tag:blogger.com,1999:blog-92149921635056307082024-03-13T05:09:58.018-07:00The Titanic sails at dawnThe Titanic sails at dawn - politics, economics & cultureBruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.comBlogger985125tag:blogger.com,1999:blog-9214992163505630708.post-63513499173137408852014-09-28T01:34:00.003-07:002014-09-28T01:45:01.462-07:00"Paul Ryan Declares War on Math"<div class="tr_bq">
<span style="background-color: black; color: white;">More <a href="http://nymag.com/daily/intelligencer/2014/09/paul-ryan-declares-war-against-math.html">Jonathan Chait:</a></span></div>
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<span style="background-color: black; color: white;">Paul Ryan has emerged from his long post-election period of repositioning, soul-searching, and secretly but not secretly visiting the poor. He had been caricatured as an Ayn Rand miser and attacked as a social Darwinist, merely for proposing the largest upward transfer of wealth in American history. Ryan has identified the root cause of his difficulties, and it is fiscal arithmetic.</span></div>
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<span style="background-color: black; color: white;">The new Ryan, now fully formed, emerges in an interview with Philip Klein that </span><br />
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<span style="background-color: black; color: white;">is revealing precisely for its evasiveness. The overview of Ryan’s new strategy must be pieced together from several elements.</span></div>
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<span style="background-color: black; color: white;">1. Tax cuts for all! Ryan has found himself caught between his career-long obsession with cutting taxes for the rich and the problem of what happens to the revenue that would be lost. During the 2012 campaign, he swept aside the problem by couching his plan as “tax reform,” promising not to cut taxes for the rich. Ryan’s new plan is just to go ahead and cut taxes.</span></div>
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<span style="background-color: black; color: white;">He tells Klein, “Those of us who live in the tax system want to lower everybody’s tax rates.” If you lower everybody’s tax rates, then everybody will be paying less in taxes, and then the government will have less revenue, right? That’s where Ryan’s solution comes in: He plans to press the government budget agencies to adopt the optimistic assumption he prefers, which is that cutting tax rates for the rich creates faster economic growth. Ryan spent much of the Bush years assailing what he called “static scoring,” which is the standard budget practice of measuring the fiscal impact of tax cuts as if they do not contain magic pixie dust.</span></div>
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<span style="background-color: black; color: white;">As Danny Vinick has noticed, Ryan has announced his intention to change the rules. Ryan reaffirmed that plan in his interview with Klein: “I’d like to improve our scorekeeping so it better reflects reality,” he said. “Reality” is Ryan’s description for a world in which Bill Clinton’s punishing tax hikes on the rich hindered the economy, which was restored to health when George W. Bush cut taxes.</span><br />
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<span style="background-color: black; color: white;">2. I have a budget, sort of. Klein begins the interview by asking Ryan if he agrees with the criticism that Republicans are coasting into the election on the basis of Democratic votes dropping off during midterms and a favorable map, rather than laying out their policy alternative. Ryan states emphatically that he agrees. He then executes this subtle pivot: “I, for one, think you need to run on something, that’s why I wrote and passed four budgets in a row.”</span></div>
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<span style="background-color: black; color: white;">Now, keep in mind, Ryan does not believe he can be held accountable for those budgets. When asked last spring to defend his budget, which imposes massive cuts in funding for programs that benefit the poor, he replied, “I can’t speak for everybody and put my stuff in their budget. My work on poverty is a separate thing.”</span></div>
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<span style="background-color: black; color: white;">Note the difference in tone. When asked about his willingness to stand behind specific proposals, Ryan cites the budget “I wrote.” When asked to defend what’s in it, he calls it “their budget.” The budget exists only as a symbol of Ryan’s virtue, not as a collection of discrete policies he has to defend.</span></div>
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<span style="background-color: black; color: white;">3. That Obamacare replacement plan will never happen. Republicans have debated whether it is actually still possible to repeal Obamacare, or if they should instead try to shape it into a more conservative-friendly law. Ryan tells Klein that they need to repeal it and “start over,” and promises to “go back to the pre-Obamacare baseline,” rather than assume that the millions of Americans who have gained coverage through the law can keep it.</span></div>
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<span style="background-color: black; color: white;">That sounds dangerous and potentially unpopular, though. So Ryan also promises to give them some unspecified alternative. “A smart system that is patient-centered will give everybody the ability to get affordable insurance,” he promises. If this smart, patient-centered plan can give everybody affordable insurance, why haven’t Republicans voted on it already?</span></div>
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<span style="background-color: black; color: white;">If your answer to that question is “because that plan to give everybody affordable insurance without harming anybody does not and cannot exist,” then your suspicions will be confirmed by Ryan’s explanation. The Republicans' approach has always been to float numerous “alternatives,” containing various popular-sounding elements, none of which has to add up to a coherent plan, and none of which binds Republicans to a defined Party-wide alternative.</span></div>
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<span style="background-color: black; color: white;">Klein asks Ryan about Bobby Jindal’s proposal that “Republicans should hold a vote on an alternative.” (Easy for Jindal to say — he isn’t in Congress and wouldn’t have to vote.) Ryan replies, “Yeah, I think we should put alternatives out there for sure.” Everything about Ryan’s reply is designed to make it sound like he agrees with Jindal’s proposal. But he wriggles away from the core promise by changing “an alternative” to “alternatives.”</span></div>
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<span style="background-color: black; color: white;">Ryan also explains that the ethereal Republican plan will make affordable insurance available to one and all, but warns, “That’s not something you can necessarily capture in scoring.” That is to say, the budget forecasters will not, per se, “measure” the “impact” of Ryan’s “plan” in a way that matches his rhetoric. As with tax cuts, Ryan’s strategy revolves around ignoring budget forecasters or forcing them to adopt his alternative ideological approach.</span></div>
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<span style="background-color: black; color: white;">4. Obamacare is hurting Americans by cutting prices. When asked about the fact that health care inflation has actually fallen (to its lowest level in 50 years, in fact), Ryan first asserts that insurance premiums will rise — “we’re gonna see another round of price increases this October.” (In fact, premiums for next year are set to rise at a lower rate than pre-Obamacare premium increases.)</span></div>
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<span style="background-color: black; color: white;">Ryan goes on to assail the way the law has held down spending, and here he has a point. The Obamacare exchanges have produced lower-than-expected premiums because they have used narrow networks of doctors and hospitals. This can be inconvenient. Ryan says he is outraged, telling Klein, “I don’t think this is the kind of country that is going to stand for being told who and where they’re going to get their health care.”</span></div>
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<span style="background-color: black; color: white;">Except that very dynamic is exactly the way Ryan’s own fabled Medicare plan is designed to work — by having insurance companies lure customers by competing to hold down prices, in part by excluding doctors and hospitals that charge too much. Only now, rather than hold up this scheme of exchanges with private insurers as the silver bullet to solve America’s problems, Ryan is exploiting discontent with it. He is implicitly promising that people will be able to go to whichever doctor or hospital they want, regardless of price. Of course he won’t say how he’ll pay for that luxury, either. Put it on the tab.</span></div>
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<span style="background-color: black; color: white;">Which of course brings us to:</span></div>
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<span style="background-color: black; color: white;">5. The debt crisis is still real, man. Ryan has been warning for four years of an imminent debt crisis and skyrocketing interest rates. Nothing like this has happened. But Ryan speaks as though his warnings have proven true rather than laughably wrong:</span></div>
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<span style="background-color: black; color: white;">The shame of it is, we just wasted eight years of knowing this crisis was coming, it’s the most predictable economic crisis we’ve ever had in this country, knowing about it, and not doing anything about it for eight years because of this presidency.</span></div>
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<span style="background-color: black; color: white;">So Ryan assails Obama for doing nothing about the long-term deficit, which he calls a “crisis” and claimed would lead to interest rate hikes years ago that are still nowhere in sight. It is true that long-term deficits are projected to rise somewhat. It is not true that Obama has done nothing. He let the Bush tax cuts on income over $450,000 rise, over Ryan’s fierce objections. He also passed a health-care reform that the Congressional Budget Office projected would cut a trillion dollars from the deficit in its second decade, and which is so far producing lower costs in the federal health-care budget than even its most optimistic advocates predicted. Here is the projected future federal budget deficit as of 2009:</span></div>
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<span style="background-color: black; color: white;">And here is the projected deficit as of 2014:</span></div>
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<span style="background-color: black; color: white;">Note that under the likely scenario represented by the steeper line, with the Bush tax cuts continuing in their entirety, the national debt was projected to hit 200 percent of gross domestic product by 2032. It is now projected to be at less than half that level.</span></div>
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<span style="background-color: black; color: white;">So, let us review. Obama enacted policies to increase revenue and slow health-care inflation, over the staunch and often hysterical opposition of Ryan, who insisted that budget forecasts showing that Obama’s proposals would reduce the deficit were wrong. The deficit has in fact fallen very fast. Ryan’s response is to deny that any of this has happened, to castigate Obama for failing to reduce the deficit, and to propose new measures that would increase it. And he wants everybody to ignore the budget forecasters because their numbers won’t bear out his claims.</span></div>
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<figure class="img horizontal secondary" data-component="img" itemtype="http://schema.org/ImageObject" style="-webkit-font-smoothing: antialiased; box-sizing: inherit; clear: both; color: #111111; cursor: pointer; display: inline-block; font-family: Arial, sans-serif; font-size: 1.1rem; line-height: 1.3rem; margin: 0.5rem 0px 2.1rem; max-width: 100%; position: relative; text-rendering: optimizelegibility; width: 52.9rem;"><figcaption itemprop="caption" style="-webkit-font-smoothing: antialiased; box-sizing: inherit; color: #353535; margin: 0.5rem 0px 0px; text-align: center; text-rendering: optimizelegibility; width: 528px;"></figcaption></figure><span style="color: #111111; font-family: Georgia, serif; font-size: 16px;"></span><span style="color: #111111; font-family: Georgia, serif; font-size: 16px;"></span><span style="color: #111111; font-family: Georgia, serif; font-size: 16px;"></span><span style="color: #111111; font-family: Georgia, serif; font-size: 16px;"></span>Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-18547171395771048262014-09-01T18:47:00.002-07:002014-09-01T18:47:29.976-07:00"Feast of the Wingnuts"<div class="tr_bq">
<a href="http://www.newrepublic.com/article/feast-the-wingnuts">Jonathan Chait (This piece</a> is adapted from Jonathan Chait's book, The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics, which will be published on September 12 by Houghton Mifflin): </div>
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American politics has been hijacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane. The scope of their triumph is breathtaking. Over the course of the last three decades, they have moved from the right-wing fringe to the commanding heights of the national agenda. Notions that would have been laughed at a generation ago--that cutting taxes for the very rich is the best response to any and every economic circumstance or that it is perfectly appropriate to turn the most rapacious and self-interested elements of the business lobby into essentially an arm of the federal government--are now so pervasive, they barely attract any notice.<br /><br />The result has been a slowmotion disaster. Income inequality has approached levels normally associated with Third World oligarchies, not healthy Western democracies. The federal government has grown so encrusted with business lobbyists that it can no longer meet the great public challenges of our time. Not even many conservative voters or intellectuals find the result congenial. Government is no smaller--it is simply more debt-ridden and more beholden to wealthy elites.<br /><br />It was not always this way. A generation ago, Republican economics was relentlessly sober. Republicans concerned themselves with such ills as deficits, inflation, and excessive spending. They did not care very much about cutting taxes, and (as in the case of such GOP presidents as Herbert Hoover and Gerald Ford) they were quite willing to raise taxes in order to balance the budget. While many of them were wealthy and close to business, the leaders of business themselves had a strong sense of social responsibility that transcended their class interests. By temperament, such men were cautious rather than utopian.<br /><br />Over the last three decades, however, such Republicans have passed almost completely <div class="separator" style="clear: both; text-align: center;">
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from the scene, at least in Washington, to be replaced by, essentially, a cult.<br /><br />All sects have their founding myths, many of them involving circumstances quite mundane. The cult in question generally traces its political origins to a meeting in Washington in late 1974 between Arthur Laffer, an economist; Jude Wanniski, an editorial page writer for The Wall Street Journal; and Dick Cheney, then-deputy assistant to President Ford. Wanniski, an eccentric and highly excitable man, had until the previous few years no training in economics whatsoever, but he had taken Laffer's tutelage...</blockquote>
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Read the rest <a href="http://www.newrepublic.com/article/feast-the-wingnuts">HERE</a>Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-83977041922711615782014-09-01T09:31:00.001-07:002014-09-02T21:14:16.280-07:00Medicare Miracle?<div class="tr_bq">
More <a href="http://www.nytimes.com/2014/09/01/opinion/paul-krugman-the-medicare-miracle.html?_r=0">Krugman</a> on good health care news...Medicare is, perhaps not a "miracle," but in very good shape compared to the dire predictions of crank "deficit scolds" (who routinely used the worst Medicare predictions moving forward primarily to deflect from the the issue of health care cost inflation to attack any and all government spending - except of course defense):</div>
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So, what do you think about those Medicare numbers? What, you haven’t heard about them? Well, they haven’t been front-page news. But something remarkable has been happening on the health-spending front, and it should (but probably won’t) transform a lot of our political debate. </blockquote>
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The story so far: We’ve all seen projections of giant federal deficits over the next few decades, and there’s a whole industry devoted to issuing dire warnings about the budget and demanding cuts in Socialsecuritymedicareandmedicaid. Policy wonks have long known, however, that there’s no such program, and that health care, rather than retirement, was driving those scary projections. Why? Because, historically, health spending has grown much faster than G.D.P., and it was assumed that this trend would continue. </blockquote>
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But a funny thing has happened: Health spending has slowed sharply, and it’s already well below projections made just a few years ago. The falloff has been especially pronounced in Medicare, which is spending $1,000 less per beneficiary than the Congressional Budget Office projected just four years ago. </blockquote>
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This is a really big deal, in at least three ways.<br />
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First, our supposed fiscal crisis has been postponed, perhaps indefinitely. The federal government is still running deficits, but they’re way down. True, the red ink is still likely to swell again in a few years, if only because more baby boomers will retire and start collecting benefits; but, these days, projections of federal debt as a percentage of G.D.P. show it creeping up rather than soaring. We’ll probably have to raise more revenue eventually, but the long-term fiscal gap now looks much more manageable than the deficit scolds would have you believe. </blockquote>
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Second, the slowdown in Medicare helps refute one common explanation of the health-cost slowdown: that it’s mainly the product of a depressed economy, and that spending will surge again once the economy recovers. That could explain low private spending, but Medicare is a government program, and shouldn’t be affected by the recession. In other words, the good news on health costs is for real. </blockquote>
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But what accounts for this good news? The third big implication of the Medicare cost miracle is that everything the usual suspects have been saying about fiscal responsibility is wrong. </blockquote>
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For years, pundits have accused President Obama of failing to take on entitlement spending. These accusations always involved magical thinking on the politics, assuming that Mr. Obama could somehow get Republicans to negotiate in good faith if only he really wanted to. But they also implicitly dismissed as worthless all the cost-control measures included in the Affordable Care Act. Inside the Beltway, cost control apparently isn’t considered real unless it involves slashing benefits. One pundit went so far as to say, after the Obama administration rejected proposals to raise the eligibility age for Medicare, “America gets the shaft.” </blockquote>
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It turns out, however, that raising the Medicare age would hardly save any money. Meanwhile, Medicare is spending much less than expected, and those Obamacare cost-saving measures are at least part of the story. The conventional wisdom on what is and isn’t serious is completely wrong. </blockquote>
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While we’re on the subject of health costs, there are two other stories you should know about. </blockquote>
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One involves the supposed savings from running Medicare through for-profit insurance companies. That’s the way the drug benefit works, and conservatives love to point out that this benefit has ended up costing much less than projected, which they claim proves that privatization is the way to go. But the budget office has a new report on this issue, and it finds that privatization had nothing to do with it. Instead, Medicare Part D is costing less than expected partly because enrollment has been low and partly because an absence of new blockbuster drugs has led to an overall slowdown in pharmaceutical spending.<br />
