Matt Yglesias

What Do Poor College Students Need?

Richard Kahlenberg thinks I’ve been too hasty in dismissing the relevance of fights over affirmative action and brings to bear a bunch of important data that doesn’t, I think, ultimately undermine what I’m trying to say:

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Pakistani Opinion on Drones

Spencer Ackerman summarizes the findings of a new Pew survey (PDF) on Pakistani views and pulls out the surprising-seeming news that most Pakistanis say they don’t know anything about the drone strikes program:

Top of the list: “Just over one-in-three Pakistanis (35%) have heard about the drone strikes.” Apparently, Pakistanis barely know this program even exists. Forty-three percent say they’ve heard “nothing at all” about the drones. You can hear the champagne corks popping at Langley.

But it’s not exactly time for bottle service. Amongst those Pakistanis who have heard of the drones, opinion skews predictably negative. Ninety-three percent say they’re a bad or “very bad” thing. Ninety percent say they kill too many innocent people. While some researchers claim that if you limit your pool of respondents to the tribal areas, support for the drones actually goes up, 32 percent of overall respondents think they’re a necessary measure. (Although perhaps that’s a robust total of people saying a foreign government should shoot missiles at their fellow countrymen.) And almost half of Pakistanis believe the fiction that the drone strikes occur without Pakistani government approval.

This strikes me as much more terrible news than most Americans realize. There are 170 million in Pakistan. 35 percent of that is 60 million people who tell pollsters they’re aware of this initiative. So we’re talking in the end about a population of 55 million Pakistanis who know what’s happening and think what we’re doing is “bad” or “very bad.” My understanding is that what we’re doing in Pakistan—the drones, the aid, the whole deal—is largely supposed to be about bolstering the stability of a US-aligned Pakistani regime. It’s difficult for me to see how this course of action is making such a regime more sustainable over the long term.

Ryan: Raise Interest Rates

Members of congress rarely offer their opinions on monetary policy issues, which I think is too bad. The Fed’s operational independence doesn’t mean this isn’t a subject people should have opinions about (politicians talk about the Supreme Court all the time) and it’s important. But Paul Ryan seems to have some odd views on how this works:

We need to do things to free up credit. We need regulatory forbearance there. Right now, the policymakers and regulators are doing opposite things. So you’re right that there’s a lot of capital parked out there, and we need to coax it out into the markets. I think literally that if we raised the federal funds rate by a point, it would help push money into the economy, as right now, the safest play is to stay with the federal money and federal paper.

The analysis of the “safest play” here is right, but raising interest rates would exacerbate that problem. He’s talking about paying banks a higher yield on the reserves they keep parked at the Fed. This is what central banks do when they want to suck money out of the system.

Perhaps he misspoke and meant to say something else, but my suspicion is that Ryan is really just outlining an underpants gnome theory of growth here. He knows that tight money is the “right-wing” position and he also knows that the general theme of this summer’s right-wing talking points is that we need to be more business-friendly to boost investment. So he’s decided to say that tighter money (right-wing!) would spur investment (right-wing!) even though there’s no causal story he can tell about this.

White Privilege Alive and Well

Don’t tell Jim Webb:

Someone accused of killing a white person in North Carolina is nearly three times as likely to get the death penalty than someone accused of killing a black person, according to a study released Thursday by two researchers who looked at death sentences over a 28-year period.

People are generally aware of the fact that the criminal justice system sanctions African-American suspects and perpetrators disproportionately harshly. Less noted, but in some ways even more pernicious, is the way it affords lesser protection to African-American victims and potential victims. Randall Kennedy’s Race, Crime, and the Law explicates this neglected issue in an excellent way.

Harnessing the Power of For-Profit Higher Education

(cc photo by carbonnyc)

As is pretty well-known at this point, the United States has seen large increases in the “college wage premium” meaning that the top 20 percent of the income distribution has tended to pull away from the bottom 80 (separately, the top 1 percent have pulled away from the bottom 99). In principle, the magic of the marketplace ought to respond to this by increasing the supply of college graduates until we regain an equilibrium. In practice, this isn’t happening. We’ve kept increasing the number of people who start college, but they’re not finishing. And surely part of the explanation is that higher education isn’t a traditional market. Recently, though, there’s been an explosion of for-profit higher education providers out there who, in principle, could help solve this problem.

