Category Archive for: Politics [Return to Main]

Monday, March 27, 2017

Tax Cuts Can’t be Financed by Reducing Government Waste

I have a new column (my title was "Some of These Markets are Not Like the Others"):

It’s a Ruse: Tax Cuts Can’t be Financed by Reducing Government Waste: The Republicans suffered a humiliating defeat on their proposal to cut taxes for the wealthy disguised as healthcare reform. But as the Trump administration has made clear, they are not about to give up on their tax cut plans.
But how will those tax cuts be financed? The Republican’s health care reform plan would have delivered $600 billion in tax cuts, but with that option gone where will the money come from? ...

Friday, March 24, 2017

Paul Krugman: The Scammers, the Scammed and America’s Fate

"The destructive effects of false symmetry in reporting":

The Scammers, the Scammed and America’s Fate, by Paul Krugman, NY Times: ...Mr. Ryan’s proposed Obamacare replacement ... is one of the worst bills ever presented to Congress.
It would deprive tens of millions of health insurance — the decline in the number of insured Americans would be larger than ... simple repeal of Obamacare! — while sharply raising expenses for many of those who remain. It would be especially punitive for lower-income, older, rural voters.
In return, we would get a small reduction in the budget deficit. Oh, and a tax cut, perhaps as much as $1 trillion, for the wealthy.
This is terrible stuff. It’s made worse by the lies Mr. Ryan has been telling about his plan. ...
Some people seem startled both by the awfulness of Mr. Ryan’s plan and by the raw dishonesty of his sales pitch. But why..., he’s still the same guy I wrote about back in 2010, in a column titled “The Flimflam Man.”
I wrote that column in response to what turned out to be the first of a series of high-profile Ryan budget proposals. ... It was a con job all the way.
So how did Mr. Ryan reach a position where his actions may reshape the lives of so many ... for the worse? The answer lies in the ... news media, who made him what he is.
You see, until very recently both news coverage and political punditry were dominated by the convention of “balance.” ... And this ... meant that it was necessary to point to serious, honest, knowledgeable proponents of conservative positions.
Enter Mr. Ryan, who isn’t actually a serious, honest policy expert, but plays one on TV. He rolls up his sleeves! He uses PowerPoint! He must be the real deal! So that became the media’s narrative. And media adulation, more than anything else, propelled him to his current position.
Now, however, the flimflam has hit a wall. ... The C.B.O. told the devastating truth about his plan, and his evasions and lies were too obvious to ignore.
There’s an important lesson here, and it’s not just about health care or Mr. Ryan; it’s about the destructive effects of false symmetry in reporting at a time of vast asymmetry in reality.
This false symmetry — downplaying the awfulness of some candidates, vastly exaggerating the flaws of their opponents — isn’t the only reason America is in the mess it’s in. But it’s an important part of the story. And now we’re all about to pay the price.

Monday, March 20, 2017

Paul Krugman: America’s Epidemic of Infallibility

"...inability to engage in reflection and self-criticism is the mark of a tiny, shriveled soul...":

America’s Epidemic of Infallibility, by Paul Krugman, NY Times: ...American politics — at least on one side of the aisle — is suffering from an epidemic of infallibility, of powerful people who never, ever admit to making a mistake.
More than a decade ago I wrote that the Bush administration was suffering from a “mensch gap.” ... Nobody ... ever seemed willing to accept responsibility for policy failures...
Later, in the aftermath of the financial crisis, a similar inability to admit error was on display among many economic commentators.
Take, for example, the open letter a who’s who of conservatives sent to Ben Bernanke in 2010, warning that his policies could lead to “currency debasement and inflation.” They didn’t. But four years later, when ... contacted..., not one was willing to admit having been wrong.
By the way, press reports say that one of those signatories, Kevin Hassett — co-author of the 1999 book “Dow 36,000” — will be nominated as chairman of Mr. Trump’s Council of Economic Advisers. Another, David Malpass — the former chief economist at Bear Stearns, who declared on the eve of the financial crisis that “the economy is sturdy” — has been nominated as undersecretary of the Treasury for international affairs. They should fit right in. ...
What happened to us? Some of it surely has to do with ideology: When you’re committed to a fundamentally false narrative about government and the economy, as almost the whole Republican Party now is, facing up to facts becomes an act of political disloyalty. ...
But what’s going on with Mr. Trump and his inner circle seems to have less to do with ideology than with fragile egos. To admit having been wrong about anything, they seem to imagine, would brand them as losers and make them look small.
In reality, of course, inability to engage in reflection and self-criticism is the mark of a tiny, shriveled soul — but they’re not big enough to see that. ...
Many Americans no longer seem to understand what a leader is supposed to sound like, mistaking bombast and belligerence for real toughness.
Why? Is it celebrity culture? Is it working-class despair, channeled into a desire for people who spout easy slogans?
The truth is that I don’t know. But we can at least hope that watching Mr. Trump in action will be a learning experience — not for him, because he never learns anything, but for the body politic. And maybe, just maybe, we’ll eventually put a responsible adult back in the White House.

Friday, March 17, 2017

Paul Krugman: Conservative Fantasies, Colliding With Reality

Talk is cheap:

Conservative Fantasies, Colliding With Reality, by Paul Krugman, NY Times: This week the Trump administration put out a budget blueprint — or more accurately, a “budget” blueprint. After all, real budgets detail where the money comes from and where it goes; this proclamation covers only around a third of federal spending, while saying nothing about revenues or projected deficits. ...
So what’s the point of the document? The administration presumably hopes that it will distract the public and the press from the ongoing debacle over health care. But it probably won’t. And in any case, this pseudo-budget embodies the same combination of meanspiritedness and fiscal fantasy that has turned the Republican effort to replace Obamacare into a train wreck.
Think ... about the vision of government ... that the right has been peddling for decades.
In this vision, much if not most government spending is a complete waste, doing nobody any good. The same is true of government regulations. And to the extent ... spending does help anyone, it’s Those People — lazy, undeserving types who just so happen to be a bit, well, darker than Real Americans.
This was the kind of thinking — or, perhaps, “thinking” — that underlay President Trump’s promise to replace Obamacare with something “far less expensive and far better.” After all, it’s a government program, so he assumed that it must be full of waste that a tough leader like him could eliminate.
Strange to say, however, Republicans turn out to have no ideas about how to make the program cheaper other than eliminating health insurance for 24 million people (and making coverage worse, with higher out-of-pocket spending, for those who remain).
And basically the same story applies at a broader level. Consider federal spending...: Outside defense it’s dominated by Social Security, Medicare and Medicaid — all programs that are crucial to tens of millions of Americans, many of them the white working-class voters who are the core of Trump support. Furthermore, most other government spending also serves purposes that are popular, important or (usually) both.
Given this reality..., what will happen if anti-big-government politicians ... put their agenda into practice? Voters will quickly get a lesson in what slashing spending really means — and they won’t be happy.
That’s basically the wall Obamacare repeal has just smashed into. ...
Republicans’ budget promises, like their health care promises, have been based on an essentially fraudulent picture of what’s really going on. And now the bill for these lies is coming due.

Tuesday, March 14, 2017

Populism and the Politics of Health

Paul Krugman:

Populism and the Politics of Health: What’s next on health care? Truly, I have no idea. The AHCA is a real stinker... But ... starting off the Trump legislative era with the crashing and burning of Obamacare repeal would deeply damage Trump... So they will pull out all the stops.
But why are Republicans having so much trouble? Health reform is hard... But there’s a more fundamental issue: who is being served?
Obamacare helped a large number of people at the expense of a small, affluent minority: basically, taxes on 2% of the population to cover a lot of people and assure coverage to many more. Trumpcare would reverse that, hurting a lot of people (many of whom voted Trump) so as to cut taxes for a handful of wealthy people. That’s a difference that goes beyond political strategy. ...
And yet, and yet: Trump did in fact win over white working-class voters, who thought they were voting for a populist...
This ties in with an important recent piece by Zack Beauchamp on the striking degree to which left-wing economics fails, in practice, to counter right-wing populism... Why?
The answer, presumably, is that what we call populism is really in large degree white identity politics, which can’t be addressed by promising universal benefits. Among other things, these “populist” voters now live in a media bubble, getting their news from sources that play to their identity-politics desires, which means that even if you offer them a better deal, they won’t hear about it or believe it if told. For sure many if not most of those who gained health coverage thanks to Obamacare have no idea that’s what happened.
That said, taking the benefits away would probably get their attention, and maybe even open their eyes to the extent to which they are suffering to provide tax cuts to the rich. ...
... Trumpism is faux populism that appeals to white identity but actually serves plutocrats. That fundamental contradiction is now out in the open.

Monday, March 13, 2017

Paul Krugman: Facts Are Enemies of the People

The "Trumphony" of falsehoods is harmful:

Facts Are Enemies of the People, by Paul Krugman, NY Times: The U.S. economy added 10.3 million jobs during President Obama’s second term, or 214,000 a month. This brought the official unemployment rate below 5 percent... But Donald Trump insisted that the good news on jobs was “phony,” that America was actually suffering from mass unemployment.
Then came the first employment report of the Trump administration, which at 235,000 jobs added looked very much like a continuation of the previous trend. And the administration claimed credit: Job numbers, Mr. Trump’s press secretary declared, “may have been phony in the past, but it’s very real now.”
Reporters laughed — and should be ashamed of themselves... For it really wasn’t a joke. America is now governed by a president and party that ... want everyone to accept that reality is whatever they say it is.
So we’re just supposed to believe the president if he says, falsely, that his inauguration crowd was the biggest ever; if he claims, ludicrously, that millions of votes were cast illegally for his opponent; if he insists, with no evidence, that his predecessor tapped his phones.
And it’s not just about serving one man’s vanity..., this attitude can hurt millions of people, consider ... health care reform.
Obamacare has led to a sharp decline in the number of Americans without health insurance. ... Republicans, however, are in denial about recent gains. ...
And as for the likely impacts of Trumpcare — well, they literally don’t want to know. ...Republicans rammed Trumpcare through key committees, literally in the dead of night, without waiting for the C.B.O. score — and they have been pre-emptively denouncing the budget office, which is likely to find that the bill would cause millions to lose health coverage. ...
The C.B.O., in other words, is in the same position as the news media, which Mr. Trump has declared “enemies of the people” — not, whatever he may say, because they get things wrong, but because they dare to challenge him on anything. ...
And much, perhaps most, of his party is happy to go along, accepting even the most bizarre conspiracy theories. For example, a huge majority of Republicans believe Mr. Trump’s basically insane charges about being wiretapped by President Obama.
So don’t make the mistake of dismissing the assault on the Congressional Budget Office as some kind of technical dispute. It’s part of a much bigger struggle, in which what’s really at stake is whether ignorance is strength, whether the man in the White House is the sole arbiter of truth.

