to serfdom.

The Widespread Occurrence of White Supremacist, Treasonous, and Pro-Slavery License Plates

The Civil War is over and American public culture generally avows the principle that abiding by election results is good, armed rebellion against the US government is bad, and chattel slavery is very bad. Nonetheless monuments to the idea of launching an armed rebellion against the US government when a political party hostile to chattel slavery wins an election are incredibly widespread.

From The Widespread Occurrence of White Supremacist, Treasonous, and Pro-Slavery License Plates


Part of me view the confederate flag as a right wing Che shirt. Far less about pro-slavery sympathy than a flipping a big middle finger at those on the left. Especially those north of the Mason-Dixon line.

Robots and Utopia

if robots are able to drastically eliminate the need to pay human beings to provide physical goods and services, then there'll be plenty of people with plenty of time and their hands to create cultural goods for free.

We're talking about a future in which there's neither a shortage of goods nor a shortage of people. We're talking, in other words, about utopia. For whatever reason, optimism is coded as a rightwing attitude in the contemporary United States, but people with their origins on the right ought to recognize these trends as the abundance of goods that makes it both possible and necessary to transcend capitalism and move to a world of from each according to his abilities to each according to his needs. Market exchange is a response to scarcity, and in many domains we're moving past scarcity.

From Robots and Utopia

SciFi fantasies aside, there will still be some shortages in some types of goods. Likely goods that we can’t yet imagine.

The Conservative Recovery Continues

this is the recovery conservatives say they want. The balance of economic activity is shifting away from the public sector and toward the private sector. So why is it that we have people running around the country-not just ignorant grassroots folks or talk show entrepreneurs, but billionaire political organizers like David Koch-screaming about incipient socialism?

From The Conservative Recovery Continues


I think this has something to do with the odd definitions of socialism that are taking hold on the right. It’s no longer about state ownership of the means of production. Now the acknowledgement of the existence of public goods or any form of social insurance is declared socialism.

Reducing Health Costs With Voluntary Death Panels

If you're 77 years old and receive a medical diagnosis that implies you have eighteen months to live without treatment, the government will spend large sums of money on trying to extent your life twelve months further. The government won't pay for you to take a trip to visit the Church of the Nativity in the West Bank or to see Michelangelo's David in Florence. But would it be so crazy for a fatally ill 77 year-old art lover who's never been to Italy to prefer the chance to see her favorite artists' iconic works in person over the chance of receiving extra medical care? I don't think so. The point of our retirement programs should be to deliver high quality of life to senior citizens, and that militates at the margin for more Social Security rather than more Medicare. But the way our programs are set up, per retiree Medicare spending will grow much more rapidly than per retiree Social Security spending. That's not the most cost-effective way to deliver high-quality retirement to people.


From Yglesias


A point often lost in the argument about health care spending.

Freedom and The Weak State

Francis Fukuyama challenges the assumption that freedom and a strong central state are opposing values:

In contemporary China, many of the worst abuses of peasant rights, violations of environmental and safety laws, and cases of gross corruption are the work not of the central government in Beijing but of local party officials or of the private employers who work hand in hand with them. It is the responsibility of the central government to enforce its own laws against the oligarchy; freedom is lost not when the state is too strong but when it is too weak. In the United States, the ending of Jim Crow laws and racial segregation in the two decades following World War II was brought about only when the federal government used its power to enforce the Constitution against the states in the South. Political freedom is not won, it would seem, only when the power of the state is constrained but when a strong state comes up against an equally strong society that seeks to restrict its power.

From Yglesias

I Normally loathe Mr Fukuyama but I can’t help but agree with this.

Congress Readies To Mobilize In Favor Of Wasteful Medicare Spending

the very same members of congress who voted this month to privatize Medicare in 2022 and enact draconian cuts throughout the 2020s and 2030s are here in town right now defending health care providers' right to charge the government high prices for services that don't work. Indeed, as recently as 2009 no less a figure than Paul Ryan himself was fuming at the idea of reducing government subsidies to for-profit insurance companies.

