Some scattered links this week:
Jason Ditz: Senate Votes to Block Pentagon Paying Millions to NFL to 'Honor Troops': You probably thought (if you thought about it at all) that the NFL was just engaging in patriotic showboating, but it turns out they were on the government dole. Precious quote, from Sens. McCain, Flake, and Blumenthal: "the US cannot afford to give 'scarce defense dollars to wealthy sports teams.'" They're talking about $5.4 million, a tiny drop in the trillion or so dollars the US spends on "defense" each year. Indeed, it's probably only a small fraction of what the Defense Dept. spends on PR, the effect of which is to make war more politically acceptable.
Paul Krugman: Why Am I a Keynesian?
Noah Smith sort-of approvingly quotes Russ Roberts, who views all macroeconomic positions as stalking horses for political goals, and declares in particular that
Krugman is a Keynesian because he wants bigger government. I'm an anti-Keynesian because I want smaller government.
OK, I'm not going to clutch my pearls and ask for the smelling salts. Politics can shape our views, in ways we may not recognize. [ . . . ]
So, am I a Keynesian because I want bigger government? If I were, shouldn't I be advocating permanent expansion rather than temporary measures? Shouldn't I be for stimulus all the time, not only when we're at the zero lower bound? When I do call for bigger government -- universal health care, higher Social Security benefits -- shouldn't I be pushing these things as job-creation measures? (I don't think I ever have). I think if you look at the record, I've always argued for temporary fiscal expansion, and only when monetary policy is constrained. Meanwhile, my advocacy of an expanded welfare state has always been made on its own grounds, not in terms of alleged business cycle benefits.
In other words, I've been making policy arguments the way one would if one sincerely believed that fiscal policy helps fight unemployment under certain conditions, and not at all in the way one would if trying to use the slump as an excuse for permanently bigger government.
But in that case, why am I a Keynesian? Maybe because of convincing evidence?
First of all, the case for viewing most recessions -- and the Great Recession in particular -- as failures of aggregate demand is overwhelming.
Now, this could be a case for using monetary rather than fiscal policy -- and that actually is the policy I advocate in response to garden-variety slumps. But when the slump pushes rates down to zero, and that's still not enough, any simple model I can think of says that fiscal expansion can be a useful supplement, while fiscal austerity makes a bad situation worse.
And while it's true that there was limited direct evidence on the effects of fiscal policy 6 or 7 years ago, there's now a lot, and it's very supportive of a Keynesian view.
Krugman is generally right that Keynesian macro is preferred because it provides a more accurate and efficient understanding of the interaction between government spending and economic growth, and can back that up with evidence, especially of a predictive nature. But whether you want growth and what kind of growth you want are political issues. Those who do, like Krugman (or Nixon, when he wanted to take credit for a robust economy, and had one that often seemed to be on the verge of collapse), will be Keynesians because they want tools that work. But those who don't care about growth (except of business profits) will disparage Keynes -- after all, why acknowledge an analysis that could work when that's not what you want? Keynes wouldn't be controversial but for the purely political desire to slag the economy. You might wonder why Republicans would want to do that -- some combination of making a Democrat in the White House look bad and a preference for increasing inequality over economic growth.
The "big government" association with Keynesianism is, as Krugman shows, misdirection. I'd personally like to trim large segments of government -- especially the biggest one of all, the military. That doing so would be contractionary doesn't bother me. One can always spend more elsewhere, and finding more productive investments than the US military should be easy. Or you can reduce taxes and, as Bush liked to put it, let people spend their own money. Strangely enough, anti-government obsessives rarely worry about the military -- even though from the founding of the republic up to WWII many Americans regarded a standing army as the greatest threat to liberty. Rather, what they object to is that government is subject to democratic rule and as such can be used to rebalance private fortunes, whereas their vaunted private sector tends to exacerbate inequities. They object not to the government which they need to secure private property, but to what that government might do to satisfy the masses. Over the ages they've pulled every trick imaginable to keep the belief that the nation was founded upon -- that all men are created equal -- from becoming reality. Denying the efficacy of Keynesian economics is just one such trick.
Bill McKibben: How mankind blew the fight against climate change: Strange scenes from Exxon Mobil's annual shareholders meeting:
The meeting came two days after Texas smashed old rainfall records -- almost doubled them, in some cases -- and as authorities were still searching for families swept away after rivers crested many feet beyond their previous records. As Exxon Mobil's Rex Tillerson -- the highest-paid chief executive of the richest fossil fuel firm on the planet -- gave his talk, the death toll from India's heat wave mounted and pictures circulated on the Internet of Delhi's pavement literally melting. Meanwhile, satellite images showed Antarctica's Larsen B ice shelf on the edge of disintegration.
And how did Tillerson react? By downplaying climate change and mocking renewable energy. To be specific, he said that "inclement weather" and sea level rise "may or may not be induced by climate change," but in any event technology could be developed to cope with any trouble. "Mankind has this enormous capacity to deal with adversity and those solutions will present themselves as those challenges become clear," he said.
