A Flea in the Fur of the Beast

“Death, fire, and burglary make all men equals.” —Dickens

Category: Economics

Blind Ambition

by evanmcmurry

Larry Bartels found a fascinating American distinction: whereas support for government spending cuts in other affluent democracies is modest but steady across incomes, it’s class-dependent in America. Which is to say, rich people support cutting gummiment spending a whole lot more than poor people. Here, have a graph:

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Bartels thinks this is due to a combo of the entanglement of class and race — government spending goes to “those people,” as a certain Nevada rancher informed us this past Wednesday — and the fact that the federal generosity that waters the upper class flows through back channels like wink-wink tax deductions rather than visible ones like food stamps.

But that’s a binary view that sees only rich and poor. Shrinking though it is, the middle class still exists. Kevin Drum fills in the gap:

The opinions of the rich are what drive public policy in America. Add in longstanding grievances against providing benefits to people with darker skins, and you’ve got a big chunk of the middle class on your side too.

Bingo. The rich drive public policy because the group caught between the rich and the poor ape the former to distinguish themselves from the latter. You might call this Yacht Politics. Or, to quote Rousseau via Corey Robin, “Citizens only allow themselves to be oppressed to the degree that they are carried away by blind ambition.” That’s the austerity vote in a nutshell.

Employment Report, Good and Bad

by evanmcmurry

By most indicators, today’s jobs report was cause for relief. That the unemployment rate dropped three-tenths to 7.0 without a decline in the labor participation force is especially notable; in a good number of recent reports the decline of the unemployment rate has been at least partially attributable to people dropping out of the job search altogether.

None of that, however, changes the fact that November’s labor participation was the second-lowest in the past decade, save for October:

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That goes a long way toward explaining why Obama’s approval numbers on the economy are so low despite a few months in a row of modest hiring. Until that labor participation number goes up, the economy isn’t “improving” in a way that’s immediately palpable, whatever the larger indicators say.

Now, good news for everybody but Ted Cruz: “The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 331,000 to 7.7 million in November.”

The deplorable rollout of Healthcare.gov and the seizure over  “if you like your crap plans you can keep them” has distracted Obamacare’s critics in the past two months from their main narrative that the ACA is a job killer. One of their specific predictions is that the ACA’s mandate that employers provide insurance for everyone over 30 hours or pay a fine will create a part time economy. Granted, the employer mandate doesn’t kick in until next summer, but if this warning were in any way true, that part time number would be going up, not down by 330K.

Yer Lying Eyes

by evanmcmurry

Krugman, succinct:

Back to the evidence versus the orthodoxy. I can, in a way, understand refusing to believe in global warming — that’s a noisy process, with lots of local variation, and the overall measures are devised by pointy-headed intellectuals who probably vote Democratic. I can even more easily understand refusing to believe in evolution. But the failure of predicted inflation to materialize is happening in real time, right in front of our eyes; people who kept believing in inflation just around the corner lost a lot of money. Yet the denial remains total.

Top 10 reasons Peter Schiff is a clown

by pdxblake

Ten (plus or minus a few) gems that will entertain you if you like to make fun of gold bugs like Peter Schiff (via Bloomberg):

[Peter Schiff] shows off $50 gold chips, to be used when paper money becomes worthless, a prediction repeated on his daily two-hour radio show broadcast from his basement studio to 68 stations in 30 states and 50,000 listeners online.

…of course he broadcasts it from his basement…

“Before President Barack Obama leaves office in 2017 the U.S. will default, the dollar will collapse, hyperinflation will strike and gold will skyrocket, he says.”

…haha…

“With inflation at or below the Fed’s 2 percent target for the past 11 months, the Standard & Poor’s 500 stock index reaching record levels and the dollar strengthening against major currencies in the past year, Schiff knows his forecasts make some people laugh. He’s used to it. “

…yeah, he’s used to being laughed at…that’s because he’s a CLOWN!

““They should take him seriously — he was right with a lot of other ones,” Ron Paul […] Schiff was an economic adviser to [Ron] Paul’s presidential campaign in 2007.”

…that explains so much…so, let’s bring in Austin Goolsbee for some explaining…

“They [gold bugs] have been saying that for literally four-plus years, and they have been egregiously wrong,” Goolsbee said by phone Oct. 30. “As a matter of mathematics, they’re just adding up the numbers incorrectly to say that they think there’s going to be 200 percent inflation.”