Unfortunately, many of these for-profit operators aren’t very good. The Obama administration’s solution is to tweak incentives through a regulatory lever. Specifically, they’re using the Title IV of the Higher Education Act of 1965’s stipulation that institutions qualifying for federal student aid must prepare students for “gainful employment in a recognized occupation” to base eligibility for money on performance:

For a program to be fully eligible for Title IV aid, its graduates would need to have a debt service-to-income ratio under 8 percent of their total income or 20 percent of their discretionary income. Or, of graduates and non-completers who entered federal loan repayment in the four most recent fiscal years, at least 45 percent would have to be paying down principal on their student loan debt. Forbearances and deferments (other than for program completers who qualify for public service loan forgiveness) would be considered nonpayments. Unless it passed at least one of the debt-to-income ratio tests as well as the loan repayment test, a program would have to disclose all of that data to current and prospective students.

In practice, this is a pretty modest step, but it’s a step down a potentially promising road. Basically the idea is to ensure that for-profit schools now have large incentives to make sure that students who attend them are securing a positive return on their tuition investment. That means that models of effective teaching will tend to spread and models of ineffective teaching will tend to die off. If it works, there’s plenty of room to make these standards tighter and drive the process of innovation further forward. You could imagine this turning out not to work, but the low-end higher education sector is in definite need of more incentive-compatible innovation and this seems like a smart way to get it done.

Improving UI With Lump Sum Payments

Annie Lowrey and Even The Conservative Josh Barro argue in favor of reforming the Unemployment Insurance system so as to make extended benefits eligibility automatic in times of economic depression. Barro:

I haven’t seen any specific formulas proposed (if a reform is on the table, readers, please alert me) but in general UI should be extended when unemployment is high and/or rising, and contracted when it is low and/or falling. A formulaic adjustment program could mimic what Congress habitually does already, but without generating market uncertainty — or incurring risk that Congress will be too timid to pull the trigger on abbreviating UI benefits in recovery.

I agree with the spirit here. One of the big lessons of the Great Recession is that relying on discretionary congressional action in the middle of a downturn is not a great idea. We need to set up systems that have more automaticity. That said, I saw a mind-blowing chart on Mike Konczal’s blog a couple of weeks ago that suggested that everything I think I know about Unemployment Insurance is wrong.

Here, then is some hot, hot empirical research from Austria:

What happens at 36 months? Well, in Austria if you’ve worked a job for at least 36 months, then you get your UI in terms of a single lump-sum payment, rather than a sporadic paycheck. Conventional UI in effect pays people to not work, and thus creates a disincentive to find a job. The general view is that this disincentive effect needs to be balanced against humanitarian issues and aggregate demand considerations during a severe slump. But the Austrian evidence suggests that conventional wisdom is badly misconstruing the situation. Instead of the lump sum encouraging people to take new jobs more quickly by removing the disincentive, it encourages them to wait even longer before finding a new position. Konczal says this is a more efficient reallocation of resources: “This is people searching for a job they fit into better, this is people making their basic payments and obligations, hedging against future risks and future financial ruin, this is people being able to efficiently make the choices for how to fix back into the economy.”

Interestingly, whether you agree with Konczal’s interpretation or want to stick with the traditional disincentive view, either way the lesson seems to be that the main reform UI needs is not automatic extensions, but transformation into lump-sum payments. If you want to do something automatic, you could add some criteria that triggers a new round of payouts.

Endgame

Waiting in Des Moines:

— Journolist is liberal because its members are ugly.

— But back in 2008, Ezra Klein was the fifth-hottest dude on the planet.

— Every once in a while you need to re-read “The Pussification of the American Male” by Kim Du Toit.

— Fred Barnes claims he’s “never been part of a discussion with conservative writers about how we could most help the Republican or the conservative team” but he’s taken thousands of dollars in money from various Republican Party organizations.

— Congress cutting FY2011 Race to the Top education money for no particular reason.

— Philly Fed President Charles Plosser doesn’t know much about the history of monetary policy, which is a problem for someone in charge of monetary policy.

— Anti-mosque protestors aren’t prejudiced, they just don’t like Muslims.

— Celestial soul portraits.

It’s time for some of the emo people love to claim to hate. The Anniversary, “D in Detroit”.

