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Yglesias

Inflation Hawk Down

Excellent column from David Leonhardt on the inflation hawks who keep being wrong about everything:

What’s striking about the last six months, however, is how much more accurate the doves’ diagnosis of the economy has looked than the hawks’.

Early this year, for example, Thomas Hoenig, president of the Kansas City Fed and probably the most prominent hawk, gave a speech in Washington warning about the risks of an overheated economy and inflation. Mr. Hoenig suggested that the kind of severe inflation that the United States experienced in the 1970s or even that Germany did in the 1920s was a real possibility.

When he gave the speech, annual inflation was 2.7 percent. Today, it’s 1.1 percent.

The doves, on the other hand, pointed out that recoveries from financial crises tended to be weak because consumers and businesses were slow to resume spending. Around the world over the last century, the typical crisis caused the jobless rate to rise for almost five years, according to research by the economists Carmen Reinhart and Kenneth Rogoff. By that timetable, the unemployment rate would rise for a year and a half more.

Relatedly, someone needs to tell Shahien Nasiripour to stop relying on Hoenig as some kind of populist hero. For all Ben Bernanke’s flaws, he’s by far the lesser of those two evils.

Politics

Karl Rove: ‘Climate Is Gone’

Karl RoveRepublican strategist Karl Rove, who helped organize the outside groups that spent millions to install Republicans in the midterm elections, spent election day celebrating with Pennsylvania’s growing drilling industry. Like other corporate sectors, the fossil industry is hoping that Republicans will be able to roll back regulations that limit their profit-seeking at the expense of people’s health and safety. Rove told the attendees of a shale-gas conference in Philadelphia that the incoming Republican House of Representatives “sure as heck” won’t pass legislation to limit greenhouse pollution from fossil fuels:

Climate is gone,” said Rove, the keynote speaker on the opening day of a two-day shale-gas conference sponsored by Hart Energy Publishing L.L.P. And Rove told the trade show, “I don’t think you need to worry” the new Congress will consider proposed legislation to put the controversial practice of hydraulic fracturing under federal rather than state regulation. The procedure, known as “fracking,” is responsible for the dramatic growth of shale-gas drilling in formations such as Pennsylvania’s vast Marcellus Shale.

Rove’s pronouncement that the “climate is gone” may be more accurate than he realizes. The Geological Society of London is warning that the planet will take 100,000 years to recover from man’s global warming pollution, the permanently warmer Arctic is altering weather patterns across the Northern Hemisphere, and scientists continue to warn that global policy ambitions — if the United States even acted — are likely too weak to avoid catastrophe.

Climate Progress

The failed presidency of Barack Obama, Part 2

He let die our best chance to preserve a livable climate and restore US leadership in clean energy — without a serious fight

The country can only contemplate serious environmental legislation when we have the unique constellation of a Democratic president and [large] Democratic majorities in both houses, an occurrence far rarer than a total eclipse of the sun.

That’s from “One brief shining moment for clean energy,” my piece on the passage of the House climate bill last June.

Obama hasn’t merely failed to get a climate bill.  Given the self-described (and self-inflicted) “shellacking” the president received Tuesday, he has made it all but impossible for a return to such an alignment of the stars this decade.

Read more

Security

Arizona Bans Affirmative Action, Oklahoma Makes English The ‘Official’ Language

In an interview with NPR on Election Day, Pamela Prah of Stateline.org expressed surprise that there were no immigration ballot measures this election season. Given the tenor of the debate, I too would’ve expected a series of anti-immigrant initiatives on several state ballots. However, there were at least two ballot initiatives that are still very much a manifestation of nativist sentiment. One, a proposal in Arizona banning affirmative action and another ballot initiative in Oklahoma which makes English the “official” language of the state. Though neither has a direct effect on immigration policy itself, the passage of both initiatives presents serious implications for the immigrant and Latino communities.