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The other involves the “sticker shock” that opponents of health reform have been predicting for years. Bulletin: It’s still not happening. Over all, health insurance premiums seem likely to rise only modestly next year, and they are on track to be flat or even falling in several states, including Connecticut and Arkansas. </blockquote>
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What’s the moral here? For years, pundits and politicians have insisted that guaranteed health care is an impossible dream, even though every other advanced country has it. </blockquote>
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Covering the uninsured was supposed to be unaffordable; Medicare as we know it was supposed to be unsustainable. But it turns out that incremental steps to improve incentives and reduce costs can achieve a lot, and covering the uninsured isn’t hard at all. </blockquote>
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When it comes to ensuring that Americans have access to health care, the message of the data is simple: Yes, we can</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com2tag:blogger.com,1999:blog-9214992163505630708.post-12679654194635661332014-08-31T19:05:00.000-07:002014-08-31T19:05:09.675-07:00Has the "Obamacare" Scare turned a corner?<div class="tr_bq">
<a href="http://krugman.blogs.nytimes.com/2014/08/19/beyond-the-lies/">Krugman thinks it has</a>:</div>
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Republican ads denouncing health reform have been dwindling month by month. </blockquote>
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The reason is fairly obvious, although it’s not considered nice to state it bluntly: the attack on Obamacare depended almost entirely on lies, and those lies are becoming unsustainable now that the law is actually working. </blockquote>
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No, there aren’t any death panels; no, huge numbers of Americans aren’t losing coverage <div class="separator" style="clear: both; text-align: center;">
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or finding their health costs soaring; no, jobs aren’t being killed in vast numbers. A few relatively affluent, healthy people are paying more for coverage; a few high-income taxpayers are paying more in taxes; a much larger number of Americans are getting coverage that was previously unavailable and/or unaffordable; and most people are seeing no difference at all, except that they no longer have to fear what happens if they lose their current coverage. </blockquote>
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In other words, reform is working more or less the way it was supposed to (except for the Medicaid expansion in non-cooperating states). </blockquote>
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Many of us argued all along that the right’s chance to kill reform would vanish once the program was actually in place; the horror stories only worked as long as the truth wasn’t visible. And that’s what seems to be happening.</blockquote>
It does look like swing-state Democrats are more willing to take on the cruel, but unfortunately, not unusual GOP governors who are refusing Medicaid expansion and denying millions of the working poor health insurance. Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com1tag:blogger.com,1999:blog-9214992163505630708.post-39095702823848690542014-08-31T18:49:00.003-07:002014-08-31T18:49:42.583-07:00"Balanced Budget Fundamentalism"<div class="tr_bq">
<a href="http://mainlymacro.blogspot.com/2014/08/balanced-budget-fundamentalism.html">Simon Wren-Lewi</a>s compares balanced budget fundamentalism to anti-evolutionists:</div>
<blockquote>
Europeans, and particularly the European elite, find popular attitudes to science among many across the Atlantic both amusing and distressing. In Europe we do not have regular attempts to replace evolution with ‘intelligent design’ on school curriculums. Climate change denial is not mainstream politics in Europe as it is in the US (with the possible exception of the UK). Yet Europe, and particularly its governing elite, seems gripped by a belief that is as unscientific and more immediately dangerous. It is a belief that fiscal policy should be tightened in a liquidity trap. </blockquote>
<blockquote>
In the UK economic growth is currently strong, but that cannot disguise the fact that this has been the slowest recovery from a recession for centuries. Austerity may not be the main cause of that, but it certainly played its part. Yet the government that undertook this austerity, instead of trying to distract attention from its mistake, is planning to do it all over again. Either this is a serious intention, or a ruse to help win an election, but either way it suggests events have not dulled its faith in this doctrine. </blockquote>
<blockquote>
Europe suffered a second recession thanks to a combination of austerity and poor monetary policy. Yet its monetary policymakers, rather than take serious steps to address the fact that Eurozone GDP is stagnant and inflation is barely positive, choose to largely sit on their hands and instead to continue to extol the virtues of austerity. (Dear ECB. You seem very keen on structural reform. Given your performance, maybe you should try some yourself.) In major economies like France and the Netherlands, the absence of growth leads to deficit targets being missed, and the medieval fiscal rules of the Eurozone imply further austerity is required. As Wolfgang Munchau points out (August 15), German newspapers seem more concerned with the French budget deficit than with the prospect of deflation. </blockquote>
<blockquote>
There is now almost universal agreement among economists that tightening fiscal policy tends to significantly reduce output and increase unemployment when interest rates are at their lower bound: the debate is by how much. A few argue that monetary policy could still rescue the situation even though interest rates are at their lower bound, but the chance of the ECB following their advice is zero. </blockquote>
<blockquote>
Paul De Grauwe puts it eloquently. </blockquote>
<blockquote class="tr_bq">
<span style="font-family: Times, Times New Roman, serif;"><span style="background-color: white; color: #222222; line-height: 18.4799995422363px;">“European policymakers are doing everything they can to stop recovery taking off, so they should not be surprised if there is in fact no take-off. It is balanced-budget fundamentalism, and it has become religious.”</span> <a name='more'></a></span></blockquote>
<blockquote>
They still teach Keynesian economics in Europe, so it is not as if the science is not taught. Nor do I find much difference between the views of junior and middle-ranking macroeconomists working for the ECB or Commission compared to, for example, those working for the IMF, apart from a natural recognition of political realities. Instead I think the problem is much the same as that encountered in the US, but just different in degree. </blockquote>
<blockquote>
The mistake academics can often make is to believe that what they regard as received wisdom among themselves will be reflected in the policy debate, when these issues have a strong ideological element or where significant sectional financial interests are involved. In reality there is a policy advice community that lies between the expert and the politician, and while some in this community are genuinely interested in evidence, others are more attuned to a particular ideology, or the interests of money, or what ‘plays well’ with sections of the public. Some in this community might even be economists, but economists who - if they ever had macroeconomic expertise - seem happy to leave it behind. </blockquote>
<blockquote>
So why does ‘balanced-budget fundamentalism’ appear to be more dominant in Europe than the US. I do not think you will find the answer in any difference between the macro taught in the two continents. Some might point to the dominance of <a href="http://mainlymacro.blogspot.co.uk/2014/01/ordoliberalism-neoliberalism-and.html">ordoliberalism</a> in Germany, but this is not so very different to the dominance of neoliberalism within the policy advice community in the US. Perhaps there is something in the greater ability of academics in the US (and one in particular) to bypass the policy advice community through both conventional and more modern forms of media. However I suspect a big factor is just recent experience. </blockquote>
<blockquote>
The US never had a debt funding crisis. The ‘bond vigilantes’ never turned up. In the Eurozone they did, and that had a scarring effect on European policymakers that large sections of the policy advice community can play to, and which leaves those who might oppose austerity powerless. That is not meant to excuse the motives of those that foster a belief in balanced budget fundamentalism, but simply to note that it makes it more difficult for science and evidence to get a look in. The difference between fundamentalism that denies the concept of evolution and fundamentalism that denies the principles of macroeconomics is that the latter is doing people immediate harm. </blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-47455150876133964952014-07-31T03:33:00.000-07:002014-07-31T03:50:51.929-07:00"Legal" corporate crime<a href="http://www.nytimes.com/2014/07/28/opinion/paul-krugman-tax-avoidance-du-jour-inversion.html"> Krugman @ NYTs:</a><br />
<blockquote class="tr_bq">
In
recent decisions, the conservative majority on the Supreme Court has
made clear its view that corporations are people, with all the attendant
rights. They are entitled to <a href="http://www.nytimes.com/2010/01/22/us/politics/22scotus.html?pagewanted=all&module=Search&mabReward=relbias%3Ar%2C%7B%221%22%3A%22RI%3A11%22%7D" title="NYT article">free speech</a>, which in their case means spending lots of money to bend the political process to their ends. They are entitled to <a href="http://www.nytimes.com/2014/07/01/us/hobby-lobby-case-supreme-court-contraception.html?module=Search&mabReward=relbias%3Ar%2C%7B%221%22%3A%22RI%3A11%22%7D" title="NYT">religious beliefs</a>, including those that mean denying benefits to their workers... </blockquote>
<blockquote class="tr_bq">
<div class="story-body-text story-content" data-para-count="414" data-total-count="414" id="story-continues-1" itemprop="articleBody">
</div>
<div class="story-body-text story-content" data-para-count="184" data-total-count="598" itemprop="articleBody">
There
is, however, one big difference between corporate persons and the likes
of </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-n-0OArvY9iQ/U9odpU55AVI/AAAAAAAAEq0/Dr5USk3EoVs/s1600/corporatetaxes.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://4.bp.blogspot.com/-n-0OArvY9iQ/U9odpU55AVI/AAAAAAAAEq0/Dr5USk3EoVs/s1600/corporatetaxes.jpg" height="311" width="400" /></a></div>
you and me: On current trends, we’re heading toward a world in which
only the human people pay taxes.</blockquote>
<blockquote class="tr_bq">
The federal government still gets a tenth of its revenue
from corporate profits. But it used to get a lot more — a third
of revenue came from profits taxes in the early 1950s, a quarter or more well into the 1960s.... Part of the decline
since then reflects a fall in the tax rate, but mainly it reflects
ever-more-aggressive corporate tax avoidance — avoidance that
politicians have done little to prevent. </blockquote>
<blockquote class="tr_bq">
Which brings us to the tax-avoidance strategy du jour: “<a href="http://online.wsj.com/articles/edward-d-kleinbard-tax-inversions-must-be-stopped-now-1405984126">inversion</a>.”
This refers to a legal maneuver in which a company declares that its
U.S. operations are owned by its foreign subsidiary, not the other way
around, and uses this role reversal to shift reported profits out of
American jurisdiction to someplace with a lower tax rate...</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com1tag:blogger.com,1999:blog-9214992163505630708.post-13188854185305932782014-07-31T03:28:00.001-07:002014-07-31T03:28:22.888-07:00The Great Economic Devolution: Median wealth dropped 20% in 30 years <a href="http://www.cepr.net/index.php/blogs/beat-the-press/median-wealth-is-down-by-20-percent-since-1984">CEPR:</a><br />
<br />
A NYT <a class="blank" href="http://www.nytimes.com/2014/07/27/business/the-typical-household-now-worth-a-third-less.html?ref=business" target="_blank">article</a>
reported on a study from Russell Sage reporting that median household
<a class="blank" href="http://web.stanford.edu/group/scspi/_media/working_papers/pfeffer-danziger-schoeni_wealth-levels.pdf" target="_blank">the study</a> is that median wealth is down by around 20 percent from 1984.<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-tRl50-xr5Z8/U9oaATjab7I/AAAAAAAAEqc/iVWqkBZNqdA/s1600/inequality-page25_actualdistribwithlegend.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-tRl50-xr5Z8/U9oaATjab7I/AAAAAAAAEqc/iVWqkBZNqdA/s1600/inequality-page25_actualdistribwithlegend.png" height="166" width="400" /></a></div>
wealth was 36 percent lower in 2013 than 2003. While this is disturbing,
an even more striking finding from <br />
<br />
This is noteworthy because this cannot be explained as largely the
result of the collapse of house prices that triggered the Great
Recession. This indicates that we have gone thirty years, during which
time output per worker has more than doubled, but real wealth has
actually fallen for the typical family. It is also important to realize
that the drop in wealth reported in the study understates the true drop
since a typical household in 1984 would have been able to count on a
defined benefit pension. This is not true at present, so the effective
drop in wealth is even larger than reported by the study. (Defined
benefit pensions are not included in its measure of wealth.)Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-52516279139223582952014-07-31T03:19:00.002-07:002014-07-31T03:19:32.742-07:00Raising the minimum wage and job creation<a href="http://takingnote.blogs.nytimes.com/2014/07/29/higher-minimum-wage-faster-job-creation/">Teresa Tritch @ NYTs:</a><br />
<blockquote class="tr_bq">
The standard argument
against a higher minimum wage is that it will lead to job loss as
employers, unable to pay more, lay off current workers or don’t hire new
ones. </blockquote>
<blockquote class="tr_bq">
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-T8X2cN3S7Ek/U9oX_VMmZtI/AAAAAAAAEqQ/N8WUXMOZX44/s1600/progressillinois.minimumwage04.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-T8X2cN3S7Ek/U9oX_VMmZtI/AAAAAAAAEqQ/N8WUXMOZX44/s1600/progressillinois.minimumwage04.jpg" height="213" width="320" /></a></div>
<div class="story-body-text" itemprop="articleBody">
It’s important to
state up front that research and experience don’t bear that out. <br />
<span id="more-17673"></span><br />
Bolstering what we already know, <a href="http://www.cepr.net/index.php/blogs/cepr-blog/2014-job-creation-in-states-that-raised-the-minimum-wage">new evidence</a> shows that job creation is faster in states that have raised their minimum wages. The <a href="http://www.cepr.net/">Center for Economic and Policy Research</a>
used federal labor data to tally job growth in 13 states* that raised
their minimums in 2014. In all but one, New Jersey, employment was
higher in the first five months of 2014 (after the wage increase) than
it was in the last five months of 2013 (before the wage increase). In
nine of the 12 states with faster growth, employment gains were above
the national median.</div>
<a name='more'></a><br />
<div class="separator" style="clear: both; text-align: center;">
</div>
The
minimum wage has been raised many times without hurting employment.
Rather than cut jobs, employers have offset the cost of higher minimums
through reduced labor turnover. Employers also cope with a higher
minimum by giving lower raises further up the wage scale, raising prices
modestly or other adjustments.</blockquote>
<blockquote class="tr_bq">
<div class="story-body-text" itemprop="articleBody">
That doesn’t mean that
a higher minimum wage caused the job growth, a point clearly stated by
the researchers at CEPR. But it indicates that raising the minimum
didn’t hurt job growth, as opponents claim ad nauseam.</div>
<div class="story-body-text" itemprop="articleBody">
<br /></div>
<div class="story-body-text" itemprop="articleBody">
That hasn’t stopped those opponents — especially in the restaurant industry — from <a href="http://watchdog.org/160956/job-growth-1/">attacking the findings</a>.
But their only argument is bluster. They don’t dispute the job gains in
states that have raised their minimums. Rather, they claim that it may
mask job loss among low-wage workers directly impacted by the raise. To
support that conjecture, they have pointed to a study from 2010,
sponsored by the restaurant lobby, which found a link between a higher
minimum wage and lower teen employment.</div>
<div class="story-body-text" itemprop="articleBody">
<br /></div>
<div class="story-body-text" itemprop="articleBody">
The fact of the matter
is that no one knows why job growth has been above trend in states with
higher minimum wages. A plausible explanation is that a minimum-wage
hike may have a more pronounced stimulus effect in a generally weak
economy than it would have in a strong economy, as workers who long have
struggled to make ends meet quickly spend their extra dollars,
providing an economic boost that help job growth.</div>
<div class="story-body-text" itemprop="articleBody">
<br /></div>
<div class="story-body-text" itemprop="articleBody">
What is clear is that
there is no need to fear a minimum wage increase — unless, apparently,
you are a restaurant lobbyist, whose job depends on keeping wages low
for already very low paid waitresses, waiters and fast-food servers.</div>
<div class="story-body-text" itemprop="articleBody">
<br /></div>
<div class="story-body-text" itemprop="articleBody">
*Four states passed
legislation to raise their minimum wages in 2014: Connecticut, New
Jersey, New York, Rhode Island. Nine states automatically increased
their minimums in line with inflation: Arizona, Colorado, Florida,
Missouri, Montana, Ohio, Oregon, Vermont and Washington.</div>
</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-18527076891923570972014-07-27T22:21:00.000-07:002014-07-27T22:21:03.403-07:00Inflation hysteria - hilarious CNBC nutcase Rick Santelli loses it!<br />
<br />
<iframe allowfullscreen="" frameborder="0" height="480" src="//www.youtube.com/embed/EU9U3ZnAD5E?rel=0" width="640"></iframe><br />Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-12255560239330116042014-07-27T22:12:00.001-07:002014-07-27T22:12:50.875-07:00Credit where credit is due - conservative tells right-wing inflation hysterics to accept the fact of low inflation and shut up !<a href="http://www.aei-ideas.org/2014/07/why-amity-shlaes-is-dead-wrong-about-inflation/">American Enterprise Institute economist James Pethokouko</a>s calls out his fellow conservatives as inflation cranks: <br />
<blockquote class="tr_bq">
<br />
<br />
<a href="http://www.aei-ideas.org/2014/07/why-amity-shlaes-is-dead-wrong-about-inflation/" rel="bookmark" title="1:26 pm"><time class="entry-date" datetime="2014-07-16T13:26:28-04:00" pubdate=""></time></a>
<br />
<div class="entry-image">
<a href="http://www.aei-ideas.org/2014/07/why-amity-shlaes-is-dead-wrong-about-inflation/071614inflation/" title="Why Amity Shlaes is dead wrong about inflation"><img alt="071614inflation" class="attachment-large wp-post-image" height="403" src="http://www.aei-ideas.org/wp-content/uploads/2014/07/071614inflation-600x403.jpg" width="600" /></a></div>
<div class="entry-content">
<br />
Are conservatives forever and always doomed to be obsessed by fear
that inflation is perpetually just around the corner? Perhaps, since it
was the Great Inflation of the 1970s that helped give rise to Reagan and
Thatcher and the conservative revival. Even worse, this inflation
obsession spawns conspiracy theories that government is manipulating the
data to hide skyrocketing prices.<br />
<a name='more'></a><br />
<br />
To be sure, the prices of some things have gone up a lot and continue
to rise, such as college tuition. But overall inflation has been
quiescent. The Consumer Price Index, including food and energy, has
risen by an annual average of just 1.6% since 2008, including 1.5% last
year. Is Washington phonying up the numbers? Well, <a href="http://bpp.mit.edu/usa/" target="_blank">MIT’s Billion Price Project</a>, which “<span style="color: #4d4d4d;">uses
prices collected from hundreds of online retailers around the world on a
daily basis” puts US inflation at just over 2% the past year. In other
words, the CPI is roughly correct, though your personal mileage will
vary a bit.</span> Looking forward, <a href="http://www.clevelandfed.org/research/data/inflation_expectations/" target="_blank">a Cleveland Fed model</a> based on both economic surveys and financial derivatives <span style="color: #333333;">reports
that its “latest estimate of 10-year expected inflation is 1.83%. In
other words, the public currently expects the inflation rate to be less
than 2 percent on average over the next decade.”</span> Not surprisingly, then, I strongly disagree with the inflation fretting of Amity Shlaes in her new NRO piece, <a href="http://www.nationalreview.com/article/382859/inflation-vacation-amity-shlaes" target="_blank">“Inflation Vacation: Things are more expensive than government statistics say they should be.</a>” Here is Shlaes;<br />
<blockquote>
All the official numbers, especially the
Consumer Price Index, say that inflation is reasonable. Economists you
respect tell you the wages are low because of “misallocation of
resources.” Janet Yellen, the new Fed chairman, says she’s not worried.