Monday, March 06, 2017

Paul Krugman: A Party Not Ready to Govern

"They have no idea how to turn their slogans into actual legislation

A Party Not Ready to Govern, by Paul Krugman, NY Times: According to Politico, a Trump confidante says that the man in the Oval Office — or more often at Mar-a-Lago — is “tired of everyone thinking his presidency is screwed up.” Pro tip: The best way to combat perceptions that you’re screwing up is, you know, to stop screwing up.
But he can’t, of course. And it’s not just a personal problem.
It goes without saying that Donald Trump is the least qualified individual, temperamentally or intellectually, ever installed in the White House. ... Thanks, Comey.
But the broader Republican quagmire — the party’s failure so far to make significant progress toward any of its policy promises — isn’t just about Mr. Trump’s inadequacies. The whole party, it turns out, has been faking it for years. Its leaders’ rhetoric was empty; they have no idea how to turn their slogans into actual legislation, because they’ve never bothered to understand how anything important works.
Take the two lead items in the congressional G.O.P.’s agenda: undoing the Affordable Care Act and reforming corporate taxes. In each case Republicans seem utterly shocked to find themselves facing reality.
The story of Obamacare repeal would be funny if the health care — and, in many cases, the lives — of millions of Americans weren’t at stake. ...
Then there’s corporate tax reform — an issue where the plan being advanced by Paul Ryan ... is actually not too bad, at least in principle. ...
But Mr. Ryan has failed spectacularly to make his case either to colleagues or to powerful interest groups. Why? As best I can tell, it’s because he himself doesn’t understand the point of the reform. ...
At this point, then, major Republican initiatives are bogged down for reasons that have nothing to do with the personality flaws of the tweeter in chief, and everything to do with the broader, more fundamental fecklessness of his party.
Does this mean that nothing substantive will happen on the policy front? Not necessarily. Republicans may decide to ram through a health plan that causes mass suffering, and hope to blame it on Mr. Obama. They may give up on anything resembling a principled tax reform, and just throw a few trillion dollars at rich people instead.
But whatever the eventual outcome, what we’re witnessing is what happens when a party that gave up hard thinking in favor of empty sloganeering ends up in charge of actual policy. And it’s not a pretty sight.

Friday, March 03, 2017

Paul Krugman: Goodbye Spin, Hello Raw Dishonesty

Who'll stop the rain?:

Goodbye Spin, Hello Raw Dishonesty, by Paul Krugman, Commentary, NY Times: The latest big buzz is about Jeff Sessions, the attorney general. It turns out that he lied during his confirmation hearings, denying that he had met with Russian officials during the 2016 campaign. In fact, he met twice with the Russian ambassador, who is widely reported to also be a key spymaster. ...
At this point it’s easier to list the Trump officials who haven’t been caught lying under oath than those who have. This is not an accident.
Critics ... used to complain, with justification, about politicians’ addiction to spin —...presenting their actions in a much better light than they deserved. But all indications are that the age of spin is over. It has been replaced by an era of raw, shameless dishonesty.
In part, of course, the pervasiveness of lies reflects the character of the man at the top: No president, or for that matter major U.S. political figure of any kind, has ever lied as freely and frequently as Donald Trump. ...
And the question is, who’s going to stop him?
The moral vacuity of Republicans in Congress, and the unlikelihood that they’ll act as any check on the president, becomes clearer with each passing day. Even the real possibility that we’re facing subversion by agents of a foreign power, and that top officials are part of the story, doesn’t seem to faze them as long as they can get tax cuts for the rich and benefit cuts for the poor.
Meanwhile, Republican ... voters, who are the real arbiters when polarized and/or gerrymandered districts make the general election irrelevant for many politicians, live in a Fox News bubble...
And what about the Fourth Estate? Will it let us down, too?
To be fair, the first weeks of the Trump administration have in important ways been glory days for journalism; one must honor the ... reporters who have been ferreting out the secrets this authoritarian-minded clique is so determined to keep.
But then you watch something like the way much of the news media responded to Mr. Trump’s congressional address, and you feel despair. It was a speech filled with falsehoods and vile policy proposals, but read calmly off the teleprompter — and suddenly everyone was declaring the liar in chief “presidential.”
The point is that if that’s all it takes to exonerate the most dishonest man ever to hold high office in America, we’re doomed. Let’s hope it doesn’t happen again.

Monday, February 27, 2017

Paul Krugman: The Uses of Outrage

"...an outraged populace can and must push back...":

The Uses of Outrage, by Paul Krugman, NY Times: ...Mr. Trump is clearly a would-be autocrat, and other Republicans are his willing enablers. Does anyone doubt it? And given this reality, it’s completely reasonable to worry that America will go the route of other nations, like Hungary, which remain democracies on paper but have become authoritarian states in practice.
How does this happen? A crucial part of the story is that the emerging autocracy uses the power of the state to intimidate and co-opt civil society — institutions outside the government proper. The media are bullied and bribed into becoming de facto propaganda organs of the ruling clique. Businesses are pressured to reward the clique’s friends and punish its enemies. Independent public figures are pushed into collaboration or silence. Sound familiar?
But an outraged populace can and must push back, using the power of disapproval to counter the influence of a corrupted government.
This means supporting news organizations that do their job and shunning those that act as agents of the regime. It means patronizing businesses that defend our values and not those willing to go along with undermining them. It means letting public figures, however nonpolitical their professions, know that people care about the stands they take, or don’t. For these are not normal times, and many things that would be acceptable in a less fraught situation aren’t O.K. now.
For example, it is not O.K. for newspapers to publish he-said-she-said pieces that paper over administration lies, let alone beat-sweetening puff pieces about Trump allies. It’s not O.K. for businesses to supply Mr. Trump with photo ops claiming undeserved credit for job creation — or for business leaders to serve on “advisory” panels that are really just another kind of photo op.
It’s not even O.K. to go golfing with the president, saying that it’s about showing respect for the office, not the man. Sorry, but when the office is held by someone trying to undermine the Constitution, doing anything that normalizes him and lends him respectability is a political act.
I’m sure many readers would rather live in a nation in which more of life could be separated from politics. So would I! But civil society is under assault from political forces, so that defending it is, necessarily, political. And justified outrage must fuel that defense. When neither the president nor his allies in Congress show any sign of respecting basic American values, an aroused public that’s willing to take names is all we have.

 

The Real Test for the Republican Health Care Plan

I have a new column:

The Real Test for the Republican Health Care Plan: The Republicans’ rallying cry on health care reform is that the marketplace – relying on the forces of supply and demand – is the best way to run our healthcare system. Government involvement in health care interferes with the magic of markets and makes us all worse off.
The problem with this argument is that markets for health insurance are subject to significant market failures. Without regulatory intervention to fix these problems the market system will not provide what the market systems promises, widely available health care at the lowest possible price. ...

Interestingly, despite their public rhetoric Republicans seem to recognize that these features will be needed in whatever health care reform package they put forward, assuming they can eventually agree on a plan. ... So far, however, although there has been evolution, the proposal is still bad news for those with low incomes and – surprise! – it is very beneficial to those with considerable means. ...

Friday, February 24, 2017

Paul Krugman: Death and Tax Cuts

"So why do Republicans hate Obamacare so much?":

Death and Tax Cuts, by Paul Krugman, NY Times: Across the country, Republicans have been facing crowds demanding to know how they will protect the 20 million Americans who gained health insurance thanks to the Affordable Care Act... And after all that inveighing against the evils of Obamacare, it turns out that they’ve got nothing. ...
After years to prepare, Mr. Ryan finally unveiled what was supposedly the outline of a health care plan. It was basically a sick joke: flat tax credits, unrelated to income, that could be applied to the purchase of insurance.
These credits would be obviously inadequate for the lower- and even middle-income families..., so it would cause a huge surge in the number of uninsured. Meanwhile, the affluent would receive a nice windfall. Funny how that seems to happen in every plan Mr. Ryan proposes.
That was last week. This week, perhaps realizing how flat his effort fell, he began tweeting about freedom, which he defined as “the ability to buy what you want to fit what you need.” Give me consumer sovereignty or give me death! And Obamacare, he declared, is bad because it deprives Americans of that freedom by doing things like establishing minimum standards for insurance policies.
I very much doubt that this is going to fly, now that ordinary Americans are starting to realize just how devastating loss of coverage would be. But for the record, let me remind everyone what we’ve been saying for years: Any plan that makes essential care available to everyone has to involve some restriction of choice. ...
So yes, Obamacare somewhat restricts choice — not because meddling bureaucrats want to run your life, but because some restrictions are necessary as part of a package that in many ways sets Americans free.
For health reform has been a hugely liberating experience for millions. ...
So why do Republicans hate Obamacare so much? It’s not because they have better ideas; as we’ve seen..., they’re coming up empty-handed on the “replace” part of “repeal and replace.” It’s not, I’m sorry to say, because they are deeply committed to Americans’ right to buy the insurance policy of their choice.
No, mainly they hate Obamacare for two reasons: It demonstrates that the government can make people’s lives better, and it’s paid for in large part with taxes on the wealthy. Their overriding goal is to make those taxes go away. And if getting those taxes cut means that quite a few people end up dying, remember: freedom!

