Category Archive for: Politics [Return to Main]

Monday, October 24, 2016

Paul Krugman: It’s Trump’s Party

It's Trump's party, so cry if you want to:

It’s Trump’s Party, by Paul Krugman, NY Times: ...Everyone who endorsed Mr. Trump in the past owns him now... And voters should realize that voting for any Trump endorser is, in effect, a vote for Trumpism, whatever happens at the top of the ticket.
First of all, nobody who was paying attention can honestly claim to have learned anything new about Mr. Trump in the last few weeks. It was obvious from the beginning that he was a “con artist”... His racism and sexism were apparent from the beginning...; his vindictiveness and lack of self-discipline were on full display in his tirades against Judge Gonzalo Curiel and Khizr Khan.
So any politicians who try after the election to distance themselves from the Trump phenomenon — or even unendorse in these remaining few days — have already failed the character test. They knew who he was all along..., they will do whatever it takes to guarantee their own political survival.
And what this means in practice is that they will remain Trumpists after the election, even if the Orange One himself vanishes from the scene.
After all, what we learned during the Republican primary was that the party’s base doesn’t care at all about ... supposed conservative principles like small government.
What Republican voters wanted, instead, were candidates who channeled their anger and fear, who demonized nonwhites and played into dark conspiracy theories. ...
This lesson hasn’t been lost on Republican politicians. ...
So you can ignore all the efforts to portray Mr. Trump as a deviation from the G.O.P.’s true path: Trumpism is what the party is all about..., the underlying nastiness is now part of Republican DNA.
And the immediate consequences will be very ugly. Assuming that Hillary Clinton wins, she will face an opposing party that demonizes her and denies her legitimacy...
In fact, it’s likely to be so bad that America’s governability may hang in the balance. A Democratic recapture of the Senate would be a very big deal, but they are unlikely to take the House, thanks to the clustering of their voters. So how will basic business like budgeting get done? Some observers are already speculating about a regime in which the House is effectively run by Democrats in cooperation with a small rump of rational Republicans. Let’s hope so — but it’s no way to manage a great nation.
Still, it’s hard to see an alternative. For the modern G.O.P. is Mr. Trump’s party, with or without the man himself.

The Election Matters for the Future of the Economy

My latest column:

The Election Matters for the Future of the Economy: We are entering into a time period when economic growth may be lower than we are accustomed to, the likelihood of recessions may increase, and income will continue to be very unequally distributed.
Our response to these problems, which depends upon who wins the presidential election and which party controls the House and Senate, will play a critical role in determining how well our economy performs, who benefits from economic growth, and how we respond if the economy enters into a recession.
The following graph illustrates some of the challenges we face. ...

Saturday, October 22, 2016

Debt, Diversion, Distraction

Paul Krugman:

Debt, Diversion, Distraction: ...So, about that supposed debt crisis...
Yes, the population is getting older, which means more spending on Medicare and Social Security. But ... quite a few baby boomers are already drawing on those programs; by 2020 we’ll be about halfway through the demographic transition, and current estimates don’t suggest a big budget problem.

Why, then, do you see projections of a large debt increase? The answer lies not in a known factor — an aging population — but in assumed growth in health care costs and rising interest rates. And the truth is that we don’t know that these are going to happen. In fact, health costs have grown much more slowly since 2010 than previously projected, and interest rates have been much lower. As the chart above shows, taking these favorable surprises into account has already drastically reduced long-run debt projections. These days the long-run outlook looks vastly less scary than people used to imagine. ...
...yes, it’s possible that we may at some point in the future have to cut benefits. But deficit scolds talk as if they offer a way to avoid this fate, when in fact their solution to the prospect of future benefit cuts is … to cut future benefits. ...
By putting the debt question aside, we are NOT in any material way making the future worse. And that is a total contrast with climate change, where our failure to act means pouring vast quantities of greenhouse gases into the atmosphere, materially increasing the odds of catastrophe with every year we wait.
So my message to the deficit scolds is this: yes, we may face some hard choices a couple of decades from now. But we might not, and in any case there aren’t any choices that must be made now. Meanwhile, there are genuinely scary things happening as we speak, which we should be taking on but aren’t. And your fear-mongering is distracting us from these real problems. Therefore, I would respectfully request that you people just go away.

Why Trade Deals Lost Legitimacy

Dani Rodrik:

The Walloon mouse: ...Instead of decrying people's stupidity and ignorance in rejecting trade deals, we should try to understand why such deals lost legitimacy in the first place. I'd put a large part of the blame on mainstream elites and trade technocrats who pooh-poohed ordinary people's concerns with earlier trade agreements. 
The elites minimized distributional concerns, though they turned out to be significant for the most directly affected communities. They oversold aggregate gains from trade deals, though they have been smallish since at least NAFTA. They said sovereignty would not be diminished though it clearly was in some instances. They claimed democratic principles would not be undermined, though they are in places. They said there'd be no social dumping though there clearly is at times. They advertised trade deals (and continue to do so) as "free trade" agreements, even though Adam Smith and David Ricardo would turn over in their graves if they read, say, any of the TPP chapters.
And because they failed to provide those distinctions and caveats now trade gets tarred with all kinds of ills even when it's not deserved. If the demagogues and nativists making nonsensical claims about trade are getting a hearing, it is trade's cheerleaders that deserve some of the blame.
One more thing. The opposition to trade deals is no longer solely about income losses. The standard remedy of compensation won't be enough -- even if carried out. It's about fairness, loss of control, and elites' loss of credibility. It hurts the cause of trade to pretend otherwise.

Friday, October 21, 2016

Neoliberalism and Austerity

Simon Wren-Lewis:

Neoliberalism and austerity: I like to treat neoliberalism not as some kind of coherent political philosophy, but more as a set of interconnected ideas that have become commonplace in much of our discourse. That the private sector entrepreneur is the wealth creator, and the state typically just gets in their way. That what is good for business is good for the economy, even when it increases monopoly power or involves rent seeking. Interference in business or the market, by governments or unions, is always bad. And so on. ...
I do not think austerity could have happened on the scale that it did without this dominance of this neoliberal ethos. Mark Blyth has described austerity as the biggest bait and switch in history. It took two forms. In one the financial crisis, caused by an under regulated financial sector lending too much, led to bank bailouts that increased public sector debt. This leads to an outcry about public debt, rather than the financial sector. In the other the financial crisis causes a deep recession which - as it always does - creates a large budget deficit. Spending like drunken sailors goes the cry, we must have austerity now.
In both cases the nature of what was going on was pretty obvious to anyone who bothered to find out the facts. That so few did so, which meant that the media largely went with the austerity narrative, can be partly explained by a neoliberal ethos. Having spent years seeing the big banks lauded as wealth creating titans, it was difficult for many to comprehend that their basic business model was fundamentally flawed and required a huge implicit state subsidy. On the other hand they found it much easier to imagine that past minor indiscretions by governments were the cause of a full blown debt crisis. ...
While in this sense austerity might have been a useful distraction from the problems with neoliberalism made clear by the financial crisis, I think a more important political motive was that it appeared to enable the more rapid accomplishment of a key neoliberal goal: shrinking the state. It is no coincidence that austerity typically involved cuts in spending rather than higher taxes... In that sense too austerity goes naturally with neoliberalism. ...
An interesting question is whether the same applies to right wing governments in the UK and US that used immigration/race as a tactic for winning power. We now know for sure, with both Brexit and Trump, how destructive and dangerous that tactic can be. As even the neoliberal fantasists who voted Leave are finding out, Brexit is a major setback for neoliberalism. Not only is it directly bad for business, it involves (for both trade and migration) a large increase in bureaucratic interference in market processes. To the extent she wants to take us back to the 1950s, Theresa May’s brand of conservatism may be very different from Margaret Thatcher’s neoliberal philosophy.

Paul Krugman: Why Hillary Wins

 "Maybe Mrs. Clinton is winning because she possesses some fundamental political strengths":

Why Hillary Wins, by Paul Krugman, NY Times: Hillary Clinton is a terrible candidate. Hey, that’s what pundits have been saying ever since this endless campaign began. You have to go back to Al Gore in 2000 to find a politician who faced as much jeering from the news media...
Strange to say, however, Mrs. Clinton won the Democratic nomination fairly easily, and now, having pummeled her opponent in three successive debates, is an overwhelming favorite to win in November, probably by a wide margin. How is that possible?
The usual suspects are already coalescing around an answer..., she just got lucky. If only the Republicans hadn’t nominated Donald Trump, the story goes, she’d be losing badly.
But here’s a contrarian thought: Maybe Mrs. Clinton is winning because she possesses some fundamental political strengths — strengths that fall into many pundits’ blind spots. ...
When political commentators praise political talent, what they seem to have in mind is the ability of a candidate to match one of a very limited set of archetypes: the heroic leader, the back-slapping regular guy you’d like to have a beer with, the soaring orator. Mrs. Clinton is none of these things...
Yet the person tens of millions of viewers saw in this fall’s debates was hugely impressive all the same: self-possessed, almost preternaturally calm under pressure, deeply prepared, clearly in command of policy issues. ...
Oh, and the strengths she showed in the debates are also strengths that would serve her well as president. ... And maybe ordinary citizens noticed the same thing; maybe obvious competence and poise in stressful situations can add up to a kind of star quality, even if it doesn’t fit conventional notions of charisma.
Furthermore, there’s one thing Mrs. Clinton brought to this campaign that no establishment Republican could have matched: She truly cares about her signature issues, and believes in the solutions she’s pushing.
I know, we’re supposed to see her as coldly ambitious and calculating, and on some issues — like macroeconomics — she does sound a bit bloodless, even when she clearly understands the subject and is talking good sense. But when she’s talking about women’s rights, or racial injustice, or support for families, her commitment, even passion, are obvious. She’s genuine, in a way nobody in the other party can be.
So let’s dispel with this fiction that Hillary Clinton is only where she is through a random stroke of good luck. She’s a formidable figure, and has been all along.

Monday, October 17, 2016

Paul Krugman: Their Dark Fantasies

"Why does the modern right hate America?":

Their Dark Fantasies, by Paul Krugman, NY Times: I’m a baby boomer, which means that I’m old enough to remember conservatives yelling “America — love it or leave it!” at people on the left who criticized racism and inequality. But that was a long time ago. These days, disdain for America — the America that actually exists, not an imaginary “real America” in which minorities and women know their place — is concentrated on the right..., you increasingly find prominent figures describing our society as a nightmarish dystopia.
This is obviously true for Donald Trump... In his vision of America — clearly derived largely from white supremacist and neo-Nazi sources — crime is running wild, inner cities are war zones, and hordes of violent immigrants are pouring across our open border. In reality, murder is at a historic low, we’re seeing a major urban revival and net immigration from Mexico is negative. But I’m only saying that because I’m part of the conspiracy.
Meanwhile, you find almost equally dark visions, just as much at odds with reality, among establishment Republicans, people like Paul Ryan...
...consider the portrait of America Mr. Ryan painted last week, in a speech to the College Republicans. For it was, in its own way, as out of touch with reality as the ranting of Donald Trump (whom Mr. Ryan never mentioned).
...Mr. Ryan claimed to be describing the future — what will happen if Hillary Clinton wins... According to him, it’s very grim. There will, he said, be “a gloom and grayness to things,” ruled by a “cold and unfeeling bureaucracy.” We will become a place “where passion — the very stuff of life itself — is extinguished.” And this is the kind of America Mrs. Clinton “will stop at nothing to have.”
...We have many problems, but we’re hardly living in a miasma of despair. ...Mr. Ryan’s vision of America looks nothing like reality. It is, however, completely familiar to anyone who read Ayn Rand’s “Atlas Shrugged” as a teenager. ...
So why does the modern right hate America? There’s not much overlap in substance between Mr. Trump’s fear-mongering and Mr. Ryan’s, but there’s a clear alignment of interests. The people Mr. Trump represents want to suppress and disenfranchise you-know-who; the big-money interests that support Ryan-style conservatism want to privatize and generally dismantle the social safety net, and they’re willing to do whatever it takes to get there.
The big question is whether trash-talking America can actually be a winning political strategy. We’ll soon find out.

