Glenn Greenwald on ThinkProgress
Glenn Greenwald has just been hitting it out of the park lately. It makes me doubly honored that I was his warm-up act on Antiwar Radio today with Scott Horton. (If someone has a direct link please post it in the comments.)
Anyway, GG wrote this post while I was on the road in Michigan, but I bears quoting extensively:
Prior to last night’s GOP foreign policy debate, the Center for American Progress Action Fund’s Think Progress blog — which has several good and independent commentators who do excellent work — announced that it had compiled a list of “what you won’t hear at tonight’s GOP foreign policy debate: Obama’s successes.” It is very worth reviewing what this self-proclaimed progressive site now — under a Democratic President – considers to be a “foreign policy success,” beginning with this:
[Image from ThinkProgress touting the killing of Awlaki, “Senior Al Qaeda Leader.”–RPM]
As I pointed out just yesterday, many Democrats not only passively acquiesce to Obama’s continuation of core Bush/Cheney Terrorism policies, but enthusiastically cheer it as proof that they, too, can be Tough and Strong (manly virtues demonstrated by how many human beings their leader kills from afar). So here you have Think Progress heaping praise on Obama for seizing what is literally the most radical power a President can seize: the power to target — in total secrecy and with no checks or due process — their fellow citizens for execution: specifically, assassination-by-CIA. Worse, to justify what Obama has done, TP spouts a blatant falsehood (that Awlaki was “a senior Al Qaeda leader”), even though actual Yemen experts have mocked that claim mercilessly and the administration itself refuses to reveal any evidence whatsoever about what it did or why. Revealingly, TP trumpets the claim that “Al Awlaki’s death brought a damaging blow to Al Qaeda in the Arabian Peninsula (AQAP)”; its link to justify that claim goes to the blog operated by the right-wing Heritage Foundation: that, quite understandably, is who TP must now cite as authoritative to justify Obama’s foreign policy conduct.
But what’s most notable here is how inaccurate TP’s prediction was: it turned out to be completely wrong that the Awlaki assassination was something “you won’t hear at tonight’s GOP foreign policy debate.” In fact, we heard a lot about it — from the GOP candidates who heaped as much praise on Obama as TP did for murdering this American citizen. Indeed, among the most vocal cheers of the night from the GOP South Carolina crowd — second only to its vocal swooning for the virtues of waterboarding — was when their right-wing candidates hailed Obama’s decision to kill Awlaki.
Michele Bachmann gushed about Obama’s decision this way: “Awlaki, who we also killed, he has been the chief recruiter of terrorists, including Major Hassan at Fort Hood, including the underwear bomber over Detroit, and including the Times Square bomber. These were very good decisions that were made to take them out.” Here was the exchange with Mitt Romney on this issue:
CBS’ SCOTT PELLEY: Governor Romney, recently President Obama ordered the death of an American citizen who was suspected of terrorist activity overseas. Is it appropriate for the American president on the president’s say-so alone to order the death of an American citizen suspected of terrorism?
MITT ROMNEY: Absolutely. In this case, this is an individual who had aligned himself with a– with a group that had declared (CHEERING) war on the United States of America. And– and if there’s someone that’s gonna– join with a group like Al-Qaeda that declares war on America and we’re in a– in a– a war with that entity, then of course anyone who was bearing arms for that entity is fair game for the United States of America.
And here was one of most revealing exchanges of the year, which Pelley (whose questions were quite good on this topic) had with Newt Gingrich:
SCOTT PELLEY: Speaker Gingrich, if I could just ask you the same question, as President of the United States, would you sign that death warrant for an American citizen overseas who you believe is a terrorist suspect?
NEWT GINGRICH: Well, he’s not a terrorist suspect. He’s a person who was found guilty under review of actively seeking the death of Americans.
SCOTT PELLEY: Not– not found guilty by a court, sir.
NEWT GINGRICH: He was found guilty by a panel that looked at it and reported to the president.
SCOTT PELLEY: Well, that’s ex-judicial. That’s– it’s not–
NEWT GINGRICH: Let me– let me– let me tell you a story– let me just tell you this.
SCOTT PELLEY: –the rule of law.
NEWT GINGRICH: It is the rule of law. (APPLAUSE) That is explicitly false. It is the rule of law.
SCOTT PELLEY: No.
NEWT GINGRICH: If you engage in war against the United States, you are an enemy combatant. You have none of the civil liberties of the United States. (APPLAUSE) You cannot go to court.
