Matt Yglesias

Endgame

Do you know what you’re missing?:

— The CBO did a bad bad thing when calculating the alternative fiscal scenario.

— Continuity of Government.

— Before raiding streetcar funds Vince Gray was against raiding streetcar funds.

— Lawrence Korb on civil-military relations.

— There’s no contradiction between more stimulus now and more deficit reduction later.

— Elena Kagan’s questioners can’t decide if they want her to uphold precedent or overrule it.

Dressy Bessy, “If You Should Try to Kiss Her”.

Is Eric Cantor Smart?

Ezra Klein asks I question I’ve wondered about myself—whence comes the notion that Eric Cantor is a super-smart policy wonk? Is it just that he wears glasses? That he’s Jewish? That his district is close to DC, so it’s relatively easy for him to do schmoozing with Beltway types?

Or has he actually achieved some noteworthy feats of policy wonkery? I’ve never seen ‘em. Of course it’s easy to develop a low opinion of people whose political views you don’t admire, but I think we’d all have to concede that something like Paul Ryan’s “budget roadmap” is an intellectual ambitious document and not just a piece of political positioning. As best I can tell, though, Cantor hasn’t mastered any area of policy or really done anything at all to earn his reputation. I don’t just want to slam the guy, though, most members of congress don’t blaze exciting new trails of policy thinking. What’s weird about Cantor is the reputation, not the reality. But maybe one of my conservative friends wants to email me with some testimonials.

People Want Empathetic Justices

I’m just going to quote John Sides:

The Washington Post tells me that in today’s hearing, Elana Kagan “sidesteps empathy question, says ‘it’s law all the way down,’” which leads the reporter, Paul Kane, to say “So much for the empathy standard.”

I know some people who will be disappointed. The American people. About 68% of them, to be precise. That is the percentage who said in a 2009 survey that it was “very important” for Supreme Court justices to “be able to empathize with ordinary people – that is, to be able understand how the law hurts or helps the people.” Only one other quality out of a list of 12 — “Uphold the values of those who wrote the U.S. constitution long ago” — was judged very important by more respondents (74%). Only 8% of the sample said that empathy was not important at all. Empathy also attracted the support of both parties: 77% of Democrats and 61% of Republicans said that it was very important.

Put me down with the people on this one. And also with the view that there’s really no contradiction between these views. Clearly, no judge should ever be in a position where he or she says “my understanding of the law dictates Outcome X but I’m going to rule so as to create Outcome Y just because I feel like it.” Equally clearly, however, judges regularly disagree about what the correct ruling is. And in particular, in closely divided Supreme Court decision we by definition have a substantial amount of disagreement.

Here I think the citizen is well within his rights to posit that the character of the justice is going to make a substantial difference in determining actual outcomes. John Roberts and the SCOTUS majority evidently approach the law with an attitude that says the owners and managers of businesses have a hard time getting a fair shake in this country, what with all the workers and environmentalists and consumers and their lawyers out there. By contrast, the progressive minority takes a more skeptical view of these claims. So you keep seeing these splits. It’s simplistic, of course, to say that this is just a question of who empathizes with whom. But I think it’s clearly relevant.

Setbacks for Affordable Care Act Repeal

The drive to repeal the Affordable Care Act took several steps backward today. One can be perceived by reading this bombastic Erick Erickson blog post in which he denounces the House GOP leadership for it’s unwillingness to push hard to bring repeal to the floor. Erickson concludes from this that “Eric Cantor and John Boehner — particularly Eric Cantor — have decided they don’t need or want conservatives” which I think is basically a self-refuting statement. The party leadership’s unwillingness to push to bring this up reflects the fact that it’s a doomed and politically counterproductive crusade.

Second, we have yet more polling showing the public warming to the Affordable Care Act. Third, as David Cutler explains the latest CBO numbers confirm that the Affordable Care Act reduces the deficit. In constructing its alternative fiscal scenario, the CBO assumed for no clear reason that ACA’s cost-saving measures will be repealed in 2020, but the fact remains that full repeal would necessarily score as a big deficit-increaser.