Friday, October 14, 2016

What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy

Robert Shiller:

What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy: Global economic weakness and a rise in inequality appear to be causing a disturbing growth in ethnic nationalism. ...
In the United States, despite his attempts to woo minority voters, Donald J. Trump appears to derive support from such sentiment. In Moscow, Vladimir V. Putin has used Russian nationalist sentiment to inspire many of his countrymen. And we see growing ethnic political parties inspired by national identity in countless other countries.
It is natural to ask whether something so broad might have a common cause, other than the obvious circumstantial causes like the gradual fading of memories about the horrors of ethnic conflict in World War II or the rise in this century of forms of violent ethnic terrorism.
Economics is my specialty, and I think economic factors may explain at least part of the trend. ...

Paul Krugman: The Clinton Agenda

The presidential race may be all but over, but many others are not -- your vote still matters:

The Clinton Agenda, by Paul Krugman, NY Times: It ain’t over until the portly gentleman screams, but it is ... highly likely that Hillary Clinton will win this election...
But what will our first female president actually be able to accomplish? That depends...
Consider, first, the effects of a minimal victory: Mrs. Clinton becomes president, but Republicans hold on to both houses of Congress.
Such a victory wouldn’t be meaningless. It would avert the nightmare of a Trump presidency, and it would also block the radical tax-cutting, privatizing agenda that Paul Ryan ... has made clear he will steamroll through if Mr. Trump somehow wins. But it would leave little room for positive action.
Things will be quite different if Democrats retake the Senate. ...
Now, even a Democratic Senate wouldn’t enable Mrs. Clinton to pass legislation in the face of an implacably obstructionist Republican majority in the House. It would, however, allow her to fill the Supreme Court seat left vacant by the death of Antonin Scalia.
Doing that would have huge consequences..., the most important ... the Clean Power Plan ... is currently on hold, thanks to a stay imposed by the Supreme Court. Democratic capture of the Senate would remove this roadblock. ... Quite simply, if Democrats take the Senate, we might take the minimum action needed to avoid catastrophe; if they don’t, we won’t.
What about the House? ... Until the last few days, the chances of flipping the House seemed low...
But a sufficiently big Clinton victory could change that, especially if suburban women desert a G.O.P. that has turned into the gropers-owned party. And that would let her pursue a much more expansive agenda.
There’s not much mystery about what that agenda would be. ... Broadly speaking, she would significantly strengthen the social safety net, especially for the very poor and children, with an emphasis on family-related issues like parental leave. Such programs would cost money...; she proposes, credibly, to raise that money with higher taxes on top incomes, so that the overall effect would be to reduce inequality.
Democratic control of the House would also open the door for large-scale infrastructure investment. ...
In any case, the bottom line is that if you’re thinking of staying home on Election Day because the outcome is assured, don’t. Barring the political equivalent of a meteor strike, Hillary Clinton will be our next president, but the size of her victory will determine what kind of president she can be.

Monday, October 10, 2016

Paul Krugman: Predators in Arms

"The Trump-Ailes axis of abuse":

Predators in Arms, by Paul Krugman, NY Times: As many people are pointing out, Republicans now trying to distance themselves from Donald Trump need to explain why The Tape was a breaking point, when so many previous incidents weren’t. ...
Meanwhile, the Trump-Ailes axis of abuse raises another question: Is sexual predation by senior political figures — which Mr. Ailes certainly was, even if he pretended to be in the journalism business — a partisan phenomenon?
Just to be clear, I’m not talking about bad behavior in general... Yes, Bill Clinton had affairs; but there’s a world of difference between consensual sex, however inappropriate, and abuse of power to force those less powerful to accept your urges. ...
Take, for example, what ... was happening politically in 2006..., it looked as if Republicans might retain control of Congress despite public revulsion at the Bush administration. But then came the Foley scandal: ...Representative Mark Foley, had been sending sexually explicit messages to pages, and his party had failed to take any action despite warnings..., the scandal seems to have ... led to a Democratic wave.
But think about how much bigger that wave might have been if voters had known ... that Dennis Hastert, who had been speaker of the House since 1999, himself had a long history of molesting teenage boys.
Why do all these stories involve Republicans? One answer may be structural. The G.O.P. is, or was until this election, a monolithic, hierarchical institution, in which powerful men could cover up their sins much better than they could in the far looser Democratic coalition.
There is also, I’d suggest, an underlying cynicism... We’re talking about a party that has long exploited white backlash to mobilize working-class voters, while enacting policies that actually hurt those voters but benefit the wealthy. Anyone participating in that scam ... has to have the sense that politics is a sphere in which you can get away with a lot if you have the right connections. ...
Assuming that Mr. Trump loses, many Republicans will try to pretend that he was a complete outlier, unrepresentative of the party. But he isn’t. He won the nomination fair and square, chosen by voters who had a pretty good idea of who he was. He had solid establishment support until very late in the game. And his vices are, dare we say, very much in line with his party’s recent tradition.
Mr. Trump, in other words, isn’t so much an anomaly as he is a pure distillation of his party’s modern essence.

Sunday, October 09, 2016

This is Not a Time for Political Neutrality

Robert Stavins:

This is Not a Time for Political Neutrality: I have been writing essays at this blog for over seven years, and throughout that time, through perhaps 100 more-or-less-monthly essays, I have tried very hard to keep politics at bay, and to view each and every issue I discussed from a politically neutral, yet analytical economic perspective. But I find that I can no longer remain neutral.
Since before the summer, I had resolved to write today’s essay, but I decided to wait until one month before the November U.S. election to post it, simply because I thought this was the point in time when people would be paying most attention to the upcoming election but would not yet have completely made up their minds. In particular, I want to address this message to people who – like me – are political independents.
I have been teaching at Harvard for close to 30 years, and every year I take pride in the fact that at the conclusion of my 13-week course in environmental economics and policy, my students cannot say – on the basis of what I have said in lectures or what they have read in the assigned readings – whether I am a tree-hugging environmental advocate from the political left, or an industry apologist from the political right (actually, I am neither, although hostile voices in the blogosphere have sometimes wanted to peg me as being on the opposite of whatever extreme they occupy).
Likewise, I have remained bipartisan in politics, ever since I directed Project 88 more than 25 years ago for the bipartisan coalition of former Democratic Senator Timothy Wirth and the late Republican Senator John Heinz. Starting with the White House of President George H. W. Bush, and continuing with every administration – of both political parties – since then, I have worked on substantive matters of environmental and energy policy, in some cases closely and intensively, and in some cases indirectly and on the periphery.
Such professional bipartisanship and political neutrality have been important to me, and have been consistent with my voter registration, as I am officially registered as an independent (in Massachusetts, this goes by the designation of “unenrolled”).
So, over the years, I have voted for Democrats and I have voted for Republicans, for various offices ranging from the Mayor of my town to the President of my country. And in each and every one of those elections, although I preferred one of the two principal candidates (sometimes very strongly), in no case did I fear for the future of my community, my state, or my country if my candidate lost and the other candidate won.
This time is different. I fear for the United States and I fear for the world if Donald Trump is elected President. The time for my professional bipartisanship and political neutrality has ended – at least temporarily. And so I apologize to my readers for using this platform – An Economic View of the Environment – to express my broader, personal views on the upcoming election. This is a departure that I hope never again will be necessary. ...

Friday, October 07, 2016

Paul Krugman: What About the Planet?

Why haven't we heard more about Clinton and Trump's positions on climate change?:

What About the Planet?, by Paul Krugman, NY Times: Our two major political parties are at odds on many issues, but nowhere is the gap bigger or more consequential than on climate.
If Hillary Clinton wins, she will move forward with the Obama administration’s combination of domestic clean-energy policies and international negotiation — a one-two punch that offers some hope of reining in greenhouse gas emissions before climate change turns into climate catastrophe.
If Donald Trump wins, the paranoid style in climate politics — the belief that global warming is a hoax perpetrated by a vast international conspiracy of scientists — will become official doctrine, and catastrophe will become all but inevitable. ...
So there is a huge, incredibly consequential divide on climate policy. Not only is there a vast gap between the parties and their candidates, but this gap arguably matters more for the future than any of their other disagreements. So why don’t we hear more about it?
I’m not saying that there has been no reporting on the partisan climate divide, but there has been nothing like, say, the drumbeat of stories about Mrs. Clinton’s email server. And it’s really stunning that in the three nationally televised forums we’ve had so far — the “commander in chief” forum involving Mrs. Clinton and Mr. Trump, the first presidential debate and the vice-presidential debate — the moderators have asked not a single question about climate. ...
And this blind spot matters a lot. Polling suggests that millennial voters, in particular, care a lot about environmental protection and renewable energy. But it also suggests that more than 40 percent of young voters believe that there is no difference between the candidates on these issues.
Yes, I know, people should be paying more attention — but this nonetheless tells us how easy it is for voters who rely on TV news or don’t read stories deep inside the paper to miss what should be a central issue in this campaign.
The good news is that there are still two debates to go, offering the opportunity to make some amends.
It’s time to end the blackout on climate change as an issue. It needs to be front and center — and questions must be accompanied by real-time fact-checking, not relegated to the limbo of he-said-she-said, because this is one of the issues where the truth often gets lost in a blizzard of lies.
There is, quite simply, no other issue this important, and letting it slide would be almost criminally irresponsible.

The Anti-Trust Election

I have a new column:

The Anti-Trust Election of 2016: A report on the “Benefits of Competition and Indicators of Market Power” from the White House Council of Economic Advisors documents that monopoly power has been increasing the last few decades, and it argues persuasively “that consumers and workers would benefit from additional policy actions by the government to promote competition within a variety of industries.” The report is part of an initiative by the Obama administration last spring to promote a “fair, efficient, and competitive marketplace” through stricter enforcement of antitrust regulations, and through other measures such as patent reform and the reform of occupational licensing. 

To those who believe more aggressive enforcement of antitrust laws is needed, and I am one of them, Hillary Clinton’s recent announcement of “A new commitment to promote competition, address excessive concentration and the abuse of economic power, and strengthen antitrust laws and enforcement” is an encouraging sign that if Clinton is elected the Obama administration’s initiative will not end when he leaves office. 

The presence of monopoly power harms the economy in several ways. ...

Donald Trump has promised to make deregulation one of the focal points of his presidency. If Trump is elected, the trend toward rising market concentration and all of the problems that come with it are likely to continue. We’ll hear the usual arguments about ineffective government and the magic of markets to justify ignoring the problem. If Clinton is elected, it’s unlikely that her administration would be active enough in antitrust enforcement for my taste. But at least she acknowledges that something needs to be done about this growing problem, and any movement toward more aggressive enforcement of antitrust regulation would be more than welcome.

Thursday, October 06, 2016

Trump’s Mudslinging Puts the Fed in Danger

An editorial at the FT:

Trump’s mudslinging puts the Fed in danger: So many extraordinary accusations and denunciations emanate from Donald Trump... One of the more potentially damaging is the contention that the Federal Reserve is setting policy to ensure the election of his opponent, Hillary Clinton.
Political criticism of the US central bank has been going on for decades. ...
Yet it is offensive and absurd to suggest that Janet Yellen, the Fed chair, and her colleagues are deliberately trying to engineer the election of another Democratic president. At a time when the Fed has a low standing in the public mind, perhaps more disturbing than Mr Trump’s eccentric claims is that congressional Republicans, who should know better, are joining in. ...
It is beyond hope that Mr Trump will see sense and moderate his attacks. His fellow Republicans, unless they are ready to endanger one of the pillars of US economic stability, should resist the urge to follow his example.