Beijing Traffic Management

Someone (Churchill) once said that the United States of America can always be counted on to do the right thing after it’s exhausted all the alternatives. And sometimes that’s how I feel about China’s ambitious-but-not-working efforts to control pollution while industrializing, admirably recounted by Andrew Jacobs. As just one example, consider my hobbyhorse of traffic planning:

In Beijing, driving restrictions that removed a fifth of private cars from roads each weekday have been offset by 250,000 new cars that hit the city streets in the first four months of 2010.

The policy here is that on any given weekday, there are two digits such that cars whose license plates end in those numbers aren’t allowed on the road. So you can see that the Beijing authorities, unlike those in most American cities, aren’t afraid to tackle the “too much driving” issue. But rather than tackle it in a way that would (a) work and (b) be economically optimal—congestion pricing to fund better bus service—they’ve opted for a goofy rationing system that’s encouraging households to stockpile multiple automobiles in order to evade road restrictions.

The upshot, pollution aside, is that Beijing is already an incredibly congested city even though it’s likely to grow in the future (it’s big, but much smaller than Tokyo, New York, Mumbai, Jakarta, Sao Paulo, or Moscow) and a greater share of the population will be able to afford cars. The Chinese are doing a lot of inspiring things, but an awful lot of their approach to urban planning—tons of new developments seem to be built around a very misguided superblock model—has terrifying implications for the future.

Nobody is Helping Aisha

It’s certainly true as Time’s emotionally manipulative new cover image indicates that the Taliban are terrible for women and that the more of Afghanistan they rule the worse things will be for women. That said, it’s extremely disingenuous to act as if continued American military engagement in Afghanistan is the key to preventing further cases of girls like Aisha from being maimed for violations of retrograde notions of gender norms.

As David Petraeus put it in his remarks upon assuming command in Afghanistan: “We must demonstrate to the Afghan people, and to the world, that Al Qaeda and its network of extremist allies will not be allowed to once again establish sanctuaries in Afghanistan from which they can launch attacks on the Afghan people and on freedom-loving nations around the world.” That doesn’t say anything about what happens to young girls who flee from their in-laws. Protecting them was not among the things he exhorted his troops to do. And when he addressed himself to the people of Afghanistan he didn’t mention anything along these lines either:

Finally, to the people of Afghanistan: it is a great honor to be in your country and to lead ISAF. I want to emphasize what a number of our country’s leaders recently affirmed – that our commitment to Afghanistan is an enduring one and that we are committed to a sustained effort to help the people of this country over the long-term. Neither you nor the insurgents nor our partners in the region should doubt that. Certainly the character of our commitment will change over time. Indeed, Afghans and the citizens of ISAF countries look forward to the day when conditions will permit the transition of further tasks to Afghan forces. In the meantime, all of us at ISAF pledge our full commitment to help you protect your nation from militants who allowed Al Qaeda sanctuary when they ruled the country. Moreover, we see it as our solemn duty to protect the innocent people of Afghanistan from all violence, whether intended by the enemy or unintended by those of us pursuing that enemy. And we stand with you as we all work to defeat the enemies of the new Afghanistan and to help create a better future for you and your families.

Defend Afghan allies from being targeted by the Taliban. Check. Avoid accidental killing of Afghans by NATO forces. Check. Women’s rights? Not so much.

And you can see this time and again if you look at statements about US policy in Afghanistan from George W Bush, Dick Cheney, Barack Obama, Joe Biden, Donald Rumsfeld, Robert Gates, Stanley McChrystal, David Petraeus, etc. We are fighting the Taliban in Afghanistan. Thus, emphasizing that the Taliban is a group of bad people is often a rhetorical point of emphasis. The Taliban’s poor treatment of women often comes up as a sub-point here to illustrate the theme that the Taliban are bad. But actually altering social conditions in southern and eastern Afghanistan isn’t on the list of war aims.

And that makes sense. After all “invade and conquer southern and eastern Afghanistan” is neither a practical nor a cost-effective means of enhancing the well-being of the world’s women. You go to war for reasons of national security. Those reasons either stand up to scrutiny or they don’t.

Paying People to Work

Catherine Rampbell reports on one ARRA-funded initiative to let states subsidize hiring by private employers:

“I never, ever, ever thought I’d end up in an art gallery,” said Tremaine Edwards, 35, a former computer technician who had been unemployed for two years before he was hired in May by Gallery Guichard, a private gallery in Chicago. Mr. Edwards now earns $10 an hour, financed by the government, through the Put Illinois to Work program, to maintain the company’s Web site, curate exhibits and run gallery events.