On Tuesday, Arizona approved Proposition 107 “banning the consideration of race, ethnicity or gender by units of state government, including public colleges and universities.” Prop. 107 was spearheaded by the American Civil Rights Committee (ACRC), a Sacramento, California political action committee connected to Ward Connerly that funneled thousands of dollars into Arizona this year. ACRC is described by one Asian political blogger as a group “whose members have spent the last two decades traveling from state to state trying to enact harmful, discriminatory laws under the guise of equality.” Unsurprisingly, state Sen. Russell Pearce (R-AZ), the lawmaker who introduced SB-1070 and was “chief promoter” of a separate bill banning ethnic studies, was one of the main figures pushing the anti-affirmative action ballot initiative. He was even featured in radio ads endorsing the measure.

Opponents included Jeffrey F. Milem, Associate Dean for Academic Affairs at the University of Arizona, who argued that Prop. 107 arguments “are purposefully misleading” and that the initiative itself is “in direct conflict” with previous Supreme Court decisions. Joe Thomas, vice president of the Arizona Education Association, wrote that Prop. 107 “is an anti-equal-opportunity measure.”

Meanwhile, in Oklahoma, voters approved a ballot initiative — Question 751 — which declares English the “official language” of the state. Several states have passed similar legislation, though they tend to vary in their severity. For example, Virginia’s “official language” law stipulates that no state agency or local government shall be required nor prohibited from providing “official” documents in a language other than English. However, Question 751 goes a step further and “requires that official State actions be in English.” “Official state actions” are not defined. Rep. Randy Terrill (R) is one of the legislative members who authored the question’s language — the same lawmaker who told the Associated Press that he “may even take Arizona’s example further and include assets seizure provisions and harsher penalties” for undocumented immigrants. On Question 751, Terrill explains, “What was really the straw that broke the camel’s back was essentially a lawsuit that was prompted against the State of Oklahoma by an Iranian couple in Bartlesville who complained to the National Highway Traffic Safety Administration because of our refusal to give them a drivers license test in Farsi.”

Proponents of Question 751 claim that it promotes immigrant integration, however, most experts note that if that were really their goal they’d dedicate more resources to ESL programs. Pat Fennell with the Latino Comm. Development Agency argued, “Instead of passing that kind of legislation, we need to create windows of opportunity while people are learning English.” University of Tulsa professor and attorney, James C. Thomas believes it’s unconstitutional. “It violated the free speech clause. The Supreme Court of Oklahoma in 2002 has already ruled that English only is unconstitutional. Why does the legislature now come back in 2010 and resurrect this issue?” said Thomas.

The language of both ballot initiatives was very carefully crafted. Whether they pass legal muster remains to be seen. What is clear that they were pushed by many of the same actors who have been aggressively pursuing harsh immigration measures throughout the years. Ultimately, it seems likely that these ballot measures are part of a multi-pronged strategy to promote a broader pro-white, anti-minority, anti-multiculturalist right-wing agenda.

Politics

Pawlenty Inadvertently Explains How House Republicans Are ‘Lying To You’ About Spending Cuts

As ThinkProgress has repeatedly noted, despite their professed commitment to cut government spending, most Republicans in Congress refuse to propose specifics that would actually cut spending in any significant way. Recognizing the extreme unpopularity of cutting Social Security and Medicare, and the aversion of their base to military cuts, these self-styled fiscal conservatives often take entitlement and defense spending off the table, removing nearly 60 percent of the federal budget from scrutiny. Of the remaining spending, another sizable portion goes to debt payments — which are untouchable — and most Republicans also take homeland security and other security spending off the table, leaving only a small fraction of the total federal budget from which to find cuts.

Despite this stark reality, Republicans still try to claim the mantle of fiscal responsibility, and are forced to fumble, hem and haw when pressed on how they would actually cut spending. But at least one Republican leader is willing to be honest. Appearing on MSNBC’s Morning Joe today, Minnesota Gov. Tim Pawlenty (R) essentially called his party’s congressional leaders liars, saying anybody says they want to cut spending but won’t touch entitlements or defesne is “lying to you”:

HOST: What are you going to cut?