Maybe <em>she </em>will have a good vacation. </blockquote>
<blockquote>
But other numbers suggest that inflation is
higher than what the official data suggest. One set, from which some of
the price bites above were taken, is <a href="http://www.zerohedge.com/news/2014-07-14/feeling-poorer-through-power-inflation" target="_blank">here</a>. For a more thorough review of why official numbers err, have a look at <a href="http://www.shadowstats.com/" target="_blank">the work</a> of John Williams, a consultant who has tracked data over the years. </blockquote>
<blockquote>
<div style="color: black;">
Boiled down, Williams’s contention is that
several alterations in the way we measure inflation have caused
distortion. The Consumer Price Index used to be simple: The government
measured the same basket of goods every year. If the price went up, the
index captured that. Decades ago, authorities pointed out that people
substitute a cheaper item when what they originally bought was too
expensive. They altered the index to capture substitution. If steak is
expensive, you buy chicken. The result of their fiddle is that inflation
looks lower than it would otherwise. That’s disappointing. No vacation
is a true vacation without a really good tenderloin.</div>
</blockquote>
<div style="color: black;">
Conservatives like Shlaes — she is hardly the
only one — should really stop using John Williams and his ShadowStats
site as source for their inflation arguments. Many <a href="http://azizonomics.com/2013/06/01/the-trouble-with-shadowstats/" target="_blank">economists</a>, not to mention the <a href="http://www.bls.gov/opub/mlr/2008/08/art1full.pdf" target="_blank">BLS</a>
itself, have given reason to think his approach methodologically
unsound. According to one Williams’s calculation, annual inflation has
never been below 5% since the mid-1980s and is nearly 10% today.</div>
<div style="color: black;">
<br /></div>
<div style="color: black;">
Think for a moment what that means for real
GDP growth the past three decades. Nominal GDP averaged about 5% from
1986 through 2013. Of that 5%, 2% was inflation and 3% was real GDP
growth. If inflation was really 5% — and often, according to Williams,
it was much, much higher — then there has been no real economic growth
in America all that time. Actually, we have probably been in a long
depression from the Reagan years forward.</div>
<div style="color: black;">
<br /></div>
<div style="color: black;">
Is that what folks on the right really want
to argue? Conservatives should not be so desperate to make the “Obama is
Carter” argument or push for a return to the gold standard or to “end
the Fed” that they will use any source to back their inflation claims,
including sources about which even a quick Google search would raise
numerous red flags. Such sloppiness render arguments unpersuasive to
anyone but true believers. It also feeds a conspiratorial mindset
unhelpful for anything other that creating customers for the numerous
gold hawkers on talk radio.</div>
</div>
</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-30270889403047132002014-07-27T22:02:00.004-07:002014-07-27T22:02:50.749-07:00Job creation and tax increases - evidence from the real world<a href="http://www.sacbee.com/2014/07/20/6564879/states-job-growth-defies-predictions.html">David Cay Johnston</a> takes on the conventional conservative "wisdom" - using DATA!<br />
<blockquote class="tr_bq">
Dire predictions about jobs being destroyed spread across
California in 2012 as voters debated whether to enact the sales and, for
those near the top of the income ladder, stiff <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/income+tax/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">income tax</a> increases in Proposition 30. Million-dollar-plus earners face a 3 percentage-point increase on each additional dollar.<br />
<br />
“It
hurts small business and kills jobs,” warned the Sacramento Taxpayers
Association, <br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-qU19xdnbOWM/U9XY7dT4m7I/AAAAAAAAEqA/h0Oy7oyGC4s/s1600/9781416592396_p0_v1_s260x420.JPG" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="http://1.bp.blogspot.com/-qU19xdnbOWM/U9XY7dT4m7I/AAAAAAAAEqA/h0Oy7oyGC4s/s1600/9781416592396_p0_v1_s260x420.JPG" height="400" width="263" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Anti-taxation cranks keep the crazy coming!</td></tr>
</tbody></table>
the National Federation of Independent Business/California,
and Joel Fox, president of the Small Business Action Committee.<br />
<br />
So what happened after voters approved the <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/tax+increases/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">tax increases,</a> which took effect at the start of 2013? </blockquote>
<blockquote class="tr_bq">
Last year California added 410,418 jobs, an increase of 2.8 percent
over 2012, significantly better than the 1.8 percent national increase
in jobs.<br />
<br />
California is home to 12 percent of Americans, but last
year it accounted for 17.5 percent of new jobs, Bureau of Labor
Statistics data shows.<br />
<br />
America has more than 3,100 counties and
what demographers call county equivalents. Eleven California counties,
including Sacramento, accounted for almost 1 in every 7 new jobs in the
U.S. last year.<br />
<a name='more'></a><br />
<br />
The <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Central+Valley/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">Central Valley</a> is home to nine of the nation’s 335 largest counties. The data show that all nine counties enjoyed better <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/job+growth/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">job growth</a> overall than the rest of America. <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Sacramento+County/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">Sacramento County</a> experienced a 2.7 percent increase, 50 percent better than the national average, as 15,425 jobs were added last year.<br />
<br />
Only
three California counties lost jobs, a total of 126 fewer positions in
sparsely populated Amador, Mariposa and Trinity counties.<br />
<br />
These results may surprise those who have heard that <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/tax+increases/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">tax increases</a> are job killers. Taxes can do that – if what is being taxed directly applies to <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/job+creation/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">job creation.</a> For example, a 10 percent increase in <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/payroll+taxes/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">payroll taxes</a> (<a class=" lingo_link" href="http://topics.sacbee.com/Social+Security/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">Social Security,</a> Medicare and state disability) would probably hamper <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/job+growth/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">job growth,</a> said David Neumark, chancellor’s professor of economics and director of the Center for Economics & Public Policy at the <a class=" lingo_link" href="http://topics.sacbee.com/University+of+California/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">University of California,</a> Irvine.<br />
<br />
Neumark said he asks his students, “Does raising <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/income+tax+rates/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">income tax rates</a> reduce hiring?”<br />
<br />
“The
answer is no. What firms care about when deciding how many workers to
hire is the marginal product of workers and the marginal cost of those
workers. So if you are an employer and your personal <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/income+tax/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">income tax</a>
rate is increased, that does not raise the marginal cost of your
workers, but it may encourage you to work a little less hard,” Neumark
noted, applying standard economic theory. <br />
Some research into tax
rates indicates that high rates have the opposite effect: People may
work harder, trying to make more money to achieve a desired after-tax
income and may slough off if tax rates are lowered. This is known to be
the case for people who have a savings target for money to leave their
children and are subject to <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/estate+taxes/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">estate taxes</a> – they save more to leave the after-tax sum they prefer, but save less when the tax is lowered or no longer applies to them.<br />
<br />
The
empirical evidence also shows that the best-paying jobs tend to be
clustered in states (and countries) with high taxes. The same tends to
be true of wealth creators, including the most money-motivated among
scientists, and existing wealth holders not actively engaged in
business.<br />
Manhattan, home to the highest taxes in America, is also
home to many centimillionaires and billionaires drawn by the proximity
of other dealmakers, as well as taxpayer-supported amenities such as
museums and performing arts halls.<br />
<br />
Overall, Manhattan produces far more in taxes than it gets back in federal <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/tax+revenues/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">tax revenues,</a> making it a major profit center from the point of view of Washington and Albany. And its population is at a record high.<br />
<br />
Neumark noted that there is one group of million-dollar-plus income Californians who could easily leave – retirees.<br />
<br />
“If you have a California business, it’s pretty hard to leave or to move the business, and costly, too,” Neumark said.<br />
<br />
Only
one in 500 American taxpayers, about 300,000, reports a total income of
more than $1 million, and 82 percent of them earn a salary, IRS data
shows.<br />
<br />
Another factor is what economists call aggregate demand:
the total capacity to pay for goods and services. When the economy
collapsed in 2008, it hit hard at construction as <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/property+values/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">property values</a> plummeted, but <a class=" lingo_link" href="http://topics.sacbee.com/mortgage+debt/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">mortgage debt</a> did not, and at retail, where many young people get started working. <br />
How taxes are spent is also crucial to the effect on jobs. Increasing taxes can, in some cases, encourage <a class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/job+growth/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">job growth.</a><br />
<br />
Highly
skilled and educated workers tend to place a high value on commonwealth
amenities, such as quality public schools and colleges; extensive
parks; honest and reliable law enforcement; as well as fast-responding
ambulance and fire suppression services.<br />
<br />
Daniel Wilson, a Federal Reserve Bank economist in <a class=" lingo_link" href="http://topics.sacbee.com/San+Francisco/" rel="nofollow" style="cursor: pointer; display: inline; font-family: Georgia,"Times New Roman",Times,serif; font-size: 15px; font-style: normal; font-weight: 400;">San Francisco,</a> has been studying the job migration patterns of so-called star scientists, especially those who hold many patents.<br />
<br />
His
preliminary data show a tendency for such star scientists to move to
Washington state, which has no income tax, but not to Texas, which also
does not tax incomes. That seems to indicate a preference among such
high performers for public amenities and, perhaps, the climate and
outdoor options of the West Coast.<br />
<br />
Wilson noted that New York, New
Jersey and Massachusetts, all high-tax states, also attract star
scientists, lending more credence to the idea that commonwealth
amenities are valuable to such workers.<br />
<br />
The economic revival in
California also partly reflects a tendency for otherwise sound
economies, when they are at peaks or troughs, to move toward the average
performance of all states with sound economies. California fell harder
than average so it is rebounding more.<br />
<br />
California has a more
volatile economy than most of the country. Aerospace, for example, took a
big hit after the Berlin Wall came down, and the state has repeatedly
experienced other ups and downs larger than the changes in the national
economy.<br />
<br />
But as long as the California economy remains vibrant –
as long as it does not fall into a pattern of fundamental decline the
way Michigan has, for example – the temporary tax increases voters
approved in 2012 are unlikely to damage economic growth even if they are
made permanent.<br />
<br />
Spending more money on university-based research
and making it easier for star students to get college and graduate
degrees by lowering or eliminating tuition could spur the California
economy by attracting and retaining more smart and ambitious young
people whose success is likely to generate future growth. Creating
barriers for them, such as tuition hikes, would create a long-term drag
on the economy.<br />
<br />
So next time someone tries to tell you that
raising income taxes will destroy jobs, tell them the evidence just does
not support that claim. <br />
<div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;">
<br />Read more here: http://www.sacbee.com/2014/07/20/6564879/states-job-growth-defies-predictions.html#storylink=cpy</div>
</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-70249750323289699032014-07-27T21:50:00.002-07:002014-07-27T21:50:28.583-07:00California raises taxes and recovers from fiscal crisis, while the right-wing fiddles and burns <div class="story-body-text story-content" data-para-count="515" data-total-count="515" id="story-continues-1" itemprop="articleBody">
<a href="http://www.nytimes.com/2014/07/25/opinion/paul-krugman-california-tax-left-coast-rising.html"> Professor Krugman </a>on California's recovery from budget crisis as tax-cutting Kansas sinks: </div>
<blockquote class="tr_bq">
<div class="story-body-text story-content" data-para-count="515" data-total-count="515" id="story-continues-1" itemprop="articleBody">
The
states, Justice Brandeis famously pointed out, are the laboratories of
democracy. And it’s still true. For example, one reason we knew or
should have known that Obamacare was workable was the post-2006 success
of Romneycare in Massachusetts. More recently, Kansas went all-in on
supply-side economics, slashing taxes on the affluent in the belief that
this would spark a huge boom; the boom didn’t happen, but the budget
deficit exploded, offering an object lesson to those willing to learn
from experience.</div>
<div class="story-body-text story-content" data-para-count="515" data-total-count="515" id="story-continues-1" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="628" data-total-count="1143" id="story-continues-2" itemprop="articleBody">
And
there’s an even bigger if less drastic experiment under way in the
opposite direction. </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-xRUXKuTBg1I/U9XWbDqgQPI/AAAAAAAAEp0/iDkF3937CMI/s1600/california.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-xRUXKuTBg1I/U9XWbDqgQPI/AAAAAAAAEp0/iDkF3937CMI/s1600/california.png" height="200" width="116" /></a></div>
California has long suffered from political
paralysis, with budget rules that allowed an increasingly extreme
Republican minority to hamstring a Democratic majority; when the state’s
housing bubble burst, it plunged into fiscal crisis. In 2012, however,
Democratic dominance finally became strong enough to overcome the
paralysis, and Gov. Jerry Brown was able to push through a modestly
liberal agenda of higher taxes, spending increases and a rise in the
minimum wage. California also moved enthusiastically to implement
Obamacare.<br />
<div class="story-body-text story-content" data-para-count="628" data-total-count="1143" id="story-continues-2" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="73" data-total-count="1216" itemprop="articleBody">
I guess we’re not in Kansas anymore. (Sorry, I couldn’t help myself.)</div>
<div class="story-body-text story-content" data-para-count="73" data-total-count="1216" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="538" data-total-count="1754" itemprop="articleBody">
Needless
to say, conservatives predicted doom. A representative reaction: Daniel
J. Mitchell of the Cato Institute declared that by voting for
Proposition 30, which authorized those tax increases, “the looters and
moochers of the Golden State” (yes, they really do think they’re living
in an Ayn Rand novel) <a href="http://danieljmitchell.wordpress.com/2012/11/07/californias-economic-suicide-and-other-news-from-yesterdays-ballot-measures/">were committing “economic suicide.”</a> Meanwhile, Avik Roy of the Manhattan Institute and Forbes claimed that California residents were about to face <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/01/the-shocking-truth-about-obamacares-rate-shock/">a “rate shock”</a> that would more than double health insurance premiums.</div>
<div class="story-body-text story-content" data-para-count="538" data-total-count="1754" itemprop="articleBody">
<br /></div>
What has actually happened? There is, I’m sorry to say, no sign of the promised catastrophe. <br />
<a name='more'></a></blockquote>
<blockquote class="tr_bq">
<div class="story-body-text story-content" data-para-count="378" data-total-count="2226" id="story-continues-3" itemprop="articleBody">
If
tax increases are causing a major flight of jobs from California, you
can’t see it in the job numbers. Employment is up 3.6 percent in the
past 18 months, compared with a national average of 2.8 percent; at this
point, California’s share of national employment, which was hit hard by
the bursting of the state’s enormous housing bubble, is back to
pre-recession levels.</div>
</blockquote>
<blockquote class="tr_bq">
<div class="story-body-text story-content" data-para-count="378" data-total-count="2226" id="story-continues-3" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="706" data-total-count="2932" itemprop="articleBody">
On
health care, some people — basically healthy young men who were getting
inexpensive insurance on the individual market and were too affluent to
receive subsidies — did face premium increases, which we always knew
would happen. Over all, however, the costs of health reform came in
below expectations, while enrollment came in well above — more than
triple <a href="http://news.coveredca.com/2014/05/covered-california-enrollments-for.html">initial predictions in the San Francisco area</a>. A recent survey by the Commonwealth Fund suggests that <a href="http://www.scpr.org/news/2014/07/10/45272/survey-finds-rate-of-californias-uninsured-slashed/">California has already cut the percentage of its residents without health insurance in half</a>. What’s more, all indications are that further progress is in the pipeline, with <a href="http://acasignups.net/14/04/27/various-sundry-insurance-cos-thrilled-also-fault-plenty-late-payments">more insurance companies entering the marketplace</a> for next year.</div>
<div class="story-body-text story-content" data-para-count="40" data-total-count="2972" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="40" data-total-count="2972" itemprop="articleBody">
And, yes, <a href="http://www.reuters.com/article/2014/07/10/us-usa-california-budget-idUSKBN0FF2G520140710">the budget is back in surplus</a>.</div>
<aside class="marginalia comments-marginalia selected-comment-marginalia" data-marginalia-type="sprinkled" data-skip-to-para-id="story-continues-4" style="display: block;">
<a class="visually-hidden" href="http://www.nytimes.com/2014/07/25/opinion/paul-krugman-california-tax-left-coast-rising.html#story-continues-4"></a></aside><div class="story-body-text story-content" data-para-count="384" data-total-count="3356" id="story-continues-4" itemprop="articleBody">
Has
there been any soul-searching among the prophets of California doom,
asking why they were so wrong? Not that I’m aware of. Instead, I’ve been
seeing many attempts to devalue the good news from California by
pointing out that the state’s job growth still lags that of Texas, which
is true, and claiming that this difference is driven by differential
tax rates, which isn’t.</div>
<div class="ad text-ad middle-right-ad" id="SponLinkA">
<a class="visually-hidden skip-to-text-link" href="http://www.nytimes.com/2014/07/25/opinion/paul-krugman-california-tax-left-coast-rising.html#story-continues-5"> </a>
</div>
<div class="story-body-text story-content" data-para-count="408" data-total-count="3764" id="story-continues-5" itemprop="articleBody">
For the big difference between the two states, aside from the size of the oil and gas sector, isn’t tax rates. it’s <a href="http://www.census.gov/prod/2013pubs/acsbr12-20.pdf" title="Table 1">housing prices</a>.