He has also become the gallery’s star salesman, selling five paintings during the most recent gallery opening despite no background in fine arts or sales.

One important advantage of this sort of thing over simply cutting people Unemployment Insurance checks is its impact on skills. An unemployed computer technician is basically a depreciating asset, the value of his skills deteriorating as technology shifts and he’s not on the job to keep up. A former computer technician working at an art gallery maintaining the company’s website and working on gallery events, by contrast, is learning new things—including new things about himself—and now has more skills than he did before.

Lindsey Graham’s Uncynical, Apolitical Crusade Against Birthright Citizenship

By Ryan McNeely

In the spring, Majority Leader Reid announced that he would attempt to tackle immigration reform before energy, a move that I thought was odd at the time. Both issues are incredibly important, but the House had already passed a decent energy bill, while work on immigration would have to start from scratch.

Lindsey Graham then released an open letter declaring that this move had so upset him that he could no longer support (and in fact would filibuster!) his own climate bill. This is coming from someone who purports to support comprehensive immigration reform. Graham’s stated rationale was that Reid’s proposal was a transparent attempt to rile up Latino voters in Nevada and that it would make passing immigration reform “exponentially more difficult in the future.”

But it appears President Obama and the Senate Democratic leadership have other more partisan, political objectives in mind.

Moving forward on immigration — in this hurried, panicked manner — is nothing more than a cynical political ploy.

He then told reporters that “If immigration comes up then that’s the ultimate CYA politics,” and warned that “it will divide the country.” Tom Friedman agreed, calling Reid’s move a “travesty,” while Gloria Borger lauded Graham as the “new John McCain,” an “independent Republican, often a lonely soul” who always bravely negotiates with Democrats in good faith.

Strange, then, that Lindsey Graham is now — a few months closer to the November elections – pushing a Constitutional amendment to revoke birthright citizenship, which he calls a “mistake.” Since Lindsey Graham doesn’t engage in cheap political stunts, he must seriously believe that it’s possible for such an amendment to get through both houses of Congress with 2/3 majorities and then be ratified by 38 state legislatures. Otherwise, one may have to regretfully conclude that Graham is simply cynically pandering to the most radical, nativist elements of the Republican base in an attempt to divide the country.

The End of Probable Cause

This is excellent news for FBI agents who might want to misuse Bureau resources to see if their wife is having an affair:

The Obama administration is seeking to make it easier for the FBI to compel companies to turn over records of an individual’s Internet activity without a court order if agents deem the information relevant to a terrorism or intelligence investigation.

The administration wants to add just four words — “electronic communication transactional records” — to a list of items that the law says the FBI may demand without a judge’s approval. Government lawyers say this category of information includes the addresses to which an Internet user sends e-mail; the times and dates e-mail was sent and received; and possibly a user’s browser history. It does not include, the lawyers hasten to point out, the “content” of e-mail or other Internet communication.

Of course, checking out someone’s browser history could be very useful in a terrorism investigation. But if I had some kind of cause—probable cause, let’s say—to suspect someone of involvement in terrorism, I could just get a warrant. If I want to see whether my wife has a secret Match.com account, by contrast, I’m going to need some kind of authority to compel private companies to divulge this information without me needing to explain myself to a judge.

FBI personnel are, I’m sure, overwhelmingly decent and honorable people whose subjective understanding is that they want to use these enhanced powers for legitimate purposes. But who among us, when being honest, has never misused work resources a bit for personal purposes? Everyone slacks off on the job. Everyone has moments of prurient interest in the lives of other people. Taking the gloves off, surveillance-wise, is much more likely to lead to abusive behavior than to super-awesome counterterrorism operations.

A New Hope

Recovery might come one of these days:

On Thursday, James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the Fed’s current policies were putting the American economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.” [...] Mr. Bullard had been viewed as a centrist and associated with the camp that sees inflation, the Fed’s traditional enemy, as a greater threat than deflation. [...] Mr. Obama’s two other nominees, Peter A. Diamond and Sarah Bloom Raskin, who like Ms. Yellen are on track to be confirmed by the Senate, have also expressed serious concerns about unemployment.

The President’s failure to make these nominations and secure their confirmation in a timely manner will, in retrospect, prove to have been his biggest mistake.