All told, I think we can say that the 111th Congress’ legacy is secure and will remain so for a long while now.

Obesity Continues Its Rise

Via Igor Volsky, the Robert Wood Johnson Foundation has a new report detailing the continued enfattening of the United States of America:

Adult obesity rates increased in 28 states in the past year, and declined only in the District of Columbia (D.C.), according to F as in Fat: How Obesity Threatens America’s Future 2010, a report from the Trust for America’s Health (TFAH) and the Robert Wood Johnson Foundation (RWJF). More than two-thirds of states (38) have adult obesity rates above 25 percent. In 1991, no state had an obesity rate above 20 percent.

The report highlights troubling racial, ethnic, regional and income disparities in the nation’s obesity epidemic. For instance, adult obesity rates for Blacks and Latinos were higher than for Whites in at least 40 states and the District of Columbia; 10 out of the 11 states with the highest rates of obesity were in the South — with Mississippi weighing in with highest rates for all adults (33.8 percent) for the sixth year in a row; and 35.3 percent of adults earning less than $15,000 per year were obese compared with 24.5 percent of adults earning $50,000 or more per year.

Both the promise and the peril of these trends is that all signs are that peer-group influence over this kind of thing is enormous. If you’re surrounded by many overweight people, that greatly increases your own chances of becoming overweight. Which means that right now we’re in a vicious cycle.

At any rate, it’s really just a coincidence but I looked it up and it turns out that I personally am one of Washington, DC’s no-longer-obese people, having dropped from 250 pounds (BMI 33.9 “obese”) on March 1 down to 211 pounds (BMI 28.6, merely “overweight”) as of this morning and I’m hoping to make further progress.

Strange Response to the CBO Outlook from the Committee for a Responsible Federal Budget

As previously noted, according to the Congressional Budget Office, if congress sticks by current law the fiscal situation is more-or-less okay for the next 20-25 years. It’s also true that according to the CBO and most everyone you meet, Congress seems unlikely to do that. So the message here should be: “Congress! Don’t live up to your bad reputation! If you don’t want to enact scheduled tax increases and payment cuts to doctors, then you ought to pay for those moves.”

But I got the following press release from Maya MacGuineas at the Committee for a Responsible Federal Budget:

“Aging, health care costs, and an outdated, insufficient revenue system are set to bury the country in debt,” said CRFB president Maya MacGuineas. “Are the findings in this report really the messages we want to be sending our creditors?”

“Policymakers must begin working on real solutions to our long-term problems now,” said MacGuineas. “With debt levels expected to soar, policymakers must embrace meaningful reforms to help us regain control over future deficits, reduce the risks of a fiscal crisis, and keep the economic recovery on track. If this year’s Long Term report isn’t a call to action, I don’t know what is.”

None of this seems accurate. The surprising message from the Congressional Budget Office is that despite aging and health care costs if we allow—as scheduled—the Bush tax cuts to fully expire and allow the AMT to afflict more and more relatively well-off but not super-rich people, then we’re in decent shape. It’s a call not to action, but to inaction. At a minimum, it’s a call for congress to be more hesitant to act. To stop treating these AMT “patches” and “doc fixes” as automatic and start thinking of them as what they are—deviations from a sustainable budget trajectory whose merits ought to be weighed against the merits of possible offsets.

New Expectations Estimates From the Cleveland Fed

The Federal Reserve Bank of Cleveland has put together some interesting new data on market expectations, including the following model of 10-year inflation expectations:

As you can see, it makes sense for policymakers to be more worried about inflation than they were 12 months ago, but less worried than they were three years ago. Or four years ago. Or five years ago. Or six years ago. Or seven years ago. Or eight years ago. Or nine years ago. Or ten years ago. Or, indeed, at any point dating back for decades. Given low inflation, high unemployment, low growth, and basically the lowest inflation expectations ever it would make an enormous amount of sense for the Fed to go out and monetize some debt.