Monday, October 03, 2016

Paul Krugman: Trump’s Fellow Travelers

Don't waste your vote:

Trump’s Fellow Travelers, by Paul Krugman, NY Times: Donald Trump has just had an extraordinarily bad week, and Hillary Clinton an extraordinarily good one... But both Mrs. Clinton’s virtues and Mr. Trump’s vices have been obvious all along. How, then, did the race manage to get so close on the eve of the debate?
A lot of the answer, I’ve argued, lies in the behavior of the news media... But let us not let everyone else off the hook. Mr. Trump couldn’t have gotten as far as he has without the support, active or de facto, of many people who understand perfectly well ... what his election would mean, but have chosen not to take a stand.
Let’s start with the Republican political establishment, which is supporting Mr. Trump just as if he were a normal presidential nominee...
While almost all Republican officeholders have endorsed Mr. Trump, the same isn’t true of ... the G.O.P. intelligentsia..., policy experts, opinion writers, and so on. For the most part,... members of this group haven’t spoken up in support of this year’s Republican nominee. ...
But if you think that electing Mr. Trump would be a disaster, shouldn’t you be urging your fellow Americans to vote for his opponent, even if you don’t like her? After all, not voting for Mrs. Clinton — whether you don’t vote at all, or make a purely symbolic vote for a third-party candidate — is, in effect, giving half a vote to Mr. Trump.
To be fair, quite a few conservative intellectuals have accepted that logic, especially among foreign-policy types... But there have also been many who balked at doing the right thing...
And the response from sane Republican economists has been especially disappointing. Only charlatans and cranks have endorsed Mr. Trump, but only a handful have ... been willing to say that if keeping him out of the White House is important, you need to vote for Mrs. Clinton.
Finally, it’s dismaying to see the fecklessness of those on the left supporting third-party candidates. ... If polls are to be believed, something like a third of young voters intend to, in effect, opt out of this election. If they do, Mr. Trump might yet win.
In fact, the biggest danger from Mr. Trump’s terrible week is that it might encourage complacency and self-indulgence among voters who really, really wouldn’t want to see him in the White House. So remember: Your vote only counts if you cast it in a meaningful way.

Friday, September 30, 2016

Paul Krugman: How the Clinton-Trump Race Got Close

Hillary Clinton "got Gored":

How the Clinton-Trump Race Got Close, by Paul Krugman, NY Times: Monday’s presidential debate was a blowout... Hillary Clinton was knowledgeable, unflappable and — dare we say it? — likable. Donald Trump was ignorant, thin-skinned and boorish.
Yet on the eve of the debate, polls showed a close race. How ... could someone like Mr. Trump have been in striking position for the White House? (He may still be there, since we have yet to see what effect the debate had on the polls.)
Part of the answer is that a lot more Americans than we’d like to imagine are white nationalists... Indeed, implicit appeals to racial hostility have long been at the core of Republican strategy...
But while racially motivated voters are a bigger minority than we’d like to think, they are a minority. And as recently as August Mrs. Clinton held a commanding lead. Then her polls went into a swoon.
What happened? ... As I’ve written before, she got Gored. That is, like Al Gore in 2000, she ran into a buzz saw of adversarial reporting from the mainstream media, which treated relatively minor missteps as major scandals, and invented additional scandals out of thin air.
Meanwhile, her opponent’s genuine scandals and various grotesqueries were downplayed or whitewashed...
I still don’t fully understand this hostility, which wasn’t ideological. Instead, it had the feel of the cool kids in high school jeering at the class nerd. Sexism was surely involved but may not have been central, since the same thing happened to Mr. Gore.
In any case, those of us who remember the 2000 campaign expected the worst would follow the first debate: Surely much of the media would declare Mr. Trump the winner even if he lied repeatedly. ...
Then came the debate itself, which was almost unspinnable. Some people tried...
But ... tens of millions of Americans saw the candidates in action, directly, without a media filter. For many, the revelation wasn’t Mr. Trump’s performance, but Mrs. Clinton’s: The woman they saw bore little resemblance to the cold, joyless drone they’d been told to expect.
How much will it matter? My guess — but I could very well be completely wrong — is that it will matter a lot. ...
But things should never have gotten to this point, where so much depended on defying media expectations over the course of an hour and a half. And those who helped bring us here should engage in some serious soul-searching.

Thursday, September 29, 2016


Greg Mankiw:

Trumponomics: Regular readers of this blog know that I often disagree with Paul Krugman. But I come here today agree with a recent post of his on the analysis put out by two Trump economic advisers. The Trump advisers' analysis is truly disappointing (though perhaps not surprisingly so, given what the candidate has said over the course of the campaign).
Their analysis of trade deficits, starting on page 18, boils down to the following: We know that GDP=C+I+G+NX. NX is negative (the trade deficit). Therefore, if we somehow renegotiate trade deals and make NX rise to zero, GDP goes up! They calculate this will bring in $1.74 trillion in tax revenue over a decade.
But of course you can't model an economy just using the national income accounts identity. Even a freshman at the end of ec 10 knows that trade deficits go hand in hand with capital inflows. So an end to the trade deficit means an end to the capital inflow, which would affect interest rates, which in turn influence consumption and investment. ...

A General Theory Of Austerity?

Paul Krugman:

A General Theory Of Austerity?: Simon Wren-Lewis has an excellent new paper trying to explain the widespread resort to austerity in the face of a liquidity trap, which is exactly the moment when such policies do the most harm. His bottom line is that austerity was the result of right-wing opportunism, exploiting instinctive popular concern about rising government debt in order to reduce the size of the state.
I think this is right; but I would emphasize more than he does the extent to which both the general public and Very Serious People always assume that reducing deficits is the responsible thing to do. ...
Meanwhile, as someone who was in the trenches during the US austerity fights, I was struck by how readily mainstream figures who weren’t especially right-wing in general got sucked into the notion that debt reduction was THE central issue. Ezra Klein documented this phenomenon with respect to Bowles-Simpson:
For reasons I’ve never quite understood, the rules of reportorial neutrality don’t apply when it comes to the deficit. On this one issue, reporters are permitted to openly cheer a particular set of highly controversial policy solutions. At Tuesday’s Playbook breakfast, for instance, Mike Allen, as a straightforward and fair a reporter as you’ll find, asked Simpson and Bowles whether they believed Obama would do “the right thing” on entitlements — with “the right thing” clearly meaning “cut entitlements.” ...

Wednesday, September 28, 2016

VAT of Deplorables

Paul Krugman:

VAT of Deplorables: I’ve been writing about Donald Trump’s claim that Mexico’s value-added tax is an unfair trade policy, which is just really bad economics. ...
But it turns out that Trump wasn’t saying ignorant things off the top of his head: he was saying ignorant things fed to him by his incompetent economic advisers. Here’s the campaign white paper on economics. The VAT discussion is on pages 12-13 — and it’s utterly uninformed.
And it’s not the worst thing: there’s lots of terrible stuff in the white paper, at every level.
Should we be reassured that Trump wasn’t actually winging it here, just taking really bad advice? Not at all. This says that if he somehow becomes president, and decides to take the job seriously, it won’t help — because his judgment in advisers, his notion of who constitutes an expert, is as bad as his judgment on the fly.

Scoring the Trump Trade Plan: Magical Thinking

Marcus Noland at PIIE:

Scoring the Trump Trade Plan: Magical Thinking: Back in the 1970s, Gabriel Garcia Marquez, Isabelle Allende, and other Latin American writers developed a literary style featuring wild juxtapositions and metaphysical leaps that came to be known as magical realism. “Scoring the Trump Economic Plan: Trade, Regulatory, and Energy Policy Impacts (link is external),” by Peter Navarro and Wilbur Ross owes much to the genre.

It is a political document. The challenge for the authors is that ... Donald Trump will cost the US government $2.6 trillion in revenue over 10 years. Mr. Trump wants his tax proposal to be “revenue neutral” so his advisors need to fill that hole.

By their own reckoning they come close, finding $2.374 trillion in additional revenue. They do this by imputing positive growth effects to various trade, regulatory, and energy reforms and then calculating the tax raised on these increments to GDP. The imputed trade policy component of additional revenue is $1.74 trillion or almost three-quarters of the projected total. So trade policy is central to the Trump story.

Unfortunately, the thinking that gets them the $1.74 trillion figure is truly magical. The authors observe that between 1947 and 2001 (the good old days, when America was great), the economy grew at 3.5 percent annually. Since then it has grown at an average of 1.9 percent. They allude to the idea that demographics ... might have something to do with it, only to dismiss this explanation. They entirely ignore the ongoing debate about the sources of productivity growth and the possibility that the rate of technological change is slowing. Instead, they focus on trade. Or more specifically, “disastrous” trade agreements.

And how do they get that $1.74 trillion in revenue? They observe that the United States has a $500 billion deficit in merchandise goods and services…and then they make it disappear! (Luis Borges would be proud.) But don’t believe me, here it is in their own words (link is external)

...[long excerpt]...

Maybe it reads better in Spanish.

Economists generally believe that the magnitude of a nation’s trade deficit fundamentally reflects the difference between saving and investment—if you are consuming more than you produce, you run a deficit, if you produce more than you consume you run a surplus. Trade policy can affect the sectoral and geographic composition of the deficit, but in the long run, the trade balance is determined by the saving-investment balance. If you want to lower the nation’s trade deficit, increasing the saving rate, not launching a trade war would be the right place to start. But there is not a word of this in “Scoring the Trump Economic Plan: Trade, Regulatory, and Energy Policy Impacts.” It’s all perfidious foreigners and incompetent trade negotiators instead. Maybe that makes for a better plot. But it does not constitute a persuasive defense of a questionable tax plan or a solution to the trade deficit. Quite the opposite—it’s another instance of the type of magical thinking best reserved for fictional realities.

Tuesday, September 27, 2016

Trump On Trade

Paul Krugman:

Trump On Trade: For the most part,... the media consensus seems to be that Clinton won. This is a big deal: you know, just know, that they were primed to declare Trump the winner... But he was so bad and she so good that they couldn’t. ...

Trump on trade was ignorance all the way.

There were specifics: China is “devaluing” (not so — it was holding down the yuan five years ago, but these days it’s intervening to keep the yuan up, not down.) There was this, on Mexico:

Let me give you the example of Mexico. They have a VAT tax. We’re on a different system. When we sell into Mexico, there’s a tax. When they sell in — automatic, 16 percent, approximately. When they sell into us, there’s no tax. It’s a defective agreement. It’s been defective for a long time, many years, but the politicians haven’t done anything about it.

Gah. A VAT is basically a sales tax. It is levied on both domestic and imported goods, so that it doesn’t protect against imports — which is why it’s allowed under international trade rules, and not considered a protectionist trade policy. I get that Trump is not an economist — hoo boy, is he not an economist — but this is one of his signature issues, so you might have expected him to learn a few facts.

More broadly, Trump’s whole view on trade is that other people are taking advantage of us — that it’s all about dominance, and that we’re weak. And even if you think we’ve pushed globalization too far, even if you are worried about the effects of trade on income distribution, that’s just a foolish way to think about the problem.

So don’t score Trump as somehow winning on trade. Yes, he blustered more confidently on that subject than on anything else. But he was talking absolute garbage even there.

Monday, September 26, 2016

Trump Picks Top Climate Skeptic to Lead EPA Transition

Robin Bravender at Scientific American (originally at ClimateWire):

Trump Picks Top Climate Skeptic to Lead EPA Transition: Donald Trump has selected one of the best-known climate skeptics to lead his U.S. EPA transition team... Myron Ebell, director of the Center for Energy and Environment at the conservative Competitive Enterprise Institute, is spearheading Trump’s transition plans for EPA, the sources said. ... Ebell’s role is likely to infuriate environmentalists and Democrats but buoy critics of Obama’s climate rules.
Ebell ... is known for his prolific writings that question what he calls climate change “alarmism.” ...
Ebell has called the Obama administration’s Clean Power Plan for greenhouse gases illegal and said that Obama joining the Paris climate treaty “is clearly an unconstitutional usurpation of the Senate’s authority.”
He told Vanity Fair in 2007, “There has been a little bit of warming ... but it’s been very modest and well within the range for natural variability, and whether it’s caused by human beings or not, it’s nothing to worry about.”
Ebell’s views appear to square with Trump’s when it comes to EPA’s agenda. Trump has called global warming “bullshit” and he has said he would “cancel” the Paris global warming accord and roll back President Obama’s executive actions on climate change...