…I fear for the people who listen to him for advice…

“Thank God we got so many stupid people that don’t understand the value of gold because that means that people who do understand are able to buy it at a low price,” Schiff said into the microphone. “Don’t necessarily get mad, get in on it.”

…and these are the types of people who do…

“Schiff’s listeners call in wanting to know how to prepare. Mike from St. Lucia asked about a $1 trillion treasure allegedly hidden in a New Mexico mountain, that if found would make a dent in the national debt. “We don’t have that much time” to discuss such theories, Schiff said.”

…and yes, he does like to promote himself…

“In November 2011, Schiff visited Occupy Wall Street protesters in Manhattan’s Zuccotti Park to “represent the 1 percent [and] see if I can have a dialog with the other 99 percent.”

…but wait, there’s more (this sentence is a real gem):

“Schiff credited his father ‘‘whose influence and guidance concerning basic economic principles enabled me to see clearly what others could not.’’ Irwin Schiff has long advised people that they didn’t have to pay income tax, and is serving a 13-year sentence in the Federal Correctional Institution in Fort Worth, Texas, for tax evasion.”

And that pretty much made my day.  He also ran for Senate and lost to Linda McMahon.  Read the whole thing here.

Time for a New “De-Americanized” World Order?

by bisonmessink

It seems like only yesterday there was hand wringing in Washington about America’s diminished credibility in the world if the United States failed to inject itself into the Syrian civil war.  Today, the international credibility of the United States has taken a far bigger plunge, after U.S. lawmakers pushed the world economy to the brink of collapse, just to prove a point about American domestic policy.

Many in the world are taking note of an editorial this week from the Chinese news agency Xinhua blasted the United States and called for a new “de-Americanized” world order.

Instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies…

Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations’ tremendous dollar assets in jeopardy and the international community highly agonized.

Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.

While America is fixated on the military threats to its world supremacy, what’s left of the Axis of Evil — North Korea and Iran — emerging economic powers China, India, Russia and Brazil are poised to become dominant global players, without or without America’s cooperation. The stability and surety of United States debt has long been America’s biggest economic advantage, and one that U.S. policy makers seem all too willing to give away.

A piggyback editorial in the Asia Times warns that China’s move to the top has already begun:

The time to capitalize has now arrived. By 2009, after the Wall Street-provoked financial crisis, there were already Chinese rumblings about the “malfunctioning of the Western model” and ultimately the “malfunctioning of Western culture”.

Beijing has listened to Dylan (with Mandarin subtitles?) and concluded yes, the times they-are-a-changing. With no foreseeable social, economic and political progress – the shutdown is just another graphic illustration, if any was needed – the US slide is as inexorable as China, bit by bit, spreading its wings to master 21st century post-modernity.

It will take far more, of course, than a couple threatening editorials to unseat the United States as the world’s top economy. It will take something like the United States defaulting on its debt, or even becoming involved in another costly and unnecessary war — thin ice that Washington is far too eager to tread upon.

2011: The Good Ol’ Days

by evanmcmurry

Following the government shutdown on Tuesday, economic confidence is at its lowest since December 2011, when it had plummeted in response to the debt ceiling crisis. The lowest before that? The 2008 financial collapse. So, great precedents all around, and good thing the House GOP shut down the government over whatever reason they had for doing that.

You look at graph now:

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This is before the coming showdown over the debt ceiling, mind you. Whispers from the Capitol (worst romance novel ever) say John Boehner no-way-no-how will allow us to default on our debt. There’s evidence Boehner is more in charge than he appears—he kept the moderate revolt on Monday night from happening, for instance, suggesting he hasn’t completely ceded his will to power—and he definitely has the votes among his caucus to join with Democrats to raise the debt ceiling, as even a good portion of  the House GOP realize the catastrophic consequences of default. But the longer the shutdown goes on, the less predictable everybody gets…

You Probably Should Not Drink Bob Benmosche’s Cabernet

by evanmcmurry

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Making wine, to say nothing of good wine, requires a sensitive palate capable of judiciously distinguishing between the subtlest of nuances, to tell when a red is slightly too jammy, or its plum notes just the teensiest bit heavy, and so forth.

So if you’re the type of guy who looks at the public outcry over AIG paying out $450 million in bonuses after receiving a $173 billion government bailout and thinks, “That’s just like when white supremacists used to lynch African Americans in the South,” you maybe lack the considered sensibilities necessary to make wine.

Previous FITF entries on wine you should not drink: Red Sox Cab, Hitler Cab, Rupert Murdoch Cab.