Jewish Christmas

The Elena Kagan confirmation hearings are deadly dull overall, but yesterday’s festivities did provide the opportunity for Kagan and Chuck Schumer to explain Jewish Christmas to Lindsey Graham:

Kagan’s Jewishness also took center stage later in the day. Graham, probing Kagan on threats to the United States, asked her if she was unnerved by the Christmas Day bomber.

“Where were you on Christmas Day?” Graham asked.

“Like all Jews,” Kagan responded, “I was probably at a Chinese restaurant.”

“I could almost see this one coming,” Leahy quipped.

Then Sen. Chuck Schumer (D-N.Y.) jumped in: “Those are the only restaurants that are open!”

It’s worth pointing out that the “only Chinese restaurants are open on Christmas” point actually holds much less true in New York City—from which Schumer, Kagan, and I all hail—than it does in the rest of the country. I recall eating dinner at BBQ on University Place one Christmas with a friend. That said, Chinese food is definitely the traditional Jewish Christmas dinner ritual and one I’ve observed with other DC Jewish bloggers these past few years.

Biden Claims Republican Party is Being Sensible

Some interesting remarks from Vice President Joe Biden:

VP Joe Biden on Monday accused Senate GOPers of holding their top members’ votes hostage in exchange for ranking committee posts, assailing the GOP as sitting “on the sidelines” while the economy nearly collapsed.

“I know at least 7 [GOP] senators, who I will not name, but were made to make a commitment under threat of losing their chairmanships, if they did not support the leadership on every procedural vote,” Biden said at a fundraiser Monday night.

“Every single thing we did, from the important to the not so important, required for the first time in modern American history, majority votes required 60 votes. All the sudden a majority became 60 instead of 50,” the VP added, according to a pool report of the event.

I have no idea whether or not this is true (the RNC’s communications director seems to have issues a not-quite-denial) but what I find striking about it is what a sensible notion it would be for a political party to demand that its members support the party leadership on procedural votes. Had the Democratic caucus adopted such a rule, the White House, the leadership, and the members themselves would have been spared an awful lot of headaches and the country would be in much better shape. After all, every member of the caucus puts some value on his or her ability to secure chairmanships of committees and subcommittees, so such a rule could very plausibly have swiftly led to the creation of a norm against filibustering your own party’s initiatives. Vote “no” on final passage if you like, but vote with the leadership on process.

Stabilizing the Debt By Doing Nothing

Here’s a shocking chart from the Congressional Budget Office’s latest long term budget outlook showing that unless Congress acts decisively, our debt situation will be totally fine:

See that line where the debt:GDP ratio is stable? That’s what happens under current law. If congress changes nothing, or the president vetoes everything, then this is what happens. No apocalypse. But nobody believes that’s going to happen. Nobody believes the Bush tax cuts will fully expire. Nobody expects the AMT phase-in to happen. Nobody expects physicians’ Medicare reimbursement rates to be held in check. And though I think he’s mistaken about this, Doug Elmendorf is skeptical that some cost-saving elements of the Affordable Care Act will ever be implemented. That’s the “alternative fiscal scenario” in which the debt level skyrockets.

But note that congress doesn’t need to do these things that it’s projected to do under the alternative fiscal scenario. Congress can stick to current law, and we’ll be fine. Alternatively, as Brad DeLong suggests, congress can commit to pay-as-you-go budgeting whereby if they choose to implement the large tax cuts and doctor salary increases they’re predicted to implement they offset these measures with other tax increases or spending cuts. If congress does that, we’ll be fine. This would give a successive series of congresses the opportunity to take a whack at modest ideas to increase the growth rate of health care spending.