Despite the bursting of the bubble, home values in California are still
double the national average, while in Texas they’re 30 percent below
that average. So a lot more people are moving to Texas even though wages
and productivity are lower than they are in California. </div>
<div class="story-body-text story-content" data-para-count="408" data-total-count="3764" id="story-continues-5" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="598" data-total-count="4362" itemprop="articleBody">
And
while some of this difference in housing prices reflects geography and
population density — Houston is still spreading out, while Los Angeles,
hemmed in by mountains, has reached its natural limits — it also
reflects <a href="http://www.jstor.org/discover/10.2307/4132841?uid=3739832&uid=2&uid=4&uid=3739256&sid=21104004173881">California’s highly restrictive land-use policies</a>, mostly imposed by local governments rather than the state. <a href="http://economix.blogs.nytimes.com/2010/12/28/behind-the-population-shift/">As Harvard’s Edward Glaeser has pointed out</a>,
there is some truth to the claim that states like Texas are growing
fast thanks to their anti-regulation attitude, “but the usual argument
focuses on the wrong regulations.” And taxes aren’t important at all.</div>
<div class="story-body-text story-content" data-para-count="598" data-total-count="4362" itemprop="articleBody">
<br /></div>
<div class="story-body-text story-content" data-para-count="517" data-total-count="4879" itemprop="articleBody">
So
what do we learn from the California comeback? Mainly, that you should
take anti-government propaganda with large helpings of salt. Tax
increases aren’t economic suicide; sometimes they’re a useful way to pay
for things we need. Government programs, like Obamacare, can work if
the people running them want them to work, and if they aren’t sabotaged
from the right. In other words, California’s success is a demonstration
that the extremist ideology still dominating much of American politics
is nonsense. </div>
</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-21219826133335520152014-07-27T21:39:00.000-07:002014-07-27T21:50:58.513-07:00 The Heritage Foundation's epic "data" fail<div class="item-body" itemprop="articleBody">
<div style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;">
</div>
<a href="http://mediamatters.org/blog/2014/07/25/conservative-medias-favorite-economist-caught-d/200213"> Media Matters</a> catches the current state of intellectual credibility among conservative economists:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div style="margin-left: 1em; margin-right: 1em;">
Heritage Foundation chief economist Stephen Moore was caught using
incorrect statistics to mislead readers about the relationship between
tax cuts and job creation in the United States.</div>
<br />
<blockquote class="tr_bq">
<div style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;">
On July 7, Moore published an <a href="http://www.kansascity.com/opinion/readers-opinion/as-i-see-it/article685284.html">op-ed</a> in <i>The Kansas City Star</i>
attacking economic policies favored by Nobel Prize-winning economist
Paul Krugman. The op-ed claimed that "places such as New York,
Massachusetts, Illinois and California ... are getting clobbered by
tax-cutting states." Moore went on to attack liberals for
"cherry-picking a few events" in their arguments against major tax cuts,
when in fact it was Moore who cited bad data to support his claims. </div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-AKgPxNh8THg/U9XSjm1gWvI/AAAAAAAAEpo/goZ_NavnbUY/s1600/stephen-moore.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="http://2.bp.blogspot.com/-AKgPxNh8THg/U9XSjm1gWvI/AAAAAAAAEpo/goZ_NavnbUY/s1600/stephen-moore.jpg" height="165" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Stephen "Pants On Fire" Moore</td></tr>
</tbody></table>
On July 24, <i>The Kansas City Star</i> published a correction to
Moore's op-ed, specifically stating that the author had "misstated job
growth rates for four states and the time period covered." The editorial
board of the <i>Star </i>inserted this <a href="http://www.kansascity.com/opinion/readers-opinion/as-i-see-it/article685284.html">annotation</a> to Moore's inaccurate claims:
<br />
<blockquote>
<i>Please see editor's note at the top of this column. </i>No-income-tax
Texas gained 1 million jobs over the last five years, California, with
its 13 percent tax rate, managed to lose jobs. Oops. Florida gained
hundreds of thousands of jobs while New York lost jobs. <i>NOTE: These
figures are incorrect. The time period covered was December 2007 to
December 2012. Over that time, Texas gained 497,400 jobs, California
lost 491,200, Florida lost 461,500 and New York gained 75,900. </i>Oops.
Illinois raised taxes more than any other state over the last five
years and its credit rating is the second lowest of all the states,
below that of Kansas! (emphasis original)</blockquote>
On July 25, <i>Star</i> columnist Yael Abouhalkah <a href="http://www.kansascity.com/opinion/opn-columns-blogs/yael-t-abouhalkah/article800237.html">explained the correction</a>
in more detail. Abouhalkah wrote that Moore had "used outdated and
inaccurate job growth information at a key point in his article" and
that Moore should have used data from 2009 to 2014, rather than from
2007 to 2012. Abouhalkah also argued that "the problems with Moore's
opinion article damaged his credibility on the jobs issue." <br />
<a name='more'></a></blockquote>
<blockquote class="tr_bq">
Moore's credibility on "the jobs issue" is not the only troubling
aspect of his economic punditry. Moore was recently brought on as the
chief economist at the conservative Heritage Foundation after serving
for many years on the right-wing editorial board of <i>The Wall Street Journal</i> and as a go-to economic commentator on Fox News. Moore has a history of disparaging reasonable economic policies in favor of <a href="http://mediamatters.org/research/2012/06/08/the-main-problem-with-jobs-growth-is-lack-of-de/185857">fiscally irresponsible tax cuts</a> for the wealthy and <a href="http://mediamatters.org/research/2013/01/08/its-health-care-why-fox-is-wrong-about-americas/192090">painful spending cuts</a> to vital programs. </blockquote>
<blockquote class="tr_bq">
Moore has referred to unemployment insurance as a "<a href="http://mediamatters.org/video/2014/01/08/to-foxs-stephen-moore-unemployment-insurance-is/197491">paid vacation</a>" for jobless Americans and bizarrely claimed that laws guaranteeing paid sick leave for full-time workers were "<a href="http://mediamatters.org/video/2014/01/17/foxs-steve-moore-calls-laws-creating-paid-sick/197648">very dangerous for cities</a>." Moore spent years basely claiming that the Affordable Care Act would <a href="http://mediamatters.org/blog/2013/09/05/economist-mark-zandi-debunks-myth-that-obamacar/195739">reduce job creation</a>, seamlessly transitioning from <a href="http://mediamatters.org/blog/2013/10/23/with-one-obamacare-part-time-jobs-myth-debunked/196561">one debunked talking point</a> to the next along the way. He is also an <a href="http://mediamatters.org/blog/2013/08/29/wsjs-moore-invents-effects-of-minimum-wage-incr/195673">outspoken opponent</a> of <a href="http://mediamatters.org/research/2013/02/15/the-minimum-wage-myths-amp-facts/192692">increasing the minimum wage</a>, claiming that even a moderate rise in wages would result in a "<a href="http://mediamatters.org/blog/2014/02/19/watch-this-cnn-anchor-stop-the-spin-on-the-mini/198115">big increase</a>" in unemployment. In a recent foray out of the safety of right-wing media, Moore's anti-living wage spin <a href="http://mediamatters.org/blog/2014/02/19/watch-this-cnn-anchor-stop-the-spin-on-the-mini/198115">was easily cut down</a> by CNN anchor Carol Costello. </blockquote>
<blockquote class="tr_bq">
The original intent of Moore's <i>Star</i> op-ed was to garner support for tax cuts enacted over the past two years by Gov. Sam Brownback (R-KS), which <i><a href="http://www.nytimes.com/2014/06/29/upshot/kansas-tax-cut-leaves-brownback-with-less-money.html">The New York Times</a></i> and <a href="http://www.vox.com/2014/7/8/5868717/sam-brownback-kansas-tax-cut">other</a> <a href="http://www.forbes.com/sites/beltway/2014/07/15/whats-the-matter-with-kansas-and-its-tax-cuts-it-cant-do-math/">outlets</a> have labeled "<a href="http://www.nytimes.com/2014/07/14/opinion/kansas-ruinous-tax-cuts.html?_r=0">ruinous</a>." The tax cuts have been such a <a href="http://www.usnews.com/opinion/blogs/pat-garofalo/2014/03/26/sam-brownbacks-tax-cuts-arent-leading-kansas-into-prosperity">dramatic failure</a> that <a href="http://www.davisforkansas.com/sections/media/53c43adf75c9a1d803000075">more than 100 members</a> of the Kansas Republican Party have sworn to help <a href="http://www.thefiscaltimes.com/Articles/2014/07/16/Brownback-Feeling-Big-Political-Backlash-Tax-Cuts-Kansas">replace Brownback</a> with a Democrat willing to reinstate taxes and spending at their previous levels.</blockquote>
</div>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-79902393511281673542014-06-28T12:06:00.000-07:002014-06-28T12:10:24.290-07:00"Even a stopped clock" etc. etc. Uber-conservative <a href="http://www.redstate.com/2014/06/25/the-marionettes-remain-uncut/">"Red State"</a> blogger Erik Erickson spills the beans on his party:<br />
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<span style="font-family: Georgia, Century, Times, serif; font-size: large; line-height: 20px;"><span style="color: white;"><span style="background-color: black;"> "I’m just not sure what the Republican Party really stands for any more other than telling Obama no and telling our own corporate interests yes. That’s not much of a platform</span><span style="background-color: black;">.</span></span><span style="background-color: black; color: white;">"</span></span>Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-43445974640859511122014-06-28T11:59:00.001-07:002014-06-28T12:00:37.753-07:00"Inequality Is Not Inevitable"<br />
Joseph Stiglitz <a href="http://opinionator.blogs.nytimes.com/2014/06/27/inequality-is-not-inevitable/">@ NYT:</a><br />
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AN insidious trend has developed over this past third of a century. A country that experienced shared growth after World War II began to tear apart, so much so that when the Great Recession hit in late 2007, one could no longer ignore the fissures that had come to define the American economic landscape. How did this “shining city on a hill” become the advanced country with the greatest level of inequality?</div>
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One stream of the extraordinary discussion set in motion by Thomas Piketty’s timely, important book, “Capital in the Twenty-First Century,” has settled on the idea that violent extremes of wealth and income are inherent to capitalism. In this scheme, we should view the decades after World War II — a period of rapidly falling inequality — as an aberration.</div>
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This is actually a superficial reading of Mr. Piketty’s work, which provides an institutional context for understanding the deepening of inequality over time. Unfortunately, that part of his analysis received somewhat less attention than the more fatalistic-seeming aspects.</div>
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Over the past year and a half, The Great Divide, a series in The New York Times for which I have </div>
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served as moderator, has also presented a wide range of examples that undermine the notion that thereare any truly fundamental laws of capitalism. The dynamics of the imperial capitalism of the 19th century needn’t apply in the democracies of the 21st. We don’t need to have this much inequality in America.</div>
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Our current brand of capitalism is an ersatz capitalism. For proof of this go back to our response to the Great Recession, where we socialized losses, even as we privatized gains. Perfect competition should drive profits to zero, at least theoretically, but we have monopolies and oligopolies making persistently high profits. C.E.O.s enjoy incomes that are on average 295 times that of the typical worker, a much higher ratio than in the past, without any evidence of a proportionate increase in productivity.</div>
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If it is not the inexorable laws of economics that have led to America’s great divide, what is it? The straightforward answer: our policies and our politics. People get tired of hearing about Scandinavian success stories, but the fact of the matter is that Sweden, Finland and Norway have all succeeded in having about as much or faster growth in per capita incomes than the United States and with far greater equality.</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
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<tr><td class="tr-caption" style="text-align: center;">Source: The Atlantic</td></tr>
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So why has America chosen these inequality-enhancing policies? Part of the answer is that as World War II faded into memory, so too did the solidarity it had engendered. As America triumphed in the Cold War, there didn’t seem to be a viable competitor to our economic model. Without this international competition, we no longer had to show that our system could deliver for most of our citizens.</div>
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Ideology and interests combined nefariously. Some drew the wrong lesson from the collapse of the Soviet system. The pendulum swung from much too much government there to much too little here. Corporate interests argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.</div>
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But this ideology was hypocritical. The bankers, among the strongest advocates of laissez-faire economics, were only too willing to accept hundreds of billions of dollars from the government in the bailouts that have been a recurring feature of the global economy since the beginning of the Thatcher-Reagan era of “free” markets and deregulation.</div>
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The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality. In fact, as he recognizes, Mr. Piketty’s argument rests on the ability of wealth-holders to keep their after-tax rate of return high relative to economic growth. How do they do this? By designing the rules of the game to ensure this outcome; that is, through politics.</div>
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So corporate welfare increases as we curtail welfare for the poor. Congress maintains subsidies for rich farmers as we cut back on nutritional support for the needy. Drug companies have been given hundreds of billions of dollars as we limit Medicaid benefits. The banks that brought on the global financial crisis got billions while a pittance went to the homeowners and victims of the same banks’ predatory lending practices. This last decision was particularly foolish. There were alternatives to throwing money at the banks and hoping it would circulate through increased lending. We could have helped underwater homeowners and the victims of predatory behavior directly. This would not only have helped the economy, it would have put us on the path to robust recovery.</div>
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OUR divisions are deep. Economic and geographic segregation have immunized those at the top from the problems of those down below. Like the kings of yore, they have come to perceive their privileged positions essentially as a natural right. How else to explain the recent comments of the venture capitalist Tom Perkins, who suggested that criticism of the 1 percent was akin to Nazi fascism, or those coming from the private equity titan Stephen A. Schwarzman, who compared asking financiers to pay taxes at the same rate as those who work for a living to Hitler’s invasion of Poland.</div>
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Our economy, our democracy and our society have paid for these gross inequities. The true test of an economy is not how much wealth its princes can accumulate in tax havens, but how well off the typical citizen is — even more so in America where our self-image is rooted in our claim to be the great middle-class society. But median incomes are lower than they were a quarter-century ago. Growth has gone to the very, very top, whose share has almost quadrupled since 1980. Money that was meant to have trickled down has instead evaporated in the balmy climate of the Cayman Islands.</div>
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With almost a quarter of American children younger than 5 living in poverty, and with America doing so little for its poor, the deprivations of one generation are being visited upon the next. Of course, no country has ever come close to providing complete equality of opportunity. But why is America one of the advanced countries where the life prospects of the young are most sharply determined by the income and education of their parents?</div>
