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Sunday, June 30, 2013

Oh What Brave New Virtual World

Ah globalization oh the internet.  What could be more wonderful that viewing from the comfort of my home in Rome an animation made in Taipei illustrating events in Austin ?  Finding the video embeded at the national memo where estemed Washington Post columnist E.J. Dionne shares the masthead with @lolgop who is, as far as I know, identified only by the handle and the avatar of an elephant felating itself (clearly representing the overwhelming self absorption of the amazingly massive internet).

update: OK so right under the elephant felating itself his twitter profile says "IRL: Ann Arbor, Michigan" so sue me.

Almost as wonderful is how I read extensive excerpts of Jon Chait's post on how Gleen Greenwald is Ralph Nader (except for the part about running for president and getting Bush elected which makes me think "Well except for that how did you like the play?").

Chait's exhibit B is that Greenwald wrote "“there is a reasonable debate to be had among reform advocates over whether this bill is a net benefit or a net harm.” he such language Glenn.  My translation is "Let's not dismiss Jane Hamsher as a nutcase but pretend she has a case so we can work with her against say Al Wynn and Joe Lieberman".  To Chait an unwillingness to exclude Hamsher from all reasonable debate is proof of arrogant extremism.

I decided to skip that Chait post (I generally check if there is a new Chait post at least 3 times before he finally posts one).  But I ran into an extensive excerpt followed by the ironic comment "Needless to say, I find the description of this behavior odd as I have never witnessed such a thing in all of my born days.
Must be an urban myth or something…" at firedoglake where Tbogg pretty much endorsed the view that anyone who doesn't dismiss the nonsense one reads at firedoglake out of hand must be a Nader clone.

The US left and right are not symmetric. Imagine reading something like that at The Corner.  In fact the left and the center are not symmetric.  Imagine hearing something like that on CNN.

Saturday, June 29, 2013

Washington Monthly Vs Washington Monthly

Bare Knuckle Brawl in Ten Miles Square

I read Ed Kilgore every day and think very highly of him.  However there are two topics on which we disagree -- welfare reform and the DLC.  The DLC doesn't exist anymore so I won't bore any potential readers discussing it.  But I was struck by what I saw when I surfed to Kilgore's blog and commented.

Grinding a new ax. This is off topic and I would understand if you delete it. I tend to agree with you but very very strongly contest your post criticizing Jason deParle and Ezra Klein for criticizing welfare reform.

In which you link to the clearly titled post by  Elaine Kamark on Ten Miles Square

By Elaine Kamarck

 I think it is past time for you and Kamark to admit that you were wrong and that they were right.

Just now I surfed to Kilgore's blog and found a clickable link to 
"Why is Child Poverty Worsening in the U.S.?"By Katelyn Fossett
at 10 miles square.

I quote the latest word on the topic from The Washington Monthly
According to figures recently released by the Annie E. Casey Foundation, nearly a quarter of U.S. children live below the poverty line, compared with15 percent of Americans generally - and that number keeps growing."
But perhaps the most unsettling part of the new numbers is the fact that increasing child poverty is a trend that seems immune to the factors that should be reining it in.
Whatever the causes of this disturbing trend, public policy needs to keep up. Recent reports, for instance, point to a thirteen year-long decline in the purchasing power of Temporary Assistance for Needy Families, and budget cuts to social programs can only worsen the increase. Now is not the time to do away with the support that could raise up the poorest group of Americans - children.

The concluding paragraph. But now is not the time to sharpen old axes by discussing the latest data and certainly not the time to question the decision to replace AFDC with a block grant. 

Also, by the way, it has been scientifically proven that welfare reform kills.

A randomized controlled trial with a p-value less than 0.1%  should settle the question (note also it considered Lawton Chiles's welfare reform not Newt Gingrich's).  Oddly you didn't mention the study.

And again. The EITC increase passed in 1993 was not part of the welfare reform bill passed in 1996.  