Paul Krugman: Progressive Family Values

"An attempt to focus on the problems of the real America":

Progressive Family Values, by Paul Krugman, NY Times: Here’s what happens every election cycle: pundits demand that politicians offer the country new ideas. Then, if and when a candidate actually does propose innovative policies, the news media pays little attention, chasing scandals or, all too often, fake scandals instead. Remember the extensive coverage last month, when Hillary Clinton laid out an ambitious mental health agenda? Neither do I. ...
Still, there really are some interesting new ideas coming from one of the campaigns, and they arguably tell us a lot about how Mrs. Clinton would govern.
Wait... Aren’t Republicans also offering new ideas? Well, I guess proposing to round up and deport 11 million people counts as a new idea. And Republicans ... seem to have moved past ... proposing tax cuts that deliver most of their benefits to the wealthy. Now they are, instead, proposing tax cuts that deliver all of their benefits to the 1 percent — O.K., actually just 99.6 percent, but who’s counting?
Back to Mrs. Clinton: Much of her policy agenda could be characterized as a third Obama term, building on the center-left policies of the past eight years. ... For example..., her proposed enhancements to the Affordable Care Act would extend health coverage to around 10 million more people, whereas Donald Trump’s proposed repeal ... would cause around 20 million people to lose coverage.
In addition..., Mrs. Clinton is pushing a distinctive agenda centered around support for working parents. ... One piece ... involves 12 weeks of paid family leave to care for new children, help sick relatives, or recover from illness or injury. ...
Another, even more striking piece involves helping families with young children in several ways, especially ... to hold down the cost of child care (the campaign sets a target of no more than 10 percent of income.) ...
But why should helping working parents be such a priority? It looks to me like an attempt to focus on the problems of the real America — not the white, rural “real America” of right-wing fantasies... And that America is one in which ... stay-at-home mothers are a distinct minority, and in which the problem of how to take care of children while making ends meet is central to many people’s lives. ...
So anyone who complains that there aren’t big new ideas in this campaign simply isn’t paying attention. One candidate, at least, has ideas that would make a big, positive difference to millions of American families.

Friday, September 23, 2016

Paul Krugman: The Lying Game


The press needs to tell the truth about lies:

The Lying Game, by Paul Krugman, NY Times: Here’s what we can be fairly sure will happen in Monday’s presidential debate: Donald Trump will lie repeatedly and grotesquely, on a variety of subjects. Meanwhile, Hillary Clinton might say a couple of untrue things. Or she might not.
Here’s what we don’t know: Will the moderators step in when Mr. Trump delivers one of his well-known, often reiterated falsehoods? If he claims, yet again, to have opposed the Iraq war from the beginning ... will he be called on it? If he claims to have renounced birtherism years ago, will the moderators note that he was still at it just a few months ago? (In fact, he already seems to be walking back his admission last week that President Obama was indeed born in America.) If he says one more time that America is the world’s most highly taxed country — which it isn’t — will anyone other than Mrs. Clinton say that it isn’t? And will media coverage after the debate convey the asymmetry of what went down?
You might ask how I can be sure that one candidate will be so much more dishonest than the other. ... PolitiFact has examined 258 Trump statements and 255 Clinton statements and classified them on a scale ranging from “True” to “Pants on Fire.” ... And they show two candidates living in different moral universes when it comes to truth-telling. Mr. Trump had 48 Pants on Fire ratings, Mrs. Clinton just six; the G.O.P. nominee had 89 False ratings, the Democrat 27. ...
And if the debate looks anything like the campaign so far, we know what that will mean: a news analysis that devotes at least five times as much space to Mr. Trump’s falsehoods as to Mrs. Clinton’s.
If your reaction is, “Oh, they can’t do that — it would look like partisan bias,” you have just demonstrated the huge problem with news coverage during this election. For I am not calling on the news media to take a side; I’m just calling on it to report what is actually happening, without regard for party. In fact, any reporting that doesn’t accurately reflect the huge honesty gap between the candidates amounts to misleading readers, giving them a distorted picture that favors the biggest liar. ...
I’m not calling on the news media to take sides; journalists should simply do their job, which is to report the facts. ...

Why Trump’s Economic Policies Would Be a Disaster

I have a new column:

4 Reasons Trump’s Economic Policies Would Be a Disaster: Donald Trump’s chances of becoming president are higher than I ever expected them to be, and there is a chance that he will be able to put his economic plans into place. He claims his economic policies will be good for the working class, but in reality his plans for high income tax cuts and deregulation adhere closely to standard Republican ideology that has favored the wealthy and powerful. Even his plans for international trade, an area where he claims populist support, would hurt far more people than it would help. Here are the four areas where Trump’s economic plans concern me the most...

[One of the four echoes what I wrote about yesterday at CBS.]

Thursday, September 22, 2016

The Curious Confidence of Charlatans and Cranks

Paul Krugman:

The Curious Confidence of Charlatans and Cranks: Brad DeLong tells us about a letter being circulated by economists for Trump — although, as he notes, they don’t dare say that, and describe themselves only as critics of Clinton. Several things are notable about the letter, including the absence of many usually reliable Republican hired guns economists. But they do have a Nobelist, Eugene Fama, at the top. And the substance of the letter — government bad! taxes and regulation bad! free markets rool like Reagan! — is pretty standard.
What’s curious is why, exactly, anyone should believe this story. In recent memory, GW Bush failed to deliver the promised Bush boom and eventually presided over disaster; the Obama economy has not been all one might have hoped, but as many have noted, the job growth of the past three years and the income growth that has finally emerged would have been hailed as triumphs if Mitt Romney were president. Taking the longer view, Clinton > Reagan and Obama > Bush, by almost any measure. Why doesn’t this reality seem to register?
One big answer, I think, lies in profound ignorance, in the insistence that history is what it was supposed to be, not what it was. ...
And let’s be clear: this is a problem that won’t go away even if Trump goes down to defeat. People like Paul Ryan are barely more in touch with reality...

Don't Believe Trump’s Tax and Spending Plans

At MoneyWatch, why I think Social Security and Medicare will be in danger of large cuts if Trump is elected:

Don't believe Trump’s tax and spending plans: Donald Trump’s new tax plan will increase the national debt between $4.4 trillion and $5.9 trillion over a decade, and that’s according to estimates from the conservative Tax Foundation. That range of $1.5 trillion is due to uncertainty about how Trump would levy some types of business taxes and how his tax cuts would be paid for.
First, the Republican candidate says, higher economic growth from lower taxes and deregulation will pay for most of the increase in the debt. According to Trump, his plan will boost output substantially, and the higher tax revenue that comes with it will offset most of the lost revenue. 
Second, his “penny plan” would make up the rest of the revenue lost to his tax cuts. This plan would cut spending on nondefense programs funded by annual appropriations by 1 percent each year. 
Since the cuts would affect only a part of the budget (defense and entitlement programs such as Medicare and Social Security are excluded), the plan would reduce spending on programs such as“veterans’ medical care…, scientific and medical research, border enforcement, education, child care, national parks, air traffic control, housing assistance for low-income families, and maintenance of harbors, dams, and waterways,” according to the Center on Budget and Policy Priorities. The total spending reduction would be approximately 25 percent over 10 years.
You should be skeptical of both claims. ...

Saturday, September 17, 2016

A Lie Too Far?

Paul Krugman:

A Lie Too Far?: I suspect Donald Trump is feeling a bit sandbagged right now, or will be when he wakes up. All along he has treated the news media with contempt, and been rewarded with obsequious deference — his lies sugar-coated, described as “disputed” or “stretching the truth,” while every aspect of his opponent’s life is described as “raising questions” and “casting shadows”, despite lack of evidence that she did anything wrong.
If Greg Sargent and Norm Ornstein are to be believed (and they are!), the cable networks at least initially followed the same pattern in their response to DJT’s latest...
But the print media appear to have finally found their voice (which may shape cable coverage over time). The Times and the AP, in particular, have put out hard-hitting stories that present the essence in the lede, not in paragraph 25.
What’s so good about these stories? The fact that they are simple straightforward reporting.
First, confronted with obvious lies, they don’t pretend that the candidate said something less blatant, or do views differ on shape of planet — they simply say that what Trump said is untrue, and that his repetition of these falsehoods makes it clear that he was deliberately lying.
Second, the stories for today’s paper are notable for the absence of what I call second-order political reporting: they’re about what Trump said and did, not speculations about how it will play with voters.
Doing these things doesn’t sound very hard — but we’ve seen very little of this kind of thing until now. Why the change? ...
One answer might be the storm of criticism over election coverage... And tightening polls probably matter too, not because journalists are being partisan, but because they are now faced with the enormity of what their fact-free jeering of HRC and fawning over DJT might produce.
There are now two questions: will this last, and if it does, has the turn come soon enough? In both cases, nobody knows. But just imagine how different this election would look if we’d had this kind of simple, factual, truly balanced (as opposed to both-sides-do-it) reporting all along.

The other possibility is that it was retaliation for trying to "play" the media with a promised news conference on his birtherism that turned into an advertisement for his hotel:

I think there’s a ... way to explain why the media’s behavior this election is so troubling to liberal intellectuals, and it has less to do with partisan liberal biases or the media’s powers of judgment than with basic anthropological facts about the press itself.
The press is not a pro-democracy trade, it is a pro-media trade. By and large, it doesn’t act as a guardian of civic norms and liberal institutions—except when press freedoms and access itself are at stake. Much like an advocacy group or lobbying firm will reserve value judgments for issues that directly touch upon the things they’re invested in, reporters and media organizations are far more concerned with things like transparency, the treatment of reporters, and first-in-line access to information of public interest, than they are with other forms of democratic accountability. ...
The result is the evident skewing of editorial judgment we see in favor of stories where media interests are most at stake: where Clinton gets ceaseless scrutiny for conducting public business on a private email server; Trump gets sustained negative coverage for several weeks when his campaign manager allegedly batters a reporter; where Clinton appears to faint, but the story becomes about when it was appropriate for her to disclose her pneumonia diagnosis...—but where bombshell stories about the ways Trump used other people’s charity dollars for personal enrichment have a hard time breaking through.
News outlets are less alarmed by the idea that Trump might run the government to boost his company’s bottom line, or that he might shred other constitutional rights, because those concerns don’t place press freedoms squarely in crosshairs. ...

Friday, September 16, 2016

Paul Krugman: Obama’s Trickle-Up Economics

Helping working families and the unemployed doesn't hurt the economy:

Obama’s Trickle-Up Economics, by Paul Krugman, NY Times: Only serious nerds like me eagerly await the annual Census Bureau reports on income, poverty and health insurance. But the just-released reports on 2015 justified the anticipation. ...
The reports showed strong progress on three fronts: rapid growth in the incomes of ordinary families — median income rose a remarkable 5.2 percent; a substantial decline in the poverty rate; and a significant further rise in health insurance coverage after 2014’s gains. ...
It’s true that the surge in median income comes after years of disappointment, and even now the typical family’s income, adjusted for inflation, is slightly lower than it was before the financial crisis. But the ... overall performance of the Obama economy has given the lie to much of the criticism leveled at President Obama’s policies. ...
Conservatives predicted disaster from these initiatives. Tax hikes on the rich, they insisted, would stall the economy. Obamacare’s combination of regulation and subsidies, they declared, would kill millions of jobs without increasing the number of Americans with insurance.
What happened instead after Mr. Obama was re-elected was the best job growth since the 1990s. But family incomes ... continued to lag. So there was still some statistical basis for the right’s Obama-bashing. Now that statistical basis is gone. ... And it should (but won’t) finally break the grip of trickle-down ideology on much of our political class.
You know how the argument goes: Any attempt to help working families directly, we’re told, will backfire by hurting the economy as a whole. So we must cut taxes on those “job creators” instead, counting on a rising tide to raise all boats.
It would be an exaggeration to say that the Obama administration has done the reverse, but there definitely was an element of trickle-up economics in its response to the Great Recession: Much of the stimulus involved expanding the social safety net, not just to protect the vulnerable, but to increase purchasing power and sustain demand. And in general Obama-era policies have tried to help families directly, rather than by showering benefits on the rich and hoping that the benefits trickle down.
Now the results of this policy experiment are in, and they’re not bad. They could have been better: The stimulus should have been bigger and more sustained, and Republican opposition hamstrung the administration’s economic policy after the first two years. Still, progressive policies have worked, and the critics of those policies have been proved wrong.