PAWLENTY: If you look at a pie chart of federal outlays, discretionary spending being the red, non-discretionary being the blue. The blue is already over the over the half way mark and it’s growing in double digits. Anybody who comes in here and tells you they’re not going to cut anything other than waste fraud and abuse, they’re not going to touch entitlements — they’re lying to you. If you want to deal with the spending issue, in terms of total federal outlays, you got to deal with interest on the national debt, Social Security, Medicare, Medicaid — if you have the time I can walk you through my ideas. But that’s the truth, you got to do entitlement reform, particularly if you’re going to hold defense harmless.

Watch it:

Pawlenty called out this “lying” because he openly favors cuts to entitlements like Social Security and Medicare. This is an unpopular position, so Republican congressional leaders often attempt to claim that no one in their ranks wants to cut these programs. However, this is patently false; ThinkProgress has identified 104 Republicans in Congress who support privatizing Social Security. Progressives have alternatively proposed defense spending cuts, eliminating corporate welfare elimination, and responsible revenue increases.

If these congressional Republicans are serious about cutting spending and want to make cuts to Social Securiy or Medicare, they should have the courage to say so honestly, as Pawlenty seems to be calling on them to do, instead of hiding behind phony claims that they can make meaningful cuts without causing significant pain.

Yglesias

Prostitution Externalities

I think Adam Ozimek’s post on “The Visceral Externality of Prostitution” nicely illustrates why nobody likes economists:

Say Ray’s friend Lenore wants to purchase Ray’s prostitution services and she values them at $400. But when Lenore does this it bothers Ray’s other friend Tonya. If the negative utility Tonya experiences is worth more than $400, then the market provides a mechanism for Tonya to satisfy her wants: she can pay Ray $401 not to sleep with Lenore. [...]

People will probably object that this is unbelievable, and that even if it happened once in a while, in the real world this would never be enough objectors to affect the quantity of prostitution. I think this is correct. After all, the objectors would have to value preventing prostitution at more than average rate of $300 an hour in order to outbid the existing buyers. But what this tells you is that the marginal utility gained from prostitution by consumers would vastly exceeds the marginal disutility to objectors.

I think objectors know. After all, market based solutions are possible and yet you never hear objectors push for anything but prohibition. This tells me that their willingness to pay is pretty low, and therefore so is their disutility.

This misses the fact that a big part of the point of prostitution prohibition laws is to express social disapproval of prostitutes and prostitution. Indeed, people seem generally quite unconcerned about whether prostitution is occurring someplace out of sight and out of mind. But they want to reserve the right to strongly disapprove of both the prostitution and especially the prostitutes. You can analogize a person who engaged in a form of sexual or commercial conduct of which you disapprove by referring to that person as a “whore.” It’s an insult. Its insult status reflects and upholds a social consensus that whores are bad people, not just that whoring is a kind of undesirable nuisance. Side-payments can’t address this issue.

I think the best way to think about prostitution prohibition is just to observe that we’ve historically done a lot of stuff to bolster the privileged position of heterosexual companionate marriage. This has entailed a lot of avoidable cruelty to gays and lesbians, sexually active women, children of unmarried women, and voluntary prostitutes. But the cruelty isn’t a pointless side-effect that can be reduced through better policy design. The cruelty is integral to obtaining the objective. Over time, counterveiling humane impulses have tended to win out. But that’s the issue.

Alyssa

Just Desserts

Two reasons this interview with Sigourney Weaver make me even more excited than I already was for Vamps:

1) Apparently, Weaver will be playing an unrepentant vampire queen. Weaver is unbelievably fabulous, funny, and tough. My real wish for Avatar was that she’d been the movie’s main character. I love the idea of seeing her glam and evil.
2) I somehow missed that Justin Kirk was involved with this project. And let me tell you, I love me some Justin Kirk. He is utterly astonishing in Angels in America. He’s delightfully creepy in his one-off on Law & Order: Special Victims Unit. He’s been a lot of fun in the small roles he’s had on Modern Family this year. I am not a Weeds person, but I hear good things about him there, too. It often seemed to me like everyone but Kirk got the bump they deserved from Angels. Meryl Streep, Al Pacino and Emma Thompson didn’t need bumps, of course, but Mary Louise Parker ended up with Weeds, Patrick Wilson earned himself a steady rotation of big movie roles, Jeffrey Wright may still be underrated but is working in things like the Bond series, and Ben Shenkman got Burn Notice, Gray’s Anatomy, and now Damages. Kirk’s tremendously talented, and deserves all the success that comes his way. I just hope there’s more of it following this. The world only spins forward, right?