Wednesday, June 19, 2013

It's a big Fracking Deal

I learn via Alan Krueger* that the US Federal Government played a major role in the development of Fracking.  See my first google hit.

Al Gore didn't invent fracking, but a lot of the financing came from Jimmy Carter's DOE.  It is odd how frequently evidence of the wonders of US capitalism ends up being evidence that Carter was a brilliant President (see also interstate trucking deregulation, airline deregulation and beer deregulation -- someone sometime discussed the wonders of disruptive entrepreneurial companies including Southwest Airlines and micro breweries -- both made possible by Jimmy Carter).

See also computers, internet (the) and mortgage bonds (can't win them all).


I wish I'd written that

the latter “momentum” idea is classic Beltway-talk based on the idea that House Republicans won’t be able to resist a good bipartisan bandwagon, which sort of ignores the fact that large numbers of them view their very purpose in life to be to the ambushing and destruction of such vehicles.

Ed Kilgore 

Tuesday, June 04, 2013

Josh Barro's Claims of Fact are Mostly Accurate

Josh Barro's claims of fact are mostly right, but this claim is BS.

Josh Barro wrote

"Liberals don't actually oppose all fiscal austerity. They cheered for the expiration of the Bush tax cuts on the wealthy and mostly shrugged at the end of the payroll tax holiday."

As Jon Chait notes "mostly shrugged" amounts to uh nothing.  Not denouncing one of the moves towards austerity enough to satisfy Barro is not the same as supporting austerity when a Democrat is in the White House and spending like drunken sailors when a Republican is.

I will now google to see what "mostly shrugged" means

Ezra Klein recently sure doesn't claim he shrugged (in a context such that he would be tempted)
"I’m not willing to throw out the idea that raising payroll taxes hurts the economy. But I have to admit that the payroll tax increase hasn’t hurt as much as I expected."

Dylan Matthews "Mark Zandi has argued that payroll tax cuts generate $1.24 of economic activity for every $1 they cost."

This is not a shrug

nor this
"Politically the best way to get more stimulus is probably extending the payroll tax holiday for workers and "

Brad Plumer didn't shrug

uncontestably ideological DailyKos and David Dayen agree

My mom and dad's representative didn't shrug (he's in the leadership)

when it come to BS "mostly" is mostly a strong enough weasel word to get away with anything, but Barro's claim does not stand up to googling.

Barro fell for Ballance

(which is remarkable enough as he was a conservative recently).

Rob Ford thinks his scandal might be good for Toronto

Rob Ford thinks his scandal might be good for Toronto

Huh ! OK just ask youself, if you see two headlines "Worthwhile Canadian Initiative" and "Mayor Filmed Smoking Crack" which story are you going to read ?

To you unfortunate people living hin huge, beautiful, liveable cities* which no one can find on the map, keep up hope.  There's a Ford in your future.

* I live in Rome which is huge a beautiful.  Everyone can find us, because all roads lead to Rome. This only partially explains the traffic.  

OK I have to tell the boring story.  I'm late (as usual) I approach a traffic circle with the big red and white transoms put up so that people who ignore the circularity notice their mistake but aren't killed (they are ugly and clash with the nearby wall constructed before the birth of Christ but I love them) .  The access lane to the circle is completely blocked by a bus with the engine running and the driver walking around on the sidewalk talking on a cell phone.  I flash my lights and wonder what to do.  I could, in theory, cross the double solid white line and drive on the wrong side of some transoms on the exit from the circle then turn right.  But that would be illegal and, much worse, driving the wrong way towards a blind curve and maybe into an oncoming car.

A police car drives up.  I am relieved as I assume there is a bent fender and I can ask one of the police officers to stop traffic so I can get to the traffic circle. Barely pausing the policeperson  driver goes across the double white line and drives the wrong way around the transom.  Oh.  Someone behind me honks.  I now fear that the police will ticket me if I do what one of them just did. But I do it anyway.  

