Archive for the ‘Economics’ Category
Even though the deficit is plunging at an extraordinarily fast rate, and saving the Republic from the supposed imminent threat of the debt crisis was the entire rationale for using the novel and dangerous tactic of holding the debt ceiling hostage, absolutely nobody within the House Republican caucus is even considering just lifting the debt ceiling. Everybody agrees they must demand a new hostage.
Relevant hostages, right?
The proposed demands change from tax reform to spending cuts to delaying Obamacare to the Keystone pipeline to the Paul Ryan budget to banning certain types of abortion.
I can’t wait to hear the explanation of how abortions are causing the deficit problem we don’t have.
As Chait goes on to point out, the real enemy of this stunt is the business community, which has put the kabosh on the hostage strategy before, and will again if need be. In the meantime, the House will do nothing but further tarnish the GOP brand at a time when the party is desperately trying to reinvent itself as not insane. Oh, and nothing will be done for the un- and underemployed, but you already knew that.
In the NY Times (ht Jared Bernstein). Offered without comment.
Yeesh, but this isn’t some timing:
“I think everybody in this debate has an obligation to say what they believe,” said [Bill] Clinton. “I think Paul Krugman’s right in the short run, and Pete Peterson and Simpson-Bowles and all those guys, everybody’s right in the long run.”
Didn’t we just go over this?
Welp, it took Niall Ferguson, what, five days to go from an “unqualified apology” to “I’m a Teacher being harangued by PC eunuchs for his views“?
To be accused of prejudice is one of the occupational hazards of public life nowadays. There are a remarkable number of people who appear to make a living from pouncing on any utterance that can be construed as evidence of bigotry. Only last year, though not for the first time, I found myself being accused of racism for venturing to criticize President Obama. This came as a surprise to my wife, who was born in Somalia.
The charge of homophobia is equally easy to refute. If I really were a “gay-basher”, as some headline writers so crassly suggested, why would I have asked Andrew Sullivan, of all people, to be the godfather of one of my sons, or to give one of the readings at my wedding?
[snip] There is still, regrettably, a great deal of prejudice in the world, racial as well as sexual. There are two strategies we may adopt. One is repression—the old Victorian practice of simply not talking about such things. The other is education.
[snip] I doubt very much that any of my vituperative online critics have made a comparable effort to understand the nature and dire consequences of prejudice. For the self-appointed inquisitors of internet, it is always easier to accuse than seriously to inquire.
In the long run we are all indeed dead, at least as individuals. Perhaps Keynes was lucky to pre-decease the bloggers because, for all his brilliance, was also prone to moments of what we would now call political incorrectness.
In other words, his “unqualified” apology the other day was a scared Ferguson trying to save his ass on the fly. This is what he comes up with when he’s had 72 hours to think about how he really isn’t sorry.
New Brookings Institute* report proves what you already knew (especially if you read this blog): unemployment is abnormally high because austerity measures have prevented the public sector from expanding to its full potential:
Based on the government’s response in the five recessions between 1970 and 2007, the US should have 2.2 million more public sector jobs than have been produced by the response to the Great Recession.
From the report: “By cutting jobs during a period of already high unemployment, budget policies have contributed to the tepid pace of labor-market recovery and stand out as a departure from typical policy responses after recessions… In the forty-six months following the end of the five other recent recessions, government employment increased by an average of 1.7 million. During the current recovery, however, government employment has decreased by more than 500,000.”
Obama gets the worst of both ends of this: a slower recovery, and the stigma of socialism from the very people calling for the austerity measures that result in the slower economy.
* Yes, Brookings is left-ish, but unlike certain think tanks it still can, you know, add and stuff.
Harvard economist Niall Ferguson got such blowback from his stupid suggestion that Keynesian policy recommendations and “In the long run we are all dead” were based on Keynes’ bisexuality and not having children. He’s already apologized. (Shorter Niall Ferguson: You’re right, I am an ass-hat.)
But what is really galling is that people are mangling the meaning of “In the long run we are all dead” as being a call to engage in short-term focused economic policy no matter its long term impact. Another economist, Greg Mankiew, whose intro macroeconomics textbook you probably read if you took Econ 101 in college, made a similar mistake in 2008 (ht @ObsoleteDogma). Mankiew wrote:
Keynesian economists often dismiss these long-run concerns when the economy has short-run problems. “In the long run we are all dead,” Keynes famously quipped.