Friday, February 17, 2017

Report: Trump Transition Ordered Government Economists to Cook Up Rosy Growth Forecasts

Mathew Yglesias:

Report: Trump transition ordered government economists to cook up rosy growth forecasts: As the White House staff tries to put together a budget for President Donald Trump, they face a fundamental problem. Trump has promised to cut taxes, increase spending on the military and infrastructure, and avoid cuts to Social Security and Medicare. The only way to do that without producing an exploding budget deficit is to assume a big increase in economic growth.
And Nick Timiraos at the Wall Street Journal reports that Trump is planning to do just that — by making things up.
Deep into his story about Trump budget hijinks, Timiraos reveals that “what’s unusual about the administration’s forecasts isn’t just their relative optimism but also the process by which they were derived.” Specifically, what’s unusual about them is that they weren’t derived by any process at all. Instead of letting economists build a forecast, Trump’s budget was put together with “transition officials telling the CEA staff the growth targets that their budget would produce and asking them to backfill other estimates off those figures.” ...

Paul Krugman: The Silence of the Hacks

The truth is out there:

The Silence of the Hacks, by Paul Krugman, NY Times: The story so far: A foreign dictator intervened on behalf of a U.S. presidential candidate — and that candidate won. Close associates of the new president were in contact with the dictator’s espionage officials during the campaign, and his national security adviser was forced out over improper calls to that country’s ambassador...
Meanwhile, the president seems oddly solicitous of the dictator’s interests, and rumors swirl about his personal financial connections to the country in question. ...
Maybe ... it’s all perfectly innocent. But if it’s not innocent, it’s very bad indeed. So what do Republicans in Congress, who have the power to investigate the situation, believe should be done?
Nothing.
Paul Ryan ... says that Michael Flynn’s conversations with the Russian ambassador were “entirely appropriate.”
Devin Nunes, the chairman of the House Intelligence Committee, angrily dismissed calls for a select committee to investigate contacts during the campaign: “There is absolutely not going to be one.”
Jason Chaffetz, the chairman of the House oversight committee — who hounded Hillary Clinton endlessly over Benghazi — declared that the “situation has taken care of itself.”
Just the other day Republicans were hot in pursuit of potential scandal, and posed as ultrapatriots. Now they’re indifferent to actual subversion and the real possibility that we are being governed by people who take their cues from Moscow. ...
The point is that you can’t understand the mess we’re in without appreciating not just the potential corruption of the president, but the unmistakable corruption of his party — a party so intent on cutting taxes for the wealthy, deregulating banks and polluters and dismantling social programs that accepting foreign subversion is, apparently, a small price to pay. ...
So how does this crisis end? It’s not a constitutional crisis — yet. But Donald Trump is facing a clear crisis of legitimacy. ... And nothing he has done since the inauguration allays fears that he is in effect a Putin puppet.
How can a leader under such a cloud send American soldiers to die? How can he be granted the right to shape the Supreme Court for a generation? ...
The thing is, this nightmare could be ended by a handful of Republican legislators willing to make common cause with Democrats to demand the truth. And maybe there are enough people of conscience left in the G.O.P.
But there probably aren’t. And that’s a problem that’s even scarier than the Trump-Putin axis.

Wednesday, February 15, 2017

The Problem with Puzder as Labor Secretary

My latest at MoneyWatch:

The problem with Puzder as Labor Secretary: Donald Trump’s pick for secretary of labor, Andrew Puzder, is scheduled to undergo confirmation hearings Thursday before the Senate Health, Education, Labor and Pensions Committee. Prior to his nomination, Puzder was the CEO of CKE Restaurants, the parent company of fast-food chains Hardee’s and Carl’s Jr.
Democrats and other critics of Puzder’s nomination have raised concerns about Puzder’s employment of an undocumented housekeeper (a transgression that has disqualified nominees of previous administrations). But for me, the biggest issue is the extent to which he can fulfill the Labor Department’s own stated mission, to be an advocate for labor...

It ends with:

...that’s a portrait of a “Secretary of Business Owners” rather than a “Secretary of Labor.” In this time of rising inequality, stagnant wages and increasing economic insecurity due to globalization and technological change, workers need someone to protect their interests, someone willing to work endlessly to improve all aspects of their working lives.
President Trump promised workers that he would stand up for them and bring decent jobs to regions of the country that have struggled in recent years. In my eyes, the nomination of Puzder for labor secretary betrays that promise, and to me, that’s reason enough that he should not be confirmed.

Monday, February 13, 2017

Will Trump Bankrupt the Fed as an Institution?

I have a new column:

If Trump Stacks Its Board, He Politicizes the Fed and Demeans Its Independence: Daniel Tarullo announced on Friday that he is resigning from the Federal Reserve Board of Governors in early April, nearly five years before his term expires on January 31, 2022. Governor Tarullo, who was appointed by President Obama in 2009, led the effort to plug the holes in financial regulation that allowed the housing bubble and financial panic to occur. So his resignation comes at an inopportune time for those of us worried about Trump’s plans for wholesale deregulation of the financial sector and the vulnerability to another financial crisis that comes with it. 
Trump could also have a large impact on how the Fed conducts monetary policy..., the Fed could be permanently damaged...

Friday, February 10, 2017

Paul Krugman: When the Fire Comes

Who will stop him?:

When the Fire Comes, by Paul Krugman, NY Times: ...there’s a pretty good chance that sometime over the next few years something nasty will happen — a terrorist attack on a public place, an exchange of fire in the South China Sea, something. Then what?
After 9/11, the overwhelming public response was to rally around the commander in chief. Doubts about the legitimacy of a president who lost the popular vote and was installed by a bare majority on the Supreme Court were swept aside. Unquestioning support for the man in the White House was, many Americans believed, what patriotism demanded. ...
Unfortunately, the suspension of critical thinking ended ... badly. The Bush administration exploited the post-9/11 rush of patriotism to take America into an unrelated war, then used the initial illusion of success in that war to ram through huge tax cuts for the wealthy.
Bad as that was, however, the consequences if Donald Trump finds himself similarly empowered will be incomparably worse. ...
Mr. Trump’s attack on Judge James Robart, who put a stay on his immigration ban, was ... unprecedented. ... The really striking thing about Mr. Trump’s Twitter tirade, however, was his palpable eagerness to see an attack on America, which would show everyone the folly of constraining his power... What we see here is the most powerful man in the world blatantly telegraphing his intention to use national misfortune to grab even more power. And the question becomes, who will stop him?
Don’t talk about institutions, and the checks and balances they create. Institutions are only as good as the people who serve them. Authoritarianism, American-style, can be averted only if people have the courage to stand against it. So who are these people?
It certainly won’t be Mr. Trump’s inner circle. It won’t be Jeff Sessions, his new attorney general... It might be the courts — but Mr. Trump is doing all he can to delegitimize judicial oversight in advance.
What about Congress? Well..., maybe, just maybe, there are enough Republican senators who really do care about America’s fundamental values to cross party lines in their defense. But given what we’ve seen so far, that’s just hopeful speculation.
In the end, I fear, it’s going to rest on the people — on whether enough Americans are willing to take a public stand. We can’t handle another post-9/11-style suspension of doubt about the man in charge; if that happens, America as we know it will soon be gone.

Wednesday, February 08, 2017

A Conservative Case for Climate Action

Feldstein, Halstead, and Mankiw :

A Conservative Case for Climate Action: Crazy as it may sound, this is the perfect time to enact a sensible policy to address the dangerous threat of climate change. Before you call us nuts, hear us out.
During his eight years in office, President Obama regularly warned of the very real dangers of global warming, but he did not sign any meaningful domestic legislation to address the problem, largely because he and Congress did not see eye to eye. Instead, Mr. Obama left us with a grab bag of regulations aimed at reducing carbon emissions, often established by executive order. ... As Democrats are learning the hard way, it is all too easy for a new administration to reverse the executive orders of its predecessors.
On-again-off-again regulation is a poor way to protect the environment. ...
Our own analysis finds that a carbon dividends program starting at $40 per ton would achieve nearly twice the emissions reductions of all Obama-era climate regulations combined. ...
The idea of using taxes to correct a problem like pollution is an old one with wide support among economists. ...
Republicans are in charge of both Congress and the White House. If they do nothing other than reverse regulations from the Obama administration, they will squander the opportunity to show the full power of the conservative canon, and its core principles of free markets, limited government and stewardship. ...

One suggested edit to the last paragraph: If the Republicans do more than reverse regulations from the Obama administration and impose a carbon tax, they will squander the opportunity to show the full power of the conservative canon, and its core principle of rewarding wealthy supporters in the business community.