But apparently those solutions don't include, say, the wind and sun. Exxon Mobil wouldn't invest in renewable energy, Tillerson said, because clean technologies don't make enough money and rely on government mandates that were (remarkable choice of words) "not sustainable." He neglected to mention the report a week earlier from the not-very-radical International Monetary Fund detailing $5.3 trillion a year in subsidies for the fossil fuel industry.
All in all, a sneering and sad performance by a man paid nearly $100,000 a day, whose company spends $100 million a day looking for new oil and gas even though scientists say we simply can't burn most of the fossil fuel we've already located without devastating consequences.
The science explaining climate change, like Keynesian economics (above), has become inconvenient for certain well established interests who prefer to think that politics trumps science, or that anything that challenges their personal interests and prejudices must be nothing but propaganda against them. While this is often true, nowhere more so than in the oil industry, where fortunes were built on nothing more than a lottery of land titles, yet every tycoon considers himself a self-made man, not to mention graced by God.
Daniel Strauss: Brownback May Empower Kris Kobach to Prosecute 'Voter Fraud' Cases Himself: Kobach has been lobbying for this power ever since he was elected Secretary of State in 2010, although it's never been clear who he'd prosecute with this -- as he hasn't been able to get a single county to prosecute one of his cases yet. If anyone should be prosecuted for voter fraud it's Kobach, Brownback, and the state legislature, whose ID laws have prevented thousands of otherwise eligible citizens from voting. Josh Marshall comments: "He can just prosecute anyone he wants." Certainly a dream come true for a self-aggrandizing demagogue.
Maybe the GOP Candidates Are Just as Self-Deluding as Their Voter Base: Much discussion with little insight into the plethora of Republicans who are mounting campaigns for president in 2016. This keys off a Kevin Drum piece (title: Why Do So Many Obvious Losers Think They Can Be President?) that, in the most pedestrian tradition of horserace journalism tries to handicap the hopefuls. Both pieces are governed by the idea that only candidates with reasonable chances should bother running -- an idea which in the past has mostly been used to avoid considering the issues that "fringe" candidates (Dennis Kucinich is pretty close to the archetype here) run on and for. But Republicans are so ideologically homogeneous that it's hard to think of a candidate with issues to be silenced. (Drum tries to dismiss Rand Paul as having views "just flatly too far out of the tea party mainstream" -- actually, Paul's tea party bona fides are as strong as any candidate's [Cruz being the only obvious competition], his one major unorthodoxy [opposition to the PATRIOT Act] is quite popular among tea party rank-and-file, and he's shown remarkable willingness to shelve libertarian positions on fetish issues like abortion and Israel.)
Of course, Drum's supposition is fully operative among Democrats. Hillary Clinton's inevitability -- a combination of name, stature, and an almost unique access to a resource base formidable enough to stand up to Republican money power -- doesn't give any other Democrats any real chance at raising the money they'd need to be taken seriously. (This on top of the usual Democratic fundraising disadvantages, such as a lower return on graft.)
On the other hand lots of Republicans seem to be coming up with the money to run, and the fact that they're all saying the same thing just helps reinforce the brand. (One person's may be a crackpot, but three add up to a trend, and nine gives you a new conventional wisdom even if what they're saying still sounds crazed.) And all saying the same thing reduces the contest to one of personality -- something they'd much rather have us talking about than issues, which usually require a thick layer of packaging to be palatable at all. As usual with the Republicans, one suspects that this is just pre-primary dog-and-pony show to drum up interest, with the fix revealed later at an appropriately dramatic moment.
One hint here is the recent demise of the candidacy of Dennis Michael Lynch -- a candidate you never heard of, probably because he doesn't fit the profile of "rising Republican star," maybe because his obsessive issue (anti-immigration) is one Republican powers would rather not talk about. On the other hand, there is a role for the nearly-as-obscure Carly Fiorina. Steve M. writes:
My first impression of [Fiorina's] campaign wasn't that it was a campaign for president or vice president -- it was that, as a candidate, she's like the one female member of a rich accused rapist's defense dream team, the attorney whose principal role is to do a really vicious cross-examination of the victim, because that would come of as sexist if a man did it.
Also, a few links for further study:
Chloe Angyal: The Subculture of Embattled Abortion Workers: Abortion is one of the very few political issues today where ordinary debate is shadowed and haunted by one side adopting a network of harrassment and terror. Of course, this is not unprecedented in American history: the civil rights movement was met by even more violence, both in the 1960s and throughout the previous century, with much of that violence orchestrated by the various states. The labor movement up to the 1930s comes in a not-too-distant second. Still, while racism and anti-laborism persist, the level of violence and its chilling effects are far less than that experienced by the people who run and work with clinics that provide abortions. (Part of the reason may be the demagoguery of anti-choice politicians like Sam Brownback, playing the role George Wallace and Lester Maddox did on race.) Angyal reviews a book by David S Cohen and Krysten Connon: Living in the Crosshairs: The Untold Stories of Anti-Abortion Terrorism (2015, Oxford University Press), which details much of this history.