Austerity Going Global

David Leonhardt once again delivers with a great column, this time on the global enthusiasm for austerity. He sums up the case against the austerity wave sweeping the world, and summarizes why it’s happening anyway:

The reasons vary by country. Greece has no choice. It is out of money, and the markets will not lend to it at a reasonable rate. Several other countries are worried — not ludicrously — that financial markets may turn on them, too, if they delay deficit reduction. Spain falls into this category, and even Britain may.

Then there are the countries that still have the cash or borrowing ability to push for more growth, like the United States, Germany and China, which happen to be three of the world’s biggest economies. Yet they are also reluctant.

China, until recently at least, has been worried about its housing market overheating. Germany has long been afraid of stimulus, because of inflation’s role in the Nazis’ political rise. In responding to the recent financial crisis, Europe, led by Germany, was much more timid than the United States, which is one reason the European economy is in worse shape today.

The reasons for the new American austerity are subtler, but not shocking. Our economy remains in rough shape, by any measure. So it’s easy to confuse its condition (bad) with its direction (better) and to lose sight of how much worse it could be. The unyielding criticism from those who opposed stimulus from the get-go — laissez-faire economists, Congressional Republicans, German leaders — plays a role, too. They’re able to shout louder than the data.

Having praised the column, I’m now going to quibble. As I’ve said before, it’s true that Germans are paranoid about inflation and it’s true that Germany had a major inflation problem in the 1919-1923 period, but it’s simply false to say that inflation played an important role in the rise of the Nazis. In 1924 there was no inflation problem and the Nazis were politically marginal. The same was true in 1925, and in 1926, and in 1927, and in 1928. By the election of 1930, the country was mired in deflation and sky-high unemployment and Nazis were securing over ten percent of the seats in parliament. Those trends—deflation, high unemployment, and a rising share of the Nazi vote—set the stage for the eventual decision of Germany’s mainstream conservatives to hand power over to Hitler. But it was monetary orthodoxy and excessive fear of socialism that put the Nazis in power.

So German policy is more irrational than Leonhardt makes it out to be, in my view. Conversely, Chinese policy is more rational than this summary suggests. Chinese economic growth is robust and Chinese inflation worries are grounded in actual changes in the price level. One can quibble with the precise implementation of tightening in China, but the general direction of policy has been correct—expansionary where needed, now cooling off.

Conversely, when discussing the United States I think Leonhardt does too much to downplay institutional structure. The President of the United States favors more stimulus. So does the Speaker of the House of Representatives and a majority of House members. So does the Majority Leader of the Senate and a majority of Senators. Supermajority rules in the Senate, the vicissitudes of partisan politics, and the fact that the unemployment rate in Nebraska is idiosyncratically low seem to me to be the main factors driving policy.

Drug Policy and Counterinsurgency

Mmm...poppies (cc photo by adactio)

Mark Kleiman previews an upcoming DC talk featuring him, Jon Caulkins, and Jonathan Kulick at which “We’re hoping to make a splash, as the basic claim – which I think is fairly bullet-proof analytically – is that current policies provide material support to the Taliban.”

To—I think—preview what they’re going to say, the basic problem with current drug policies in Afghanistan is that we don’t have effective control over the bulk of the country. Consequently, attempting to curb poppy production amount to putting the Taliban’s competitors out of business, boosting their fortunes. To draw an analogy, in the 1970s and 80s we were engaged in Cold War competition with the USSR. The USSR drew substantial strengths from oil exports. So we might have reasoned “oil production is important to the USSR, so we should therefore declare war on oil production.” This would lead us to shut down wells in Texas and Alaska and other places under our control, but the Soviet wells would remain beyond our grasp. The result would, of course, be a bonanza for our enemies and not at all a means of hurting them.