Monday, February 06, 2017

How Incomplete is the Theory of the Firm? Q&A with Daniel Carpenter

ProMarket interviews Daniel Carpenter "ahead of the upcoming conference on the theory of the firm, in which he will be taking part, Carpenter shared some of thoughts on the role of corporations and government interference in the market:

How Incomplete is the Theory of the Firm? Q&A with Daniel Carpenter: ...Q: The neoclassical theory of the firm does not consider political engagement by corporations. How big an omission do you think this is?
I think it’s an immense omission. For one, we can’t even talk about the historical origins of many firms without talking about corporate charters, limited liability arrangements, zoning, public contracts and grants, and so on. To view these processes as legal and not political is a significant mistake. I’m currently writing a lot on the history of petitioning in Europe and North America, and in areas ranging from railroads, to technology-heavy industries, to extractive industries, to banking, firms (or their investors) had to bring a case before the legislature, or an agency of government, or both. They usually used petitions to do so. 
Beyond the past and into the present, there are a range of firm activities that we can’t understand without looking at politics. ...
And in the future, the profitability and survival prospects of many firms in the coming years will depend heavily, in a polarized environment, on the political skills of managers. ...
Q: Some people describe Donald Trump’s economic policies as “corporatism.” Are you more worried by Trump’s interference in the market economy or by companies’ ability to subvert markets’ rules?
I don’t see those as binary opposites but as complements. If regulation is constitutive of marketplaces (fraud standards, disclosure and labeling requirements, evidentiary requirements), then companies’ ability to subvert market rules will in fact interfere in the proper functioning of a market economy.
I think we’re likely to see both Trumpian interference and company subversion, in other words.
That said, I am concerned about Trump’s interference in markets, for example his bullying of companies and the idea of imposing border taxes. In the U.S. and elsewhere, we are going to see the need for legislative and judicial constraints upon this kind of executive action.

Saturday, February 04, 2017

Trump Picks Wall Street Over Main Street

Mike Konczal:

Trump Picks Wall Street Over Main Street: President Trump fired the first round in his war against financial regulations by signing two executive orders on Friday.
The first calls for the Treasury secretary to conduct a review over the next 120 days of regulations stemming from the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The second calls for a review of the Department of Labor’s “fiduciary rule,” which requires investment professionals to act in the best interest of their clients, rather than seek the highest profits for themselves...
Though they don’t do too much by themselves to roll back these reforms, the directives do offer important details on how Mr. Trump will approach the financial industry in the next four years — and provide three reasons that people on Main Street should be scared about how Mr. Trump will help Wall Street.
The first is that President Trump, contrary to the hopes of many, has no intention of getting tough with finance. ...
Second, while Mr. Trump wants to repeal the fiduciary rule, he appears to have no interest in a replacement for it. ...
Third, rather than meet with regulators, small businesses or community banks, Mr. Trump met with the titans of Wall Street before announcing the directives. ...
It’s no wonder financial stocks have been soaring since Mr. Trump was elected. Voters who hoped he would “drain the swamp” and upset the elite are in for a big surprise. ...

Friday, February 03, 2017

Paul Krugman: Donald the Menace

"A man who is out of his depth and out of control":

Donald the Menace, by Paul Krugman, NY Times: For the past couple of months, thoughtful people have been quietly worrying that the Trump administration might get us into a foreign policy crisis, maybe even a war. ...
The most likely flash point seemed to be China ... where disputes over islands in the South China Sea could easily turn into shooting incidents. But the war with China will, it seems, have to wait. First comes Australia. And Mexico. And Iran. And the European Union. (But never Russia.) ...
The Australian confrontation has gotten the most press... Australia is, after all, arguably America’s most faithful friend in the whole world...
Well, at least Mr. Trump didn’t threaten to invade Australia. In his conversation with President Enrique Peña Nieto of Mexico, however, he did just that. ...
The blowups with Mexico and Australia have overshadowed a more conventional war of words with Iran...
There was also ... the response to ... Russia’s escalation of its proxy war in Ukraine. Senator John McCain called on the president to help Ukraine. Strangely, however, the White House has said nothing... This is getting a bit obvious, isn’t it?
Oh, and ... Peter Navarro, head of Mr. Trump’s new National Trade Council, accused Germany of exploiting the United States with an undervalued currency..., government officials aren’t supposed to make that sort of accusation unless they’re prepared to fight a trade war. Are they?
I doubt it. In fact, this administration doesn’t seem prepared on any front. Mr. Trump’s confrontational phone calls, in particular, don’t sound like the working out of an economic or even political strategy — cunning schemers don’t waste time boasting about their election victories and whining about media reports on crowd sizes.
No, what we’re hearing sounds like a man who is out of his depth and out of control, who can’t even pretend to master his feelings of personal insecurity. His first two weeks in office have been utter chaos, and things just keep getting worse — perhaps because he responds to each debacle with a desperate attempt to change the subject that only leads to a fresh debacle.
America and the world can’t take much more of this. Think about it: If you had an employee behaving this way, you’d immediately remove him from any position of responsibility and strongly suggest that he seek counseling. And this guy is commander in chief of the world’s most powerful military.
Thanks, Comey.

Thursday, February 02, 2017

Class & Confidence

Chris Dillow:

Class & confidence: On Radio 4’s Media Show yesterday Andrea Catherwood told Sarah Sands, the incoming editor of the Today programme:

The job specification did say that there was a requirement of extensive experience of broadcast journalism and a sound appreciation of studio broadcast techniques. You obviously got over that hurdle (16’23” in).

Many of us, though, wouldn’t even have tried the hurdle. If I’d had Ms Sands otherwise decent CV, I’d have looked at that job spec and ruled myself out as unqualified. Ms Sands, obviously, did not.

In this, she’s following many others. Tristram Hunt has become head of the V&A despite no experience of curating or of running large organizations. David Cameron wanted to become PM because he thought he’d be “rather good” at it – a judgment which now looks dubious. And the last Labour government asked David Freud to review welfare policy even though, by his own admission, he “didn't know anything about welfare at all.”

These people have something in common: they come from families sufficiently rich to afford private schooling*. And they are not isolated instances. ...

One thing that’s going on here is a difference in confidence. Coming from a posh family emboldens many people to think they can do jobs even if they lack requisite qualifications. By contrast, others get the confidence knocked out of them (16’20 in)**. As Toby Morris has brilliantly shown, apparently small differences in upbringing can over the years translate into differences not only in achievement but also in senses of entitlement.

The point is not (just) that people from working-class backgrounds suffer outright discrimination. It’s that they put themselves forward less than others, and so save hirers the bother of discriminating against them. ...

Herein lies an issue. In hiring Ms Sands (and no doubt many others like her) the BBC is conforming to a pattern whereby inequality perpetuates itself. This suggests that the corporation is badly placed to address what is for many of us one of the great issues of our time - the many aspects of class inequality – because it is part of the problem. And it compounds this bias by focusing upon other matters instead – for example by the incessant airtime it gives to the (Dulwich College-educated) Farage***. Bias consists not merely in what is said and reported, but in what is not – in the choice of agenda. In matters of class, the BBC is not impartial. ...

If Obama Was For It, We Had To Be Against It

Just a reminder -- this is a (slightly edited) rerun of a post from August 10, 2012:

Biden: McConnell decided to withhold all cooperation even before we took office, by Greg Sargent, Washington Post: I’ve got my copy of Michael Grunwald’s new book on the making of stimulus, The New New Deal, and ... it may shed new light on the degree to which Republicans may have decided to deny Obama all cooperation for the explicit purpose of rendering his presidency a failure — making it easier for them to mount a political comeback after their disastrous 2008 losses.

Grunwald has Joe Biden on the record making a striking charge. Biden says that during the transition, a number of Republican Senators privately confided to him that Mitch McConnell had given them the directive that there was to be no cooperation with the new administration — because he had decided that “we can’t let you succeed.” ...

Biden, of course, has a history of outsized comments. But two former Republican Senators [Bob Bennett and Arlen Specter] are confirming the gist of the charges... Meanwhile, former Senator George Voinovich also goes on record telling Grunwald that Republican marching orders were to oppose everything the Obama administration proposed.

“If he was for it, we had to be against it,” Voinovich tells Grunwald. ... “He wanted everyone to hold the fort. All he cared about was making sure Obama could never have a clean victory.” ...

It seems pretty newsworthy for the Vice President of the United States to charge that seven members of the opposition confided to him that their party had adopted a comprehensive strategy to oppose literally everything the new President did — with the explicit purpose of denying him any successes of any kind for their own political purposes — even before he took office.

Wednesday, February 01, 2017

Help for Business Scholars and Students Affected by the US Restrictions

Via Joshua Gans (and Brad DeLong's excerpt):

The Rotman School of Management, University of Toronto... is offering to help scholars and students impacted on by the new US immigration restrictions. We would like to hear from anyone who:

  • Can no longer return to the US to continue their academic position or studies in a business, economics or related areas.
  • Missed application deadlines for University of Toronto degree programs in business, economics, or related areas; but are concerned they will not be able to undertake studies in the US anymore.
  • Facing temporary disruptions as a result of the new policies who may need a place in North America to continue their academic work.

The official statement is here: http://www.rotman.utoronto.ca/Connect/MediaCentre/NewsReleases/20170201

Tuesday, January 31, 2017

CNN Hires Hack Trump Adviser to Spout Gibberish About Economics

Jordan Weissmann:

CNN Hires Hack Trump Adviser to Spout Gibberish About Economics: ...I would like to pause for a brief moment to commemorate the act of journalistic malpractice CNN has just committed by hiring conservative scribbler and Trump adviser Stephen Moore as an economics analyst. It is a doozy. ...
In economics circles, Moore is looked at as a sort of tragicomic figure, the supply-side gang leader who can't count straight. ...
CNN has a habit of veering wildly from serious journalism from its Washington bureau or its online KFile investigative team to vomit-worthy infotainment in which toadies like Jeffrey Lord or—previously—Corey Lewandowski defend whatever the heck Donald Trump has just said. (The network has a lot of airtime to fill, and it fills it with mostly useless discussion panels.) You can guess which side the pendulum just swung to with Moore's hire.

A network that is serious about delivering factual information instead of propaganda to viewers would not have made these hires.

In the Trump Administration, Credibility May be a Problem

Here's my latest column:

In the Trump Administration, Credibility May be a Problem, by Mark Thoma: ...politicians have an additional credibility problem over and above their inability to make long-run commitments. Little of what politicians say can be trusted even during the years they are in office. And with Trump saying whatever comes to his mind, or whatever a particular audience wants to hear, his erratic behavior, and his tendency to contradict himself, who knows what to believe? Nothing is credible until it happens, and even then it might be reversed. ...