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Among the most poignant stories in The Great Divide were those that portrayed the frustrations of the young, who yearn to enter our shrinking middle class. Soaring tuitions and declining incomes have resulted in larger debt burdens. Those with only a high school diploma have seen their incomes decline by 13 percent over the past 35 years.</div>
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Where justice is concerned, there is also a yawning divide. In the eyes of the rest of the world and a significant part of its own population, mass incarceration has come to define America — a country, it bears repeating, with about 5 percent of the world’s population but around a fourth of the world’s prisoners.</div>
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Justice has become a commodity, affordable to only a few. While Wall Street executives used their high-retainer lawyers to ensure that their ranks were not held accountable for the misdeeds that the crisis in 2008 so graphically revealed, the banks abused our legal system to foreclose on mortgages and evict people, some of whom did not even owe money.</div>
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More than a half-century ago, America led the way in advocating for the Universal Declaration of Human Rights, adopted by the United Nations in 1948. Today, access to health care is among the most universally accepted rights, at least in the advanced countries. America, despite the implementation of the Affordable Care Act, is the exception. It has become a country with great divides in access to health care, life expectancy and health status.</div>
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In the relief that many felt when the Supreme Court did not overturn the Affordable Care Act, the implications of the decision for Medicaid were not fully appreciated. Obamacare’s objective — to ensure that all Americans have access to health care — has been stymied: 24 states have not implemented the expanded Medicaid program, which was the means by which Obamacare was supposed to deliver on its promise to some of the poorest.</div>
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We need not just a new war on poverty but a war to protect the middle class. Solutions to these problems do not have to be newfangled. Far from it. Making markets act like markets would be a good place to start. We must end the rent-seeking society we have gravitated toward, in which the wealthy obtain profits by manipulating the system.</div>
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The problem of inequality is not so much a matter of technical economics. It’s really a problem of practical politics. Ensuring that those at the top pay their fair share of taxes — ending the special privileges of speculators, corporations and the rich — is both pragmatic and fair. We are not embracing a politics of envy if we reverse a politics of greed. Inequality is not just about the top marginal tax rate but also about our children’s access to food and the right to justice for all. If we spent more on education, health and infrastructure, we would strengthen our economy, now and in the future. Just because you’ve heard it before doesn’t mean we shouldn’t try it again.</div>
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We have located the underlying source of the problem: political inequities and policies that have commodified and corrupted our democracy. It is only engaged citizens who can fight to restore a fairer America, and they can do so only if they understand the depths and dimensions of the challenge. It is not too late to restore our position in the world and recapture our sense of who we are as a nation. Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.</div>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-76355792365529985512014-06-28T11:33:00.001-07:002014-06-28T11:33:50.940-07:00"The Pitchforks Are Coming!""<a href="http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html#ixzz35xWi3WXg">From Politico:</a><br />
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<b>Memo: </b>From Nick Hanauer</div>
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<b>To: </b>My Fellow Zillionaires</div>
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You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor. Then I founded aQuantive, an Internet advertising company that was <a href="http://allthingsd.com/20120702/microsoft-writing-off-nearly-all-of-the-6-3-billion-it-paid-for-aquantive/"><span class="s1">sold </span></a>to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a bank. I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine. Multiple homes, my own plane, etc., etc. </div>
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You know what I’m talking about. In 1992, I was selling pillows made by my family’s business, </div>
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Pacific Coast Feather Co., to retail stores across the country, and the Internet was a clunky novelty to which one hooked up with a loud squawk at 300 baud. But I saw pretty quickly, even back then, that many of my customers, the big department store chains, were already doomed. I knew that as soon as the Internet became fast and trustworthy enough—and that time wasn’t far off—people were going to shop online like crazy. Goodbye, Caldor. And Filene’s. And Borders. And on and on.<br />
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Realizing that, seeing over the horizon a little faster than the next guy, was the strategic part of my success. The lucky part was that I had two friends, both immensely talented, who also saw a lot of potential in the web. One was a guy you’ve probably never heard of named Jeff Tauber, and the other was a fellow named Jeff Bezos. I was so excited by the potential of the web that I told both Jeffs that I wanted to invest in whatever they launched, big time. It just happened that the second Jeff—Bezos—called me back first to take up my investment offer. So I helped underwrite his tiny start-up bookseller. The other Jeff started a web department store called Cybershop, but at a time when trust in Internet sales was still low, it was too early for his high-end online idea; people just weren’t yet ready to buy expensive goods without personally checking them out (unlike a basic commodity like books, which don’t vary in quality—Bezos’ great insight). Cybershop didn’t make it, just another dot-com bust. Amazon did somewhat better. Now I own a very large yacht.</div>
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But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?</div>
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I see pitchforks.</div>
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At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent <a href="http://taxfoundation.org/blog/irs-data-income-shifts-shows-progressivity-federal-individual-income-tax"><span class="s1">controlled </span></a>about 8 percent of U.S. national income. The bottom 50 percent <a href="http://taxfoundation.org/article/summary-latest-federal-individual-income-tax-data-0#table3"><span class="s1">shared </span></a>about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, <a href="http://taxfoundation.org/article/summary-latest-federal-income-tax-data"><span class="s1">just </span></a>12 percent.</div>
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But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.</div>
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And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.</div>
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If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.</div>
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Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.</div>
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Here’s what I say to you: You’re living in a dream world. What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.</div>
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<b>The most ironic thing </b>about rising inequality is how completely unnecessary and self-defeating it is. If we do something about it, if we adjust our policies in the way that, say, Franklin D. Roosevelt did during the Great Depression—so that we help the 99 percent and preempt the revolutionaries and crazies, the ones with the pitchforks—that will be the best thing possible for us rich folks, too. It’s not just that we’ll escape with our lives; it’s that we’ll most certainly get even richer.</div>
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The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he <a href="http://corporate.ford.com/news-center/press-releases-detail/677-5-dollar-a-day"><span class="s1">raised </span></a>their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.</div>
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What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.</div>
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It’s when I realized this that I decided I had to leave my insulated world of the super-rich and get involved in politics. Not directly, by running for office or becoming one of the big-money billionaires who back candidates in an election. Instead, I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines—and has so screwed the American middle class and our economy generally. Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another.</div>
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Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.</div>
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On June 19, 2013, Bloomberg published an <a href="http://www.bloombergview.com/articles/2013-06-19/the-capitalist-s-case-for-a-15-minimum-wage"><span class="s1">article </span></a>I wrote called “The Capitalist’s Case for a $15 Minimum Wage.” <i>Forbes</i> <a href="http://www.forbes.com/sites/timworstall/2013/06/21/nick-hanauers-near-insane-15-an-hour-minimum-wage-proposal/"><span class="s1">labeled </span></a>it “Nick Hanauer’s near insane” proposal. And yet, just weeks after it was published, my friend David Rolf, a Service Employees International Union organizer, roused fast-food workers to go on strike around the country for a $15 living wage. Nearly a year later, the city of Seattle<a href="http://money.cnn.com/2014/06/03/smallbusiness/seattle-business-minimum-wage/"><span class="s1">passed </span></a>a $15 minimum wage. And just 350 days after my article was published, Seattle Mayor Ed Murray signed that ordinance into law. How could this happen, you ask?</div>
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It happened because we reminded the masses that they are the source of growth and prosperity, not us rich guys. We reminded them that when workers have more money, businesses have more customers—and need more employees. We reminded them that if businesses paid workers a living wage rather than poverty wages, taxpayers wouldn’t have to make up the difference. And when we got done, 74 percent of likely Seattle voters in a <a href="http://blogs.seattletimes.com/politicsnorthwest/2014/05/14/new-poll-shows-big-support-for-15-minimum-wage/"><span class="s1">recent poll </span></a>agreed that a $15 minimum wage was a swell idea.</div>
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The standard response in the minimum-wage debate, made by Republicans and their business backers and plenty of Democrats as well, is that raising the minimum wage costs jobs. Businesses will have to lay off workers. This argument reflects the orthodox economics that most people had in college. If you took Econ 101, then you literally were taught that if wages go up, employment must go down. The law of supply and demand and all that. That’s why you’ve got John Boehner and other Republicans in Congress insisting that if you price employment higher, you get less of it. Really?</div>
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The thing about us businesspeople is that we love our customers rich and our employees poor. </div>
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Because here’s an odd thing. During the past three decades, compensation for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker pay ratio has increased 1,000 percent, and that is not a typo. CEOs <a href="http://www.theatlantic.com/business/archive/2013/06/ceos-now-earn-273-times-the-average-workers-pay-should-you-be-mad/277284/"><span class="s1">used</span></a> to earn 30 times the median wage; now they rake in 500 times. Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before. So, too, for financial services workers and technology workers. These folks earn multiples of the median wage, yet we somehow have more and more of them.</div>
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The thing about us businesspeople is that we love our customers rich and our employees poor. So for as long as there has been capitalism, capitalists have said the same thing about any effort to raise wages. We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.</div>
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Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses <a href="http://www.paychex.com/jobs-index/index.aspx"><span class="s1">are</span></a> San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The <a href="http://seattle.cbslocal.com/2014/05/22/seattle-is-nations-fastest-growing-major-city/"><span class="s1">fastest-growing</span></a> big city in America? Seattle. Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.</div>
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<br /></div>
<div class="p3">
It makes perfect sense if you think about it: If a worker earns $7.25 an hour, which is <a href="http://www.dol.gov/elaws/faq/esa/flsa/001.htm"><span class="s1">now </span></a>the national minimum wage, what proportion of that person’s income do you think ends up in the cash registers of local small businesses? Hardly any. That person is paying rent, ideally going out to get subsistence groceries at Safeway, and, if really lucky, has a bus pass. But she’s not going out to eat at restaurants. Not browsing for new clothes. Not buying flowers on Mother’s Day.</div>
<div class="p3">
<br /></div>
<div class="p3">
Is this issue more complicated than I’m making out? Of course. Are there many factors at play determining the dynamics of employment? Yup. But please, please stop insisting that if we pay low-wage workers more, unemployment will skyrocket and it will destroy the economy. It’s utter nonsense. The most insidious thing about trickle-down economics isn’t believing that if the rich get richer, it’s good for the economy. It’s believing that if the poor get richer, it’s bad for the economy.</div>
<div class="p3">
<br /></div>
<div class="p3">
I know that virtually all of you feel that compelling our businesses to pay workers more is somehow unfair, or is too much government interference. Most of you think that we should just let good examples like Costco or Gap lead the way. Or let the market set the price. But here’s the thing. When those who set bad examples, like the owners of Wal-Mart or McDonald’s, pay their workers close to the minimum wage, what they’re really saying is that they’d pay even less if it weren’t illegal. (Thankfully both companies have recently said they would not oppose a hike in the minimum wage.) In any large group, some people absolutely will not do the right thing. That’s why our economy can only be safe and effective if it is governed by the same kinds of rules as, say, the transportation system, with its speed limits and stop signs.</div>
<div class="p3">
<br /></div>
<div class="p3">
Wal-Mart is our nation’s largest employer with some 1.4 million employees in the United States and more than <a href="http://www.marketwatch.com/investing/stock/wmt/financials"><span class="s1">$25 billion</span></a> in pre-tax profit. So why are Wal-Mart employees the largest group of Medicaid recipients in many states? Wal-Mart could, say, pay each of its 1 million lowest-paid workers an extra $10,000 per year, raise them all out of poverty and enable them to, of all things, afford to shop at Wal-Mart. Not only would this also save us all the expense of the food stamps, Medicaid and rent assistance that they currently require, but Wal-Mart would still earn more than $15 billion pre-tax per year. Wal-Mart won’t (and shouldn’t) volunteer to pay its workers more than their competitors. In order for us to have an economy that works for everyone, we should compel all retailers to pay living wages—not just ask politely.</div>
<div class="p3">
<br /></div>
<div class="p3">
We rich people have been falsely persuaded by our schooling and the affirmation of society, and have convinced ourselves, that we are the main job creators. It’s simply not true. There can never be enough super-rich Americans to power a great economy. I earn about 1,000 times the median American annually, but I don’t buy thousands of times more stuff. My family purchased three cars over the past few years, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. I bought two pairs of the fancy wool pants I am wearing as I write, what my partner Mike calls my “manager pants.” I guess I could have bought 1,000 pairs. But why would I? Instead, I sock my extra money away in savings, where it doesn’t do the country much good.</div>
<div class="p3">
<br /></div>
<div class="p3">