Of course, whether someone is an “enemy combatant” and has “engaged in war against the United States” is exactly what is in question in these controversies. But, critically, this mindset — that the President has the power to secretly and unilaterally decree you guilty of being an Enemy Combatant and then take whatever steps he wants against you (warrantless eavesdropping, indefinite detention, consignment to Guantanamo, execution) — was until very recently the hallmark, the defining crux, of right-wing Bush/Cheney radicalism. That’s why Newt Gingrich — Newt Gingrich — defends Obama’s actions by claiming with a straight face that Awlaki was “found guilty” — meaning “found guilty” by a secret White House committee and thus “has none of the civil liberties of the United States.” Thanks to Barack Obama, this twisted mentality about what the “rule of law” means and how treason is decreed (not by a court, as the Constitution requires, but by the President acting alone) has now been enshrined as bipartisan consensus. That’s why Think Progress, Bachmann, Romney and Gingrich all find full common ground in embracing it as a “success” to be celebrated.
It took Ron Paul — whom every Good Progressive will tell you is Completely Crazy and Insane — to point out to the GOP the rather glaring inconsistency between, on the one hand, distrusting government authorities to run health care, but on the other, wanting to empower the President to kill whomever he wants with no transparency or due process.
And We’re Back
I’d like to say the FBI shut me down, but I’m not that important yet.
I’d like to say what the real reason was, but my blog hosting company has now given me three different reasons. Also, when you call their customer support, they explain that all they have to work with is the trouble ticket that I was emailed by some other department. So I have to email the people who sent the trouble ticket.
I don’t want to tell you the name of the company, since they might retaliate. So I’ll do it in charades. If you can guess the name of the company, then don’t use them if you are thinking about it.
Two words.
First word.
(Picture me sticking my gut out.)
Second word.
(Picture me mooing.)
And if you guess correctly in the comments, I’ll have to delete it. I don’t want anything jumping out at them when they’re deciding if my site is acceptable.
Landsburg vs. Murphy on the Supercommittee
Oh boy, strap on your seatbelts kids because Landsburg and I are going at it. You will never see such rapid-fire deployment of assumptions, rhetorical tricks, absurd scenarios, and kidney punches as when the two raconteurs from Rochester duke it out in the comments of his blog. (I was born and raised in Rochester, and Steve teaches at the University of Rochester.)
Here’s the blog post in question, in which Steve linked to his WSJ op ed on advice for the Supercommittee. Here’s how Steve summarized his argument:
[T]he thrust…is that raising taxes can’t convert fiscally irresponsible spending to fiscally responsible spending.
If your household is over budget, you can address that problem either by spending less or by earning more income. It is tempting to fall into the trap of thinking that by analogy, the government can address its budget problems either by spending less or by raising taxes. But the analogy fails because raising taxes is not like earning more income; it’s more like visiting the ATM.
The government is an agent of the taxpayers. Raising taxes to pay for government spending depletes our assets just as visiting the ATM to pay for household spending depletes our assets. That’s not at all like earning income, which adds to our assets.
So insofar as the supercommittee relies on tax increases to address issues of “fiscal irresponsibility”, it will have failed.
I first read all the comments, and digested Steve’s responses. I even asked for a clarification. When I was pretty sure I had all the issues down, I let fly with this:
Steve, I think I get your general point, and obviously you are thinking about these issues much more clearly than (say) the NYT editorial board, but I don’t think you’ve really “got them” on this one. I think at best you would just force them to speak a little more clearly when stating their position.
For example, NOBODY would explicitly say, “I am OK with spending that we can neither afford nor need, since we can just jack up taxes on rich people.” Rather, they are saying, “By all means let’s slash spending wherever we can, without compromising important social goals. But to get back to a sustainable fiscal trajectory, we will need to bring in more revenue. So we need to raise taxes as part of the solution.”
In light of the above analogy of a loan shark, I think such a position is immune to your critique.
Let me put it this way: I think for your op ed to really work, you would have to argue that the present discounted value of government tax receipts is independent of the tax system. I don’t think that’s true, do you?
Last way to get my POV across: Suppose we have an Ayn Rand nightwatchman state that just spends $1 million maintaining an arsenal of nuclear weapons, which keeps foreign governments from invading. Right now the government levies an income tax just on red-headed, left-handed people named Jim who work in accounting; everyone else in the country is tax-exempt. With this tax scheme, the government extracts $200,000 per year in revenues. It borrows the remaining $800,000 in the first year. Then in successive years, more and more of the $200,000 (which itself slowly grows over time as the Jims get raises, etc.) is devoted to interest payments on the accumulating debt.