Thursday, September 15, 2016

Trump Campaign’s “Dynamic Scoring” of Revised Tax Plan Should Be Taken With More Than a Grain of Salt

The Trump campaign endorses a standard Republican tax con. This is from Chad Stone and Chye-Ching Huang at the CBPP:

Trump Campaign’s “Dynamic Scoring” of Revised Tax Plan Should Be Taken With More Than a Grain of Salt: The revised tax plan that Republican presidential nominee Donald Trump will release today was reportedly designed at least in part to reduce the cost of his earlier plan,[1] which would have generated very large revenue losses.[2] The revised plan now looks similar to the tax plan that House Republican leaders introduced in June, which cost less than Trump’s original plan. Moreover, like the House plan, the Trump plan takes advantage of an aggressive approach to “dynamic scoring” that the Tax Foundation uses to estimate how tax cuts affect the economy and the budget, which sharply lowers the estimated revenue loss from certain tax-cut provisions.[3] We should, however, view such large dynamic effects derived from Tax Foundation estimates with considerable skepticism. That’s because the Tax Foundation, with its unusually large dynamic estimates, is considerably outside the analytic mainstream.
In particular, the Tax Foundation assumes that certain tax cuts produce far larger increases in business investment than researchers typically find. Consequently, the Tax Foundation estimates that certain tax changes will produce far greater economic activity and a far smaller revenue loss than do Congress’s highly respected official estimating bodies — the Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO). ...
Analysts continue to debate whether and how to implement dynamic scoring.[7] It’s new and controversial: the best way to model dynamic effects remains unsettled; and the estimates produced can vary depending on the assumptions used. Mainstream analysts typically find that any additional economic activity generated by tax cuts can offset, at most, a modest portion of their cost. With that in mind, the Tax Foundation’s dynamic scoring estimates — including those that the Trump campaign is relying on for its estimates of its revised tax plan — should be viewed with particular skepticism.
For instance, in 2015, the Tax Foundation estimated that making permanent the bonus-depreciation tax break (which allows businesses to deduct a larger share of the cost of their equipment in the year they purchase it) would generate enough new revenue to pay for more than 75 percent of its costs, while JCT pegged the figure at less than 5 percent. ...
The Tax Foundation produces its dynamic scoring estimates very quickly, while JCT and CBO take much more time to develop theirs. And JCT and CBO don’t analyze tax plans from candidates, so no official analysis of the Trump plan will be available. The nonpartisan Urban Institute-Brookings Institution Tax Policy Center (TPC) provides estimates of candidates’ tax plans but usually takes some time to provide them. Thus, after Mr. Trump unveils his revised plan today, the estimate based on the Tax Foundation’s model will likely be the most widely cited one for a while.
Consequently, one should approach any forthcoming estimate based on the Tax Foundation model with considerable caution. ...

After an extensive analysis and explanation, they conclude:

The initial Trump tax plan was widely estimated to lose large amounts of revenue and substantially enlarge future deficits and debt. The Trump team says that the revised plan costs substantially less. In addition to including some policy changes that lower the standard cost estimate, the Trump team will cite the estimates they have derived from Tax Foundation work to claim that the plan will produce large “dynamic” effects on economic growth and revenues.
As this analysis documents, the Tax Foundation model generates far larger economic and budgetary effects than the models of the Congressional Budget Office and Congress’s Joint Committee on Taxation, and relies on assumptions that are inconsistent with the economic evidence or well outside mainstream economic thinking. All dynamic budget estimates should be approached with caution. That admonition applies with particular force to the highly questionable dynamic estimates that the Tax Foundation model produces.

Monday, September 12, 2016

Paul Krugman: Thugs and Kisses

Why are so many Republicans members of "the Putin cult"?:

Thugs and Kisses, by Paul Krugman, NY Times: ...Donald Trump’s effusive praise for Vladimir Putin — which actually reflects a fairly common sentiment on the right — seems to have confused some people..., today’s Russia isn’t Communist, or even leftist; it’s just an authoritarian state, with a cult of personality around its strongman, that showers benefits on an immensely wealthy oligarchy while brutally suppressing opposition and criticism.
And that, of course, is what many on the right admire.
Am I being unfair? Could praise for Russia’s de facto dictator reflect appreciation of his substantive achievements? Well, let’s talk about what the Putin regime has, in fact, accomplished...
Mr. Putin came to power at the end of 1999... Fuels account for more than two-thirds of its exports, manufactures barely a fifth. And oil prices more than tripled between early 1999 and 2000; a few years later they more than tripled again. Then they plunged, and so did the Russian economy, which has done very badly in the past few years.
Mr. Putin would actually have something to boast about if he had managed to diversify Russia’s exports. And this should have been possible: ... But Russia wasn’t going to realize its technology potential under a regime where business success depends mainly on political connections.
So Mr. Putin’s economic management is nothing to write home about. ...
Which brings us back to the significance of the Putin cult, and the way this cult has been eagerly joined by the Republican nominee for president.
There are good reasons to worry about Mr. Trump’s personal connections to the Putin regime (or to oligarchs close to that regime, which is effectively the same thing.) How crucial has Russian money been in sustaining Mr. Trump’s ramshackle business empire? There are hints that it may have been very important indeed, but given Mr. Trump’s secretiveness and his refusal to release his taxes, nobody really knows.
Beyond that, however, admiring Mr. Putin means admiring someone who has contempt for democracy and civil liberties. Or more accurately, it means admiring someone precisely because of that contempt.
When Mr. Trump and others praise Mr. Putin as a “strong leader,” they don’t mean that he has made Russia great again, because he hasn’t. He has accomplished little on the economic front, and his conquests, such as they are, are fairly pitiful. What he has done, however, is crush his domestic rivals: Oppose the Putin regime, and you’re likely to end up imprisoned or dead. Strong!

Friday, September 09, 2016

Trump’s Taco Truck Fear Campaign Diverts Attention From the Real Issues

I have a new column:

Trump’s Taco Truck Fear Campaign Diverts Attention From the Real Issues: Donald Trump would like you to believe that immigration is largely responsible for the difficult economic conditions the working class has experienced in recent decades. But immigration is not the problem. The real culprits are globalization, technological change, and labor’s dwindling bargaining power in wage negotiations.
Let’s start with immigration. ...

Paul Krugman: Donald Trump’s ‘Big Liar’ Technique

"Why is it apparently so hard to hold Mr. Trump accountable for blatant, in-your-face lies?":

Donald Trump’s ‘Big Liar’ Technique, by Paul Krugman, NY Times: ...Donald Trump has come up with something new, which we can call the “big liar” technique. Taken one at a time, his lies are medium-size — not trivial, but mostly not rising to the level of blood libel. But the lies are constant, coming in a steady torrent, and are never acknowledged, simply repeated. He evidently believes that this strategy will keep the news media flummoxed, unable to believe, or at least say openly, that the candidate of a major party lies that much.
Mr. Trump ... is in a class of his own. He lies about statistics like the unemployment rate and the crime rate. He lies about foreign policy: President Obama is “the founder of ISIS.” But most of all, he lies about himself — and when the lies are exposed, he just keeps repeating them. ...
Why is it apparently so hard to hold Mr. Trump accountable for blatant, in-your-face lies? Part of the answer may be that journalists are overwhelmed by the sheer volume of outrageous material. After all, which Trump line should be the headliner for a news analysis of Wednesday’s event? His Iraq lie? His praise for Vladimir Putin, who “has an 82 percent approval rating”? His denigration of the American military, whose commanders, he says, have been “reduced to rubble”?
There’s also a deep diffidence about pointing out uncomfortable truths. Back in 2000, when I was first writing this column, I was discouraged from using the word “lie” about George W. Bush’s dishonest policy claims. As I recall, I was told that it was inappropriate to be that blunt about the candidate of one of our two major political parties. And something similar may be going on even now, with few people in the media willing to accept the reality that the G.O.P. has nominated someone whose lies are so blatant and frequent that they amount to sociopathy.
Even that observation, however, doesn’t explain the asymmetry, because some of the same media organizations that apparently find it impossible to point out Mr. Trump’s raw, consequential lies have no problem harassing Mrs. Clinton endlessly over minor misstatements and exaggerations, or sometimes over actions that were perfectly innocent. Is it sexism? I really don’t know, but it’s shocking to watch.
And meanwhile, if the question is whether Mr. Trump can really get away with his big liar routine, the evidence from Wednesday night suggests a disheartening answer: Unless something changes, yes he can.

Monday, September 05, 2016

Paul Krugman: Hillary Clinton Gets Gored

 Pres coverage of the campaigns has been "bizarre":

Hillary Clinton Gets Gored, by Paul Krugman, NY Times: ...George W. Bush, was dishonest in a way that was unprecedented in U.S. politics. ... Yet throughout the campaign most media coverage gave the impression that Mr. Bush was a bluff, straightforward guy, while portraying Al Gore — whose policy proposals added up, and whose critiques of the Bush plan were completely accurate — as slippery and dishonest. Mr. Gore’s mendacity was supposedly demonstrated by trivial anecdotes, none significant, some of them simply false. No, he never claimed to have invented the internet. But the image stuck.
And right now I and many others have the sick, sinking feeling that it’s happening again.
True, there aren’t many efforts to pretend that Donald Trump is a paragon of honesty. But it’s hard to escape the impression that he’s being graded on a curve. If he manages to read from a TelePrompter without going off script, he’s being presidential. If he seems to suggest that he wouldn’t round up all 11 million undocumented immigrants right away, he’s moving into the mainstream. And many of his multiple scandals, like what appear to be clear payoffs to state attorneys general to back off investigating Trump University, get remarkably little attention.
Meanwhile, we have the presumption that anything Hillary Clinton does must be corrupt, most spectacularly illustrated by the increasingly bizarre coverage of the Clinton Foundation. ...
So I would urge journalists to ask whether they are reporting facts or simply engaging in innuendo, and urge the public to read with a critical eye. If reports about a candidate talk about how something “raises questions,” creates “shadows,” or anything similar, be aware that these are all too often weasel words used to create the impression of wrongdoing out of thin air.
And here’s a pro tip: the best ways to judge a candidate’s character are to look at what he or she has actually done, and what policies he or she is proposing. Mr. Trump’s record of bilking students, stiffing contractors and more is a good indicator of how he’d act as president; Mrs. Clinton’s speaking style and body language aren’t. George W. Bush’s policy lies gave me a much better handle on who he was than all the up-close-and-personal reporting of 2000, and the contrast between Mr. Trump’s policy incoherence and Mrs. Clinton’s carefulness speaks volumes today.
In other words, focus on the facts. America and the world can’t afford another election tipped by innuendo.

Friday, September 02, 2016

Paul Krugman: Black Lead Matters

"Poisoning kids is a partisan issue":

Black Lead Matters, by Paul Krugman, NY Times: Donald Trump is still claiming that “inner-city crime is reaching record levels,” promising to save African-Americans from the “slaughter.” In fact, this urban apocalypse is a figment of his imagination; urban crime is actually at historically low levels. But he’s not the kind of guy to care about another “Pants on Fire” verdict from PolitiFact.
Yet some things are, of course, far from fine in our cities, and there is a lot we should be doing to help black communities. We could, for example, stop pumping lead into their children’s blood. ... Like it or not, poisoning kids is a partisan issue. ...
I’ve just been reading a new study ... confirming the growing consensus that even low levels of lead in children’s bloodstreams have significant adverse effects on cognitive performance. And lead exposure is still strongly correlated with growing up in a disadvantaged household. ...
What with everything else filling the airwaves, it may be hard to focus on lead poisoning, or environmental issues in general. But there’s a huge difference between the candidates, and the parties, on such issues. And it’s a difference that will matter whatever happens to Congress: A lot of environmental policy consists in deciding how to apply existing laws, so that if Hillary Clinton becomes president, she can have substantial influence even if she faces obstruction from a Republican Congress.
And the partisan divide is exactly what you would expect.
Mrs. Clinton has pledged to “remove lead from everywhere” within five years. She probably wouldn’t be able to get Congress to pay for that ambitious an agenda, but everything in her history, especially her decades-long focus on family policy, suggests that she would make a serious effort.
On the other side, Mr. Trump — oh, never mind. He rants against government regulations of all kinds, and you can imagine what his real estate friends would think about being forced to get the remaining lead out of their buildings. Now, maybe he could be persuaded by scientific evidence to do the right thing. Also, maybe he could be convinced to become a Buddhist monk, which seems about equally likely.
The point is that the divide over lead should be seen not just as important in itself but as an indicator of the broader stakes. If you believe that science should inform policy and that children should be protected from poison, well, that’s a partisan position.