So forget all that rhetoric about how America is great because of people like you and me and Steve Jobs. You know the truth even if you won’t admit it: If any of us had been born in Somalia or the Congo, all we’d be is some guy standing barefoot next to a dirt road selling fruit. It’s not that Somalia and Congo don’t have good entrepreneurs. It’s just that the best ones are selling their wares off crates by the side of the road because that’s all their customers can afford.</div>
<div class="p3">
<br /></div>
<div class="p3">
So why not talk about a different kind of New Deal for the American people, one that could appeal to the right as well as left—to libertarians as well as liberals? First, I’d ask my Republican friends to get real about reducing the size of government. Yes, yes and yes, you guys are all correct: The federal government is too big in some ways. But no way can you cut government substantially, not the way things are now. Ronald Reagan and George W. Bush each had eight years to do it, and they failed miserably.</div>
<div class="p3">
<br /></div>
<div class="p3">
Republicans and Democrats in Congress can’t shrink government with wishful thinking. The only way to slash government for real is to go back to basic economic principles: You have to reduce the demand for government. If people are getting $15 an hour or more, they don’t need food stamps. They don’t need rent assistance. They don’t need you and me to pay for their medical care. If the consumer middle class is back, buying and shopping, then it stands to reason you won’t need as large a welfare state. And at the same time, revenues from payroll and sales taxes would rise, reducing the deficit.</div>
<div class="p4">
<br /></div>
<div class="p3">
This is, in other words, an economic approach that can unite left and right. Perhaps that’s one reason the right is beginning, inexorably, to wake up to this reality as well. Even Republicans as diverse as Mitt Romney and Rick Santorum recently came out in favor of raising the minimum wage, in defiance of the Republicans in Congress.</div>
<div class="p3">
<br /></div>
<div class="p7">
***</div>
<div class="p7">
<br /></div>
<div class="p3">
<b>One thing we can agree on</b>—I’m sure of this—is that the change isn’t going to start in Washington. Thinking is stale, arguments even more so. On both sides.</div>
<div class="p3">
<br /></div>
<div class="p3">
But the way I see it, that’s all right. Most major social movements have seen their earliest victories at the state and municipal levels. The fight over the eight-hour workday, which ended in Washington, D.C., in 1938, began in places like Illinois and Massachusetts in the late 1800s. The movement for social security began in California in the 1930s. Even the Affordable Health Care Act—Obamacare—would have been hard to imagine without Mitt Romney’s model in Massachusetts to lead the way.</div>
<div class="p3">
<br /></div>
<div class="p3">
Sadly, no Republicans and few Democrats get this. President Obama doesn’t seem to either, though his heart is in the right place. In his State of the Union speech this year, he mentioned the need for a higher minimum wage but failed to make the case that less inequality and a renewed middle class would promote faster economic growth. Instead, the arguments we hear from most Democrats are the same old social-justice claims. The only reason to help workers is because we feel sorry for them. These fairness arguments feed right into every stereotype of Obama and the Democrats as bleeding hearts. Republicans say growth. Democrats say fairness—and lose every time.</div>
<div class="p3">
<br /></div>
<div class="p3">
But just because the two parties in Washington haven’t figured it out yet doesn’t mean we rich folks can just keep going. The conversation is already changing, even if the billionaires aren’t onto it. I know what you think: You think that Occupy Wall Street and all the other capitalism-is-the-problem protesters disappeared without a trace. But that’s not true. Of course, it’s hard to get people to sleep in a park in the cause of social justice. But the protests we had in the wake of the 2008 financial crisis really did help to change the debate in this country from death panels and debt ceilings to inequality.</div>
<div class="p3">
It’s just that so many of you plutocrats didn’t get the message.</div>
<div class="p3">
<br /></div>
<div class="p3">
Dear 1%ers, many of our fellow citizens are starting to believe that capitalism itself is the problem. I disagree, and I’m sure you do too. Capitalism, when well managed, is the greatest social technology ever invented to create prosperity in human societies. But capitalism left unchecked tends toward concentration and collapse. It can be managed either to benefit the few in the near term or the many in the long term. The work of democracies is to bend it to the latter. That is why investments in the middle class work. And tax breaks for rich people like us don’t. Balancing the power of workers and billionaires by raising the minimum wage isn’t bad for capitalism. It’s an indispensable tool smart capitalists use to make capitalism stable and sustainable. And no one has a bigger stake in that than zillionaires like us.</div>
<div class="p3">
<br /></div>
<div class="p3">
The oldest and most important conflict in human societies is the battle over the concentration of wealth and power. The folks like us at the top have always told those at the bottom that our respective positions are righteous and good for all. Historically, we called that divine right. Today we have trickle-down economics.</div>
<div class="p3">
<br /></div>
<div class="p3">
What nonsense this is. Am I really such a superior person? Do I belong at the center of the moral as well as economic universe? Do you?</div>
<div class="p3">
<br /></div>
<div class="p3">
My family, the Hanauers, started in Germany selling feathers and pillows. They got chased out of Germany by Hitler and ended up in Seattle owning another pillow company. Three generations later, I benefited from that. Then I got as lucky as a person could possibly get in the Internet age by having a buddy in Seattle named Bezos. I look at the average Joe on the street, and I say, “There but for the grace of Jeff go I.” Even the best of us, in the worst of circumstances, are barefoot, standing by a dirt road, selling fruit. We should never forget that, or forget that the United States of America and its middle class made us, rather than the other way around.</div>
<div class="p3">
<br /></div>
<div class="p3">
Or we could sit back, do nothing, enjoy our yachts. And wait for the pitchforks.</div>
<div class="p3">
<br /></div>
<div class="p3">
<i>Nick Hanauer is a Seattle-based entrepreneur. </i></div>
<div class="p4">
<br /></div>
<div class="p4">
<br /></div>
</div>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-911353959177597002014-05-11T08:26:00.002-07:002014-05-11T08:42:51.007-07:00"All Science Is Wrong, Concludes Esteemed Fox News Panel"Jonathan Chait <a href="http://nymag.com/daily/intelligencer/2014/05/krauthammer-george-will-attack-climate-science.html">at New York Magazine</a> exposes the intellectual and moral bankruptcy of "conservatism's" foremost alleged "intellectuals." "Conservative intellectual" has truly become an oxymoron:<br />
<blockquote class="tr_bq">
There is no issue where educated ignorance is
on more perfect display than <i>Post</i> columnists,
and Fox News All-Star panelists. They numbered among the select
conservative intellectuals chosen to dine with newly elected president
Barack Obama in 2009.<br />
<div style="text-align: right;">
<a href="http://1.bp.blogspot.com/-FCRSSf8Wp5c/U2-YvWGa_EI/AAAAAAAAEog/oLM3AyyIT0Y/s1600/111209_2_brooks_will_krauthammer_nbc_ap_shinkle_328.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-FCRSSf8Wp5c/U2-YvWGa_EI/AAAAAAAAEog/oLM3AyyIT0Y/s1600/111209_2_brooks_will_krauthammer_nbc_ap_shinkle_328.jpg" height="261" width="320" /></a></div>
watching the conservative movement confront
scientific evidence of climate change. Educated ignorance is not the
same thing as the regular kind of ignorance. It takes real talent to
master. George F. Will and Charles Krauthammer are two of the
intellectual giants of the right, former winners of the Bradley
Foundation’s $250,000 annual prize, Washington <br />
<br />
On their <a href="http://www.foxnews.com/on-air/special-report-bret-baier/2014/05/07/all-star-panel-criticism-obamas-global-warming-agenda">Fox News All-Star Panel appearance this week</a>,
both men discussed the U.S. National Climate Assessment, which they
dismissed with various irritable mental gestures. Their evasions and
misstatements, clothed in <i>faux</i>-erudition, offer a useful entrance point to study the current state of the right-wing mind.<br />
<a name='more'></a><br />
What
follows is an annotated analysis of Will and Krauthammer’s remarks, the
intellectual quality of which starts off low, and grows increasingly
and even frighteningly so as the program progresses. After a brief
introduction of the climate report, we begin with Krauthammer:<br />
<br />
<figure class="story-img center"><figcaption></figcaption></figure><br />
<blockquote>
What
they tell you is that you should be scared about what's happening
today. Of course, if it's very cold in the winter, they blame it, here
in the northeast, they blame it on global warming, and the report says
that global warming makes summers hotter and winters are generally
shorter and warmer.</blockquote>
In one sentence, Krauthammer claims “they” blame
every cold winter on climate change, but does not identify who “they”
is. In the next sentence, he correctly says that the climate assessment
links climate change with shorter, warmer winters in the United States,
negating his previous point.<br />
<blockquote>
Any scientific theory that explains everything
explains nothing, and no matter what happens in climate is unpleasant,
the word for that is weather, it's attributed to global warming. If we
continue global warming up here in the northeast, we're going to freeze
to death.</blockquote>
It is not clear what Krauthammer means when he
says climate science “explains everything.” Climate science is an
attempt to model the complex impact of heat-trapping gasses in the
atmosphere. It does not attempt to explain “everything” more than, say,
the Theory of Gravity does. (In fact, it attempts to explain less, as it
contains more room for unpredictability.) It is also impossible to
understand exactly what Krauthammer’s line about freezing to death even
means. The <a href="http://www.whitehouse.gov/sites/default/files/docs/state-reports/MASSACHUSETTS_NCA_2014.pdf">report</a> does in fact describe dangerous and costly impacts in the Northeast:<br />
<blockquote>
“Heat waves, coastal flooding, and river flooding
will pose a growing challenge to the region’s environmental, social, and
economic systems. This will increase the vulnerability of the region’s
residents, especially its most disadvantaged populations. </blockquote>
<blockquote>
Infrastructure will be increasingly compromised by
climate-related hazards, including sea level rise, coastal flooding, and
intense precipitation events.<br />
Agriculture, fisheries, and ecosystems will be increasingly
compromised over the next century by climate change impacts. Farmers can
explore new crop options, but these adaptations are not cost- or
risk-free. Moreover, inequities exist in adaptive capacity, which could
be overwhelmed by changing climate.”</blockquote>
Krauthammer goes on to endorse comments by Senate Minority Leader Mitch McConnell:<br />
<blockquote>
But the most important element is what McConnell
was talking about, the negligible gains. Assume they are right about
global warming, assume that it is all caused by man. The United States
has reduced carbon emissions since 2006 more than any other country on
earth. We are right now at 1992 levels, according to the International
Energy Agency, and yet carbon emissions have gone up globally. Why? We
don't control the emissions of the other 96 percent of humanity,
especially China and India. As we dismantle the coal plants in our
country, China and India together are adding one coal-fired plant every
week. The net effect is to shift the U.S. coal energy generating
industry from here to India and China. It will have zero effect. </blockquote>
<blockquote>
If we could have a pact with other countries in which everybody
would reduce their emissions, I would sign on. In the absence of it,
all that we're doing is committing economic suicide in the name of
do-goodism that will not do an iota of good.</blockquote>
Krauthammer asserts, with an air of unassailable
confidence, that reducing U.S. greenhouse gas emissions will have no
significant impact on worldwide greenhouse gas emissions, because “we
don't control the emissions of the other 96 percent of humanity.”
Krauthammer’s implication that 96 percent of the greenhouse gas problem
lies beyond the direct control of the United States is untrue, since,
while the United States may only account for 4 percent of the world’s
population, it emits 16 percent of the world’s greenhouse gas emissions.<br />
<br />
<br />
<figure class="story-img center"><img src="http://pixel.nymag.com/imgs/daily/intelligencer/2014/05/08/08-carbon-footprints-compared.w1120.h1098.jpg" /><figcaption></figcaption></figure>The
strategy to limit climate change does not assume that limiting American
emissions is a sufficient step to mitigate catastrophic climate change.
It assumes it is a necessary step to mitigate catastrophic climate change. Countries like India and China have, in fact, <a href="http://www.reuters.com/article/2014/04/04/us-china-coal-idUSBREA330QQ20140404">taken steps</a>
to reduce their energy intensiveness. Given that those countries’ per
capita greenhouse gas emissions are a small fraction of ours, there is
no plausible or defensible path to securing an international agreement
without a commitment by the countries with the highest per-capita
emissions, like the U.S., to participate.<br />
<br />
After an interlude from others on the panel, George Will jumps in:<br />
<blockquote>
There is, however, no evidence for the increase in extreme weather.</blockquote>
The <a href="http://ipcc-wg2.gov/SREX/">Intergovernmental Panel on Climate Change</a> found otherwise in 2011:<br />
<blockquote>
There is evidence that some extremes have changed
as a result of anthropogenic influences, including increases in
atmospheric concentrations of greenhouse gases. It is likely that
anthropogenic influences have led to warming of extreme daily minimum
and maximum temperatures at the global scale. There is medium confidence
that anthropogenic influences have contributed to intensification of
extreme precipitation at the global scale. It is likely that there has
been an anthropogenic influence on increasing extreme coastal high water
due to an increase in mean sea level.</blockquote>
The National Oceanic and Atmospheric Administration concluded, somewhat more conclusively, “Human influences are having an impact on some extreme weather and climate events.”<br />
Will continues:<br />
<blockquote>
I own a home on an island in South Carolina looking
south in the direction of hurricanes, and after Katrina I was really
interested when they said this is a harbinger of increased hurricane
activity, which since then has plummeted.</blockquote>
The
chance of a hurricane striking a given location is extremely variable.
The lack of major hurricanes striking the United States since 2005 is <a href="http://www.livescience.com/39619-major-hurricane-landfall-drought.html">attributable to luck</a>. It does not contradict any major scientific conclusions about climate change.<br />
<blockquote>
Now, Mr. Holdren, who introduced this report, has
his own record of very interesting failed forecasts, not to mention Al
Gore, who in 2008 said by 2013, for those of you keeping score at home,
that's last year, the ice cap in the North Pole would be gone. It's not.</blockquote>
It is not clear what failed Holdgren forecasts Will is referencing. Al Gore, in his 2007 Nobel Prize acceptance <a href="http://www.nobelprize.org/nobel_prizes/peace/laureates/2007/gore-lecture_en.html">speech</a>, said, “One
study estimated that it could be completely gone during summer in less
than 22 years. Another new study, to be presented by U.S. Navy
researchers later this week, warns it could happen in as little as 7
years.” As implied by Gore’s remarks, there is a high level
of uncertainty surrounding the pace of polar ice melting. There is
agreement about <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/19/sorry-arctic-sea-ice-isnt-really-recovering/">the general trend</a>, which is clearly in the direction of more melting:<br />
<br />
<figure class="story-img"><img src="http://pixel.nymag.com/imgs/daily/intelligencer/2014/05/08/08-arctic-sea-ice.w1120.h750.jpg" height="428" width="640" /><figcaption></figcaption></figure>Gore
has, at times, highlighted the more pessimistic studies, which predict
ice-free summers in “five to seven years.” One time he <a href="http://wonkette.com/536931/al-gore-forgot-to-add-to-seven-about-a-thing-so-climate-change-a-hoax-haw-haw">paraphrased </a>the
prediction as “five years,” leaving out the “to seven,” and this has
become a major talking point among climate-science skeptics.<br />
Will continues:<br />
<blockquote>
Now, there is, as Charles says, the policy question
is how much wealth do we want to spend directly or in lost production
in order to have no discernible measurable effect on the climate? People
say, well, what about this report? There is a sociology of science.