CEPR’s Budget Calculator

The Center on Economic and Policy Research has put together an interesting deficit calculator that lets you try out different ways of stabilizing the debt:GDP ratio at different levels, while making sure to provide plenty of progressive options. For example, I decreased the Social Security cost of living adjustment by one percentage point, increased SS benefit levels for low-income seniors, boosted spending on infrastructure, research and development, and education by 1 percent of GDP, allowed all the Bush tax cuts to expire, let the estate tax return as scheduled, replaced the home mortgage interest tax deduction with a 15% tax credit, added a public option to the Affordable Care Act, imposed a tax on greenhouse gas emissions, raised gasoline taxes, enacted a variety of defense cuts, and last but by no means least implemented Joe Gagnon’s plan to have the Fed buy and hold $2 trillion worth of bonds.

The result would be a debt:GDP ratio of 52 percent by 2020 which is quite good.

These are also policies that would, in my opinion, boost growth over the short term (Gagnon plan) while cleaning the environment, boosting the fortunes of poor seniors, laying the groundwork for sustained economic growth, and probably improving American foreign policy. CEPR lays out some other ideas that I like—including changing how pharmaceutical research is financed and a clever “globalized Medicare”—and that would further decrease the deficit, but that I didn’t include on my checklist because I don’t think they’re really budgetary measures. Suffice it to say that the point is that you can find a menu of progressive policies that shrink the debt:GDP ratio to 52 percent by 2020 without even seriously tackling health care costs. On top of that, there are a lot of good progressive ideas for tackling health care costs.

To me at least this is one reason progressives shouldn’t be so allergic to the idea of debt/deficit commissions and the like. We ought to say, loud and proud, that we have good ideas for tackling the deficit and demand representation on these panels.

Democrats Care About the Deficit

By Ryan McNeely

In contrast to conservatives who don’t actually care about the deficit, it’s important to remember that Barack Obama recently signed a massive deficit-reduction bill called the “Affordable Care Act.” The health care team at CAP just released a memo that explains “How Health Reform Saves Consumers and Taxpayers Money,” and while most of the figures won’t be a surprise to readers of this blog, it’s important to remember that ACA will save a lot of money.

To sum up, Senate Republicans were in lockstep opposition to a bill that shaved over a trillion dollars off the long-term deficit, but they will go to the mat to filibuster an extension of unemployment benefits because…it will add $33 billion to the deficit. When Republicans block measures that help lower-income people, they claim they are doing so in the name of deficit reduction. But their opposition to health care reform shows that blocking measures that help lower-income people — not deficit reduction — is actually their primary concern.

Endgame

I care less and less and less about you:

— Supreme Court lets employer health care mandate stay in place in San Francisco.

— “Principles for Transparency and Public Participation in Redistricting” is interesting, but multiple member districts is still the answer here.

— Turns out conservatives have off-the-record email lists too. Who knew?

— Idaho GOP goes goldbug, endorses various other bits of lunacy.

— American banks just can’t quit money-laundering.

Tame Impala, “Solitude is Bliss”

The Best Party

A few days ago, I read Sally McGrane’s excellent profile of Reykjavik’s new mayor, Jon Gnarr, a comedian and musician, whose Best Party captured 34.7 of the vote in the recent elections and is now governing in coalition with the Social Democrats:

With his party having won 6 of the City Council’s 15 seats, Mr. Gnarr needed a coalition partner, but ruled out any party whose members had not seen all five seasons of “The Wire.”

A sandy-haired 43-year-old, Mr. Gnarr is best known here for playing a television and film character named Georg Bjarnfredarson, a nasty, bald, middle-aged, Swedish-educated Marxist whose childhood was ruined by a militant feminist mother.

The profile would have done well, however, to link to this Best Party campaign video, which is priceless on its own terms:

Reykjavik is a funny place—a national capital and center of government and culture and all the rest. But it’s tiny. The metropolitan area has about 200,000 residents, on a par with Fargo or Yuma or Racine.

At any rate, I asked ace intern Ryan McNeely to look up how Iceland’s doing economically compared to the other big crisis hot spots. In GDP terms, they’re doing terribly, almost as bad as Ireland:

But in labor market terms, things look pretty rosy:

Does currency devaluation explain the difference? Or maybe some direct labor market interventions?