Priorities Abroad

Kristof: “In the presidential campaign, Mr. Obama promised to invest in a global education fund. Since then, he seems to have forgotten the idea — even though he is spending enough every five weeks in Afghanistan to ensure that practically every child on our planet gets a primary education.”

To get technical, I doubt you could really scale up in that way but the point stands. Maybe you get primary school for 80 percent of those who like it and spend the rest on something else. But at least we’ll be making it easier for the FBI to spy on people without warrants.

Mysteries of the Title I “Comparability” Proposal

Several of my colleagues made this video to try to explain the “comparability loophole” in Title I federal funding for schools for poor kids:

To try to explain it in words, the basic issue here is that the provision of the law designed to make sure that high-poverty schools get a fair share of resources lets you define a large share of this in terms of the number of teachers rather than the per student budget. This is like saying the Yankees and the Royals have the same resources because they both field a complete roster of baseball players, completely ignoring the fact that the Yankees are actually spending 3-4 times as much money. In education, just like in baseball, simply having more money doesn’t guarantee results—you need to spend that money effectively. But in both fields, it’s easier to spend money effectively if you have money to spend.

Congress needs to fix this.

Erskine Bowles’ 21 Percent Mistake

In addition to my previous concerns about Erskine Bowles’ approach to his job as co-chair of the president’s deficit commission, Matt Miller is adding some new ones:

In little-noticed remarks a few weeks ago, Bowles suggested that the long-term goal the commission should adopt for federal spending should be 21 percent of gross domestic product. This sounds like a bookkeeping matter. But Bowles’ goal would end progressive ambition, ratify America’s declining competitiveness and bury the American dream.

Why? For starters, federal spending under Ronald Reagan averaged 22 percent of GDP. Under Bowles’s view, therefore, the outer limits of the Democratic Party’s 21st-century aspirations would be to run government at a size smaller than did a 20th-century conservative icon.

I think it’s extremely unlikely that this commission is going to end up producing any kind of compromise, but in many ways that makes it all the more important that its members lay down markers in smart ways. We can’t have folks who are supposed to be from the commission’s more progressive half laying out ideas that would simply rule progressive policy out of bounds from the get-go.

My view, like Miller’s, is that “I’m all for ending ineffective programs and reallocating the cash.” But cuts should start with analysis of programs, not with arbitrary budget targets. Things that aren’t worth doing shouldn’t be done. But we shouldn’t simply cut for the sake of cutting.

Republicans Successful in Convincing Republicans to Hate ACA

By Ryan McNeely

A new poll from the Kaiser Family Foundation contains more evidence that the effort to repeal the Affordable Care Act is doomed: support for the law is up to 50% while opposition has dropped to a surprising low of 35%. Independents split 48/37 in favor. But the Republican campaign to mislead the public about the contents of ACA has been successful in one respect:

Though the legislative battle is over, the political tug-of-war continues. Democrats and Republicans have been fighting to shape public opinion on the issue in hopes of influencing the fall elections.

Among Republicans, opposition to the law remained steady at 69 percent, but the intensity of that opposition ticked upward. Fifty-three percent of Republicans said they had a “very unfavorable” opinion of the law this month, up from 50 percent in June.

Of course, if the Republican base is now super-duper opposed to ACA, that could have turnout implications. But people whose intensity of opposition to ACA is increasing are a shrinking minority, can’t vote twice, and were unlikely to ever vote for Democrats.

I think the news will continue to get even better for ACA supporters, as “the public remains split into rough thirds as to whether the law will leave their own family better off, worse off or unchanged,” and many people still hold incorrect views about the bill’s contents, including 36% of seniors who as Igor Volsky notes have fallen for “death panel” smears. These numbers will likely improve as more of the bill’s components come online, and seniors see for themselves.

Durbin Backs Filibuster Reform

Dick Durbin, the number two Democrat in the Senate hierarchy, seems open to filibuster reform judging by his remarks to TPM DC’s Brian Beutler:

“Here we were with amendments on Wall Street reform. 28 amendments by majority vote. I want to offer an amendment on credit card fees, and they say, ‘Oh that’ll be 60.’ Well where did that come from?” Durbin said.

Durbin’s amendment ultimately passed, but, he said, “the 60 was designed for me to lose. I won instead.”

“But the point is, if you can just out of the blue say, ‘Uh that’s not a majority, that’s 60,’ and not have any basis other than if you don’t we’ll filibuster, it really reaches the point where this place isn’t on the square. And I think it should be.”