Scientists are not saints in white laboratory smocks. They have got
interests like everybody else. If you want a tenure-track position in
academia, don't question the reigning orthodoxy on climate change. If
you want money from the biggest source of direct research in this
country, the federal government, don't question its orthodoxy. If you
want to get along with your peers, conform to peer pressure. This is
what's happening.</blockquote>
Will is arguing that climate scientists have been
massively corrupted by federal funding and peer pressure. (“They have
got interests like everybody else.”) He does not consider the
countervailing power of opposing financial interests that might lure
scientists to question of the scientific consensus, such as the
lucrative funding made available in the right-wing think-tank world. He
likewise discounts the possibility that scientists would find the lure
of being proven eventually correct to be a powerful reputational
incentive, let alone that they would actually care enough about being
right to disregard social and financial pressure. If Will has any
specific sense of how these social pressures survived the rigors of the
scientific method and peer review, he does not explicate them.<br />
<br />
Will is then asked about the 97 percent of climate scientists who share the consensus analysis, and replies:<br />
<blockquote>
Who measured it? Where did that figure come from? They pluck these things from the ether. I do not.</blockquote>
It comes from a <a href="http://iopscience.iop.org/1748-9326/8/2/024024/article">peer-reviewed study</a> which found that 97.1 percent of scientific papers taking a position on anthropogenic climate change “endorsed the consensus position that humans are causing global warming.” Will continues:<br />
<blockquote>
<i>The New Yorker</i> magazine, which is
impeccably upset about climate change, recently spoke about the report
from the Intergovernmental Panel on Climate Change as "the last word on
climate change." Now, try that phrase, "the last word on microbiology,
quantum mechanics, physics, chemistry." Since when does science come to
the end? <i>The New Yorker</i> has discovered the end of this. Who else has?</blockquote>
Will is referring to a <a href="http://www.newyorker.com/online/blogs/comment/2013/10/lost-in-the-denialosphere-climate-change-and-obamacare.html#entry-more">blog post</a> that appeared in <i>The New Yorker</i>
last October, and hinging a great deal of his argument on a pedantic
argument over what “the last word” means. Nothing in the post states or
implies that that the field of climate science will cease to grow and
evolve. It does imply that, like microbiology, quantum mechanics,
physics, and chemistry, its basic findings are a matter of consensus.<br />
<br />
At this point, the host asks Krauthammer if he, too scoffs at the 97 percent figure. Krauthammer indeed scoffs:<br />
<blockquote>
99 percent of physicists convinced that space and
time were fixed until Einstein working in a patent office wrote a paper
in which he showed that they are not. I'm not impressed by numbers. I'm
not impressed by consensus. When I was a psychiatrist, I participated in
consensus conferences on how to define depression and mania. These are
things that people negotiate in the way you would negotiate a bill,
because the science is unstable, because in the case of climate, the
models are changeable, and because climate is so complicated.</blockquote>
It is hard to dispute this except to note that
Krauthammer here has taken a radically skeptical position not merely on
climate science, but on all science. His argument implies that no
scientific argument merits respect. Given the provisional and socially
constructed peer pressure driving the consensus theory of aerodynamics,
it is amazing that he is willing to travel in an airplane.<br />
Krauthammer continues:<br />
<blockquote>
The idea that we who have trouble forecasting
what's going to happen on Saturday in the climate could pretend to be
predicting what's going to happen in 30, 40 years, is absurd.</blockquote>
Krauthammer is confusing the difference between
modeling the long-term impact of heat-trapping gasses with short-term
atmospheric fluctuations. Scientists are not forecasting precise daily
temperatures decades in advance.<br />
Krauthammer proceeds to make his most radical argument against science:<br />
<blockquote>
And you always see that no matter what happens,
whether it's a flood or it's a drought, whether it's one — it's warming
or cooling, it's always a result of what is ultimately what we're
talking about here, human sin with the pollution of carbon. It's the
oldest superstition around. It was in the Old Testament. It's in the
rain dance of the Native Americans. If you sin, the skies will not
cooperate. This is quite superstitious, and I'm waiting for science
which doesn't declare itself definitive but is otherwise convincing.</blockquote>
Now climate science is not merely corrupt, but akin to superstition. Both he and Will return to this astonishing claim.<br />
<br />
At this point, Will returns to his argument that climate science is fundamentally corrupt:<br />
<br />
<blockquote>
A moment ago, we had a report here on our crumbling
infrastructure, gave it a D, emergency. Who wrote it? As we said on
there, it was written by civil engineers, who said, <i>by golly, we need more of what civil engineers do and are paid to do.</i>
Again, there is a sociology of science, there is a sociology in all of
this, and engaging the politics of this, we have to understand the
enormous interests now invested in climate change.</blockquote>
Will here does not specifically extend his
critique of climate science to all sciences, but it surely applies. All
fields of sciences have a “sociology”; all receive government grants. If
those things can induce climate scientists to manufacture a false
consensus, the same effect can work just as well in any other scientific
field.<br />
<br />
To watch Will and Krauthammer grasp for rationales to cast
doubt on an established scientific field merely because its findings
pose a challenge to their ideological priors is a depressing, and even
harrowing, study in the poisonous effects of dogma upon a once-healthy
brain. They have amassed an impressive array of sound bites and
factoids, and can render them with convincing gravitas, and yet their
underlying reasoning is absolutely bonkers. The analogy Krauthammer
suggests of the rain man — an authority figure possessed of commanding
prestige despite lacking even rudimentary analytic powers — turns out to
be apt; only he is describing himself.</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-15225944454084941472014-05-11T08:12:00.002-07:002014-05-11T08:12:12.370-07:00"Predictions and Prejudice" among that cohort of right-wing hacks posing as social scientistsKrugman <a href="http://krugman.blogs.nytimes.com/2014/05/08/predictions-and-prejudice/">@ NYT</a> on the shame - or should I say "shamelessness" - of too many in his profession:<br />
<blockquote class="tr_bq">
<div class="story-body-text">
The 2008 crisis and its aftermath have been a
testing time for economists — and the tests have been moral as well as
intellectual. After all, economists made very different predictions
about the effects of the various policy responses to the crisis;
inevitably, some of those predictions would prove deeply wrong. So how
would those who were wrong react? </div>
</blockquote>
<blockquote class="tr_bq">
<div class="story-body-text">
The results have not been encouraging.</div>
<div class="story-body-text">
<br /></div>
<div class="story-body-text">
<a href="http://loyaltothegroupofseventeen.tumblr.com/post/85058563274/thursday-idiocy-on-wednesday-the-astonishingly">Brad DeLong</a>
reads Allan Meltzer in the Wall Street Journal, issuing dire warnings
about the inflation to come. Newcomers to this debate may not be fully
aware of the history here, so let’s recap. Meltzer began banging the
inflation drum five full years ago, predicting that the Fed’s expansion
of its balance sheet would cause runaway price increases; meanwhile, <a href="http://krugman.blogs.nytimes.com/2009/05/04/a-history-lesson-for-alan-meltzer/">some of us</a>
pointed both to the theory of the liquidity trap and Japan’s experience
to say that this was not going to happen. The actual track record to
date:</div>
<div class="story-body-text">
<br /></div>
<div class="w480">
<img alt="" height="344" id="100000002869658" src="http://graphics8.nytimes.com/images/2014/05/08/opinion/050814krugman1/050814krugman1-blog480.png" width="640" /><span class="credit"></span><span class="caption"></span></div>
<div class="story-body-text">
<br /></div>
<div class="story-body-text">
Tests in economics don’t get more decisive; this is where you’re supposed to say, “OK, I was wrong, and here’s why”.</div>
<div class="story-body-text">
<br /></div>
<div class="story-body-text">
Not a chance. And the thing is, Meltzer isn’t
alone. Can you think of any prominent figure on that side of the debate
who has been willing to modify his beliefs in the face of overwhelming
evidence?</div>
<div class="story-body-text">
<br /></div>
<div class="story-body-text">
Now, you may say that it’s always like this —
but it isn’t. Consider the somewhat similar debate in the 1970s over
the “accelerationist” hypothesis on inflation — the claim by Friedman
and Phelps that any sustained increase in inflation would cause the
unemployment-inflation relationship to worsen, so that there was no
long-run tradeoff. The emergence of stagflation appeared to vindicate
that hypothesis — and the great majority of Keynesians accepted that
conclusion, modifying their models accordingly.</div>
<div class="story-body-text">
<br /></div>
<div class="story-body-text">
So this time is different — and these people
are different. And I think we need to try to understand why. Were the
freshwater guys always just pretending to do something like science,
when it was always politics? Is there simply too much money and too much
vested interest behind their point of view?</div>
</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-59361714183940302122014-04-30T06:18:00.000-07:002014-04-30T06:21:30.519-07:00The knives come out for Piketty...and they are pretty dullKathleen Geier outlines "<a href="http://thebaffler.com/blog">What Piketty’s Conservative Critics Get Wrong"</a> <a href="http://thebaffler.com/blog/2014/04/what_pikettys_conservative_critics_get_wrong">@ The Baffler:</a><br />
<blockquote class="tr_bq">
With his book <a href="http://shop.harvard.com/book/9780674430006"><i>Capital in the Twenty-First Century</i></a>,
Thomas Piketty has lobbed a truth bomb that has blown up several
decades’ worth of received opinion about the way the economy works in
capitalist societies. He makes a powerful, meticulously-argued,
data-driven case that inequality is a feature of capitalist economies,
not a bug. Let to its own devices, wealth tends to become highly
concentrated. The only events likely to prevent our society from
plunging into a dystopian spiral of inequity are, on the one hand,
certain rarely occurring catastrophes, such as war or depression; or, on
the other, dramatic government intervention in the economy, in the form
of steep taxes on the wealthy.<br />
<div class="separator" style="clear: both; text-align: center;">
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<br />
You can see why conservatives are going to be enraged by this book.<br />
<br />
A conservative backlash to Piketty was inevitable; the only surprise
is that it’s taken so long to develop. But in the last week or so,
responses from the right have finally begun to roll in. Send in the
clowns!<br />
<a name='more'></a><br />
Reihan Salam, inexplicably regarded as a leading light among today’s
young conservative intellectuals, doesn’t appear to have read a word of
the book, but took it upon himself to write about it anyway <a href="http://www.nationalreview.com/agenda/374478/will-future-be-dominated-immortal-quadrillionaires-reihan-salam">for the <i>National Review Online</i></a>. Cribbing from one of the few <a href="http://www.huffingtonpost.com/dean-baker/capital-in-the-twenty-fir_b_4932184.html">less-than-glowing reviews</a>
of Piketty on the left, by economist Dean Baker, Salam decides he
didn’t like the book because of its “pessimism.” But he disagrees with
Baker’s ideas about policies to fix inequality, and asserts that a more
“open” and “entrepreneurial” economy will do the trick instead. Salam
offers no policy details, but his piece does discuss many plot details
of a sci-fi novel he enjoyed. (WTF?)<br />
<br />
Salam’s piece was dumb, but things were about to get more idiotic. Earlier this week, the economist <a href="https://twitter.com/BrankoMilan/status/458617080427061248">Branko Milanovic tweeted</a>, “And the award for the stupidest review of Piketty’s book so far goes to . . . . (no surprise there) @WSJ.” The <a href="http://online.wsj.com/news/articles/SB10001424052702303825604579515452952131592"><i>Wall Street Journal</i> review</a>
is indeed wretched. Reviewer Daniel Shuchman describes this
painstakingly careful work as “less a work of economic analysis than a
bizarre ideological screed.” He also suggests that Piketty’s argument
that confiscatory tax rates won’t hurt growth is a groundless “breezy”
assurance. In fact, Piketty’s argument is based on his rigorous
econometric analysis of fifty years of data from eighteen OECD
countries. Shuchman ends his review with a classic move straight out of
the red-baiting playbook: “the professor ought to read ‘Animal Farm’ and
‘Darkness at Noon,’” he wrote. Awesome point!<br />
<br />
I didn’t think it was possible to find a more hack-stastic review of
Piketty in a major publication than the one by Shuchman. Like Milanovic,
I was ready to award the dunce cap to the <i>Journal</i> and call it a day. But then along came <a href="http://www.bloombergview.com/articles/2014-04-22/piketty-s-tax-hikes-won-t-help-the-middle-class">Megan McArdle’s column for <i>Bloomberg View</i></a>. Her piece on Piketty contains what is surely one of the most extraordinary openings of a book review I have ever read:<br />
<blockquote>
I apologize in advance, because I am going to talk about a
book that I have not yet read. To be clear, I intend to read Thomas
Piketty’s “Capital in the Twenty-First Century.” It is sitting on my
(virtual) bedside with a big stack of other (digital) books that I
intend to read. But it’s far down in the queue, and I’m afraid that I
can’t wait to weigh in—not on the book itself, but on its topic.</blockquote>
Okay then! She proceeds to argue vigorously against Piketty’s policy
proposal on taxes—although, to repeat, she did not read his arguments in
favor of them. At this point, I strongly suggest you skip her piece and
read <a href="http://fredrikdeboer.com/2014/04/23/my-review-of-megan-mcardles-review-of-capital-in-the-21st-century/">Fredrik deBoer’s review</a> of McArdle’s review instead. It is delightful. </blockquote>
<blockquote class="tr_bq">
Not every conservative response to Piketty has been quite as
disgraceful as the ones by Salam, Shuchman, and McArdle. There have been
more serious reviews as well—though all of them deserve scrutiny and
pushback.<br />
<br />
For instance, the American Enterprise Institute’s <a href="http://www.aei.org/speech/economics/remarks-on-thomas-pikettys-capital-in-the-twenty-first-century/">Kevin Hassett</a>
argues that the correct way to measure economic inequality is to look
at consumption inequality rather than income inequality, and he claims
that consumption inequality is not on the rise. Nice try, but no. The <a href="http://economistsview.typepad.com/economistsview/2012/10/the-myth-that-growing-consumption-inequality-is-a-myth.html">best recent research shows</a>, in fact, that consumption inequality is soaring as well.<br />
<br />
The Manhattan Institute’s <a href="http://www.forbes.com/sites/scottwinship/2014/04/17/whither-the-bottom-90-percent-thomas-piketty/">Scott Winship claims</a>
that if Piketty had included taxes and transfers in his measure of
inequality, he would have found that, even though income rose
disproportionately at the top, the bottom 90 percent still experienced
significant gains. He doesn’t link to his analysis, but I’m skeptical.
An earlier study Winship <a href="http://www.economics21.org/research/has-income-inequality-really-risen-0">touted</a> that showed similar results turned out to have <a href="http://jaredbernsteinblog.com/when-the-results-look-weird-check-the-methods-carefully/">serious methodological flaws</a>.<br />
<br />
More importantly, transfers have their limits. Studies show that <a href="http://thebaffler.com/blog/2014/04/proof_of_wealths_power">the wealthy increasingly dominate the political process</a>,
and that their views on economic issues lean much more conservative
than the rest of the population. As the rich get richer and wield even
more control over our democracy, it’s likely that government policy will
become less, rather than more, redistributionist.<br />
<br />
Let’s be real: are we to deduce from Winship-type arguments that
conservatives believe that the way to deal with inequality is to
increase welfare spending, and make the tax system more fair for
low-income earners? Sorry, but that’s a <a href="http://www.redstate.com/diary/dhorowitz3/2011/10/05/the-handouts-in-the-tax-code-that-nobody-wants-to-discuss/">suggestion</a> that <a href="http://www.motherjones.com/politics/2014/01/republicans-won-food-stamps-farm-bill">doesn’t</a> even pass the <a href="http://www.cbpp.org/cms/?fa=view&id=3114">laugh test</a>.<br />
<br />
Some conservative reviewers appear to misunderstand basic points of Piketty’s argument. <i>Foreign Affairs</i>’s <a href="http://www.foreignaffairs.com/articles/141218/tyler-cowen/capital-punishment">Tyler Cowen</a> (who also discusses the book <a href="http://marginalrevolution.com/marginalrevolution/2014/04/why-i-am-not-persuaded-by-thomas-pikettys-argument.html">on his blog</a>) falsely asserts that Piketty claims that capital returns will be “non-diminishing.” <i>The National Review</i>’s <a href="http://www.nationalreview.com/article/376214/unequal-task-joshua-hendrickson">Joshua Hendrickson</a>
asks what will happen to return on capital when the growth rate
changes. Piketty’s analysis makes it clear that that even if growth
slows and the return on capital is reduced, the gap between the two will
merely narrow; it won’t reverse itself. The essence of Piketty’s
argument is that return on capital will outpace growth—a dynamic that,
left unattended, will lead to growing wealth concentration and
inequality.<br />
<br />
Another misunderstanding: Cowen as well as <i>Bloomberg</i>’s <a href="http://www.bloombergview.com/articles/2014-04-20/the-most-important-book-ever-is-all-wrong">Clive Crook</a>
claim that Piketty argues that a high capital-to-income (or, as Crook
puts it, capital-to-output) ratio is what’s driving inequality. Piketty
does not actually say that, nor he does he believe a high
capital-to-income ratio is objectionable in itself, if capital is
divided equally. The issue is that wealth is <i>unequally distributed to begin with</i>, and then over time tends to become even <i>more</i> concentrated. In that context, a high capital-to-income ratio becomes a major problem.<br />
<br />
Finally, Crook argues that “living standards” matter most, not
inequality. Living standards are indeed important, but for decades,
wages for the bottom 90 percent have been <a href="http://jaredbernsteinblog.com/rents-rents-everywhere-rents/">stagnating</a>. For many people in our society, living standards are abysmal; <a href="http://www.reuters.com/article/2013/09/17/us-usa-economy-poverty-idUSBRE98G0PN20130917">the poverty rate is high</a> and increasing numbers of people <a href="http://www.msnbc.com/msnbc/hunger-the-us-historic-highs">can’t get enough food to eat</a>.<br />
<br />
Even for the non-poor, inequality matters. Many goods are positional,
such as the best schools, housing, and jobs. But in a society where
wealth is power, and economic inequality is skyrocketing, those are
perks that increasingly are restricted to a rich and well-connected
elite. That’s a disturbing reality that violates basic norms of fairness
and equal opportunity. It’s one of the reasons why addressing economic
inequality has become our nation’s most urgent political priority. And
it’s another point that all of Piketty’s right-wing detractors (whether
they’ve actually read his book, or not) seem to have missed.</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-76118151841025325802014-04-29T06:29:00.001-07:002014-04-29T06:29:53.586-07:00Recovery Has Created Far More Low-Wage Jobs Than Better-Paid OnesAnnie Lowrey <a href="http://www.nytimes.com/2014/04/28/business/economy/recovery-has-created-far-more-low-wage-jobs-than-better-paid-ones.html">@ NYT:</a><br />
<blockquote>
WASHINGTON — The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.</blockquote>
<blockquote>
In essence, the poor economy has replaced good jobs with bad ones. That is the <br />
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conclusion of a new report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.<br />
<br />
“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”<br />
<br />
The report shows that total employment has finally surpassed its pre-recession level. “The good news is we’re back to zero,” Mr. Evangelist said.<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />
But job losses and gains have been skewed. Higher-wage industries — like accounting and legal work — shed 3.6 million positions during the recession and have added only 2.6 million positions during the recovery. But lower-wage industries lost two million jobs, then added 3.8 million.<br />
<br />
Most of the jobs added during the recovery have been in lower-wage industries...<br />
<a name='more'></a><br />
With 10.5 million Americans still looking for work — the unemployment rate is 6.7 percent — employers feel no pressure to raise wages for those who are working. As a result, the average household’s take-home pay has declined through the recession and the recovery to $51,017 in 2012 from $55,627 in 2007, after adjusting for inflation.<br />
<br />
With joblessness high and job gains concentrated in low-wage industries, hundreds of thousands of Americans have accepted positions that pay less than they used to make, in some cases, sliding out of the middle class and into the ranks of the working poor.<br />
<br />
That includes Connie Ogletree, a former administrative and executive assistant who now earns $7.25 an hour at a McDonald’s in Atlanta. “It was 40 years ago that I had my first fast-food job, at a Dairy Queen,” said Ms. Ogletree, 55. “This is my second.”<br />
<br />
Ms. Ogletree is in school working toward a bachelor’s degree, in the hope of returning to a white-collar position. But in the meantime, she and her older sister have scrimped and saved to make ends meet on her meager earnings.<br />
<br />
She said that she appreciated her job — many do not have one — but that she found the work tough. </blockquote>
<blockquote>
“When you go into a fast-food restaurant, you want to be sure the people in the back are doing the best job they can,” she said. “You want them not to be worried about missing a day if they’re sick, to be able to go to a child’s play at school or a P.T.A. meeting. I’d like a vacation once a year, but my employer doesn’t offer that, or sick days.”<br />
<br />
The National Employment Law Project study found that there were about a million fewer jobs in middle-wage industries — including parts of the health care system, loan servicing and real estate — than there were when the recession hit.<br />
<br />
Economists worry that even a stronger recovery might not bring back jobs in traditionally middle-class occupations eroded by mechanization and offshoring. The American work force might become yet more “polarized,” with positions easier to find at the high and low ends than in the middle.<br />
<br />
The swelling of the low-wage work force has led to a push for policies to raise the living standards of the poor, including through job training, expansion of health care coverage and a higher minimum wage.<br />
<br />
President Obama has supported a Democratic proposal to lift the federal minimum wage to $10.10 an hour from its current level of $7.25.<br />
<br />
“Nobody who works full-time should ever have to live in poverty,” Mr. Obama said on Saturday in his weekly address. “That’s why nearly three in four Americans support raising the minimum wage.” </blockquote>
<blockquote>
Raising it to $10.10 would “lift wages for nearly 28 million Americans across the country,” he said. “We’re not just talking about young people on their first job. The average minimum-wage worker is 35 years old. They work hard, often in physically demanding jobs.”<br />
<br />
But with congressional inaction stalling that proposal, many state and local governments have forged ahead on their own. States including Connecticut, New York, New Jersey, California and Rhode Island have raised their local minimum wages. And a total of 34 states are considering lifting their wage floors, while activists in other states are pushing for ballot referendums to do so. </blockquote>
<blockquote>
“They’re actually getting the job done, so that workers get a raise,” said Thea Lee, the deputy chief of staff of the A.F.L.-C.I.O. “The hope is that it creates momentum nationally and builds an activist base.”<br />
<br />
But many Republicans oppose raising the wage floor while the economy remains weak. And many businesses staunchly oppose higher minimum wages because of the threat to their bottom lines. </blockquote>
<blockquote>
The National Employment Law Project study found especially strong growth in restaurants and food services, administrative and waste services and retail trades. Those industries — which often pay wages at the federal minimum — accounted for about 40 percent of the increase in private sector employment over the past four years.</blockquote>
<blockquote>
There has also been strong jobs growth in some high-paying industries, like professional, scientific and technical services — a category that includes accountants, lawyers, software developers and engineers. That sector accounted for about 9 percent of the private-sector job gains in the recovery.</blockquote>
<br />Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-8934571147994835192014-04-22T11:50:00.000-07:002014-04-22T11:50:43.667-07:00U.S. is a world leader in class conflict over government spending<br />
Political science Prof. Larry Bartels <a href="http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/04/21/u-s-is-a-world-leader-in-class-conflict-over-government-spending/">at WaPo</a>:<br />
<br />
<br />
<br />
<br />
<div class="wp-caption aligncenter" id="attachment_9661" style="width: 420px;">
<img alt="(Data from International Social Survey Programme; tabulation by Larry Bartels)" class=" wp-image-9661 " src="http://www.washingtonpost.com/blogs/monkey-cage/files/2014/04/welfare1.jpg" /><br />
<div class="wp-caption-text">
<br /></div>
<div class="wp-caption-text">
(Data from International Social Survey Programme; tabulation by Larry Bartels)</div>
</div>
<br />
The United States does <a href="http://www.lisdatacenter.org/wps/liswps/581.pdf">less to redistribute income</a>
than virtually any other economically “advanced” democracy. So why does
class conflict loom so much larger in U.S. public opinion about
government spending than in other affluent democracies? The answer may
have something to do with our peculiar system of taxation.<br />
<br />
The claim that America is riven by class conflict may come as a
surprise to people who like to think that “There are no classes in
America,” as <a href="http://www.cbsnews.com/news/santorum-says-there-are-no-classes-in-the-united-states/">Rick Santorum</a>
put it during his 2012 presidential campaign. But the fact is that rich
and poor Americans disagree about government spending to an extent
virtually unmatched elsewhere in the world.<br />
<a name='more'></a><br />
<br />
In 2006, just before the onset of the Great Recession, the International Social Survey Programme (<a href="http://www.issp.org/">ISSP</a>) asked
people in 33 countries about “some things the government might do for
the economy.” In the United States, 63 percent of the respondents
favored (or strongly favored) “cuts in government spending” to boost the
economy, while only 13 percent opposed (or strongly opposed) such cuts.