Health

McConnell Makes And Breaks Promise To ‘Listen To The People Who Sent Us Here’ In The Same Speech

This morning, after laying out the Republican strategy for repealing the Affordable Care Act, Senate Minority Leader Mitch McConnell (R-KY) argued that Republicans stood with the American people and urged the administration to follow suit. “The formula is simple, really: when the administration agrees with the American people, we will agree with the administration,” McConnell said in the speech titled “Listening To The People Who Sent Us Here.” “When it disagrees with the American people, we won’t”:

MCCONNELL: But whether or not the administration has a mid-course correction, Republicans have a plan for following through on the wishes of the American people. It starts with gratitude and a certain humility for the task we’ve been handed. It means sticking ever more closely to the conservative principles that got us here. It means learning the lessons of history. And, above all, it means listening to the people who sent us here. If we do all this, we will finish the job.

But McConnell has already broken “the formula” and his pledge to listen to Americans. Exit polls don’t suggest that a majority of Americans support repealing the health law and neither does regular polling. National exit polls reveal that neither party has a mandate on the issue, with 48 percent of Americans saying they want to repeal the law, and 47 percent saying it should be kept in place or expanded.

In most national opinion polls, support for repealing the law is a mile wide but an inch deep. For instance, a recent New York Times survey found that 41% of Americans thought Republicans should repeal the law, but that number dropped to 25% when the respondent was told that “repealing the law meant that insurance companies were no longer required to cover people with existing medical conditions.” Also, 46 percent of respondents also said that “the Democratic party is more likely to improve the health care system,” while just 28 percent thought Republicans were. An earlier poll similarly found that while 40 percent of respondents said they supported repealing the Affordable Care Act, “more than half changed their minds (leaving just 19 percent in favor of repeal) when pollsters mentioned that it’d mean letting insurance companies exclude people with pre-existing conditions.”

Indeed, as I’ve argued here, opposition for the law increased during the election cycle was because Americans were exposed to false advertising about the health law. “Opponents of the legislation, including independent groups, have spent $108 million since March to advertise against it” — “six times more than supporters have spent, including $5.1 million by the Department of Health and Human Services to promote the new law.” That $108 million went to finance the false claims that individuals who don’t purchase coverage will go to jail, or sex offenders will have access to government subsidized Viagra and seniors will lose all their Medicare benefits.

During an appearance on MSNBC this morning, incoming Pennsylvania Senator Pat Toomey similarly dismissed the polls and suggested that Republicans should pursue the repeal strategy. But in his home state, a majority wanted to leave the plan alone or expand it.” Just 45 percent supported repeal.

Politics

Gingrich Imagines The World Is Elated With GOP Midterm Election Victories

In Nov. 2008, President Obama’s election “unleashed a renewed love for the United States after years of dwindling goodwill” — generating overwhelmingly positive responses from around the globe. UK Conservative Party Leader David Cameron, now the country’s Prime Minister, said at the time that Obama’s election “shows that the United States is a beacon of hope and opportunity and change.”

Last night on Fox News, Newt Gingrich tried to advance the illusion that the world has reacted similarly to the GOP’s strong showing in Tuesday’s midterms:

GINGRICH: I mean, imagine if you were in China as a dictatorship and you watched the American people cheerfully firing people, and you thought to yourself, Wow, that’s a pretty cool idea. Or imagine you were an Iranian student thinking, you know, wouldn’t it be nice to be able to fire Ahmadinejad, the way Americans go about their politics? So I think it actually strengthens us.