I drive a Ford Ka.  I'm pretty sure there is a Ford in my future, driving the other way, head on.

But our neo Fascist mayor was never filmed smoking crack. So there.

Sunday, June 02, 2013

On Thoma on Dorman on AS-AD on the Web

Mark Thoma makes me think.

The question is why is the AS-AD model rarely seen on econoblogs.

I comment.

It seems to me you get an AS curve pretty quickly by assuming that, in the short run, some firms adjust prices and others don't.  I mean you don't have to get into Calvo pricing to get to "facing increased demand for a given price a firm might produce and sell more or raise prices so let's assume a bit of both (really some firms don't change prices at all most days but uh aggregate wave hands jump to aggregate demand)".
You have to say something about imperfect competition and second order costs of other than optimal pricing, but really, perfect competition is a strange idea which people don't grasp at first.  I think the hard part is the counter-intuition explaining why with perfect competition and flexible prices the AS curve is vertical.
AD has to be given as a function of the money supply.  I mean that's the way things are.  Yes real world central banks target an interest rate.
I think there is little AS-AD on the web not because bloggers appeal to DSGE, but because most have gone all the way back to an IS curve (real interest and output) assuming AS doesn't matter and with the LM curve replaced with something like a Taylor rule.  AS if anything, is an adaptive expectations augmented Phillips curve which matters only because of real interest rates, the monetary authority's response to inflation and debt deflation/inflation.
I don't know of anyone whose policy advice or discussion of current events shows any hint of any intellectual influence of DSGE models.  I see basically Friedmanites who say monetary policy is key (I don't understand their arguments) Keynesians who seem to be thinking of an IS curve and a few new classicals who, frankly, seem to have gone quiet lately (by which I really mean neither you, nor DeLong nor Krugman link to them).
I read DSGE in discussion of new Keynesian DSGE models but I can't remember having any sense of anything coming from them beyond aggregate demand matters, expected inflation matters, and there is something like an expectations augmented Phillips curve (except for hysteresis which we will ignore).  This is, I think Keynesian economics as of 1960.

OK OK so I ended up dumping on DSGE as usual, but I did think for a minute there.

On Douthat on Reform Conservatism

Many people (too many) have commented on Ross Douthat's reform conservatism op-ed.
I have nothing new to say.

There are  two obvious points. As noted by Douthat, the proposal has nothing to do with really existing US Conservatism "Is it an agenda that the party is likely to actually embrace anytime soon? That’s much more doubtful".  This is reform conservatism not reform liberalism and is based on the assumption that Douthat et al have something to teach liberals too.

I admire Douthat's dedication and patience, but I don't think he has useful policy proposals which are new to say Obama.  He has a diagnosis which is roughly that inequality is a problem (not per se but in se or something) and existing social welfare programs are not perfect. I am going to skip to the proposals and fisk.