The longer-term problem we now face, however, may be more serious than any that Keynes ever envisioned. Passing a larger national debt to the next generation may look attractive to those without children. (Keynes himself was childless.) But the rest of us cannot feel much comfort knowing that, in the long run, when we are dead, our children and grandchildren will be dealing with our fiscal legacy.
Now, a lay-person could be excused for only knowing the part about being dead in the long run without knowing the context. However, when you write one of the most taught macroeconomics textbook, you have no excuse not to pretend you haven’t read the paragraph the quote came from!
Paul Krugman quoted it, so I don’t have to go pull out one of my two copies of the General Theory and find it. Keynes wrote:
But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
I’m going to let Paul explain why Greg and Niall should both be apologizing for being wrong on economics, not just being jerks about Keynes’ personal life:
Keynes’s point here is that economic models are incomplete, suspect, and not much use if they can’t explain what happens year to year, but can only tell you where things will supposedly end up after a lot of time has passed. It’s an appeal for better analysis, not for ignoring the future; and anyone who tries to make it into some kind of moral indictment of Keynesian thought has forfeited any right to be taken seriously.
So, let’s move the discussion of what’s gotten to Niall today and Greg in 2008 about Keynes’ personal life and just remember that they have each advocated in greater or less form the austerity policies that have completely and utterly failed. So maybe we should stop listening to them now that their austerity gospel (Reinhart & Rogoff) has been shown to be based on flawed Excel and flawed analysis.
Yesterday it was the inability to admit that austerity does not promote growth. Today the failure of Monetary Policy to cause HYPERINFLATION! is Obamacare. In a debate between the two, Paul Krugman and Alan Meltzer predicted different outcomes from Fed policy. Now the results are in and Krugman notes:
So here we are four years later, the huge expansion of the Fed’s balance sheet has not, in fact, led to inflation. And Meltzer is puzzled by the fact that all those bond purchases just sat there:
“The answer, he [Meltzer] said, is that the obstacles to faster economic growth are not mainly monetary. Instead, they lie mostly with business decisions to invest and hire; these, he argued, are discouraged by the Obama administration’s policies to raise taxes or, through Obamacare’s mandate to buy health insurance for workers, to increase the cost of hiring.”
He made a monetary prediction; I made a monetary prediction; his prediction was wrong. Therefore, it must be because of Obamacare!
The pro-austerity response to the Reinhart-Rogoff fiasco continues to be SHUT UP. The more they do this, the more austerity looks like a religion indifferent to evidence rather than an ideology in search of some.
On the occasion of the collapse of
fiat currencies the price of gold, Business Insider caught up with Paul Krugman who expressed why people don’t like gold bugs:
Well, the inflationistas/goldbugs are really, really annoying — all this air of having the secret wisdom when they actually haven’t a clue. And they have been a real destructive factor in policy debate, standing in the way of effective policy by raising fears of Weimar and Zimbabwe. So seeing the one thing they got right — betting on higher gold prices — turn sour is cause for a bit of celebration.
Well put, Paul Krugman.
Turns out the economy’s recovery, boosted by the 2009 stimulus and the Federal Reserve’s Quantitative easing, is having a dramatic impact on the government’s budget deficit. Can we stop talking about the manufactured panic over the deficit designed to push through harsh cuts to programs that help the poor? That means you too, Obama, with your pandering to the Washington Post‘s editorial board as a “Serious” politician willing to make harsh and unnecessary cuts to Social Security.
Via Calculated Risk:
From a research note by Goldman Sachs chief economist Jan Hatzius: The Rapidly Shrinking Federal Deficit:
“The federal budget deficit is shrinking rapidly. …[I]n the 12 months through March 2013, the deficit totaled $911 billion, or 5.7% of GDP. In the first three months of calendar 2013–that is, since the increase in payroll and income tax rates took effect on January 1–we estimate that the deficit has averaged just 4.5% of GDP on a seasonally adjusted basis. This is less than half the peak annual deficit of 10.1% of GDP in fiscal 2009.”