Jared Bernstein/Ben Spielberg: Inequaliity Matters: Lead in:
Lately, one argument that's been making the rounds is that people should worry less about inequality and more about opportunity. Arthur Brooks, head of the conservative American Enterprise Institute, said, "I don't care about income inequality per se; I care about opportunity inequality." Senator and presidential candidate Marco Rubio believes that inequality is but a symptom of immobility and constrained opportunity. Tyler Cowen argued in the New York Times that what matters is not the fact that the top 1 percent is capturing a much larger share of total income growth than they used to, but that the poor are stuck in poverty.
These individuals have identified a worthy goal. Unequal access to opportunity offends deeply held American values, and poverty is not only a matter of near-term material deprivation -- too often, it also robs low-income children of the chance to realize their intellectual and economic potential.
But it's not possible to effectively address either poverty or inadequate opportunity if America hives off its opportunity concerns from the broader problem of inequality (nor, as Senator Rubio intimates, can America reduce inequality by focusing solely on increasing mobility). Boosting mobility will require reductions in wage, income, and wealth inequalities.
The authors back up their initial assertions. One question they don't address is whether opportunity is being deliberately constricted by the rich; e.g., by making elite education both more necessary for advancement and more inaccessible to the unwealthy. It makes sense that a politically aggressive upper class recognizing a stagnant economy with austerity reducing the number of slots near the top would focus more on securing those slots for their own progeny. I don't know that anyone has sorted out the evidence for this, but there are many hints -- e.g., the nepotism boom under the second Bush administration.
Garrett Epps: Out of Spite: The Governor of Nebraska's Threat to Execute Prisoners: Nebraska's state legislature passed a bill to ban capital punishment. Governor Ricketts vetoed the bill, and the legislature overrode the veto, making the bill law. So what does Ricketts do? Follow the law? No. He vows to speed up the executions of ten prisoners already on death row. Epps surveys many of the issues, including the increasing difficulty that states are having obtaining lethal injection drugs.
Insuring 25 million additional Americans, as the CBO projects the ACA will do, is surely worthwhile. But the administrative cost of doing so seems awfully steep, particularly when much cheaper alternatives are available.
Traditional Medicare runs for 2 percent overhead, somewhat higher than insurance overhead in universal single payer systems like Taiwan's or Canada's. Yet traditional Medicare is a bargain compared to the ACA strategy of filtering most of the new dollars through private insurers and private HMOs that subcontract for much of the new Medicaid coverage. Indeed, dropping the overhead figure from 22.5 percent to traditional Medicare's 2 percent would save $249.3 billion by 2022.
The ACA isn't the first time we've seen bloated administrative costs from a federal program that subcontracts for coverage through private insurers. Medicare Advantage plans' overhead averaged 13.7 percent in 2011, about $1,355 per enrollee. But rather than learn from that mistake, both Democrats and Republicans seem intent on tossing more federal dollars to private insurers.
Esther Kaplan: Losing Sparta: The Bitter Truth Behind the Gospel of Productivity: That's Sparta, Tennessee, home of a huge unionized factory owned by Philips and shut down in 2010, the equipment (and business) to be moved to Mexico.
When Philips announced its plans to shut down the plant in Sparta, the firm was in the black, aided by $7.2 million in federal stimulus grants and contracts. Profits were even better the following year as the firm began to lay off the plant's nearly 300 workers. Even Philips's lighting division was doing well. By late 2010, three years into the recovery, corporate profits, in general, had bounced back decisively, reaching record highs. Yet layoffs continued apace -- 1.4 million in 2010, 1.3 million a year in 2011 and 2012 -- well above prerecession levels.
Among other profitable firms -- indeed, Fortune's list of America's most profitable firms in 2012, the year the Philips plant finally closed its gates -- closures and layoffs have been widespread: Chevron lays off 103 from a New Mexico mine; Walmart shuts down a New York office, putting 275 out of work; Ford shuts down two assembly plants in Minnesota, laying off nearly 1,700; IBM lays off 1,790 from its business units; Microsoft lays off 5,000. Exxon, ranked number one in profitability by Fortune in 2012, with $41 billion in profits in 2011, shrank its global workforce by more than 15,000 between 2010 and 2012. Chevron, at number two with profits of $27 billion, added only a thousand US jobs during that period. Apple was the only one of the country's five most profitable firms to add more than 10,000 jobs during that time (and Apple's public disclosures don't specify how many of those jobs were domestic). The latest Commerce Department data show that all US multinationals combined added a net total of only half a million jobs domestically between 2002 and 2011, but added 3.5 million jobs abroad, an indication of offshoring on a very grand scale.