From Congress Readies To Mobilize In Favor Of Wasteful Medicare Spending

Being against rationing but in favor of cost-controls is a self contradictory position. Rationing is cost control and there is no type of cost control that isn’t a form of rationing. We have to be honest about this and make a call for rationing.

Productivity Only Causes Persistent Unemployment If Policymakers Fail To Provide Adequate Demand

the point is that when you take the long view it's not as if steadily increasing productivity leads to steadily declining employment-what it leads to is higher average output and rising living standards. But it only accomplishes that if the policymakers charged with macroeconomic stabilization use fiscal and monetary policy to ensure that there's a level of aggregate demand that's commensurate with our productive capacity. The fact that we have over 9 percent of the workforce unemployed indicates that they're failing. But this is the fault of the US Congress and the Federal Reserve Open Market Committee (and the European Central Bank, and Angela Merkel, and the Bank of Japan, etc.) not Steve Jobs.


From Yglesias


Yglesias explains Eco-101

A very large share of the public has no income that hasn't already been reported to the IRS by the payer and doesn't itemize deductions. Under the circumstances, the sensible thing would be for the IRS to send everyone a sheet of paper that says "based on the income that's been reported to us and your family status from last year, your taxes owed (or refund owed to you) is $X with standard deductions. If something's changed, or if that income number is wrong, or if you want to itemize deductions, you should fill out forms blah blah blah. Otherwise, just send a check." A lot of us would still need to wrestle with the forms and nobody likes to give up money, but this would be much more convenient for millions of people. We don't do it because H&R Block and TurboTax don't want to lose customers and, crucially, because the conservative movement wants taxes for ordinary people to be as annoying as possible. Rich people don't care about this kind of simplification because they itemize their deductions and hire accountants. But they benefit from middle class people resenting the tax process because it helps them build the case for low tax rates.

A very large share of the public has no income that hasn't already been reported to the IRS by the payer and doesn't itemize deductions. Under the circumstances, the sensible thing would be for the IRS to send everyone a sheet of paper that says "based on the income that's been reported to us and your family status from last year, your taxes owed (or refund owed to you) is $X with standard deductions. If something's changed, or if that income number is wrong, or if you want to itemize deductions, you should fill out forms blah blah blah. Otherwise, just send a check." A lot of us would still need to wrestle with the forms and nobody likes to give up money, but this would be much more convenient for millions of people. We don't do it because H&R Block and TurboTax don't want to lose customers and, crucially, because the conservative movement wants taxes for ordinary people to be as annoying as possible. Rich people don't care about this kind of simplification because they itemize their deductions and hire accountants. But they benefit from middle class people resenting the tax process because it helps them build the case for low tax rates.
Yglesias >> Why Taxes Are Annoying

Barber Licensing Rules Harm Prisoner Re-entry

Nobody comes out and says "I want to establish an occupational licensing regime for my profession in order to create an arbitrary barrier to entry" but the system works, in practice, to create arbitrary barriers to entry. Consequently, there's a need to find barriers that don't seem totally arbitrary,

From Barber Licensing Rules Harm Prisoner Re-entry

Why is the talk of deregulation always about banks and mineral extraction and never about main street?

Empty Chinese Houses

According to Hong Kong-based real estate analyst Gillem Tulloch, who is interviewed in the piece, the housing units are priced well above what an average Chinese person can afford. The result, he says, is a housing bubble that is terrifying in size, "a property bubble like which I don't think we've ever seen," he says. "It will make the United States pale in comparison. It's said that there's around 64 million empty apartments.... It's essentially the modern equivalent of building pyramids. It doesn't add to the betterment of people's lives, all it does is it promotes GDP."


From Empty Chinese Houses


Uh-no. Not again.

The Limits of First Principles

You could have the government do nothing, which would mean there are no exclusive spectrum licenses and everything is wide open. Or you could have the government marketize everything, which would mean you auction everything off to exclusive owners. But either way, that would be a choice and in making the choice you'd be "managing" the development of the communications marketplace. And so once the government is in the business of managing the development of the communications marketplace, there's no obvious reason why it should be all or nothing. Why not auction some and some some unlicensed? Why not conditional auctions?