Wednesday, August 31, 2016

How Much Impact Can a President Have on the Economy?

At MoneyWatch:

How much impact can a president have on the economy?, by Mark Thoma: ... How much influence does the president actually have over the economy? 
The stock answer is that presidents get too much credit when the economy does well and too much blame when it slumps. The boom-and-bust cycles that are inherent in capitalist economies depend on forces that are independent of any president’s actions. It’s mostly luck that determines how the economy is doing when it’s time to elect a president.
However, it’s not right to conclude presidents don’t matter for the economy.  ...

Monday, August 29, 2016

Paul Krugman: States of Cruelty

Why are some states unwilling to help the poor?:

States of Cruelty, by Paul Krugman, NY Times: ...While many people are focused on national politics, with reason — one sociopath in the White House can ruin your whole day — many crucial decisions are taken at the state and local levels. If the people we elect to these offices are irresponsible, cruel, or both, they can do a lot of damage.
This is especially true when it comes to health care. Even before the Affordable Care Act went into effect, there was wide variation in state policies, especially toward the poor and near-poor. Medicaid has always been a joint federal-state program... States with consistently conservative governments generally offered benefits to as few people as the law allowed, sometimes only to adults with children in truly dire poverty. States with more liberal governments extended benefits much more widely. These policy differences were one main reason for a huge divergence in the percentage of the population without insurance, with Texas consistently coming in first in that dismal ranking.
And the gaps have only grown wider since Obamacare went into effect... This should be a no-brainer: If Washington is willing to provide health insurance to many of your state’s residents — and in so doing pump dollars into your state’s economy — why wouldn’t you say yes? But 19 states, Texas among them, are still refusing free money, denying health care to millions. ...
But why are states like Texas so dead-set against helping the unfortunate, even if the feds are willing to pick up the tab? ...
A large part of the answer, surely, is the usual one: It’s about race. Medicaid expansion disproportionately benefits nonwhite Americans; so does spending on public health more generally. And opposition to these programs is concentrated in states where voters in local elections don’t like the idea of helping neighbors who don’t look like them.
In the specific case of Planned Parenthood, this usual answer is overlaid with other, equally nasty issues, including — or so I’d say — a substantial infusion of misogyny.
But it doesn’t have to be this way. Most Americans are, I believe, far more generous than the politicians leading many of our states. The problem is that too many of us don’t vote in state and local elections, or realize how much cruelty is being carried out in our name. The point is that America would become a better place if more of us started paying attention to politics beyond the presidential race.

Sunday, August 28, 2016

Brexit: This Backlash Has Been a Long Time Coming

Kevin O’Rourke at VoxEU:

Brexit: This backlash has been a long time coming: Editors' note: This column first appeared as a chapter in the VoxEU ebook, Brexit Beckons: Thinking ahead by leading economists, available to download free of charge here.

It has recently become commonplace to argue that globalisation can leave people behind, and that this can have severe political consequences. Since 23 June, this has even become conventional wisdom. While I welcome this belated acceptance of the blindingly obvious, I can't but help feeling a little frustrated, since this has been self-evident for many years now. What we are seeing, in part, is what happens to conventional wisdom when, all of a sudden, it finds that it can no longer dismiss as irrelevant something that had been staring it in the face for a long time.

The main point of my 1999 book with Jeff Williamson was that globalisation produces both winners and losers, and that this can lead to an anti-globalisation backlash (O'Rourke and Williamson 1999). We argued this based on late-19th century evidence. Then, the main losers from trade were European landowners, who found themselves competing with an elastic supply of cheap New World land. The result was that in Germany and France, Italy and Sweden, the move towards ever-freer trade that had been ongoing for several years was halted, and replaced by a shift towards protection that benefited not only agricultural interests, but industrial ones as well. Meanwhile, across the Atlantic, immigration restrictions were gradually tightened, as workers found themselves competing with European migrants coming from ever-poorer source countries. 

While Jeff and I were firmly focused on economic history, we were writing with half an eye on the ‘trade and wages’ debate that was raging during the 1990s. There was an obvious potential parallel between 19th-century European landowners, newly exposed to competition with elastic supplies of New World land, and late 20th-century OECD unskilled workers, newly exposed to competition with elastic supplies of Asian, and especially Chinese, labour. In our concluding chapter, we wrote that:

"A focus of this book has been the political implications of globalization, and the lessons are sobering. Politicians, journalists, and market analysts have a tendency to extrapolate the immediate past into the indefinite future, and such thinking suggests that the world is irreversibly headed toward ever greater levels of economic integration. The historical record suggests the contrary… unless politicians worry about who gains and who loses, they may be forced by the electorate to stop efforts to strengthen global economy links, and perhaps even to dismantle them…The globalization experience of the Atlantic economy prior to the Great War speaks directly and eloquently to globalization debates today. Economists who base their views of globalization, convergence, inequality, and policy solely on the years since 1970 are making a great mistake. We hope that this book will help them to avoid that mistake— or remedy it."

This time it is not different

You may argue that the economic history of a century ago is irrelevant – after all, this time is different. But ever since the beginning of the present century, at the very latest, it has been obvious that the politics of globalisation today bears a family resemblance to that of 100 years ago. 

  • It was as long ago as 2001 that Kenneth Scheve and Matthew Slaughter published an article finding that Heckscher-Ohlin logic did a pretty good job of explaining American attitudes towards trade – lower-skilled workers were more protectionist (Scheve and Slaughter 2001: 267). 

Later work extended this finding to the rest of the world. 

  • If the high skilled were more favourably inclined towards free trade in all countries, this would not be consistent with Heckscher-Ohlin theory, but that is not what the opinion survey evidence suggested – the Scheve-Slaughter finding held in rich countries, but not in poor ones (O'Rourke and Sinnott 2001: 157, Mayda and Rodrik 2005: 1393).

You may further argue that such political science evidence is irrelevant, or at least that conventional wisdom could be forgiven for ignoring it. But by the first decade of the 21st century, again at the very latest, it was clear that these forces could have tangible political effects. 

  • In 2005, a French referendum rejected the so-called 'Constitutional Treaty' by a convincing margin. 

While the treaty itself was a technical document largely having to do with decision-making procedures inside the EU, the referendum campaign ended up becoming, to a very large extent, a debate about globalisation in its local, European manifestation. 

Opponents of the treaty pointed to the outsourcing of jobs to cheap labour competitors in Eastern Europe, and to the famous Polish plumber. Predictably enough, professionals voted overwhelmingly in favour of the treaty, while blue-collar workers, clerical workers and farmers rejected it. The net result was a clear rejection of the treaty.

Lessons not learned

Shamefully, the response was to repackage the treaty, give it a new name, and push it through regardless – a shabby manoeuver that has done much to fuel Euroscepticism in France. There was of course no referendum on the Lisbon Treaty in that country, but there was in Ireland in 2008. Once again, a clear class divide opened up, with rich areas overwhelmingly supporting Lisbon, and poor areas overwhelmingly rejecting it. Survey evidence commissioned afterwards by the Irish government suggested that what canvassers on the doorsteps had found was indeed the case – hostility towards immigration in the poorer parts of Dublin was an important factor explaining the "No" vote there (O'Rourke 2008, Sinnott et al. 2010).

For a long time, conventional wisdom ignored these rather large straws in the wind – after all, the Irish could always be asked to vote again, while the French could always be told that they couldn't vote again. And so the show could go on. But now Brexit is happening, and the obvious cannot be ignored any longer. 

Recent work suggests that exposure to Chinese import competition was a common factor in many British regions that voted to leave the EU (Colantone and Stanig 2016). If this finding survives the scholarly scrutiny that it deserves, it will hardly come as a surprise. But it is nevertheless crucial, since these are precisely the kinds of regions that are voting for the National Front in France. And unlike Britain, France is absolutely central to the European project.

What can be done? Great openness requires greater governments

This is where Dani Rodrik's finding that more open states had bigger governments in the late 20th century comes in (Rodrik 1998). Dani – who was long ago asking whether globalisation had gone too far (Rodrik 1997) – argues that markets expose workers to risk, and that government expenditure of various sorts can help protect them from those risks. 

In a series of articles (e.g. Huberman and Meissner 2009) and a book (Huberman 2012), Michael Huberman showed that this correlation between states and markets was present before 1914 as well. Countries with more liberal trade policies tended to have more advanced social protections of various sorts, and this helped maintain political support for openness.

Anti-immigration sentiment was clearly crucial in delivering an anti-EU vote in England. And if you talk to ordinary people, it seems clear that competition for scarce public housing and other public services was one important factor behind this. But if the problem was a lack of services per capita, then there were two possible solutions: 

  • Reduce the number of 'capitas' by restricting immigration; or 
  • Increase the supply of services. 

It is astonishing in retrospect how few people argued strongly for more services rather than fewer people.

Concluding remarks and possible solutions

If the Tories had really wanted to maintain support for the EU, investment in public services and public housing would have been the way to do it. If these had been elastically supplied, that would have muted the impression that there was a zero-sum competition between natives and immigrants. It wouldnít have satisfied the xenophobes, but not all anti-immigrant voters are xenophobes. But of course the Tories were never going to do that, at least not with George Osborne at the helm.

If the English want continued Single Market access, they will have to swallow continued labour mobility. There are complementary domestic policies that could help in making that politically feasible. We will have to wait and see what the English decide. But there are also lessons for the 27 remaining EU states (28 if, as I hope, Scotland remains a member). Too much market and too little state invites a backlash. Take the politics into account, and it becomes clear (as Dani Rodrik has often argued) that markets and states are complements, not substitutes.


Colantone, I. and P. Stanig (2016), "Brexit: Data Shows that Globalization Malaise, and not Immigration, Determined the Vote", Bocconi Knowledge, 12 July. 

Huberman, M. (2012), Odd Couple: International Trade and Labor Standards in History, New Haven, CT: Yale University Press.

Huberman, M. and C. M. Meissner (2009), "New evidence on the rise of trade and social protection",, 23 October. 

Mayda, A. M. and D. Rodrik (2005), "Why are some people (and countries) more protectionist than others?", European Economic Review 49(6).

Rodrik, D. (1997), Has Globalization Gone Too Far?, Washington, DC: Peterson Institute for International Economics. 

Rodrik, D. (1998), "Why do More Open Economies Have Bigger Governments?" Journal of Political Economy 106(5): 997-1032

O'Rourke, K. (2008), "The Irish "no" and the rich-poor/urban-rural divide",, 14 June. 

O'Rourke, K. and R. Sinnott (2001), "The Determinants of Individual Trade Policy Preferences: International Survey Evidence", Brookings Trade Forum. 

O'Rourke, K. and J. Williamson (1999), Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, Cambridge, MA: MIT Press.

F. Scheve, K. F. and M. J. Slaughter (2001), "What determines individual trade-policy preferences?", Journal of International Economics 54(2).

Sinnott, R., J. A. Elkink, K. H. O'Rourke and J. McBride (2010), "Attitudes and Behaviour in the Referendum on the Treary of Lisbon", report prepared for the Department of Foreign Affairs.