Three-Way Split?

Chuck Schillken reports on the possibility that Chris Bosh, LeBron James, and Dwyane Wade will all team up in Miami, noting one potential problem with this scenario is that they’d each have to make less money than they otherwise might:

When free agency begins at 12:01 a.m. EDT Thursday, the Heat will have a league-high $43.3 million available in salary-cap space — if my math is correct, that’s $14.4 million each if the three superstars split it evenly.

So if this dream-team scenario takes place, it might cost each of them $2 million or more in potential pay. Sounds like a lot, but it may be worth it especially for James and Bosh, who are still seeking their first NBA championship rings.

In some ways I think the bigger logistical hurdle to this isn’t leaving the $2 million on the table, it’d be the fact that Chris Bosh isn’t nearly as good at basketball as James or Wade. Make no mistake, he’s good. But he’s not as good, so why should they all earn the same amount of money?

This scenario almost certainly won’t happen, but it does highlight some of the oddities created in the marketplace by the ascension of the cap on how much money a team is allowed to pay any one player. That habituates us to the idea that all really good players deserve “max contracts” and thus that it’s plausible to imagine these three guys splitting the pie evenly at a sub-max level.

Michele Bachmann Denounces Global Economy

The reassuring thing about a lot of the nonsense you hear from the right is to think to yourself “well, these guys are liars.” Other times you see something like this transcript of Rep Michele Bachmann talking to radio host Scott Hennen and you come face to face with the realization that some key figures in the movement are dumber than Jonah Goldberg:

HENNEN: What did you make of the G20 Summit this weekend in Toronto, in which President Obama says he’s going to call your bluff, Congresswoman Bachmann, about all this talk of, you know, deficits, because he’s going to cut the deficit in 2013. This after sending a letter in advance saying, whoah, be careful now with all this talk of reducing the deficit because we can’t stop this spending too quick or we’ll be in trouble there. What did you think of that?

BACHMANN: What really concerned me was Treasury Secretary Tim Geithner said that we don’t want to see one country’s economy doing better than another. What? This is the U.S. Treasury Secretary? We don’t want to see Zimbabwe’s economy do better than the United States? Aren’t we supposed to be about the United States and making sure that our economy can be the greatest in the world. If you look at the G20, what they’re trying to do is bind together the world’s economies. Look how that played out in the European Union when they bound all of those nations economies together and one of the smallest economies, Greece, when they got into trouble, that one little nation is bringing down the entire EU. Well, President Obama is trying to bind the United States into a global economy where all of our nations come together in a global economy. I don’t want the United States to be in a global economy where, where our economic future is bound to that of Zimbabwe. I can’t, we can’t necessarily trust the decisions that are being made financially in other countries. I don’t like the decisions that are being made in our own country, but certainly I don’t want to trust the value of my currency and my future to that of like a Chavez down in Venezuela. So I think clearly this is a very bad direction because when you join the economic policy of different nations, it is one short step to joining political unity and then you would have literally, a one world government. That’s not going to be, I think, helpful in the future for our country and I don’t want to cede United States authority to a transnational organization.

Of course the existence of a global economy in which events outside our borders impact us is not something Barack Obama dreamed up, and the idea that having world leaders gather for occasional meetings constitutes a “one world government” is insane. Is her idea that the President should never meet with anyone? Does that undermine our sovereignty?

Models and Predictions

Will Wilkinson notes that “a solid background in the philosophy of science is especially useful when it comes to explaining why many economic theories fail to meet the basic standards of adequate science.” That certainly seems true to me.

To oversimplify a bit for the sake of polemic, a lot of economics work seems to put more emphasis on “doing work that superficially resembles physics and therefore counts as science-like” rather than on doing work that actually resembles scientific endeavor in the sense of leading to useful predictions or technologies or what have you. You get the sense that some practitioners of economics would pick up The Origin of Species and dismiss it as too narrative to count as real science. This guy’s just arguing from a bunch of anecdotes!