The other is, I think this was a real signal to the world not to assume that the United States is a weak, timid country, not to assume that we’re going to tolerate bad economic policies and not to assume that we’re a country you’re going to be able to push around or run over because I think the American people are exhibiting a robust willingness to change the entire game. And that’s a pretty good historic reminder to other countries that we are a remarkably powerful, and if necessary, remarkably dangerous country when people try to behave in a predatory way towards us.

Watch it:

However, this reception Gingrich speaks of only exists in his mind. In fact, the world is worried that the U.S. will actually be tolerating bad economic policies such as wanting to extend the Bush tax cuts for the rich, as the New York Times reports today:

“The rest of the world, including Asia, is looking at the United States and seeing no real effective policy measures in bringing the economy back on track,” said Bart van Ark, the chief economist at the Conference Board, which measures American economic indicators. “That is making the U.S. lose its legitimacy in the global economic community as a leader in terms of providing solutions.” [...]

“Republican claims to fiscal probity are a little difficult to buy into,” said Simon Tilford, the chief economist at the Center for European Reform in London. “What they’re advocating would probably increase the deficit rather than effect the dramatic reduction which they claim they want to bring about.”

Benedict Brogan, deputy editor of the right of center Daily Telegraph in London said “you will find folk in Downing Street who fear mainstream Republicans are on the wrong economic path.”

As the AP reported, “China’s interest in the elections was high,” but not because the Chinese want to be like the U.S., as Gingrich said, but because of worries “about the election’s fallout on the U.S.-China relationship, which has been marked by tensions over trade and currency.”

And Iranians probably don’t heed American election results as an impetus to remove Ahmadinejad from office — as last year’s disputed election protests in Iran clearly demonstrated. A Tehran University professor of North American studies said that Iranians view the U.S. midterms and are actually more concerned about “easing tensions” between Iran and the U.S., something the new GOP House majority will be fighting against.

Yglesias

If QE2 Inspires Foreign Investment That, Too, Will Help Boost US GDP

(cc photo by LateNightTaskForce)

One of the reasons you can tell that though QE2 may be too modest to do much good, it’s still a step in the right direction, is that its strongest critics have critiques that just don’t add up. The Cato Institute’s Mark Calabria, for example, says we should be worried that QE2 will succeed in pushing the price level up closer to its trend level. But there’s no reason to worry about that—doing so would be a good thing. Similarly, Pete Davis lays out a theory whereby higher inflation expectations harm the economy:

Will it work? Yes and No. It should raise short-run growth, but only if this money is put to use by American businesses and consumers. If they fear further weak growth and long-term inflation because the Fed may be unable to unwind these massive liquidity injections fast enough, it could easily end up being saved and invested overseas. So a lot depends upon market and consumer perceptions of whether the Fed picked a large enough liquidity injection to raise growth, but a small enough one to avoid fears of future inflation. The Japanese experience with quantitative easing a decade ago was that it didn’t work very well.

I completely disagree with this. The Japanese experience with quantitative easing was that it didn’t work very well at raising inflation expectations. But higher inflation expectations boost growth in a severely depressed economy (note that the “in a severely depressed economy” part is an important qualifier). Higher inflation expectations are likely to inspire cash-hoarding firms to unload their money and invest it in something. There are two choices here. One is that they might invest it in expanding their real economy activities here in the USA. That would boost growth. The other, as noted by Davis, is that they might invest it abroad. That would decrease the value of the dollar boosting import-competing and exporting US-based firms. That would boost growth.

As I mentioned yesterday on BHTV it’s important to be clear about what “more inflation” would mean in this context. Relative to where we are today, the inflation rate of the Clinton and George W Bush administrations would be “more inflation.” Relative to where we are today, the inflation rate of the “Morning in America” recovery of 1983-90 would be a lot more inflation. Saying “Yglesias wants inflation” sounds bad. Saying “Yglesias wants to return to Reagan-era levels of inflation” sounds much more reasonable.

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