This is clearly an unsustainable situation. At some point, all of the revenue extracted from the Jims will be needed just to service the existing debt. So some people say, “Let’s be responsible people. Let’s raise taxes on the people in our society who are right-handed, or not named Jim, or don’t work in accounting. Then we can maintain this incredibly urgent and socially beneficial spending of $1 million per year to stave off foreign invasion.”
Does such a person not understand Econ 101?
It doesn’t get any better than this. What will Landsburg say? Who knows, but it will be fun.
And Bryan Caplan says economic consultants have a boring life.
Krugman Kontradiction on Unemployment Benefits
This is such a good Krugman Kontradiction that it might deserve a new category; call it a Paul Paradox. Dan in the comments referred me to Robert Wenzel, who in turn linked to Ed Yardeni catching Krugman in, well, a typical Kontradiction.
My post will actually give you “the rest of the story,” because Yardeni didn’t give the full quotation from Krugman in all its glory. But lucky for us, Robert Fellner emailed it to me. So watch:
Back in March 2010, Paul Krugman wrote an op ed in which he said:
So the Bunning blockade is over. For days, Senator Jim Bunning of Kentucky exploited Senate rules to block a one-month extension of unemployment benefits. In the end, he gave in, although not soon enough to prevent an interruption of payments to around 100,000 workers.
But while the blockade is over, its lessons remain. Some of those lessons involve the spectacular dysfunctionality of the Senate. What I want to focus on right now, however, is the incredible gap that has opened up between the parties. Today, Democrats and Republicans live in different universes, both intellectually and morally.
Take the question of helping the unemployed in the middle of a deep slump. What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. That’s because the economy’s problem right now is lack of sufficient demand, and cash-strapped unemployed workers are likely to spend their benefits. In fact, the Congressional Budget Office says that aid to the unemployed is one of the most effective forms of economic stimulus, as measured by jobs created per dollar of outlay.
But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”
In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe.
And the difference between the two universes isn’t just intellectual, it’s also moral.
Bill Clinton famously told a suffering constituent, “I feel your pain.” But the thing is, he did and does — while many other politicians clearly don’t. Or perhaps it would be fairer to say that the parties feel the pain of different people.
During the debate over unemployment benefits, Senator Jeff Merkley, a Democrat of Oregon, made a plea for action on behalf of those in need. In response, Mr. Bunning blurted out an expletive. That was undignified — but not that different, in substance, from the position of leading Republicans.
…
[B]ipartisanship is now a foolish dream. How can the parties agree on policy when they have utterly different visions of how the economy works, when one party feels for the unemployed, while the other weeps over affluent victims of the “death tax”?
…
Someday, somehow, we as a nation will once again find ourselves living on the same planet. But for now, we aren’t. And that’s just the way it is.
I put the lines about “textbook economics,” and about the Republicans not feeling the workers’ pain, in bold. Check out the following quotation from Krugman’s 2009 textbook (supplied by Yardeni):
“Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that affects a number of European countries.”
I have just two comments:
(A) This is not a contradiction, it is still just a Kontradiction. Krugman and his fans can say, “What the heck is wrong with you idiots? Yes, at any given time Europe tends to have a higher natural unemployment rate than the US, because they have more generous unemployment benefits. And, right now, the whole West is suffering from insufficient aggregate demand, where getting people to spend via government transfer payments boosts the economy. Krugman talked about that in his book too. No contradiction.”
(B) Even conceding the above point, Krugman is still being outrageous on the “I feel your pain” stuff. Either that, or he and his co-author don’t care about unemployed Europeans.
Krugman on Shaping Expectations
I’m not going to say this even qualifies as a “Kontradiction,” but it’s close. By now, every serious geeconosphere wonk should know that Paul Krugman’s recommendation to Japan back in the day, was that its central bank should credibly commit to future inflation. That would cause the public to expect a lower purchasing power of money in the future, meaning that even if nominal interest rates were stuck at zero, the real interest rate would be negative, inducing the public to go spend. Here’s Krugman summarizing his case in November 2009:
We’re in a liquidity trap, with interest rates up against the zero bound. This means that conventional monetary policy isn’t sufficient. What should we do?
The first-best answer — that is, the answer that economic models, like my old Japan’s trap analysis, suggest would be optimal — would be to credibly commit to higher inflation, so as to reduce real interest rates.
But the key thing to recognize about this answer is that it’s all about expectations — the central bank only has traction over expected inflation to the extent that it can convince people that it will deliver that inflation after the liquidity trap is over. So to make this policy work you have to (i) convince current policymakers that it’s the right answer (ii) Make that argument persuasive enough that it will guide the actions of future policymakers (iii) Convince investors, consumers, and firms that you have in fact achieved (i) and (ii).