Friday, August 26, 2016

Paul Krugman: No, Donald Trump, America Isn’t a Hellhole

What is Trump's pivot to crime all about?:

No, Donald Trump, America Isn’t a Hellhole, by Paul Krugman, NY Times: ...When the Trump campaign started, it was, at least nominally, about economics. Foreigners are stealing your jobs, the candidate declared, both through unfair trade and by coming here as immigrants. And he would make America great again with punitive tariffs and mass deportations.
But the story changed at the Republican convention. There was remarkably little economic discussion on display... Instead, the focus was all on law and order, on saving the nation from what the candidate described as a terrifying crime wave.
That theme has continued in recent weeks, with Mr. Trump’s “outreach” to minority voters. His notion of a pitch to these voters is to tell them how horrible their lives are, that they are facing “crime at levels that nobody has seen.” Even “war zones,” he says, are “safer than living in some of our inner cities.”
All of this is really strange — because nothing like this is actually happening. ...
Let’s talk specifically about violent crime. Consider, in particular, the murder rate... Homicides did shoot up between the early 1960s and the 1980s... Conservative writers assured us that soaring crime was the inevitable result of a collapse in traditional values...
But then a funny thing happened: The murder rate began falling, and falling, and falling. By 2014 it was ... back down to where it was half a century earlier. There was some rise in 2015, but so far ... it’s barely a blip in the long-run picture.
Basically, American cities are as safe as they’ve ever been...
So what is all of this about? The same thing everything in the Trump campaign is about: race.
I used scare quotes when talking about Mr. Trump’s racial “outreach” because it’s clear that the real purpose ... is to reassure squeamish whites that he isn’t as racist as he seems. But..: Even when he is trying to sound racially inclusive, his imagery is permeated by an “alt-right” sensibility that fundamentally sees nonwhites as subhuman. ... In the mental world he and those he listens to inhabit, blacks and other nonwhites are by definition shiftless burdens on society.
Which brings us back to the notion of America as a nightmarish dystopia. Taken literally, that’s nonsense. But today’s increasingly multiracial, multicultural society is a nightmare for people who want a white, Christian nation in which lesser breeds know their place. And those are the people Mr. Trump has brought out into the open.

Thursday, August 25, 2016

Why Do We Talk About ''Helicopter Money''?

Brad DeLong:

Why Do We Talk About “Helicopter Money”?: Why do we talk about “helicopter money”? We talk about helicopter money because we seek a tool for managing aggregate demand–for nudging the level of spending in an economy up to but not above the economy’s current sustainable productive potential–that is all of:

  1. Effective and successful–even in the very low interest rate world we appear to be in.
  2. Does not excite fears of an outsized central bank balance sheet–with its vague but truly-feared risks.
  3. Does not excite fears of an outsized government interest-bearing debt–with its very real and costly amortization burdens should interest rates rise.
  4. Keeps what ought to be a technocratic problem of public administration out of the mishegas that is modern partisan politics.

Right now the modal projection by participants in the Federal Reserve’s Open Market Committee meetings is that the U.S. Treasury Bill rate will top out at 3% this business cycle. It would be a brave meeting participant who would be confident that we would get there–if we would get there–with high probability before 2020. That does not provide enough room for the Federal Reserve to loosen policy by even the average amount of loosening seen in post-World War II recessions. Odds are standard open market operation-based interest rate tools will not be able to do the macroeconomic policy stabilization job when the next adverse shock hits the economy.

The last decade has taught us that quantitative easing on a scale large enough to rapidly return economies to full employment is one bridge if not more too far for central banks as they are currently constituted–if, that is, it is possible at all. The last decade has taught us that bond-funded expansionary fiscal policy on a scale large enough to rapidly return economies to full employment is at least several bridges too far for our political systems, at least as they are currently constituted.

If we do not now start planning for how to implement helicopter money when the next adverse shock comes, what will our plan be? As a candidate for a tool capable of doing all four of these things, helicopter money–giving the central bank the additional policy tool of printing up extra money and either mailing it out to households as checks or getting it into the hands of the public by buying extra useful stuff–is our last hope, and, if it is not our best hope, then I do not know what our best hope might be. ...

[The post also includes a list of links to other discussion of this topic.]

Economists Who’ve Advised Presidents Are No Fans of Donald Trump

From Real Time Economics at the WSJ:

Economists Who’ve Advised Presidents Are No Fans of Donald Trump: Republican presidential nominee Donald Trump, who has broken with many of the GOP’s traditional positions on economic policy, garners no support from any of the White House economists who have advised U.S. presidents for the past half-century.
The Wall Street Journal this month reached out to all 45 surviving former members of the White House Council of Economic Advisers under the past eight presidents, going back to Richard Nixon, to get their views on this year’s presidential election.
Among 17 Republican appointees who responded to Journal inquiries, none said they supported Mr. Trump. ...

Tuesday, August 23, 2016

Why We Need a Fiscal Policy Commission

I have a new column:

Why We Need a Fiscal Policy Commission: During the Great Recession, monetary policymakers were aggressive and creative in their attempts to revive the economy. I wish they had been even more aggressive, and at times they were a bit slow to react due to excessive fear of inflation and the tendency to see recovery just around the corner, but their overall response to the crisis was commendable. Unfortunately, monetary policy alone was far from enough to give the economy the help it needed. Fiscal policy was needed too. 
But fiscal policymakers let us down. ...

Monday, August 22, 2016

Paul Krugman: The Water Next Time

"This election is likely to be decisive for the climate":

The Water Next Time, by Paul Krugman, NY Times: ...The governor of flood-ravaged Louisiana asked President Obama to postpone a personal visit while relief efforts were still underway. ... He made the same request to Donald Trump, declaring, reasonably, that while aid would be welcome, a visit for the sake of a photo op would not.
Sure enough, the G.O.P. candidate flew in, shook some hands, signed some autographs, and was filmed taking boxes of Play-Doh out of a truck. If he wrote a check, neither his campaign nor anyone else has mentioned it. Heckuva job, Donnie! ...
Let’s back up for a minute and talk about the real meaning of the Louisiana floods. In case you haven’t been keeping track, lately we’ve been setting global temperature records every month. ...
And one consequence of a warmer planet is more evaporation, more moisture in the air, and hence more disastrous floods. ... So a proliferation of disasters like the one in Louisiana is exactly what climate scientists have been warning us about.
What can be done? The bad news is that drastic action to reduce emissions of greenhouse gases is long overdue. The good news is that the technological and economic basis for such action has never looked better. In particular, renewable energy — wind and solar — has become much cheaper in recent years, and progress in energy storage looks increasingly likely to resolve the problem of intermittency (The sun doesn’t always shine, the wind doesn’t always blow.) ...
It probably won’t surprise you to hear that..., as with so many issues, Mr. Trump has gone deep down the rabbit hole, asserting not just that global warming is a hoax, but that it’s a hoax concocted by the Chinese to make America less competitive.
The thing is, he’s not alone in going down that rabbit hole..., Mr. Trump is squarely in the Republican mainstream. ...
In any case, this election is likely to be decisive for the climate, one way or another. President Obama has made some serious moves to address global warming, and there’s every reason to believe that Hillary Clinton would continue this push — using executive action if she faced a hostile Congress. Given the technological breakthroughs of the last few years, this push might just be enough to avert disaster. Donald Trump, on the other hand, would do everything in his power to trash the planet, with the enthusiastic support of his party. So which will it be? Stay tuned.

Friday, August 19, 2016

Paul Krugman: Obamacare Hits a Bump

The problems with Obamacare would be easy to fix, the real problem is Congress:

Obamacare Hits a Bump, by Paul Krugman, NY Times: More than two and half years have gone by since the Affordable Care Act, a.k.a. Obamacare, went fully into effect. Most of the news about health reform since then has been good, defying the dire predictions of right-wing doomsayers. But this week has brought some genuine bad news: The giant insurer Aetna announced that it would be pulling out of many of the “exchanges,” the special insurance markets the law established. ...
So what’s the problem?
Well, Obamacare is a system that relies on private insurance companies to provide much of its expanded coverage... And many of these private insurers are now finding themselves losing money, because previously uninsured Americans ... turn out to have been sicker and more in need of costly care than we realized. ...

The bad news mainly hits states that have small populations and/or have governments hostile to reform, where the exit of insurers may leave markets without adequate competition. That’s not the whole country, but it would be a significant setback.
But it would be quite easy to fix the system. It seems clear that subsidies for purchasing insurance, and in some cases for insurers themselves, should be somewhat bigger — an affordable proposition given that the program so far has come in under budget... There should also be a reinforced effort to ensure that healthy Americans buy insurance, as the law requires, rather than them waiting until they get sick. Such measures would go a long way toward getting things back on track.
Beyond all that, what about the public option?
The idea of allowing the government to offer a health plan directly to families was blocked in 2010 because private insurers didn’t want to face the competition. But if those insurers aren’t actually interested in providing insurance, why not let the government step in (as Hillary Clinton is in fact proposing)?
The trouble, of course, is Congress...
That said, there may still be room for action at the executive level. And I’m hearing suggestions that states may be able to offer their own public options; if these proved successful, they might gradually become the norm.
However this plays out, it’s important to realize that as far as anyone can tell, there’s nothing wrong with Obamacare that couldn’t be fairly easily fixed with a bit of bipartisan cooperation. The only thing that makes this hard is the blocking power of politicians who want reform to fail.

Wednesday, August 17, 2016

Liberalism and Hate-Based Extremism

[I am traveling, so apologies for the lack of posts lately. Hopefully this will give you something to talk about.]

Daniel Little:

Liberalism and hate-based extremism, Understanding Society: How should a democratic society handle the increasingly virulent challenges presented by hate groups, anti-government extremists, and organizations that encourage violence and discrimination against others in society? Should extremist groups have unlimited rights to advocate for their ideologies of hatred and antagonism against other groups within a democracy?

Erik Bleich has written extensively on the subject of racist speech and the law. Recent books include The Freedom to Be Racist?: How the United States and Europe Struggle to Preserve Freedom and Combat Racism and Race Politics in Britain and France: Ideas and Policymaking since the 1960s. Bleich correctly notes that these issues are broader than the freedom-of-speech framework in which they are often placed; so he examines law and policy in multiple countries on freedom of speech, freedom of association, and freedom of opinion-as-motive. In each of these areas he finds important differences across European countries and the United States with respect to legislation concerning racist expressions. In particular, liberal democracies like Great Britain, France, and Germany have created legislation to prohibit various kinds of hate-based speech and action. Here is his summary of the status of European legislation:

European restrictions on racist expression have proceeded gradually but consistently since World War II. A few provisions were established in the immediate postwar era, but most countries’ key laws were enacted in the 1960s and 1970s. The statutes have been tinkered with, updated, and expanded in the ensuing decades to the point where virtually all European liberal democracies now have robust hate speech laws on their books. These laws are highly symbolic of a commitment to curb racism. But they are also more than just symbols. As measured by prosecutions and convictions, levels of enforcement vary significantly across Europe, but most countries have deployed their laws against a variety of racist speech and have recently enforced stiffer penalties for repeat offenders. (kl 960) 

In the United States it is unconstitutional under the First Amendment of the Constitution to prohibit "hate speech" or to ban hate-based organizations. So racist and homophobic organizations are accorded all but unlimited rights of association and expression, no matter how odious and harmful the content and effects of their views. As Bleich points out, other liberal democracies have a very different legal framework for regulating hate-based extremism by individuals and organizations (France, Germany, Sweden, Canada).

Here is the First Amendment of the US Constitution:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

This is pure liberalism, according to which the state needs to remain entirely neutral about disagreements over values, and the only justification for legal prohibition of an activity is the harm the activity creates. There is a strong philosophical rationale for this position. John Stuart Mill maintains an ultra-strong and exceptionless view of freedom of expression in On Liberty.  He argues that all ideas have an equal right to free expression, and that this position is most advantageous to society as a whole. Vigorous debate leads to the best possible set of beliefs. Here are a few passages from On Liberty:

The object of this Essay is to assert one very simple principle, as entitled to govern absolutely the dealings of society with the individual in the way of compulsion and control, whether the means used be physical force in the form of legal penalties, or the moral coercion of public opinion. That principle is, that the sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. (13)
But the peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error. (19)

This line of reasoning leads to legal toleration in the United States of groups like the White Citizens Councils, Neo-Nazi parties, and the Westboro Baptist Church to conduct their associations, propaganda, and demonstrations to further their hateful objectives. And they and their activists sometimes go further and commit actress of terrible violence (Timothy McVeigh, the murder of Matthew Shepherd in Wyoming, and the murders of civil rights workers in Mississippi).

But as Mill acknowledges, a democratic society has a right and an obligation to protect its citizens from violence. This is the thrust of the "harm" principle in Mill's philosophy of political authority. Is right-wing extremism (RWE) really just another political platform, equally legitimate within the public sphere of debate in a democratic society? Or do these organizations represent a credible threat to personal safety and civil peace?