From The Limits of First Principles


Interesting point there.

The complaint alleges that a Georgia-Pacific paper mill on the Coffee Creek in Arkansas - owned by the billionaire Koch Brothers -emits 45 million gallons of paper mill waste including hazardous materials like ammonia, chloride, and mercury each day. Coffee Creek then flows into Louisiana's Ouachita River where the pollutants have left the formerly pristine water speckled with odorous foam, slime and black pockets of water, said Jerry Johnson, who has been visiting the Ouachita River for 35 years. "People used to swim in it," said Johnson, who now lives along the river. "In the summertime, it was the place to go."

The complaint alleges that a Georgia-Pacific paper mill on the Coffee Creek in Arkansas - owned by the billionaire Koch Brothers -emits 45 million gallons of paper mill waste including hazardous materials like ammonia, chloride, and mercury each day.

Coffee Creek then flows into Louisiana's Ouachita River where the pollutants have left the formerly pristine water speckled with odorous foam, slime and black pockets of water, said Jerry Johnson, who has been visiting the Ouachita River for 35 years.

"People used to swim in it," said Johnson, who now lives along the river. "In the summertime, it was the place to go."

Property Rights And the Kochs

Collective bargaining for me, but not for thee

This brings to mind the phenomenon that's sort of the obverse of union decline-the extraordinary level of solidarity manifested by the corporate executive class in the United States of America. There are plenty of individual firms that benefit from this or that public sector spending stream, but essentially all business organizations are solidly united in opposition to essentially all possible ways to enhance government revenue. On financial reform, it's not merely that the big banks opposed the Dodd-Frank bill, but there was absolutely no counter-lobbying from firms in the non-financial economy in favor of it. And that's not to say that Dodd-Frank was the greatest thing since sliced brad, but there were no proposals coming out of corporate America for any financial regulatory overhaul of any kind. Yet clearly something went badly awry in 2007-2008. But the business class united behind TARP, then united to oppose any regulatory reforms, and is now united against any return to pre-Bush levels of taxation on rich people.


From Collective bargaining for me, but not for thee


Collective bargaining works, that’s why they want to stop it.

The Kochs and the Commons

Suppose I had a business where what I do is find people who live in flood prone areas and threaten to wreck their houses unless they pay me money. That would be called an extortion racket, not capitalism. I don't own those people's houses. Real capitalism requires the government to restrain me from knocking the houses down. Similarly, I can't just stand in the middle of a busy intersection, cause a traffic jam, and then shout "free market" when the cops try to take me away. After all, I don't own the intersection any more than I own your house. So what about Koch Industries and its substantial fossil fuel interests. Do they own the air? Do they own the homes of people in flood-prone areas? To the best of my knowledge, that's not the case. Charles Koch no more owns the air than I own his house or the interstate highway system. So why is "Koch Industries is allowed to spew whatever it wants into the air" considered a free market position? In part, it's a misunderstanding. But to a much larger extent it's a branding triumph. The basic point about pollution and regulation was understood by classical economists and political theorists, was understood by Hayek, is understood by right-of-center politicians in Europe, etc. But in America, things are different, and that's in large part a triumph of some very self-interested philanthropy.

From The Kochs and the Commons

Listening to the Kochs complain about crony capitalism is like listening to someone eating a free lunch complain about the food being awful and the portions too small.

We're actually purchasing shockingly little in the way of improved health for all that money

Americans are getting richer, agriculture is becoming more efficient, apparel is increasingly made by Bangladeshis or robots, etc. At the same time, computers and other electronic gadgets are getting cheaper in real terms. And if some things shrink as a share of our income, other things need to grow. The biggest of those things has been health care. And that makes perfect sense. Richer people should be spending our money trying to be healthier. The problem we have isn't so much that the volume of health related spending is "too high" as it is that we're actually purchasing shockingly little in the way of improved health for all that money.


From Something's Got to Go Up


Looking at the numbers, it makes sense that where our money goes should shift as markets mature.