Monday, January 30, 2017

When Government Misguides

Cecchetti & Schoenholtz:

When Government Misguides: "That [comparative advantage] is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them." Paul Samuelson
Governments play favorites. They promote residential construction by making mortgages tax deductible. They encourage ethanol production by subsidizing corn. They boost sales of electric cars by offering tax rebates. These political favors usually diminish, rather than increase, aggregate income. They’re about distribution, not production.
With the ascendance of Donald Trump to the presidency, U.S. government intervention has taken a particularly troubling turn. Not only has he threatened companies planning to produce their products outside of the United States, but he has appointed strident free-trade opponents (ranging from China-bashing Peter Navarro to trade-litigator Robert Lighthizer) to key positions in his administration. In his first week in office, President Trump has pulled the United States out of the Trans-Pacific Partnership (TPP) and moved to renegotiate the North American Free Trade Agreement (NAFTA). His representatives also have threatened to impose tariffs on Mexico (and other countries). In what seems like the blink of an eye, these actions have sacrificed the valuable U.S. reputation–earned over seven decades since President Truman—as a trustworthy leader in the global fight for open, competitive markets. ...

Paul Krugman: Building a Wall of Ignorance

"The story seems, like so much that’s happened lately, to have started with President Trump’s insecure ego":

Building a Wall of Ignorance, by Paul Krugman, NY Times: We’re just over a week into the Trump-Putin regime, and it’s already getting hard to keep track of the disasters. ...
But I want to hold on, just for a minute, to the story that dominated the news on Thursday, before it was, er, trumped by the uproar over the refugee ban. As you may recall ... the White House first seemed to say that it would impose a 20 percent tariff on Mexico, but may have been talking about a tax plan, proposed by Republicans in the House, that would do no such thing; then said that it was just an idea; then dropped the subject, at least for now. ...
The story seems, like so much that’s happened lately, to have started with President Trump’s insecure ego: People were making fun of him because Mexico will not, as he promised during the campaign, pay for that useless wall along the border. So his spokesman, Sean Spicer, went out and declared that a border tax on Mexican products would, in fact, pay for the wall. So there!
As economists quickly pointed out, however, tariffs aren’t paid by the exporter..., they’re paid for by ... consumers. America, not Mexico, would therefore end up paying for the wall.
Oops. But that wasn’t the only problem. America is part of a system of agreements — a system we built — that sets rules for trade policy, and one of the key rules is that you can’t just unilaterally hike tariffs that were reduced in previous negotiations.
If America were to casually break that rule, the consequences would be severe. ... If we treat the rules with contempt, so will everyone else. The whole trading system would start to unravel, with hugely disruptive effects everywhere, very much including U.S. manufacturing. ...
All of this should be placed in the larger context of America’s quickly collapsing credibility.
Our government hasn’t always done the right thing. But it has kept its promises, to nations and individuals alike.
Now all of that is in question. Everyone, from small nations who thought they were protected against Russian aggression, to Mexican entrepreneurs who thought they had guaranteed access to our markets, to Iraqi interpreters who thought their service with the U.S. meant an assurance of sanctuary, now has to wonder whether they’ll be treated like stiffed contractors at a Trump hotel.
That’s a very big loss. And it’s probably irreversible.

Friday, January 27, 2017

Paul Krugman: Making the Rust Belt Rustier

Will Trump Repeat Reagan's mistake?:

Making the Rust Belt Rustier: Donald Trump ... appears serious about his eagerness to reverse America’s 80-year-long commitment to expanding world trade. On Thursday the White House said it was considering a 20 percent tariff on all imports from Mexico; doing so wouldn’t just pull the U.S. out of NAFTA, it would violate all our trading agreements. ...
Taken together, the new regime’s policies will probably lead to a faster, not slower, decline in American manufacturing.
How do we know this? We can look at the underlying economic logic, and we can also look at what happened during the Reagan years, which in some ways represent a dress rehearsal for what’s coming. ...
What Reagan did ... was blow up the budget deficit with military spending and tax cuts. This drove up interest rates, which drew in foreign capital. The inflow of capital, in turn, led to a stronger dollar, which made U.S. manufacturing uncompetitive. The trade deficit soared — and the long-term decline in the share of manufacturing in overall employment accelerated sharply.
Notably, it was under Reagan that talk of “deindustrialization” and the use of the term “Rust Belt” first became widespread.
It’s also worth pointing out that the Reagan-era manufacturing decline took place despite a significant amount of protectionism, especially a quota on Japanese car exports ... that ended up costing consumers more than $30 billion in today’s prices.
Will we repeat this story? The Trump regime will clearly blow up the deficit, mainly through tax cuts for the rich. (Funny, isn’t it, how all the deficit scolds have gone quiet?)..., interest rates have already risen in anticipation of the borrowing surge, and so has the dollar. So we do seem to be following the Reagan playbook for shrinking manufacturing. ...
And there’s a further factor to consider: ... Manufacturing is a global enterprise, in which cars, planes and so on are assembled from components produced in multiple countries. ... There will, inevitably, be huge dislocation: Some U.S. factories and communities will benefit, but others will be hurt, bigly, by the loss of markets, crucial components or both.
Economists talk about the “China shock,” the disruption of some communities by surging Chinese exports in the 2000s. Well, the coming Trump shock will be at least as disruptive.
And the biggest losers, as with health care, will be white working-class voters who were foolish enough to believe that Donald Trump was on their side.

Thursday, January 26, 2017

We Are the Last Defense Against Trump

Daron Acemoglu

We Are the Last Defense Against Trump: In the second half of the 20th century, the main threat to democracy came from the men in uniform. Fledgling democracies such as Argentina, Brazil, Chile, Thailand, and Turkey were set back by dozens of military coups. For emerging democracies hoping to ward off such military interventions into domestic politics, Western European and American institutions ... were offered as the model to follow. They were the best way to ensure that democracy, as Juan Linz and Alfred Stepan famously put it, became “the only game in town.” ...
Yet today we are coming to discover that contemporary democracy has its own soft underbelly — not so much a weakness against a cabal of colonels conspiring a violent takeover of government, but the gutting of state institutions and the incipient establishment of a variant of personal rule. Examples of personal rule include Venezuela under Hugo Chavez, Russia under Vladimir Putin, and Turkey under Recep Tayyip Erdogan. These differ from the Mobutus, arap Mois and the Abachas of the world, because they are engineered by democratically elected leaders and maintain a much higher degree of legitimacy among some segments of the population But they still showcase how this process can irreparably damage institutions and hollow out democracy. Now, these examples are poised to include America under Donald Trump.
Trump appears to share several political goals and strategies with Chavez, Putin, and Erdogan. Like them, he seems to have little respect for the rule of law or the independence of state institutions, which he has tended to treat as impediments to his ability to exercise power. Like them, he has a blurred vision of national and personal interests. Like them, he has little patience with criticism and a long-established strategy of rewarding loyalty, which can be seen in his high-level appointments to date. This is all topped by an unwavering belief in his abilities.
What makes America vulnerable to being blindsided by such a threat is our unwavering — and outdated — belief in the famed strength of our institutions. ...

How Pro-competition Rules Can Benefit Consumers: A Look at the Wireless Industry

From Guy Rolnik at ProMarket:

How Pro-competition Rules Can Benefit Consumers: A Look at the Wireless Industry: During the summer of 2014, SoftBank-controlled Sprint abandoned its plans to merge with T-Mobile. The alleged reason was antitrust regulators who “would block a deal in an industry that is dominated by just a few large players.”
Following a meeting of SoftBank’s CEO Masayoshi Son with Donald Trump last December, both Sprint and T-Mobile signaled that the merger might still happen. ...
How would a T-Mobile-Sprint merger affect U.S. consumers?” A new Stigler Center working paper, “Political Determinants of Competition in the Mobile Telecommunication Industry,” by Mara Faccio and Luigi Zingales may help to answer this question. ...
The takeaway
... A lax antitrust enforcement can cost American consumers billions of dollars every year.

Tuesday, January 24, 2017

Trump's Alternative Facts about the Economy

Me, at MoneyWatch:

What if “alternative facts” spread to economic data?: Donald Trump’s inability to accept news that disagrees with the view he has of himself and what his administration can accomplish was on display on his first two days as president. He, and those speaking on his behalf, claimed falsely that “This was the largest audience ever to witness an inauguration, period, both in person and around the globe,” and then doubled down even when presented with solid evidence it wasn’t true. 
Americans were told the new administration relies on “alternative facts,” which seems to mean whatever numbers it can come up with to support Mr. Trump’s claims.
What worries me, among other things, is how the president will react to bad news about the economy. ...

Monday, January 23, 2017

Paul Krugman: Things Can Only Get Worse

How will Trump handle bad news?:

Things Can Only Get Worse: ...Donald Trump ... spent his first full day in office having a temper tantrum, railing against accurate reports of small crowds at his inauguration..., how is he going to react to disappointing numbers about things that actually matter? ... How will a man who evidently can’t handle even the smallest blow to his ego deal with it?
Let’s talk about the predictable bad news.
First, the economy..., unemployment probably can’t fall much from here... And since bad stuff does happen, there’s a strong likelihood that unemployment will be higher four years from now than it is today.
Oh, and Trumpist budget deficits will probably widen the trade deficit, so that manufacturing employment in particular is likely to fall, not rise.
A second front on which things will almost surely get worse is health care. ...
On a third front, crime, the future direction is unclear. ... Violent crime is, in fact, way down... Crime could, I suppose, fall further, but it could also rise. What we do know is that the Trump administration can’t pacify America’s urban war zones, because those zones don’t exist.
So how will Mr. Trump handle the bad news...? That’s obvious: He’ll deny reality, the way he always does when it threatens his narcissism. But will his supporters go along with his fantasy?
They might. After all, they blocked out the good news from the Obama era. Two-thirds of Trump voters believe, falsely, that the unemployment rate rose under Obama. (Three-quarters believe George Soros is paying people to protest Mr. Trump.) Only 17 percent of self-identified Republicans are aware that the number of uninsured is at a historic low. Most people thought crime was rising even when it was falling. So maybe they will block out bad news in the Trump years. ...
On top of that, Mr. Trump made big promises during the campaign, so the risk of disillusionment is especially high.
Will he respond to bad news by accepting responsibility and trying to do better? Will he renounce his fortune and enter a monastery? That seems equally likely.
No, the insecure egomaniac-in-chief will almost surely deny awkward truths, and berate the media for reporting them. And — this is what worries me — it’s very likely that he’ll try to use his power to shoot the messengers. ...
You may have thought that last weekend’s temper tantrum was bad. But there’s much, much worse to come.