These thoughts seemed relevant to me as at Paul Krugman’s suggestion, I read James Morley’s critique (PDF) of Dynamic Stochastic General Equilibrium modeling as a way of explaining macroeconomic outcomes:

However, in terms of really predicting the crisis, the award obviously goes to theories of endogenous financial crises inspired by the ideas of Hyman Minsky. Formal evaluation of these more narrative approaches is hard and there may be an element of the “stopped-clock syndrome” at play. But it would be foolish to dis- miss such theories out of hand. In particular, a ludicrous notion sometimes expressed in the ivory towers of academia is that, for Minsky to be taken seriously, his ideas need to be put into a DSGE model. Instead, the converse is true. For DSGE models to be taken more seriously outside of academia, they need to explain and predict as well as Minsky.

In these terms, there’s good reason to think it would be better if ideas as good as Minsky’s could be put into a more formal framework since that would make them more useful. But the correct ordering is that you start with theories that are doing some good and try to make them formal to make them more useful. Starting with formalisms that would be useful if they were accurate, and then endlessly tweaking the inputs so that in retrospect they give you the right answer is in some ways an interesting exercise but there’s a reason policymakers don’t rely on this work and it’s not that the policymakers are stuck in the past.

The Global Financial Crisis is Not an Ant

John Boehner explains his opposition to tighter bank regulation: “This is killing an ant with a nuclear weapon.”

And there’s the rub. Conservatives are supposed to say that opposition to the bill is driven by concern that it doesn’t go far enough and won’t really solve problems. In reality, Boehner is conceding that his concern is that congress is using big nasty weapons to go after poor defenseless ants.

Objectivity as a Business Strategy

Something that goes unmentioned too often in the United States is that “journalistic objectivity” as traditionally practiced by reporters at American newspapers and television stations is a business strategy as well as an ethos. The way it works is that when a market has only a small number of competitors (one or two daily newspapers in a given city, three television networks) the economic incentive is to try to be generic and inoffensive. Attracting passionate fans doesn’t really help you—even if you love the Indianapolis Star you’re not going to buy two copies a day.

In a more competitive marketplace like the one highbrow magazines and UK newspapers have always operated in things look different. You need to differentiate your product, and it pays to develop an audience of passionate fans. That’s the Internet.

The regulative ideal of “objective journalism” should be understood as a particular ideology associated with a business model of being bland and inoffensive. This particular approach has some pros and some cons, but it has only a tenuous relationship to the idea that what a writer ought to do is to describe “objective” reality. Those of us operating in a different economic paradigm have our own ideological theory which holds that our greater ability to call a spade a spade affords superior reality-describing powers. I think people are largely coming to realize that the shift from one mode to another is inevitable at this point, but people used to the older ways are likely to continue to prefer their model. What’s more of an open question, I think, is whether the concept of a journalist—rather than some more generic idea of a “person who writes about stuff”—will stay viable in the emerging new era.

Economics is Hard!

Something I agree with Kartik Athreya about is that economics is hard, though I’m not sure he gets the implications of this correctly. Take, for example, the slides (PDF) Paul Krugman posted yesterday that accompany a talk he gave on whether there’s a causal link between income inequality and giant economic collapses. The barest outline of a case that there is such a link is that you have two giant increases in inequality, one that ended with the Great Depression and one that ended with the current recession. The barest outline of a case against the existence of such a link is that it’s hard to understand what the causal mechanism here. This, though, is one stab at identifying a mechanism:

Maybe inequality leads to growing indebtedness and this leads to financial crisis. Maybe. Now in the natural sciences what you would do with provocative observations like this is try to conduct some experiments to get a better handle on the issues. Economists, however, can’t run controlled experiments on macroeconomic phenemona. That’s a big part of what makes these questions so hard. But that’s also why it’s foolish to view them as akin to questions in the natural sciences where laymen have nothing to contribute. If economic policy questions were easier, you’d just “ask an economist” what to do about sky-high unemployment. But economists, as individuals, have answers to these questions there’s no consensus and relatively little prospect for forging a consensus through standard scientific methods.