Making Things

As we're able to produce more material goods with fewer people, that ought to lead not only to more chefs and yoga instructors and private security guards but also more preschool teachers and cops and home health aides. There's an argument out there that "we can't afford" the larger public sector that's currently projected for the future. But we can afford it, and the fact that in the future we won't need as many manufacturing workers to have all the manufactured goods we need is a big part of the reason.

From Making Things


The problem is that there a gap between what we can afford and what people will pay for. We’ve had 30 years of government on credit. Asking people to now pay for the services they use is a shock now. How else can you explain the contrast between people voting for people who promise to cut government and people being aghast when those same people want to cut services.

Progressives don't need to indulge the premises of this "welfare state for me but not for thee" brand of conservatism that's taken over the country.

I don't think we should cut Social Security benefits. But if we are going to cut Social Security benefits, I think it doesn't make sense to do what the Obama administration has done and make "No current beneficiaries should see their basic benefits reduced" one of the bargaining points.

In essence, by first separating the domestic budget into "discretionary" and "entitlement" portions and then dividing the entitlement programs up into "what today's old people get" versus "what tomorrow's old people will get" the political class has created a large and vociferously right-wing class of people who are completely immune from the impact of their own calls for fiscal austerity. In my view, that reality is the biggest driver of our current political dysfunction.

Progressives don't need to indulge the premises of this "welfare state for me but not for thee" brand of conservatism that's taken over the country.

Yglesias >> Lucky Duckies

Economic conservatism as a religion

But beyond the specific facts, it's the logical structure of the argument that's insane. Economic growth is a key predicate for an expansive welfare stare. So it's completely true that if you just started throwing out the key institutional features of modern market economies that you'd strangle big government. But you'd be strangling big government by destroying the economy. Why do this? It's like economic conservatism as a religion, with small government a totem to worship at.

From Bill Kristol, Gold Bug

At some point in the past two decades the libertarian wing of the conservative movement has shifted from the belief that shrinking government would promote growth, liberty and personal responsibility to a belief that shrinking government is a good in and of itself.

The Eternal Return of Robert Rubin

The thing about the Clinton administration is that Jimmy Carter's administration ended in 1980. So if you're going to create an economic policy team for Barack Obama your main choices are (1) "folks who worked on economic policy in the Clinton administration," (2) "folks who worked on economic policy in the Bush administration," and (3) "folks with little economic policy experience." Now forced to choose between (1) and (2), I think (1) is clearly the better choice. Option (3) isn't the worst thing in the world, lots of intelligent knowledgeable right-thinking people don't happen to have experience in government. But it seems to me that it's extremely prudent for a president to desire that the majority of his economic policy team be composed of people with previous executive branch economic policy experience. That means basically a lot of "Rubinites" plus various exceptions around the margin.


From Yglesias >> The Eternal Return of Robert Rubin


Worth a read.

Yglesias on The Conservative Recovery

conservatives should wake up to the fact that their economy theory is nonsense. On their telling, the state of the economy is bleak due to Obama's socialistic policies and if we just trimmed back government the private sector would come roaring back. The truth is that under Obama the private sector has been growing and the public sector's been shrinking. But public sector shrinkage hasn't spurred private job growth, it's been a drag on it. Which is exactly how it should be. Your town's firefighters are also customers for your town's stores and plumbers. Cutbacks in bus service make it more difficult for people to get to work and participate in the economy. If we'd had more stimulus-specifically more fiscal aid to state and local government-then those public jobs wouldn't have gone away (lowering unemployment) and the income streams attached to them wouldn't have gone away either, spurring private employment and further improving the labor market.

From Yglesias >> The Conservative Recovery

If cutting taxes promoted growth or entrepreneurship and all, the 8 years of W would have show some evidence of it.