Leadership offices don’t “matter” in the vain & egomaniacal Senate the same way they do in the House of Representatives, so Durbin’s thinking won’t necessarily have a ton of pull. But it does show that there’s some momentum behind this idea.

I think that if you want to talk about the counterproductive nature of progressive apathy then you have to talk about this filibuster reform effort. It’s 100 percent true that progressive policy becomes less likely, rather than more likely, if progressives become cynical, apathetic, disillusioned, and blind to the very real achievements of the 111th Congress. But at the same time, there’s an iterative relationship between political leaders and their supporters. Leaders can’t just point to the policy accomplishments of yore and say “stop whining” they need to join with activists in fighting for further change. Appointing Elizabeth Warren would boost morale, and beginning to organize for reform of Senate procedure would as well. If you tell people “we did the best we could, but the structure of the Senate hemmed us in” then people get depressed. If you say “we did the best we could but the structure of the Senate hemmed us in and that’s why I’m fighting to reform the Senate and deliver the reforms we all believe in” then people have something to hang on to.

Municipalities Set to Lay Off 500,000

Things like this are the real story of fiscal policy as a macroeconomic stabilizer in the contemporary United States: “Local governments are looking to eliminate 8.6% of their total full-time equivalent positions by 2012, according to a new survey released Tuesday by the National League of Cities, the National Association of Counties and United States Conference of Mayors.”

That’s 500,000 lost jobs. Conservatives have largely convinced themselves that public servants are such vile and overpaid monsters that anything that forces layoffs is a good thing and the moderates in Congress seem scared of their own shadows so nothing will be done. But economically speaking, the time for local governments to try to trim the fat is when unemployment is low and your laid-off librarian, ambulance driver, or guy who keeps the park clean can get a new job where his or her skills will plausibly be more optimally allocated. But guess what produces less social welfare than driving a bus? Sitting at home being unemployed. And so it goes down the line. Dumping people into a depressed labor market all-but-guarantees an increase in idleness along with a drop in revenue for local retailers that will lead to more idleness and waste.

I’m just a humble blogger, but it seems to me that there’s real need for some of the smart policy minds out there to start working on proposals for some kind of structural reform to reduce the pro-cyclicality of state & local budgeting. Clearly the “if things get really bad, Congress will deliver the money” theory of making automatic fiscal stabilizers work isn’t panning out.

Communism in China

Earlier this week, Chris Beam did a piece asking “How communist is China, really?” and concluding “not very.” He makes familiar points, but this is one hell of a too-be-sure graf in my opinion:

(cc photo by bokur.net)

That said, the Chinese government still controls major aspects of the economy and society. For example, just about every Chinese bank is state-owned, so the government decides which businesses and individuals will get the most favorable loans. The domestic media are entirely state-owned as well and offer uniformly favorable political coverage. Perhaps the biggest vestige of classical communism is the fact that every square inch of land in the country still belongs to the government. (People and businesses can own houses and other property.)

I’ve made this point before but the approach of today’s CCP is arguably right in line with Lenin’s New Economic Policy or the ideas of Nikolai Bukharin and Mikhail Gorbachev all of whom certainly thought they were Communists. Indeed, if you ask me the status quo in China is pretty similar to the agenda outlined in the Communist Manifesto. Similarly, when Bean says “irony is that the Communist leadership structure is geared toward capitalist ends” he turns out to mean that it’s geared toward economic growth. Growth is something that the post-1960s far left is typically skeptical of, but Karl Marx and all the leaders of the USSR espoused the view that policy should be geared toward maximizing growth.

I don’t want to make too much out of this and obviously the “China embraces capitalism” view has taken hold largely because it contains a lot of truth. Still, I think it’s a mistake to too-quickly reject the idea that China’s leadership may very sincerely see themselves as continuing to carry the Communist torch.

Economic Outlook Worsening

Neil Irwin: “The economic expansion has proceeded unevenly this summer, according to a new Federal Reserve report, with new pockets of weakness emerging in parts of the country.”

The more I think and write about monetary policy, the more I think the entire subject is shot through with people over-thinking and over-complicating things. The Fed steps on the gas to generate growth, and steps on the breaks to stop inflation. Two years ago, the Fed saw slowing growth and falling inflation expectations, so for a while it did some gas-stepping. But since January of 2009 or so, data keeps coming in to indicate that conditions are worse than previously estimated. If you step on the gas in response to bad news, then when the news turns out to be worse than you thought it was you need to redouble your efforts. This isn’t brain surgery. Nor does it take a genius to understand why with the Fed refusing to respond in the obvious way to new data we keep not recovering. What else is supposed to happen?