a. A tax reform that caps deductions and lowers rates,
There is no hint of a justification for the proposal to lower rates in the diagnosis which I didn't cut and paste or later in the op-ed.  The justification is, I guess, that reform conservatism must be conservative and to be a conservative one must propose lower tax rates.  Clearly Douthat was just clearing his throat -- my guess is that he didn't seriously consider the possiblity of not typing "lowers rates" in a sentence which included "tax".but also reduces the burden on working parents and the lower middle class, whether through an expanded child tax credit or some other means of reducing payroll tax liability. (Other measures that might improve the prospects of low-skilled men, ranging from a larger earned income tax credit to criminal justice reforms that reduce the incarceration rate, should also be part of the conversation.)
Been there done that.  This was part of the ARRA (which Douthat denounces below) extended for two years with the payroll tax partial holliday whose further extension was blocked by Republicans.  The tax proposal is to agree that the Democrats are right (and stop talking about the 47%).  then a bit of soft on crime as the icing on the cake.  I agree, but this is moderate leftism not reform conservatism.b. A repeal or revision of Obamacare that aims to ease us toward a system of near-universal catastrophic health insurance, and includes some kind of flat tax credit or voucher explicitly designed for that purpose.
Ah catastrophic health insurance related program activities.  "ease us towards" was too radical, so he added the additional weasel word "aims".  Also been there done that. It is the tax on cadillac health plans.  It clearly was the maximum which was politically possible.  the proposal in general would be rejected by both parties and the vast majority of the public.  c. A Medicare reform along the lines of the Wyden-Ryan premium support proposal, and a Social Security reform focused on means testing and extending work lives rather than a renewed push for private accounts.
Here Douthat assumes that Medicare advantage on steroids will reduce costs even though Medicare advantage increased costs.  This is a triumph of faith over evidence.  It is just not reality based.  Means testing social security will create perverse incentives (it punishes saving) and save little money.  Extending work lives is the most regressive approach to social security reform and makes no sense (we work to live we don't live to work).  
d. An immigration reform that tilts much more toward Canadian-style recruitment of high-skilled workers, and that doesn’t necessarily seek to accelerate the pace of low-skilled immigration. (Any amnesty should follow the implementation of E-Verify rather than the other way around, guest worker programs should not be expanded, etc.)
Douthat agrees with Obama on immigration reform.  Notably he sides with the AFL-CIO against the Chamber of Commerce.  I agree that keeping unskilled workers out is right wing, but I'm the only one.  This is just agreeing with Obama but trying to be rude about it.e. A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today.
I don't think this will work.  I have written much too much about it.  Note that Douthat advocated further fiscal stimulus as point a. f. An attack not only on explicit subsidies for powerful incumbents (farm subsidies, etc.) but also other protections and implicit guarantees, in arenas ranging from copyright law to the problem of “Too Big To Fail.”
The path to reform is for Conservatives to occupy Wall Street.  Here he is well to the left of Obama and out there with Sherrod Brown (and the diaper guy).
The reform conservatism is moderate progressivism (basically the Obama agenda) plus the Ryan Medicare proposal (try what's failed) and standard conservative tics (lower rates, Any amnesty should follow, no further fiscal stimulus).
I am going to skip back to the diagnosis part.  I think that Douthat's proposals suggest only one objection to 

1) The core economic challenge facing the American experiment is not income inequality per se, but rather stratification and stagnation [skip]
2) The existing welfare-state institutions we’ve inherited from the New Deal and the Great Society, however, often make these tasks harder rather than easier: Their exploding costs crowd out every other form of spending, require middle class tax increases and threaten to drag on economic growth; their tangled web of subsidies and credits and tax breaks often benefit the already-affluent and create perverse incentives for the poor, and the distortions created by the way they pay for health care, in particular, contribute mightily to the rising cost of health insurance and thus the stagnation of middle class incomes.

Note the proposal suggests nothing (more exactly nothing not done already by Democrats and reversed by Republicans) about the alleged "perverse incentives for the poor." I haven't clicked the link, but I note that Douthat's only proposal to this is something along the lines of a making work pay tax credit -- that is from Obama's 2008 proposal (temporarily) enacted in 2009.He wants to reduce tax breaks for the affluent. This was in Obama's 2008 proposal and he is still fighting for it.  Much of this is endorsement of Obama 2008 program disguised by "welfare state" New Deal" and "Great Society."

 Douthat provides no link or argument about how public spending on health care drives up private health insurance premiums.  I think he doesn't because he can't.   I guess he could be referring to the fact that health insurance isn't taxed.  This is not social welfare or inherited from the New Deal or the Great Society.  Replacing the exemption with a tax credit is an egalitarian move.  Obamacare is the first step in that direction.  

But my point (if any) in quoting the diagnosis is to note that none of the proposals have anything to do with anti poverty programs.  The only link between the diagnosis and the proposals is that both have something to do with health care spending.