Certainly most of the disagreements between liberals and conservatives fall in Millian category -- how much a society should spend on social welfare programs, what its immigration policies ought to be, the legal status of single-sex marriage. The disagreements among the parties are intense, but the debates and positions on both sides are legitimate. Mill is right about this range of policy disagreements. The political process and the sphere of public debate should resolve these disagreements.

But RWE goes beyond this level of disagreement about policy and legislation. RWE represents a set of values and calls to action that are inconsistent with the fundamentals of a democratic society. And they are strongly and essentially related to violence. RWE activists call for violence against hated groups, they call for armed resistance to the state (e.g. the Bundy's), and they actively work to inculcate hatred against specific groups (Muslims, Jews, African Americans, gays and lesbians, ...). These groups are anti-constitutional and contemptuous of the common core of civility upon which a democratic society depends.

There are two fundamental arguments against hate-based speech and associations that seem to justify exceptions to the general liberal principle of toleration of offensive speech. One is an argument linking hate to violence. There is ample historical evidence that hateful organizations do in fact stimulate violence by their followers (Birmingham bombing, lynchings and killings of civil rights workers, the assassination of Yitzak Rabin). So our collective interest in protecting all citizens against violence provides a moral basis for limiting incendiary hate speech and organization.

The second kind of argument concerns hate itself, and the insidious effects that hateful ideologies have on individuals, groups, and the polity. EU reports make an effort to capture the essential nature and harms of hate (link). Hate incites mistrust, disrespect, discrimination, and violence against members of other groups. The social effects of hate are toxic and serious. Do these effects suffice to justify limiting hate speech?

This is a difficult argument to make within the context of US jurisprudence. The realm of law involves coercion, and it is agreed that the threshold for interfering with liberty is a high one. It is also agreed that legal justifications and definitions need to be clear and specific. How do we define hate? Is it explained in terms of well-known existing hatreds -- racism, anti-semitism, islamophobia, homophobia, ...? Or should it be defined in terms of its effects -- inculcating disrespect and hostility towards members of another group? Can there be new hatreds in a society -- antagonisms against groups that were previously accepted without issue? Are there legitimate "hatreds" that do not lead to violence and exclusion? Or is there an inherent connection between hatred and overt antagonism? And what about expressions like those of Charlie Hebdo -- satire, humor, caricature? Is there a zone of artistic expression that should be exempt from anti-hate laws?

Here is Bleich's considered view on the balance between liberty and racism. Like Mill, he focuses on the balance between the value of liberty and the harm created by racist speech and action.

To telegraph the argument here, my perspective focuses on the level of harm inflicted on individuals, victim groups, and societies. For individuals and victim groups, the harm has to be measurable, specific, and intense. For societies, racism that fosters violence or that drives wedges between groups justifies limiting freedom of expression, association, and opinion-as-motive. (kl 247)


Racist expressions, associations, or actions that drive a wedge between segments of society or that provoke an extremely hostile response have little redeeming social value. Their harm to other core liberal democratic values such as social cohesion and public order simply outweighs any potential benefits to be gained by protecting them. At the same time, if the statements or organizations are designed to contribute to public debate about state policies, they have to be rigorously protected, even if they may have potentially damaging side effects. (kl 3403)

And here are the closing words of advice offered in the book:

How much freedom should we grant to racists? The ultimate answer is this: look at history, pay attention to context and effects, work out your principles, convince your friends, lobby your representatives, and walk away with a balance of values that you can live with. (kl 3551)

The issue to this point has been whether the state can legitimately prohibit hate speech and organization. But other avenues for fighting hateful ideas fall within the realm of civil society itself. We can do exactly as Mill recommended: offer our own critiques and alternatives to hatred and racism, and strive to win the battle of public opinion. Empirically considered, this is not an entirely encouraging avenue, because a century of experience demonstrates that hate-based propaganda almost always finds a small but virulent audience. So it is not entirely clear that this remedy is sufficient to solve the problem.

These are all difficult questions. But the rise and virulence of hate-based groups across the world makes it urgent for democracies to confront the problem in a just way, respecting equality and liberty of citizens while stamping out hate. And there are pressing practical questions we have to try to answer: do the non-coercive strategies available to the associations of civil society have the capacity to securely contain the harmful spread of hate-based organizations and ideologies? And, on the other hand, do the more restrictive legal codes against racism and hate-based organizations actually work in France or Germany? Or does the continuing advance of extremist groups there suggest that legal prohibition had little effect on RWE as a political movement? And if both questions turn out unfavorably, does liberalism face the possibility of defeat by the organizations of hatred and racism?

Friday, August 12, 2016

Paul Krugman: Pieces of Silver

How can Republicans support Trump?:

Pieces of Silver, by Paul Krugman, NY Times: By now, it’s obvious ... that Donald Trump is an ignorant, wildly dishonest, erratic, immature, bullying egomaniac. On the other hand, he’s a terrible person. But despite some high-profile defections, most senior figures in the Republican Party ... are still supporting him, threats of violence and all. Why?
One answer is that these were never men and women of principle. ...
Another answer is that ... the greatest risk facing many Republican politicians isn’t that of losing in the general election, it’s that of losing to an extremist primary challenger. This makes them afraid to cross Mr. Trump, whose ugliness channels the true feelings of the party’s base.
But there’s a third answer, which can be summarized in one number: 34..., the average federal tax rate for the top 1 percent in 2013.... And it’s up from just 28.2 in 2008, because President Obama allowed the high-end Bush tax cuts to expire and imposed new taxes to pay for a dramatic expansion of health coverage... Taxes on the really, really rich have gone up even more.
If Hillary Clinton wins, taxes on the elite will at minimum stay at this level, and may even go up significantly if Democrats do well enough ... to enable her to pass new legislation. ...
But if “populist” Donald Trump wins, taxes on the wealthy will go way down...
So if you’re wealthy, or you’re someone who has built a career by reliably serving the interests of the wealthy, the choice is clear — as long as you don’t care too much about stuff like shunning racism, preserving democracy and freedom of religion, or for that matter avoiding nuclear war, Mr. Trump is your guy..., it’s just an extension of the devil’s bargain the economic right has been making for decades, going all the way back to Nixon’s “Southern strategy.” ...
If this election goes the way it probably will, a few months from now those leading Republicans will be trying to pretend that they never really supported their party’s nominee, that in their hearts they always knew he was the wrong man.
But whatever doubts they may be feeling don’t excuse their actions, and in fact make them even less forgivable. For the fact is that right now, when it matters, they have decided that lower tax rates on the rich are sufficient payment for betraying American ideals and putting the republic as we know it in danger.

Tuesday, August 09, 2016

The Failure of the Market for Presidential Candidates

New column:

The Failure of the Market for Presidential Candidates: Almost all economists believe in markets, and the tools economists use to analyze markets can be applied to a surprisingly large number of social interactions. Our attempts to use economics to examine questions that are traditionally the purview of sociology, psychology, and political science have not always been welcomed by those in other fields, and there’s no doubt that our methods are often applied naively without a full understanding of what researchers in other disciplines have learned. Nevertheless, I can’t help speculating on why the “market” for political candidates failed so spectacularly this year. ...

Friday, August 05, 2016

Paul Krugman: No Right Turn

There's no reason for Democrats to change their agenda to attract Republicans fleeing from Trump:

No Right Turn, by Paul Krugman, NY Times: ...we’re finally seeing some prominent Republicans not just refusing to endorse Mr. Trump, but actually declaring their support for Mrs. Clinton. So how should she respond?
The obvious answer, you might think, is that she should keep doing what she is doing... But at least some commentators are calling on her to do something very different — to make a right turn, moving the Democratic agenda toward the preferences of those fleeing the sinking Republican ship. ...
I don’t think there’s much prospect that Mrs. Clinton will actually do that. But if by any chance she and those around her are tempted to take this recommendation seriously: Don’t.
First of all, let’s be clear about what she’s running on. It’s an unabashedly progressive program, but hardly extreme. ... And no, the program doesn’t need to be more “pro-growth.”
There’s absolutely no evidence that tax cuts for the rich and radical deregulation, which is what right-wingers mean when they talk about pro-growth policies, actually work, or that strengthening the social safety net does any harm. ...
It’s true that there are things we could do to boost the U.S. economy. The most important ... would be to ... expand public investment — which is something progressives support but conservatives oppose. So enough already with the notion that being on the center-left somehow means being anti-growth.
Now let’s talk about the politics.
The Trumpification of the G.O.P. didn’t come out of nowhere. On the contrary, it was the natural outcome of a cynical strategy: long ago, conservatives decided to harness racial resentment to sell right-wing economic policies to working-class whites, especially in the South. ...
So now the strategy that rightists had used to sell policies that were neither popular nor successful has blown up in their faces. And the Democratic response should be to adopt some of those policies? Say what? ...
Trumpism is basically a creation of the modern conservative movement, which used coded appeals to prejudice to make political gains, then found itself unable to rein in a candidate who skipped the coding.
If some conservatives find this too much and bolt the party, good for them, and they should be welcomed into the coalition of the sane. But they can’t expect policy concessions in return. When Dr. Frankenstein finally realizes that he has created a monster, he doesn’t get a reward. Mrs. Clinton and her party should stay the course.

Friday, July 29, 2016

Paul Krugman: Who Loves America?

Republicans and the patriot act:

Who Loves America?, by Paul Krugman, NY Times: ...too many influential figures on the right are tribalists, not patriots.
We got a graphic demonstration of that reality after Michelle Obama’s speech, when she spoke of the wonder of watching her daughters play on the lawn of “a house that was built by slaves.” It was an uplifting and, yes, patriotic image, a celebration of a nation that is always seeking to become better, to transcend its flaws.
But many people on the right ... heard was a knock on white people. “They can’t stop talking about slavery,” complained Rush Limbaugh. The slaves had it good, insisted Bill O’Reilly: “They were well fed and had decent lodgings.” Both men were, in effect, saying that whites are their tribe and must never be criticized.
This same tribal urge surely underlies a lot of the right’s rhetoric about national security. Why are Republicans so fixated on the notion that the president must use the phrase “Islamic terrorism,” when actual experts on terrorism agree that this would actually hurt national security, by helping to alienate peaceful Muslims?
The answer, I’d argue, is that ... it’s all about drawing a line between us (white Christians) and them (everyone else), and national security has nothing to do with it.
Which brings us back to the Vlad-Donald bromance. Mr. Trump’s willingness to cast aside our nation’s hard-earned reputation as a reliable ally is remarkable. So is ... his support for Mr. Putin’s priorities... And he has offered only evasive non-answers to questions about his business ties to Putin-linked oligarchs.
But what strikes me most is the silence of so many leading Republicans in the face of behavior they would have denounced as treason coming from a Democrat...
What this tells you, I think, is that all the flag-waving and hawkish posturing had nothing to do with patriotism. It was, instead, about using alleged Democratic weakness on national security as a club with which to beat down domestic opponents, and serve the interests of the tribe.
Now comes Mr. Trump, doing the bidding of a foreign power and inviting it to intervene in our politics — and that’s O.K., because it also serves the tribe.
So if it seems strange to you that these days Democrats are sounding patriotic while Republicans aren’t, you just weren’t paying attention. The people who now seem to love America always did; the people who suddenly no longer sound like patriots never were.

Tuesday, July 26, 2016

Trump Jr.’s Pants-on-Fire Allegation of Manipulated Jobs Numbers

Jeff Frankel at Econbrowser:

Trump Jr.’s Pants-on-Fire Allegation of Manipulated Jobs Numbers: When interviewed about the unemployment numbers, which have fallen steadily since 2010, Donald Trump Jr., replied “These are artificial numbers. These are numbers that are massaged to make the existing economy look good, to make this administration look good when, in fact, it’s a total disaster.” PolitiFact asked a variety of experts about the quote. Their bottom line: the quote from the younger Trump was a “Pants on Fire” lie. The truth is that presidents don’t and can’t manipulate the jobs numbers. No White House has even tried — at least not since Richard Nixon made a heavy-handed attempt in 1971 to interfere with BLS staffing. After that, extra firewalls were put in place.
Here is my own full response to PolitiFact’s question regarding the Trump claim...