Of course given the fact that the policymakers charged with macroeconomic stability aren’t doing their jobs correctly, we have a bunch of interesting phenomena to analyze. For example, firms are hoarding cash and spiking productivity isn’t leading to new hiring. It’s interesting stuff. But if month after month we saw higher-than-anticipated inflation and had no response and then inflation got out of control nobody would be very interested in the micro-dynamics of firms’ pricing decision, they’d be wondering why policymakers weren’t responding to events.

Endgame

Pour qui tu dansais pendant ta vie sans moi?

— Big legislative win on crack/powder sentencing disparities.

— Big win on Arizona immigration law.

— Masjid Manhattan has been near Ground Zero since before the World Trade Center was even completed.

— Improve the CLASS Act, don’t scrap it.

— The real problem with “gifted” programs.

— Robert Gates takes a dark view of scouting.

— John Thune and Greta Van Susteren don’t understand what a 10 percent annual reduction means.

Stereo Total, “Je Rêve Encore de Toi”.

The Perils of Overtreatment

Scare stories from Sarah Palin and Chuck Grassley about “death panels” didn’t succeed in derailing efforts to expand health insurance coverage, but they did help the health insurance industry shield its conduct from some much-needed scrutiny. Two recent posts, one from Igor Volsky discussing doctors’ tendency to prescribe useless aggressive treatment options for men with low-risk prostate cancer and one from Ezra Klein citing Atul Gawande on making terminally ill patients miserable with dignity-sapping extraordinary measures.

This is all bad stuff and not primarily because it “costs money.” Rather, it costs people quality of life. People have better things to do with their time than undergoing painful cancer treatments that they don’t need. Gawande writes of a study “showing that terminally ill cancer patients who were put on a mechanical ventilator, given electrical defibrillation or chest compressions, or admitted, near death, to intensive care had a substantially worse quality of life in their last week than those who received no such interventions” and also “six months after their death, their caregivers were three times as likely to suffer major depression.” I don’t think there’s anyone out there who’s terminally ill and saying to himself “I want to handle this in the way most likely to produced major depression for my loved ones” but that’s what happens and it’s horrible.

Unfortunately, even post-reform our health care policies are going to skew incentives in favor of too-little preventive care and too much end-of-life care as well as too much health care and not enough healthy living. But we are slowly making progress.

Loopy Hits

I was talking about this earlier today while recording a BHTV episode with Ross Douthat, but I think it’s genuinely too bad that so much of the right-wing’s energy is dedicated to idiotic made-up stuff. There’s presumably some insidious goings-on inside anything as enormous as the United States government and people need to look into that, and the ideological adversaries of the incumbent administration are logical candidates. Instead we’ve got:

— Andrew Breitbart discovers Dixiecrats: “Tea Party demand: Will the Democratic Party condemn its racist KKK roots on national TV?”

— Jim Lindgren exposes the totalitarian implications of Michelle Obama’s birthday email about her husband.

— The Weekly Standard exposes . . . something unclear about John Podesta’s not-at-all secret support for UFO disclosure.

— Newt Gingrich battles a made-up looming sharia takeover of Minnesota.

That’s just stuff I came across today, none of it written by Andy McCarthy or Jonah Goldberg!

Recession-Response Has Worked

Mark Zandi and Alan Blinder have an intellectually ambitious effort (PDF) to quantify the impact of the various recession-response measures undertaken by George W Bush, Barack Obama, Ben Bernanke, and the US congress. Their conclusion is that the total impact was substantial:

We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 6.5% lower, payroll employment would be less by some 8.5 million jobs, and the nation would now be experiencing deflation.

Annie Lowrey observes that “that the stimulus — the $787 billion American Reinvestment and Recovery Act — had less impact and proved less important than the government’s monetary policy and financial-market stabilization measures, like the Fed buy-up of mortgage-backed securities.” And this isn’t because ARRA didn’t work: “the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 2%, holding the unemployment rate about 1.5 percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls.”

I think this is important, because with fiscal policy politically off the table I think it’s important for progressives to get more engaged on all the other levers the government has—including just talking differently—to get output closer to its potential.