Saturday, January 21, 2017

Attacking Economics is a Diversionary Tactic

Simon Wren-Lewis:

6.  ... In terms of conventional monetary and fiscal policy, academic economists got the response to the crisis right, and policymakers got it very wrong. Central banks, full of economists, relaxed monetary policy to its full extent. They created additional money, rightly ignoring those who said it would bring rapid inflation. Many economists, almost certainly a majority, supported fiscal stimulus for as long as interest rates were stuck at their lower bound, were ignored by policymakers in 2010, and have again been proved right.

7.  So given all this, why do some continue to attack economists? On the left there are heterodox economists who want nothing less than revolution, the overthrow of mainstream economics. It is the same revolution that their counterparts were saying was about to happen in the early 1970s when I learnt my first economics. They want people to believe that the bowdlerised version of economics used by neoliberals to support their ideology is in fact mainstream economics.

8.  The right on the other hand is uncomfortable when evidence based economics conflicts with their politics. Their response is to attack economists. This is not a new phenomenon, as I showed in connection with the famous letter from 364 economists. With austerity they cherry picked the minority of economists who supported it, and then implemented a policy that even some of them would have disagreed with. (Rogoff did not support the cuts in public investment in 2010/11 which did most of the damage to the UK economy.) The media did the rest of the job for them by hardly ever talking about the majority of economists who did not support austerity.

9.  The economic costs of Brexit is just the latest example. Critics have focused on the most uncertain and least important predictions about Brexit, made only by a few, to attack all Brexit analysis. The fact that this prediction involved an unconditional macro forecast, while the assessment made by a number of groups about the long term cost involves a conditional projection based largely on trade equations, seems to have completely escaped the critics. More important, the fact that the predicted depreciation in sterling happened, and is in the process of already causing a large drop in living standards, is completely ignored by these critics.

10.  Attacking economists over Brexit is designed to discredit those who point out awkward and uncomfortable truths. Continuing to attack economists over not predicting the financial crisis, but failing to ignore their successes, has the effect of distracting people from the group who actually caused this crisis, and the fact that very little has been done to prevent a similar crisis happening in the future.

Friday, January 20, 2017

Disillusioned in Davos

Larry Summers:

Disillusioned in Davos: Edmund Burke famously cautioned that “the only thing necessary for the triumph of evil is for good men to do nothing.” I have been reminded of Burke’s words as I have observed the behavior of US business leaders in Davos over the last few days. They know better but in their public rhetoric they have embraced and enabled our new President and his policies.
I understand and sympathize with the pressures they feel. ... Businesses who get on the wrong side of the new President have lost billions of dollars of value in sixty seconds because of a tweet. ...
Yet I am disturbed by (i) the spectacle of financiers who three months ago were telling anyone who would listen that they would never do business with a Trump company rushing to praise the new Administration (ii) the unwillingness of business leaders who rightly take pride in their corporate efforts to promote women and minorities to say anything about Presidentially sanctioned intolerance (iii) the failure of the leaders of global companies to say a critical word about US efforts to encourage the breakup of European unity and more generally to step away from underwriting an open global system (iv) the reluctance of business leaders who have a huge stake in the current global order to criticize provocative rhetoric with regard to China, Mexico or the Middle East (v) the willingness of too many to praise Trump nominees who advocate blatant protection merely because they have a business background.
I have my differences with the new Administration’s economic policies and suspect the recent market rally and run of economic statistics is a sugar high. Reasonable people who I respect differ and time will tell. My objection is not to disagreements over economic policy. It is to enabling if not encouraging immoral and reckless policies in other spheres that ultimately bear on our prosperity. Burke was right. It is a lesson of human experience whether the issue is playground bullying, Enron or Europe in the 1930s that the worst outcomes occur when good people find reasons to accommodate themselves to what they know is wrong. That is what I think happened much too often in Davos this week.

Nobel Laureates Give Advice to President Donald Trump

Paul Krugman: Donald the Unready

The Trump administration's readiness and fitness for office:

Donald the Unready, by Paul Krugman, NY Times: Betsy DeVos, whom Donald Trump has nominated as education secretary, doesn’t know basic education terms, doesn’t know about federal statutes governing special education, but thinks school officials should carry guns to defend against grizzly bears.
Monica Crowley, selected as deputy national security adviser, withdrew after it was revealed that much of her past writing was plagiarized. ...
Meanwhile Rex Tillerson, selected as secretary of state, casually declared that America would block Chinese access to bases in the South China Sea, apparently unaware that he was in effect threatening to go to war if China called his bluff.
Do you see a pattern here?...
The ... typical Trump nominee, in everything from economics to diplomacy to national security, is ethically challenged, ignorant about the area of policy he or she is supposed to manage and deeply incurious. Some, like Michael Flynn, Mr. Trump’s choice as national security adviser, are even as addicted as their boss to internet conspiracy theories. This isn’t a team that will compensate for the commander in chief’s weaknesses..., it’s a team that will amplify them. ...
If you want a model for how the Trump-Putin administration is likely to function (or malfunction), it’s helpful to recall what happened during the Bush-Cheney years.
People tend to forget the extent to which the last Republican administration was also characterized by cronyism, the appointment of unqualified but well-connected people to key positions. ... Remember “Brownie, you’re doing a heck of a job”? And it caused very real damage..., Katrina was the event that finally revealed the costs of Bush-era cronyism to all.
Crises of some kind are bound to occur on any president’s watch. They appear especially likely given the crew that’s coming in and their allies in Congress...
Real crises need real solutions. They can’t be resolved with a killer tweet, or by having your friends in the F.B.I. or the Kremlin feed the media stories that take your problems off the front page. What the situation demands are knowledgeable, levelheaded people in positions of authority.
But as far as we know, almost no people meeting that description will be in the new administration, except possibly the nominee for defense secretary — whose nickname just happens to be “Mad Dog.”
So there you have it: an administration unprecedented in its corruption, but also completely unprepared to govern. It’s going to be terrific, let me tell you.

Thursday, January 19, 2017

Economy under Trump: Plan for the Worst

Larry Summers:

Economy under Trump: Plan for the worst: ...There has not been so much anxiety about U.S. global leadership or about the sustainability of market-oriented democracy at any time in the past half-century. Yet with markets not only failing to swoon as predicted, but actually rallying strongly after both the Brexit vote and Trump’s victory, the animal spirits of business are running hot.
Many chief executives are coming to believe that, whatever the president-elect’s infirmities, the strongly pro-business attitude of his administration, combined with Republican control of Congress, will lead to a new era of support for business, along with much lower taxes and regulatory burdens. This in turn, it is argued, will drive major increases in investment and hiring, setting off a virtuous circle of economic growth and rising confidence.
While it has to be admitted that such a scenario looks more plausible today than it did on Election Day, I believe that it is very much odds-off. More likely is that the current run of happy markets and favorable sentiment will be seen, with the benefit of hindsight, as a sugar high. John Maynard Keynes was right to emphasize the great importance of animal spirits, but other economists have also been right to emphasize that it is political and economic fundamentals that dominate in the medium and long terms. History is replete with examples of populist authoritarian policies that produced short-run benefits but poor long-run outcomes. ...

Tuesday, January 17, 2017

The Economics of the Affordable Care Act

Dean Baker at INET:

The Economics of the Affordable Care Act: The Affordable Care Act (ACA), which President-elect Donald Trump and the Republican-controlled Congress have vowed to repeal, was crafted to overcome two basic problems in the provision of health care... First, the costs are incredibly skewed, with just 10 percent of patients accounting for almost two thirds of the nation’s healthcare spending. The other problem is asymmetric information: Patients have far more knowledge about the state of their own health than insurers do. This means that the people with the largest costs are the ones most likely to sign up for insurance. These two problems make it impossible to get to universal coverage under a purely market-based system. ...
Covering the least costly 90 percent of patients is manageable, but the cost of covering the least healthy 10 percent is exorbitant. ...
The ACA gets around this problem by requiring that everyone buy insurance — a mandate that allows people with serious health problems to get insurance at a reasonably affordable price. Since many people cannot afford an insurance policy even if it’s based on average costs, the ACA also provided subsidies to low and moderate income people. It pays for the subsidies primarily through a tax on the wealthiest households, those with incomes over $200,000.
Thus far, the ACA has actually worked better than expected in most respects. ...
Insofar as the ACA has run into problems, those have been attributable to too few healthy people in the health care exchanges, and too little competition among insurers. Many commentators have wrongly blamed the problem in the exchanges on a failure of young healthy people to sign up for insurance. This is not the cause of the problem, since more people are getting insured than had been projected. The reason fewer healthy people are showing up on the exchanges is that fewer employers dropped insurance than had been projected. ... By continuing to provide insurance for their workers despite the ACA, employers are effectively keeping healthy people out of the exchanges.
The other problem with the exchanges has been limited competition, as many insurers have dropped out after the first few years. The loss of competition has meant higher prices. ...
One way to make insurance more affordable would be to reduce the costs of the health care system as a whole. Americans pay twice as much per person as people in other wealthy countries, with few obvious benefits in terms of outcomes. But such cost cutting would mean reducing the incomes of drug companies, doctors, and insurance companies — the big winners under the current system. It seems unlikely the Republicans will go this route. They are more likely to restore a version of the pre-ACA situation, in which many more people are uninsured and most workers know that their insurance is only as secure as their job.