But that was not so unusual; in 15 other affluent democracies, an
average of 57 percent of the respondents favored cuts in government
spending.<br />
<br />
What is much more remarkable about the pattern of opinion in the
United States is the extent to which it was polarized along class lines.
In the other affluent democracies, net support for spending cuts was
virtually constant across income groups, from the very poor to the very
affluent. In the United States , however, poor people were only slightly
more likely to favor than to oppose spending cuts, while affluent
people were vastly more likely to favor spending cuts. No other rich
country even came close to matching this level of class polarization in
budget-cutting preferences. Among the poorer countries included in the
ISSP survey, only one displayed a larger division of opinion between
rich and poor — South Africa.<br />
<br />
What accounts for the remarkable enthusiasm for government
budget-cutting among affluent Americans? Presumably not the sheer
magnitude of redistribution in the United States, which is modest by
world standards. And presumably not a traditional aversion to government
in American political culture, since less affluent Americans are
exposed to the same political culture as those who are more prosperous. A
more likely suspect is the entanglement of class and race in America,
which <a href="http://www.amazon.com/Why-Americans-Hate-Welfare-Communication/dp/0226293653">magnifies aversion to redistribution</a> among many affluent white Americans. Another is the <a href="http://www.amazon.com/The-Hidden-Welfare-State-Expenditures/dp/069100529X">“hidden”</a> nature
of the American welfare state, which funnels subsidies to affluent
people indirectly through tax breaks on mortgages and health insurance
rather than providing them with public housing and free clinics.<br />
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The U.S. tax system is also quite different from most affluent countries’ in its <a href="http://themonkeycage.org/2012/02/16/the-facts-about-tax-progressivity/">heavy reliance</a>
on progressive income taxes. The political implications of
this difference are magnified by the remarkable salience of income taxes
in Americans’ thinking about taxes and government. Matthew Yglesias <a href="http://www.vox.com/2014/4/17/5624686/the-heritage-foundations-misleading-tax-chart">chides</a>
the Heritage Foundation for harping on the steep progressivity of
federal income taxes while ignoring payroll taxes and state and local
taxes, which make the overall U.S. tax system much less progressive. But
it’s not just the Heritage Foundation.<br />
<br />
Income taxes seem to dominate public discussion of taxes and tax
policy. For example, years of dramatic political confrontation
culminated in a grudging agreement to shave a few percentage points off
the <a href="http://www.epi.org/blog/bush-tax-cuts-stay/">Bush tax cuts</a> for incomes over $400,000 per year; meanwhile, a major reduction in the <a href="http://www.washingtonpost.com/business/fiscal-cliff/most-will-face-a-rare-tax-increase-with-or-without-fiscal-cliff-resolution/2012/12/31/31d4bf0a-5259-11e2-8b49-64675006147f_story.html">payroll taxes</a>
paid by millions of ordinary working Americans expired with barely a
whimper. Thinking about the cost of government solely in terms of
federal income taxes makes it tempting for affluent Americans to see
politics as a battle between <a href="http://www.rushlimbaugh.com/daily/2014/04/16/obama_s_america_86_million_makers_support_148_million_takers">“makers” and “takers”</a> — between them and Mitt Romney’s famous “<a href="http://www.cbsnews.com/news/fact-checking-romneys-47-percent-comment/">47 percent</a> … who are dependent on government.”<br />
<br />
Some readers of Martin Gilens and Benjamin Page’s <a href="http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/04/08/rich-people-rule/">bombshell research</a>
on economic elite domination have questioned whether the outsized
political influence of affluent people really matters, since they agree
with ordinary Americans on most political issues anyway. Most issues,
but by no means all—as Gilens’s <a href="http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=5293180">previous work</a>
handsomely demonstrates. The remarkable enthusiasm of affluent
Americans for government budget-cutting is a prime example of what is at
stake in economic elite domination of the U.S. political system.<br />
<br />
<span style="font-size: xx-small;">(The affluent democracies included in my comparison were those with
GDP per capita in excess of $25,000 in 2006 — Australia, Canada,
Denmark, Finland, France, Germany, Great Britain, Ireland, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, and Switzerland. The
other countries in the 2006 ISSP study included Chile, Croatia, the
Czech Republic, the Dominican Republic, Hungary, Israel, Latvia, the
Philippines, Poland, Portugal, Russia, Slovenia, South Africa, South
Korea, Taiwan, Uruguay, and Venezuela. The levels of net support for
government spending cuts shown in the figures are calibrated to range
from −100 for strong opposition to +100 for strong support; thus, the
positive values indicate net support for spending cuts all across the
income spectrum in the U.S. and elsewhere. The levels of net unmet
demand for social welfare spending are calibrated to range from −100 for
respondents who want to spend much less on each program to +100 for
those who want to spend much more; so positive values indicate net
support for spending increases.)</span>Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-29668038159089245612014-04-21T10:27:00.000-07:002014-04-21T10:27:19.101-07:00Paul Krugman talks Piketty's "Capital In The 21st Century" with Bill Moyers<iframe allowfullscreen="" height="281" mozallowfullscreen="" src="//player.vimeo.com/video/92308666" webkitallowfullscreen="" width="500"></iframe>Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-39949842012091053492014-04-19T10:12:00.002-07:002014-04-19T10:12:59.281-07:00Rand Paul is either an idiot or a calculated propagandist...or bothMore <a href="http://krugman.blogs.nytimes.com/2014/04/18/dont-know-much-about-history-rand-paul-edition/">Krugman</a> on The Crazy:<br />
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I can easily understand it when people don’t know the facts about economic statistics; you need a fair bit of background knowledge even to know how to look these things up. It’s more surprising when people don’t know what they don’t know — when they make confident assertions that can be proved false in a few seconds by anyone who does know these things.<br /><br />I had a one-on-one encounter with Rand Paul over such a case; there our heads were, talking on TV, and he insisted that government employment had risen under Obama. (It has actually plunged.) At the very least, you’d think he would have learned a lesson from the experience.<br /><br />But no. There he goes, saying, <i>"When is the last time in our country we created millions of jobs? It was under Ronald Reagan … "</i><br /><br />Hmmm:</blockquote>
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<br />It’s not just that more jobs were created under Clinton, who raised taxes on the rich, than under Reagan; I wonder how many people know that more jobs were created under Jimmy Carter than under either Bush?<br /><br />But I guess I really do understand it: according to right-wing theology, The Blessed Reagan’s tax cuts must have created far more jobs than the policies of evil redistributors. And so that’s what must have happened. Hey, Clinton was probably cooking the books.</blockquote>
<br />Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-7733200915424969172014-04-19T09:37:00.002-07:002014-04-19T10:05:37.818-07:00Liberal Facts and "Conservative" CrazyKrugman <a href="http://krugman.blogs.nytimes.com/2014/04/18/on-the-liberal-bias-of-facts/">@ NYTs</a> on The Crazy:<br />
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“The facts have a well-known liberal bias,” declared Rob Corddry way back in 2004 — and experience keeps vindicating his joke. But why?<br />
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Not long ago Ezra Klein cited research showing that both liberals and <br />
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conservatives are subject to strong tribal bias — presented with evidence, they see what they want to see. I then wrote that this poses a puzzle, because in practice liberals don’t engage in the kind of mass rejections of evidence that conservatives do. The inevitable response was a torrent of angry responses and claims that liberals do too reject facts — but none of the claims measured up.<br />
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Just to be clear: Yes, you can find examples where *some* liberals got off on a hobbyhorse of one kind or another, or where the liberal conventional wisdom turned out wrong. But you don’t see the kind of lockstep rejection of evidence that we see over and over again on the right. Where is the liberal equivalent of the near-uniform conservative rejection of climate science, or the refusal to admit that Obamacare is in fact reaching a lot of previously uninsured Americans?<br />
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What I tried to suggest, but maybe didn’t say clearly, is that the most likely answer lies not so much in the character of individual liberals versus that of individual conservatives, as in the difference between the two sides’ goals and institutions. And Jonathan Chait’s recent thoughts on the inherently partisan nature of “data-based” journalism are, I think, helpful in bringing this better into focus.<br />
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As Chait says, the big Obamacare comeback and the reaction of the right are a very good illustration of the forces at work.<br />
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The basic facts here are that after a very slow start due to the healthcare.gov debacle, almost everything has gone right for reform. A huge surge of enrollments more than made up the initially lost ground; the age mix of enrollees has improved; multiple independent surveys have found a substantial drop in the number of Americans without health insurance.<br />
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Opponents of Obamacare could respond to these facts by arguing that the whole thing is nonetheless a bad idea, or they could accept that the rollout has gone OK but call for major changes in the program looking forward. What they’re actually engaged in, however, is mass denial and conspiracy theorizing strongly reminiscent of their reaction to polls showing Mitt Romney on the way to defeat, or for that matter evidence of climate change. Acceptance of the facts is, well, unacceptable.<br />
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Nothing illustrated this better than the reaction to Ezra Klein’s own note about the resignation of Kathleen Sebelius, which was intended as analysis rather than advocacy; Klein simply made the fairly obvious point that the HHS secretary was in effect free to resign now because Obamacare has been turned around and is going well. But Klein’s statement was met with a mix of outrage and ridicule on the right; how dare he suggest that the program was succeeding?<br />
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Why is it, then, that the right treats statements of fact as proof of liberal bias?<br />
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Chait’s answer, which I agree is part of the story, is that the liberal and conservative movements are not at all symmetric in their goals. Conservatives want smaller government as an end in itself; liberals don’t seek bigger government per se — they want government to achieve certain things, which is quite different. You’ll never see liberals boasting about raising the share of government spending in GDP the way conservatives talk proudly about bringing that share down. Because liberals want government to accomplish something, they want to know whether government programs are actually working; because conservatives don’t want the government doing anything except defense and law enforcement, they aren’t really interested in evidence about success or failure. True, they may seize on alleged evidence of failure to reinforce their case, but it’s about political strategy, not genuine interest in the facts.<br />
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One side consequence of this great divide, by the way, is the way conservatives project their own style onto their opponents — insisting that climate researchers are just trying to rationalize government intervention, that liberals like trains because they destroy individualism.<br />
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But this can’t be the whole story. It doesn’t explain, for example, the rejection of polls in 2012, or the refusal of the right to admit that things weren’t going well in Iraq — both cases in which conservatives really did have an interest in the outcomes. So what else differentiates the two sides?<br />
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Well, surely another factor is the lack of a comprehensive liberal media environment comparable to the closed conservative universe. If you lean right, you can swaddle yourself 24/7 in Fox News and talk radio, never hearing anything that disturbs your preconceptions. (If you were getting your “news” from Fox, you were told that the hugely encouraging Rand survey was nothing but bad news for Obamacare.) If you lean left, you might watch MSNBC, but the allegedly liberal network at least tries to make a distinction between news and opinion — and if you watch in the morning, what you get is right-wing conspiracy theorizing more or less indistinguishable from Fox.<br />
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Yet another factor may be the different incentives of opinion leaders, which in turn go back to the huge difference in resources. Strange to say, there are more conservative than liberal billionaires, and it shows in think-tank funding. As a result, I like to say that there are three kinds of economists: Liberal professional economists, conservative professional economists, and professional conservative economists. The other box isn’t entirely empty, but there just isn’t enough money on the left to close the hack gap.<br />
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Finally, I do believe that there is a difference in temperament between the sides. I know that it doesn’t show up in the experiments done so far, which show liberals and conservatives more or less equally inclined to misread facts in a tribal way. But such experiments may not be enough like real life to capture the true differences — although I’d be the first to admit that I don’t have solid evidence for that claim. I am, after all, a liberal.</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0tag:blogger.com,1999:blog-9214992163505630708.post-72749547458628545272014-04-19T09:25:00.000-07:002014-04-19T09:25:20.849-07:00The rich got richerIn what is beginning to sound like a "Dog Bites Man" story from the <a href="http://blogs.wsj.com/economics/2014/04/17/wealthiest-households-accounted-for-80-of-rise-in-incomes-in-recessions-aftermath/">WSJ:</a><br />
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The rich got richer, the poor got poorer.<br />
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A <a data-ls-seen="1" href="http://www.bls.gov/spotlight/2014/high-income-spending-economic-recovery/home.htm" target="_blank">recent article</a> by
Labor Department senior economist Aaron Cobet highlights the sharp
disparity between the wealthiest and poorest Americans in the aftermath
of the 2007-2009 recession.<br />
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“While average income has returned to pre-recession levels, income gains have been distributed unevenly,” Mr. Cobet said.<br />
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The economist mined Labor Department data to show that the top 20% of
earners accounted for more than 80% of the rise in household income
from 2008-2012. Income fell for the bottom 20%.</blockquote>
Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.com0