Presidential Succession Act Needs Revision

Daniel Foster gently suggests that perhaps Daniel Inoue’s accession to the role of President Pro Tempore of the United States Senate we ought to rethink that job’s spot in the presidential order of succession:

The Senate has just sworn-in Sen. Daniel Inouye (D., Hawaii) to be President Pro Tempore of the United States Senate. That puts him third in the line of succession to the presidency.

Should we rethink this? The President Pro Tempore is by its nature as much a ceremonial role as a substantive one, and its occupant is almost certain to be of advancing years.

There are a number of problems with the current version of the Presidential Succession Act, of which this seems to me to be the most egregious. It would make more sense to assign the presidency to a randomly selected member of the Senate than to give the job to someone who’s likely to be too old to do it effectively.

More broadly, there’s an argument that putting members of congress in line for succession is unconstitutional, and it’s definitely unwise. If succession passes to the Vice President or another member of the incumbent administration, then one can expect a fair amount of continuity in terms of policy and personnel. If succession passes to the Speaker of the House we can easily imagine awkward shifts in policy and an artificial sense that the personnel needs to be overhauled very rapidly. What’s more, if something happened that killed the VP and incapacitated the President (or vice versa) the possibility of a switch in partisan control of the government could make the cabinet unduly hesitant to invoke the 25th Amendment. The current setup is a disaster waiting to happen, and refusing to fix it simply because a cataclysm is unlikely is really foolish—just look at the financial meltdown or the gulf oil spill. In this case the cost of fixing the problem would be almost nothing.

The FinReg Votes Fall Apart

Russ Feingold voted against the Senate version of the financial regulation overhaul and nobody much noticed or cared because a handful of Republicans voted yes and thus it passed. One gets the sense that this is oftentimes what the most liberal members really want out of these compromise bills. It’s not that they want to block them, they just want the opportunity to vote “no” and register their official objection to legislation that has, in fact, been considerably watered down at the behest of “centrist” members.

But now it looks like we’re in trouble. Not only is Feingold sticking to his “no” position, but suddenly Senators Collins, Snowe, and Brown are jumping ship as well.

The problem here, as a result, isn’t so much that Feingold’s vote is needed to pass the bill—with Senator Byrd dead, it can’t pass anyway without the moderate Republicans—as it is that it will be tough for the White House and Harry Reid to put the squeeze on the recalcitrant Republicans as long as their caucus isn’t united. As you recall, the financial regulation bill really started to move once the full political press was put on. The bank lobby is extremely powerful, but also extremely unpopular, so when there’s partisan unity and a big public focus on an issue it’s very hard to stand with the banks. But when any kind of confusion, disarray, or lack of attention enters the picture then suddenly it’s trouble.

Austerity in Ireland

Liz Alderman reports on the failure of austerity budgeting in Ireland:

“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession. [...]

Despite its strenuous efforts, Ireland has been thrust into the same ignominious category as Portugal, Italy, Greece and Spain. It now pays a hefty three percentage points more than Germany on its benchmark bonds, in part because investors fear that the austerity program, by retarding growth and so far failing to reduce borrowing, will make it harder for Dublin to pay its bills rather than easier.

Other European nations, including Britain and Germany, are following Ireland’s lead, arguing that the only way to restore growth is to convince investors and their own people that government borrowing will shrink.

As Kevin Drum says, it’s not clear that Ireland had a ton of options because it’s stuck in the Euro. But the lesson is still clear enough—what gives confidence to investors is prospects for growth, and what countries need to do to instill confidence is to adopt pro-growth policies. The United States can get away with more short-term borrowing, and will ultimately have an easier time paying off the debts we’ve already accumulated if the economy grows.