Monday, January 16, 2017

Paul Krugman: With All Due Disrespect

People are saying that Donald Trump is an illegitimate president:

With All Due Disrespect, by Paul Krugman, NY Times: As a young man, Congressman John Lewis, who represents most of Atlanta, literally put his life on the line in pursuit of justice. As a key civil rights leader, he endured multiple beatings. Most famously, he led the demonstration that came to be known as Bloody Sunday, suffering a fractured skull at the hands of state troopers. Public outrage over that day’s violence helped lead to the enactment of the Voting Rights Act.
Now Mr. Lewis says that he won’t attend the inauguration of Donald Trump, whom he regards as an illegitimate president.
As you might expect, this statement provoked a hysterical, slanderous reaction from the president-elect – who, of course, got his start in national politics by repeatedly, falsely questioning President Obama’s right to hold office. ...
But let’s not talk about Mr. Trump’s ravings. Instead, let’s ask... Is it O.K., morally and politically, to declare the man about to move into the White House illegitimate?
Yes, it is. In fact, it’s an act of patriotism.
By any reasonable standard, the 2016 election was deeply tainted. It wasn’t just the effects of Russian intervention...; Hillary Clinton would almost surely have won if the F.B.I. hadn’t conveyed the false impression that it had damaging new information about her, just days before the vote. This was grotesque, delegitimizing malfeasance, especially in contrast with the agency’s refusal to discuss the Russia connection.
Was there even more to it? Did the Trump campaign actively coordinate with a foreign power? Did a cabal within the F.B.I. deliberately slow-walk investigations into that possibility? Are the lurid tales about adventures in Moscow true? We don’t know... Even given what we do know, however, no previous U.S. president-elect has had less right to the title. So why shouldn’t we question his legitimacy? ...
Now, anyone questioning Mr. Trump’s legitimacy will be accused of being unpatriotic — because that’s what people on the right always say about anyone who criticizes a Republican president. (Strangely, they don’t say this about attacks on Democratic presidents.) But patriotism means standing up for your country’s values, not pledging personal allegiance to Dear Leader.
No, we shouldn’t get into the habit of delegitimizing election results we don’t like. But this time really is exceptional...
So let’s be thankful that John Lewis had the courage to speak out. It was the patriotic, heroic thing to do. And America needs that kind of heroism, now more than ever.

Blind Trust in Donald Trump Could Be Costly

I have a new column:

Blind Trust in Donald Trump Could Be Costly: Donald Trump has refused to divest himself of his business interests before being inaugurated as president and has instead said he would hand control over to his sons. However, as the director of the Office of Government Ethics, Walter Shaub, Jr., said in a letter last December, a point he reiterated after Trump announced his plan to turn control over to his sons last week, “Transferring operational control of a company to one's children would not constitute the establishment of a qualified blind trust, nor would it eliminate conflicts of interest."

In response, Trump argues that his numerous conflicts of interest won’t affect his decisions as president. But there have already been instances where meetings with foreign leaders had a clear connection to his business pursuits, his nominations for important government positions show a strong bias toward favoring business interests, and his proposed legislative agenda, while touted as a populist, contains the standard Republican pro-business slate of policies. The stage is set for those coming into power to use their government offices to enrich themselves, and if they do, it has the potential to undermine US competitiveness and reduce long-term economic growth. ...

Saturday, January 14, 2017

Infrastructure Delusions

Paul Krugman:

Ben Bernanke has a longish post about fiscal policy in the Caligula Trump era. It’s not the most entertaining read; perhaps because of the political fraughtness of the moment, Bernanke has reverted a bit to Fedspeak. But there’s some solid insight, a lot of it pretty much in line with what I have been saying.
Notably, Bernanke, like yours truly, argues that the fiscal-stimulus case for deficit spending has gotten much weaker, but there’s still a case for borrowing to build infrastructure...
But he gently expresses doubt that this kind of thing is actually going to happen...
Let me be less gentle: there will be no significant public investment program, for two reasons.
First, Congressional Republicans have no interest in such a program. They’re hell-bent on depriving millions of health care and cutting taxes at the top; they aren’t even talking about public investment...
But this then raises the obvious question: who really believes that this crew is going to come up with a serious plan? Trump has no policy shop, nor does he show any intention of creating one; he’s too busy tweeting about perceived insults from celebrities, and he’s creating a cabinet of people who know nothing about their responsibilities. Any substantive policy actions will be devised and turned into legislation by Congressional Republicans who, again, have zero interest in a public investment program.
So investors betting on a big infrastructure push are almost surely deluding themselves. We may see some conspicuous privatizations, especially if they come with naming opportunities: maybe putting in new light fixtures will let him rename Hoover Dam as Trump Dam? But little or no real investment is coming.

Friday, January 13, 2017

Paul Krugman: Donald Trump’s Medical Delusions

Repeal and hope to blame the Democrats:

Donald Trump’s Medical Delusions, by Paul Krugman, NY Times: ...Some Republicans appear to be realizing that their long con on Obamacare has reached its limit. Chanting “repeal and replace” may have worked as a political strategy, but coming up with a conservative replacement for the Affordable Care Act — one that doesn’t take away coverage from tens of millions of Americans — isn’t easy. In fact, it’s impossible.
But it seems that nobody told Mr. Trump. In Wednesday’s news conference, he asserted that he would submit a replacement plan, “probably the same day” as Obamacare’s repeal — “could be the same hour” — that will be “far less expensive and far better”; also, with much lower deductibles.
This is crazy, on multiple levels.
The truth is that even if Republicans were settled on the broad outlines of a health care plan — the way Democrats were when President Obama took office — turning such an outline into real legislation is a time-consuming process.
In any case, however, the G.O.P. has spent seven years denouncing the Affordable Care Act without ever producing even the ghost of an alternative. That’s not going to change in the next few weeks, or ever. For the anti-Obamacare campaign has always been based on lies that can’t survive actual repeal. ...
Republicans don’t have a health care plan, but they do have a philosophy — and it’s all about less. Less regulation, so that insurers can turn you down if you have a pre-existing condition. Less government support, so if you can’t afford coverage, too bad. And less coverage in general: Republican ideas about cost control are all about “skin in the game,” requiring people to pay more out of pocket (which somehow doesn’t stop them from complaining about high deductibles).
Implementing this philosophy would deliver a big windfall to the wealthy, who would get a huge tax cut from Obamacare repeal...
But the idea that it would lead to big cost savings over all is pure fantasy, and it would have a devastating effect on the millions who have gained coverage during the Obama years.
As I said, it looks as if some Republicans realize this. They may go ahead with repeal-but-don’t-replace anyway, but they’ll probably do it because they believe they can find some way to blame Democrats for the ensuing disaster.
Mr. Trump, on the other hand, gives every impression of having no idea whatsoever what the issues are. But then, is there any area of policy where he does?

Making America's Risk of a Financial Crisis Great Again

Me, at MoneyWatch:

Making America's risk of a financial crisis great again: In the decades prior to the financial crisis, the U.S. underwent a period of financial deregulation under the assumption that market forces would prevent financial institutions from taking excessive risk. In particular, the shadow banking system -- financial institutions that don’t operate as traditional banks -- was lightly regulated. 
However, as Alan Greenspan admitted in testimony on Capital Hill after the financial crisis, that assumption turned out to be wrong. The traditional banking sector, which is highly regulated, weathered the storm fairly well, but the shadow banking system came crashing down -- and brought the economy with it.
Nevertheless, Republicans are determined to roll back financial regulation, particularly measures implemented under the Dodd-Frank financial reform package passed in the aftermath of the financial crisis. I believe that’s a mistake. ...

Tuesday, January 10, 2017

Here's What Really Caused the Housing Crisis

Me, at MoneyWatch:

Here's what really caused the housing crisis: One story of the housing crisis goes like this: Government programs that helped low-income households purchase houses led to widespread defaults on the subprime loans they held, sparking the entire the financial meltdown. 
For example, Lawrence Kudlow and Stephen Moore, both of whom have been named as economic advisers to Donald Trump, argue that the financial crisis and recession were caused by policies Bill Clinton implemented that were designed to stop discrimination in housing loans, known as “red-lining,” in poor areas. In particular, they argue that the Community Reinvestment Act (CRA), legislated in 1977, is to blame:
“Under Clinton’s Housing and Urban Development (HUD) secretary, Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in ‘credit-deprived’ areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting.
What’s more, in the Clinton push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. The phrase “subprime” became commonplace. What an understatement. … Tragically, when prices fell, lower-income folks who really could not afford these mortgages under normal credit standards, suffered massive foreclosures and personal bankruptcies.”
However..., that isn’t what happened. ...

There Will Be No Obamacare Replacement

Paul Krugman:

There Will Be No Obamacare Replacement: You may be surprised at the evident panic now seizing Republicans, who finally — thanks to James Comey and Vladimir Putin — are in a position to do what they always wanted, and kill Obamacare. How can it be that they’re not ready with a replacement plan?
That is, you may be surprised if you spent the entire Obama era paying no attention to the substantive policy issues — which is a pretty good description of the Republicans, now that you think about it.
From the beginning, those of us who did think it through realized that anything like universal coverage could only be achieved in one of two ways: single payer, which was not going to be politically possible, or a three-legged stool of regulation, mandates, and subsidies. Here’s how I put it exactly 7 years ago...
It’s actually amazing how thoroughly the right turned a blind eye to this logic, and some — maybe even a majority — are still in denial. But this is as ironclad a policy argument as I’ve ever seen; and it means that you can’t tamper with the basic structure without throwing tens of millions of people out of coverage. You can’t even scale back the spending very much — Obamacare is somewhat underfunded as is.
Will they decide to go ahead anyway, and risk opening the eyes of working-class voters to the way they’ve been scammed? I have no idea. But if Republicans do end up paying a big political price for their willful policy ignorance, it couldn’t happen to more deserving people.

