A Flea in the Fur of the Beast

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

Category: Economics

If You Want to Be in Charge of Gabillions of Dollars With No Accountability or Responsibility, Become a Movie Director

by evanmcmurry

M. Night Shyamalan’s movies are so bad that his career just got a postmortem on the weekend of his new release, which must be like reading your obituary on your birthday. His movies are so bad that one review praised his new release as “surprisingly not horrible” for so little resembling his other films. His movies are so bad that whereas he was once an auteur, now studios attempt to hide his involvement in films, lest people avoid the theater.

M. Night Shyamalan is a bad director. And yet the budget of his new movie was $130 million. $130 MILLION! One-hundred-thirty-million dollars! That’s the entire annual budget of the NEA. For a director who’s so embarrassing the people who gave him $130 million don’t even want his name on the product.

Interns Interning Internships

by evanmcmurry

Christ on a mule:

ProPublica has just launched a Kickstarter campaign to raise $22,000 to pay for the salary of one intern for the fall 2013 semester. The lucky intern in question will be contributing to their ongoing investigation into internships, paid and unpaid, by traveling to college campuses, interviewing past and present interns, and helping to build an interactive news app based on the data collected from reporting and through an online questionnaire.

This is a real currency war

by pdxblake

Back in February, I wrote about why the “currency war” argument is over-used and how aggressive central bank actions is not a currency war.  Now, I have an example of what a real currency war is from the :

The US has unveiled fresh sanctions against Iran, targeting its currency, as it increases the pressure on Tehran to abandon its nuclear programme. These include penalties on anyone facilitating “significant” transactions in the rial or holding significant amounts of the currency outside Iran. A US official said the move would force institutions to dump rial holdings and weaken the currency further. This is the first time the US has directly targeted the Iranian currency.

This promises to make Iran’s weak currency, even weaker and more volatile,” the US official was quoted as saying. “The idea here is to make the rial essentially unusable outside of Iran.

Ben Bernanke, you are not a currency warrior.

The Sky Is Not Falling, Social Security and Medicare Edition

by evanmcmurry

Krugman has a good’n taking down the Chicken Littles on Medicare and Social Security:

The usual suspects insist that we must move right now to reduce scheduled benefits. But I’ve never understood the logic of this demand. The risk is that we might, at some point in the future, have to cut benefits; to avoid this risk of future benefit cuts, we are supposed to act pre-emptively by…cutting future benefits. What problem, exactly, are we solving here?

As the kids say, read the whole thing.

The Coming Debt Ceiling Hostage Negotiation Meltdown Spectacular (Now With Abortions!)

by evanmcmurry

Hey, remember how the deficit is shrinking at an unexpectedly rapid rate, thus pushing any debt crisis, even imaginary ones, far into the future? Ya don’t? You must be a House Republican:

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.

Austerity slows GDP growth, employment recovery

by pdxblake

In the NY Times (ht Jared Bernstein).  Offered without comment.

More People Who Should Read Keynes More Carefully

by evanmcmurry

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?

Niall Ferguson Not Sorry At All, Haterz

by evanmcmurry

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.

Austerity Is Hurting The Recovery, Part the Zillionth

by evanmcmurry

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.

Niall Ferguson is a jerk, and has no idea what he’s talking about (Childless Edition)

by pdxblake

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.