The Eternal Return of Robert Rubin

The thing about the Clinton administration is that Jimmy Carter's administration ended in 1980. So if you're going to create an economic policy team for Barack Obama your main choices are (1) "folks who worked on economic policy in the Clinton administration," (2) "folks who worked on economic policy in the Bush administration," and (3) "folks with little economic policy experience." Now forced to choose between (1) and (2), I think (1) is clearly the better choice. Option (3) isn't the worst thing in the world, lots of intelligent knowledgeable right-thinking people don't happen to have experience in government. But it seems to me that it's extremely prudent for a president to desire that the majority of his economic policy team be composed of people with previous executive branch economic policy experience. That means basically a lot of "Rubinites" plus various exceptions around the margin.


From Yglesias >> The Eternal Return of Robert Rubin


Worth a read.

Yglesias on The Conservative Recovery

conservatives should wake up to the fact that their economy theory is nonsense. On their telling, the state of the economy is bleak due to Obama's socialistic policies and if we just trimmed back government the private sector would come roaring back. The truth is that under Obama the private sector has been growing and the public sector's been shrinking. But public sector shrinkage hasn't spurred private job growth, it's been a drag on it. Which is exactly how it should be. Your town's firefighters are also customers for your town's stores and plumbers. Cutbacks in bus service make it more difficult for people to get to work and participate in the economy. If we'd had more stimulus-specifically more fiscal aid to state and local government-then those public jobs wouldn't have gone away (lowering unemployment) and the income streams attached to them wouldn't have gone away either, spurring private employment and further improving the labor market.

From Yglesias >> The Conservative Recovery

If cutting taxes promoted growth or entrepreneurship and all, the 8 years of W would have show some evidence of it.

China's Dangerous Lower Middle Class

Back in the 1990s it was often fashionable to argue that increased prosperity would magically transform China into a more liberal political system. Today, that's clearly not the case. What we're seeing here, though, is the more likely mechanism for political change-dashed hopes. Peasant farmers often just feel beaten-down and resigned to their fate. But these are the would-be upwardly mobile. People who know perfectly well that better economic opportunities are possible and thus are poised to develop complaints and resentments.


From Yglesias >> China's Dangerous Lower Middle Class


This is a test of the theory that economic liberalization will lead to political change.

Free Markets and Safety Nets

Guaranteeing people a decent retirement and decent health care does more than smooth out the rough edges of capitalism. Those guarantees give people the freedom to take risks. If you know that professional failure won't leave you penniless and won't prevent your child from receiving needed medical care, you can leave the comfort of a large corporation and take a chance on your own idea. You can take a shot at becoming the next great American entrepreneur.

From Free Markets and Safety Nets

The progressive argument for social insurance in a nutshell.

A European-Style Fiscal Crisis Is Impossible in the United States of America

The government of Ireland can run out of Euros-they make Euros in Frankfurt. And the government of Peru can run out of dollars-they make dollars in Washington. But the government of the United States can't run out of dollars. The problem we could find ourselves with is the problem of inflation. Problematic inflation is a genuinely problematic thing, but it's a strange thing to worry about at the moment when inflation's been running unusually low for years. Our current problem is that the total volume of nominal spending is way too low, which means that as a country we're producing much less than we could be.


From Yglesias

The Tea Party and the market for land

You have people here who enjoy their existing low density lifestyles, they like the fact that said lifestyles are explicitly and implicitly subsidized through a variety of public policy measures, and they don't like the idea of losing those subsidies. What's more, they regard their antagonists as somewhat culturally alien. So they're pissed off. The fact that a small government approach to land use would in fact lead to denser lifestyles, more bus commuting, and smaller homes is of absolutely zero interest to them.

From Yglesias >> The Land Market

But those subsidies that allow for their life-style aren’t socialism. It’s only socialism when government helps other people. When it helps them, it’s freedom.

Yglesias on suburbanization

Fundamentally, I think Fannie and Freddie as they existed pre-crisis represented a bad implementation of the bad idea that government policy should promote the construction of large single-family owner-occupied housing. But the concept of pro-suburbanization industrial policy seems very broadly supported in American politics.

From Yglesias >> The Pricey Bailout

Good point. Much of this boils down to an American love of cars and the hatred of mass transit. Cities don’t make sense without buses and trains. If you start there then the only policy than can support that is suburban sprawl.