Monday, January 09, 2017

Paul Krugman: Deficits Matter Again

Republicans are planning to "blow up the deficit mainly by cutting taxes on the wealthy":

Deficits Matter Again, by Paul Krugman, NY Times: Not long ago prominent Republicans like Paul Ryan ... liked to warn in apocalyptic terms about the dangers of budget deficits, declaring that a Greek-style crisis was just around the corner. But ... tax cuts ... would, according to their own estimates, add $9 trillion in debt over the next decade. Hey, no problem. ...
All that posturing about the deficit was obvious flimflam, whose purpose was to hobble a Democratic president... But running big deficits is no longer harmless, let alone desirable.
The way it was: Eight years ago, with the economy in free fall, I wrote that we had entered an era of “depression economics,” in which the usual rules of economic policy no longer applied... In particular, deficit spending was essential to support the economy, and attempts to balance the budget would be destructive.
This diagnosis ... was ... always conditional, applying only to an economy far from full employment. That was the kind of economy President Obama inherited; but the Trump-Putin administration will, instead, come into power at a time when full employment has been more or less restored. ...
What changes once we’re close to full employment? Basically, government borrowing once again competes with the private sector for a limited amount of money. This means that deficit spending no longer provides much if any economic boost, because it drives up interest rates and “crowds out” private investment.
Now, government borrowing can still be justified if it serves an important purpose..., infrastructure is still a very good idea... But while candidate Trump talked about increasing public investment, there’s no sign at all that congressional Republicans are going to make such investment a priority.
No, they’re going to blow up the deficit mainly by cutting taxes on the wealthy. And that won’t do anything significant to boost the economy or create jobs. In fact, by crowding out investment it will somewhat reduce long-term economic growth. Meanwhile, it will make the rich richer, even as cuts in social spending make the poor poorer and undermine security for the middle class. But that, of course, is the intention. ...
But back to deficits: the crucial point is not that Republicans were hypocritical. It is, instead, that their hypocrisy made us poorer. They screamed about the evils of debt at a time when bigger deficits would have done a lot of good, and are about to blow up deficits at a time when they will do harm.

Sunday, January 08, 2017

Who Will Donald Trump Turn Out To Be?

Brad DeLong:

Who Will Donald Trump Turn Out To Be?: We have very little indication of what policies Donald Trump will try to follow or even what kind of president he will be. The U.S. press corps did an extraordinarily execrable job in covering the rise of Trump--even worse than it usually does. Even the most sophisticated of audiences--those interested in asset prices and how they are affected by government policies--have very little insight into Trump's views or those of his key associates.
Will Donald Trump turn out to be the equivalent of Ronald Reagan--someone who comes into office from the world of celebrity with a great many unfixed policy intuitions, but no consistent plan? Will he turn out to be the equivalent of Silvio Berlusconi, who regards the presidency as an opportunity to wreak his kleptocratic will on the country? Or will he turn out to be someone worse than Berlusconi?
I would say that Trump could be any of four figures...

Friday, January 06, 2017

Paul Krugman: The Age of Fake Policy

Don't let Trump distract you from his real agenda:

The Age of Fake Policy, by Paul Krugman, NY Times: On Thursday, at a rough estimate, 75,000 Americans were laid off or fired by their employers. Some of those workers will find good new jobs, but many will end up earning less, and some will remain unemployed for months or years.
If that sounds terrible to you..., I’m just assuming that Thursday was a normal day in the job market. ... In an average month, there are 1.5 million “involuntary” job separations (as opposed to voluntary quits), or 75,000 per working day. Hence my number. ...
Real policy ... involves large sums of money and affects broad swathes of the economy. Repealing the Affordable Care Act ... would certainly qualify.
Consider, by contrast, the story that dominated several news cycles a few weeks ago: Donald Trump’s intervention to stop Carrier from moving jobs to Mexico. Some reports say that 800 U.S. jobs were saved; others suggest that the company will simply replace workers with machines. But even accepting the most positive spin, for every worker whose job was saved in that deal, around a hundred others lost their jobs the same day. ...
This was fake policy — a show intended to impress the rubes, not to achieve real results.
The same goes for the hyping of Ford’s decision to add 700 jobs in Michigan...
The incoming administration’s incentive to engage in fake policy is obvious... Mr. Trump won overwhelming support from white working-class voters, who believed that he was on their side. Yet his real policy agenda, aside from the looming trade war, is standard-issue modern Republicanism: huge tax cuts for billionaires and savage cuts to public programs, including those essential to many Trump voters. ...
Still, none of this would work without the complicity of the news media. ...
Sorry, folks, but headlines that repeat Trump claims about jobs saved, without conveying the essential fakeness of those claims, are a betrayal of journalism. This is true even if ... the articles eventually, quite a few paragraphs in, get around to debunking the hype: many if not most readers will take the headline as validation of the claim.
And it’s even worse if headlines inspired by fake policy crowd out coverage of real policy.
It is, I suppose, possible that fake policy will eventually produce a media backlash — that news organizations will begin treating stunts like the Carrier episode with the ridicule they deserve. But nothing we’ve seen so far inspires optimism.

Tuesday, January 03, 2017

Trying to Remain Positive

Robert Stavins:

Trying to Remain Positive: With inauguration day in the United States just two weeks away, it is difficult to harbor optimism about what the Trump presidency will mean for this country and for the world in realms ranging from economic progress to national security to personal liberty... In the wake of the election, expectations are no better, including in the environmental realm... And since then, the President-elect’s announced nominations for key positions in the administration have probably eliminated whatever optimism some progressives may have been harboring.
Remarkably, the least worrisome development in regard to anticipated climate change policy may be the nomination of Rex Tillerson to become U.S. Secretary of State. Two months ago it would have been inconceivable to me that I would write this about the CEO of Exxon-Mobil taking over the State Department (and hence the international dimensions of U.S. climate change policy). But, think about the other likely candidates. And unlike many of the other top nominees, Mr. Tillerson is at least an adult, and – in the past (before the election) – he had led his company to reverse course and recognize the scientific reality of human-induced climate change (unlike the President-elect), support the use of a carbon tax when and if the U.S. puts in place a meaningful national climate policy, and characterize the Paris Climate Agreement as “an important step forward by world governments in addressing the serious risks of climate change.”
It’s fair to say that it is little more than damning with faint praise to characterize this pending appointment as “the least worrisome development in regard to climate change policy,” but the reality remains. ... Of course, whether Mr. Tillerson will maintain and persevere with his previously stated views on climate change is open to question. And if he does, can he succeed in influencing Oval Office policy when competing with Scott Pruitt, Trump’s pick to run EPA, not to mention Rick Perry, Trump’s bizarre choice to become Secretary of Energy?
In the face of all this (and much else), is it possible to offer any statement of optimism or at least hope? The answer may be found in the reality that U.S. policy – in many issue areas – consists of much more than the policies of the Federal government. In a variety of policy realms, the states play an exceptionally important role. One might not normally think about this in the context of addressing a global commons problem, such as climate change, but these are not normal times.
And so I will try to rescue myself from my current mental state – at least temporarily – by focusing today on policy developments in the State of California. To do this, I offer an op-ed I recently wrote with Professor Lawrence Goulder of Stanford University, which was published in the Sacramento Bee a week before the November election. Good policy developments at the state level are, of course, even more important now than they were then. ...

Monday, January 02, 2017

Paul Krugman: America Becomes a Stan

"This debacle didn’t come out of nowhere":

America Becomes a Stan, by Paul Krugman, NY Times: In 2015 the city of Ashgabat, the capital of Turkmenistan, was graced with a new public monument: a giant gold-plated sculpture portraying the country’s president on horseback. This may strike you as a bit excessive. But cults of personality are actually the norm in the “stans,” the Central Asian countries that emerged after the fall of the Soviet Union, all of which are ruled by strongmen who surround themselves with tiny cliques of wealthy crony capitalists.
Americans used to find the antics of these regimes, with their tinpot dictators, funny. But who’s laughing now?
We are, after all, about to hand over power to a man who has spent his whole adult life trying to build a cult of personality around himself; remember, his “charitable” foundation spent a lot of money buying a six-foot portrait of its founder. ... So we can expect lots of self-aggrandizement once he’s in office. I don’t think it will go as far as gold-plated statues, but really, who knows?
Meanwhile, with only a couple of weeks until Inauguration Day, Donald Trump has done nothing substantive to reduce the unprecedented — or, as he famously wrote on Twitter, “unpresidented” — conflicts of interest created by his business empire. Pretty clearly, he never will — in fact, he’s already in effect using political office to enrich himself...
This means that Mr. Trump will be in violation of the spirit, and arguably the letter, of the Constitution’s emoluments clause... But who’s going to hold him accountable? Some prominent Republicans are already suggesting that, rather than enforcing the ethics laws, Congress should simply change them to accommodate the great man.
And the corruption won’t be limited to the very top: The new administration seems set to bring blatant self-dealing into the center of our political system..., assembling a team of cronies, choosing billionaires with obvious, deep conflicts of interest for many key positions in his administration.
In short, America is rapidly turning into a stan. ...
But this debacle didn’t come out of nowhere...: an increasingly radical G.O.P., willing to do anything to gain and hold power, has been undermining our political culture for decades. ...
The only question now is whether the rot has gone so deep that nothing can stop America’s transformation into Trumpistan. One thing is for sure: It’s destructive as well as foolish to ignore the uncomfortable risk, and simply assume that it will all be O.K. It won’t.