In reality, we haven’t even gotten anywhere near (i): the conventional wisdom is still that any rise in expected inflation above 2 percent is a bad thing, when it’s actually good.
So some readers have asked why I’m not making the same arguments for America now that I was making for Japan a decade ago. The answer is that I don’t think I’ll get anywhere, at least not until or unless the slump goes on for a long time.
OK so back then, Krugman was saying the “first best” answer, based on a rigorous economic model, and what he himself told the Japanese, was to manipulate the public’s expectations about future policy. But, since that had some practical roadblocks, a fall-back was to rely on deficit spending today.
Contrast that treatment with Krugman’s analysis of a recent paper promoting supply-side solutions:
There’s a new Vox paper suggesting that supply-side policies — structural reform that makes workers more productive, prices more flexible, or whatever — may be the answer to a liquidity trap. Some people may seize on this claim. So it’s worth pointing out that a casual interpretation here gets it all wrong.
Here’s what we already know: in the looking-glass world of the liquidity trap, supply-side improvements are generally counter-productive…
So how does the Vox paper get a different story? By assuming that the payoff to supply-side improvements doesn’t come until the economy has already spontaneously emerged from the liquidity trap, and so these perversities are gone. The idea then is that consumers, rationally perceiving this future improvement, feel richer and spend more now.
Oh, Kay. It might be true, although it depends on consumers being very well informed. I don’t know anyone in the Princeton economics department, let alone Main Street USA, who does family budgeting based on perceptions about how reforms in tax law or labor regulation will affect incomes five years from now. But whatever.
Clearly not an actual contradiction, and perhaps not even a Krugman Kontradiction. But it seems Krugman is much more sympathetic to the idea of central bankers promising higher future inflation, than to the idea of Treasury officials promising lower future taxes. It seems that Main Street USA, when doing the family budgeting, must read more Scott Sumner than Art Laffer.
Karl Smith’s Less-Than-Soothing Fed Exit Strategy
I truly enjoy reading Karl Smith’s posts over at Modeled Behavior. Karl might be second only to Steve Landsburg in terms of thinking about standard issues in novel ways. (For example, check out this post where Karl consciously walks headfirst into the liquidity trap, and becomes more powerful than Paul Krugman can possibly imagine.)
So it’s with all due respect when I point with astonishment at Karl’s handling of worries over central bank insolvency:
A lot of smart folks seem to be worried about [central banks losing money] but I don’t completely understand why.
…
Lets suppose that either the Fed or the ECB takes a flyer on a bunch of debt. My immediate reaction is – so what?There is the issue that you can’t contract the total quantity of reserves down to an arbitrarily low level if you don’t have an asset to sell in exchange for them.
However, if you are paying interest on reserves then you don’t have to do this. You continue to print reserves in order to meet the interest payments. If the interest on reserves is higher than the rate of growth of checkable deposits then you are going to have the issue that excess reserves will grow without bound.
However, first its not immediately clear why that’s a problem and second its not likely that growth rate on checkable deposits will be less than the interest rate on reserves indefinitely.
Over the long long run the supply of money is going to grow roughly at the size of the nominal economy which in turn is going to be greater than interest on reserves.
So, eventually you will back down out of this process. However, even if for some reason you didn’t what exactly are you afraid of going wrong? Its not clear to me.
If nothing else, now I know how Joe Romm must feel when he reads typical libertarian arguments denying the danger of carbon emissions. (The inflation/climate change analogy is actually really interesting if you map out the standard way progressives and hard-money libertarians come down and the types of arguments they use.)
The Battle Rages on at The Economist
Rob Bradley asked me to make you folks aware that he is currently running neck and neck at The Economist in a debate over government subsidies to renewable energy sources. I link, you decide.
Back From Michigan
I’m back in Music City. The bus tour in MIchigan was definitely a new experience for me. I was really hoping we would get hecklers but it never happened while I was there.
Apparently there were some Occupiers who tried to disrupt the stops in Pennsylvania. We also saw evidence of them on the bus. After each rally, the organizers would pass out Sharpies for people to sign the bus. (The idea is that at the end of the tour, they’ll drive the bus to DC and show how Americans all over the country want expanded access to domestic energy.)
So some of the wiseguys infiltrated the crowd and signed things like, “I hate the environment! Adolf Hitler, Berlin, Germany.”
Another interesting one said “F*** trees!” (without the asterisks). We noticed it at the next stop, and some of the older Tea Party types saw it and said, “Oh, we should cover that up.” I explained, “They were just showing that they love nature.”
Then the bus driver put a “Friends of Coal” sticker on it.
Good times, good times.
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